J.14 Annual Reports of, and assessments by, the USAID Competitiveness, Trade, and Jobs Activity.pdf

YEAR ONE ANNUAL REPORT

USAID COMPETITIVENESS, TRADE, AND JOBS IN

CENTRAL ASIA ACTIVITY

October 2016 – September 2017

This publication was produced for review by the United States Agency for International Development. It was prepared by DAI

CTJ

Activity Title: USAID Competitiveness, Trade, and Jobs in Central Asia Activity

Contract Number: AID-176-H-16-00001

Sponsoring USAID Office: USAID-Central Asia

Contractor: DAI

COR: Svetlana Golovatskaya

Chief of Party: Geoff Wright

USAID Competitiveness, Trade, and Jobs in Central Asia Activity aims to facilitate exports and employment in horticulture and strengthen transport and logistics services across the five Central Asian economies. By incentivizing firms to become more regionally competitive and by addressing cross-border impediments to trade, USAID helps to develop a more diverse and competitive private sector and generate export-driven growth.

Five-Year Project: October 2016 to September 2021 Goals: Expand regional trade and employment in the horticulture, transport and logistics sectors in Central Asia Approach: Market Systems Development – facilitating market actors to implement activities and achieve goals Components:

The authors’ views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government.

C o m p o n en t 1 • Facilitating

Trade

• Partner with key actors to assess and implement solutions to expand exports and transport & logistics services

• Customs and border management

• Central Asia Trade Forum

C o m p o n en t 2 • Partnering for

Innovation

• Competitively select firms to co-finance innovation and expansion of exports and jobs

• Horticulture

• Transport

• Logistics

• Skills Development

• Entrepreneurship

C o m p o n en t 3 • Expand

Employment in Key Sectors

• Skills development

• Entrepreneurship

CONTENTS

I. ABBREVIATIONS ......................................................................................................................... x

II. EXECUTIVE SUMMARY

III. SCOPING WORK & HORIZON SCANNING

End Market Analysis

Value Chain ANalysis

Transportation & Logistics Study

Tajikistan & KazakhStan Workforce Landscape Reports

Third Sector Selection

IV. FIRST YEAR ACTIVITIES

COMPONENT 1. COMPETITIVENESS AND TRADE

Regional Activities

C5+1

Cooperation with the Commercial Law Development Program (CLDP)

Central Asia Transportation and Logistics Partnership (TLP)

National Activities

KAZAKHSTAN

KYRGYZ REPUBLIC

TAJIKISTAN

TURKMENISTAN

UZBEKISTAN

COMPONENT 2. PARTNERING FOR INNOVATIONS

COMPONENT 3. EMPLOYEMENT CREATION IN KEY SECTORS

Tajikistan

Kazakhstan

V. COORDINATION

USAID COORDINATION

OTHER DONORS

VI. PUBLIC AND PRIVATE SECTOR COUNTERPARTS

VII. MANAGEMENT AND ADMINISTRATION

CTJ Country Teams

VIII. OBSTACLES AND CHALLENGES

Annex 1: Performance Monitoring (M&E)

Annex 2: Context Indicators

Annex 3: FY1 Project Performance Indicators Tracking Table (PITT)

Annex 4: List of Agreements of Intent signed during Samarkand Business Forum 50

Annex 5. Media

Annex 6. List of Deliverables

I. ABBREVIATIONS

AMEP Activity Monitoring and Evaluation Plan

AVC Agricultural Value Chains Project (Uzbekistan)

BAA Blanket Activity Announcement

C5+1 Five Central Asian Countries plus the United States Initiative

CA Central Asia

CATF Central Asia Trade Forum

CO Contracting Officer

COP Chief of Party

COR Contracting Officer Representative

CTJ USAID Competitiveness, Trade and Jobs Activity in Central Asia

DCOP Deputy Chief of Party

GIZ Deutsche Gesellschaft fur Internationale Zusammenarbeit

HACCP Hard Analysis and Critical Control Points

ISO International Standard Organization

IDG International Development Group

IFC International Finance Corporation

ISO International Standards Organization

IT Information Technology

ME&L Monitoring, Evaluation, and Learning

MOU Memorandum of Understanding

NGO Non-governmental organization

OSCE Organization for Security and Cooperation in Europe

PMCG Policy and Management Consulting Group

PREIA USAID-Pakistan Regional Economic Integration Activity

RCDS Regional Development Cooperation Strategy

TAWA USAID-Tajikistan Agriculture and Water Activity

TVET Technical and Vocational Education and Training

TFA Trade Facilitation Agreement

UNDP United Nations Development Programme

USAID United States Agency for International Development

WTO The World Trade Organization

6 COMPETITIVENESS, TRADE AND JOBS IN CENTRAL ASIA YEAR 1 ANNUAL REPORT

II. EXECUTIVE SUMMARY

This is the first annual report for the five-year USAID-funded Competitiveness, Trade and Jobs (CTJ) Activity in Central Asia, covering the period of October 1, 2016 through September 30, 2017. CTJ’s objective is to increase the competitiveness of the economies of Central Asia in order to expand trade within the region and to markets beyond and to create jobs. This objective and CTJ’s activities align with USAID/Central Asia’s 2015-2019 Regional Development Cooperation Strategy (RDCS) and are designed to contribute to the achievement of Intermediate Result 1.1:

More diverse and competitive private sector and Intermediate Result 1.3: Harmonization of cross-border trade.

