New Tourism Development Fund in Kyrgyzstan: What Is It and What Is It For?

In March 2022, Prime Minister Akylbek Zhaparov signed a document on the establishment of an open joint-stock company “Tourism development support fund in the Kyrgyz Republic”. According to the Government, its activities will help:

• improve the infrastructure for the reception of tourists in the regions;
• create additional jobs in remote regions of our country;
• support socially vulnerable segments of the population, namely women, by conducting training programmes and master classes, as well as increasing employment of the population in tourist locations;
• improve the level of education of the population and the quality of services provided in the field of tourism;
• expand the geography of tours and create more attractive and competitive tourism products;
• qualitatively increase the number of tourists visiting the country;
• improve the image of Kyrgyzstan internationally.

According to the head of the Fund Yelena Kalashnikova, it was created under the Ministry of Economy and Commerce of the Kyrgyz Republic (while the tourism sector is controlled by the Ministry of Culture) as a commercial organisation in the form of an open joint-stock company with 100% share of the state. And 1 billion som (12.035 million dollars at the rate of NBKR as of 26.04.2022) is provided on the terms of repayment.

The head of the Fund became Yelena Kalashnikova, director of the travel company “Ak Sai Travel”, which has been on the market for more than 20 years. This raised a number of questions as to whether an active entrepreneur can head a state enterprise.

“A person from business must not join state organisations because he surely will look at everything in terms of his business. Either officials don’t know anything about this matter so that they are ready to give the job to some businessperson, or they will delegate all their problems to Yelena Anatolyevna, and finally she will be held responsible. I hope she understands the whole plenitude of responsibility,” Nur Saparov, executive director of the Kyrgyz Association of Travel Operators (KATO) said.

“I want to say that the Fund will not be allocating loans, grants for business development. Let’s see the specific example. There is a 9-storey house with good apartments inside, everyone made a good layout, good repair. And entrances are awful, no one is responsible for their maintenance. The house’s value declines and no one wants to buy apartments in it because the house look terrible both inside and outside. We have a similar situation. The fund’s task now is to repair the entrances to increase the value of the whole market,” Kalashnikova said to CABAR.asia.

At the end of March, the Fund submitted 34 projects to Head of Government Akylbek Zhaparov and they are pending. All of them, according to Kalashnikova, were developed before the official registration of the Fund with the justice bodies, and work on its formation began last year in autumn. Therefore, all 34 projects will be implemented simultaneously upon approval and all of them, according to Kalashnikova, will be paid off.

Not really. The Tourism Department of the Ministry of Culture, Information, Sports and Youth Policy builds the positive image of the country, creates conditions for tourism development, and improves efficiency of national policy in this area.

“I think this is a political matter. We as the Tourism Department just pursue the policy, and the Fund will be dealing with economic issues, therefore it was [established] at the Ministry of Economy,” said Samat Shatmanov, deputy minister of culture, information, sport and youth policy of the Kyrgyz Republic, and director of Tourism Department.

As it was found out, representatives of the tourism market did not take part in discussion of new projects and are still unaware of the innovations.

“I, as a person who is directly related to tourism, provides services, works in the region, have questions like “What are those projects? Who are they intended for? Why haven’t we been invited to get familiar with the projects? Why haven’t they learned about our regional needs?” Albina Alimova, chair of the board of Destination Karakol Public Association, said with resentment.

The organisation brings together nearly 50 business entities in tourism in the city of Karakol. Among them are owners of cafes, restaurants, hotels, guest houses, and inns. In general, the association takes part in promotion of 16 tourism products within the city and in the suburbs (tracking, tours to hot springs, gastronomy tours, photo tours, jeep tours, etc.).

Representatives of Destination Karakol expected that this year would be special for the city: it will be the place of the biggest events and the tourist hub. The reason is that Karakol was announced the cultural capital of CIS countries 2022 for the first time.

However, according to Alimova, there have not been any announcements of the forthcoming big events. Until the end of the year, the residents of Karakol will need to hold at least 10 events before this title goes to another CIS country.

“Maybe, financial issues have not been resolved yet. This is not the local issue, but the republican. If we don’t have the approved document, we won’t be able to announce it. The document was forwarded and translated into two languages. We had to announce forthcoming events back in February to attract tourists. So, we are disappointed in this regard,” Alimova said. 

The head of the new fund haven’t provided the full list of projects to CABAR.asia, but promised to do it later for all participants of the tourism market. So far, construction of 68 so-called rest points across the country is being discussed. They will have modern public toilets, cafes, shops.

They all will belong to the Fund, and the new management company of the Fund will be running them. The financial model looks as follows – more successful and budget revenue generating ones will finance subsidised ones. There are going to be 18 subsidised rest points.

