1.
CENTRAL ASIA INITIATIVE
INVESTMENT AND COMPETITIVENESS
IN CENTRAL ASIA
Focus on the Kyrgyz Republic
3rd Steering Committee Meeting
Bishkek, 14 November 2013
With the financial assistance
of the European Union

2.
Expected benefits of the project
REMINDER
1. Enhancing country competitiveness
• Assessing country policies on human capital, access to
finance, investment and trade promotion
• Developing targeted and practical action plans for
reforms
• Following-up on implementation and building capacity
2. Providing global visibility
• Reviewing policies and reform action plans with OECD
countries
• Showcasing the Kyrgyz Republic’s reform agenda as a
model in Eurasia
OECD Private Sector Development
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3.
The main objective of today’s meeting is to prepare for the peer
review of project results in Paris in December
1. To agree on the results of the assessment of policies for
competitiveness in the Kyrgyz Republic
2. To agree on the action plans for competitiveness reforms in
the Kyrgyz Republic
3. To agree on practical next steps from now to February 2014
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4.
OECD Eurasia Ministerial conference in Warsaw, June 28
Kyrgyz Republic volunteered to be reviewed by OECD peers
A National Co-ordinator was further appointed by Kyrgyz Republic government
OECD Private Sector Development
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5.
What is peer review and why is it effective?
An examination of one state’s performance or practices in a particular and welldefined area by other states
 Peer review relies on mutual trust among the states involved, as well as their
confidence in the process
 Peer review is a discussion among equals with no enforcing mechanisms
 Peer reviews encourage open dialogue and knowledge-sharing on policies under
review
 Peer reviews are highly effective due to peer advice and pressure
Peer review mechanisms are the main discussion platform among OECD members
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6.
The Kyrgyz Republic in the peer review process
OECD members to comment on current policies and action plans for reform
March-November 2013
Country work on
1.
2.
3.
Human Capital
Access to
Finance
Investment and
trade
promotion for
SMEs
3-4 December 2013, OECD Headquarters in Paris
Presentation of
the country work to OECD peers
Turkey
2. OECD
3. OECD
reviewer
to Finance
1. OECD
reviewer
on Human
Germany
reviewer
on Access
Korea
on Investment and
Capital
Trade Promotion
Eurasia Competitiveness Roundtable
Project Steering Committee
Kyrgyz Republic
Kyrgyz Republic
The peer review process is expected to stimulate the policy reforms implementation
in the Kyrgyz Republic
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7.
Project results to be peer reviewed include a policy assessment and action plans
for reform in skills, access to finance and internationalisation of SMEs
A
Assessment of 3
policies for
competitiveness
B
Action plans for
3 targeted competitiveness
reforms
 How to improve workplace
training schemes in
agribusiness ?
1
Human Capital
Development
2
Access to Finance
for SMEs
 How to set up warehouse receipts
financing for agricultural
producers?
Investment and
trade promotion for
SMEs
 How to help textile and garment
producers to move up the valuechain?
3
OECD, GIZ and public-private working groups to support the on-going work, with
in-depth involvement of civil society and business associations
OECD Private Sector Development
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8.
A
What are the major policy challenges for competitiveness in
the Kyrgyz Republic?
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9.
OECD peer review methodology
34 policy indicators have been assessed across three major policy areas
Assessment of three policy areas to define
priorities for reform implementation
Dimensions
1
•
Legal and regulatory framework
•
Sources of external finance
•
Financial literacy
Access to finance for SMEs
1.1
Sub-Dimensions
1. Access to Finance for SMEs
Legal and regulatory framework
1.2
Sources of external finance
Sub-dimensions
3. Investment and export promotion
•
Strategy and institutions
•
Credit guarantee schemes
Indicators
Level of Reform
1
2
3
4
5
Credit guarantee schemes
Indicators
Tools and public-private partnerships to
promote skills for jobs
1.2.1
Indicators
•
Education policy framework for business
needs
Indicators
5.3
ACAAs
1.1 Sources of external finance for SMEs
2. Skills development
•
Sub-dimensions
Public start-up funding
Investment and export promotion tools
Supply-chain financing
Each policy indicator is assigned a score ranging from 1 to 5 to measure the level of
policy development and monitor progress in implementation over time
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10.
Skills for Private Sector Development - Need to enhance public and private
sector co-operation to implement the national education strategy
5
4
3
2
1
2.1 Education policy framework for business needs
2.2.5 Training quality assurance
2.2.4 Access to training
2.2.3 Existence of workplace
training (internship/apprenticeship)
schemes
2.2.2 Development of a workrelated system of continuing
education and training
2.2.1 Skills gap analysis
2.1.4 Responsiveness of the
university system to business needs
2.1.3 Development of the VET
system
2.1.2 Workforce skills strategy:
design and evidence
2.1.1 Consultative processes in the
education system
0
2.2 Tools and public private partnerships to promote the skills for jobs
Implementation of workplace training schemes has been selected
as a tool to enhance public-private dialogue in education Private Sector Development
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11.