The report details how the DAI team has organized its work to implement CTJ activities designed to achieve the targeted results. DAI has mobilized and recruited twenty-five staff over the past year and implemented a regional accounting and operations system. CTJ staff are located in all five countries and are implementing activities in cooperation with USAID country offices and local public and private sector stakeholders.

In January CTJ signed an MOU with GIZ to support the regional Transport and Logistics Partnership. This is a voluntary private sector advocacy group that has attracted over 50 transport and logistics operators as members over its brief two-year life. In Year 1, CTJ facilitated two plenary meetings, arranged for a six-month rolling Chairperson to be elected and supported with a modest stipend and is about to launch the TLP website. These activities have enabled members to sign more than $20 million in transport contracts among each other in 2017. Membership in the TLP provides some level of professional reliability and so facilitates such agreements. In Year 2 CTJ will support the TLP to develop a regional logistics training network ensuring a common standard of instruction and knowledge for all trainees across Central Asia. The Partnership has also developed a policy and legislative action plan of reform that it is advocating to governments in the region. It is one of very few truly regional private advocacy groups in Central Asia.

CTJ carried out a number of assessments and scoping studies to identify key skill, post-harvest and transport and logistics challenges along the most valuable horticultural supply chains in the region. The studies and their findings are summarized in the next section of this report and have driven the design of Year 2-3 activities for CTJ. CTJ will cost-share quality certification training and attendance at trade shows for export ready firms. The regional logistics training network under the TLP will ensure logistics facility operators develop the necessary skills and knowledge to efficiently provide cold chain and other services to producers, processors and traders. CTJ will work with other donors to strengthen TVET delivery of skills to school leavers and ensure they meet the needs of employers.

CTJ supported a number of export promotion activities in Year 1including the following:

• The Samarkand Horticulture Forum attracted representatives of more than 100 buyers and producers from fifteen countries on 28-29 April. Market experts explained market entry requirements into European markets and traders signed letters of intent valued at $40 million.

• CTJ worked with USAID AVC, the Uzbekistan Chamber of Commerce and Embassy to the United Kingdom to arrange for five horticulture producers to examine fruit import control, logistics and retail requirements in and around London. The United Kingdom is the largest dried fruit importer.

7 COMPETITIVENESS, TRADE AND JOBS IN CENTRAL ASIA YEAR 1 ANNUAL REPORT

• Training on Kazakhstan SPS and retail market requirements for 35 horticultural producers and processors from Khatlon and Sughd regions in Tajikistan.

• CTJ worked with Kazakh Invest to arrange a study tour to Almaty and Astana for export promotion officials from the Kyrgyz Republic, Tajikistan and Uzbekistan. Kazakh Invest is the regional leader in export and investment promotion -attracting over $25 billion from the US alone over the past 25 years.

Significant time and resources were invested in preparing for the VII Central Asian Trade Forum – held on 18-19 October in Almaty. USAID supports the annual Forum which brings public and private sector leaders from across Central Asia to discuss and expand trade in the region. This year’s Forum explored innovative solutions to increase horticultural exports from the region and included a conference, B2B networking, an exhibition and ISO training. CTJ undertook a wide range of tasks to prepare for CATF including arranging the following:

• Emailing and telephoning more than 3,000 organizations and individuals to participate – ultimately 1,100 people attended the Forum;

• Sponsorship and support from the Atameken, Cert Academy, Crown Agents, EBRD, GIZ, GlobalGAP, Institute “Silkway”, JICA and KAZLogistics,;

• Agenda topics and more than 60 speakers/moderators to present at the conference:

• Press conference and briefing packages for thirteen media organizations who attended.

• Speaking notes for U.S. Ambassadors Krol, Mustard and Spratlen as well as Counsel General Moody and Mr. Chris Edwards, USAID Regional Mission Director;

• Fifty exhibitors including “National Corners” for each country to exhibit their arts and crafts;

• B2B meetings with online appointment and tablet facilities

Outside of the original vision for the program, CTJ has been supporting the C5+1 Initiative – a platform that brings together the five states of Central Asia and the United States to discuss and work on issues of common concern. CTJ facilitates cooperation to strengthen business competitiveness in horticulture and transport corridors. In February USAID and CTJ staff organized a two-day C5+1 meeting for officials to identify future C5+1 activities. CTJ subsequent meetings on regional customs and phytosanitary cooperation on August 23-24 in Dushanbe. Officials agreed to share further customs data and explore implementation of national trusted trader programs that simplify procedures for frequent and compliant traders. Officials also agreed to exchange SPS information review their phytosanitary testing and certification processes with support from CTJ. The C5+1 meetings represent real progress in regional cooperation – moving beyond meetings and discussion to the implementation of mutually beneficial programs in the region.

CTJ reviewed the free economic zone regimes in Tajikistan and Uzbekistan – zones have the potential to generate significant employment and export growth. The consultant discussed best zone practices at a conference in Tashkent and a series of meetings with officials as well as recommending a number of legislative and institutional changes to the regimes in each country.

Some CTJ recommendations were incorporated in the Uzbekistan Presidential Decree Oct. 25, 2017 N ПП-3356 on Additional Measures to Increase Efficiency of FEZ and Special Industrial Zone Activities. One of outcomes of the decree is to revise the institutional oversight of zones.

