Moldova Competitiveness Project

MOLDOVA COMPETITIVENESS PROJECT

QUARTERLY PROGRESS REPORT

APRIL 1 – JUNE 30, 2019 QUARTERLY REPORT

YEAR 4 QUARTER 3 (FY2019 Q3)

SUBMITTED: JULY 12, 2019

RESUBMITTED: AUGUST 13, 2019

Prime Contractor: Chemonics International Inc. www.chemonics.com/

Partners: J. E. Austin Associates, Inc. www.jeaustin.com

Bhavana World Project www.bhavanaworldproject.com

Contract No.: AID-117-C-15-00001

PHOTO CAPTION: Students demonstrate the technology they have learned as part of the Future Classroom Pilot to MCP Chief of Party Doina Nistor, Swedish First Secretary Thomas Alveteg, Minister of Education, Culture and Research Monica Babuc, and USAID Mission Director Karen Hilliard at the Future Classroom launch. Credit: COVER PAGE PHOTO CREDIT: Orange Foundation

DISCLAIMER

This assistance is made possible by the support of the American, Swedish, and British people through the United States Agency for International Development (USAID), the Government of Sweden, and UK aid. The contents are the responsibility of the creator and do not necessarily reflect the views of USAID, the American, Swedish, and UK Governments.

TABLE OF CONTENTS

ACRONYM LIST ...... 7 EXECUTIVE SUMMARY ...... 9 SECTION I ...... 13

PROJECT TECHNICAL INTERVENTIONS DURING FY19 Q3 ...... 13

WINEGROWING INDUSTRY ...... 13

OBJECTIVE 1: INCREASED PRODUCTIVITY AND QUALITY (BETTER WORKFORCE AND ADOPTED INNOVATION) ...... 13 PROGRAM 1. Upgrading quality and driving innovation in viticulture and winemaking ...... 13 ACTIVITY 1. ASW (Association of Small Winemakers) Mentorship Program - support the emergence and development of small wine producers ...... 13 ACTIVITY 2. ‘PQUP’ Program (Product Quality Upgrading Program): expanding the Wine of Moldova portfolio ...... 16 PROGRAM 2. Building knowledge for future growth ...... 16 ACTIVITY 1. “Best Grapes” and “FlaveDor” - piloting innovations in vineyard management and grape quality improvement ...... 18 OBJECTIVE 2. EXPANDED MARKET LINKAGES ...... 19 PROGRAM 1. Wine of Moldova international promotion program support ...... 19 ACTIVITY 1. Build Wine of Moldova Brand Equity and Foster Business Linkages ...... 20 ACTIVITY 2: Export Support Program (ESP): increased wine sales on target markets through firm-level marketing support ...... 23 PROGRAM 2. Enhance wine culture and grow a mature local market ...... 23 OBJECTIVE 3: IMPROVED SECTOR-ENABLING ENVIRONMENT AND INCREASED CAPACITY ...... 27 PROGRAM 1. Policy upgrading and legal regulatory reforms in the wine industry ...... 27 ACTIVITY 1. Support ONVV to continue policy, legal and regulatory reforms ...... 27 ACTIVITY 2. Finalize the Wine of Moldova 2030 strategy to guide long-term industry competitiveness, and promote in the Government ...... 28 ACTIVITY 3. Develop and strengthen the PGI wine associations ...... 29

TOURISM INDUSTRY ...... 31

OBJECTIVE 1: INCREASED PRODUCTIVITY AND QUALITY (BETTER WORKFORCE AND ADOPTED INNOVATION) ...... 31 PROGRAM 1. Start-up Tourism Moldova: product development, service quality upgrading and tourism offer diversification ...... 31 ACTIVITY 1. Wine-Up: Wine Tourism Accelerator Program ...... 31 ACTIVITY 2. Hospitality+ Moldova program: improving tourism hospitality infrastructure ...... 32 ACTIVITY 3. Go-Regional Tourism Start-Up: unveiling the tourism potential of Orheiul Vechi reservation and Purcari region ...... 34 OBJECTIVE 2: EXPANDED MARKET LINKAGES ...... 35 PROGRAM 2. Tree of Life Marketing Program: unveiling the hidden gems of Moldova to the world ...... 35 ACTIVITY 1. Placing Moldova on the map of world tourism: building brand equity and international awareness of Moldova as a tourism destination ...... 35 ACTIVITY 2. Foster business linkages and expand target markets ...... 37 OBJECTIVE 3: IMPROVED SECTOR-ENABLING ENVIRONMENT AND INCREASED CAPACITY ...... 37 PROGRAM 3: Re-Think Tourism Moldova. Building a sustainable public-private partnership ...... 37 ACTIVITY 1. Re-think tourism industry: reformed policies and regulation to ensure sustainable development ...... 37 ACTIVITY 2. Strengthen private sector voice to balance public-private dialogue ...... 37

LIGHT INDUSTRY ...... 38

OBJECTIVE 1: INCREASED PRODUCTIVITY AND QUALITY (BETTER WORKFORCE AND ADOPTED INNOVATION) ...... 38 PROGRAM 1. Strengthening ZIPhouse as the flagship institution in workforce development and fashion startup acceleration ...... 38 ACTIVITY 1. Enhance ZIPhouse institutional capacity ...... 38 ACTIVITY 2. Boost fashion creativity, startups and community building ...... 39 ACTIVITY 3. Develop industry skills through quality advanced technical education and training ...... 41 PROGRAM 2. SMART (Streamline Manufacturing, Accountability, Resource efficiency, and Transparency) Factory program ...... 42 ACTIVITY 1. Implement complex innovative methods to streamline manufacturing and productivity growth ...... 42 OBJECTIVE 2: EXPANDED MARKET LINKAGES ...... 46 PROGRAM 3. Expanding Market Opportunities ...... 46 ACTIVITY 1. Reposition Moldova as a full-product manufacturing partner and support internationalization of Moldovan fashion brands on regional markets ...... 46 ACTIVITY 2. Consolidate the Din INIMA Umbrella Brand and Expand Domestic Market ...... 47 OBJECTIVE 3: IMPROVED SECTOR-ENABLING ENVIRONMENT AND INCREASED CAPACITY ...... 48 ACTIVITY 1. Assist APIUS to Become a Strong Professional and Industry Association ...... 48

INFORMATION TECHNOLOGY, ENGINEERING AND CREATIVE SERVICES ...... 48

OBJECTIVE 1: INCREASED PRODUCTIVITY AND QUALITY (BETTER WORKFORCE AND ADOPTED INNOVATION) ...... 48 PROGRAM 1: Promoting STEAM Education and STEAM fields Careers...... 48 ACTIVITY 1. Pilot the Future Classroom (FCL) Concept in Moldovan schools ...... 48 ACTIVITY 2. Expand Educational Robotics Program ...... 49 ACTIVITY 3: Support private initiatives for improving STEAM education and promoting STEAM careers .. 50 PROGRAM 2: Build the Ecosystem for Workforce and Entrepreneurship Development ...... 51 ACTIVITY 1. Develop Regional Innovation Centers (Balti, Regional FabLabs) ...... 51 ACTIVITY 2. Creative Hub – the grand opening ...... 51 ACTIVITY 3. Fab Lab Chisinau – coaching the ATIC/TUM partnership ...... 53 ACTIVITY 4. Support and develop IT and engineering laboratory cluster within TUM ...... 53 ACTIVITY 5. Improve the entrepreneurial ecosystem for innovation and creative services ...... 54 OBJECTIVE 2: EXPANDED MARKET LINKAGES ...... 56 ACTIVITY 1. Assist foreign market entry for domestic tech & creative firms and attract tech-based investors to Moldova ...... 56 ACTIVITY 2. Support private-driven initiatives to develop IT Parks ...... 57 OBJECTIVE 3: IMPROVED SECTOR-ENABLING ENVIRONMENT AND INCREASED CAPACITY ...... 58 ACTIVITY 1. Implementation of the Law on IT Parks ...... 58 ACTIVITY 2. Strengthen and update industry strategies ...... 58 ACTIVITY 3. Capacity Building for ATIC and COR business associations ...... 58

