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Nazrin Abdul

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The Asian Development Bank (ADB) is deepening its engagement with Azerbaijan and other CAREC member states through the second phase of the Central Asia Regional Economic Cooperation (CAREC) Integrated Trade Agenda 2030, with a strong focus on accelerating digital trade. This move reflects a broader strategic shift by the bank and participating countries toward modernising trade systems, reducing structural bottlenecks, and strengthening regional economic resilience amid global trade fragmentation.

Under Sub-project 3: Accelerating Digital Trade, ADB is supporting Azerbaijan alongside Georgia, Kazakhstan, the Kyrgyz Republic, Mongolia, Pakistan, China, Tajikistan, Turkmenistan, and Uzbekistan. The initiative seeks to digitise trade processes, facilitate cross-border transactions, and align national systems with international digital trade standards - an area where many CAREC economies remain at an early or uneven stage of development.

Funded by $900,000 in technical assistance from Korea’s e-Asia and Knowledge Partnership Fund, the sub-project focuses on three core objectives: accelerating the implementation of electronic trade documents, promoting internationally recognised model rules and standards for digital trade, and establishing systems to manage cross-border information and payment flows. While modest in financial terms, the project’s strategic value lies in its potential to unlock efficiencies across customs, logistics, finance, and regulatory coordination.

According to ADB, despite the adoption of national digital strategies in many CAREC countries, the practical rollout of electronic trade documentation and harmonised standards remains incomplete. Persistent challenges include limited interoperability between national systems, data privacy and cybersecurity concerns, incompatible digital payment platforms, and gaps in trade connectivity infrastructure. These shortcomings continue to raise transaction costs and slow cross-border trade, particularly for landlocked economies in Central Asia.

For Azerbaijan, participation in this initiative aligns closely with its ambition to position itself as a regional logistics, transport, and digital trade hub connecting Central Asia, the South Caucasus, and Europe. As trade routes such as the Middle Corridor gain prominence, the efficiency of digital customs, e-documents, and cross-border payments becomes just as critical as physical infrastructure. In this context, ADB’s emphasis on pilot projects, knowledge sharing, and institutional capacity building could help Azerbaijan accelerate reforms already underway and ensure compatibility with neighbouring markets.

Beyond trade facilitation, the digital agenda also supports broader policy priorities. ADB notes that the initiative will contribute to the green transformation of regional trade, reducing paperwork, streamlining logistics, and supporting climate solutions under the CAREC 2030 Integrated Trade Agenda, the Regional Action Program on Climate Change, and the Baku Declaration on CAREC Partnership on Climate, Innovation, and Trade. Digitalisation, in this sense, is framed not only as an efficiency tool but also as an enabler of more sustainable trade practices.

The strategic importance of CAREC was underscored in November 2025 in Bishkek, where ADB announced plans to invest more than $10 billion through 2030 to support CAREC-related projects and initiatives. Speaking at the 24th CAREC Ministerial Conference, ADB President Masato Kanda described the bank’s vision of CAREC as “economically resilient, environmentally sustainable, socially inclusive, and digitally connected,” signalling a long-term commitment to regional integration.

During the conference, CAREC ministers endorsed the Bishkek Declaration, launching negotiations on trade and investment facilitation aimed at lowering barriers, boosting investment flows, and expanding cooperation in emerging areas such as digital trade and the green economy. This political backing is crucial, as digital trade reforms often require not only technical solutions but also legal harmonisation and sustained intergovernmental coordination.

Since its launch in 2001, the CAREC Program has mobilised about $54 billion in investments for regional projects, making it one of the most significant platforms for economic cooperation across Central and South Asia.

The CAREC Business Forum held ahead of the ministerial meeting further highlighted the growing role of the private sector, with discussions focused on transforming CAREC corridors into engines of economic growth, digital innovation, and climate resilience. Looking ahead, the success of ADB’s digital trade initiatives, particularly for countries like Azerbaijan, will depend not only on how effectively pilot projects translate into scalable reforms but also on the strength of political and institutional partnerships.

The recent visit of ADB President Masato Kanda to Azerbaijan on November 14, 2025, underscores the strong relationship between Azerbaijan and the bank. During his visit, Kanda met with President Ilham Aliyev to discuss ADB’s strategic support for the country’s development priorities, with a focus on transforming Azerbaijan into a regional hub for connectivity, trade, and energy linking Central Asia and Europe.

Kanda also held discussions with Prime Minister Ali Asadov on potential areas of collaboration aimed at attracting private investment, boosting innovation, and creating new jobs. Meetings with Minister of Finance Sahil Babayev, Minister of Economy Mikayil Jabbarov, and Minister of Digital Development and Transport Rashad Nabiyev focused on ongoing and future ADB projects, highlighting the bank’s comprehensive engagement across public policy, infrastructure, and digital transformation.

Beyond high-level meetings, Kanda toured key infrastructure projects, including the Icherisheher metro station, part of the upcoming Baku Metro Expansion Project, and an ADB-financed modern warehouse facility that has improved food accessibility, affordability, and safety. He also met with smallholder farmers adopting resilient agricultural practices, reflecting ADB’s multi-sectoral approach to inclusive development.

Azerbaijan has been a member of the ADB since 1999, with the bank investing around $5.6 billion in the country - $4.4 billion in the public sector and $1.2 billion in the private sector. Major investments have targeted transport ($1.5 billion) and energy ($1.7 billion), underlining the country’s strategic role as a regional connectivity and energy hub.

The high-level engagement between ADB and Azerbaijan signals that political support and institutional alignment are in place to ensure that CAREC’s digital trade reforms and related initiatives can be implemented effectively. If these reforms succeed, the CAREC digital trade agenda could significantly reduce trade frictions, enhance regional competitiveness, and better integrate participating countries into global value chains.

The next CAREC Ministerial Conference, scheduled for Mongolia in 2026, will mark the program’s 25th anniversary - an opportunity to evaluate whether CAREC’s growing focus on digitalisation, sustainability, and strategic partnerships is delivering tangible economic outcomes across the region.