8 COMPETITIVENESS, TRADE AND JOBS IN CENTRAL ASIA YEAR 1 ANNUAL REPORT

The CTJ program design called for a third sector to be selected in Year 1 and supported throughout the remaining life of the program. Consultants undertook a quantitative analysis of available GDP and employment data as well as a qualitative assessment of economic linkages and the potential impact of a number of short-listed sectors. The tourism and travel sector was selected as having not only the greatest potential impact but also the highest synergies with CTJ’s existing target sectors – horticulture, transport and logistics. CTJ looks forward to working with tourism stakeholders in order to increase employment and export earnings in the sector.

9 COMPETITIVENESS, TRADE AND JOBS IN CENTRAL ASIA YEAR 1 ANNUAL REPORT

III. SCOPING WORK & HORIZON SCANNING

During year one, CTJ conducted a series of studies across multiple countries, sectors and value chains to identify opportunities, gauge alliances, and ground truth information. In complex regional projects operating both multilaterally and bilaterally, this type of “horizon scanning”, ground-truthing and analysis provide the foundation for targeting and defining initial leverage points and designing interventions intended to yield maximum impact and scalability.

The following provides brief summaries/findings of some of the key reports conducted by CTJ in year one.

END MARKET ANALYSIS

The analysis of end markets provides essential information to producers and can incentivize them to pursue certain standards, seek certification from recognized bodies and expand their access to new markets. In order to lay the ground work for Year 2-4 activities, CTJ analyzed the requirements of key end markets (e.g. German, Latvia, Kazakhstan, Russia) for fresh and dried fruits from Uzbekistan, Tajikistan and Kazakhstan.

International buyers noted the higher prices and higher risks of importing fruit from Central Asia.

For example, Turkey is exporting fruit to far east Russia at a lower cost than Central Asia. The analysis identified critical success factors as defined by buyers and assessed the competitive position of products from Central Asia in these markets. These success factors are centered around sufficient volume at sufficient quality. While CTJ does not work at the production/growing stage of the value chain, it can seek to address quality control issues including cooling, grading, sorting and packaging. The report also noted increasing consumer preference for organic and healthy food products, particularly in Germany and Scandinavia.

CTJ is disseminating these import requirements to growers in the region and planning a follow-up horticulture and logistics trade mission to Latvia in April 2018 for traders. In Years 2-4 CTJ is concentrating on phytosanitary administration, post-harvest training and improvements to cross-border clearance of perishable products.

VALUE CHAIN ANALYSIS

The report also highlights the atomistic nature of horticulture production in the region. Over six million households, operating on less than half a hectare produce, the majority of fruit and vegetables. The high cost and time of sorting, grading, packing, cooling and transporting fruit from households to market means less than only ten percent of output is exported, twenty percent is lost and the remainder sells in local markets often at unnecessarily low prices. CTJ will work to improve quality control, cooling and consolidation along the value chain through capacity building focused workshops and trainings?

The report confirms that fresh and dried grapes and apricots dominate Central Asian horticulture trade with rising exports of fresh cherries. Traditional markets in Kazakhstan and Russia are the leading destinations. However, Central Asian producers need to strengthen their diversification and competitiveness efforts. Following the Rouble devaluation and shift to import substitution, Russian total fruit imports have almost halved over the past five years – although growing slightly in 2016. China is a larger fruit import market than Russia and is growing at 13 percent per annum.

Europe is also growing and imports over $50 billion in fruit each year.

10 COMPETITIVENESS, TRADE AND JOBS IN CENTRAL ASIA YEAR 1 ANNUAL REPORT

A new area of potential export growth from Central Asian countries lies in processed fruit and vegetable products. Global demand for these products dwarfs that for fresh and dried fruits and vegetables and Central Asia supplies a miniscule share of leading markets. Processed products are especially attractive because they do not require the transport and logistics infrastructure necessary to preserve fresh fruit. Finally, scaling up processing will generate jobs and investment in the region, increase the competitiveness of Central Asian firms and strengthen linkages to global markets.

Pulses such as peas and beans also offer high potential for the region. Nearby India is the leading global importer of these products, but Central Asia supplies only 0.5 percent of Indian imports.

Like processed fruits and vegetables, peas and beans require limited processing, production is not water intensive, and transport logistics are simpler than what is required for fresh fruits.

CTJ will focus export promotion efforts on fresh and dried fruit to Europe (Baltics, Germany, Scandinavia and the United Kingdom) and Persian Gulf markets; dried beans to Pakistan and India and increasing exports of processed horticulture products.

TRANSPORTATION & LOGISTICS STUDY

CTJ’s Transportation & Logistics Study examined transport and logistics challenges along the export supply chains of fresh and dried fruit in four countries (Kazakhstan, Kyrgyz Republic, Tajikistan and Uzbekistan). Inefficient and inadequate transportation and logistics systems, along with trade-related infrastructure, severely impede the region’s ability to compete in international markets. Regional transport costs are twice the global average. This is particularly important for perishable horticulture products which cost two to three times as much to ship than products with longer shelf lives. Appropriate cooling is essential along the supply chain to maintain product life and quality.

Due to much slower transit times, road transport dominates rail in horticulture trade. However, the perishable nature of horticulture attracts additional informal fees from public agencies – representing 27 percent of the total transport cost of a refrigerated truck per trip. High import duties on trucks and high financing costs mean most of the Central Asia road transport fleet does not meet EU standards. The shortage of road transport vehicles can double the cost of transport during peak harvest season. Air freight is only economic for products with the highest unit value, i.e. fresh cherries.

