regional initiative concept paper usaid business growthpdf.usaid.gov/pdf_docs/pa00n4ns.pdf ·...

Regional Initiative Concept Paper

Overview of International Donors' Programs on

Access to Finance for Small and Medium Enterprises

R

September, 2010

Prepared by

October 30, 2017

This publication was produced for review by the United States Agency for International Development. It was prepared for the USAID Business Growth Initiative Project, task order number AID-176-TO-14-00001, implemented by Deloitte Consulting, LLP

USAID Business Growth Initiative (BGI) Third Year Annual Report October 2016 – September 2017

USAID Business Growth Initiative

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USAID Business Growth Initiative (BGI) Third Year Annual Report October 2016 – September 2017 USAID BUSINESS GROWTH INITIATIVE CONTRACT NUMBER: AID-176-I-11-00005 TASK ORDER NUMBER: AID-176-TO-14-00001 DELOITTE CONSULTING, LLP October 30, 2017 DISCLAIMER The report made possible by the support of the American People through the United States Agency for International Development (USAID). The contents of this report are the sole responsibility of Deloitte Consulting, LLP and do not necessarily reflect the views of USAID or the United States Government.


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Table of Contents

1. SUMMARY OF ACTIVITIES AND MAJOR ACCOMPLISHMENTS DURING THE THIRD PROJECT

YEAR .................................................................................................................................................... 4 2. CHALLENGES AND RISKS TO PROJECT IMPLEMENTATION .................................................... 5 3. TEXTILE/APPAREL VALUE CHAIN .................................................................................................. 6 4. TOURISM VALUE CHAIN ................................................................................................................. 25 5. CONSTRUCTION MATERIALS VALUE CHAIN ............................................................................. 48 6. YOUTH INITIATIVES ......................................................................................................................... 51 7. TAX POLICY AND ADMINISTRATION ............................................................................................ 53 8. BUSINESS REGULATIONS – LICENSING AND INSPECTIONS .................................................. 55 9. ACCESS TO FINANCE ..................................................................................................................... 57 10. PROJECT FUND ............................................................................................................................... 60


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1. Summary of Activities and Major Accomplishments during the Third Project Year

The BGI project achieved the following key results in its third project year:

BGI Technical Area Results

Apparel

Style Quotations Results

• A total of 14 factories participated in preparing a total of 224 style quotations for 5 Russian and 3 European retail chains, resulting in actual orders of 42 different styles to 4 different Russian retailers during FY 2017.

Sales Order Results • A total of 7 factories generated sales to Russian retailers of $1,083,753

during FY 2017. • This brings the total sales revenues generated by BGI to $1,951,487 during

the life of the project through FY 2017.

Future Orders Confirmed

• In the final weeks of FY 2017 and October of FY 2018, BGI generated an additional $1,015,026 of sales for 7 factories, 2 of which were for the European market.

• One factory shipped $90,000 of women’s blazers for the EU market the last week of October, produced during the last three months of FY2017; the client estimates conservatively that it will place up to $1 million of orders with the firm for the calendar year 2018.

• Another factory shipped the first monthly tranche of a six-month order of t-shirts to the same client in the EU the last week of October, which were produced during September FY2017. Under a supply contract through March, the firm will ship an average monthly total of $115,000. The client estimates conservatively that it will place up to $2 million of t-shirt orders with the firm and $1 million for pique polo shirts for the calendar year 2018.

Total Sales Revenues

• With these October shipments, this brings BGI-generated life-of-project sales revenues to $2,967,240.

Employment • Apparel firms reported an increase of 78 workers or an 11% increase over its 2016 work force.

Tourism

Guest House Results*

• Overall, 53 guest house beneficiaries in 5 destinations reported an average increase of 48% in the number of tourists from 2016 to 2017. The actual number of tourists increased by more than 15,000.

• Overall revenues to guest houses increased an average of 40%, resulting in a combined increase in revenue for all 5 destinations of $500,000.

• Average revenues to guest houses in Karakol, South Shore and Jyrgalan more than doubled from 2016 to 2017.

• Overall employment in guest houses increased a more modest 5% across destinations.

Tour Operator Results*

• A total of 14 tour operators working with BGI reported an average increase in the number of tourists from 2016 to 2017 of 7%.

• Of the 6 tour operators reporting revenues in both 2016 and 2017, they experienced an increase in revenue of 13% or $157,000.

• The total number of Turkish tourists reported by these tour operators increased 89% from 2016 to 2017, from 168 to 318.

• Of the 4 tour operators reporting revenues from Turkish tourists in both 2016 and 2017, they experienced an increase in revenue of 45% or $63,000.

Results from Experiential Product

Development

• BGI created or designed a total of 38 new tourism products offered by 5 destinations, which were delivered to more than 2,000 tourists and resulted in a combined increase of revenues of more than $30,000 to tour providers.

• Destination Management Organizations (DMOs) brought in revenues of $2,200 from organizing and delivering these tour products for more than 600 tourists. Many of these tour products, however, were not introduced until the end of the summer season, indicating substantial growth opportunities for 2018.

Results from Tourism Festivals

• More than 2,000 tourists attended 7 festivals in 5 destinations in 2017, resulting in revenues to more than 200 concessions providers of $23,000


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BGI Technical Area Results

and revenues to DMOs of $2,800.

Initial Results from Travel Influencer Media Campaign

• A total of 25 international social media travel influencers delivered 2,885 pieces of social media content as a result of their familiarization tours of Kyrgyzstan during summer 2017.

• This social media in the form of blogs, Facebook, Instagram, Twitter and YouTube posts generated 4.7 million total engagements with potential travelers globally.

• A total of 6 Turkish-language social media travel influencers delivered 190 pieces of social media content, which generated 6.2 million total engagements with potential Turkish travelers. (Turkey has one of the highest user rates of social media in the world.)

Trekking Trail Results

• BGI identified, mapped and marketed 45 new trekking trails in 6 regions of Kyrgyzstan, with plans for 9 more by summer 2018, for a total of 2,790 kilometers of trails.

Audio Guide Results

• Since launching the Bishkek City Walking Tour audio guide in August, it has been downloaded a total of 166 times, 79 times in English and 87 times in Russian. Construction Materials

Construction Materials Value

Chain

• Kyrgyz Stone Association attracted 4 new members, bringing total membership to 20 stone producing companies.

• The four most active members of KSA generated $800,000 in sales in FY 2017.

*Many tour operators and guest house providers were unwilling to provide full sets of data and the accuracy of reported results is questionable. Variances are assumed to be significantly underreported.

2. Challenges and Risks to Project Implementation

More than three years into the BGI Project, the largest risk to project implementation is that there remains only 8 months with which to implement a very aggressive schedule to create the impact that BGI is seeking. BGI has made very significant headway in reaching intermediary goals in both the apparel and tourism sectors. In apparel, BGI has successfully assisted five Kyrgyz firms in concluding sales contracts and delivering apparel orders to a widening group of Russian retail chains produced by an increasing number of local firms. BGI has also made inroads into the European market through work with an agent for a very large retail chain, which has generated substantial sales contracts with two Kyrgyz apparel-makers, one in tailored clothing and the other in jersey knitwear. These orders will be shipped primarily in FY 2018 and beyond. BGI is poised to award substantial grants to two knitwear producers who can both capitalize on the advantages of Kyrgyzstan’s first investment into a modern textile-producing plant in more than 25 years, the cotton knitting factory. This eliminates one of Kyrgyzstan’s key obstacles in developing a strategic niche in the fast-fashion market. Proposed grants to two knitwear firms will enable both firms to expand rapidly into the global marketplace, particularly with the technical support that BGI has provided in the past year. Both firms project that they will create up to 200 new jobs each with the expansion of their factories and the resulting sales forecast for 2018. They will also substantially benefit from USAID’s investment into the Bishkek Garment Industry Center (BGIC), and BGI is working with to finalize the financial projections and governance structure that will enable USAID to approve a substantial grant to support the development of this legacy center. The BGI grant to BGIC to invest in critical income-generating equipment to sustain the center in the long run is insufficient, however, to ensure that the center reaches sustainability. To continue to provide the sales generation, order management, and production efficiency and quality assurance improvements, the center will need to draw on USAID operational funding for one year following the closure of BGI in June 2018. USAID is aware of this limitation and is seeking solutions to ensure that BGIC is granted sufficient time to mature and begin generating income on its own. However, if the solutions discussed


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do not materialize, there is risk that much of the improvement in factory capacity in these areas will evaporate since the project has not been working with the factories long enough for changes to take root. This is one of the key risks to retaining the gains that BGI has made over the past three years in the apparel sector. With the award of the apparel sector grants identified above (worth approximately $1.4 million) and proposed awards to guest houses to invest in innovative technologies, BGI will exhaust the remaining resources in its Project Fund and, in fact, plans to seek a budget realignment to re-allocate funds. Even with this reallocation, however, BGI may struggle to deliver all project activities identified in its approved Fourth Year Work Plan. For this reason and with USAID approval, BGI will be seeking opportunities to retrench in a few activity areas over the coming months, with construction materials activities targeted as the first area to eliminate. Results from sector investment have been disappointing and its prospects for turning this around in the remaining eight months of the project are more than doubtful. Other areas for retrenchment may be certain activities in the tourism sector although BGI believes that most will be able to be completed with remaining funds. Some reduction in staff in the tourism area may be required as the end of the project approaches. Should one of the large grants to the apparel sector fall through, however, there should be sufficient funds to expand some tourism activities in preparation for the launch of the 2018 summer season and to have established a strong legacy in introducing travel to Kyrgyzstan to a wide international market.

3. Textile/Apparel Value Chain

Sales Initiatives and Retailer Orders BGI Third Year Work Plan, Apparel, Activity 1.2 Russian Quotations and Orders Throughout FY2017, the BGI team developed streamlined processes for preparing technical documentation, providing standardized templates for order quotations, studying and explaining technical issues, finding necessary trims and fabrics, organizing third party inspections of fabrics, and assisting in preparing financial documents, contracts, invoices, shipping documents, and customs declarations. Received Orders and Sales Initiatives with Russian and European Retailers BGI Third Year Work Plan, Apparel, Activity 1.2 Style Requests & Quotations During FY2017, BGI received in total more than 200 style requests for quotations from both Russian and European retailers. A total of 14 of 25 partner factories responded to these requests by providing price quotations.

Quarter Number of Styles Number of Factories Quoted Prices

Quarter 4 – July-September, 2017 84 11 Quarter 3– April-June, 2017 53 6 Quarter 2 – January-March, 2017 35 9 Quarter 1 – October-December, 2017 52 7

Total: 224 14* *Unique factories

Completed & Delivered Orders During the reporting period, BGI partner factories delivered to Russian fashion retailers a total of 138,633 garments totaling $1,083,753. In addition, they have received $1,015,026 in new orders to be delivered from October 2017 to June 2018).


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BGI’s third year has been marked by style requests from two European buyers – 4 style requests from a UK retailer and 15 style requests from an Italian retailer. Although factories participating in quotations did not meet price targets, they were encouraged by future prospects of entering European markets.

A Russian chain sent 13 requests from which three styles were prepared by two factories. The largest number of requests came from another Russian chain – more than 100 style requests; 10 requests became orders and three more requests are under consideration since two Kyrgyz firms sent their samples in September. In the third quarter, another large Russian retailer opened its doors to Kyrgyz firms. More than 80 styles were quoted by four factories for this retailer. One received an order for five styles with total value of $166,468. More than 50 style requests are still under consideration.

In the BGI’s third year, a European retailer placed orders for four styles with one firm and one order for women’s blazers with another. While all communication between the client and these firms was done through an agent, BGI was responsible for introducing the agent and the client to Kyrgyz apparel makers. The total order for one of these firms is $702,000 and the number of pieces is 640,000, which will be shipped monthly through March. Another firm has already produced 12,000 pieces for this retailer. Both orders were shipped together on October 27, and, reportedly, did not incur problems crossing the Kazakh border despite the delays experience.

New Orders to Be Delivered – October 2017 – June 2018 Order & Product Delivery Date Quantity Value

#1 – T-Shirts October – November, 2017

640,000 $702,000

#2 – Women’s Jackets October, 2017 12,000 *$90,000 #3 – Men’s Sweatshirt January 2018 7,138 $52,715 #4 – Men’s Trousers February 2018 9,812 $54,260 #5 – Men’s Shorts March 2018 4,806 $19,656 #6 – Boys Shorts Print March 2018 3,234 $12,580 #7 – Men’s Shorts March 2018 6,900 $27,255 #8 – Girls’ Dresses November 2017 1,500 $12,068 #9 – Dresses December 2017 2,460 $33,853 #10 – Blouses March 2018 225 $6,519 #11 – Dresses December 2017 800 $4,117 688,875 $1,015,026 *Estimation

Project Quarter 4 – July-September 2017

Order & Product Delivered Quantity Value #1 – Dress – Twist September 2017 3,835 $23,100 #2 – Skirt – No 202 September 2017 4,075 $26,661 #3 –Trousers, Jackets September 2017 206 $2,360 #4 – Dresses September 2017 126 $3,000 #5 – Dress, Jackets September 2017 76 $1,195 #6 – Blouses September 2017 75 $2,173 8,393 $58,489

Summary of Orders for FY 2017

Period Quantity Value

Jul-Sep 2017 8,393 $58,489

Apr-Jun 2017 58,796 $426,992

Jan-Mar 2017 40,886 $352,047

Oct-Dec 2016 30,558 $246,224

TOTAL FY 2017 $1,083,753

TOTAL PRIOR YEARS FY 2014-2017 $867,734

CONFIRMED FUTURE ORDERS FY 2018 $1,015,026

TOTAL BGI-GENERATED RETAIL ORDERS $2,967,240


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Project Quarter 3 – March-June 2017 Order & Product Delivered Quantity Value

#1 – Girl Dress – Neper April 2017 5,875 $45,531 #2 – Girl Dress – Erl May 2017 4,808 $29,569 #3 – Girl Skirt – Kelvin 1 May 2017 6,936 $34,680 #4 – Girl Skirt – Kelvin 2 May 2017 5,163 $25,815 #5 – Dress - Labo May 2017 4,864 $35,993.60 #6 – Dress – Petra June 2017 1,538 $14,011 #7 – Blouse – Nuri June 2017 1,234 $7,897 #8 – Skirt – No 202 June 2017 2,200 $17,054 #9 – Dress – No 512 April 2017 2,194 $24,457 #10 – Dress – No О13 May 2017 3,278 $22,532 #11 – Dress – No О41 May 2017 3,691 $24,781 #12 – Dress – No 501 June 2017 3,627 $29,259 #13 – Dress – No 503 June 2017 2,919 $32,445 #14 – Dress – No 506 June 2017 10,469 $82,965 58,796 $426,992

Project Quarter 2 – January-March 2017

Order & Product Delivered Quantity Value #1 – Skirt – Kazbek February 2017 9,200 $45,448 #2 – Skirt – No 202 February 2017 4,547 $29,555 #3 – Skirt – No 205 February 2017 2,092 $17,154 #4 – Dress – No 513 February 2017 3,818 $40,050 #5 – Trousers – No 706 February 2017 2,577 $23,708 #6 – Trousers – No 714 January 2017 1,291 $13,126 #7 – Trousers – No 715 January 2017 1,365 $11,986 #8 – Trousers – No 712 March 2017 2,580 $20,866 #9 – Trousers – No 710 March 2017 1,401 $12,828 #10 – Skirt – No 212 January 2017 1,385 $10,578 #11 – Dress – No 524 January 2017 1,257 $16,882 #12 – Dress – No 507 February 2017 4,382 $39,880 #13 – Vest – No 604 March 2017 1,583 $21,237 #14 – Vest – No 605 March 2017 3,408 $48,744 40,886 $352,047

Project Quarter 1 – October-December 2016

Order & Product Delivered Quantity Value #1 – Trousers – No 700 December 2016 1,904 $16,680 #2 – Trousers – No 701 December 2016 2,358 $19,561 #3 – Skirt – No 200 December 2016 2,222 $17,045 #4 – Dress – No 515 October 2016 3,571 $33,403 #5 – Dress – No 519 November 2016 6,580 $46,496 #6 – Dress – No 505 December 2016 2,366 $25,866 #7 – Blouse – No 306 December 2016 2,551 $21,425 #8 – Dress – No 518 December 2016 9,006 $65,743 30,558 $246,224 Exploring and Selecting New Apparel Factories for Participating in the BGI Program BGI Third Year Work Plan, Apparel, Activity 1.3 During the first quarter of 2017, BGI explored factories in four destinations and visited 10 new factories who became interested in the project and expressed readiness for cooperation. The BGI apparel team developed a special questionnaire, called the Production Auditing Form, to use in assessing the production capacities of the factories and preparing their profiles.


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New Factories Analyzed for BGI Participation Factory Location Customer

Focus Number of Staff Equipment Assortment &

Production Production Area/sq.m.

1 D-max Belovodsk Retailers / e-Commerce 43

Cutting – 9 Sewing – 60 Special – 29 Ironing - 11

Skirts – 1600/week

School Uniform – 2160/week

600

2 Barhat Gold Bishkek e-Commerce 193

Cutting – 12 Sewing – 200

Special – 1 Ironing - 36

Vest on a lining – 16000/10 days 1100

3 Kovcheg Novo-Pavlovka Retailers / e-Commerce 60


Men’s pants – 350-400/day 300

4 Kamila Aleksandrovka e-Commerce 23 Cutting – 6

Sewing – 73 Special – 1 Ironing - 3

Women t-shirts 2500/week

Kids quilted vest – 800/week

120 and 340

5 Silena Belovodsk e-Commerce 41 Cutting – 6


Women dresses – 800-

1000/week, coats 1000/week

230

6 Melady Bishkek e-Commerce 21 Cutting – 8


Women dresses – 3000/week 250

7 Elvira Kids Bishkek e-Commerce 26


Kids dresses – 2000-3000/week N/A

8 PE Abasova Bishkek e-Commerce 35


Women dresses – 2000-

3000/week Frock coats –

1500-2000/week

250

9 Mona Liza Bishkek Retailers / e-

Commerce 67 Cutting – 12 Sewing – 60 Special – 11 Ironing - 11

Women jackets/blazers – 1800-4500/week

360

10 Bilal Kids Manas Retailers / e-Commerce 151


Kids hats – 5000/day

Kids pants – 1000/day

Kids shorts – 1000/day

1500

These factories began engaging with BGI by attending Innovation Club meetings, preparing price quotations received from the buyers, and preparing samples for promotion through existing online platforms. The work on engaging more factories into BGI apparel activities was done on a continuous basis. This brought more companies into BGI project activities who benefited from the dissemination of market intelligence and know-how on doing business with foreign brands and retailers. Some of these firms have received actual orders by the end of FY 2017. Study of Apparel Companies in Osh BGI Third Year Work Plan, Apparel, Activity 1.10 In May, the BGI team visited Osh to determine whether there were opportunities to work with apparel firms and provide recommendations for launching potential development programs for factories in Osh. BGI staff held meetings with the heads of 13 apparel companies to discuss their workload, production capacities, product specializations, and development needs. Currently, Osh apparel companies address the needs of the local market of the southern region of Kyrgyzstan, and a small volume of products are exported to the bordering areas of Uzbekistan and Tajikistan. Small wholesalers come to the market to buy goods from Tajikistan and Uzbekistan and ship


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products mainly through illegal channels since the trade borders between Kyrgyzstan and Uzbekistan are closed. The primary market for their products is the Kara-Suu bazaar, where most factories have their own retail points of sale and also sell directly to wholesalers. Just as in Dordoi bazaar, overall trade in Kara-Suu decreased 2.5 times before joining the EAEU and after joining by another 40%, according to data of the website Sputnik-tj.com. BGI concluded, however, that the capacity level of Osh workshops is significantly lower than those of Bishkek, which discourages engaging them into BGI’s existing program for retail clothing production. With more than 2 million people, the southern region of Kyrgyzstan has sufficient market size for firms to continue to produce for the domestic market. However, local factories cannot compete with Chinese manufacturers in price and product range of products and have, therefore, begun to specialize in specific market segments, such as school uniforms approved by the Ministry of Education of the Kyrgyz Republic, Kyrgyz ethnic clothing and bedding, very simple everyday clothes such as dresses and sports pants made from inexpensive fabric, and Islamic-style clothes with long dresses, vests and shawls. Taking into account the results of the study, in order to support apparel factories in Osh and achieve sufficient impact, there will be needed a separate project with a minimum of 4-year life-frame, which should focus all its resources on these factories. It is not likely, however, that this is the best use of donor funds in the short- and medium-term, without a service center, such as BGI, that can help them develop adequate capacities in input sourcing, production, management, and sales. Production Capacity Development to Meet Buyer Specifications BGI Third Year Work Plan, Apparel, Activity 1.2 In order to supply international buyers, Kyrgyz factories must be capable to achieve three production targets: quality, quantity and time (“QQT”). However, when BGI analyzed the needs of the local industry, BGI identified that the primary obstacle in achieving these three targets is weak human capacity at all levels of the industry. Therefore, during FY 2017, BGI supported improving production capacities in the following areas:

• Quality Management • Production Management • Human Capital Development through Training and Individual Coaching

This support seeks to ensure that factories are able to produce the goods, according to buyer product specifications and meet delivery time schedules, and are able to do this in the future without the support of the BGI team. BGI followed the following rules and principles when providing technical assistance to factories in production capacity improvement:

• Learning is more effective when factories are producing real orders received from buyers. BGI gave priority support to those factories that received orders from fashion retailers;

• Active factories that demonstrated interest and progress received more support; • BGI was fully engaged in the production of the first order, then partially engaged in the second

and the third orders. By the fourth order, factories should operate independently but still receive advisory support.

Within the reporting period, USAID BGI actively supported the factories below in achieving QQT targets:

No Factory Type of Support

1 Nazik Production layout, line balancing, quality systems, training of sewing operators, pattern making and adjusting, fabric inspections, garment inspections, cycle timing, understanding of buyers’ specifications

2 Zorin Quality systems, labor control and payments, trainability assessment, production balancing, training of trainers, understanding of buyers’ specifications


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3 Panin Basics of production balancing, training of sewing operators, understanding of buyers’ specifications

4 E-Line Moda Production balancing, quality systems, understanding of buyers’ specifications

5 Aktis Line balancing, quality systems, training of sewing operators, quality inspections, cycle timing, understanding of buyers’ specifications

6 Aziar Line balancing, quality systems, training of sewing operators, quality inspections, cycle timing, understanding of buyers’ specifications

7 Tedis Line balancing, quality systems, training of sewing operators, quality inspections, cycle timing, understanding of buyers’ specifications

8 Olga Classic Style

Production layout, line balancing, quality systems, training of sewing operators, cycle timing, understanding of buyers’ specifications

9 Cool Bros Production layout, line balancing, quality systems, training of sewing operators, pattern making and adjusting, fabric inspections, garment inspections, cycle timing, understanding of buyers’ specifications

10 Lila Style New factory production layout, understanding of buyers’ specifications 11 Selya New factory production layout, understanding of buyers’ specifications

As a result of the assistance provided above, BGI-supported factories have improved their level of productivity in the following way:

USAID BGI team learned the below lessons when implementing activities under the production capacity support program:

• The factory support in production management improvement should last not less than six months. Otherwise, factories will be unable to sustain results achieved due to low knowledge retention rate;

• In order to provide better support, the BGI team should learn from international advisors first, adapt/localize the knowledge, then advise and coach the factories without the direct assistance of international consultants;

• The BGI team should have sufficient staff to fulfil orders and have staff able to perform all factory functions, such as quality control, garment technology, industrial engineering, and pattern making;

• There is a need to have on staff a full-time professional industrial engineer; • BGI must have its own sampling room with a plotter machine for printing of patterns received

from buyers. This is to ensure a speedy response to style requests for companies under BGI’s assistance.