Skills for private sector development
Initial recommendations
Sub-dimension
1
Support the implementation of the national education strategy:
Education policy
•
Framework for
•
business needs
Tools and public
•
2
Enhance public private partnerships in education:
•
private
partnerships
to promote the
skills for jobs
Allocate a budget to enable main stakeholders to implement activities to
achieve defined goals
Identify mechanisms to enhance private sector contribution to education
and training provision, for example through VET programmes
Monitor the implementation of the strategy and hold regular public-private
consultations with social partners
•
Develop and implement efficient workplace training programmes (e.g.
internship/apprentice schemes) as a mechanism to enable students to
acquire first practical knowledge and skills for their future jobs during
their university studies
Extend the usage of skills gap analysis beyond pilot projects that already
exist in Naryn, Jalal-Abad and Osh regions to assess supply and demand for
skills
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12.
Access to Finance for SMEs – Need to further strengthen the legal and
regulatory framework and diversify sources of external finance
5
4
3
2
1
0
1.1.1 Cadastre
1.1.2
1.1.3
Collateral and Registration
provisioning systems for
requirements moveable
assets
1.1.4 Credit 1.1.5 Laws and 1.1.6 Creditor 1.2.1 Credit 1.2.2 Financial 1.2.3 Supply1.2.4
information procedures on
rights
guarantee
support
chain
Microfinance
services
distressed
schemes
services for
financing
Facilities
companies,
start-ups
instruments
receivership
(vouchers,
(warehouse
and
grants, etc.)
receipts,
bankruptcy
contract
farming, etc.)
1.1 Effective Regulatory Framework
1.2.5 Credit
1.2.6
1.2.7 Leasing 1.3.1 Financial
Unions
Availability of
literacy
Risk Capital
(e.g. venture
capital, private
equity funds)
1.2 Access to External Finance
1.3 Other
factors that
affect demand
and supply of
finance
Implementation of warehouse receipt financing has been selected as a
pilot project to improve usage of movable assets as collateral
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13.
Access to Finance for SMEs
Initial recommendations
Sub-dimension
Effective
1
•
•
•
•
regulatory
Framework
2
Access to
•
•
finance
3
Streamline procedures for registration of moveable assets
Review current legislation on collateral and provisioning requirements
Extend availability of credit information services
Strengthen creditor rights and enforcement mechanisms
Diversify and expand external sources of finance:
•
external
Other factors
Further strengthen the legal and regulatory framework for access to finance to
stimulate lending to SMEs:
Implement pilot projects to develop supply-chain financing instruments,
such as warehouse receipts
Expand activities of existing credit guarantee funds
Explore opportunities to attract risk capital (e.g. through business angel
networks and private equity funds)
Enhance financial literacy through targeted education programmes, for example
in business planning and financial reporting to enable SMEs to prepare higher
quality loan applications to banks.
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14.
Investment and export promotion for SME – Need to strengthen the
institutional framework for investment and export promotion
5
4
3
2
1
3.1 Investment and Export Promotion
Strategy and Institutions
3.2.8 National export/investment
promotion events
3.2.7 Financial support for export
promotion activities
3.2.6 Export promotion
programmes
3.2.5 Public-private consultations
with investors
3.2.4 Business linkage
programmes
3.2.3 Free economic zones (FEZs)
3.2.2 Aftercare services
3.2.1 One Stop Shop for investors
3.1.3 Monitoring and evaluation
of the agency
3.1.2 Investment/Export
Promotion Agency
3.1.1 Investment/Export
Promotion Strategy
0
3.2 Investment and Export Promotion Tools
Business linkage programmes have been selected as a pilot tool to upgrade
and integrate the CONFIDENTIAL – NOT FOR DISTRIBUTION global value chainsPrivate Sector Development
garment industry into
OECD
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15.
Investment and export promotion for SMEs
Initial recommendations
Sub-dimension
Investment and
1
Strengthen the institutional framework:
•
strategy and
Approve the 2013 – 2017 Export Development Strategy
•
export promotion
Strengthen investment promotion efforts, for example by setting up an
investment and export promotion agency with sector expertise, and by
defining clear roles and responsibilities to implement related activities
institutions
2
Further develop investment and export promotion tools:
Investment and
•
Implement business linkage programmes, as a mechanism to establish
linkages between SMEs and foreign investors and facilitate the
participation of domestic companies in global value chains
•
Assess private sector needs for government support and identify
investment and export promotion support mechanisms that can be
implemented with limited resources at hand
export promotion
tools
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16.