Customs processing and border crossing times are improving. However, over reliance on documentation and physical inspection continues to slow border crossings. SPS standards are not harmonized throughout the region and testing capacity is limited in the Kyrgyz Republic and Tajikistan. Furthermore, the Russian Phyto-sanitary service “Rosselkhoznadzor” requires all foreign exporters to obtain a unique code from the unified export register which is not easily available in Kyrgyz Republic and Tajikistan. This process costs an average of $1,340 per shipment.

Under C5+1, the Transport and Logistics Partnership and the Innovation Facility, CTJ is planning to strengthen phytosanitary testing capacity and logistics training across the region particularly relating to cold storage. CTJ is also working with national Customs agencies to implement measures to expedite clearance of perishable products and recognize trusted traders.

TAJIKISTAN & KAZAKHSTAN WORKFORCE LANDSCAPE REPORTS

The two reports highlight the challenges for TVET and workforce development organizations to meet skill requirements in horticulture, transport and logistics. A lack of resources such as;

11 COMPETITIVENESS, TRADE AND JOBS IN CENTRAL ASIA YEAR 1 ANNUAL REPORT

training centers, teachers, inappropriate curricula and training methods and minimal consultation with employers has led to a lack of specialists in agronomy and logistics with knowledge of important skills, such as warehouse management and cold storage which has resulted in skilled agricultural workers migrate to cities or overseas. Employers prefer to contract specialists from Turkey and Ukraine rather than employ local consultants. Three donor-funded projects are commencing operations to strengthen TVET in each country. The Government of Kazakhstan and the World Bank are investing $127 million to revise the national TVET program. The ADB and ILO are each supporting TVET delivery of training in Tajikistan. CTJ is exploring cooperation with these donor programs, as well as the regional Transport and Logistics Partnership and the Global Cold Chain Alliance, in order strengthen post-harvest handling skills, particularly cold storage. This work reinforces the findings of the transport study on logistics training requirements.

THIRD SECTOR SELECTION

CTJ’s program design envisaged that a third sector would be supported by the program starting in Year 2. A desk based sector selection study was conducted by reviewing quantitative and qualitative data and interviewing a range of economists and industry representatives from across the region. Significant sectoral data limitations in most countries of the region restricted the quantitative sector selection approach. The compound annual growth rates (CAGR) of sectoral contribution to GDP for a short list of sectors in each Central Asian country over 2011-2014 showed tourism with the strongest CAGR of 35% p.a. followed by construction and retail/wholesale trade, at 22% and 19%, respectively. The study recommends the Tourism and Travel industry as CTJ’s third sector. Globally, in 2016 tourism grew faster than GDP growth in most countries, provided ten percent of global employment, employed more women and youth than national labor force and contributed 6.6 percent of global exports. Tourism also has strong synergies with transport and logistics and regional cooperation. Early in Year 2, CTJ will scope impactful areas for program intervention in the regional tourism industry.

IV. FIRST YEAR ACTIVITIES

This section of the annual report provides an overview of key activities carried out by CTJ in year one. In order to reduce redundancy, the section begins at the regional level with brief summaries of multilateral activities CTJ facilitated or otherwise engaged in during the reporting period. After an overview of CTJ’s regional/multilateral work, the report shifts to a component-by-component breakdown of activities on a nation-by-nation basis. By structuring the report in this manner, the reader is permitted a first look at big-picture multilateral initiatives, followed by a more focused account of CTJ’s activities at the country-level.

In year one, CTJ focused the majority of its activities on Component I and laid the ground work for year two activities to ramp up under CTJ’s Innovation Facility (Component II) and Workforce Development (Component III).

COMPONENT 1. COMPETITIVENESS AND TRADE

1.A. Increase Competitiveness and Trade-Readiness in Selected Sectors Activities under this subcomponent focus predominantly on the “behind the border” interventions that are needed to increase competitiveness, exports and employment within horticulture, transport and logistics. In year one, CTJ completed a number of scoping studies required to identify barriers and dig into the root causes constraining trade and competitiveness. These studies

12 COMPETITIVENESS, TRADE AND JOBS IN CENTRAL ASIA YEAR 1 ANNUAL REPORT

included looking into the region’s horticultural value chains, and end market analysis and a transportation and logistics study. This scoping work is discussed in the above “Horizon Scanning & Scoping Work” section. Accordingly, the activities described under each country below demonstrate CTJ’s breadth and scope in addressing the wide range of constraints in increasing the competitiveness and preparing the region’s various market systems for economic growth via increased trade.

1.B. Facilitating Trade The activities in this subcomponent focused on trade facilitation through improving border management and customs policies in order to move goods more efficiently at less cost at and beyond the border. CTJ has worked at the national level with Kazakhstan, Tajikistan and Uzbekistan (and with Kyrgyzstan and Turkmenistan, albeit to a lesser extent) to begin identifying non-tariff barriers and enhance national trade facilitation coordination. Trade facilitation issues include a wide range of opportunities, including, but not limited to, improved sanitary and phyto-sanitary (SPS) control; improved border crossing risk management, establishment of trusted trader programs and green channels; improved transit and regional customs cooperation. Some of these multilateral issue activities were addressed under the Regional & Multilateral Activity subsection above and for efficiency, will not be duplicated here.