DELIVERABLES ...... 59

SECTION II ...... 60

PROJECT-LEVEL OUTCOMES AND RESULTS ...... 60

Sector Engagement, Enhancement, and Development (SEED) Fund ...... 60 ...... 61 Local Capacity Building Program ...... 61 Anti-Corruption ...... 62 Access to finance through special channels/USAID Development Credit Authority (DCA) ...... 62 Public-Private Partnerships ...... 63

Inclusive Development ...... 67 Monitoring & Evaluation ...... 69 Communications ...... 72 SECTION III ...... 77

HIGHLIGHTS OF ACTIVITIES PLANNED FOR FY19 Q4 (JULY-SEPTEMBER 2019) ...... 77

SECTION IV ...... 79

PROJECT ADMINISTRATION ...... 79

Level of Effort Report ...... 79 Administration and Finance ...... 79 MCP Project mapping ...... 81 ANNEX I. RISK ASSESSMENT ...... 82 ANNEX II. SUCCESS STORIES ...... 86

ACRONYM LIST

ANSA National Food Safety Agency ANTRIM National Association for Inbound Tourism APIUS Employers Association of Light Industry ASW Association of Small Wineries ATIC Moldovan Association of Private ICT Companies B&B Bed & Breakfast B2B Business to Business B2C Business to Company BSCI Business Social Compliance Initiative CEED Competitiveness Enhancement and Enterprise Development CIS Commonwealth of Independent States COP Chief of Party COR Association of Creative Companies DCFTA Deep and Comprehensive Free Trade Agreement DCOP Deputy Chief of Party DO Development Objective EU European Union ERC/EMMP Environmental Review Checklist/Environmental Mitigation and Monitoring Plans FI Founder Institute FCL Future Classroom Lab FY Fiscal Year ICT Information and Communications Technology ICTCE ICT Center of Excellence (Tekwill) IDC International Data Corporation ISO International Organization for Standardization. ISO 9001:2015 International standard “Quality management systems – Requirements” ISO 45000:2018 International standard “Occupational health and safety management systems - Requirements with guidance for use” JAA J.E. Austin Associates K Thousands LOP Life of Project M Millions MARDE Ministry Agriculture, Regional Development and Environment MCCI Moldovan Chamber of Commerce Industries M&E Monitoring and Evaluation MIA Moldovan Investment Agency MECR Ministry of Education, Culture and Research MICE Meetings, Incentives, Conferences, and Events Tourism MODARTS Modular Arrangements of Predetermined Time Standards MOU Memorandum of Understanding NJAL Not just a label ONVV National Office of Vine and Wine PDO Protected Designation of Origin PGI Protected Geographical Indication PIRS Performance Indicator Reference Sheet PMP Performance Monitoring Plan PMU Project Management Unit PPP Public Private Partnership PR Public Relations PQUP Product Quality Upgrading Program Q Quarter

UK United Kingdom SEED Sector, Engagement, Enhancement, and Development Fund SMART Streamline Manufacturing, Accountability, Resource Efficiency, and Transparency SME Small and Medium Size Enterprise STTA Short-term Technical Assistance TBD to be determined TOT Training of Trainers ToL Tree of Life TUM Technical University of Moldova USAID United States Agency for International Development USD United States Dollar USG United States Government WFTGA World Federation of Tourist Guide Associations WoM Wine of Moldova WTAP Wine Tourism Accelerator Program Y Year

EXECUTIVE SUMMARY

WINEGROWING INDUSTRY

MCP continued to improve the quality of Moldovan wine production through technical trainings and mentoring. With MCP assistance, Moldovan wineries won 580 awards international competitions. The project invested in viticulture research and knowledge development for key decision makers and initiated the development of a sectorial strategy to ensure the sustainable growth of Wine of Moldova on foreign export markets.

Increasing productivity, quality and skills: MCP prepared for the fourth round of its key wine quality improvement programs: The Association of Small Winemakers Mentorship Program and Product Quality Upgrade Program (PQUP). Graduates of these programs won medals and mentions at domestic and international competitions, including International Wine Contest Bucharest, Galicja Vitis and Decanter World Wine Awards. The project also invested in the winegrowing sector, training over 100 viticulturists in key challenges facing the sector (climate change, decreasing workforce) and over 450 other sector specialists on various subjects from marketing to sparkling wine production.

Improving market linkages: Wine of Moldova continues to diversify export destinations and strengthen its position on key export markets. Over 300 new market linkages were established, and Moldovan wine won 580 awards at international competitions. New results indicate that Wine of Moldova is continuing to shift away from traditional markets, towards EU and non-CIS countries. Over 40 hospitality workers were trained in wine service, and new wine culture events were developed.

Strengthening business enabling environment: MCP contributes to improving the regulatory and legislative framework impacting Moldova’s wine industry and continues to strengthen the National Office of Vine and Wine by increasing its accountability and transparency. MCP relaunched the development of the National Wine Strategy, leading Moldova’s winegrowing sector towards sustainable growth.

Wine of Moldova Pop-up stand in the central square of Brasov, Romania, June 14-16, 2019 Photo credit: ONVV

9 TOURISM INDUSTRY

In Q3Y4, MCP continued to strengthen Moldova’s unique rural, soft adventure and wine tourism products, increase awareness about the country as a new unspoiled tourism destination, and facilitate the creation of direct market linkages for local tourism business.

Increasing productivity, quality, and skills: The project provided personalized assistance to eight wineries and five rural guesthouses to upgrade the quality of food and wine experiences offered to tourists, and to increase customer satisfaction and potential visitor spend. MCP also conducted a training for the wineries’ sales and marketing managers on new trends in wine consumption and the peculiarities of the UK wine market.

Improving market linkages: In Q3, the project focused on expanding international awareness about Moldova as a tourism destination, with a strategic focus on developing quality content in internationally recognized travel magazines and online media resources to highlight Moldova’s strengths as an international tourism destination. In partnership with industry association ANTRIM, the project organized 10 press trips for 32 foreign journalists and influencers from key source markets including Poland, Italy, and Romania.

Moldovan inbound tourism operators developed direct market linkages with eight Italian outbound tour operators as part of a familiarization trip organized by tourism association ANTRIM with support from MCP and the Moldova Investment Agency (MIA). The Italian delegation visited key tourism sites, wineries and travel businesses across the country.

Strengthening business enabling environment: MCP continued to work on reforms to the tourism legal framework by initiating amendments to Law 356/2006 on tourism activity aimed at easing the regulatory burden on small and medium rural tourism activities. The project also assisted Moldova’s public authorities to define the role of the automated information system known as the "Tourism Registry"; and offered professional legal training to industry stakeholders about changes to the Civil Code with regard to travel packages.