Q1 Q2 Q3 Q4 Average1 Factory 1 45% 47% 36% N/A 43%

2 Factory 2 N/A N/A 65% 71% 68%

In Q4, the BGI production team started to work with the factory on improving productivity by organizing operator's workplace, training operators, mapping the processes, and other industrial engineering techniques.

3 Factory 3 N/A N/A N/A N/A 0%The factory joined the BGI project in August 2017. It received 2 style requests from participating in CPM. The BGI production team audited quality control system.

4 Factory 4 74% 84% 90% N/A 83%

BGI production team assisted the factory in implementing orders from a Russian retailer. By applying industrial engineering techniques the team was able to gradually increase productivity.

5 Factory 5 71% 60% 64% N/A 65% The BGI production team assisted the factory in implementing orders from two Russian retailers.

6 Factory 6 N/A N/A N/A 300% N/A

In October 2017, BGI began to help manage the quality inspection process on factory. As a result of this work, the buying agent reported that the company's productivity improved from 700 units per line per day to 2,500 units per line within a period of 6 weeks, increasing productivity by more than 300%.

7 Factory 7 66% 100% N/A N/A 83%

# Name of Company

Change in Productivity (%)Comments


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The primary challenge BGI has faced during implementation of activities under the production capacity support program has been need to simultaneously select, hire and train local staff while fulfilling real orders at the factories and coaching factory staff. At the same time, BGI has had to perform not only production functions but sales and fabric sourcing functions. Over the past year, BGI has provided training for 21 apparel factories, either through formal training courses or individual, on-the-job coaching and training, primarily for improving production practices and introducing quality systems.

Training Course Date Men Women Total

System organization of quality inspections October 19, 2016 4 35 39 Apparel Production Training (3G Tailor) January 5-21, 2017 0 15 15 Industrial Engineering Training April 6-11, 2017 0 3 3 Apparel Production Training (3-G Tailor) June 13-29, 2017 9 13 22 Improvement of the Production System of a Knitwear Factory June 30, 2017 7 12 19

20 78 98

In addition, BGI has provided the following type of coaching to factory management and staff:

Area of Coaching Factories Number of People (Factory Management)

Certification of Conformity 4 4 Price Quotation 13 14 Compliance 2 4 Fabric Sourcing 3 7 Trade Fairs 12 14 Order Management 2 4 E-Commerce 1 1 Productivity Baseline Assessment of Primary Counterparts In July, BGI completed baseline capacity assessments against key indicators:

Apparel Firm Capacity Assessment Summary Report

Process Number Process Type

Apparel Firms (Score Range: 1 – 4) Factory

1 Factory

2 Factory

3 Factory

4 Factory

5 Factory

6 Factory

7 Factory

8 Factory

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Process 1 T3 (Technical Specifications) 3.0 1.0 2.0 3.3 1.0 3.3 2.5 1.8 2.3

Process 2 T2 (Cost Pricing) 2.5 3.0 3.3 3.3 3.0 3.3 2.0 2.3 1.8

Process 3 Input Sourcing 1.8 1.8 2.3 2.3 1.8 2.3 2.0 3.3 2.3

Process 4 Samples (Sample 1, Sample 2, Pre-Production Sample) 2.8 2.5 3.0 3.0 2.5 3.0 2.3 2.3 2.3

Process 5 Pre-Production Run 2.8 2.3 2.8 3.3 2.3 3.3 1.3 1.3 1.3

Process 6 Quality Control and Inspection Systems 3.0 3.0 2.3 3.0 3.0 3.0 2.5 2.5 2.5

Process 7 Production 3.3 2.3 2.8 3.3 2.5 3.3 3.0 2.7 2.7

Process 8 Packing 2.3 2.3 2.5 2.3 2.3 2.3 2.0 2.0 2.0

Process 9 Shipment 3.3 3.3 2.3 3.3 3.3 3.3 1.7 2.0 2.0

Process 10 Finance 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8

Process 11 Contracting 2.0 1.8 2.0 2.0 2.0 2.0 1.5 1.8 1.8

Total Average Score 2.6 2.3 2.4 2.8 2.3 2.8 2.0 2.1 2.0

Date of Assessment: 11 July 2017


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BGI will conduct an updated capacity assessment at the end of the project for inclusion in the final report. Introduction of Social Compliance Standards BGI Third Year Work Plan, Apparel, Activity 1.2 Since BGI first introduced the requirement for BSCI compliance within factories seeking orders from international retails, BGI has audited 15 factories for meeting social compliance requirements under BSCI standards. In 2016, the audit was carried out by BSCI professional auditor from Hong Kong. In 2017, the audit was conducted by the BGI apparel team, who followed the format and audit structure of the original audit. It should be noted that all audits were conducted not because of the request of buyers, but by the request of BGI and the factories themselves. There were two types of factories interested in BSCI: (1) those who desired to become eligible to supply international buyers and start business with them very soon; and (2) those who were planning to seek new premises or build new factories, and they were potentially planning to do business with international buyers in a long run. Current Factory Status

• Salkyn (100%). The factory is fully compliant and has already started supplying European fashion retailers;

• Zorin (92%). The factory is almost compliant but still need to eliminate some issues related to wages and social security;

• Aktis (80%). The factory has improved several issues related to working conditions and safety – installed fire extinguishers on required height and places, allocated special place for all chemicals, marked all electrical switches, some of the machines were equipped with finger safety devices. But labor contracts will come in place only upon receiving orders from European customers;

• Nazik (80%). The factory has worked on improving hygiene issues. Previously, all bathrooms were located outside of the main building. This summer Nazik invested into moving and placing of bathrooms inside the main production building;

• Barkhat (40%). The factory invested $2,500 to fix fire safety nonconformities: installed smoke detectors, fire alarm, placed exit signs, contracted the 3rd party company to train the factory staff on fire safety rules, marked some of the electrical switches and allocated container for collecting of a machine oil to meet chemical safety requirements;

• Aziar (10%). The factory invested in fire safety by installing an external fire exit ladder; • Mona Lisa and Cool Bros factories are planning to build new premises, which will meet all

social compliance requirements and, therefore, have not taken steps to introduce social compliance standards;

• Larisa Fashion and Lila Style have modern buildings, which meet basic requirements. However, the factories will ameliorate non-compliance after they receive interest from European buyers;

• The rest of the factories (Renovacio, Ardamina, Panin, E-line moda) have made no changes to their previous status, and one factory went almost out of business (Olga Classic Style).

It is important to note that in March 2017, the world’s leading firm for conducting laboratory tests, inspections, audits, and certifications, SGS, opened a branch in Bishkek. SGS employs 90,000 experts and has more than 2,000 offices worldwide. Recently, six Kyrgyz apparel factories applied to SGS Bishkek requesting a social compliance audit under BSCI standards. It is a good sign and fully due to BGI’s introducing the necessity of obtaining BSCI compliance. Support in Product Certifications BGI Third Year Work Plan, Apparel, Activity 1.2 USAID BGI Apparel Team has assisted the local partner apparel factories in obtaining of EAEU’s product certifications, as EAC Declaration of Conformity. The Eurasian Conformity mark (EAC) is a


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product marking to indicate that the products conform to all technical regulations of the Eurasian Customs Union assessment procedures. It means that the certified product meets all requirements and technical regulations applicable to the product, and that it can be serviced in all service centers of the producer in the territory of all Customs Union member countries. It takes around 3-4 weeks to get EAC Declaration of conformity. Four factories have Below are the apparel factories that received EAC Declaration of conformity since September 2016:

• Nazik Fashion LLC • Vector Textile LLC (Zorin) • Toolai (IE Beishenova) • Kovcheg Manufaktura LLC

Today these apparel factories are entitled to export their products to all countries of the Customs Union under trademarks they have registered. The authenticity of the declaration can be checked on the official website of Russian Accreditation body, on the web-link: http://188.254.71.82/rds_ts_pub/ In addition, in April, 2017 “Nazik Fashion” LLC received the certificate for exporting children’s wear to Customs Union member countries. Input Sourcing Capacity Development to Meet Buyer Specifications BGI Third Year Work Plan, Apparel, Activity 1.2 USAID BGI has identified that one of the key gaps in servicing international buyers is input sourcing: quick search, quality inspection and shipment of fabrics and trims from China. During the reporting year, BGI has implemented a number of activities towards improving input sourcing operations:

• Created data base of mills and trim manufacturers; • Identified cost-effective and reliable shipping companies; • Enhanced the knowledge of BGI staff in textiles and fabrics; • Contracted an expert in textiles to support the activities; • Developed an approach in addressing buyers demand in fast-fashion or quick turn-around

business. BGI has created a data base of approximately 100 Chinese mills who can supply the types of fabrics and trims for the types of garments in highest demand. In order to create the data base and regularly update it, the BGI team has undertaken several missions to China and visited the current key suppliers, large and medium size mills, textile markets and textile production regions in the East and the South of China. In addition to mills, BGI has identified reliable shipping and logistics companies who can deliver fabrics to Kyrgyzstan (and to Kazakhstan as an option) in 2-3 weeks with all appropriate accompanying this documents for the customs clearance objectives. To provide better customer service purposes and to be able to work efficiently with fabric suppliers, 10 members of the BGI team completed an online course on the properties of fabric and textiles delivered by the Textile and Fashion Industry Training Center of Singapore. Now, the BGI team has a better knowledge in fibers, fabrics, knit and woven textiles, dyeing and printing technology, and finishing. This knowledge is being used in day-to-day work with buyers, fabric suppliers and in coaching of representatives of local factories. In order to speed up the process of search of fabrics in China, USAID BGI contracted an experienced specialist from Shanghai (China), who has previously worked for Russian fashion retailers. She visited factories in Bishkek, studied their needs and explored offerings at the local fabric markets (Dordoi, Madina). She visited two trade fairs related to textiles – the China Textile Expo (Keqiao) and Intertextile Shanghai. In July, she supported and joined the apparel team in its market exploration trip to find new mills in China. As the result, the data base of mills was updated by suppliers of prepared-for-dye (PFD) and


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prepared-for-print (PFP) basic fabrics, who will play an important role in a new approach of USAID BGI in addressing the input sourcing needs of Kyrgyzstan. After that trip, she helped to strengthen and update the existing approach and operations in input sourcing by developing the below documents, which can be considered as manuals or instructions for input sourcing specialists in USAID BGI or any local apparel factory, wishing to work with mills in China. They are:

• Most typical types of fabrics and trims to be sourced from China in order to address needs of Russian fashion retailers;

• How mills should be searched in China and timeframe for these actions; • Instructions for fabric inspection with standard inspection template and form; • Shipment of fabrics to Bishkek; • Effective work with samples swatches and managing of fabric library, with instruction on

classification, naming and recordings; • Fabric testing laboratories in China; • Logistics companies delivering small volume shipments (consolidated) to Bishkek or Almaty.

The launch of the new knitting factory in Tokmok, Textiletrans, offers significant opportunity for BGI to assist apparel firms to further pursue the fast-fashion niche within the international apparel business by eliminating the key obstacle that sourcing fabric from China has presented. Textiletrans specializes in the production of cotton knitted fabrics for t-shirts, polo-shirts, sweatshirts, and other knits, with the capacity to produce 10 tons of fabric per day (in the future, up to 20 tons/day). This can save up to 30-45 days in total lead time, and deliver faster garments to target markets or respond faster to market needs. Woven fabrics, however, has presented more challenges in pursing this niche. However, BGI has identified a viable solution – the printing of fabrics using sublimation printers (paper transfer for synthetic fabrics) and modern direct digital inkjet printers (for natural fabrics). The only disadvantage in the printing of fabrics is the need to keep a 1-2 month stock of basic fabrics. For printing of fabrics, BGI has explored different machine suppliers from Japan, Italy, and Israel, by attending equipment trade shows in Germany and site visits to machine factories in Italy (EFI/Reggiani) and representative offices in Moscow (Mimaki) and in Dusseldorf (Kornit). As a result, BGI has identified the most appropriate machines, which can help effectively implement the developed new approach. BGI then tested this approach by discussing it with potential customers during the Apparel Sourcing Paris and Collection Premier Moscow trade fairs held in September this year and obtained positive feedback. Most of those approached were interested in locally made knit fabrics and faster lead times. Those who were interested in woven garments, expressed the same need in short lead times and wide variety of fabrics (prints, colors) which is possible in Kyrgyzstan only with availability of fabric printing machines. This has led BGI to consider fabric printing a key procurement when establishing BGIC. It is also led BGI to consider focusing on those local factories that are positioned to pursue this strategy – those who produce garments from knitted fabrics and those most interested in the fast fashion strategy – as well as re-thinking the need for employing an expert in Shanghai to source fabrics from Chinese mills. Exploring Partnership Opportunities for On-Line Promotion Program BGI Third Year Work Plan, Apparel, Activity 1.4 BGI is pursuing development of e-commerce capabilities to support local private label companies through promotion of their brands in well-known e-commerce platforms in Russia, Europe, and Kyrgyzstan.


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In the first quarter of 2017, BGI sought to obtain better market intelligence on this specific segment and sales channel in target markets to explore opportunities for developing an online retailing program for those apparel companies interested in retaining their brand. Based on this intelligence, BGI planned to design a specific program in partnership with an identified Kyrgyz partner and interested factories. For obtaining necessary market intelligence, the BGI apparel team:

• Bought several reports on the Russian E-Commerce market for fashion and clothing items – 2016;

• Collected market information and identified key players in the fashion e-commerce sector by acquiring access to a database of the top 100 European fashion and clothing retailers provided by Retail-Index and access to market reports prepared by RosBusinessConsult (RBC), including The Russian Market of Online Trade with Clothing, Footwear and Accessories 2016.

• Conducted meetings in Russia with key players and identified their requirements for placing products on their platforms. The team met with three companies in the Top 10 of all Russian online retailers and the Top 3 in the fashion clothing category. They captured the following market share of e-commerce fashion sales across Russia – La Moda (21.5%), Wildberries (20%), and AliExpress (64%). The meetings included a meeting with the top-management of La Moda, a key Russian online retailer;

• Made contact with a leading e-commerce retailer in Russia, Wildberries.ru, and obtained an understanding of the retailer’s basic partnership terms and conditions.

The BGI apparel team met with all factories interested in this initiative to prepare product samples. Factories prepared samples based on copies of the best-selling products currently available from their online platforms. These samples demonstrate the current production capabilities and product quality standards of the Kyrgyz apparel manufacturers. The BGI apparel team visited nine factories, of which four of them provided samples and expressed interest in the initiative. (Several firms were not interested in the low production volume generally ordered through on-line channels.) BGI procured the appropriate best-selling products of Lamoda.ru and wildberries.ru to distribute among factories for making exact copies from locally available fabrics and trims. BGI obtained production costs and bills of materials of these samples to determine how good the Kyrgyz factories are in production and costing. (These are generally factories that have not previously been producing for the cut-make-trim market.) Meetings with the management of the Lamoda.ru and Wildberries.ru took place on May 23-24, 2017. At the meetings, BGI discussed the existing potential of Kyrgyz apparel industry in the fast fashion business and cooperation with Russian electronic platforms in development of this business. In July and August, BGI contracted two consultants to undertake short-term assignments for support in development of on-line promotion program. Based on their work, BGI developed a cooperation model with local factories and e-commerce platforms. The cooperation model describes BGI’s services for local factories wishing to place their products in the major e-commerce platforms in Russia, Kyrgyzstan and US/EU. The cooperation model will benefit the local factories in their product development, product testing, marketing and sales initiatives. Particularly, it will help to:

• Minimize total overheads and transaction costs in e-commerce sales; • Maximize promotion of Kyrgyz private labels through accessing and placement at major e-

commerce platforms; • Provide a good opportunity for product market testing (through preliminary sales) with

minimum costs; • Speed up the product development process; • Minimize risks of poor product developments;


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• Access to end-consumers information and feedback that was not possible before in wholesale business model in Dordoi (that usually causes of big money losses, because still many Kyrgyz factories follow “made-for-stock” business model in Dordoi).

For better product development purposes and minimization of product failure risks in both on-line and off-line sales, BGI identified a worldwide fashion industry tool – WGSN (www.wgsn.com). This resource can help to identify future trends (colors, silhouettes, textiles) and analyze the current offerings and sales information (price, products, stocks, etc.). BGI held a meeting with the managers of WGSN in Moscow during Collection Premier Moscow, accompanied later by product presentations. WGSN, combined with easy access to major e-commerce platforms, may help local factories be able to run quick market-product tests. Factories based on WGSN information may choose a right color, shapes and prices, and develop their own new products and then try on major e-commerce platforms with minimum costs through BGIC partnership. It may help to avoid significant losses of the product failure under current business model “made-for-stock” of many local Kyrgyz apparel manufacturers. In order to start active implementation of on-line promotion program, there will be needed the below actions from BGIC:

• A corporate body for doing business with e-commerce platforms in Russia and Kyrgyzstan: legal entity in Kyrgyzstan and Russia;

• A physical body with a good credit card history for doing business with Amazon.com, and later a corporate body when total value of transactions exceeds $10,000 per month;

• Registered product trade mark or at least applied registration; • Access to WGSN resource (optional, but preferable); • Partnerships with local photo-studios and logistics companies (optional, but preferable). • Secure start-up budget: $5,000

Create and Implement the Talent Development Program BGI Third Year Work Plan, Apparel, Activity 1.9 The development of human capital is the key factor in success and development of the Kyrgyz garment industry. BGI’s two studies on the apparel value chain showed a tremendous gap in this area, primarily:

• Low qualification of sewing operators and high labor turn-over among them; • Near absence of qualified mid-level managers in local garment industry and local

capacity/resources to develop them; • Weak management skills of factory top managers and owners.

A review of the prior efforts of other international development agencies in addressing these issues show that:

• Proper human capital development program in the entire industry requires significant financial, human, and time resources;

• Introduction of changes at the institutional level – vocational schools, colleges and universities and other educational institutions engaged in preparation of all types of personnel for garment industry;

• The knowledge and skills transfer rate from foreign experts to local factories is lower than expected by donors;

• The overall labor retention rate, especially of trained staff of both operators and managers, at local factories is also low, caused by numerous factors including improper working conditions and weak skills by factory owners in managing people.

• The existing talents in local market (young graduates) rarely seek employment at local garment manufacturers.


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BGI also believes that developing an acceptable knowledge retention rate requires the conditions below: • Direct day-to-day involvement and work at the factory by experts or the BGI team; • The duration of this work should be at least 6 months per factory in overall, and the work should

be based on at least 3 real orders; • After 6 months, there should be available some local experts, who can advise when needed and

provide support if necessary to the factory; • All learning and training materials should be kept outside of the factory and be available and

accessible; • The language of all advisors should be primarily be in the Kyrgyz language; • Direct involvement and support of factory owners is absolutely critical; • Availability of sufficient funding from factory owners, in terms of readiness to cover educational

expenses, payment of overtime, rewards (increase of salary rates) for staff members who improved their expertise and skills;

As a result, BGI has focused on training and development of a manageable group of local talents (instead of trying to cover the entire industry), who are selected and hired by BGI to perform specific function that are currently missing in the industry, such as:

o Order management (merchandising, communication with buyers, sales and B2B marketing)

o Production management (industrial engineering, effective production of small and big orders, meeting “QQT” requirements – Quality, Quantity and Time)

o Quality management (quality control, assurance and final inspections using international standards on AQL basis)

o Garment technology (proper pattern making, quick sampling, stitching standards) o Input sourcing management (search and import of fabrics and trims from China and

Turkey, the major suppliers of inputs) o Logistics and documentation (including packing, labeling requirements, export and

import documentation and related laboratory testing, certifications and other procedures) To accomplish this, BGI has hired and continuously trained young talented staff through direct knowledge transfer by international advisors. Then these talents not only perform the above functions for BGI, but also simultaneously work with partner factories, coaching them on a daily basis, with the ultimate objective that factory staff will then be able to perform these functions independently. By training factory staff, BGI staff are themselves further strengthening their knowledge by practicing at local factories and with real orders. The acquired knowledge is further being structured and documented into specific manuals, standard operating procedures, forms, templates keeping into account local business practices and “localizing” international practices. These efforts have one big purpose to sustain as much as possible the acquired intelligence in all needed areas – marketing and sales, production, input sourcing, and general management. After being documented, the dissemination of the expertise will be easier and the BGI team can cover much wider group of local factories. Innovation Club Meetings BGI Third Year Work Plan, Apparel, Activity 1.6 BGI conducted three Innovation Club meetings during FY2017. It was the intension to conduct several additional meetings, but BGI conducted numerous informal training sessions that engaged multiple firms and sessions to prepare for the CPM and ASP. These served greater direct purpose for the pursuit and delivery of active orders than the conduct of more formal and general Innovation Club meetings.

