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Kyrgyzstan: Travel Industry Relies on Compatriots

The industry will seemingly fail to earn 700 million dollars as was planned.  Workers in this sphere hope at least to cover current expenses by means of domestic tourists. If the latter have spare money for tourism.

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Trekking is the main source of foreign exchange earnings for the travel industry of Kazakhstan. Photo: BS LandscapePhotography/Flickr.com

A 36-year old resident of Karakol, Sovetbek Kachkynbaev, has been involved in this business for three years. From April to October, during the summer season, nearly two thousand guests visit his mini hotel. Almost 90 per cent of tourists that visit the city are the nationals of EU, USA, Australia and Japan. Karakul is more popular with them than Cholpon Ata or Bosteri. Tourists from Russia and Kazakhstan comprise even less than one per cent of the total number of tourists.

“Karakol is a transit centre. Foreigners here procure food, tents, stay overnight and go trekking for a few days. Then they get back and spend a day or two here visiting museums and sights,” Kachkynbaev said. “These tourists come here to see what our country is like. They want to explore something new every day. Therefore, they don’t spend more than 2-3 nights at one place.”

Because of coronavirus pandemic, the traveling season this year is actually lost. Moreover, according to Kachkynbaev, he would be glad to achieve 50 per cent of last year’s statistics by May next year.

“We are not expecting any tourists until next April. Even if the borders are open. If we have visitors, they will be very few. We rely on Bishkek residents who come to the ski resort in winter. We can cover our heating expenses and won’t go into the red. For foreigners we used to cook Japanese food, which is rather expensive. As an option, we want to make it affordable to local buyers or we’ll go to Cholpon Ata for 2 months. The Russian and Kazakhstanis will come to Issyk Kul this summer anyway. However, it’s not clear yet,” he added.

Maksat Damir uulu. Photo: press service of the government

 Maksat Damir uulu, the head of the tourism department of Kyrgyzstan, reported first cancellations of booked tours in early March. A month later, head of ministry of culture and tourism Azamat Zhamankulov predicted that the number of tourists arriving to Kyrgyzstan would drop by 80 per cent. In May, it was reported that foreigners fully cancelled their booked tours.

After earning 613 million dollars in the industry in 2019, it was planned to earn up to 700 million this year.

“We still hope that the borders will be opened in July or August, but we won’t be able to get to the predicted level,” Maksat Damir uulu, director of the tourism department of the Kyrgyz Republic, said. “We hope to earn 25-30 per cent of last year’s earnings. It’s difficult to predict anything. No one knows how the pandemic will develop further. Somewhere it goes down, and then we again see the increasing number of cases.”

According to the manager of one of travel agencies, Saltanat Toksumakova, foreign tourists started making reservations in Kyrgyzstan for this spring and summer back in autumn. However, the demand for travel services has declined significantly.

“We didn’t want to earn money because of this situation and we stopped selling. According to my experience, this period should be waited out,” Toksumakova, said. “We didn’t sell any tours in February. We sold only air tickets. Moreover, the payment for unpaid tours would not be compensated because of force majeure. They can only be postponed, although for indefinite term. Hotels wait for air tickets, airlines wait when the state will open the skies.”

As there were no sales, agency employees had to take unpaid leaves. However, no one can guarantee jobs to them. According to Toksumakova, more than one third of travel companies in Kyrgyzstan had to close.

Despite the fact that every year the top echelons of power claim that it is tourism in Kyrgyzstan that needs to become a priority in economy, no special approach to the problem of the industry has been offered. Currently, the republic has over 600 travel companies. More than 11 thousand entities are associations of guides, transport operators, restaurant keepers, owners of yurt camps and guesthouses. The exact number of people involved in the industry is unknown. The dedicated agency reports some 100 thousand people. They received government support on the same basis as other sectors of economy – three months of repayment holidays and tax holidays.

According to Ermek Myrzabekov, the chair of the Association of Tourism of the Kyrgyz Republic, a small travel agency earns up to 100 thousand som a month, but now they face only losses.