Photo caption: World-class Moldovan musicians attract over 5,500 tourists at DescOpera Festival taking place at Orheiul Vechi Natural and Archeological Reservation during June 14-16, 2019 Photo credit: MCP

LIGHT INDUSTRY

In Q3Y4, MCP investments in skills development strengthened the competitiveness of emerging fashion entrepreneurs, and a continued focus on improving manufacturing efficiency resulted in a 22 percent increase in productivity in beneficiary companies. The project supported the consolidation of the DININIMA umbrella brand, gathering eight fashion companies to open two new DININIMA multi-brand stores in the Moldovan capital, Chisinau. MCP also assisted the development of a comprehensive data base of more than 120 light industry manufacturers, the majority of which are also members of the Light Industry business association APIUS.

Increasing productivity, quality, and skills: The MCP-supported fashion hub ZIPhouse was officially accepted as associate member of the 2019-2020 of the European Creative Hubs Network. ZIPhouse partnered with the International Trade Center and UK aid to deliver workforce development programs. 200+ participants from local fashion companies upgraded their business development skills at trainings delivered by ZIPhouse Fashion Academy and Leadership Programs. The ZIPhouse Fashion Accelerator and Z Generation Young Designers Competition continued to develop the skills of young fashion designers and entrepreneurs. Manufacturing improvements resulting from MCP SMART program investments led to an average 22 percent increase in productivity, plus new contracts, new jobs, and higher salaries.

Improving market linkages: Moldovan bridal designers made $10,000 USD worth of on- the-spot sales at a B2C bridal fair in Bucharest, Romania. 19 Moldovan brands were promoted on the local market at the Fashion Soiree 2019 catwalk, which showcased resort collections from local designers.

Z Generation Young Designers Competition participants and MCP Chief of Party, Doina Nistor (second from left) pose at the competition final at Artcor Center for Creative Industries. Credit: ZIPhouse

INFORMATION TECHNOLOGY, ENGINEERING AND CREATIVE SERVICES

MCP continued to strengthen Moldovan Science Technology Engineering Arts and Math (STEAM) education by investing in education hubs and skills development activities. The project focused on industry ecosystem development, supporting Moldova’s first virtual and physical IT Parks to begin recruiting members, and helping the creative industries to grow their industry association.

Increasing productivity, quality, and skills: Educational Robotics teams won prizes at national competitions in Moldova and Romania, and two teams will go on to compete in Regional and International competitions in Estonia and Detroit. 55 teachers and 21 coding mentors developed their technological and pedagogical skills to improve Moldovan STEAM education, and creative industry entrepreneurs improved design and business skills at courses in Moldova and Ukraine. Work progressed on the Balti Innovation Center, Chisinau Creative Hub, and FabLab Chisinau. Moldova’s first physical IT Park began advertising for tenants, strengthening the industry infrastructure and ecosystem.

Improving market linkages: MCP supported the ICT industry association ATIC to implement the Tekwill Travelers Program, designed to support IT and Creative companies to take part in international Events. Moldovan companies including Zeroqode, Beeast Games, and Atomik Fabrik participated in international events to develop new market connections and export their products and services internationally. MCP published the International Data Corporation (IDC) study “Moldovan IT Players Priming for Worldwide Presence” and distributed the report via a campaign targeting the Romanian ICT market.

Strengthening business enabling environment: Moldova’s first Virtual IT park reached more than 450 members, more than 30 percent of whom are IT companies with foreign capital. MCP continued to support amendments to the IT Sector Competitiveness Strategy and Law Nr. 77 on IT Parks to ensure that the whole sectoral ecosystem is supported. The new Creative Industries Association reached 20 members.

Experienced robotics teachers learning advanced programming skills at a Tekwill training organized by ATIC with MCP support. Credit: MCP

SECTION I

PROJECT TECHNICAL INTERVENTIONS DURING FY19 Q3

Chemonics International Inc. (Chemonics) and its partners, J. E. Austin Associates, Inc. and Bhavana World Project, are pleased to submit to the United States Agency for International Development in Moldova (USAID/Moldova) and Swedish International Development Cooperation Agency (SIDA), this Quarterly Report covering the period from April 1 through June 30, 2019.

WINEGROWING INDUSTRY

OBJECTIVE 1: INCREASED PRODUCTIVITY AND QUALITY (BETTER WORKFORCE AND ADOPTED INNOVATION)

PROGRAM 1. Upgrading quality and driving innovation in viticulture and winemaking

ACTIVITY 1. ASW (Association of Small Winemakers) Mentorship Program - support the emergence and development of small wine producers

The Association of Small Winemakers Mentorship Program supports farmers opportunities to add value to their vine plantations. MCP support is complex and includes providing a mentor to oversee grape-growing and winemaking operations and assistance for sustainable winery management, marketing, and sales. The ASW Mentorship program as has three key objectives: support the institutional development of the Association of Small Winemakers; grow their internal capacities; and foster trust on behalf of their members, to result in a sustainable ecosystem for the development of family owned wineries.

Mentors assist the bottling of 2018 wine vintage MCP provided technical assistance to small winemakers within the ASW program during one of the most critical stages of winemaking – wine stabilization and bottling. Five consultants provided 61 level of effort days of support to 18 small winegrowers, supervising, assisting and consulting the winemakers on how to prepare wine for bottling and stabilization. It is estimated that MCP consultants have ensured the quality of 42 wine SKUs (stock-keeping units), equivalent to a total of 51 thousand bottles.

MCP identifies applicants for the fourth ASW Mentorship program intake The AWS Mentorship Program has contributed to the significant increase in the number of small wineries in Moldova, from seven at the start of the program to a total of 32 in Q3Y4, demonstrating proof of concept. To continue this success, MCP has identified and conducted introductory meetings with nine prospective applicants for the fourth round of the program. It Bottling of the 2018 wine vintage at ASW beneficiary Mihai Sava. Credit: Vitalie Babanuta is anticipated that these companies will receive technical support for their applications during the new RFA for winegrowing programs, and

13 will benefit from ASW consultancy and mentoring during the 2019 harvest and wine production season.

MCP Small Winemakers Kara Gani and ATU Win First International Gold Medals Small winery and tourism startup Kara Gani has received extensive MCP support since it was founded by the Cerven family in the Gagauzian Autonomy. In May 2019, the winery's 2016 Red Blend (Cabernet Sauvignon & Merlot) won its first Gold medal outside Moldova at the International Wine Contest in Bucharest, Romania. ATU winery – one of the top performers in the MCP’s ASW Mentorship program – also received its first ever international Gold medal at the same competition, for its 2018 vintage Viorica. These first international prizes for MCP beneficiary boutique Red wine blend from MCP-supported small winery Kara Gani, which won gold at the International Wine Contest in Bucharest, Romania. Credit: Kara Gani wineries provide objective expert validation of the impact of the ASW mentorship program on Moldova's small winemakers.

MCP assists ASW to improve communications and outreach MCP supports ASW to grow its capacities to serve as an information resource and common marketing platform for its members. During the reporting period, MCP worked closely with the Associations’ executive team to update their website, including website redesign, development of a mobile version, and adding functionality to increase search engine optimization and basic monetization. The website is planned to go live before National Wine Day 2019. MCP also organized a series of 15 video reports and promotional videos showcasing ASW members as part of a strategic marketing and promotion campaign. The materials were developed in collaboration with local news channel TV8, and were embedded in TV8’s show ‘Egoist’ for broadcast to the Moldovan public.

MCP supports ASW compliance with Moldovan labor code and safety norms Moldovan legislation is not conducive for the success of small businesses, especially for SME’s operating in the agri-food and other foodstuff sectors. MCP and its predecessor projects have made significant contributions to Moldova’s winegrowing legislative framework, resulting in the easing of regulations to enable small winemakers to emerge and operate legally. However, other legislation such as the labor code and health and safety norms still do not include special provisions for SMEs, and (often) exaggerate restrictive norms which apply to all legal entities in Moldova, whatever the size or business. Following a request from ASW, MCP partnered with a local consulting company to work with 17 small winemakers to ensure full compliance to the national labor code and workplace safety norms. This work will include an initial audit of the workforce employment and work security papers; development of missing documentation; training for designated personnel on workforce security and first aid; and the production of mandatory safety signage.