No Trade Fair Name No of Factories People Attended

1 Collection Premier Moscow 15 17 2 Collection Premier Moscow 12 13 3 Apparel Sourcing Paris 5 7 4 Apparel Sourcing Paris 7 8


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In each meeting, in addition to trade fair questions, USAID BGI Apparel Team and partner-factories shared with each other the latest news, market developments and current activities. With a broader audience, the communication was done through publication of press release and news article in Russian and English on the Facebook page of USAID BGI. Meeting#9, October 27, 2016: This meeting highlighted the recent developments and activities completed by the BGI Apparel Sector Development program. In September 2016, BGI apparel team, together with representatives of two local apparel firms, visited offices of two Russian retailers. The objectives of the meeting at one of the firms were to obtain feedback on the orders completed in August, to identify potential future orders and to discuss a framework for further cooperation. The BGI team also presented findings of BGI research on developing and implementing trade finance tools for the Kyrgyz apparel firms to offer up to 90-120 day deferred payment terms to buyers. At the Innovation Club meeting, BGI’s Access to Finance Manager presented findings of the research on financial products such as export finance loan and factoring. At this meeting, BGI also presented new local staff who recently joined the apparel team and also announced that BGI’s former international consultants had established a trading company operating in Kyrgyzstan. The company is working with local factories as an agent/dealer in apparel sales, suppling locally produced garments to Russian and European retailers. BGI highlighted that it will continue to provide support for fulfilling these orders but also help apparel firms to establish direct relationships with retail buyers. Under both conditions, BGI will continue to provide a full range of centralized assistance functions, such as input sourcing, social compliance, quality assurance, quotation on style requests and logistics. Meeting #10, December 22, 2016: Attended by 21 apparel firms, the meeting was held in a discussion format, summarizing all of the activities completed during the year of 2016 and plans for assistance during 2017. BGI’s Apparel Sector Development Team Leader, presented the results of marketing/sales activities to buyers in Russia and EU, specifically, that the number of sales plus pipeline orders has reached $600,000 for the year 2016 with BGI’s support. He announced that two apparel companies out of the eight that were audited for social compliance had now fully met the set of international social compliance standards. The Innovation Club meeting had substantial interaction between apparel companies who have experienced working with international retail brands and who have launched quality assurance and social compliance improvement programs in order to develop long-term relationships with international retail brands. The Executive Director of one of the factories said that firms do not necessarily receive profits from each order and that firms should ready to bear some initial losses. She highlighted that, in exchange for these losses, her firm has gained a lot of knowledge in production standards, buyer requirements, costing and the invaluable experience of working with international retailers. The BGI Apparel Team also announced ongoing staff expansion plans and its commitment to attract additional international consultants in order to support more companies and ensure the transfer of knowledge in merchandising, apparel technology, product management and compliance in adjusting to international buyer demands. Meeting #11, April 12, 2017: At this meeting, held for the first time at the American University of Central Asia (AUCA), there were 40 apparel factories, more than third of which were new to BGI. The head of the Sourcing Department of a Russian retail customer introduced to Kyrgyzstan by BGI was the honored speaker and made a brief presentation about her company and future plans of cooperation with Kyrgyz apparel manufacturers. In her presentation, she said that the company owns several brands, with 450 stores located in 47 regions throughout Russia. In November, the company is planning to open stores in Kazakhstan, Belarus and India. The firm is currently planning to allocate an increasing number of orders and would like to work up to placing 10% of all orders here, 1.5 – 2 million units – of a total of 24 million units a year. She said that the company is looking for additional Kyrgyz factories, telling them that they should not be afraid of expansion and should target both higher quantity and quality.


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Launch of Innovation Centers and Grant for Cutting Machine BGI Third Year Work Plan, Apparel, Activity 1.7 Bishkek Innovation Service Center In the fourth quarter of 2016, BGI concluded its grant agreement with one of two firms selected for assistance in establishing Innovation Centers in former Soviet factories to provide production services to apparel workshops co-located in these premises. With the conclusion of the grant agreement, BGI delivered embroidery and small-scale laser cutting equipment, which will enable it to provide affordable and reliable cutting and embroidery services to 52 small workshops in a former Soviet factory complex, each employing an average of 10 workers. This service will add additional value to their products, which will increase their chances of attracting new customers. The laser cutting and embroidery will be offered as a unique package of services not offered elsewhere at affordable rates. In January 2017, BGI supported the opening of the first Innovation Service Center in Bishkek. Through a BGI grant, the Innovation Center purchased an eight-head, 40-color thread embroidery and laser-cutting system to provide access to specialized machinery that is too expensive for individual workshops to purchase on their own. USAID Mission Director Kimberly Rosen cut the ribbon launching the Service Center at a ceremony conducted on January 27, 2017. As part of the grant award, the Innovation Center trained two operators and a designer who have been working two shifts to deliver orders on time. The new website, in addition to booklets and posters, helped the company identify customers even outside the 1st of May complex. It plans to invest in a smaller embroidery system that can prepare samples for prospective clients because its 8-head machine is fully employed during the day shift. As a result, the company is preparing samples for future orders only during the night shift. Since the opening of the Innovation Service Center through September 2017, it has received 64 separate orders for more than 23,000 pieces of embroidery and laser cutting services, including customers located outside of the Factory Complex. Ten buyers placed repeat orders within the 8-month period. As of the end of FY2017, the Center generated revenue of 1.3 million KGS (approximately US $18,000) for a price-per-item of roughly 79 cents. Osh Innovation Service Center On June 15, 2017, US Ambassador Sheila Gwaltney launched the Innovation Service Center in Osh. BGI finalized a similar grant agreement for the opening of the center with the purchase of a Grafis pattern-making and CAD/CAM system that will improve design and, in turn, will lead to the production of higher quality products for multiple workshops. This Innovation Center will provide pattern making services as well as practical training to the small companies in the southern region of Kyrgyzstan to help them cut costs on creating accurate patterns. Many apparel firms in the southern region of Kyrgyzstan draw patterns manually, which takes up to five hours, while with access to the new equipment they can produce patterns within 15-40 minutes, depending on the size and type of the garment. Printing patterns through Grafis will help reduce production costs and improve the quality of products. In addition to providing affordable pattern making services, the center plans to cooperate with educational institutions to strengthen the practical knowledge of students using the new equipment. Since the opening, the center has competed 10 orders from the local apparel workshops for designing and printing of patterns. Grant for an Automatic Cutting and Spreading Machine Since receiving the Gerber automated cutting machine in July under the BGI grant, the grantee has been learning how to effectively use the machine. It is, therefore, too early to report real results, but the company has noted the following benefits:


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• Cutting is now done with one person, rather than five; • The speed of the machine has reduced cutting time – in half an hour, the machine can cut the

same number of fabric rolls as previously taken during 2-3 hours; • Previously, the factory’s bottleneck was the cutting room. Today, the situation is reversed; the

cutter stands idle at times waiting for sewing operation. To keep pace, the factory needed to increase number of lines from two to three.

• Cutting quality is far superior and uses less fabric. BGI will report actual results for inclusion in its final report in June 2018. Kyrgyzstan International Debut as a Sourcing Destination BGI Third Year Work Plan, Apparel, Activity 1.5 Apparel Sourcing Paris (ASP) / Texworld From September 18-21, 15 factories exhibited their garments for the first time at the Apparel Sourcing Paris trade fair. Apparel Sourcing Paris is number one European Trade Fair for worldwide apparel sourcing. This year 15,473 buyers from 111 countries participated in the exhibition including representing all functions within the global clothing supply chain: manufacturers of clothing and accessories, private labels, garment retailers and wholesalers, mail-order retailers, large-scale retailing, chain stores, department stores, trading companies, agents, designers, buying offices, sales representatives. One of the highlights of the exhibition for Kyrgyz firms was the opportunity to showcase their styles in a catwalk fashion show. A total of 25 samples from 10 factories (2-3 samples from each factory) were presented on the podium to an audience of 200 visitors for the first time, which boosted the motivation of Kyrgyz factories. Overall, Kyrgyzstan received attention from countries that did not previously know that Kyrgyzstan as a sourcing destination for both woven and knitted apparel. Inditex Group, known for high end brands such as Zara, Pull&Bear, Stradivarius, Bershka, Massimo Dutti, Oysho and others, is one of the world largest apparel retailers. By 2012 Inditex had 274 shops in Russia, which has increased annually by 50-60 stores. The company showed immediate interest in Kyrgyzstan and was ready to visit the country immediately, particularly for taking advantage of Kyrgyzstan’s EAEU membership and established trucking channels to supply its Russian stores. Social compliance, however, is a critical condition for placing orders, so the BGI team has delayed the visit until spring to give more time to prepare factories. The vice president of global sourcing from LAT Apparel, an American wholesaler to major retailers and industry players, such as Disney, also approached the Kyrgyz stand multiple times looking for blank t-shirts and onesies. After discussing cooperation with one of the knitwear companies, it was decided that LAT Apparel will send its specifications to BGI after the exhibition. Order capacity from LAT could reach one million pieces. The Kyrgyzstan BGI stand drew approximately 250 visitors over the four-day period. Forty-five buyers from around the world left their business cards, 38 of whom entered discussions regarding possible further cooperation. Upon returning from the exhibition, BGI immediately began to communicate with several buyers from the United States and Europe. In addition to exhibiting at Apparel Sourcing Paris, BGI was able to visit the TexWorld exhibition which was held on the same ground. TexWorld draws fabric producers from around the world and exhibits fabrics, trims and dyeing facilities. There were 987 international suppliers from 27 countries. The BGI team identified 10 new contacts that could potentially become new sourcing place from trims and collected contact information from 38 fabric producers.


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Participation at the Paris exhibition provided numerous benefits to BGI and Kyrgyz apparel firms:

• BGI obtained market intelligence on the production prices of exhibitors from different countries that could then be compared against targets offered by BGI clients in the past. Now, BGI has baseline prices from which to negotiate with the buyers. In addition, BGI had the opportunity learn production techniques of producers that supply for large retailers, which could be adopted by the BGI production team.

• BGI gained access to large retailers despite the myth that buyers are unapproachable or require special approach. Companies with turnover worth billions visited the Kyrgyz stand ready to cooperate in the future.

• The Kyrgyz group gained wide publicity from the French press, through ASP newsletters, press releases, press conference and the Agora Conference. Long before the exhibition started, clients began to approach BGI with requests after they saw information about Kyrgyzstan in the newsletter. Moreover, the French press has shown an eagerness to visit Kyrgyzstan and to write about the Kyrgyz apparel industry.

• BGI widened its suppliers’ database by meeting exhibitors at TexWorld, some of which already sent their offers to BGI promising mutually beneficial collaboration.

• BGI and the Kyrgyz factories gained experience in participating at the apparel exhibition and were able to draw conclusions were drawn to make future participation more efficient: to follow trend books while preparing samples for the fair, to pre-select the samples to be showcased on the catwalk, to have a separate press conference dedicated to Kyrgyzstan, and other conclusions

Collection Première Moscow (CPM) The BGI apparel team, Kyrgyz apparel factories, and Kyrgyz fashion designers participated in the CPM from August 30 – September 2. The CPM is the most important fashion show in Russia and one of the most successful ones in Eastern Europe with over 1.300 international brands. Organized by Igedo Company from Germany with the support of Messe Düsseldorf and Messe Dusseldorf Moscow, it takes place twice a year and especially focuses on the rapidly growing market segment of mid-to upper class in Russia. Eight Kyrgyz factories participated in the show and four factories provided samples to be exhibited at the Kyrgyz stand. Four Kyrgyz fashion designers also participated. The CPM officially opened on August 30th with a catwalk that continued throughout exhibition followed by numerous fashion shows and informative seminars on current topics and trends. The BGI booth successfully attracted professional buyers who represented global and small/medium markets of Russia, Kazakhstan, and Eastern Europe. There were roughly 550 visitors potentially interested in Kyrgyz apparel while BGI qualified 50 of them as potential clients. Russian and Kazakh retailers were particularly interested in Kyrgyz producers because they can offer a good quality product with attractive prices. Experience at a high-end fair such the CPM (as opposed to the familiar Tekstillegprom) gave Kyrgyz factories the opportunity to understand the need for continued development and produce improvement to be competitive on the international market. Direct contact with buyers has helped Kyrgyz factories to better assess the demand for their products and expose them to new industry trends and technologies. The BGI team also had the opportunity to strengthen a relationship with a Russian brand founded in 1991, which has become one of the recognized leaders in designing casual collections. Following the exhibition, the company sent samples of underwear for quotation to which Cool Bros responded and secured an order.


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Textile/Apparel Machinery Exhibitions in Germany BGI Third Year Work Plan, Apparel, Activity 1.2 As part of developing the business plan for creating the apparel service center, called Bishkek Garment Industry Center, to provide continued support of the apparel sector after BGI’s closure in June 2018, the apparel team investigated the kinds of apparel-making machinery that would be required to help the sector expand sales into export markets. Providing access to specialized machinery would not only enable local producers to improve the quality and reduce the costs of apparel production but also generate revenue that could help subsidize the marketing, sales, and order-management services that are also critical to sector expansion and growth in global retail markets. For this purpose, BGI apparel sector leader, accompanied by BGI consultants, visited two trade fairs in Germany related to textile/apparel machinery in May 2017:

• Texprocess, May 9-10, 2017, Frankfurt: to explore fabric-inspection and related machines • FESPA, May 11-12, 2017, Hamberg: to explore fabric-printing options

On May 16, 2017, the team also visited demonstration room of a printing equipment manufacturer, Kornit Digital, in Dusseldorf. As a result of the participating in the exhibitions, the consultants provided advice on the most appropriate fabric-printing, fabric-cutting, and fabric-inspection machines, including an analysis of the required resources (funds, materials/consumables, human capital, and operation space) for effective operation. The table below provides a brief analysis of the types of machines considered necessary to address the key challenges of the industry and ensure financial sustainability of the proposed service center.

Types of Machines to Address Key Challenges and Financial Sustainability

Machine Type Availability in Kyrgyzstan Critical for Competing in International Market

Fabric Cutting

Only three companies have automated cutting machines in Kyrgyzstan although they are old models. One BGI grantee has co-invested in a new automated cutting machine.

Access to this equipment by the sector is critical to compete with the suppliers from China, Turkey etc.

Main benefits: fabric savings of 2%, tremendous increase of product quality

Fabric Inspection

Two companies have this equipment Absolutely critical.

Main benefits: decrease of waste (time, cut fabric) and increase of product quality

Fabric Printing

One company uses this small-capacity printer for own needs only. Although limited, other companies outsource fabric printing to China, Turkey and South Korea.

Critical to compete in fast fashion business.

Main benefits: short lead times, low quantities, and less financial burden on stocks, more options and product range

Garment Screen Printing

Some players in the local market have semi-automatic screen-printing machines.

Critical added-value service for knit products.. Important to compete in big bulk business.

Main benefits: added value service for locally produced knit fabrics promoting a semi-complete knitwear value chain.

Garment Digital Printing

Few companies. Critical to compete in fast fashion business.

Main benefits: short lead times, low quantities, and less financial burden on stocks, more options and product range. A complete one value chain of knit products.

Specialist Machines. Machines for Sample

Making

Scattered in the entire industry. Companies use for their own needs only. If a specific specialist machine is needed, companies need to buy a new machine, even though they use

Absolutely critical.

Main benefits: decrease losses (time, costs) and increase of product quality, fast reaction to


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only 10-20% of its capacity.

No sampling services. The weakest function in the industry, which causes of rejection of many potential orders.

buyers’ needs

Creation of the Bishkek Garment Industry Center (BGIC) BGI Third Year Work Plan, Apparel, Activities 1.1 and 1.2 In January 2017, two international experts in garment sourcing and buying visited Bishkek to conduct an initial analysis of the feasibility of creating a vehicle for continuing support of apparel sector after BGI’s closure. Despite BGI’s success in helping Kyrgyz factories begin to produce for retail clothing chains, this business has not yet thrived, mainly due to their lack of understanding of client requirements, slow order execution and poor fabric/accessory sourcing skills. The subsequent approach was to use BGI as a resource and communication center, supporting many of the mid-management soft skills and functions that the factories have not yet developed on their own, including: communication with buyers and factories, order and price negotiation, factory cost price calculations, order management, raw material sourcing, sample production, pre-production and bulk production, inspections of quality, packaging and labelling, logistical support, and training and developing factory staff and managers. Given the significant market potential, BGI would like to establish a centralized innovation, resource, and service center, to continue performing BGI’s current functions and give access of know-how, expertise, network and resources to the local apparel firms. The questions that were covered in this initial feasibility study were: (1) Is this service center feasible? (2) If this project is feasible, can it be sustainable? and (3) If this project can be sustainable, how can it achieve sufficient revenue to become independent of external funding? After several interviews and visits to 14 factories, including the Dordoi bazaar, the experts came to the following conclusion: “A service center such as the one envisioned by the BGI initiative and outlined in the scope of the project is feasible, in the current prevailing market conditions, with the initial support of external funding that should be gradually reduced, following a mutually agreed business plan between the supporters and the management of the service center. The key to its success will be the building block concept, which allows gradual implementation, the correct team set-up, and sufficient time for consolidation before the following phase begins. The transition to sustainability will require at least 18 months from start, and 12 months from the kick-start of the production services activities.” The experts recommended a three-phase transition approach, starting from laying strong foundations of the potential organization, followed by the start of commercial services and production, and ending with reaching a sustainability stage. Following this feasibility report, BGI subcontracted local financial experts for conducting analysis and development of financial projections of the business model indicated and described in the report. As the result, the basic financial model was developed. It was accompanied by a sensitivity and break-even analysis and supported by key financial reports (Balance sheet, P&L, and Cash Flow Statements). BGI also mobilized a short-term Deloitte advisor to determine how to structure this center within a USAID due diligence framework and Deloitte’s risk management requirements. His conclusion was that the financial model developed was not sufficiently tested by industry professionals who have sufficient experience to determine if baseline assumptions were accurate. His recommendation was to identify a suitable, sustainable counterpart, with thorough knowledge of the global apparel industry, and “engage them in a way that meets development objectives and retains private sector sensibilities to co-invest in the service center.”


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Nevertheless, BGI has identified a local partner willing to contribute what USAID believes to be an adequate contribution for creation of the center. BGI is in the final stage of developing financial projections for the Center and approaches to the Center’s governance and structure.

4. Tourism Value Chain

Overall Results from Destination Development Programs

Increase in the Number Guest House Tourists in Destinations and the Number of Nights

# % # %Karakol Destination 13,333 24,919 11,586 87% 18,270 36,704 18,434 101%Jyrgalan Destination 138 345 207 150% 403 854 451 112%Osh Destination 12,449 12,366 -83 -1% 31,340 29,602 -1,738 -6%South Shore Destination 2,114 4,191 2,077 98% 2,698 6,484 3,786 140%

Naryn Destination 3,781 5,178 1,397 37% 5,399 7,033 1,634 30%Total 31,815 46,999 15,184 48% 58,110 80,677 22,567 39%

DestinationsNumber of Guests Number of Nights

2016 20172016 to 2017

2016 20172016 to 2017

Increase in Guest House Revenues and Employment in Destinations from 2016 to 2017

# % # %Karakol Destination $400,027 $824,319 $424,292 106% 75 78 3 4%Jyrgalan Destination $5,380 $13,064 $7,684 143% 11 12 1 9%Osh Destination $841,585 $879,409 $37,824 4% 88 87 -1 -1%South Shore Destination $33,789 $83,359 $49,571 147% 6 7 1 17%

Naryn Destination $46,306 $62,269 $15,963 34% 8 13 5 63%Total $1,327,086 $1,862,420 $535,334 40% 188 197 9 5%

Destinations2016 20172017

2016 to 2017Estimated Revenue (USD)

20162016 to 2017

Number of Employees

Development of Destination Karakol BGI Third Year Work Plan, Tourism, Activity 2.1 In October 2016, BGI began to work with Destination Karakol to better define its strategy and plans for sustainability. In December 2016, BGI hired advisors to assist members in better defining the experiential ‘product’ that Karakol can offer to tourists and help them better identify and reach their targets markets primarily through online marketing. In November 2016, Destination Karakol delivered training on the fundamentals of guest house management for 15 potential entrepreneurs from Naryn, Chui, and Issyk-Kul oblasts in a program sponsored by UNDP. The training marked one of the first revenue-generating activities of the Karakol DMO and drew upon newly acquired management skills of DMO members who had participated in BGI’s guest house capacity development program conducted by a bed & breakfast advisor last spring. On December 8-9, 2016, Alan Meltzer, Deputy Chief of Mission of the US Embassy in Kyrgyzstan, visited Karakol and Jyrgalan and participated in several meetings with BGI DMO members. On Thursday, December 8, 2016, he presented a copy of the pedestrian street maps that were installed in Karakol to the Plenipotentiary Representative of the Government in Issyk-Kul oblast, Askhat Akibaev, and to Mayor of Karakol Daniyar Arpachiev. He also lunched that day with members of the Karakol DMO to find out more about the challenges the tourism sector faces in attracting tourists to the region. On Friday, December 9, 2016, he traveled to Jyrgalan to meet with DMO members there. He presented


26

a plaque to DMO Executive Director Tynchtykbek Zhanadylov to place on the door of the new office of the DMO. On February 17, 2017, Destination Karakol, with other local organizations, hosted a day-long community forum designed to promote innovation in business and investment in the Issyk-Kul region. The objective of the forum, entitled Karakol: Good for Business and Life, was to create a platform for constructive dialogue between local authorities and the business community to improve tourism development capacity and attract investment. More than 150 representatives of businesses and local and regional government participated in extensive discussions on local economic development through tourism sector development. The Forum was organized with support from the Issyk-Kul Council on Business Development and Investment, the Association of Young Entrepreneurs (JIA), the European Bank for Reconstruction and Development (EBRD), and USAID’s BGI project. Karakol’s DMO Executive Director and two DMO founders participated with BGI and Kyrgyz tour operators in the ITB Berlin 2017 International Tourism Exhibition. There, they were able to observe the ways in which destinations throughout the world market themselves and to get to know some of the motivations of tourists that may be interested in traveling to Kyrgyzstan. They were also able to spend some time with BGI tourism marketing and product development consultants and obtain additional ideas for Karakol product development. Social Media Marketing Program On March 16, 2016, BGI kicked off a four-day social media and marketing (SMM) training program for 15 students from the Issyk-Kul State University and the Karakol Eurasian College on how guest houses and other businesses can employ social media to bring more tourists to Karakol. The students then worked with participating businesses as interns to help owners and managers harness the power of the internet to promote their hospitality services to potential tourists. The internships took place over a three-month period, under the guidance of social media experts and Peace Corps volunteers from the Karakol region, who mentored the student-owner teams in their SMM campaigns. The teams created SMM posts promoting Karakol tourism and hospitality services during the pilot period, with the goal that businesses will realize the value of such promotional efforts and continue to employ students beyond the pilot period. The project provided a second phase of the training in May 2017. On June 29, 2017, Destination Karakol held a graduation ceremony for the 15 SMM interns, which marked official completion of the program. As a result of the pilot, four of the interns were officially offered employment during the ceremony, and other businesses negotiated employment terms for their interns. Experiential Tour Products Development During the second quarter of 2017, the Karakol DMO developed and packaged four experiential tour products, based on the Experiential Guide to Karakol and with coaching by consultants to position Karakol not only as a stop-off for adventure tours in the mountains, but also as a culinary and cultural destination of Kyrgyzstan. To help independent travelers book these tours, the DMO will arrange for interpreters, transportation and other services, as needed, and retain 10-15% of tour revenues to build a revenue stream for the DMO. The tours are now developed and are being both sold to tourists and tested with others in exchange for

Tour Product Name Product Revenue $

DMO Revenue $

Number of Times

Total Tourists

Total Tourists

from DMO

Dungan Family Dinner $2,059 $210 21 114 35Sunset Cruise $1,412 $340 16 96 24Laghman show $309 $37 6 30 0Free Walking Tour $0 $0 10 50 25Foodie Tour $287 $174 10 41 28Yurt construction $53 $6 2 5 3Handicrafts workshop $176 $25 6 21 0