REGIONAL ACTIVITIES

C5+1 The C5+1 is a platform that brings together the five states of Central Asia and the United States to discuss and work on issues of common concern. At the first C5+1 ministerial, held in Samarkand in November 2015, the six attending ministers agreed to develop regional projects to improve security, promote economic connectivity, and increase resilience against the impacts of climate change. At the second C5+1 ministerial, held in Washington in August 2016, the six ministers agreed to launch five corresponding projects:

1. Central Asia Business Competitiveness (CABC)

2. Transport Corridor Development (TCD)

3. Power the Future

4. Supporting National and Regional Adaptation Planning

5. Global Counterterrorism Forum Regional Dialogue

Two of these five “projects” are supported through the USAID/Central Asia’s CTJ activities:

“Central Asia Business Competitiveness (CABC): The CABC project will seek to make it easier for businesses in Central Asia to increase exports and enter new markets. To begin, the project will focus on horticultural sub-sectors with strong export potential.

Transport Corridor Development (TCD): The TCD project will aim to reduce the cost and time of moving goods across borders in Central Asia, as well as improve the quality of transport and logistics services throughout the entire region...”1

1 See https://tj.usembassy.gov/wp-content/uploads/sites/143/2016/08/c5-1-fact-sheet_english.pdf

13 COMPETITIVENESS, TRADE AND JOBS IN CENTRAL ASIA YEAR 1 ANNUAL REPORT

The Power the Future and Supporting National and Regional Adaptation Planning initiatives are supported by other USAID projects in Central Asia.

In February USAID and CTJ staff organized a two-day C5+1 meeting for officials from all five countries to discuss key issues and identify future activities for the four USAID-supported initiatives. During the first day of the meeting officials agreed to CTJ’s proposed set of issues and meetings around regional cooperation in customs, SPS, special economic zones and multimodal transport and logistics centers. More than 15 officials attended the meetings from all five Central Asian countries representing ministries of foreign affairs, agriculture, transport, environment and energy. Scott Reid, South and Central Asia Office Director, Deborah Robinson, C5+1 Coordinator and Ellen Connorton, Senior Science Advisor attended the event from Washington DC representing the U.S. State Department.

CTJ organized a subsequent two-day C5+1 expert-level meeting on regional customs and phytosanitary cooperation in August 23-24, 2017 in Tajikistan, Dushanbe. Officials agreed to develop a protocol to share further customs data and explore implementation of national trusted trader programs that simplify procedures for frequent and compliant traders. At the subsequent C5+1 meeting on 19 October, customs officials agreed to establish national working groups to develop trusted trader criteria and measures to expedite customs clearance of horticulture perishables. Additionally, in Dushanbe, C5+1 SPS agency officials agreed to exchange SPS information review their phytosanitary testing and certification processes with support from CTJ.

The Asian Development Bank funded its lead SPS consultant, Rob Black, to present on the ADB’s review of SPS capacity in CAREC countries and the resulting capacity building strategy. Countries agreed that CTJ will support elements of the strategy relating to phytosanitary control of exports.

The C5+1 meetings represent real progress in regional cooperation – moving beyond meetings and discussion to the implementation of mutually beneficial programs in the region. The momentum for C5+1 was strengthened at a high-level meeting of Secretary Tillerson with ministry of foreign affairs representatives from all five countries at the United Nations General Assembly in September. The officials agreed to continue to solidify C5+1 cooperation.

COOPERATION WITH THE COMMERCIAL LAW DEVELOPMENT PROGRAM (CLDP)

CTJ is cooperating with the regional working groups supported by the US Department of Commerce Commercial Law Development Program (CLDP). CLDP has regional expert-level working groups comprising of the five Central Asian countries plus Afghanistan on customs and SPS. CTJ presented its activities and discussed the Asian Development Bank SPS program at the fifth SPS working group meeting in Tbilisi in June. In October, CLDP will coordinate its fifth customs working group meeting to take place over the two days before CATF in Almaty. CLDP delegates will be able to attend the Forum and the C5+1 meetings on 19 October during CATF.

The objective is for C5+1 to implement ideas and lessons learned from the shared experiences discussed during the CLDP meetings.

CENTRAL ASIA TRANSPORTATION AND LOGISTICS PARTNERSHIP (TLP)

The Central Asia Transport and Logistics Partnership was established in 2015 to improve the quality of transport and logistics services throughout the region. This private sector led public-private partnership brings together over 55 public and private transport and logistics companies from across the region to facilitate trade and advance reforms that improve the cost and time of

14 COMPETITIVENESS, TRADE AND JOBS IN CENTRAL ASIA YEAR 1 ANNUAL REPORT

moving goods across borders in Central Asia. CTJ and GIZ work together to facilitate TLP’s regional initiatives to remove trade barriers and reduce friction at the border.

In January, TLP held its Fourth Regional Meeting attended by more than 70 representatives of Central Asian government ministries, railway officials, transport & logistics companies, private sector representatives, international organizations, and mass media. Turkmenistan was represented for the first time by the Ministry of Railway Transportation and the Ministry of Automobile Transportation. Delegates confirmed an action plan of reform activities including support from GIZ to implement an International Road Union transit data exchange program.