B
How to implement competitiveness reform in the Kyrgyz
Republic?
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17.
Despite being a relatively simple mechanism, the internship contract and its
regulatory framework among players are key aspects to consider
WORKPLACE TRAININGS IN
AGRIBUSINESS
REGULATORY FRAMEWORK
FRAMEWORK TO:
Service and contract
Students
Wage and training
Training
report
Monitoring
• Provide certainty to
employers
FIRMS
(PRIVATE
PLAYERS)
Convention
Educational
institutions
Feedback
on CVs
• Protect students (e.g.
medical coverage, insurance)
and employers (e.g.
confidentiality)
• Rule the interaction
between Universities and
private players
• Promote the Schemes
• Provide internships which
are relevant to the players
and of high quality
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18.
Action plan for the establishment of workplace training schemes in
WORKPLACE TRAININGS IN
agribusiness
AGRIBUSINESS
1
Strengthen the legislative framework and set incentives
• Introduce an internship/ apprenticeship convention/ contract
• Agree on a duration and on a minimum remuneration for workplace training
Short
term
2
•
•
•
•
•
3
Medium
term
Long
term
Ensure the engagement and ownership of the private sector
Set up career services within agricultural institutions
Build a database (through alumni and company visits)
Organise outreach events, career fairs
Consider creating financial incentives for employers that offer workplace training
Provide workplace training opportunities on a competitive basis
Ensure that students are efficiently matched with training places
• Create a formalised platform to match supply and demand
• Monitor the practical experience using a feedback report on the match of student skills
for firm needs
4
Promote education in agribusiness
• Adjust educational institutions’ curricula based on recommendations of agricultural firms
• Market agribusiness as an attractive career option for students
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19.
Warehouse receipt financing can improve access to finance providing
benefits to both agricultural players and to the banks financing them
WAREHOUSE RECEIPT FINANCING IN AGRIBUSINESS
Warehouse receipt financing
Agricultural supplier/
producer/ processor/
distributor/ trader
Deposited
goods
Warehouse
Warehouse
receipt
Benefits to agricultural players
•Manage price volatility
•Access to working capital finance
without having to sell crops at times
of low prices
Benefits to banks
Warehouse
receipt
Loan
Financial
institution
Examples of production used as collateral: seeds,
fertilizers, grains, sugar, potatoes, fresh fruits and
vegetables, processed fruits and vegetables, dairy
products
Reducing the risk by shifting the risk
from the borrower to the warehouse
operator
Sector benefits
•Increases transparency and efficiency
in commodity markets
•Addresses collateral and liquidity
constraints
•Encourages the development of
warehouses and the logistical network
around warehouses
Source: World Bank, FAO (2009), The use of warehouse receipt financing in agriculture in transition countries
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20.
There are two approaches to the development of warehouse receipt
financing in agribusiness
WAREHOUSE RECEIPT FINANCING IN AGRIBUSINESS
National
Sub-national
Implementation at national level with
the development of all the elements in
parallel
Implementation at regional level with
certain banks farms or warehouses and
scaling up of the schemes later on
Key factors:
•Institutional setting at national level
•Ability of the banking sector to quickly
adopt innovative forms of financing
•Examples: USA, Bulgaria
Key factors:
•Capacity of farmers to organise
•Strength of local associations, cooperatives and other associative bodies
•Willingness to accept innovative forms
of financing
•Examples: Malawi, Madagascar
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21.
Draft action plan for the establishment of warehouse receipt financing
in agriculture
WAREHOUSE RECEIPT FINANCING IN AGRIBUSINESS
1
Short
term
Identify and engage partners
•
•
•
2
Put in place elements to ensure the credibility of the scheme
•
•
Medium
term
3
ensure access to agricultural information
support the development of a wider range of insurance products for agricultural sector
Set up the legal and regulatory framework
•
•
•
•
Long
term
reliable storage facilities at strategic locations
development of trade and distribution services in agricultural co-operatives
dissemination of information about financing opportunities among farmers
4
establish a certification agency
establish an indemnity fund
ensure compliance of warehouses with the standards
build reliable systems for collection and dissemination of agricultural information
Promote investments in the warehouse system
•
Build a warehouse/logistical centre based on a public-private partnership
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22.