Total $4,296 $791 357 115

Karakol


27

providing feedback on pricing, timing, marketing, etc., to improve the offering. Other BGI-supported DMO members have also experienced some of the products so they get a better understanding of how to support the development of their own products. Public Wi-Fi Program In August, BGI provided a grant to the Karakol DMO to establish public free Wi-Fi internet in the high traffic public areas of the city. In September, the DMO established four Wi-Fi zones at the Karakol River Park, main city bus station and two business zones. This is a pilot activity to test the feasibility of and desire for free wireless service for customers and visitors to Karakol that could help attract local visitors, tourists and conventioneers, and new businesses, particularly those emphasizing technology, innovation and creativity. The other key motivation behind the initiative is to enable the Karakol DMO to sell advertising space to local businesses as a way to generate revenue that would contribute to its sustainability as an organization. The DMO has hired technical and sales staff for implementing the activity. On September 30, the Karakol DMO introduced the Wi-Fi system to 30 business and public organizations to promote the benefit of the service to the community and to set the stage for the launch of advertising sales to local enterprises. River Park Opening With USAID’s acceptance of BGI’s environmental checklist for the Karakol River Park development project in December 2016, BGI developed the contracting plan during the first quarter of 2017 and drafted and prepared the RFP for engaging a development contractor. In June, the Karakol DMO signed a contract to construct the Karakol River Park. The construction of the River Park was completed at the end of August in time for an opening ceremony and festival on Saturday, September 9, 2017. Dedicating the park opening was the Charge d’Affaires of the United States Embassy, Alan Meltzer, with Uzarbek Zhytkybayev, Plenipotentiary of the Government of the Kyrgyz Republic in Issyk-Kul Oblast, and Daniyar Arpachiev, Mayor of Karakol. Following the opening ceremony, Destination Karakol hosted a community festival in the park, which included pavilions in which all of Karakol’s major ethnic groups – Kyrgyz, Dungan, Uighur, Tatar and Russian – displayed cultural traditions and handicrafts and offered samples of traditional food. Local artisans sold handicrafts while local restaurants and cafes sold food to the estimated more than 1,000 visitors throughout the day. Development of Destination Jyrgalan Valley BGI Third Year Work Plan, Tourism, Activity 2.2 With the official registration of the Jyrgalan Valley Destination and the appointment of Executive Director Tynchtykbek Zhanadylov in fall 2016, the Jyrgalan Valley DMO expanded its membership and its accommodation capacity thanks to infrastructure improvements supported by the BGI project. Four members of the Jyrgalan community invested in converting their homes to tourist guesthouses as part of the DMO’s efforts to accommodate guests seeking backcountry ski opportunities in winter and the prospect of trekking holidays and kymys treatments in summer. Previously, the founding member of the Jyrgalan DMO an only guest house could accommodate only 15 guests. The four new guest houses can now accommodate an additional 29 visitors, and an expansion of the founding guest house now accommodates a total of 35 overnight guests. As a result, Jyrgalan now has the capacity to host 64 overnight guests, all with access to indoor plumbing and shower facilities, which represents an increase of greater than 300%. A new dining room at the founding guest house can seat 50-60 guests or accommodate meetings or gatherings of up to 80 participants. These investments nearly tripled local job opportunities as well as the potential to work as guides or providers of other guest services. In December 2016, Deputy Chief of Mission Alan Meltzer also visited Jyrgalan as part of his tour of Karakol, at which BGI conducted an official award ceremony for the opening Jyrgalan DMO office with participation of all members of Jyrgalan DMO. The Jyrgalan DMO opened its formal office in February. It also successfully collected fees from its five member guest houses based on 10% of its tourism


28

accommodation revenue collected during 2016. The DMO now collects revenues monthly based on the past month’s revenues. Winter Season Opening To launch the winter season opening, which is vital to promote Jyrgalan as a destination for backcountry skiers, BGI provided support for conducting the Winter Tourism Festival, J-Fest, on November 18-19, 2016. About 323 participants from Bishkek, Karakol, and Jyrgalan attended the fest, including tour operators, mass media, ski trainers, oblast and local administration officials and members of the local community. On the first day of the festival, DMO members made a presentation for tour operators, and guests toured the newly established guest houses to see the recently completed renovations. Two operators signed memoranda of understanding with the DMOs to formalize relationship. The second day of the festival engaged the local community with guests representing tourism and hospitality businesses. BGI presented plaques to the five guest houses that received support for these renovations and also made a presentation of the three yurts to a Jyrgalan guest house. Following these presentations, the festival kicked off a series of open air winter games designed to promote interaction of festival guests with the local community. During the first quarter of 2017, the Jyrgalan DMO designed and printed posters advertising its winter tourism offerings and distributed them in public places throughout Karakol. The DMO Executive Director participated as a mentor in Karakol’s SMM intern training and hosted an intern, who posted on the Jyrgalan DMO social media pages. The Jyrgalan aiyl okmotu also signed an Act of Acceptance of the signs BGI installed on the road from Karakol. Volunteer Program The Jyrgalan DMO became aware of an international volunteer program called WorkAway, whose website matches people interested in volunteering to work in local communities with community hosts who provide meals and accommodation. The DMO placed a profile on the WorkAway website and were able to attract a New Zealander, who came to Jyrgalan on May 10, 2017 for a two-month volunteer assignment to teach local residents English and help the DMO with social media marketing. The female volunteer also launched a fundraising campaign for creating a children’s playground in Jyrgalan that raised $1,500 from visiting tourists, the local community, and others. Residents were in charge of building the playground and completed it in July 2017. Tour Products Development As a result of Jyrgalan’s participation in the Arslanbob study tour, members were able to see how simple it was to create similar adventure/outdoor tourism products for its their own DMO, and within a few weeks of returning home, had developed 12 product offerings complete with marketing materials describing trekking, horseback riding, and bicycle tour products of various routes and duration, and several plans for placing yurts along these routes to serve tourists. Throughout the second quarter of 2017, BGI worked with the DMO to hone and implement these plans. BGI also awarded a grant to the DMO to fund the purchase of hiking, camping, bicycling, and horseback riding equipment, which the DMO members rented out during the 2017 summer season in exchange for contributing 20% of their gross proceeds to the DMO. This commission policy, coupled with the 10% guesthouse commission policy and annual membership will help support the sustainability of the organization.


29

Development of Destination Osh BGI Third Year Work Plan, Tourism, Activity 2.3 Despite BGI’s selection of the Osh consortium, DMO members were never able to develop a comprehensive vision for development that was achieved by the Karakol and Jyrgalan DMOs. Consequently, BGI conducted a two-week hospitality training program from October 11-20, 2016, for guest houses in Osh and its vicinity, followed by a presentation of the achievements of the Karakol and Jyrgalan DMOs to demonstrate the tourism development momentum that working together in a DMO can generate. Following these training sessions, on October 21, 2016, BGI conducted a community meeting to achieve two goals: (1) to highlight to the community BGI’s installation of tourism maps and signage in the Osh region and (2) to generate a ‘call to action’ to the enthusiastic participants in the guest house training to participate in the activities of an expanded Osh DMO. The meeting began with USAID’s presentation to Osh Vice-Mayor Zamirbek Askarov, a copy of one of the pedestrian maps of Osh to commemorate those that the project recently installed around the city to promote tourism. This drew his attention also to BGI’s recent installation of 15 directional road signs to attractions in Osh oblast and four maps of Osh to guide visitors who want to explore the city on foot. Following the ceremony, which was also attended by 50 members of the Osh hospitality community, Executive Directors of Karakol and Jyrgalan’s tourism destination management organizations (DMOs) shared the experiences they encountered and progress achieved in working collaboratively with members of their DMO communities in tourism development to encourage greater cooperation in efforts to expand tourism offerings and services through the Osh DMO. The original Osh DMO then presented the activities that it had initiated in the past year with BGI. As a result of the community meeting, a


DMO Revenue $

Number of Times

Total Tourists

Total Tourists

from DMO

Kok Bel Waterwall Hike - Half day $171 $26 3 10 10Kesken Kija Trek $1,466 $220 7 40 40Turnaluu Kol Horse trek - Half day $426 $64 15 15 15Tulpar Tash Horsetrek - Half day $29 $4 2 1 1Uuru-Tor - Kyle Pass-Emil Peak horsetrek $370 $55 7 6 6

Chaar Jon -Kyzyl Jar Canyons horsetrek $122 $18 2 4 4

Boz Uchuk Trek $471 $71 2 3 3Yurt stays $44 $7 3 4 4Ailampa Lake trek $46 $7 1 1 1Sleeping bag rental $13 $1 5 1 1Sleeping mat $2 $0 2 2 2Trekking poles $0 $0 0Gas Stove with Cylinder (size: 200 gram) $10 $1 2 2 2

Guide (Kyrgyz, Russian speaking, some English) on foot, horse trek, bike trek $221 $22 6 4 4

Porter (Can go with his horse, but will not charge for horse) per day per 60 KG. $0 $0 0 0 0

Cooking service $0 $0 0 0 0Horse rental $71 $7 4 2 2Bike rental $12 $1 1 1 1Rental of kitchen kit $4 $0 1 1 1Tent rental $7 $1 2 2 2

Total $3,485 $506 99 99

Jyrgalan


30

group of 10 hospitality sector stakeholders in Osh formed Destination Osh, which they registered in January. Since then, Destination Osh became a member of the mayor’s council that is developing a tourism strategy for the city. The Osh DMO a full-time coordinator to implement its annual work plan. Members also created three committees designed to focus on specific aspects of tourism development – the overall tourism market, hotel capacity development, and improving restaurant services. In February 2017, the temporary Executive Director traveled to Karakol with the DMO from Lake Issyk-Kul’s southern shore, and in March 2017, five Osh DMO members participated in BGI’s study tour to Arslanbob. They raised awareness of the creation of Destination Osh by participating in an EITR TV discussion program, Koz Karash, which addressed challenges in tourism development. Thanks to the active participation of the head of the tourism faculty at Osh State University, members participated in a business recruiting workshop for young graduates sponsored by the university’s career center and promoted the university’s launch of English language courses for tour guides, drivers, waitresses and guest house maids. Launched at the end of March 2017, the courses continued until the end of May 2017 taught by faculty who have volunteered to teach. DMO members also sponsored a study tour for 31 students with majors in tourism to visit Gulcha in the Alai region. With the students Destination Osh created an inventory of all the tourism-related businesses in the city and in May contracted the design of its logo. The DMO received a grant from BGI in July to open a Tourist Information Center and a DMO office near to the visitor entrance to tourist attraction Suleyman-Too. Experiential Tour Products Development In May, BGI consultants conducted an exploratory visit to Osh and helped the DMO uncover many of the raw ingredients through which to create an engaging experience for the traveler: culture, cuisine, and history. They assisted the DMO to begin developing city-based tourism products - food tours, city walking tours, cooking workshops, fashion/design tours, and ethnic dinners in local family homes – that could help Osh create a tourism identity positioned as the multicultural crossroads of Central Asia, not too dissimilar to its place once along the Silk Road. BGI then began to form, package and test these experiential products in Osh. The first tests of the newly developed products took place in June 2017 and were perfected over the course of the summer. At the end of FY2017, the DMO was interviewing candidates for a permanent Executive Director. Launch and Development of Issyk-Kul’s South Shore DMO BGI Third Year Work Plan, Tourism, Activity 2.5 On December 15, 2016, BGI facilitated the launch of the destination management organization on the southern shore of Lake Issyk-Kul at a community meeting designed to promote cooperation among tourism businesses, artisans, government representatives and community leaders. The initiative included more than 20 stakeholders from all municipalities in the Ton district and neighboring municipalities in Jeti-Oguz, and seeks to enhance tourism offerings in the Issyk-Kul region by creating a comprehensive set of Kyrgyz nomadic experiences for the cultural and adventure traveler.


DMO Revenue $

Number of Times

Total Tourists

Total Tourists

from DMO

Plov tour $287 $44 4 26 26Foodie tour $675 $189 11 83 83Bread baking tour $179 $96 6 27 27City walking tour $199 $171 4 34 34Sulaiman Too tour $110 $73 3 15 15

Total $1,449 $574 185 185

Osh


31

BGI engaged international tourism advisors to identify the ‘products’ that can be delivered to tourists and how to package them to meet the experiential needs of specific target audiences by leveraging resources to deliver cultural fairs, demonstrations of nomadic handicrafts, cuisine and culture, basic improvements in light infrastructure and sanitation, upgrades to museum displays, better signage, and development of small businesses. The consultants spent several days assessing local tourism offerings. Following the launch, members identified a DMO coordinator to assist in managing DMO activities. She participated in BGI’s study tour to Karakol for members of the Southern Shore DMO, who also participated in BGI’s study tour for DMOs to Arslanbob. Members of the DMO also participated in BGI’s other cross-DMO activities during the quarter – trail marking, mountain guide training, and were able to finalize and select a logo representing the DMO. Experiential Tour Products Improvement On April 23-24, 2017, BGI consultants conducted a one-day practical workshop and half-day individual consultations to build DMO skills to package and market their products and services. As a result of the workshop, participants learned about the basis on marketing and how the tourism product should be packaged and promoted to meet the expectations of the tourists. This was a new experience for South Shore DMO, and to make their tasks easier and more effective, the consultants distributed simple forms to note product highlights and what is offered to the costumer. As a result, the following services were standardized and re-packaged to ensure greater access to information about these services and ability to book them outside of engaging Kyrgyz tour operators or the Community-Based Tourism (CBT) network.

Launch and Development of Naryn Tourism Initiatives BGI Third Year Work Plan, Tourism, Activity 2.21 In March 2017, BGI undertook an assessment of the feasibility of adding Kochkor and Naryn cities as new candidates for BGI’s destination development program. The BGI met 30 stakeholders in Bishkek, Kochkor, and Naryn over a week-long trip to the region and determined that there was adequate stakeholder interest to expand their history of working with the Community-Based Tourism (CBT) initiative to promote cooperation with the wider network of local tourism services providers. In April 2017, BGI launched the assistance program to the two tourism centers in the Naryn oblast – to 48 stakeholders in Kochkor on April 13, 2017, and to 56 stakeholders in Naryn city on April 14, 2017 – representing yurt camp owners, CBTs, tour agencies, guesthouse owners, universities, NGOs, guides, cafes, handicrafts associations and other businesses. While BGI did not intend to initiate registered DMOs in these locations, the project wants to provide stakeholders with access to many of the assistance programs that BGI has been delivering to DMOs throughout Kyrgyzstan – including tourism signage, trail marking, guide training, experiential product development, co-financing programs, promotion, capacity building – and introduce stakeholders to the informal networks BGI is creating among DMO members, including domestic and international study tours and exhibitions. During the second quarter of 2017, stakeholders subsequently had the opportunity to work together for the first time in exhibiting at the ITF in Cholpon-Ata, participating in event management training, coordinating activities in the Shyrdak Festival, BGI also conducted an event management training


DMO Revenue $

Number of Times

Total Tourists

Total Tourists

from DMO

Salburuun $3,449 $201 9 235 46Jailoo Experience $4,024 $16 3 311 29Felt Making $8,647 $22 8 829 29Yurt Building $4,147 $40 6 216 22

Total $20,266 $279 1,375 104

South Shore


32

course in Naryn, and local stakeholders have also begun to develop experiential tour products. In July 2017, the Karakol DMO hosted Naryn stakeholders so they could experience the products the DMO developed as examples for possible duplication or adaptation in Naryn. Ultimately, BGI decided to work with Naryn city stakeholders and those based in surrounding villages rather than to promote further engagement with stakeholders in Kochkor, where successive leaders of the CBT organization had become disillusioned with the model and had formed their own CBT-like “clubs” of participating guest houses. These local dynamics have now created a highly competitive environment based on price that is contrary to the spirit of cooperation that is essential to supporting a sustainable DMO. However, BGI has decided to support highly motivated stakeholders in the remote village of Jamgal on the west side of Lake Son-Kul, as another enclave for BGI development assistance. The potential tourism offerings of this community align more with BGI’s development activities in Jyrgalan and the project’s recent cooperation with the CBT in Arslanbob. Naryn has since decided to register a tourism association and adopted a Destination Naryn logo. Experiential Tour Products Development In August, BGI tourism consultants conducted an experiential tourism product development workshop for 16 members of the Naryn group, primarily those whose products were tested prior to the workshop. Unfortunately, it was too late to launch them properly during the 2017 summer season, but they are under development for wider-spread roll-out in 2018. Domestic Study Tours BGI Third Year Work Plan, Tourism, Activity 2.10 Study Tours to Karakol As part of BGI’s tourism destination development program, the project launched a series of study tours within Kyrgyzstan to enable stakeholders from one region to understand the products and services delivered to tourist in other parts of the country. In February 2017, Destination Karakol hosted a two-day study tour for 15 members of the newly formed ethno-cultural destination management organization (DMO) of the southern shore of Lake Issyk-Kul, a group of tourism providers in locations stretching from Kyzyl-Too in the west to Barskoon in the east. Several members of the Osh destination also joined them in this opportunity to network and learn from counterparts based in the Karakol region. The study tour’s format was a combination of peer-to-peer learning sessions, discussions and team-building exercises, as well as field visits to Karakol tourism businesses. The team also took part in informal strategy and tourism development sessions, which carried far into the evening, reinforcing cohesion within the Southern Shore DMO while promoting wider participation of Karakol and Osh DMO counterparts. BGI also supported members of Destination Osh to visit Karakol en route to participating in the Southern Shore’s Teskey Zheek Festival in July to sample the various tour products launched earlier in the summer by Destination Karakol. In addition, 7 members of the Naryn group traveled to Karakol two weeks later also to learn from Karakol’s experiences so far in rolling out its new tourism products and to learn from the activities Karakol had launched over the previous year.


DMO Revenue $

Number of Times

Total Tourists

Total Tourists

from DMO

Beshbarmak Workshop $282 $28 4 6 6Boorsok Workshop $88 $9 2 15 15Eagle Hunting Show $132 $13 3 37 37City Waking Tour $0 $0 0 0 0Movie Night $31 $3 5 48 48

Total $534 $53 106 106

Naryn


33

Study Tour to Arslanbob for Members of All DMOs In March 2017, BGI promoted a similar experience by hosting a tour of the Arslanbob Community-Based Tourism (CBT) in Jalalabad oblast for 25 DMO stakeholders from Karakol, Jyrgalan, Osh, and Lake Issyk-Kul’s southern shore. Traveling through Osh to reach the Arslanbob destination, participants were also introduced to the Visit Alai program currently implemented by Helvetas. To organize the study tour, BGI employed the Kyrgyz CBT Association, based in Bishkek, as well as the Arslanbob CBT to offer a program combining theory with practice and the opportunity to expand skills in developing and marketing tourism products according to the CBT Hospitality Kyrgyzstan model, which the DMOs can adapt to their own organizations. Arlanbob has been highly successful in developing a range of formal tourism products including backcountry skiing and horseback tours, visits to natural landmarks in the region, and cultural and culinary experiences inherent to Kyrgyz culture. International Study Tour – Participation in the Open World Exchange Program BGI Third Year Work Plan, Tourism, Activity 2.11

From Sept 21- Oct 1, BGI organized a study tour to the United States for five leaders of the Tourism DMOs: Jyrgalan, Osh, South Shore of Issyk Kul, Naryn and Karakol as a part of the Open World Exchange Program. The program was designed to share the development of regional tourism with those experienced by the State of New Hampshire because they have similar types of natural resources as Kyrgyzstan with which to promote tourism. During the 10-day intensive program, Kyrgyz participants explored the community and culture in Portsmouth and how the city utilizes historic buildings as tourist attractions. The DMO leaders also studied the winter/summer tourism development in the area of the White Mountain National Forest, visiting well-developed resorts, such as the Gunstock Mountains and Great Glen Trails, to learn about their marketing strategies and the services provided to entice tourists.

During the trip, meetings were also held with representatives of the New Hampshire Tourism Development Division, congressional staff and New Hampshire University professors and students specializing in hospitality and recreation management. Through these meetings, they learned about the type of support the state provides for tourism development, discussed the tourism education system, and how work in partnership can bring more tourists to the state. The DMO leaders, in turn, briefed the counterparts about tourism development in Kyrgyzstan, about the USAID-supported emerging tourism destinations and the World Nomad Games to be hosted by Kyrgyzstan in the fall of 2018. DMO leaders are expected to share the information and knowledge gained during the study tour with DMO members and discuss the ideas to improve the products and services they are developing and offering to tourists.

DMO Capacity Building BGI Third Year Work Plan, Tourism, Activities 2.1, 2.2, 2.3, 2.5 On-site Hospitality and Guest House Management Workshops for DMOs BGI a hired local trainer to address the capacity gaps of destination guest-houses, particularly new guest house providers in Jyrgalan and those in the Southern Shore. The two-day training took place in Jyrgalan from April 24-26, 2017 and on the Southern Shore on April 29-May 1, 2017. The training was designed to upgrade existing services and skills in guest-house management and customer service. She also focused building skills in cooking a greater variety of national/international/vegetarian food that appeal to visitor tastes, particularly since most guest houses offer both breakfast and dinner to guests. The training also covered the rudiments of housekeeping as well as human resources management principles and front office operations. After workshop, the trainer conducted on-site consultations, visiting 10 guest-houses on South Shore and five in Jyrgalan to provide feedback on the quality of their services. During the workshop on the South Shore, the DMO hosted three members of the Osh DMO based in the Alai region, and shared their experiences in promoting ethno-cultural tourism and managing authentic yurt camps. This was also a good exercise to promote information and knowledge exchange cross the two DMOs.


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DMO Summer Festivals BGI Third Year Work Plan, Tourism, Activities 2.1, 2.2, 2.3, 2.5 BGI contracted a local event management agency, which was involved in managing events at the 2016 World Nomad Games, to deliver four, two-day Events Management Workshops for the DMO members of four BGI destinations on the following dates:

• South Shore of Issyk-Kul – May 15-17, 2017 • Jyrgalan – May 18-17, 2017 • Osh – June 12-13, 2017 • Naryn – June 15-16, 2017

The purpose of the training was to build skills to effectively conceptualize, manage, and stage tourism-related events and festivals in collaboration with local tourism stakeholders. The firm coached DMO members to deliver tourism events effectively and monetize event management as a way to promote tourism in their destinations and generate revenues for DMOs and their members. The training covered marketing and promotion, budgeting (identification of resources needed for events), negotiation, fundraising, and content planning. As a result of the workshop, the DMOs developed the concepts and budgets for one seasonal event that took place in the third quarter of 2017 at each destination with the following results:

Summer 2017 DMO Festival Results

Food Souvenirs Total Vendors

Food Sales KGS

Souvenir Sales KGS

Total Sales USD

Tickets/ Commission

to DMOs* KGS

Revenue to DMOs

Naryn Shyrdak Festival June 28, 2017 103 50 63 113 250,000 798,000 $15,412 0 $0South Shore Teskey Jeek July 15, 2017 350 1 5 6 14,000 80,000 $1,382 110,850 $1,630Osh Osh Fest 2017 August 19, 2017 1,054 24 36 60 39,000 72,500 $1,640 19,000 $279Jyrgalan Summer Tourism J-Fest August 27, 2017 150 9 15 24 10,000 58,000 $1,000 30,700 $451South Shore Salburuun September 6, 2017 300 3 6 9 25,000 100,000 $1,838 28,500 $419

Karakol Karakol River Park Opening Ceremony September 9, 2017 20 3 1 4 25,000 3,000 $412 0 $0

Naryn Nukura Fest September 16, 2017 89 4 3 7 16,200 71,500 $1,290 0 $0Total 2,066 94 129 223 379,200 1,183,000 $22,974 189,050 $2,780*Destination Osh did not sell tickets but earned a commission of 10% on concessions. South Shore charged commission on booth rentals for the Salbuurun Festival.