At the Fifth Regional Meeting in June, with CTJ support, TLP reviewed a USAID study on containerized trade and a GIZ review of road legislation and transit insurance practices in the region. CTJ agreed to support TLP capacity by providing a stipend for a chairperson to be elected by TLP members and also to facilitate communication among TLP members by developing and hosting a website. Mr. Berik Bulekbayev, an Almaty based logistics business owner and academic, was elected as the first six-monthly revolving Chairperson in September. During the fourth quarter of FY 2017, CTJ finalized the design of the CTJ project website which includes a section for the TLP. Development and uploading material shall be complete by the end of December 2017.

1.C. Central Asian Trade Forum During the fourth quarter, CTJ directed significant time and energy to preparations for the Seventh Central Asia Trade Forum (CATF) – which will be held in Almaty’s Rixos Hotel on October 18-19, 2017. The theme of this year’s Forum will be Future Growth: Trade, Transport, and Horticulture.

The CATF is an annual event for national governments and industry leaders to discuss challenges and opportunities for increased trade and economic collaboration and to identify solutions and development strategies. While past forums were broad in scope, this year’s forum will focus on the competitiveness of enterprises in the horticulture, transport, and logistics sectors and the application of new technology and innovation to overcome existing barriers to enter new markets.

A concurrent trade exhibition will bring together different technology, equipment, and service providers to showcase their products and ideas to lower production and transport costs in the region.

Although the event will take place in the first quarter of CTJ’s second year, significant time and resources were spent in year one preparing for this large and high-profile international event.

More than 4,000 organizations and individuals were approached by email and phone to participate in CATF. CTJ arranged sponsorship with GIZ, EBRD, JICA, GlobalGAP, KAZLogistics, Cert Academy, and Crown Agents. CTJ finalized the venues and detailed agendas for the conference, exhibition, C5+1 meetings and reception. Themes and topics for the conference agenda were finalized and arrangements made for over 60 speakers/moderators to present at the conference, including travel and translation of their presentations. A press conference was arranged and press briefing packages prepared for more twenty media organizations who would attend. Speaking notes were prepared for Ambassador Spratlen to moderate the Women’s Entrepreneurship Session and Ambassador Mustard to moderate the Horticulture Export Strategy session. Notes were also prepared for Ambassador Krol, Counsel General Moody and Mr. Chris Edwards, USAID Regional Mission Director. CTJ staff organized fifty exhibitors to travel and attend from across the region including “National Corners” for each country to exhibit their arts and crafts. A B2B meeting area with online appointment and tablet facilities were arranged.

15 COMPETITIVENESS, TRADE AND JOBS IN CENTRAL ASIA YEAR 1 ANNUAL REPORT

NATONAL ACTIVITIES

KAZAKHSTAN

On May 16-18, 2017 trade and investment promotion officials from the Kyrgyz Republic, Tajikistan, and Uzbekistan visited Almaty and Astana to share their experiences and learn from Kazakhstan.

CTJ organized the study tour in collaboration with KAZAKH INVEST, the National Export and Investment Agency of the Ministry of Investment and Development

In the spirit of C5+1, the tour offered an opportunity for regional collaboration on attracting foreign investment, an issue of great interest to all countries in the region. Participants discussed how to create programs to support exporters, organize trade missions, develop analytical products for foreign investors, and prioritize other key aspects of investment promotion. [

Foreign Direct Investment in Kazakhstan greatly outstrips that of its neighbors, and Kazakhstan's experience serves as a valuable example of a country in the region taking the necessary steps to improve its investment climate. This initiative will help to improve the capacity of Central Asian investment promotion entities to actively participate in, and contribute to export development projects while improving bilateral cooperation among the export promotion agencies in the region.

Kazakhstan now ranks number 35 on the World Bank's Ease of Doing Business index, setting a high bar and serving as a relevant example of promoting an effective investment climate.

KYRGYZ REPUBLIC

Due to the current breadth of USAID-supported agricultural activities in Kyrgyzstan and cautious engagement with associated public agencies -- while a new bilateral agreement is being negotiated between USAID and the Government of the Kyrgyz Republic -- CTJ’s has not implemented any activities supporting horticulture and trade facilitation within the Kyrgyz Republic

CTJ did participate in a working group to coordinate the WTO Trade Facilitation Agreement (TFA) Action Plan. All relevant government agencies participated in the discussion. Together with international organizations, the working group prepared a draft WTO TFA Action Plan. Upon finalizing, it will go to the Government of the Kyrgyz Republic for approval. Eventually, it will provide a road map of actions for both the government and international organizations to begin implementing activities to be in full compliance with WTO membership requirements.

TAJIKISTAN

Tajikistan and the Kyrgyz Republic are the smallest economies in the region. Tajikistan depends on a small number of commodities such as cotton, aluminum and apricots as well as declining worker remittances for its foreign earnings. The large Khatlon region in southern Tajikistan has one of the lowest average income levels in the region comprising thousands of smallholders growing fruit on less than half a hectare. Difficult market conditions have put pressure on economic reform to increase competitiveness. The country’s recent accession to the WTO provides a framework for policies and institutional changes supporting increased competitiveness.

WTO Implementation Support CTJ has recruited a full-time WTO advisor to support and build the capacity of the Government of Tajikistan in order to support implementation of the country’s policy and institutional commitments to WTO members made upon accession. Mr. Jovan Jekic is located within the

16 COMPETITIVENESS, TRADE AND JOBS IN CENTRAL ASIA YEAR 1 ANNUAL REPORT

Ministry of Economic Development and Trade and works closely with senior officials to support the Post Accession Implementation Work Plan approved by the Cabinet.