The challenge is to sustain the industry’s development in the
long term
INVESTMENT AND TRADE PROMOTION IN
TEXTILE/GARMENT
Improved company capabilities
and business environment
Improved business connections
Capabilities
Large/foreign
firm
•e.g. improved skills and knowhow
through human capital development
• e.g. improved equipment and
technology through better access to
finance
•e.g. improved knowledge of
markets and suppliers
Value-added business
relationships, e.g. FOB contracts,
long-term contracts, investment
Increased integration
in regional/global
value chains
•e.g. improved collective capabilities
through co-operatives
Business environment
•e.g. trade and tariff agreements,
investment policy, tax policy
Local firm
Local firm
Local firm
•e.g. infrastructure, Technopolis
Increased financial resources, knowledge transfer and ultimately higher added value products
Sources: OECD ECP
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23.
Draft action plan on fostering the development of the garment
industry in the context of global value chains INVESTMENT AND TRADE PROMOTION IN
TEXTILE/GARMENT
1
Focus on areas of strength
•
•
•
2
Decrease the number of actions in the strategic documents
• By evaluating past industry development initiatives, including the “patent” system
• By taking stock of the priorities of government and potential donors
Focus on garment production
• For textile production, rely on agricultural development and investment attraction
Focus first on Russia, Kazakhstan and other CIS markets
Enhance the capabilities of companies
•
•
•
3
Focus on the development of technical skills
Improve access to equipment through basic schemes
Foster the creation of co-operatives
Ensure that the Bishkek light industry Technopolis brings the expected results
•
•
4
Ensure that the planned project responds to actual business needs
• Through a feasibility study
Not only provide infrastructure, but also collective organisation
Increase trade promotion and start sector-specific investment promotion
•
•
Continue and scale up existing trade promotion efforts
Start investment promotion for the sector
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24.
What are the next steps?
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25.
Next major step is the peer-review session of these results
OECD Headquarters, Paris, 3-4 December 2013
2013
July
Working level
2nd WG Meeting
Work-in-progress
Foreign experts
invited
16-17 July, Bishkek
Steering
Committee
level
Meeting
Follow-up on
the Ministerial
Update on the
country work
17 July, Bishkek
International
level
November
2014
December
OECD reviewers’ visit and 3rd WG
meeting
Finalisation of the horizontal
assessment
Finalisation of the 3 targeted
reform plans
February
Meeting
Capacity-building
workshops on
« How » to
implement the 3
targeted reform
plans
12-14 November, Bishkek
Meeting
Endorsement of
the 3 peerreviewed targeted
reform plans
Launch of 3 OECD
Policy Handbooks
Meeting
Review and endorsement of the
country work – horizontal
assessment and 3 targeted reform
plans
14 November, Bishkek
Eurasia Comp.
Roundtable
Peer-review of
the country work
3-4December, Paris
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26.
Key decisions
1. Approve the results of the assessment of policies for
competitiveness in Kyrgyz Republic in:
o
o
o
Enhance public-private sector co-operation in the implementation of the national strategy for
education
Strengthen the legal and regulatory framework for access to finance and diversify sources of
external finance
Strengthen the institutional framework and implement targeted tools to promote investments and
exports
2. Approve the targeted action plans for competitiveness reform
o
o
o
3.
Workplace training for agribusiness: framework and incentives, business ownership, matching,
promotion of careers in agribusiness
Warehouse receipts for agribusiness: partners, credibility, regulatory framework, investments
Textile and garment: focused strategy, company capabilities, cluster creation, promotion of the
sector
Practical next steps
o
o
December 2013: Kyrgyz Government delegation to come to Paris and discuss the results with OECD
peer countries and other Eurasia countries
February 2014: Capacity building events to further support implementation of the 3 targeted plans
for reform
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27.
Background information
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28.
Each policy indicator is assigned a score ranging from 1 to 5 to measure
the level of policy development
The policy development path of each indicator is typically structured around the
following lines:
• Level 1: There is no framework (e.g. law, institution, project, initiative etc.) in place to
cover the area concerned.
• Level 2: There is a draft or pilot framework and there are some signs of government
activity to address the area concerned.
• Level 3: A solid framework is in place for this specific policy area.
• Level 4: Level 3 + some concrete indications of effective policy implementation of the
framework.
• Level 5: Level 4 + some significant record of concrete and effective policy
implementation of the framework. This level comes closest to good practices as
identified by OECD standards.
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29.
Design of targeted reforms is on agribusiness and textile/garment since
both sectors have strong potential for SMEs, FDI and exports growth
How could the OECD
Project help ?
Agribusiness
Garment /
Textile
REMINDER
SMEs
FDIs
Exports
Other barriers
Access to Finance
Human Capital
Investment and trade
promotion
Energy
Energy prices
distortion
!
Mining
Limited impact on
employment
!
Tourism
Infrastructures
first
!
Logistics
Infrastructures
first
!
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