DMOs

Destination Festival Name Date Tourists

Vendors

Teskey Zheek Ethno-Festival on Southern Shore of Lake Issyk-Kul Lake Issyk-Kul’s Southern Shore DMO kicked off the festival season designed specifically for tourists with its Teskey Zheek Ethno-Festival on July 15. Held at an exquisite location atop a bluff overlooking the lake, the festival drew busloads of tourists from as far as Karakol, Naryn and Bishkek thanks to promotion with national tour operators and CBT organizations. It was estimated that more than 350 tourists attended the festival, a tremendous increase over other festivals hosted by southern shore residents in the past. Members of the DMO and residents of Ton country cleaned the grounds of trash, installed homemade portable toilets, and determined how to bring electricity to the site. In all, the DMO earned roughly US $1,600 from ticket sales, while handicraft artisans brought in more than $1,000, and local residents selling food and drink made more than $300. Osh Fest Silk Road Caravan Destination Osh decided to capitalize on its medieval heritage and host a Silk Road Caravan to kick off its Osh-Fest on August 19. Both USAID Mission Director Kimberly Rosen and Department of Tourism and Deputy Minister Azamat Zhamankulov were on hand to join the 90-minute caravan route that wound through the streets of Osh. Camels, yaks, horses, and donkeys laden with goods and local actors dressed in medieval costume drew bystanders into the parade, which ended at the festival site in Toktogul Park. At the park, the DMO had set up a Silk Road oriental bazaar of food, spices and fabrics and featured interactive demonstrations of skills in making knifes, carpets and pottery. In the chaikhana food zone,


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guests could participate in making plov, shakarap, manty, samsy, kattama, boorsok and laghman and other culinary expressions of Osh’s unique culture. All vendors reported profits from participating in the festival, which was the result of efficient teamwork among DMO members, local governments, NGOs, youth and cultural organizations. Nearly 2,000 residents and visitors took part in the festival. Jyrgalan Valley Summer Fest Destination Jyrgalan Valley conducted its festival a week later on August 26-27. Unlike other festivals, this was a two-day event that focused more on building relationships with Bishkek- and Karakol-based tour operators and national and regional media outlets. DMO members presented the new hiking, bicycle and horse trails they created that radiate from Jyrgalan. As with other festivals, there were abundant performances and demonstrations of nomadic traditions, games, and food to satisfy the approximately 120 tourists the festival drew from Karakol, the Southern Shore and those visiting Jyrgalan itself. Destination Karakol helped recruit a number of these visitors and arranged for transportation as well. Like other DMO festivals, local residents made money by selling food, drinks, and handicrafts, while the DMO was able to sell tickets and bus fare to tourists staying in Karakol. Naryn Nukura Fest Destination Naryn stakeholders hosted two festivals this season – the first, Naryn oblast’s annual Shyrdak festival in At-Bashy in June, and the second, the Nukura Fest, on September 16. Based on lessons learned from June’s Shyrdak Fest, Naryn promoted the Nukura Fest two months in advance on Facebook and placed posters in guest houses, hotels, cafes, and other likely tourist spots in Bishkek and other destinations. This allowed four tour operators to include attending the festival as part of their customer itineraries. With active support from the Naryn mayor’s office, the opening ceremony began with a theatrical performance of Naryn’s city history, followed by 50 komuz players playing Mash Botoy, folk dances and songs. The festival presented traditional nomadic customs and food, but also included a 16-meter horse sausage (chuchuk), which was sampled by visitors. More than 200 tourists and more than 2,000 local residents attended the festival, held in the stadium in the city center. As a result, the oblast and municipal administration wants to engage Destination Naryn to help reformat the Shyrdak festival to be more convenient and appealing for tourists and more widely publicized. Southern Show Salbuurun Fest for IAF Delegates The Southern Shore DMO also had the opportunity to host a Salbuurun Festival for more than 100 delegates from the International Association of Falconry (IAF) in early September. The visitors, representing 41 countries, came to Cholpon-Ata to participate in the IAF’s 48th Council of Delegates Meeting. Co-sponsored by the Government of Kyrgyzstan and the Kyrgyz chapter of the Salbuurun Federation, led by Southern Shore DMO Chairman, the Salbuurun Fest provided an opportunity to showcase the deep traditions of falconry among Kyrgyz nomads to visiting delegates. On September 5-6, the delegates traveled to the southern shore to overnight in yurt camps before participating in the day-long festival held in Boz Salkyn jailoo. Among Central Asian countries including Mongolia, Kyrgyzstan is the first country to host an annual IAF conference. Marking and Mapping Trekking Trails BGI Third Year Work Plan, Tourism, Activities 2.1, 2.2, 2.3, 2.5 During the second and third quarters of 2017, BGI launched a six-month project to exponentially expand the number of marked trails throughout Kyrgyzstan to increase the country’s product offering and make it easier for independent travelers to explore Kyrgyzstan’s mountain treks on their own. The project kicked off in May 2017 with the assistance of the Trekking Union of Kyrgyzstan (TUK) to identify, mark and take GPS coordinates for trails at the lower altitudes surrounding Jyrgalan, Karakol and Southern Shore, which was continued at higher altitudes in June. From July-October, BGI marked trails in Naryn oblast and the Alai region of Osh oblast in August 2017. In all, BGI marked and mapped 52 trails in seven regions of Issyk-Kul, Naryn and Osh oblasts, creating nearly 2,800 kilometers of new


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trails. BGI is also creating maps of these new trails for TUK and DMOs to sell to hikers and will also post GPS coordinates online to download into map applications.

Trails Established or Planned # Name of Trail # of

Days Distance Maximum Elevation Season Marking Date

Jyrgalan – 9 Trails 1 Boz-Uchuk Lakes Trek 3 53km 3481m May-October 10-16 June 2 Kesken-Kiya Loop Trek 4 64km 3380m June-October 10-16 June 3 Jyrgalan — Eci-Chat Trek 1 16km 2614m May-October 10-16 June 4 Turnaly-Kol Trek 1 15km 2865m June-October 10-16 June 5 Waterfall Trek 1 16km 3085m June-October 10-16 June 6 Jyrgalan — Echkili-Tash Trek 5 63km 3723m July-September TBC 7 Ailampa trek 3 52km 3550m May-October 15-19 May

Karakol – 5 Trails 1 Chon-Kyzyl-Suu - Jeti-Oguz 4 30km 3920m June-October 10-16 June 2 Kok-Jar — Arashan Trek 2 18km 3627m June-October 10-16 June 3 Ak-Suu Arboretum Trek 1 11.7km 3085m Year-round 10-16 June 4 Jergez - Ak-Suu 3 51km 3671m July-September 15-19 May 5 Jeti-Oguz — Arashan Trek 6 58km 3922m June-October 10-16 June

Southern Shore – 6 Trails 1 Panorama Trek 3 30.3km 3487m June-October 10-16 June 2 Ton – Teshil-Kol 3 26km 4020m July-October 10-16 June 3 Boz-Salkyn – Barskoon Trek 5 70km 3893m June-October 10-16 June 4 Shatyly Trek 1 hr 4km 2592m Year-round 15-19 May 5 Barskoon-Juku 4 57km 3773m June-October 10-16 June 6 Petroglyphs Trek 4 hr 8.5km 2389m Year-round 15-19 May

Kochkor – 3 Trails 1 Ak-kiya – Kol-Ukok 3 47km 3919m July-October 10-16 June 2 Kol-Ukok – Taldy 5 56km 3885m July-October 10-16 June 3 Ulahol – Kara-Kungei 4 57km 3635m July-October 10-16 June

Naryn – 14 Trails 1 Jany-Jer 5 130km 3646m July-September 6-14 July 2 Ulan 4 101km 3783m July-September 6-14 July 3 Eki-Naryn 4 96km 3814m June-September 6-14 July 4 Ottuk-Baidulu 3 69km 3814m July-September 6-14 July 5 Tash-Rabat (circle) 2 50km 4127m July-September 6-14 July 6 Waterfall Shar 2 28km 3200m July-September 6-14 July 7 Jakbolot 3 82km 3805m July-September 6-14 July 8 Tash-Rabat Kol-Suu 7 192km 4020m July-September 6-14 July 9 Ozgorush - Kol-Suu 5 160km 3851m July-September 6-14 July

10 Solton-Sary 4 105km 3928m July-September 6-14 July 11 Salkyn-Tor 1 11km 3000m June-September 12 Tash-Rabat - Botosh 4 112km 3431m June-September 13 Tash-Rabat panoramic 1 12km 4020m July-September 14 Panorama 360 1 7.31km 3323m June-September

Alai Valley – 8 Trails 1 Akbosogo to Sarymogol 1 21km 3622m June-September 20-29 August 2 Bulolu to Askaly 1 12km 2824m May-September 20-29 August

3 Jashtilek to Kyrgyz Ata National Park 8 180km 3948m May-September 20-29 August

4 Karakol to Sarytash 2 17km 3611m June-September 20-29 August 5 Koshkol lakes 1 22km 4200m June-September 20-29 August 6 Kyzyleshme to Darootkorgon 1 16km 3512m May-September 20-29 August 7 the Hights of Alay 3 100km 4306m May-September 20-29 August 8 Truly Nomadic Land 4 71km 3557m May-September 20-29 August

Jumgal / Ak Tala – 9 Trails 1 Ak-Kol - Kazarman 3 40km 3524m June-October 2 Ak-Kol loop 1 13km 2350m June-October


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# Name of Trail # of Days Distance Maximum

Elevation Season Marking Date

3 Ak-Kol - Minkush 2 22km 2735m June-October 4 Three lakes 2 64km 3220m June-September 5 Kurtka - Son-Kol 1 40km 3173m June-October 6 Ak-Kya - Boz-Aigyr-Son-Kol 3 77km 3660m June-September 7 Kyzart-Kilemche-Son-Kol 3 35km 3325m June-October 8 Sary-Kol Loop 2 58km 3550m June-September 9 Son-Kol-Ak-Kuduk 3 43 3607m June-October

52 Total Trails

2789.5

Total km

Trekking Guides Training BGI Third Year Work Plan, Tourism, Activities 2.1, 2.2, 2.3, 2.5 BGI partnered with the Kyrgyz Mountain Guides Association (KMGA) to train 74 trekking guides, recruited and selected from all BGI DMOs, on May 10-24, 2017. Trekking guides from across the country were trained on customer care, international safety, and geographical orientation. Many local guides have lacked access to high-quality mountaineering training and professional certification courses, which can result in a negative tourism experience, thus potentially hampering growth in the sector. The five-day training designed to enhance their skills, deliver better services, and improve the quality and safety of backcountry tourism, included a mix of classroom studies and a two-day mountain trek at an altitude of 2,300 meters in Jyrgalan, which gave BGI’s newly established guest houses the opportunity to test their hospitality skills with full houses over a three-week period. This was the first large-scale trekking guide training in Kyrgyzstan, which the KMGA intends to continue in the future. DMO Website Development BGI Third Year Work Plan, Tourism, Activity 2.7 During the first quarter of 2017, BGI worked with tourism consultants to build the website infrastructure for the Karakol and Jyrgalan DMOs in the easy-to-use, open source Word Press website development template. Nevertheless, after hiring two local companies to work with modular, plug-in software, to ensure that the sites can be easily updated by the DMOs, BGI remained unpleased with local performance. As a result, BGI hired an international free-lance developer to complete the assignment. The plan was first to build the underlying website infrastructure for Karakol, then adapt the basic framework for all destination websites. As of the end of FY2017, the Karakol website is nearly complete and ready for testing. BGI expects that the framework for all websites will be completed by the end of the calendar year. BGI also hired an experienced travel blogger and writer to draft the content in native English for the websites. She visited all Kyrgyz destinations in July and the content for Karakol is nearly completed. She is also in the process of drafting content for all destinations and is working on the esthetic formatting of the Karakol site and its search engine optimization, for which she is a specialist. Once the website architecture is completed, she will conduct training for all the DMOs on how to update the site and keep it current. Bishkek Audio Walking Tour BGI Third Year Work Plan, Tourism, Activity 2.7 In August, BGI finalized and launched the first free audio guide to enable tourists to take a walking tour of the city of Bishkek. Established on the free storytelling platform, izi.TRAVEL, the guide highlights the city’s primary points of interest to enrich the sightseeing experiences of visitors to Kyrgyzstan. Tourists can easily access the audio guide by installing the izi.TRAVEL mobile application on their smart phones. The Izi.TRAVEL application enables content providers worldwide to easily create multimedia guides for travelers.


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The Bishkek audio guide includes a map of the 15 city attractions featured in the application. If the mobile tracking function is on, the corresponding audio starts automatically once the tourist approaches the site. Each page in the app provides images of the site with the full text of the audio. The audio tour is available in English and Russian languages and will soon be offered in Turkish as well. The Bishkek walking tour leads tourists through the most noteworthy sights in the center of Kyrgyzstan’s capital, starting from Victory Square and ending at the National Philharmonic Theater. Users may listen to the story of each place, including its origin, cultural significance, and current function or use. The purpose of the audio guide is to make Bishkek a more enjoyable destination for visitors by enabling them to tour the city conveniently on their own. It is a useful tool for solo travelers who may be reluctant to engage a personal tour guide to conduct excursions for one individual. Since its launch, the Bishkek audio guide has been downloaded a total of 166 times, 79 times in English and 87 times in Russian. It has received four five-star reviews so far in English. In the next few months, USAID BGI intends to develop similar audio guides for Osh and Karakol, which are destinations the project is working with to develop tourism throughout Kyrgyzstan. Museum Capacity Development Investment Partnership Projects BGI Third Year Work Plan, Tourism, Activity 2.13 In November 2016, BGI conducted a Museum Demo Day to mark completion of its Museum Capacity Development Program implemented in partnership with the Center of Museum Initiatives (CMI). Museums presented specific projects that they have identified to promote Kyrgyzstan’s cultural and historical heritage by creating contemporary exhibitions and ultimately attracting more visitors. The Demo Day was designed to attract potential investors from the private sector, donor agencies, and other organizations interested in promoting tourism and cultural heritage preservation by providing funding for these projects. At the Demo Day, the opening speech was delivered by US Ambassador to the Kyrgyz Republic, Sheila Gwaltney, followed by Member of Parliament Irina Karamushkina, who has a keen interest in promoting cultural heritage. Prior to individual presentations by participants in the Museum Capacity Development Program, Gulnara Kalikova of the Kalikova & Associates Law Firm spoke on the need for business leaders and philanthropists to support the further development of museums and their exhibitions to promote cultural heritage as a key component for attracting tourists. BGI and Center of Museum Initiatives has worked with museums to promote partnerships with investors of projects presented on Demo Day and will provide co-funding to museums that are able to obtain additional funding from other sources. BGI has also worked with students who are alumni of the US Government exchange program, FLEX, to help museums in writing grant proposals to seek investment from alternative sources. During the second quarter of 2017, BGI received 13 concept papers as a result of sponsoring Museum Demo Day in November 2016, of which four were selected for submission of full grant proposals. Two others were selected to receive micro purchase contracts to implement their concepts. Those selected were based on feasibility of project, cost-benefit assessment, and whether they were located in a BGI-sponsored DMO.

Museum Project Name Total

Project Cost

Investor Request of BGI Status


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Museum Project Name Total

Project Cost

Investor Request of BGI Status

Przhevalsky Museum, Karakol

Book on the Life and Travels of the Russian Geographical Explorer

Nickolai Przhevalsky $2,200 Museum

Funds $2,000 Award TBD

Naryn Regional Historical and Ethnographic

Museum

Center for the Study of Traditional Ethnic Kyrgyz Cuisine $18,000 Restaurant

Group $11,050 Awarded –funded only

$3,500

Kurmanjan Datka Museum, Gulcha,

Alai Region Center Demonstrating the Making

of Handicrafts $9,650 Construction Firm $4,950

Awarded – funded only

$3,500

Suleyman-Too Museum Osh

Expand the pilot for which the Osh Fine Arts Museum previously received a grant to create and

stock a museum shop

$10,080 Amanat Omur NGO $7,290 Awarded –

funded

Uzgen Archaeological-

Architectural Museum Complex

Expand tours within the town of Uzgen, develop branding for Uzgen

and Uzgen rice $16,000 PE Askarov $10,000 Awaiting full

proposal

By the end of FY2017, BGI had issued grants for implementing the following projects: Book on the Life and Travels of the Russian Geographical Explorer Nickolai Przhevalsky The text of the book in Russian and English has been drafted and heavily edited and the layout designed and approved. It is set to be printed in October 2017 for the eventual sale to museum visitors as a source of income for the museum. Center for the Study of Traditional Kyrgyz Cuisine, Naryn The Naryn Regional Historical and Ethnographic Museum has created a tour product that introduces visitors to Kyrgyzstan’s ethnic cuisine. The tour product will enable visitors to participate in preparing besh barmak and other savory specialties, learn of the traditions surrounding the preparation of Kyrgyz nomadic cuisine, and sample the results of their culinary experience. A group of restaurants that specialize in delivering ethnic culinary experiences, provided a contribution to co-invest with USAID in renovating the museum’s premises and investing in furniture, equipment and supplies. The museum introduced the Naryn tourism community to the availability of the tour through an open house held in September. Center Demonstrating the Making of Handicrafts, Gulcha, Alai Region The Alai Museum of Kurmanjan Datka received a grant to launch a center for local artisans to demonstrate the making of national handicrafts. Tourists will not only observe the process of crafting traditional handworks, but also participate in the making of kalpaks (men’s traditional felt hats), felt toys and ornaments and other crafts. Co-investment by a local construction firm will enable the museum to renovate space for creating the interactive tourism experience and a museum shop in which visitors can purchase traditional souvenirs. The project will generate revenues for the museum to invest in strengthening its exhibitions while providing an additional channel of income for local artisans. Launch a Museum Shop with Replica Souvenirs of Kyrgyzstan’s Museum Collections The Suleyman-Too Museum in Osh has begun building on international museum trends by opening a shop on museum premises to sell replicas of Kyrgyz artifacts and souvenirs depicting images of national treasures. The goals of the grant are to popularize the collections of Kyrgyzstan’s museums to tourists and expand sources of revenue for museum maintenance. The project has engaged numerous local arts


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and artisans to create museum pieces for sale such as jewelry, scarves, coffee mugs, t-shirts and other souvenirs popular with international visitors. The products will also be available at the Tourist Information Center created by Destination Osh, also supported by USAID BGI. Participation in International Tourism Fairs BGI Third Year Work Plan, Tourism, Activity 2.6 BGI sponsored participation in seven international tourism exhibitions FY 2017 – WTM in London, FITUR Tourism Fair in Madrid, the Eastern Mediterranean Travel and Tourism (EMITT) Exhibition in Istanbul, the ITB Tourism Exhibition in Berlin, the Moscow International Trade and Tourism (MITT) Exhibition, and the Uzbekistan International Tourism Fair (UITF) in Tashkent. BGI provided limited assistance for Jyrgalan DMO members to participate in the Kazakhstan International Tourism Fair (KITF) in Almaty and assisted the Association of Kyrgyz Resorts (AKK) to sponsor its annual International Tourism Fair in Cholpon-Ata. World Travel Market London – November 2016 Representatives of four Kyrgyz tourism companies successfully exhibited at the World Travel Market (WTM), one of the world’s largest tourism shows that takes place annually in London. From November 7-9, 2016 members of the Kyrgyz Association of Tour Operators (KATO) met with potential partners, discussed foreign tourist expectations, scouted global competitors, and signed contracts with several European counterparts. The number of contacts and contracts in 2016 were significantly higher in comparison to the results from the WTM 2015. More than 3,000 people visited the Kyrgyzstan booth during the exhibition in London. Participation in the event helped to identify that foreign partners are primarily interested in ecotourism and package tours with Uzbekistan and Kazakhstan for Silk Road experiences. During the speed networking session, the BGI team also met with digital influencers interested in highlighting Kyrgyzstan as an attractive tourism destination. Kyrgyz tour operators showcased a presentation on Kyrgyzstan tourism opportunities to potential counterparts, which presentation raised awareness of new travel opportunities and destinations in Kyrgyzstan for foreign partners. FITUR Tourism Fair in Madrid – January 2017 In January 2017, BGI also supported the Kyrgyzstan exhibition space at the FITUR travel show in Madrid on January 18-22, 2017, which promoted overall travel to Kyrgyzstan and the World Nomad Games (WNG) 2018 to potential Spanish tourists. Deputy Minister of Culture and Tourism, Azamat Dzhamankulov and a WNG representative met with Juan Antonio Samaranch, Vice President of the International Olympic Committee, to discuss future promotional support by the Olympic committee for Kyrgyzstan’s WNG. While in Madrid, Mr. Dzhamankulov also took the opportunity to meet with Taleb Rifai, Secretary General of the United Nations World Tourism Organization (UNWTO), which was the first official visit from a representative of the Government of the Kyrgyz Republic, where both parties agreed to collaborate in the UNWTO’s Silk Road development program and areas of other technical cooperation. Eastern Mediterranean Travel and Tourism (EMITT) Exhibition in Istanbul – January 2017 The presentation of a Kyrgyz yurt helped capture an award for the most authentic exhibition space at the Eastern Mediterranean Travel and Tourism (EMITT) fair that took place in Istanbul from January 26-29, 2017. Kyrgyzstan exhibited for the first time as part of BGI’s program to attract more visitors from Turkey. Kyrgyzstan’s booth helped seven Kyrgyz inbound tour operators bring Kyrgyz travel experiences to life for potential trade clients and consumers at Turkey’s largest tourism exhibition. This year, more than 46,000 visitors from 80 countries participated in the exhibition. In partnership with a Turkish travel and media firm, USAID hosted several promotional events at the exhibition to generate additional interest in Kyrgyzstan among tour operators, tourism bloggers and the traditional media. More than 14,000 people visited the Kyrgyzstan booth, and Kyrgyz tour operators negotiated 42