Seven ASW members present wines to local and international tourists at 2019 DescOPERA festival In June, MCP ensure the participation of seven ASW members at the flagship DescOPERA music festival in Butuceni village, Orheiul Vechi, which attracted more than 5,500 Moldovan and international tourists. The wineries sold more than 1,500 bottles of wine, a significant amount for these small winemakers who produce an average of 10,000 bottles a year. Participating small winemakers who have tourism facilities also promoted their facilities to foreign tourists, and invite them to visit their premises.

MCP supports two wine startups to develop brand identities MCP offers marketing and branding assistance to participating small wineries after achieving a certain quality level. During the reporting period, MCP cost shared the production of labels on specialized paper for small winery Crama Tudor, and supported GT Gherghelejiu Serghei Ivan to develop a new brand name, “Terasele Facebook posts made by Mihai Sava winery inviting Hagimus”, before designing a new winery logo its followers to the DescOPERA open-air classical music festival. Credit: Sava Wines and label concept. MCP plans to launch four new small winemakers on the local market at National Wine Day 2019 and showcase them to international visitors of the festival.

Examples of the design work for ASW small winery Terasele Hagimus, carried out with support from MCP. Credit: GT Gherghelegiu Serghei Ivan

ACTIVITY 2. ‘PQUP’ Program (Product Quality Upgrading Program): expanding the Wine of Moldova portfolio

The goal of the PQUP program is to support ‘transition wineries’ to graduate to the ‘quality over quantity’ paradigm. This enables beneficiaries to convert their business models from bulk wine to production of bottled wines with higher added value, thus expanding the quantity of wines that are compatible with Wine of Moldova and Protected Geographic Indication quality standards.

Transition wineries receive technical assistance during bottling of 2018 vintage Similar to assistance provided within the ASW Mentorship program, MCP provided technical assistance for the stabilization and bottling of the 2018 harvest at transition wineries within the PQUP program. Since May, MCP has deployed four expert winemakers to deliver 96 level-of-effort days to 14 program beneficiaries, ensuring the maintenance of wine quality during the most critical phase of bottled wine production.

Three transitional wineries prepared for launch on local market at National Wine Day Within the PQUP program, once assisted wineries are producing wine compatible with WoM and/or PGI quality standards, MCP begins supporting the beneficiary with complex marketing and branding assistance. The project has developed brand identities for three PQUP participants included in the 2nd and 3rd program intakes: Saiti SA, Podgoria Vin and Vintage Avenue. MCP will cost share the development of names, logos and labels for these companies, and delegate marketing consultants to develop annual marketing plans in preparation for their launch at National Wine Day 2019 in October.

PQUP wineries receive 63 gold medals at international wine competitions International awards serve as indisputable proof of the leaps forward in quality achieved due to MCP support for Moldovan wineries and demonstrate to the sector that significant increases in quality can be achieved even with moderate investments. During the reporting quarter, PQUP wineries won 63 gold, 28 silver, 15 bronze and 14 “special mentions” at 11 international wine competitions. Prizes like this also enhance the confidence of participating companies and spur them on the path to developing international exports.

PROGRAM 2. Building knowledge for future growth

The Moldovan wine sector lacks the qualified workforce needed to increase its competitiveness and respond to the new demands of highly competitive markets, both in the EU and globally. The Wine of Moldova (WoM) Academy aims to address the continuous education needs of Moldova’s wine industry and fill this knowledge and skills gap. WoM Academy bases its curriculum on the lessons learned from the MCP Skills Gap Analysis and the industry’s development goals. The Wine of Moldova Academy is a private sector service delivered under ONVV, and acts as a support program for the wine industry’s educational institutions providing trainings that cover the most important knowledge gaps. These trainings include workshops by local and international workshops experts, plus internships abroad, study visits, field days, and other knowledge building and knowledge sharing activities.

316 wine industry professionals upgrade knowledge with Wine of Moldova Academy During the reporting quarter, ONVV organized highly specialized training sessions to improve skills and upgrade workforce knowledge under the Wine of Moldova Academy:

• Three trainings with Mr. Arkadi Papikian, an Israeli winemaker with Moldovan heritage. Over the course of three days in April, Mr. Papikian trained Moldovan winegrowers on: “Modern Wine Making Technologies, Styles and Quality Levels”; “The philosophy of

modern winemaking and wine marketing, based on Israeli experience”, and "The Future of the Wine Industry in Israel - Lessons for the Wine Sector of the Republic of Moldova”. • Two trainings “On soil management, vineyard fertilization and vineyard protection” hosted by leading ONVV viticulture expert Mr. Vladimir Corobca, and international viticulture expert Frank Mazy. • A three-day training on “Best practices in sparkling wine production” in June, hosted by Richard Marchal, oenologist and biochemist at the Applied Chemistry and Oenology Laboratory of the Reims Champagne – Ardennes University, France. • A one-day field experience exchange program at the Cricova and Kvint vineyards in June, led by the ONVV viticulture expert Mr. Vladimir Corobca. In total 316 people attended these trainings and workshops, of which 146 were young specialist and 133 were women.

Participants attending the Wine of Moldova Academy training “Best practices in sparkling wine production”, June 2019. Credit: ONVV

40 industry professionals trained in “Oenoflair” methodology Forty members of the Moldovan wine industry attended a training titled “Organoleptic Evaluation and Description of Wines according to Oenoflair Method”, delivered by Swiss oenologist-perfumer Richard Pfister from Switzerland, and organized by Wine of Moldova Academy with support from MCP and the National Office of Vine and Wine (ONVV). Moldovan sales managers, marketing specialists, and sommeliers are the wine industry’s secret weapon, promoting Moldovan wine at trade fairs, exhibitions and professional wine events. This training upgrades the skills of key members of this workforce, combining skills Participants of the Wine of Moldova Academy training on “Organoleptic evaluation of wines by Oenoflair method” with trainer Richard Pfister, June from the worlds of wine and 2019. Credit: MCP perfume to improve their ability to present, describe and analyze Moldovan wines to develop their image on the export market.

Moldovan specialists receive internationally recognized WSET level 1 certification MCP supports the skills development of Moldovan sommeliers and wine industry marketing and sales personnel by organizing courses, trainings and continuous education programs. The Wine and Spirits Education Trust (WSET) is one of the world’s leading wine education programs, and is recognized internationally. To improve local capacities, grow credibility through international certification and enhance workforce capacities, ONVV organized a training for the first of four levels of WSET program accreditation. following the two-day course, 42 Moldovan winegrowing sector specialists received WSET level 1 certification, of which 40 are young people and 20 were women.

Moldovan wine marketing professionals upgrade knowledge of international trends MCP organized a workshop for Moldovan wine marketing and sales professionals with Mr. Robert Joseph, international wine marketing consultant, professor at the Burgundy School of Business, and one of the top 10 wine influencers worldwide. Workshop participants discovered contemporary global wine trends, including decreasing consumption, overproduction, emerging new wine categories, and trends in labeling and promotion. At the end of the training, the group discussed possible new Unique Selling Points and development paths for Wine of Moldova, and agreed that sustainable growth should be one of the central axes of the sector’s development. As a result, sustainability will become one of the core communications messages for the international promotion of Moldova as a wine producing country.