“Thus, we will show the business how it works and will be promoting a kind of franchise policy. The Fund may go shares, start up new businesses, and then reduce its share by selling it to new stockholders,” Kalashnikova said.

The second important project deals with construction of tourism centres, which will contain public toilets, shops, cafes. However, according to the Tourism Department, international organisations have granted 3.5 million dollars to its implementation.

“Upon completion of construction we can transfer them to businesses under the public private partnership line or to the Fund’s ownership. The main point is to activate them and to make them sustainable,” Samat Shatmanov, director of the agency, said.

The third project that is going to be developed by the Fund is the cataloguing of all cultural monuments, natural and other tourist places. In the follow-up, one of the main problems in the sector is going to be resolved – proper country positioning and its awareness on the international market.

“For example, Holy Apostle relics are of interest to European people, poet Li Bai is of interest to China, the battle of Talas is of interest to the Turkic people. When we create advertising for tourists from different countries, we’ll focus on these things,” Yelena Kalashnikova said.

The cataloguing will also help identify natural and historical objects that need to be restored.

The Fund is also planning to take control of state vacation hotels, holiday centres and health resorts and to catalogue them. Previously, the state-run enterprise “Kyrgyz Tourism” was established to this end. However, it has failed to take unprofitable enterprises to the new level for several years. Today, its functions have been transferred to the new Tourism Development Support Fund.

The idea of construction of rest points is not new in the tourism market of Kyrgyzstan and officials have been trying to implement it for several years. According to ex-head of state enterprise “Kyrgyz Tourism” Daniyar Kazakov, in 2020-21 he suggested to build 100 one-style rest points across the country. But he could find only two land plots during that time.

“All these land plots belong to aiyl okmotu (local authorities – author’s note) and are allocated between local residents. Once we come to them, they say, “Buy them!”, and we can do nothing about it. As long as the Land Code does not specify that lands need to be allocated for tourism objects, their words will remain just words,” Kazakov said.

According to experts, all relations between tourists and businessmen must be guided by market mechanisms only, and the state’s task is to create proper conditions.

“Why build them? You just specify the standards, give land plots for free, and investors will take loans and implement the project themselves. The Fund’s task is to ensure it. The state should not deal with it, the state must create conditions for the private sector. Whenever the state meddles in, I start to take it sceptically,” Nurbek Saparov, executive director of the Kyrgyz Association of Tour Operators, said.

Cataloguing of objects causes scepticism in travel companies. According to Albina Alimova, chair of the board of public association “Destination Karakol”, there should not be cataloguing only, the single register must be created and relevant standards should be introduced.

“Many objects have been leased out to individuals who do not create proper conditions for tourists. What do we pay for when we visit such places? There are no waste bins, no modern public toilets. Look at yurt camps. Where do they pour out used water? To the river. We need to think about the future and preserve the nature,” Alimova said.   

According to Yelena Kalashnikova, first, the number of tourists entering the country needs to be managed.

“The number of tourists here exceeds 8 million. So, all international organisations, such as UNWTO, say, “Why help you? You have more tourists than citizens.” No country has such a situation. Given this situation, we need to build the strategy to protect our country from tourists so that they don’t tread down our land. Otherwise, we won’t be able to live in this country in a year because they rely on official statistics. And we take these strategies because we pay for them,” Kalashnikova said.

According to her, if we follow the recommendations given by international organisations to introduce standards, for example, of marking of travel routes, we can attract new tourists. Foreign experts will be promoting our country by saying that it is well-organised.

Meanwhile, the regions feel the need to carry out the campaign of raising country awareness as a travel destination. Residents of some regions do not know about the existence of natural and cultural objects located in other parts of the republic and vice versa.

According to the Tourism Department, the new website map.tourism.gov.kg allows travelling across Kyrgyzstan online, but not all citizens know about it. For example, public association “Destination Karakol” use the website discoverykyrgyzstan.org up to date and feel dissatisfied because “it was not updated for a long time, whereas it could be used as a powerful tool to promote all tourism products of the country.”

However, whatever the approach, local providers and tour operators are more focused on foreign market. So, they want the state to promote the country’s recognition abroad.

“Lack of tourists is our pain. Our Karakol can accept twice as much tourists than it does now. But where can we take them from? Of course, we can accept domestic tourists, but they will be looking for cheap accommodation and board, while mountain tours are not cheap ones – tents, equipment are expensive,” Albina Alimova said.

And according to Asylbek Razhiev, local tourists have low paying capacity.

“It’s cheaper for them to go to Turkey than to Issyk-Kul. I’ve seen recently a crazy offer – 380 dollars for 8 days in Turkey, all inclusive, except for lunch and dinner. Therefore, our people will be having rest abroad,” he said.