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potential contracts with Turkish counterparts for the 2017 summer season, who next fall will report on the increase in Turkish visitors as a result of participating in the EMITT exhibition. In February 2017, BGI presented the activities and results to date of all programs to increase Turkish tourism to Turkish Ambassador to the Kyrgyz Republic, Metin Kilic, as well as Turkish Commercial Attache and representatives from Manas University, Turkish Airlines, and Pegasus Airlines, ITB Berlin International Tourism Exhibition – March 2017 A Kyrgyz yurt was also the centerpiece of Kyrgyzstan’s exhibition space at ITB Berlin, where Kyrgyzstan placed sixth in its category from a field of nearly 1,100 exhibition booths in 11 categories at the world’s leading travel fair that hosted more than 100,000 visitors from March 8-12, 2017. The yurt attracted countless visitors and also doubled as a meeting space where Kyrgyzstani tour operators exchanged business contacts with more than 1,200 potential partners and finalized 31 contracts with European tour operators. Kyrgyz participants estimated that at least 10 percent of all exhibition visitors stopped by the Kyrgyz stand over the five-day event. Participating in the exhibition for the first time included three founders of Destination Karakol, a destination management organization (DMO) supported by BGI. BGI also sponsored a promotional event for media at which 50 travel influencers were eager to glimpse authentic nomad culture and sample traditional food, drink, and music. BGI staff also conducted more than 40 travel influencer meetings during the exhibition to select candidates for participation in the project’s summer familiarization tour program. Moscow International Trade and Tourism (MITT) Exhibition – March 2017 At MITT from March 14-16, 2017, the Kyrgyz yurt won a trophy for Best Representing a Tourism Destination for the 10 exhibiting tour operators and hotels by winning. Two members of Destination Jyrgalan Valley, another USAID-sponsored DMO, also participated at MITT to promote its backcountry skiing and summer trekking offerings. Participants signed a total of 59 contracts with Russian counterparts during and immediately following the exhibition. Uzbekistan International Tourism Fair (UITF) – April 2017 With the Tourism Department and the Association of Kyrgyz Resorts, BGI partially funded participation of 13 tour operators and resorts in the UITF 2017 from April 13-14, 2017 in Tashkent. Two of these are members of the Osh DMO who participated with the goal of identifying Uzbek tour operators with whom to partner to offer combined Uzbekistan-Kyrgyzstan tours to foreign visitors. Kyrgyz resorts and tour operators signed more than 192 contracts of partnership with Uzbek tour operators, primarily to bring Uzbek citizens to Issyk-Kul resorts. But Osh DMO members found that there is significant interest in Osh as a tourist destination for Uzbekistan tour operator itineraries. Destination Osh partnership negotiations lead to the further involvement of the Kyrgyz Embassy in Tashkent in working with the Uzbekistan government on improving border crossing at Duslik/Dostuk border checkpoint. Another positive outcome from Kyrgyzstan’s participation in Uzbek International Tourism Fair was the decision to establish charter flights from Tashkent to Tamchy by Uzbekistan Airlines, which began service to Tamchy on July 4, 2017. Kazakhstan International Tourism Fair (KITF) – April 2017 Although BGI did not fund Kyrgyzstan’s exhibition space at the 2017 KITF from April 19-21, 2017, BGI did partially sponsor the participation of two representatives of the Jyrgalan DMO since Kazakhstan is a key target market for the DMO’s kymys treatment product offering. International Tourism Fair Cholpon-Ata – May 2017 BGI provided support to the Kyrgyz Association of Resorts for conducting the 2017 the Issyk-Kul Tourism Fair on May 5-6, 2017 in Cholpon Ata's Hippodrome as part of its ongoing tourism promotion and development work. Vice Prime Minister Cholpon Sultanbekova, Deputy Minister of Tourism


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Azamat Zhamankulov and USAID Mission Director Kimberly Rosen opened the festival at which more than 1,000 visitors participated and 120 tour operators from outside the country. The key purpose of the fair was to find resort partners and adventure tourism providers for the 2017 Lake Issyk-Kul summer season. Representatives of USAID-supported tourism destination organizations from Karakol, Osh and Issyk-Kul's south shore also exhibited to draw potential business partners to their destinations. Spring Festival at the Middle East Technical University (METU) in Ankara, Turkey – May 2017 BGI participated in the METU (Middle East Technical University) spring festival in Ankara from May 10-13, 2017. One of the top-rated universities in Turkey, METU annually organizes a spring festival that exhibits and demonstrates traditional art, culture and sports for students, faculty, staff, and alumni. Ankara-based Kyrgyz diaspora and students set up a full-sized, authentic Kyrgyz yurt with Kyrgyz folk music and dance performances and plov and boorsok for sampling. More than 6,000 attendees visited the Kyrgyz yurt, many of whom said that the yurt created excitement and a ‘wow’ factor about the country and appeared in numerous social media posts. Copies of Kyrgyz tourism brochures in Turkish were also distributed at the stand. Development of the Turkish Outbound Tourism Market BGI Third Year Work Plan, Tourism, Activity 2.8 Turkey’s cultural, historical and religious ties to Central Asia inspired BGI to undertake a study of Turkish outbound tourism to determine whether this shared heritage, the prevalence of Turkish investors and students, the accessibility of direct flights from Istanbul, and a burgeoning Turkish middle class would constitute a viable target for expanding Kyrgyz cultural offerings. Following the completion of this study, BGI undertook several initiatives to attract a greater number of Turkish tourists. Kyrgyzstan Days Cultural Promotional Program in Istanbul With a Kyrgyz association of former Kyrgyz students of Turkish universities, BGI also sponsored a series of events in Istanbul on November 2-5, 2016, to promote travel to Kyrgyzstan directly to potential Turkish tourists. These events include the following:

• Kyrgyzstan Cultural Day at Sahaf Festival, Taksim Square (Nov. 2); • Kyrgyzstan Cultural Night with the Turkish Travelers Club, Armada Hotel (Nov. 3); • B2B meeting between Kyrgyz and Turkish tour operators, TURSAB (Nov. 4); and • Kyrgyzstan Cultural Show at Ozdilek Park Istanbul Shopping Mall (Nov. 4-5).

The first event was a Kyrgyzstan Cultural Day at Istanbul’s Sahaf Festival in Taksim Square. BGI, with the assistance of Kyrgyz diaspora in Istanbul, erected a yurt at the entrance to the festival which displayed handicraft products by Kyrgyz artisans. Nearly 2,900 persons visited the yurt on November 2, 2016. Later that evening, BGI sponsored a performance by Kyrgyz folk musicians, Ordo Sakhna, played to an audience of 400-450 spectators. . On November 3, 2016, BGI sponsored a Kyrgyzstan Cultural Night with the Turkish Travelers Club (TTC) at the Armada Hotel. The TTC brings together more than 500 travelers who must have traveled to at least 10 countries and who are open to new travel opportunities. The event took place in two parts: an official program with addresses by guests such as: Azamat Zhamankulov, Head of Tourism Department of the Kyrgyz Republic and Cem Polatoglu, a senior TURSAB official. During the event, BGI showcased travel opportunities through a presentation on Kyrgyzstan’s key destinations. To support increased local media, the TTC and Azamat Zhamankulov presented a chalpon to Tamer Karadagli, well-known Turkish actor. Following the official program, a folklore musical groupplayed traditional Kyrgyz folk music during a dinner of plov, samsy and kymys provided by the Kyrgyz diaspora. Diaspora volunteers performed Kyrgyz folk dancing and Kyrgyz artisans held a fashion show of Kyrgyz national costumes. A small Kyrgyz yurt exhibition and photo corner was well attended by participants. The event ended with the raffle program and contact exchanges. The 'Kyrgyzstan Cultural


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Night' event was attended by 280 participants. Two Turkish TV channels, Istanbul 2 and Bloomberg HT, broadcasted the event; and six Turkish and two Kyrgyz online news portals covered the event. BGI also sponsored a Kyrgyzstan Cultural Show on November 4 and 5, 2016 at the Ozdilek Park shopping mall, located in the business center of Istanbul. More than 9,000 people visited the cultural program at Ozdilek Park over the course of the two-day event. Ozdilek Park promoted the event through its own marketing channels, such as through a giant LED screen outside the mall and through smaller ones located throughout the mall. Events included Kyrgyz yurt and handicrafts exhibitions, a Kyrgyz national costume show, Kyrgyz dances, and musical performances. The Turkish audience in attendance was thrilled by the common Turkic demonstrated through Kyrgyz music, songs, and handicrafts. In addition to the cultural program at the mall, BGI conducted a small survey of 109 visitors to the mall. Survey findings state that the event increased the awareness of Kyrgyzstan as a travel destination in general and that the younger generation is more likely to visit Kyrgyzstan in the near future. Tour Operator B2B with TURSAB In addition to the cultural events during the Kyrgyzstan Days in Turkey program, BGI worked with the Association of Turkish Travel Agencies (TURSAB) to organize a business-to-business (B2B) meeting for Kyrgyz and Turkish tour operators on November 4, 2016. TURSAB has a semi-governmental status as the association of more than 8,600 Turkish travel agencies. During the pre-arrangement trip in October 2016, TURSAB showed a high interest and offered its premises for organizing a platform where tour operators of both countries could meet and discuss opportunities for cooperation. Seven Kyrgyz tour operators, as well as representatives of the Karakol and Jyrgalan DMOs, participated in the B2B meeting. TURSAB invited ten tour companies to participate in the meeting. During the speed networking session following the formal presentation, both the Kyrgyz and Turkish tour operators had an opportunity to establish contacts with each other and discuss possible tour packages that could be arranged to accommodate the clients of Turkish tour operators. Most of the Kyrgyz tour operators participating in the B2B could converse fluently in Turkish, which impressed their counterparts and facilitated mutual cooperation. Three Kyrgyz companies agreed to collaborate with Turkish partners in 2017 as a result of the speed networking session. Several of the tour operators participating in the session participated in the Eastern Mediterranean International Travel & Tourism (EMITT) Exhibition in Istanbul in January 2017. Kyrgyzstan Historical Media Clips in Turkish BGI also developed a set of six short media clips in the Turkish language that highlight six historical sights of relevance and importance to Turkish tourists. These sights are: Burana Tower, Chingiz Aitmatov Museum, Ata Beyit Memorial Complex, Saimaluu Tash, Imam Sarakhsi Mausoleum, and Uzgen Architectural Complex. These videos were uploaded to USAID’s and BGI’s YouTube channels and utilized in further online promotional efforts, as well as at future fairs and events supported by BGI. (https://www.youtube.com/channel/UCHSLSNMnP0DK9l3vhTf2oTg) BGI also developed and printed the 'Kyrgyzstan’s Cultural and Historical Heritage' brochure in Turkish that reflects the highlighted six attractions and translated the '10 Reasons to Explore Kyrgyzstan' brochure into Turkish language for distribution during BGI’s promotional events in Istanbul described below. Istanbul Workshop and B2B for Turkish and Kyrgyz Tour Operators In preparation for conducting a familiarization tour for Turkish tour operators in July 2017, BGI engaged Kyrgyz association and with ties to Turkey and a Turkish travel and media company to conduct a country presentation and business-to-business (B2B) meeting with Turkish and Kyrgyz tour operators in Istanbul on May 24, 2017. Twelve Turkish travel companies and four Kyrgyz tour operators attended the workshop during which Turkish tour operators were introduced to Kyrgyzstan’s tourism products and business opportunities in tourism, and Kyrgyz tour operators had an opportunity to learn about their


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Turkish counterparts’ needs and expectations. One of the Turkish travel companies specializing in mountaineering expressed great interest in including Kyrgyzstan in its tour packages. During the workshop, participants enjoyed an archery show by a Kyrgyz Salbuurun archer and a komuz performance to paint the stage for a Kyrgyz experience. Ten of the 12 participating Turkish tour operators confirmed their participation in BGI’s familiarization trip. On May 24, 2017. the country presentation and B2B meeting between ten Turkish tour companies and four Kyrgyz tour operators was held in Istanbul, Turkey. The main goal of the activity was to raise awareness and trigger interest about Kyrgyzstan’s tourism potential among Turkish tour operators and present tour products offered by the Kyrgyz tour operators. This event served as an introductory platform to the FAM trip supported by BGI for Turkish tour operators interested in expanding their tours to Kyrgyzstan. It was noted by the Turkish and Kyrgyz tour operators that the networking event was fruitful. The interest from Turkish operators was high as they discussed development of new tour products with Kyrgyz stakeholders. Familiarization Trip for Turkish Tour Operators In conjunction with the B2B in May, BGI organized a FAM trip for eight Turkish tour operators from July 7-13, 2017. All four Kyrgyz tour operators, participants of the B2B meeting, were actively engaged in organizing the FAM trip logistics for the Turkish partners in the country. During the full 5-days trip, the Turkish tour operators experienced and tested various tour products offered in destinations supported by USAID BGI such as Osh, Karakol, Southern Shore and Naryn. Mainly their trip focused on cultural and historical tourism as Turkish people have cultural and emotional bond to Central Asia and its people, Kyrgyzstan in particular. Cultural activities centered on traditional Kyrgyz food, horse games, yurt-making and other nomadic traditions. Two months after the FAM trip Turkish tour operators were asked to complete survey to gather information on effectiveness of the FAM trip. According to the survey results:

• Number of companies that reached verbal agreements with Kyrgyz tour operators for 2018: 2 • Number of companies that are in the active process of discussing the partnership: 2 tour

companies • Estimated number of tourists coming to Kyrgyzstan in 2018: 260-310; • Type of tours attracting Turkish tourists: cultural tours, hiking, horseback riding; • Destinations to be visited: Bishkek, Cholpon Ata, Southern Shore, North Shore, Son Kul; • Recommended tour duration: 5-7 days; • Recommended average tour package price: $800-1300.

As a result of the trip, the Turkish tour operators gained broader picture of what Kyrgyzstan, as a perspective destination, has to offer to Turkish market and travel specifics that need to be considered while developing tour packages for the Turkish market. Emphasis on common Turkic cultural roots between two countries and cultural activities, such as eagle hunting, yurt stay, horseback riding, folklore, felt art should be made. Familiarization Trip for Turkish Bloggers Six high profile travel bloggers from Turkey arrived for a familiarization tour for June 2-8, 2017, some exploring Issyk-Kul and Son Kol areas and others touring Kyrgyzstan’s southern regions, with a focus on BGI DMOs. All six bloggers participated in BGI’s pre-EMITT exhibition workshop in January and were selected based on the impact of their audiences. During the trip, it was evident that their social media channels were actively followed by their readers, who ‘traveled’ with them through Kyrgyzstan through posting of Facebook and Instagram videos and photos. The bloggers once again confirmed that the key driver to visit Kyrgyzstan is the Central Asian roots of the Turkish people and their emotional connection to their 1000-year old roots.


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Initial results of the media campaigns are summarized below.

Familiarization Trip for Turkish Mass Media The last group of Turkish visitors came from August 7-13, representing traditional media outlets and leading Turkish travel magazines and newspapers, such as Hurriyet Seyahat, Atlas, Magma and TV channels Haber Turk and TV2. They spent a week exploring Kyrgyzstan’s cultural traditions as well as took part in some adventure hiking and horse trekking.

Media Channel Result Itinerary Teve2 (TV2) Journalist and Cameraperson

Çok Gezenti Program. Created 2 (two) 60-minute TV shows that will be repeated 5 times until May 2018.

Bishkek – Cholpon Ata – Karakol – Barskoon – Bokonbaevo – Kyzyl

Tuu – Son Kol – Burana - Bishkek

Haber Türk TV Journalist and Cameraperson

Airport Rota TV Program. Created 2 (two) 45-minute TV shows that will be repeated 5 times until May 2018.

Atlas Magazine Published one 17-page article. Hürriyet (largest Turkish daily newspaper).

Published one half-page article.

Familiarization Trip for International Bloggers – Summer 2017 BGI Third Year Work Plan, Tourism, Activity 2.7 As a part of BGI’s digitally driven promotional strategy, BGI hosted 29 travel bloggers and journalists from the US, Canada, Europe and Australia on tours this summer designed to introduce vast opportunities to experience nature, adventure and nomadic culture through visits to Kyrgyzstan. From May to October, BGI organized 22 individual itineraries that included USAID BGI’s newly developed hiking and biking trails, experiential tour products and other activities from throughout the country to highlight and promote Kyrgyzstan’s tourism offerings to international travel audiences. All participants have since been producing photo and video content for sharing through their social media channels. The initial results of their media campaigns are summarized below. The following table summarizes the initial results of the social media campaign for non-Turkish travel influencers:

Blog Name Total Blog Posts

Total Blog Posts Read

Count

Total Facebook

Posts

Total Facebook Interaction

s

Total Facebook

Reach

Total Instagram

Posts

Total Instagram Interaction

s

Total Instagram

Reach

Total Twitter Posts

Total Twitter

Interactions

Gezimanya 1 7,367 9 4,036 797,923 8 8,340 257,200 11 85

Yolda Olmak 3 5,036 11 27,480 1,900,000 11 33,602 420,000 7 150

Biz Evde Yokuz 3 2,062 4 8,790 526,112 9 68,800 972,700 7 145

Bir Hayalin Peşinde 2 1,418 10 8,343 568,392 12 39,513 557,100 11 52

Gezenti anne 3 N/A 9 913 N/A 12 20,593 N/A 11 29

Keşfet.tv 2 774 10 2,657 89,857 12 10,508 68,205 12 9414 16,657 53 52,219 3,882,284 64 181,356 2,275,205 59 555


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Social Media Campaign Content Delivered

Blogs 25 82 27Facebook 25 423 32

Facebook Video 1 25 6

Instagram 23 393 93Instagram Stories 5 248 -Instagram Video 1 3 0

Twitter 24 930 -

YouTube 8 47 19Pinterest 1 31 -Snapchat 1 45 -

Photos 6 656 -

Videos 1 2 -Total 2,885 177

Channel Number of Influencers

Content Delivered

Mentions of Intent to Visit Kyrgyzstan*

Initial Results of Social Media Campaign

Likes Views Comments Shares / Retweets Impressions

Total Engage-ments

Blogs NA 49,604 387 8,225 NA 58,216Facebook 77,904 695,799 1,326 1,131 1,382,943 2,159,103

Facebook Video 14,278 165,292 1,315 3,086 NA 183,971Instagram 385,872 NA 877 NA NA 386,749Instagram Stories - - - - - -

Instagram Video 1,260 NA NA NA NA 1,260Twitter 9,928 NA NA 2,250 1,727,229 1,739,407

YouTube 5,174 139,449 1,438 NA NA 146,061G+ 3,383 NA NA NA NA 3,383Total 497,799 1,050,144 5,343 14,692 3,110,172 4,678,150

Channel

Engagements

Partnership with the Adventure Travel Trade Association (ATTA) and Familiarization Tour BGI Third Year Work Plan, Tourism, Activities 2.7 and 2.14 From August 21 to August 27, six international tour operators from the United Kingdom, France, Netherlands, Australia and the United States spent a week in Kyrgyzstan seeking unique adventures and glimpses of alpine wildlife deep in the Tien Shan Mountains of Issyk-Kul oblast. The tour was part of a

Indicator Definition

Views Number of times a page had been opened and viewed

Likes Number of people who are following the page

Comments Number of people who wrote a response to the post

Shares Number of times a post is republished on other pages

Impressions Number of times a post has shown up in a person’s feed on that channel

Total Engagements

Total number of times a viewer has performed action on a page – like, comment, or share


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year-long partnership that USAID BGI kicked off with the ATTA to cultivate international tour operators as ‘advocates’ of the country and to work with Kyrgyz tour operators to improve their readiness to work with international partners. Adventure tourism is a rapidly growing segment of the international travel industry that globally attracts more than 1.6 million tourists annually. BGI worked with the international Adventure Travel and Trade Association (ATTA) to bring these visitors to introduce them to a more robust set of experiences than what they may have thought was available from tours in Kyrgyzstan. Although some of these tour operators offer travel itineraries to Kyrgyzstan, USAID BGI invited them to re-experience Kyrgyzstan as an adventure travel destination to entice them to promote an expanded number of tours. The following tour operator participated in this familiarization tour:

• SNP TRAVEL, Netherlands • KE Adventure Travel, UK • Exodus Travels, UK • Terres d'Aventure, France • Wilderness Travel , USA • World Expeditions, Canada

BGI engaged a Kyrgyz tour operator to arrange the itinerary in response to ATTA’s desire to introduce new and different experiences to their members. The group set off for the southern shore of Lake Issyk-Kul, where the visitors experienced their first real taste of Kyrgyz culture in the Jaichy jailoo, including besh barkmak, kok-boru, and Kara Jorgo. But their real destination was the Uch-Koshkon Valley, Solomo Gorge, Eshekart Pass at 4,200 meters, and the mountain passes of the Ak Shiyrak Range, where they alternately hiked, biked and rode horses to experience the wonders of the untouched environment. They trekked to high-altitude camera traps in search of the captured images of elusive wildlife, particularly the threatened snow leopard for which they were rewarded for their efforts. Returning to well-traveled terrain, the group visited Jeti-Oguz before heading to Karakol, where they sampled several of the new experiential tourism products developed by Destination Karakol. On their way back to Bishkek, they stopped in Kyzyl-Suu to participate in yurt-building and the making of Kyrgyz felt handicrafts. On August 28, BGI, ATTA and KATO hosted a Marketplace during which 20 Kyrgyz tour operators had the opportunity to meet their international counterparts and begin to build a relationship which could eventually lead to partnership. ATTA is following up this activity by offering a two-day training course in delivering adventure travel experiences that counterparts can offer to international clients. Prior to B2B meetings in July and August, BGI sponsored three webinars delivered by the Adventure Travel Trade Association (ATTA) to introduce Kyrgyz tour operators to deliver adventure travel experiences to international tourists. Drafting the Tourism Law BGI Third Year Work Plan, Business Regulation, Activity 5.1 BGI’s legal advisor continued providing consultative support to the Tourism Department and tourism business associations and stakeholders to improve the legal framework for the tourism development. The government’s work plan determined for the draft amendments to the Tourism Law to be developed by April 30, 2017. In October 2016, through the Order of the Minister of Culture, Information and Tourism #522 dated October 17, 2016, the legal advisor was formally included as the member of the Working Group for Drafting the Tourism Law. She held meetings with the leading tour companies,


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associations and private entrepreneurs to discuss the existing tourism issues from the legal perspective and developed two versions of proposed tourism law structure. The efforts resulted in the Draft Law on Tourism, consisting of 43 articles, submitted to the Tourism Department on February 23, 2017. The law was drafted in line with the norms of international legislation on tourism and in accordance with the state policy in the tourism industry. The authors took into account the requirements and provisions of the National Strategy for Sustainable Development of the Kyrgyz Republic for the period 2013-2017, the Government Tourism Development Program until 2020 and other strategic state documents. The draft law recommends to clearly delineate the responsibilities of the national government, local governments, associations and commercial organizations working in tourism. It provides for the functions, rights, duties and responsibilities of each stakeholder group. In addition, 22 new concepts and definitions were introduced, such as destination, tourist zone, tourist market, camping and other terms. The draft law provides for the classification of tourism forms and types, using international terminology and identifying the principles and priorities in tourism development. The proposed law will create the legal framework for organizing tourist information centers, tourist zones, and camping sites and centers. It also defines the range of activities of tour operators, travel agents and individual entrepreneurs in the tourism sector. Upon review, the Tourism Department will organize public discussion of the proposed law with all tourism stakeholders. During the second quarter of 2017, stakeholders participated in numerous public meetings to discuss the draft law. On May 25, 2017, the draft was posted on the Ministry of Culture, Information and Tourism’s website, and on May 31, 2017, the website of the Government of the Kyrgyz Republic. The Tourism Department held a public discussion of the proposed law with all tourism stakeholders to incorporate the business community’s comments. Following this, the Tourism Department initiated the process of approval of the new law with 11 ministries and four state agencies and services. Positive feedback was received from 12 state agencies along with the signed approval letters. The draft law will be submitted to the Parliament upon completion of the approval process with all ministries and agencies. Another law was drafted to initiate amendments and additions to other laws and regulations, such as the Law on Local Self-Government, the Code on Administrative Responsibility, and the Tax Code, to bring them in line with the New Tourism Law. BGI’s Lawyer prepared the package of necessary documents for both draft laws, including the Government Resolutions, Justification Letters, RIAs and the Comparative and Summary Tables.