PROGRAM 3. Innovations and precision viticulture technologies to face climate change and ensure high quality grapes

ACTIVITY 1. “Best Grapes” and “FlaveDor” - piloting innovations in vineyard management and grape quality improvement

MCP is committed to pursuing precision viticulture technologies and other innovations to address the challenges of global climate change and ensure high quality raw material for winemaking. In partnership with ONVV, MCP implements two pioneering projects: ‘Best Grapes’ and ‘FlaveDor’, which pilot innovations in vineyard management and grape quality improvement in Moldova. The pilots are implemented by the PGI regional producer associations, which help to build specialized extension services for grape and wine producers, and the project aims to eventually increase their scale to the national level.

Best Grapes program continues to grow In order to increase the international competitiveness of Wine of Moldova, the Moldovan wine sector needs to update its viticulture practices to provide high quality raw materials (grapes) for wine production. During the reporting period, ONVV identified seven new demo plots to test grape-growing conditions within the Best Grapes pilot. The plots will also be equipped with cutting edge meteorological stations, pest sensors and pathogen traps, and the resulting data will be recorded in an electronic database developed with MCP support. ONVV also issued two newsletters to a subscription list of grape growers containing an overview of weather conditions, recommended vineyard care operations and disease risks, as part of the information dissemination component of the pilot.

18 grape growers discover best international practices in mechanization To encourage workforce and skills development, MCP continues to support the ONVV Wine of Moldova Academy, which facilitates continuous education and focused knowledge sharing for the wine industry. At the request of ONVV, MCP supported the organization of a study trip for 18 winery directors, chief agronomists, and viticulturists to the wine region of Veneto,

Italy to study best practices in the mechanization and automatization of vineyard operations. The delegation visited producers of viticulture equipment and machinery; a vine nursery; two wineries implementing intensive and mechanized processes, technologies and equipment in their Delegation of Moldovan viticulturists during their study trip to Veneto, Italy. June 10-14, 2019. Credit: ONVV vineyards; and a producer of vine planting and suspension materials.

Key learnings of the FlaveDor project to be disseminated to the wine sector After surveilling over 300 hectares of Moldovan vineyards, including inspecting more than 30 ha with the project’s high precision drone system, ONVV has gathered and analyzed extensive data about the symptoms of the incurable Flavescence dorée vine disease in Moldova, and how to detect, prevent and quarantine against its spread. This knowledge has been compiled into an informational brochure by ONVV, which will be published by mid- August 2019 and disseminated across the entire wine sector.

OBJECTIVE 2. EXPANDED MARKET LINKAGES

PROGRAM 1. Wine of Moldova international promotion program support

In Y4, MCP continues to support the Moldovan wine industry guided by the classic AIDA (attract, interest, desire, action) model. This assistance multi-layered and systemic, and adapted to build awareness WoM umbrella brand; improve country- and firm-level integrated marketing; open pathways for individual brands and companies to enter and/or develop export markets; and raise sales of value-added wines from Moldova on non-CIS markets. As such MCP continues to assist winery participation in major trade shows and trade events on target export markets (Poland, China, Romania), as well as tradeshows on secondary high- potential, distant markets with high growth potential. This support contributes to repositioning and growing Moldova’s wine exports to stable and high-margin European and other markets, helping it to recover from the Russian embargoes that led to an extensive recession and a three-fold shrinking of exports.

As of May 2019, Moldova continued to distance itself from its ‘traditional’ markets. In the first five months of 2019, exports of bottled wine to CIS markets fell by five percent compared to the same period in 2018. In contrast, exports to non-CIS destinations for the same period saw stable growth, exceeding the previous year’s export volume by two percent. The current top five destinations for Wine of Moldova are: Poland – 16 percent of all bottled exports, + 5 percent in comparison to the first five months of 2018; Czech Republic – 14 percent of all bottled exports, + 8 percent in comparison to the first five months of 2018; Romania – 13 percent of all bottled exports, same volumes as in the first five months of 2018; Russia – 12 percent of all bottled exports, - 5 percent in comparison to the first 5 months of 2018; China – 10 percent of all bottled exports, - 1 percent in comparison to the first 5 months of 2018. The top grossing destinations are: Turkey +140%; Serbia +70%; and Germany +26%.

ACTIVITY 1. Build Wine of Moldova Brand Equity and Foster Business Linkages

13 Moldovan wineries take part in the sole B2B wine event in Beijing, China In 2019 China was ranked as the number-four export destination for bottled Moldovan wines, reaching an impressive value of almost 9 million USD. Following the recent decrease in wine exports to this destination, mainly caused by a total decrease Chinese wine imports, Wine of Moldova needs to consolidate its current positions and enlarge distribution. ONVV organized the participation of 13 wineries with stable importers in China to take part in the only business-to-business wine fair in the Chinese capital, Beijing – Top Wine. Most participating wineries delegated their Chinese import partners to man the stand, with the aim of finding regional distributors. As a result, participants reported over 130 new business linkages which will be developed during the next quarter to expand the physical presence of Moldovan wine in the Chinese market. This participation was facilitated by the Moldovan Embassy in China, which negotiated free Ambassador of Moldova to China Denis Jelimalai visiting the Wine of Moldova exhibition space for the stand at Top Wine fair, in discussion with representatives of Imperial Vin, Moldovan stand with the Beijing, China. Credit: ONVV event organizers.

Wine of Moldova explores export opportunities in two strategic markets: USA and Belgium. Neither the USA nor Belgium are considered target export destinations by the Wine of Moldova marketing and promotion framework, however they remain countries with countries with great potential for expansion. The USA is the world’s number one wine importer and a key image-building market for a wine exporting country, and Belgium has a comparatively high per capita wine Matchmaking Session in Belgium 1 consumption at over 15 liters a year , with a preference “Belgium is still a relatively small for sparkling wines and an openness to new, emerging market for [Radacini] us. However if wine regions, resulting in an immediate growth we analyze the export dynamics, we opportunity for Moldovan wine exports to the EU. To can conclude that since our first exploit these opportunities, ONVV partnered with two shipments in 2015 we have steadily quadrupled the exported quantities of companies specializing in business matchmaking: World wine. I think the growth potential is Leading Wines for the USA market and Gateway & huge " Partners for Belgium, resulting in three ‘matchmaking’ Veaceslav Nivnea, sessions in Chicago (USA), New York (USA) and Commercial Director of Radacini/Albastrele wines Brussels (Belgium). These sessions included wineries from the ONVV New Generation and Export Champion

1 https://www.statista.com/statistics/670169/per-capita-consumption-of-wine-in-belgium/

20 classifications, and resulted in over 120 new business linkages to be developed by participating wineries into export contracts and wine shipments.

Representatives from the Wine of Moldova delegation taking part in B2B matchmaking sessions in New York, USA (June 7) and Brussels, Belgium (June 19). Credit: ONVV

Wine of Moldova enjoys three-day showcase in the center of Brasov, Romania. Romania is a key target market for Moldovan wines, and has demonstrated exponential growth within the last five years due to the absence of a language barrier, its proximity to Moldova, and the openness of the Romanian public to Moldovan products. As such, ONVV partnered with the Moldovan Chamber of Commerce to organize an open trade fair in the central square of Brasov, a Romanian city with a booming economy, and high rates of tourism and trade. Seventeen Moldovan wineries presented their wines to Brasov residents and tourists at the open-air event. ONVV supported a Wine of Moldova pop-up stand, which attracted the attention of thousands of visitors and press. This activity is part of the annual marketing and promotional plan for Romania and underlines the importance of wine as one of the pillars of Moldova’s export economy. The event also included a trade fair with other Moldovan food, fashion and creative industry products, and hosted a bilateral business and investment forum. Despite the fact that this event mainly targeted end consumers, some participating wineries established meetings with regional distributors hoping to enlarge their regional distribution within Romania. These wineries reported over 50 new market contacts, which will be further developed through their Romanian importers.