Time Release Study CTJ worked with the International Finance Corporation (IFC) funded Trade Facilitation Project to support the Customs Service of Tajikistan conduct a Time Release Study in accordance with World Customs Organization methodology. The primary objective of the TRS study was to find bottlenecks in border crossing procedures, to discuss reasons for delays caused by customs, other border agencies and/or the private sector, and, where necessary, to formulate an action plan for improvement. The study examined border crossing points with Uzbekistan, Kyrgyz Republic and Afghanistan. In addition to these international border crossings, the study also covered clearance times in four inland customs terminals. Over 800 interviews were conducted during the study and CTJ is awaiting approval from IFC to release the final report.

Export Promotion Study Tour to KazNexInvest Tajikistan and Turkmenistan do not have any public or private export promotion authority. Last year the Government of Tajikistan approved the “Export Promotion Strategy for 2016-2020” which recommends the need establishment of an authority on export promotion. CTJ intends to support this initiative. As an initial step, CTJ supported representatives from the Ministry of Economic Development and Trade, the Ministry of Agriculture, the Chamber of Commerce and Association of Exporters and Processors of Horticultural Goods to attend a three-day study tour to Kazakhstan to gain a better understanding of Kazakhstan’s experience in export promotion.

Access to Export Market Information More than 45 traders from the Khatlon and Sughd regions attended a seminar on Kazakhstan phytosanitary and retail requirements for importing horticultural goods. CTJ contracted the Kazakhstan Trade Policy Center staff to deliver the two days of training on SPS, technical regulations and retail chain requirements for horticultural imports. This event was organized jointly with USAID Feed the Future Water and Agriculture (TAWA) and USAID Women Business Empowerment Project in Tajikistan.

Participation of Khatlon horticulture industry representatives in the Sughd Trade Fair USAID CTJ and TAWA Projects jointly organized a trip of 12 horticulture industry representatives to Khujand to participate in the annual Sughd Agriculture Trade Fair on June 15-16, 2017. The majority of participants represented cold storage businesses in Khatlon, representing all 12 districts of USAID’s Feed-the-Future coverage. CTJ will continue cooperation with cold storage owners during the year two to build their capacity to become consolidation centers for horticultural goods in the Khatlon region.

FIATA training Tajikistan has the least developed freight forwarding industry in the region. Many factors impede Tajikistan’s transit trade potential particularly with Afghanistan. Together with the GIZ Regional Trade Facilitation Project, CTJ conducted a 12-day International Federation of Freight Forwarders Associations (FIATA) training course. Eleven participants from the transport and logistics industry successfully passed the exam and were certified with FIATA Diplomas, increasing their productivity and the competitiveness of the freight forwarding industry in Central Asia. The training was organized on a cost-sharing basis where CTJ, GIZ and the private sector participants equally shared all expenses for the event. The training was delivered by the Georgian Freight Forwarders Association, a FIATA accredited organization.

17 COMPETITIVENESS, TRADE AND JOBS IN CENTRAL ASIA YEAR 1 ANNUAL REPORT

Free Economic Zones (FEZ) Study Free Economic Zones area specially designated areas which offer incentives such as reduced taxes and other benefits in order to encourage investment and production in those locations. To attract foreign and local investment in a number of zones have been established throughout Uzbekistan.

The Government of Tajikistan has developed and operates four free economic zones – Sughd, Panji Poyon, Dangara and Ishkashim. The law permits tax and customs duty privileges and a wide range of activities are permitted provided minimum capital investment targets are met. Stakeholders are concerned that the FEZs are not meeting their full potential. The Ministry of Economic Development and Trade invited consultant, Jose Ceron, to review the FEZ regime in September.

Mr. Ceron recommended a series of legislative, training and institutional actions to strengthen the regime. Providing a concession to the private sector to develop and operate one or more zones would likely incentivize zones to attract more enterprises to locate in the zones.

Strengthening Market Linkages Between Tajikistan and Pakistan The USAID Pakistan Regional Economic Integration Project (PREIA) and CTJ Tajikistan worked with the Government of Tajikistan and both Chambers of Commerce and Industry of Tajikistan and Pakistan to organize a Pakistan - Tajikistan business forum in Dushanbe, Tajikistan. Fourteen businesses representing a variety of sectors from Pakistan arrived in Dushanbe to find business opportunities with businesses from Tajikistan. The forum provided an overview of the trading environment in Tajikistan followed by B2B meetings, and site visits to large textile and construction materials’ retail and wholesale markets in Dushanbe, including the “Vahdat Textile” factory.

TURKMENISTAN

CTJ is working with the private sector in Turkmenistan to strengthen the competitiveness of SMEs.

In particular, CTJ is supporting the Union of Entrepreneurs and Industrialists to support local companies in increasing exports and improving the quality of their products.

Support to Financial Sector CTJ started translating the International Valuation Standards 2017 (IVS) from English into Russian and Turkmen. The work is carried out as part of our assistance to the Union of Economists, which acts as a financial valuation professional association, and the Ministry of Economy and Development, which is regulates the valuation sector. The availability of IVS in the local languages will contribute to the development of the valuation sector and to the professional growth of local valuators. A sound and well-functioning valuation sector is a key to the implementation of Turkmenistan’s privatization program. It is also important for the private sector development, because a developed valuation sector determines a fair, market-based value of businesses and assets, which is crucial for potential investors.