5. Construction Materials Value Chain

Support to the Kyrgyz Stone Association (KSA) BGI Third Year Work Plan, Construction Materials, Activity 3.1 BGI provided a grant to the KSA to provide partial start-up and operational funding (approximately 70 percent) to enable the association to offer effective business services to a core group of 16 fee-paying members, primarily producers and processors of travertine. In the fourth quarter, however, KSA recruited an additional four members to the association. During year, the executive team, with select KSA members, met with various government officials to present the goals of the association and to solicit overall support for sector development. They held meetings with:

• Deputy Head of the Government Office and Representative of the Kyrgyz Republic in the Eurasian Economic Union, Mr. S.B Umetaliev;

• Director of the Committee for Industry, Energy and Mining (formerly Geology Agency), Mr. D.T. Zilaliev;


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• Head of the Department of Industry, Energy and Mining Sector of the Prime Minister's Office, Mr. A.A. Akmataliev; and

• Director of the Investment and Export Promotion Agency, Mr. O Alymbekov. The KSA also participated in the conference, "Four Degrees of Freedom of the EAEU: The Movement of Goods, Labor, Services and Capital, Experience and Lessons Learned," which took place on November 24-25, 2016 in Bishkek. The KSA made a presentation at the conference and discussed its future activities with Deputy Minister of Economy A. Sazbakov, and representatives of the Eurasian Economic Commission. In December 2016, the Association conducted two meetings with members in Bishkek on December 6, 2016 and in Jalalabad on December 13 to review the mission statement, goals and objectives of the association, the results of 2016 activities and the proposed work plan for 2017. At the meeting, the membership decided to convene a general assembly for KA members in February 2017. At this meeting, the KSA also collected 5,000 som in dues from each of 16 members of the association to show good faith in supporting the operations of the association. On December 22, 2016, KSA’s management made a similar presentation to BGI management. BGI determined that it will continue to support the association on institutional and human development and fulfillment of its activity, believing that Kyrgyz Stone Association will carry out marketing activities and quality and technology improvement in order to continue to develop the Kyrgyz stone industry and represent the voice of the stone industry abroad. The association conducted a preliminary review of the priorities for improving legislation and the business environment of the stone industry by collecting recommendations and suggestions of its members. Throughout the year the association worked to introduce protective duties on the sale of raw stone materials, slabs in other countries besides the EAEC as raw material. In order to protect the domestic commodity market and ensure stable operation of stone processing enterprises, the association lobbied for amendments to the Law "On Customs Tariff of the Kyrgyz Republic," which resulted in adopting export duties of not less than EUR 50 per 1000 kg. on the export of raw stone materials from the Eurasian Economic Union. The association also conducted preliminary consultations for releasing stone processing companies from VAT following the example of the dairy and milling industries, and reducing royalties on mined stone. The association has also launched discussions with the mayors’ offices of Bishkek and Osh on improving the architectural appearance of buildings on the main streets of the cities. On February 2, 2017, KSA conducted a meeting with Vice Prime Minister Oleg Pankratov to introduce him to the current challenges and opportunities in developing the decorative stone industry in Kyrgyzstan. During this meeting, KSA asked for intergovernmental support to the sector's development. As a result, the Kyrgyz delegation raised these issues during 19th session of the Kyrgyz-Russian Intergovernmental Commission on Trade-Economic, Scientific-Technical and Humanitarian Cooperation held on February 17, 2017. Mr. Pankratov also created an interdepartmental working group, which first met on March 15, 2017 during which Executive Director Stanislav Karpovich requested that the group assist in improving the busienss environment for stone producers and pave the way for expanding the Russian market for Kyrgyz stone. As a result, the State Committee on Industry, Energy and Mining sent a letter to the Russian Ministry of Trade with the request to support a road show of Kyrgyz stone companies in promotion presentations in Russia planned for the second quarter. Throughout the year, the KSA actively communicated with the Prime Minister’s Office and the State Committee of Industry, Energy and Mining to address key sector issues. In April 2017, the landslides that occurred in Jalalabad oblast forced the closure of key roads, which blocked access to KSA-member quarries. This closure has had a devastating effect on revenues of those members whose quarries were inaccessible from April until August, when the road was cleared and opened. The losses borne by the stone-cutting firms were estimated at 5 mln USD.


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Despite the critical situation that halted supply of the stone, KSA continued its market promotion efforts communicating with potential buyers and provided necessary information to them. These efforts resulted in a few contracts for the supply of Kyrgyz stone to Russia. Nevertheless, the following table presents sales of KSA's leading companies over the period: From June to August 2017, KSA Executive Team held meetings with the stone-cutting firms and attracted 4 (four) new companies to the Association as members. On September 21, KSA Executive Director made a presentation about the KSA activities and the development of the stone-cutting industry at the meeting of the Business Development and Investment Council chaired by Prime Minister Sapar Isakov and attended by Vice Prime Minister Tolkunbek Abdygulov, government officials and business associations. The KSA raised the most burning issues, including the road renovation, support of Kyrgyz Government in promotion of the Kyrgyz stone in Russia, reduction of the royalty rates for natural stone in Kyrgyzstan. On September 22, BGI and KSA met with Mr. Duyshembiev, Bishkek Vice Mayor, Mr. Bolot Usubaliev, Deputy Director of Bishkek Architecture Department and other responsible authorities to discuss the possibilities of increased use of the Kyrgyz natural stone in construction and maintenance in Bishkek. The Vice-Mayor proposed to improve two streets in Bishkek as a pilot project –Manas Avenue and Abdrakhmanov Street. Both sides agreed to work out ways of decorating the facades of the buildings in the city with Kyrgyz stone. Support Participation of Kyrgyz Stone Association in International Exhibitions BGI Third Year Work Plan, Construction Materials, Activity 3.2 WorldBuild Moscow Build Trade Show – April 4-7, 2017 From April 4-7, 2017, BGI supported the KSA’s exhibition at the WorldBuild/MosBuild Trade Show. Four stone companies and association management participated in the show, which is the largest exhibition of building supplies not only in Russia but also in Europe, with the active participation of global stone producers and well-known stone experts. The exhibition offered seminars on various aspects of the business of producing stone such as marketing, consumer trends and quality standards. KSA members prepared and brought samples of stone products such as flooring, exterior building tiles, interior tiles, and small sculptures made travertine, limestone and granite and their promotional materials to exhibit at the 12-square-meter booth. Russian buyers demonstrated significant interest in Kyrgyz stone. Based on meetings held at the exhibition and negotiation of potential contracts, KSA members expected that the exhibition would result in a minimum of 20 contracts, but the subsequent landslide prevented any of them from being concluded. It is expected that when the road reopens this summer, contract negotiations will be resumed. Moscow Stone Industry Exhibition – June 27-30, 2017 Four members of KSA participated in a subsequent trade show in Moscow from June 27-30, 2017. KSA displaced tiles, balustrades and other stone products and promotional materials at its booth. Kyrgyz stone producers conducted several business meetings with wholesalers and retailers and have begun to build relationships with these contacts. At the show, KSA learned that there may be an opportunity for Kyrgyz stone producers from a potential project considered by the Moscow city government to restore the old historical appearance of the city with use of limestone facades. It was estimaed that approximately 300 guests visited the Kyrgyz stand. Participation in both exhibitions confirmed the interest in Kyrgyzstan’s stone products. The statistics of the Kyrgyz booth attendance and interest showed that there are specific regions and cities facing a construction boom and are actively seeking stone products for facing, flooring, and decorative designs. As a result, KSA made a quick desk research on the Russian market for natural stone, which showed that Kyrgyz stone-cutting firms generated around 30 million dollars (2016) in sales of natural stone. 90% of


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stone is exported, and only 1% of that is exported to Russia. The desk research conclusions are as follows:

• The cumulative value of Kyrgyz stone that is sold to Russia is less than US $300,000 annually; • Kyrgyz travertine is being sold mainly by intermediaries at the Russian Cities Construction

Markets for small private buildings; • There are several Russian companies established by Kyrgyz entrepreneurs that have focused on

sale of Kyrgyz stone such as TM Stone in Moscow and Kyrgyz travertine in Novosibirsk; • There are some companies that use partnership agreements to sell their products. A Kyrgyz

company, Camelot Ltd, has been selling its products in the Saint Petersburg construction markets for the past few years.

• Russia is the most promising market for Kyrgyz stone producers.

6. Youth Initiatives

Sponsorship of JashtarCamp 2016 BGI Third Year Work Plan, Tourism, Activity 2.1 BGI provided a grant to the Institute for Youth Development to conduct JashtarCamp and Youth Week on November 7-13, 2016. On November 12-13, 2016, more than 4000 youth from 12 cities of the country joined the eighth annual ‘JashtarCamp 2016’ National Conference and Youth Week to celebrate youth activism and engagement in entrepreneurship, tourism development, arts and culture promotion, media and journalism. The events sought to inspire and motivate young citizens to apply their entrepreneurial skills and competencies in business and tourism. Other objectives were to provide a practical platform for youth to discuss issues of relevance to their lives, exchange experiences, and obtain inspiration and motivation from other young people through their interesting and successful stories. Outstanding national leaders in business, government and civil society shared their experiences, and leading companies opened their doors to host young entrepreneurs to learn about business and internship opportunities. Sapar Isakov, Head of Department of the Foreign Policy Office of the President of the Kyrgyz Republic greeted the participants and presented a country development strategy entitled ‘Smart Country’ that aims to promote government transparency and create a strong business enabling environment. He noted that tourism can be a potential engine of the economy and stimulate growth. JashtarCamp was first organized in 2009 in Bishkek. In 2016, the JashtarCamp celebrated its 8th anniversary in 12 cities of Kyrgyzstan and became one of the largest youth events in Central Asia. During the last years more than 10,000 young people participated in the camp. Results from the a Grant to a Small Business Start-Up Fund BGI Third Year Work Plan, Tourism, Activity 2.1 In the second quarter of 2017, the fund completed its grant program and reported the following achievements:

• In 2016, one of the enterprises was able to generate revenues of 1.7 million KGS (US $24,600) with customers from the US, Australia, Germany, Switzerland and England. The company was invited by Techgarden from Kazakhstan to participate in its business acceleration program, and its principals were able to meet with startups from all over the region. They are currently in talks to receive additional investment.

• Another enterprise won the Ataturk Alatoo International University’s startup competition and received US $2000 USD in investment funds. In addition, the enterprise also won 50,000 KGS (US $725) in the Tabyshker competition organized by a Kyrgyz youth NGO;

• Bravolab fashion studio is now focusing on selling their products to clients Russia and Kazakhstan. It is currently building a website based on shopify.com's framework and wants to


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offer a space for selling famous local designer brands. It is hoping to increase sales significantly using this approach;

• NomadDoors is actively working on establishing a partnership with tour operators in Karakol and Naryn;

• Kulun has pivoted to a new idea, but its team is still strong and working together. The team is working on an artificial intelligence product that designs logos and banners for advertisers;

• Ideagrad leadership met with ACDI/VOCA and Village Capital to discuss potential collaboration to promote investment activities in Kyrgyzstan and developing local angel investors;

• Ideagrad recruited a variety of new mentors to brainstorm ideas with startuts and advise its young entrepreneurs who an advise and brainstorm with startups;

• Ideagrad established a variety of new partnerships with stakeholders within the region and abroad that will help it and its startups learn new methods and expand business networks;

• Several local stakeholders within Kyrgyzstan joined the company's network when they conducted the tourism hackathon in collaboration with a local IT NGO.

The company was also able to streamline its own business processes in interacting with its portfolio startups through a newly developed rating system. Tourism Hackathon BGI Third Year Work Plan, Tourism, Activity 2.21 Through a BGI grant to this startup fund, the company, in partnership with an IT NGO, initiated a Travel and Tourism Hackathon to engage Kyrgyz youth in creating products to enhance tourism or in finding solutions to challenges in tourism development. Prior to the Hackathon launch at the American University-Central Asia (AUCA), organizers conducted four ‘Ideation’ Sessions with the involvement of local and foreign experts and businessmen working in tourism to familiarize the Hackathon participants with existing issues and to brainstorm ideas on potential projects. The Department of Tourism, the Trekking Union of the Kyrgyz Republic (TUK), the Kyrgyz Association of Tour Operators (KATO), and the Association and Community-Based Tourism (ACBT) attended Ideation Sessions and shared their views on the tourism sector in Kyrgyzstan. The Hackathon took place over the weekend of December 2-4, 2016. By the launch of the Hackathon, participants had formed into eight teams. Over the weekend, the teams developed versions of six smart phone applications, and on Sunday evening they presented a demonstration of their applications to a team of judges, potential investors and fellow hackathoners. Applications included the following:

• Myth: An online map with information and icons of cultural artifacts across the country; • Chak-Chak: A smart-chat app for tourists who arrived to the country and do not speak local

languages. It provides information and guidance for tourists online, including restaurants, taxi, tours, guides ,etc.;

• Wishmaster: An app that provides guidance as to the various cultural activities that tourists can engage in;

• ZorGuide: Enables tourists to find an appropriate tour guide, depending on the type of guide requested. It describes the skills and knowledge of different guides;

• Challengers: Based on the game, “Pokemon Go,” this app is structured as a game through which tourists can ‘challenge’ themselves to participate in various cultural experiences or tasks while touring throughout Kyrgyzstan, and collecting ‘points’ that can redeemed for discounts in tourism services;

• Trelper: An online helper for travelers with an online chat function and catalog with services and products available for tourists;

Both the audience and the judges determined that the winner was Challengers. The team was given the opportunity to present their project at the upcoming Bishkek Investment Forum on December 8. The


53

second prizewinner received a promising offer for a potential partnership from one of the judges, the initiator of a well-known picvpic.com online sales platform.

7. Tax Policy and Administration

Participation in Fiscal Policy Working Groups BGI Third Year Work Plan, Tax Administration, Activity 4.10 Tax Policy and Administration activities remain suspended, but BGI’s in-house tax expert continued her work as a member of various tax commissions and working groups. The tax expert worked with the Inter-ministerial Committee established by the Prime Minister’s Resolution #512-r dtd 11/25/2016 to develop the National Fiscal Policy Concept for 2017-2040. On June 13, 2017, the Parliamentary Fiscal and Economic Policy Committee approved the proposed Fiscal Policy Concept and sent it to the Kyrgyz Government for ratification. This Committee was also tasked to review the New Tax Code which had been drafted by the Expert Group and to advise on further actions given the business community’s resistance to the adoption of the New Tax Code. Having held a series of meetings with the private sector, the Committee recommended to the Government to withdraw the New Tax Code from the review process and instead to make necessary changes to the relevant articles of the current Tax Code. She worked with another working group chaired by the 1st Vice Prime Minister of Kyrgyzstan Mr. Abulgaziev (established on June 30, 2016 by PM’s Order №354) to analyze the mechanisms for tax administration, non-tax and customs payments, and possible reserves for replenishment of the state budget. The group developed the Action Plan listing the measures that could generate additional revenues to the state budget in 2017. The proposed Action Plan was approved by the Prime Minister through his official resolution # 17-12 passed on February 3, 2017. As part of the Tax Incentives Working Group, created by the Ministry of Economy, she conducted an assessment of the budget impact of the existing tax incentives in pursuance of the Government Resolution on assessment of the effectiveness of the existing tax incentives (# 646 dated December 8, 2016). She also participated in an international conference in Minsk, Belarus, on the VAT collected from electronic services and e-commerce activities, organized by OECD. The conference was attended by the Tax Service professionals from Russia, Belorussia, Kazakhstan, and Azerbaijan. The Kyrgyz delegation included experts from the Ministry of Economy and State Tax Service, including other independent tax experts. Following participation in the conference and learning about new international practices on E-commerce VAT taxation, the decision was made to draft the Concept for Taxation for E-services and E-commerce in the territory of the EAEU that would be applicable to all EAEU member-countries. BGI’s tax expert made a presentation for the local staff of the US Embassy in Kyrgyzstan and the USAID Mission on personal income tax payments and social insurance contributions required to be paid by the employees of these organizations who are the citizens of the Kyrgyz Republic. Simplified VAT Administration System BGI Third Year Work Plan, Tax Administration, Activity 4.10 In line with the new VAT amendments signed into law on August 12, 2016, by the President, on November 7, 2016, the State Tax Service began assigning serial numbers to VAT invoices, thereby replacing paper VAT forms. This step has now completed VAT administration reform that was supported by BGI prior to the suspension of these activities. On November 4, 2016, the Kyrgyz Government issued Resolution #569 brining current regulations in line with adopted tax amendments, approving new VAT invoice forms, and establishing procedures for assigning serial numbers to invoices. On November 7, 2016, the State Tax Service began assigning serial numbers to VAT invoices, thereby replacing paper VAT forms. This step has now completed VAT administration reform that was


54

2 0 1 3 Г 2 0 1 4 Г 2 0 1 5 Г 2 0 1 6 Г 2 0 1 7 Г

290,798 311,396 331,920 351,707 379,091

NUMBER OF TAX FILERS

supported by BGI prior to the suspension of these activities. On November 4, 2016, the Kyrgyz Government issued Resolution #569 bringing current regulations in line with adopted tax amendments, approving new VAT invoice forms, and establishing procedures for assigning serial numbers to invoices. The new VAT administration procedure allows both taxpayers and tax authorities to save time and money that used to be spent on obtaining, recording and using paper invoices. Moreover, the new process will reduce needless reporting on the use of paper invoices. According to STS data, taxpayers annually paid 3.8 million som for the production of paper VAT invoice forms. On December 27, 2016, the Government through its Resolution # 702 approved into action new Regulations for Registration of VAT Taxpayers. The new procedure for registration of VAT taxpayers will assist to detect and struggle pseudo-entrepreneurship through a survey of taxpayers during the process of voluntary VAT registration that is aimed to validate the reliability of doing business. Grant for Bishkek/Chui Property Tax Calculations BGI Third Year Work Plan, Tax Administration, Activity 4.5 BGI awarded a grant to an IT firm to develop an automated system of property tax calculation for the company’s website. The company developed the software for online completion of tax returns on movable and immovable property in Bishkek, including the land tax for taxpayers in Chui oblast. The objective of the grant project was to facilitate the filling and submission of tax reports by individuals and individual entrepreneurs, including those operating in BGI’s target value chains. To develop the software, the company collected the zone coefficients for each aiyl okmotu approved by local deputy councils as well as data on the population of each village in Chui oblast. The grantee undertook market research on the use of internet by the population to determine the level of demand in online filling and reporting. The firm interviewed 435 citizens and individual entrepreneurs in Bishkek, including 100 local market traders, 54 owners of hairdressers’ shops, 24 car cleaning shops, 54 café owners, 101 real estate owners, and 102 vehicle owners. The survey showed that 81% of the respondents use the internet, 66% file their tax declarations and 53% are ready to use the services of professionals when filing tax returns and reports. The new online tool was launched in June 2017. During the first 4 months until September 21, the web-site was visited by 10,612 people, of them 6,978 people visited the web-site in August to find out more about the property tax due on September 1. The number of taxpayers who used new on-line services for the tax form completion and tax calculation increased almost 10 times reaching 2,059 compared to 219 people in 2016. Overall, tax revenue from movable property taxation in 2017 increased by 3.5% or 20.3 million KGS compared to 2016, while revenue from real property taxation increased by 10.4% or 49 million KGS. This grant activity also supported BGI’s prior activities on raising public awareness about the mandatory annual tax filing by individual entrepreneurs and individuals who own movable and immovable property. The grantee implemented an information campaign about new online sources of tax information, in addition to the Tax Service web-site, through which the taxpayers may learn about tax compliance requirements. 35,000 booklets and 100,000 flyers were printed and distributed in Bishkek and Chui oblast, along with the ads posted on the most popular social media resources such as Akipress, Dizel, Facebook, and Instagram and in local media – newspapers and TV channels. As a result, the number of tax filers – individual entrepreneurs and individuals - in 2017 increased by 27,400 compared to 2016. For the last three years, the number of tax filers increased by 22% in


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total or by almost 68,000.

