Regional : Enhancing Preparedness Through OneADB for Transport Projects in South Asia

Transport / Rail transport (non-urban) - Road transport (non-urban) - Urban public transport

South Asia has made great strides in poverty reduction and economic growth in the last 50 years. However, there are unfinished development agendas. Issues such as poverty and vulnerability, rising inequality, climate change, growing environmental pressures, and large infrastructure deficits, remain to be addressed. Emerging trends, such as technological advancements, urbanization, and changing demographics, present opportunities and challenges.

Given the size of Asia and the Pacific, achieving major global commitments the Sustainable Development Goals (SDGs), the related Financing for Development agenda, the Paris Agreement on climate change, and the Sendai Framework for Disaster Risk Reduction will depend critically on the success of the region.

Strategy 2030 sets the course for ADB to respond effectively to the region's changing needs. ADB will sustain its efforts to eradicate extreme poverty and expand its vision to achieve a prosperous, inclusive, resilient, and sustainable Asia. ADB's aspirations are aligned with major global commitments. Strategy 2030 reflects feedback from a wide range of stakeholders, including policy makers in developing and developed countries, academics, and civil society organizations, as well as ADB Board members and staff.

Weak global economic and political instability. ADB DMCs across Asia and the Pacific continued to face strong economic headwinds in 2022. These included a variety of supply chain disruptions and sharp increases in international commodity prices exacerbated by the Russian invasion of Ukraine. Economies reliant on food and energy imports, and the smooth flow of transportation and logistics, were particularly affected.

Inadequate quality infrastructure. The transport sector in South Asia faces development constraints which can hamper economic growth and connectivity. One significant challenge is inadequate infrastructure, characterized by a lack of well-maintained roads, railways, and ports. This deficiency leads to high transportation costs, delays, and limited accessibility, particularly in rural and remote areas. Additionally, issues like traffic congestion and poor road safety contribute to inefficiencies and reduced economic competitiveness.

Lack of sustainable transport technologies deployed. Furthermore, the transition to electric vehicles presents both opportunities and challenges. While electric vehicles can contribute to reducing carbon emissions and air pollution, the lack of widespread electric vehicle charging infrastructure and affordability issues hinder their adoption. Additionally, the integration of digital technologies, such as smart traffic management systems and real-time data analytics, is crucial to address issues like traffic congestion. These constraints can limit the region's ability to harness the benefits of cleaner and more sustainable transportation, slowing down progress towards a greener, more efficient, and digitally connected transport sector. Addressing these constraints, both in traditional transportation infrastructure and electric vehicle adoption, and integrated digital technologies, is crucial for improving connectivity, trade, and overall development in the region.

Shift to sustainable transportation solutions aligning with international conventions on climate change. South Asia's public transport infrastructure necessitates reforms for the adoption of

sustainable transportation solutions, including transitioning public transport fleets to eco-friendly options like electric vehicles. This shift will effectively contribute towards low carbon development of the transport sector and implement environment-friendly and sustainable urban transport solutions, curb pollution and greenhouse gas emissions, and support DMCs in designing mobility solutions that align with their respective Nationally Determined Contributions (NDC) (as a part of the Paris Agreement 2015). When coupled with advanced intelligent transport solutions, it will ameliorate traffic congestion and minimize accidents by optimizing routes and traffic patterns. This initiative aligns with country partnership strategies (CPS) of South Asian DMCs and the prevailing global trends, and will also support to tap opportunities for private sector investments and tourism.

Limited experience in developing sustainable transport solutions. While transport plays a crucial role in economic development, it can also generate adverse social, environmental, and economic impacts that require careful management. Recognizing the need to address these challenges, DMCs are seeking assistance to establish sustainable transport systems. Nonetheless, many of these nations lack the requisite expertise and experience in formulating sustainable transport solutions and thus require support in expanding their investments and establishing more appropriate institutional frameworks to advance their objectives. The TA will support a broad range of transport projects and their implementation; thus, the transport portfolio is being transformed, which will provide more opportunities and chances for sustainable technologies and sustainability experts to be involved in project design. Examples are the proposed Sustainable Urban E-Mobility Project in Nepal and Nashik Neo Metro Project in India.

