A Review on the Participation of Domestic Firms for Infrastructure Construction Projects in Central Asia : With Special Reference to the Railroad Vehicle Projects in Kazakhstan
Authors:   Asia-Europe Perspective Association, Park Eunyoung 
Published: June 2018

The Central Asian region has a high growth potential as an underdeveloped resource rich country, but it is experiencing growth stagnation due to the recent downward trend in raw material prices and the lack of land and infrastructure. However, it is expected that its importance will increase due to its regional advantage of connecting Europe and Asia in the past. Korea should also take more interest in the Central Asian region. For Korea to participate as a leading country in future Eurasian transit trains, the entrance into the railroad market of Kazakhstan, the central country of the Central Asian region, requires review as an important strategy. In this context, it is necessary to examine how Korean companies can benefit by entering the Kazakh railroad market.
Continued and extensive investment is planned into Kazakhstan’s aged railroad infrastructure whilst it is in relatively good condition, as the nation’s strategic growth plan is to be a logistics hub for the Central Asian region. A new railroad link from China to Europe via Kazakhstan is expected to reduce the existing 14 days of the Trans-Siberian Railroad by more than four days.
In an international railroad bidding process, very important weighting is given to the legal and technical criteria and specification requirements of the country that invites the tender. If railroad vehicles and operation systems are introduced, reliability and passenger safety are of utmost importance since they operate for (at least) 25 years in the short term and over 40 years in the long term. Therefore, each country provides its legal and technical criteria as its standards. In addition to this, the Transport Authority sets additional requirements in accordance with the route environment. Of these, the most important condition is existing business results. The railroad market in Korea also requires existing business results as a key criterion. Whilst these conditions are required due to the importance of safety and reliability for railroad operation, the localization of expensive equipment by Korean companies has become a high barrier to market entry. Korean vehicle developers have been trying for many years to localize a railroad signal system, but due to these conditions, localized equipment has not been introduced.
A Korean company has proposed and contracted a subway project in Almaty City, Kazakhstan and successfully supplied vehicles. In the process, the company identified that the local subway system was dependent on manual operation and proposed a modernized railroad signaling system. The Almaty City Transport Authority positively reviewed the proposals for the implementation of modernized signaling systems and introduced the Korean signaling system. The railroad signal system which was developed in Korea but could not be used was implemented for the first time due to the timing and political factors of Kazakhstan. Based on these achievements, it could be possible to advance to other railroad projects in Central Asia, and a path to implement the Korean railroad system which had not been applied due to lack of results has been formed.