8. Business Regulations – Licensing and Inspections

Reforms in Business Licensing and Permitting BGI Third Year Work Plan, Business Regulation, Activity 5.3 BGI’s legal advisor continued working with the Ministry of Economy and the Government to finalize the draft Law on the Licensing and Permitting System. BGI is the only international organization whose representative is invited to attend the government’s working group meetings by businesses. As a result of the meetings held, the explanatory notes to the Draft Law were edited, recommendations and additions were made to the comparative table, and some specific changes were recommended to the draft law. In June, 2017, following the approvals obtained by the relevant ministries, the draft law was submitted by the MoE to the Government. On June 13, the Government passed a Resolution # 369 to approve the draft law and subsequently submitted by Government to the Parliament for a new round of review. The draft law was reviewed by the Committee on Economic and Fiscal Policy. The similar readings are to be held in other relevant committees and upon successful readings in the committees is expected to be submitted to the Parliament by the end of 2017. Strengthening Public-Private Dialogue BGI Third Year Work Plan, Business Regulation, Activity 5.4 On August 8, 2016, BGI awarded a grant to the Secretariat of the Business Development and Investment Council to strengthen existing regional investment councils to support public-private dialogue in Osh and Naryn oblasts. These Councils had been established through the support of the USAID REFORMA Project in 2014. Regional Council meetings in both oblasts will be held quarterly to give local businesses the opportunity to raise obstacles to business with local authorities. Issues unable to be resolved at the local level will be brought to attention of the national government and voiced at meetings of the National Business Development and Investment Council chaired by the Prime Minister. Naryn The first meeting took place on October 4, 2016 in Naryn, where Governor Amanbay Kaiypov presided over 50 representatives of business, government and local authorities. Among discussion of access to finance and other issues, the agenda also focused on the challenges of tourism development in the oblast. Tourism development faces difficulties in further expansion due to Naryn’s remoteness, harsh climate and poor infrastructure for tourists. Participants proposed to create an inventory and data base of tourism services, develop an electronic map of possible tourist itineraries, and create an association of tour operators and handicrafts. BGI intends to work with stakeholders to identify ways to draw them into the project’s overall support for tourism development and promotion. Additionally, the Secretariat launched an Entrepreneurship Support Center in Naryn, with the support of BGI and GIZ. The center will provide business services to local entrepreneurs and maintain a comprehensive database of local businesses, agencies, NGOs and donor organizations. Local businesses may seek information on recent legislatives changes and receive consultation on business registration, re-registration, taxation, and other services. On February 17, 2017, the 9th meeting of the Regional Investment Council was held in At-Bashi region of Naryn oblast chaired by Governor Amanbai Kayipov. The participants raised issues related to improving the business environment and investment climate in Naryn oblast, construction of a trade and logistics center in At-Bashi region, activities of the Kamkor brick production enterprise in At-Bashi region, and the activities


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of small and medium-size enterprises. Participants were briefed on the activities of the Entrepreneurship Support Center in Naryn, which was recently opened under the grant with cooperation from GIZ. Creation of a tourism association in Naryn was discussed, which could unite 18 regional organizations working in the tourism sector. The Entrepreneurship Support Center began to provide legal consultation services to local entrepreneurs. The Center, jointly with the Chamber of Commerce and Industry, organized participation of Naryn oblast entrepreneurs in an exhibition of Kyrgyz goods in Uzbekistan scheduled for April. The Center helped GIZ to hold training on Green Technologies for Business for 100 entrepreneurs in February and in March. It was also involved in the development of a preliminary plan for a cluster-based business development initiative similar to Issyk Kul oblast and determined seven potential clusters in Naryn oblast. The Center served as an information center for local businesses and helped to distribute information about workshops organized by the Chamber of Commerce and Industry on the HACCP principles (ISO 22000: 2005) for food producers. It helped in organizing the participation of over 40 handicraft companies and individual artisans from Naryn oblast in the handicrafts fair in Novosibirsk, Russia, which began on March 17, 2017 and will run through mid-April. The Center, jointly with the University of Central Asia (UCA), MoE and Naryn Free Economic Zone, organized participation of 30 Naryn oblast businesses in the National Export Caravan event held in Talas, Bishkek and Naryn in March. Osh In Osh, the Secretariat held its first session of the re-established Investment Council on November 11, 2016. Attended by 26 representatives of business, government and local agencies, the council was moderated by Mr. Maksatbek Zakirov, Chief of Staff of the Governor of Osh oblast. Discussion centered around the need to establish a business support center for entrepreneurs, the availability of a local credit guarantee fund, and the rejuvenation of tourism sector through various activities of the BGI project. On February 22, 2017, the 6th Regional Investment Council meeting was held in Osh with the participation of 36 people. The participants discussed the need to support entrepreneurs in the regions, problems related to the functioning of labs for certification of agricultural products in Osh oblast, transportation problems in the southern region affecting tourism development, and problems of domestic investment in both the tourism and textile industries. The meeting was attended by representatives of the business sector, government, independent experts, mass media and others. A newly hired regional coordinator for Osh held meetings with the representatives of all donor organizations in Osh oblast – USAID, UNDP, GIZ, and OSCE – to coordinate activities in the oblast. Meetings were also held with all business associations in Osh oblast, including JIA, Legprom, Chamber of Commerce and others, to brief them on the principles of public-private dialogue and discuss the problems of the local business community. Also, with the representative of Osh government authorities, seven round tables were organized in Aravan, Nookat, Karak-Kuldzha, Ozgon, Kara-Suu, Chon-Alai and Alay to discuss their region-specific problems and ways to solve them. On May 24, 2017, the 7th Regional Investment Council meeting took place at which businesses raised the problems with the electricity supply to business entities, the work of the insurance companies and the business problems raised by the local Entrepreneurs’ Union. At this meeting, the Osh DMO made a presentation about Destination Osh, its goals and objectives and past and future activities. The presentation was followed by the discussion of the problems impeding tourism development in the region. The tourism community asked the Governor’s office to conduct negotiations with the relevant authorities and Turkish Airlines to resume the flights from Osh to Istanbul. The newly hired regional coordinator for Osh held meetings with the representatives of all donor organizations in Osh oblast – USAID, UNDP, GIZ, and OSCE – to coordinate activities in the oblast. Meetings were also held with all business associations in Osh oblast, including JIA, Legprom, Chamber of Commerce and others, to brief them on the principles of public-private dialogue and discuss the problems of


57

the local business community. Also, with the representative of Osh government authorities, seven round tables were organized in Aravan, Nookat, Karak-Kuldzha, Ozgon, Kara-Suu, Chon-Alai and Alay to discuss their region-specific problems and ways to solve them. Annual Public-Private Dialogue Strengthening Round Table On September 14-16, BGI supported the conduct of the annual round table on strengthening public-private dialogue, which was attended by 54 people. Of them, 35 were representatives of the private sector and business associations, 10 participants were from international organizations and nine from government and local government bodies. The participants discussed the problems faced by businesses, the issues of optimization of trade procedures in the EAEU, implementation of the SME business agenda, simplification of tax administration, and tourism development problems raised by BGI experts and representatives of the Naryn and Osh regional investment councils. The List of the Issues to be raised at the Business Development and Investment Council in 2018 was discussed and agreed upon by the participants of the round table.

9. Access to Finance Development of Trade Finance through Grant BGI Third Year Work Plan, Access to Finance, Activity 6.1 During the fourth quarter of 2016, BGI, jointly with its grantee identified apparel companies in need of trade finance loans. As a result, HC issued a working capital export loan of $50,000 to an apparel firm on November 22, 2016. Since BGI agreed with the grantee to pilot test a factoring transaction, it was decided that it would also provide factoring to one of the apparel firms. In view of this, the grant agreement was extended until April 30, 2017 to provide more time to structure the factoring transaction. During the first quarter of 2017, BGI continued to support its grantee to pursue the working capital finance product based on prior research in Russia on factoring. BGI hired a local lawyer to write the standard documentation supporting factoring transactions in the Kyrgyz Republic. The lawyer drafted a bilateral agreement on assignment of the right to claim receivables between the grantee and another firm that BGI identified to participate in the first factoring transaction pilot. The agreement stipulated the assignment of right to claim receivables through which the borrower assigns to the factoring company the monetary right to receive payment from the buyer to obtain financing. The lawyer also prepared a number of legal documents, including a written consent from the Russian retailer to assign the right to claim receivables, an agreement on the pledge of immovable property and an agreement on out-of-court foreclosure of pledged immovable property. Assigning collateral to backstop the transaction is not typically employed in international factoring transactions, but it was not anticipated that Russian retail buyers would be unwilling to participate in the factoring arrangement. Citing short payment window, small contract value, lack of capacity to oversee legal and other associated risks, and the currency control regime in Russia, both companies showed reluctance to include a factoring service into their existing agreements with suppliers in the Kyrgyz Republic. As a result, the grantee executed a silent form of a factoring transaction to support a February 20, 2017 shipment of clothing to a Russian retailer with a deferred 90-day payment. Under this silent transaction, all payments under the factoring contract are settled between seller and the grantee. In order to provide added security for this first transaction, the apparel firm provided a collateral to guarantee payment. Once the financing from was disbursed, the company already requested additional financing in the form of factoring, which indicates strong demand for factoring and a positive first experience. The experience of delivering the factoring agreement in the Kyrgyz Republic provides valuable learning about the feasibility a factoring company. From a legal standpoint, the contract of assignment backed by collateral, involved in supporting this factoring arrangement sets a viable framework that can be used by a new factoring company in the context of the Kyrgyz Republic although regulatory ambiguities related to licensing of institutions that perform factoring transactions will need to be resolved through legislative amendments.


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As a result of the pilot, the grantee concluded that, all things considered, factoring is the most attractive product to introduce at the current level of development of the Kyrgyz financial market from the perspective of market opportunity, value addition and sustainability potential. Despite latent demand, interest is likely to increase with greater customer awareness. Based on the earlier analysis, a factoring company can achieve a break-even point after reaching the threshold value of $1.2 million for its factoring portfolio. Support Other Tourism Development Opportunities through Grants or Direct Investment BGI Third Year Work Plan, Tourism, Activity 2.21 Tourism Investment Partnerships BGI has focused its access to finance component on generating leads for partnership grants within assisted value chain members, particularly focusing on establishing an innovative technology program for harnessing solar power for DMO guest houses and yurt camps. To launch the program, BGI made the following presentations:

• April 3, 2017, BGI conducted a presentation on innovation grants for the Southern Shore DMO and conducted consultations with individual members on the following day. Subsequently, on May 10-14, 2017, BGI conducted an engineering feasibility study of projects proposed by DMO members and identified 10 prospective green technology projects for grant funding.

• April 13-14, 2017, BGI presented the innovation grant program to residents of Jumgal, who want to develop their own DMO as well as join association efforts in Naryn, and identified two potential projects

• April 24, 2017, BGI made a similar presentation to Osh DMO members, two of which submitted prospective projects.

• May 16, 2017, BGI presented the innovation grants to Karakol DMO members followed by visits to 12 potential grantees to estimate the cost of green technologies for guesthouses. BGI is currently reviewing 13 perspective green technology projects for Karakol DMO.

Throughout all presentations and subsequent seminars, BGI In addition, BGI told interested DMO members that those businesses receiving innovation grants program must sign a grant agreement in which they pledge to contribute 10% of their annual revenues from lodging to support DMO operations. This stipulation has dissuaded some DMO members from further interest, but BGI was able to prove to most applicants that the present value of these future contributions represent 10 years or more to reach the value of the grant that BGI would be contributing to the investment in their businesses today. Following these intial meetings, BGI identified an expert who specializes specifically in energy efficient technologies to review the preliminary selected green technology projects and provide comments on the technical specifications of solar energy equipment.

• On July 31, BGI conducted a half-day seminar about energy efficient, renewable and environmentally responsible technical solutions for South Shore DMO members, and conducted a similar seminar on August 5 for Karakol DMO members and on September 15 for Jyrgalan DMO members. During these seminars, DMO members completed a questionnaire about their needs and, following these presentations, the renewable energy expert provided on-site consultations for better understanding specific needs of each interested DMO member determined the type of innovative equipment suitable for each business. Follwing this, the consultant prepared detailed technical specifications for 9 projects in South Shore and 7 projects in Karakol. In follow-up meeting September 11-14, 14 projects from Karakol and the Southern Shore confirmed their continued interest in the project.

• On the basis of these technical specifications, on September 29, BGI announced a tender to supply energy efficient, innovation technologies (solar hot water systems, heat pumps, solar PV systems) for guesthouses and yurt camps.


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• The renewable energy expert provided recommendations for monitoring indicators that are individual for each type of innovative equipment, for example, for solar hot water systems it is recommended to install a hot water metering device to calculate energy savings. For photovoltaic systems, the expert advised that BGI install an electric meter to monitor the Kwh per day/month/year consumption from which BGI can calculate electricity savings. These monitoring indicators would be part of the grant applications that are being prepared individually by DMO members individually.

• On September 15-16, BGI and the renewable energy expert visited 9 potential projects for green technologies in Jyrgalan, of which 8 projects were selected. Currently, the renewable energy expert is preparing detailed technical specifications for innovative equipment for each individual Jyrgalan DMO member.

• On September 18-22, BGI and the expert conducted a feasibility study with visits to selected sites in the Naryn region and provided onsite introductions to energy efficient, renewable and environmentally responsible technical solutions for Naryn and Jumgal DMO members. It is expected that the renewable energy expert will prepare detailed technical specifications for 11 projects in Jumgal and Naryn that will be available in November.

Bishkek Investment Forum (BIF) 2016 BGI Third Year Work Plan, Access to Finance, Activity 6.5 The Association of Young Entrepreneurs (JIA) requested that BGI support the second Bishkek Investment Forum (BIF) held on December 8, 2016. The type of support BGI provided was: (1) hiring an experienced project and event manager to guide the team with planning BIF activities and monitoring performance of tasks and deadlines; (2) making a video presentation of 14 best projects (creating a script for the video presentation, recording different aspects of business activities and preparing graphical presentation of data and research); and (3) assisting JIA with promotion of BIF 2016. JIA received total of 250 business projects covering such economic sectors as manufacturing and processing, agriculture and livestock, textiles, construction and mining, and trade and services. Sixty promising business projects were selected and included in a BIF catalogue for distribution to BIF participants, and the 14 best business projects were presented to BIF participants. The remaining190 business projects were not included in the BIF catalogue as they were either incomplete or poorly prepared. The total number of BIF participants was 730, of which 390 were entrepreneurs from Bishkek, 191 participants from the regions, 25 participants from India, three participants from Tajikistan, one representative from Uzbekistan, two participants from Kazakhstan, two from United Arab Emirates, 30 mass media representatives, 56 participants from local organizations, 19 representatives of diplomatic missions and international organizations, and 12 participants from the Kyrgyz Government and Jogorku Kenesh. Representing the government at BIF was Mr. Arzybek Kojoshev, Minister of Economy of the Kyrgyz Republic. The event was also attended by Mr. Abdyvahap Nurbayev, Jogorku Kenesh Deputy and Deputy Chairman of Jogorku Kenesh Committee on Foreign Affairs, Defense and Security, and Mr. Jayant Khobragage, Ambassador of India to the Kyrgyz Republic. A total of nine investment and finance companies also took part in BIF Forum. As a result of BIF 2015, a total of five companies attracted investments with the total value of US$475,000. An unexpected result of the 2015 forum was that eight firms were able to find additional clients as a result of their presentations. In 2016, BGI followed up with JIA to report progress on investment generation from the second BIF held in December 2016. As of June 2017, the total value of signed contracts and those currently in negotiation are US $5,680,000.


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10. Project Fund

Activity Committed Paid Outstanding Pipeline TotalGrants $688,590 $544,235 $144,355 $2,031,607 $2,720,197 Subcontracts $1,677,207 $1,464,402 $212,805 $60,000 $1,737,207

$2,365,796 $2,008,637 $357,159 $2,091,607 $4,457,403

Total Project Fund as of September 23, 2017

BGI Grant Awards – As of Q4 2017 Subcontracting Activity Grantee Award

Date BGI Grant

Award Grantee Portion Percent Total

1 Purchase of Ski Safety Equipment Jyrgalan DMO Feb 2016 $18,042 $3,961 18% $20,003

2 DMO Operating Costs Destination Karakol Apr 2016 $21,300 $6,000 22% $27,300

3 Issyk-Kul International Tourism Fair 2016

Association of Kyrgyz Resorts May 2016 $24,771 $5,438 18% $30,209

4 Summer Program for Entrepreneurial Youth Start-Up Fund Jun 2016 $37,101 $38,530 51% $75,631

5

Purchase of Apparel Embroidery and Cutting Equipment – Innovation Center

Apparel Firm July 2016 $31,550 $8,650 22% $40,200

6 Development of Trade Finance in Kyrgyzstan

Investment Fund Jul 2016 $48,655 $50,000 51% $98,655

7

Development of Regional Public Private Dialogue – Business Development and Investment Council

Secretariat of the Investment

Council August 2016 $41,691 $29,900 42% $71,591

8 Development of Youth Business Capacity

Institute for Youth

Development August 2016 $26,636 $12,807 32% $39,443

9 Support to Development of the Botanical Garden Archa Initiative September

2016 $37,780 $18,860 33% $56,640

10 DMO Operating Costs Jyrgalan DMO December 2016 $18,380 $9,829 34% $28,209

11 Purchase of Plotter and Pattern-Making Software Apparel Firm December

2016 $13,510 $3,554 21% $17,064

12 Purchase of an Automated Apparel Cutting System Apparel Firm February

2017 $132,750 $192,750 59% $325,500

13 Online Property Tax Return Form IT Company March

2017 $20,025 $20,025 50% $40,050

14 SSM for Destination Karakol Destination Karakol

March 2017 $20,200 $16,200 45% $36,400

15 Initial Operating Costs of Association

Association of Kyrgyz Stone

Producers May 2017 $47,430 $14,138 23% $61,568

16 Osh DMO Operating Costs Osh DMO May 2017 $19,318 $4,649 19% $23,967

17 DMO Operating Costs Destination Karakol May 2017 $21,120 $6,000 22% $27,120

18 Purchase of Solar Panels for Mountain Accommodations of Alpinists

Alpinists Club May 2017 $4,560 $4,563 50% $9,123

19 On-Line Training in Tourism for Regional Members

Chamber of Commerce May 2017 $5,745 $1,634 22% $7,379


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Completed Local Subcontracts – Q4 2014 - Q4 2017 Subcontracting Activity Award

Date Period of Perform.

Contract Value Status

1 Conducting Textile/Apparel Value Chain Study Dec 2014 4 months $61,096 Completed

2 Conducting Assessment of Demand and Supply of Skills in BGI Value Chains Dec 2014 4 months $56,411 Completed

3 Promoting Passage of the New Air Code Dec 2014 6 months $38,329 Completed

4 Implementing VAT Administrative Reform Dec 2014 6 months $72,460 Completed

5 Promoting Tax Literacy to Prepare for the Introduction of Universal Tax Declaration Feb 2015 6 months $68,960 Completed

6 Conducting Construction Materials Value Chain Study Feb 2015 4 months $56,436 Completed

7 Broadcasting Video and Audio Announcements on Universal Tax Declaration Feb 2015 2 months $41,856 Completed

8 Providing Continued Capacity Developments for the State Geology Agency Feb 2015 6 months $24,812 Completed

and Industry

20 Strengthening TUK’s Sustainability for Domestic Tourism

Trekking Union of Kyrgyzstan Jun 2017 $18,005 $8,098 31% $26,103

21 Jyrgalan Summer Equipment

Destination Jyrgalan Jun 2017 $24,505 $5,370 18% $29,875

22 Karakol Wi-Fi Project Destination Karakol July 2017 $24,224 $6,050 20% $30,274

23 Suleyman-Too Museum Project Osh NGO August

2017 $7,290 $2,790 28% $10,080

24 Lake Issyk-Kul Southern Shore DMO Operating Costs

Southern Shore DMO

August 2017 $24,000 $5,270 18% $29,270

$688,588 $475,066 $1,161,654

BGI Grant Pipeline – As of Q4 2017

Subcontracting Activity Grantee BGI Grant Request

Grantee Portion Percent Total

1 Outfit a new sewing factory for European orders Apparel Firm $300,000 $545,128 64% $845,128

2 Outfit a new sewing factory for US orders Apparel Firm $300,000 $534,014 64% $834,014

3 Create an innovation resource center for apparel sector

Apparel Center $800,000 $600,000 42% $1,400,000

4 Innovation Energy Grants to Guest Houses/Yurt Camps Various $150,000 $27,000 18% $177,000

5 Modernization & Expansion of Embroidery Services Apparel Firm $85,595 $97,419 53% $183,014

6 Purchase of Silos for Gypsum Wallboard Production

Construction Materials Firm $102,250 $135,140 57% $237,390

7 Manufacture of facing bricks based on waste recycling

Construction Materials Firm $91,000 $109,550 55% $200,550

8 Uzgen city tourism development Uzgen NGO $11,640 $6,960 37% $18,600


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9 Legal Revision, Checklist Development and Training on New Inspections Methodologies Mar 2015 7 months $72,295

Suspended

($103,278)

10 Study of the Market for Leasing in the Kyrgyz Republic (1) Jun 2015 4 months $21,307 Completed

11 Study of the Market for Leasing in the Kyrgyz Republic (2) Jun 2015 4 months $40,455 Completed

12 Study of the Elasticity of Social Fund Contributions (1) Jun 2015 5 months $24,244 Suspended

($40,406)

13 Study of the Elasticity of Social Fund Contributions (2) Jun 2015 5 months $43,360

Suspended

($54,200)

14 Launching Public Education Campaign for Mining Strategy Jun 2015 3 months $53,640 Suspended

15 Conducting Results Survey of the Tax Declaration Campaign Jun 2015 2 months $25,685 Completed

16 Conducting the Summer Business Boot Camp for Young Entrepreneurs Jun 2015 3 months $9,000 Completed

17 Organizing Fashion Designers Contest and Sponsoring Designer Workshop Jun 2015 2 months $4,850 Completed

18 Conducting Baseline Survey of Destination Management Sites Aug 2015 3 months $29,910 Completed

19 Transferring Registration of Individual Entrepreneurs to the STS Aug 2015 8 months $11,382 Suspended

($56,912)

20 Conducting Study of the Turkish Outbound Tourism Market Sep 2015 3 months $11,400 Completed

21 Organizing Grants Launch Events in Bishkek and Throughout Regions Oct 2015 3 months $32,227 Completed

22 Organizing JashtarCamp Nov 2015 1 month $6,085 Completed

23 Arranging Logistics for Tourism Exhibition ITB Berlin Feb 2016 1 month $6,263 Completed

24 Developing Capacity of Kyrgyz Museums Apr 2016 8 months $80,954 Completed

25 Provision of Services for Social/Ethical Compliance Consulting Firm Apr 2016 3 months $17,320 Completed

26 Designing, Manufacturing and Installing Tourism Road Signs May 2016 6 months $78,050 Completed

27 World Nomad Games Student Surveys Aug 2016 3 months $27,527 Completed

28 Internet and Social Media Marketing Aug 2016 12 months $59,102 Suspended ($98,503)

29 Logistics Services for Blogger FAM Tours (WNG) Aug 2016 2 months $42,055 Completed

30 Logistics for Kyrgyzstan Days in Istanbul Oct 2016 2 months $34,494 Completed


63




31 Turkish Tourism Media and FAM Trip May 2017 4 months $31,231 Completed

Outstanding Local Subcontracts FY2107

1 Logistics Services for Blogger FAM Tours 2017 Jun 2017 5 months $177 935 Outstanding*

2 Logistics for ATTA fam trip Jul 2017 4 months $20,187 Outstanding**

3 Signage Phase II Sep 2017 5 months $75,795 Outstanding

4 City Guide Training Sep 2017 3 months $62,580 Outstanding

* All but $37,000 has been paid. ** All but $4,000 has been paid.

USAID Business Growth Initiative (BGI) 15 Razzakova Street, Office 6, Second Floor

Bishkek, Kyrgyz Republic 720040 Tel: +966 312 66 60 44, 61 04 48

+966 312 66 16 34

regional initiative concept paper usaid business growthpdf.usaid.gov/pdf_docs/pa00n4ns.pdf ·...

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