Lack of climate-resilient infrastructure ecosystem. The absence of a climate resilient infrastructure ecosystem is a significant challenge. In the context of adaptation, it is imperative that transport projects take a more proactive approach in addressing climate change and disaster resilience, particularly in Bangladesh, Bhutan, Nepal, and the Northeast India. These assets will be harnessed to enhance project preparation and administration. In terms of mitigation, promoting a modal shift from road transport to rail and/or metro transport is essential to align with the Paris Agreement Alignment (PAA) and ADB's climate change priorities, with a particular emphasis on metro and rail projects in Bangladesh, India, and Sri Lanka. In Asia and the Pacific, a range of challenges face the sustainability of the transport sector. In particular, these include rapid motorization and urbanization that are affecting the social sustainability of transport, transport's emergence as the largest and fastest growing sector for greenhouse gas (GHG) emissions, high accident rates, a gap in transport infrastructure and transport services, and regional integration and trade facilitation that is hampered by current arrangements for cross-border transport and logistics. This TA addresses urban transport, climate change, and social sustainability aspects of these challenges. ADB is already implementing substantial work including cross-border transport and logistics as well as activities on road safety that are currently being considered for other financing sources.

Inadequate regulatory environment and institutional capacity. Developing regulatory and institutional capacities is vital for South Asia's transport sector, particularly in the context of addressing climate change and achieving Paris Agreement goals. This involves creating effective regulatory frameworks and strengthening the institutional capabilities of the transport sector to ensure safety,

efficiency, and sustainability, including the promotion of electric vehicles. It is essential for coordinated policy implementation, cross-border connectivity, streamlined decision-making processes, promoting economic growth, regional development, and environmental sustainability. Common issues and challenges within and among the South Asia DMCs bring tremendous opportunities for regional cooperation, collaborative learning, and collaboration. Under the standard framework of investment projects and TAs where resource packaging is largely project- and country-focused,

it is difficult to exchange knowledge and expertise on regional and global best practices which is often more efficient and more likely to bring successful results.

There are limited avenues for government officials to collaborate with NGOs, think tanks or the private sector within and outside South Asia on topics such as road and rail safety, engineering design, resettlement and rehabilitation, environment management, climate resilience, gender mainstreaming, asset management, and project finance.

Urban Smart portfolio. Under ADB's New Operating Model (NOM), the smart mobility team of the transport sector group is dealing with new types of transport modalities. This would include guided rail system, electric vehicle-enabled mobility solutions, intelligent transport system and/or traffic management, electronic toll collection system, road safety equipment, port community system, transit-oriented development, and land value capture during infrastructure design and development. The TA will support DMCs in structuring interventions in these new and emerging areas of the transport sector.

The TA aligns with the seven operational priorities of the ADB Strategy 2030, PAA on Climate Change, ADB Safeguard Policy Statement Policy Update, NOM, and One ADB Approach. The TA will use the One ADB approach in bringing together expertise and knowledge across various functional areas and help in identifying and working on the bottlenecks in the implementation and processing of projects. In addition, the TA will align with the following CPS: (i) Bangladesh, 2021-2025: Sustain Growth, Build Resilience, and Foster Inclusion-August 2021; (ii) Bhutan, 2019-2023: Fostering Diversification and Reducing Disparities- August 2019; (iii) India, 2023-2027; Catalyze Robust, Climate-Resilient, and Inclusive Growth; (iv) Maldives, 2020-2024: A Resilient and Sustainable Island Life for All Maldivians; (v) Nepal, 2020-2024: Promoting Connectivity, Devolved Services, and Resilience; and (vi) Sri Lanka, 2018-2022: Transition to Upper Middle- Income Country Status.

Alignment with regional initiatives. The TA will support the South Asia Association for Regional Cooperation (SAARC) activities by contributing to the initiatives on crossborder connectivity and transportation for SAARC's vision of enhancing regional trade and cooperation. The TA is also aligned with the South Asia Subregional Economic Cooperation (SASEC) program that supports infrastructure development, trade facilitation, and regional connectivity.

Climate resilience and Paris Agreement. The TA is closely linked to regional efforts to address climate change and meet the goals of the Paris Agreement. By promoting climate-resilient transport solutions, including the adoption of electric vehicles, the TA will contribute to the region's commitment to reducing carbon emissions and building climate resilience.