Wine of Moldova pop-up stand attracting visitors in the central square, Brasov, Romania, June 14-16. Credit: ONVV

Wine of Moldova works to regain lost position on Ukrainian market As a result of political and social turmoil and a depreciation in the value of its currency and extremely long delays in payments, Ukraine lost its role as a target export destination for Moldovan wine in 2014. Following this, Ukrainian imports of Moldovan wine declined, mainly favoring low-quality bulk wine, in high demand since Ukraine lost parts of its territories that were its main wine producing regions. This transition propelled Moldova to the number-one exporter of wine to Ukraine by volume, and built a reputation for Moldova as a producer of low-quality bulk wine. However, the structure of the Ukrainian market is changing as the economy rebuilds, and Ukrainian wine connoisseurs and opinion leaders are demonstrating an increased interest in Moldovan fine wines as a result of Wine of Moldova international awareness campaigns, and incoming tourists visiting from Ukraine. As such, Moldovan wine is trying to regain its lost positions on Ukrainian market. To support this, Wine of Moldova organized for 13 wine producers to attend Kiev Wine Festival, under a common Wine of Moldova country stand. This event, one of the largest specialized and high-class events in Ukraine, took place in Kiev on June 8-9, bringing together over 90 producers from 20 countries and attracting over 10,000 visitors. The Moldovan delegation interacted with trade and HoReCa specialists, and provide wine lovers with the opportunity to discover premium wines produced in Moldova. Even though Kiev Wine Festival is a B2C event, the Moldovan wineries established over 30 new market linkages, and MCP beneficiary Novak Winery developed a relationship with influential sommeliers in the Ukrainian market. The winery is planning to organize a Representatives of the Wine of Moldova delegation at Kiev Wine Festival, Ukraine, June 8- 9. Credit: ONVV dedicated tasting for Ukrainian HoReCa representatives in mid-July 2019.

Moldovan wineries win a record 580 awards at international wine competitions In the reporting quarter, Moldovan wines won a total of 580 awards at international competitions, exceeding the total number of awards won in the whole of 2018. This success is the result of MCP and ONVV programs to support industry submissions to international wine competitions, and the general increase in wine quality across the sector. The project supported wineries were supported to enter wine samples to six wine competitions during the reporting period: Mondial du Rose; Concours Mondial de Bruxelles; Galicja Vitis; International Wine Contest Bucharest; Decanter World Wine Awards; and Oenoforum. MCP beneficiary wineries also independently entered international wine competitions without project support: Et Cetera’s 2016 Pinot Noir won a Gold Medal at the specialized “Global Pinot Masters” competition in the GBP 50+ category, and the wine, priced at EUR 80 per 0.75l bottle, was immediately sold out. Meanwhile, Cricova won a Gold Medal at the specialized sparkling competition “Brut Experience”. These results are extremely important for building a portfolio of super-premium wines from Moldova, increasing the competitiveness of Moldovan wines over other wine producing countries.

MCP supports the development of the new Wine of Moldova website The project is keen to assist ONVV in the development of a new country brand website, to increase international visibility. The current version was developed in 2014 as a landing page, and since then it has lost its usefulness due to a rigid structure and lack of new content. In 2018, MCP supported ONVV to add dynamic content, however the website now needs more serious updates to fully respond to sectoral needs and the expectations of external stakeholders. Following a request from ONVV, MCP has contracted an IT consulting company which assisted ONVV to develop the Terms of Reference for the new portal. The Terms of Reference have been approved and published on the official public acquisitions portal, and it is anticipated that the winning company will develop the new website by the end of 2019.

ACTIVITY 2: Export Support Program (ESP): increased wine sales on target markets through firm-level marketing support

Since 2015, MCP has implemented a firm-level Export Support Program, complementing the Wine of Moldova marketing and promotion framework, and in line with the national brand communication strategy. Over 18 wine producers have benefited from this program, which targets markets in Romania, Poland, Germany and Austria, and participating wineries have reported impressive sales growth, averaging 135 percent year on year. This tailored support package is adapted to the size, export-readiness, and role in contribution to national brand equity on export markets of each winery, and takes into account the anticipated effects on other groups of beneficiaries. The marketing opportunities and support available is tailored both large exporters and small wineries, and requires at least 50/50 cost-share by the company, based on realistic and executable marketing plans. Project marketing assistance under the ESP Program benefits the WoM national brand image, with a spillover effects to other Moldovan winemakers.

Vinaria din Vale goes on sale in Mega Image retail chain in Romania During the reporting period, MCP worked closely with two ‘New Generation’ wineries to support their expansion on the Romanian market. Vinaria din Vale was assisted to finalize its creative assets for a launch campaign on the Romanian market. The beneficiary is well prepared to enter the Romanian market, following previous MCP assistance to purchase marketing intelligence data that helped the winery to plan and adapt their branding. As a result, Vinaria din Vale is now stocked on the shelves of the Mega Image retail chain across Romania, and is now working on a promotion plan to boost sales. MCP will determine the level of further support following the development of the plan.

Meanwhile, MCP is assisting Timbrus winery to deploy an integrated marketing and promotion program targeting the Romanian market. MCP has contracted all promotional components, including social media advertising, creative concepts, design development and event organization, and is awaiting the first results of the campaign.

Radacini plans to expand market penetration in the Netherlands MCP conducted discussions with representatives from Radacini to identify opportunities to collaborate in markets with high opportunities for growth. Radacini recently signed an import contract with the biggest wine importer in the Netherlands – Delta Wines, so MCP and the winery beneficiary worked together to develop a promotional plan to boost sales and ensure repeated orders. Upon the completion of the plan, MCP will decide on the amount of offered support.

PROGRAM 2. Enhance wine culture and grow a mature local market

A stable and developed domestic wine market is of major importance for any wine producing country. The domestic market is the most important market for small winemakers, and it

23 serves as a platform for local wine producers to launch and test new wine products and wine vintages, providing a relatively low-risk earnings cushion. A developed domestic market also serves as a launch pad for new market players and represents an important component for the development of Moldova’s tourism industry. As a result, MCP is committed to developing excellence in wine service in on-trade outlets (HoReCa segment), and enhancing knowledge in the gastronomy sector, which is one of Moldova’s key tourism products.

MCPs efforts to support continued market growth focus on enhancing wine culture, a critical factor for tourism development. As a result, MCP works to increase the number of qualified sommeliers in Moldova, and continues to support the Wine School initiative aimed at consolidating the sommelier and wine connoisseur communities. MCP also supports several prominent wine and wine tourism events that are an important attraction for tourists, and gather a large local and international audience.