Export Promotion and Networking In April 2017, CTJ facilitated the participation of five Turkmen businessmen in the Horticulture Export Promotion and Competition Development business forum arranged by CTJ on April 27-28 in Samarkand, Uzbekistan. The participation of the Turkmen businessmen resulted in signing four letters of intent with counterparts from various countries of the region and beyond.

18 COMPETITIVENESS, TRADE AND JOBS IN CENTRAL ASIA YEAR 1 ANNUAL REPORT

In June 2017, CTJ arranged for the participation of two high-ranking representatives of Turkmen transportation companies at the Central Asia Transport & Logistic Partnership meeting and the Astana Economic Forum held on June 14-16, 2017.

ISO Training

Many local companies are desperate to start exporting or increase their exports to earn hard currency due to the shrinking local market and difficulties related to converting the Turkmen manats into U.S. dollars in Turkmenistan. In this regard, CTJ has received numerous requests from the private sector asking for support in getting local companies and their products internationally certified in accordance with international standards, especially ISO standards aimed at improving the quality of products. To provide the requested support and to build the capacity of local businesses, CTJ conducted the following ISO trainings:

In July 2017, CTJ, jointly with the EU-funded SARD project, conducted a course on ISO 9001 (quality management standard) for consultants and managers of private companies that are willing to implement ISO standards at their enterprises. The participants received skills and knowledge to independently design and implement quality management standards at local enterprises in line with ISO 9001:2015 and/or smoothly transit from the outdated version of 9001:2008 to the current 9001:2015 version.

On August 29-31, 2017, USAID Competitiveness, Trade, and Jobs Activity in Central Asia conducted a training course on ISO 19011 standard (internal audit), which focuses on auditing of implemented ISO 9001 (quality management) and ISO 22000 (food safety) standards, for 15 local company managers, consultants, and experts. The purpose of the course was to address the lack of quality management experts and consulting services in that area. CTJ engaged SGS, a leading global certification body to deliver the course. After completion of the course, the participants acquired skills to independently design and implement audit programs in line with ISO 19011 requirements at local enterprises. The ISO implementation and certification will allow companies to improve the competitiveness and will provide a sustainable basis for further improvement.

In August 2017, CTJ also translated ISO 15421 (Information technology -- Automatic identification and data capture techniques -- Bar code master test specifications) at the request of GS1 Turkmenistan (national barcoding organization).

UZBEKISTAN

Uzbekistan is implementing a series of economic reforms that are expected to improve the competitiveness of the economy, ensuring sustainable growth of jobs and exports. Under the recent National Development Strategy (2017-2021), a single exchange rate was introduced on 5 September eliminating former distortionary practices, export transactions with a value less than $20,000 no longer require total prepayment, and more competition was permitted among exporters. Bilateral agreements on transport and border crossing points were signed with neighboring countries, particularly with Tajikistan.

Samarkand Horticulture Export Promotion Forum CTJ, the State Committee of the Republic of Uzbekistan for Assistance to Privatized Enterprises and Development of Competition, and the GIZ Regional Programme “Trade facilitation in Central Asia” held a business forum entitled “Horticulture Export Promotion and Competition Development” and a horticulture exhibition on April 27-28, 2017 in Samarkand, Uzbekistan. The

19 COMPETITIVENESS, TRADE AND JOBS IN CENTRAL ASIA YEAR 1 ANNUAL REPORT

forum and exhibition supported regional horticulture export promotion efforts and competition development, boosting economic growth in Central Asia.

The event was generously supported by the Samarkand Province Authority. The Governor of the Samarkand Province and the First Deputy Governor attended the event. Horticulture producers, traders, buyers, retail chains, investors, officials and development institutions from all five Central Asian countries gathered with importers and traders from Afghanistan, Belarus, Germany, France, Israel, Latvia, Lithuania, Russia, Turkey and Ukraine. In total, over 200 participants attended the two-day event discussing potential transactions and innovative solutions to stimulate exports of the horticulture in Central Asia.

The Forum generated 38 letters of intent between participants indicating their interest to trade horticultural products valued at over of $40,700,000. On the next day, over 100 delegates visited Urgut, a newly designated free economic zone. The program included an exhibition of over 20 horticulture and textile producers and a visit to the Urgaz carpet production plant, paper packaging factory and cold storage facilities.

Horticulture Trade Mission to United Kingdom A group of nine Uzbekistan horticulture exporters joined 800+ artisanal food and drink suppliers at the Specialty & Fine Food Fair, the UK’s leading event in London to meet retail, wholesale and foodservice buyers. Uzbekistan horticulture exporters attended a matchmaking event with British buyers at the Embassy of Uzbekistan in London. Participants started negotiations to ship capers, raisins, chick-peas, dried apricots, melons, and honey. At a separate meeting with the EBRD, the EBRD discussed its work in Uzbekistan to support private sector development.

The trade mission to UK was supported by the USAID Competitiveness, Trade, and Jobs Activity in Central Asia and USAID Agricultural Value Chains Project jointly with the Uzbekistan Chamber of Commerce and the British Embassy in Uzbekistan.

Free Economic Zone Study International special economic zone expert, Mr.