“Holidays won’t solve any problems, just postpone them. The borders are still closed. We are allowed to work, but in fact we have nothing to sell. This situation will last for 3-4 months, and we’ll have to pay all taxes at once in 3 months. We won’t earn anything in this period, so this is not an exemption,” Myrzabekov said.

Moreover, larger travel agencies who decided to pay salaries to their employees keep on paying taxes and social expenditures.

Emil Umetaliev. Photo: Facebook.com

“We have not had any income for two months, but we keep on paying taxes,” Emil Umetaliev, president of Kyrgyz Concept, said. “To retain our staff, we keep on paying salaries, which are allowances in fact. Payments should be made for labour, and once there is no labour, social allowances by rights should be paid by the government. However, it cannot do this, and we are trying to support each other, and in this case the state should not impose taxes and social expenditures on us. However, it is doing it and will be doing it in future. The situation is absurd.”

According to Umetaliev, multimillion projects that were implemented were suspended because of coronavirus for this and even 2021 and 2022. Several thousand Kyrgyzstanis gain income from cooperation with this company including organisers of horse riding tours, national cuisines, owners of guesthouses, and waiters and drivers.

According to ex-minister of economy, now member of Zhogorku Kenesh, Akylbek Zhaparov, 50 per cent of GDP of Kyrgyzstan are made up of services and trade, whose lion’s share falls on tourism. The industry is focused on international tourists mainly, which makes it very dependent on the factors that are beyond the country’s capacities.

“This focus has played a low-down trick on us,” Zhaparov said. “It’s not only coronavirus that led to the crisis, but also the structure of our economy, the system of government of a state. 70 per cent of all goods are imported from abroad. Coronavirus has shown that borders can close within a day.”

“There will be great losses in terms of self-employment, not in terms of budget losses,” he said. “One-fourth of GDP of Kyrgyzstan is in the shadow, almost 80 per cent falls on the sector of services and trade. Many people would lose their jobs. No one has actually felt any effect from 14 billion som that were spent by the government to support the economy.

Lion’s share of earnings from domestic tourism belong to the beaches of Issyk Kul. Photo: Tripadvisor

According to Zhaparov, Kyrgyzstan has already lost 33 billion som as taxes. By the end of the year, State Tax Service predicts losses up to 43 billion.  The situation in the travel industry is one of the most deplorable.

“In China, out of 25 million tourists there are only 4 million of foreigners, the remaining 21 million are their nationals. It means the industry is sustainable. We need a state programme to have the government pay some expenses for the leisure of local tourists. We also need to increase the number of south-north flights and to purchase new comfortable buses to develop our domestic tourism,” Akylbek Zhaparov suggested.

The government also speaks of domestic tourism development. Thus, they are planning to earn at least 30 per cent of 2019 proceeds. According to Maksat Damir uulu, Kyrgyzstanis spent nearly 350 million dollars last year for their leisure abroad. On June 1, the summer travel season was officially announced open in Kyrgyzstan.

The title of ‘Honorary Tourist’ was introduced to involve active citizens. The requirements are to visit and make a picture of 10 national sights such as Burana Tower, historical complexes Uzgen, Tash Rabat, reserves of Sary Chelek, Arslanbob, Sulaiman Too, etc.

However, some experts are not optimistic about this idea. Many citizens, according to them, lost their sources of income and their savings during the pandemic. According to experts, people will be saving on tourism as well as many other non-essential things.

As part of anti-crisis plan, the travel business asked the government to exempt them fully from taxes until the end of 2020.  If they earn some money, according to them, they will pay to their staff who was left destitute.  The document developed jointly with the tourism department is now under consideration of the government. Entrepreneurs are also going to ask the national bank to ease some requirements due to the difficulties with loan disbursement. However, it’s not clear which requirements they are going to ease. For the rest of summer vacations, the representatives of travel businesses are going to focus on tourists from CIS. To this end, a single plan of travel packages is going to be developed jointly with resorts, and a big promotion will be launched internationally. Besides, tour operators together with colleagues from other Central Asian states are going to develop joint travel projects along Silk Road that cover all countries in the region. However, no one will sell this product this year. 

This article was prepared as part of the Giving Voice, Driving Change – from the Borderland to the Steppes Project implemented with the financial support of the Foreign Ministry of Norway.

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