Spring Wine Vernissage profiles record breaking medal wins from 2018 wine season The Spring Wine Vernissage took place in April, showcasing more than 300 of the best white and rose wines from 50 wineries across Moldova to an audience of more than 1,000 wine enthusiasts, industry experts, and members of the international community. The 16th edition of the bi-annual event was organized by ONVV in partnership with the Ministry of Agriculture, and the three PGI wine associations, with support from MCP. The domestic wine market accounts for approximately 20 percent of industry sales, acting as a foothold for emerging small winemakers, and supporting tourism growth and increased employment opportunities in rural areas. High profiles events like Wine Vernissage are key to strengthening this market and ensuring the continued growth of domestic sales, which increased by 66 percent in 2017-2018. To raise domestic awareness of the increasing quality of Moldovan wine, the 16th Wine Vernissage included a special area showcasing the winners of 190 gold and 300 silver medals at 28 leading national and international competitions in 2018. These More than 1000 visitors sample Moldova’s premium white and rose wines at the Spring Wine Vernissage 2019, organized by ONVV and the PGI Associations with wines were also listed in the support from MCP. Credit: ONVV publication “The Golden Wines of the Republic of Moldova 2018” which was launched at the event.

International experts upgrade skills in the wine, hospitality and tourism industries Following unprecedented interest from local sommeliers for the opportunity to study for the European Sommeliers Diploma (recognized by European Parliament), MCP invited Brigitte Leloup, Vice-President of the European Sommelier Association (ASE) to return to Moldova for the second year running to deliver a series of capacity building activities aimed at developing Moldova's domestic wine culture. Eleven new Moldovan wine and hospitality specialists attended a two-week training at the Technical University of Moldova to qualify for the internationally recognized European Sommelier Certificate. Mrs. Leloup also provided additional master classes and workshops across the hospitality sector, including trainings for restaurant staff from Chisinau, Balti and Orhei, and for service personnel from rural guesthouses in the Orheiul Vechi tourism hotspot. Providing trainings by international wine experts like Mrs. Leloup facilitates the emergence of a new generation of Moldovan

24 sommeliers who can continue to expand the domestic wine market, which has increased by 10 percent each year since 2014. Meanwhile, Chef Alain Leloup provided a gastronomic masterclass for students of the hospitality faculty at the Academy of Economic Sciences to develop their ability to meet the demands of the growing gastronomic tourism segment in Moldova.

ONVV launches first catalogue of award-winning wines from 2018 at the 16th Wine Vernissage In 2018, Wine of Moldova won more than 500 medals and awards at international competitions around the world, including 190 gold medals and 300 silver and bronze awards, demonstrating the leap forward in quality achieved within Moldova’s wine sector as a result of strategic investments in wine making techniques and technology. To highlight this success, ONVV published a catalogue dedicated to 2018’s record haul of gold medals titled “The Golden Wines of the Republic of Moldova”, showcasing 556 award-winning wines from 40 Moldovan wineries, including 125 wines from 15 companies that are direct beneficiaries of the MCP PQUP and ASW mentorship programs. ONVV, with assistance from MCP, provides support to winemakers to participate in international wine competitions to gain objective international validation of Moldova’s wine quality, and to raise awareness of its wines on the international market. The publication of this catalogue, which was th launched at the 16 “The Golden Wines of the Republic of Moldova” wine catalogue showcasing the Wine Vernissage, is a winners of more than 500 medals at international competitions in 2018, published by ONVV and launched at the 16th Wine Vernissage. Credit: ONVV stand-alone initiative of ONVV, demonstrating the maturity of the PPP following extensive capacity building by MCP and predecessor projects.

MCP develops “Open Cellars Fest” concept According to best international practicies, and taking the growing interest of locals and visitors from nearby Romania and Ukraine in Moldovan wineries into account, MCP worked on adapting the international concept of an “Open Cellars” festival to the specifics of the Moldovan context. MCP developed the event concept and logistics, and worked on producing the event’s key visuals and identity. In the upcoming period MCP will present the The proposed visual identity for a Moldovan “Open Cellars’ festival, developed with MCP support. Credit: Imago concept to ONVV and other sector stakeholders seeking to organize the first pilot edition in 2019.

ASE course alumni wins regional competitions bring international fame to Moldova During the reporting quarter, Moldovan members of the European Association of Sommeliers (ASE) made important achievements that help position Moldova as a country with a growing wine culture. A team of young sommeliers “SOMMOLDOVA” formed from ASE alumni won 3rd place in the “Grand Iasi Tasting” competition in Romania, where sommeliers had to determine grape varieties and origins during a blind tasting. Another ASE alumnus, Maxim Levcenco, won a bronze medal at the “Best Taster of Cotnari” competition, and Daniel Frumusachi who received his ASE certification in February 2019 beat two Guinness World Records at sabrage (the traditional practice of opening sparkling wine with a sword), opening 49 bottles in 30 seconds, and then opening 79 in under 60 seconds. Unfortunately, the records were not officially recorded, as the attempt was not officiated by Guinness World Records representatives, however the event received extensive attention on local and international media, increasing the profile of Moldova.

ASE activities with Brigitte and Alain LeLoup during Wine Friendly/SMART wine education weeks. June 2019. Credit: MCP

Sommelier School initiatives extend educational programs to amateurs Follwing the success of MCP efforts to popularize Moldovan domestic wine culture, there has been an increasing interest from simple consumers to learn about wine, wine culture and concious wine consumption. The number of private/commercial courses available to consumers is growing, and MCP supported partner NGO “Sommelier School” to organize two wine training sessions, titled “Express Sommelier course”. Eighteen people attended the four days of training in May and June. For the first time, these trainings were offered in Russian, and there were no eligibility criteria for admission.

National Wine Day recognized as an event of Major National Importance The the national authority for broadcasting, “Consiliul Audivizualului”, issued a decree recognizing National Wine Day as an event of Major (National) Importance. This places the festival on a level with the Olympic Games, international song contests, and Moldovan Independence Day. As a result, all local broadcasters are oblige to issue news about the event, and to ensure broadcast coverage of the event, in edited or complete form.

OBJECTIVE 3: IMPROVED SECTOR-ENABLING ENVIRONMENT AND INCREASED CAPACITY

PROGRAM 1. Policy upgrading and legal regulatory reforms in the wine industry

ACTIVITY 1. Support ONVV to continue policy, legal and regulatory reforms

MCP supports ONVV and MARDE to continue industry reforms MCP predecessor projects originally supported the development of legal and regulatory reforms in 2013 to develop a more business-enabling environment for Moldova’s wine industry. Reforming the sector is an ongoing process, aiming to fully reorganize the existing model of industry regulation, management, and control. MCP supports ONVV and MARDE to initiate changes in technical regulations, assessment of quality controls, and to introduce a traceability system currently subordinated to normative acts. During the reporting period, ONVV was consulted in preparation for harmonization of the following legal acts in line with EU standards, or to update current legislation to meet the requirements of the private sector, as follows: • Until now, control over the production and quality of Protected Geographical Indication (PGI) wines was the responsibility of wine producers, PGI Associations and ONVV. Decree No. 110 on May 16, 2019 empowered ANSA to verify authorized wine producers with respect to the terms of reference and technical regulations on PGI wine production. • MCP seeks to ensure a favorable business environment for the development of small winemakers, and that all government mechanisms related to traceability and support procedures for PGI/PDO wines are synchronized with ONVV in its role as the implementing party. On April 24, 2019 MARDE issued a decree on amendments to the National Rural Agriculture Development Fund managed by the Agency for Interventions in Agriculture (AIPA), setting out increased subsidies for small vine plantations (up to 40 hectares); increased subsidies for PGI/PDO vineyard plantations, and consistency with ONVV traceability rules, stipulating references to mandatory registration in the National Vine and Wine Register. • MCP supports ONVV and PGI associations to implement several flagship projects, including "FlaveDor" - aimed at combating the consequences of incurable vine diseases Flavescence dorée and Bois Noir. On April 3rd, 2019, MARDE approved a decree on quarantine diseases to harmonize Moldovan legislation with EU legislation, specifically Annex I to Council Directive 2000/29 / EC of 8 May 2000 on protective measures against the introduction into the Community of organisms harmful to plants or plant products and against their spread within the Community, published in the Official Journal of the European Union no. L 169 of 10 July 2000.

ONVV wins historic lawsuit questioning compulsory nature of levies to National Wine and Vine Fund On May 22, the Supreme Court of Justice denied an appeal by two wine producers, Moldavskii Standart and Zolotoi Aist, questioning the requirement to pay levies to the National Vine and Wine fund. This lawsuit was originally raised over two years ago, and the result has created a favorable precedent for all wine producers to obey to current legislation and honor their obligations.

ONVV continues to increase its transparency and accountability to the wine sector ONVV continues to face institutional management challenges, amplified by high staff turnover. These challenges bring fragility to the public-private partnership and raise questions from the wine private sector about the efficiency of the organization’s management. In the context of MCP’s role as the bearer of institutional memory, the ONVV

Coordination Counsel requested the project to review ONVV’s internal regulations (codes, protocols and procedures) and other governing documents to increase transparency and accountability to the sector. Following this review, MCP developed a set of documents and actions to streamline procedures and allocate resources more efficiently. Unfortunately, some of the new proposals (including proposals on Activity Regulation and amendments to the competencies and attribution of Board members and managerial staff) were blocked by some Board members. However, MCP will continue to work with ONVV board members and ONVV managerial staff to adjust and implement the new governing documents.

ACTIVITY 2. Finalize the Wine of Moldova 2030 strategy to guide long-term industry competitiveness, and promote in the Government

In Y3, MCP took part in the development of a national wine industry strategy, following a request from MARDE and ONVV. To support the development of the strategy, MCP organized several consultations and scoping visits to Napa Valley in California, the Rioja region in Spain, and Cote du Rhone, France. MCP worked to hasten the development process to prepare the Moldovan wine sector for challenges in the global wine market, and to ensure the sustainable development of Moldova’s winegrowing industry in the context of global climate change.

MCP ensures a consistent approach to the sustainable development of Moldova’s wine sector by contributing to the national strategy Wine of Moldova 2030 During the reporting quarter, ONVV relaunching the process to develop a national strategy for Moldova’s wine sector. John Barker, New Zealand wine expert and International Organization of Vine and Wine (OIV) member, was proposed as strategic development leader, and visited Moldova for a two-week familiarization trip to meet with MCP and key sector stakeholders. During the visit, it became evident that Mr. Barker has moderate expertise in marketing (which is one of the key pillars of the anticipated strategy) and little knowledge of specifics of Moldovan winegrowing sector. Following direct requests from several members of ONVV board and the private sector, MCP proposed Robert Joseph as an alternative strategic development leader. Mr. Joseph is an international wine marketing consultant, listed by several specialized publications as one of the top 10 wine influencers

Robert Joseph chairing a meeting between the ONVV Board and Moldova’s top 15 wine exporters. June 27th, 2019. Credit: MCP

worldwide, and is a Professor at the Burgundy School of Business with extensive knowledge of the Moldovan wine sector.

In June, Mr. Joseph worked with ONVV to provide input to the Wine of Moldova marketing strategy, strengthening its focus on building awareness raising the global profile of Moldova as a quality wine producing country. Mr. Joseph also made proposals related to the marketing and promotional component of the Wine of Moldova 2019-2030 strategy with a focus on Sustainable Development. These proposals were vetted during one-to-one meetings with some of the most important stakeholders in Moldova’s wine industry, and during an MCP-organized meeting of the ONVV board and the top 15 wine exporters. Meeting participants approved Mr. Joseph to work alongside Mr. Barker on the development of the Wine of Moldova strategy, acting as an international marketing expert. Mr. Joseph is keen to propose a synergy between the most performing sectors of the Moldovan economy – fashion, IT and creative industries – to transform the image of Moldova around the world. To kick-start this process, he met with local blockchain experts aiming to introduce this technology as part of the wine sector’s sustainability reporting, and visited leading AR and VR experts during visits to Tekwill and Artcor.

ACTIVITY 3. Develop and strengthen the PGI wine associations

According to European best practices, PGI wines is traditionally achieve prices 15-20 percent higher than the same wine with a generic label. Moldova’s four PGI associations – Valul lui Traian, Stefan Voda, Codru, and Divin – have a leading role in promoting high- quality wines and regional wine traditions. However, the PGI associations have limited experience and low capacity, and need support to clarify and adjust the internal control procedures and technical specifications aimed at promoting the specific features of each wine region. To ensure a fully functioning PGI wine production system, Moldova’s PGI associations must become fully operational and be able to execute their legal and statutory role. French Institute of Origin and Quality (INAO) will assist Moldova to establish the first Protected Denominations of Origin.

France is a pioneer in the development of quality systems in the wine sector, and French experts will now share their experience with the Republic of Moldova In April, ONVV signed a Memorandum of Understanding with the National Institute of Origin and Quality (INAO) in France, defining a cooperation which will provide a framework of support and technical assistance to Moldovan producers to strengthen the quality systems of local wine products. This agreement highlights ONVV's efforts to develop quality signs such as Protected Geographical Indication (PGI) and Protected Designation of Origin (PDO), which are guarantees of wine quality for final consumers, and reflects the originality and typicality of Moldovan wines and of traditional winemaking methods. These designations also facilitate Moldovan winemakers' access to Mr. Gheorghe Arpetin, Director of the National foreign markets by adding value and Office for Vine and Wine, and Mrs. Marie internationally recognized standards to their Guittard, INAO Director, signing the products. The Memorandum is an essential Memorandum of Understanding outlining their future cooperation. April 15th, 2019. Credit: component of the “Terroir” project that aims to ONVV identify and establish the first PDO in Moldova, in compliance with EU requirements and regulations.

Stefan Voda PGI Association assisted to upgrade its brand identity Following a request from the marketing board of the Stefan Voda PGI Association, MCP provided technical assistance to upgrade the Association’s logo and other visual assets in line with modern trends. The contracted design agency proposed over 12 proposals for a

29 new logo, and MCP will organize consultations with local and international branding experts to select the winning option. MCP offered additional support to develop a robust communications campaign to promote PGI Stefan Voda wines, which will include a series of wine tastings, video and photo reports, and social media activity. The campaign kicked-off with a dedicated tasting held at an MCP-supported wine culture hub.

Expert taster trained to identify typicity of PGI wines Organoleptic evaluation of wine typicity is one of the key stages of appraising wine that appears to show signs of a specific PGI and/or PDO quality. As a result, wine tasters need to develop a specific set of abilities to identify and determine the typicity of wine samples in terms of their region of origin. In May, ONVV organized a training session with Swiss oenologist and expert taster Richard Pfister, during which 22 authorized Moldovan tasters learned how to determine the specific characteristics of each wine region when tasting wine samples.

National Wine and Vine Register updated with MCP support and transferred to ONVV The National Wine and Vine register is one of the most important components of the traceability and quality compliance systems implemented by ONVV. The register was initially developed by direct funding from USAID through the National Agency for Rural Development (ACSA) and the Czech Agency for International Development (UCZUZ), however MCP was involved in every stage of development stage, securing US Government investment and ensuring proper execution of the software that processes the entries and manages the database of the Register. Like any other software, the Register needs periodic updates and maintenance in order to better respond to the needs of the sector. As a result, MCP offered technical assistance and consultancy to develop the Terms of Reference for an update to the software and its annual maintenance. The Terms of Reference are currently published on a public acquisitions’ portal awaiting finalization of the tender procedure. In May, the Ministry of Agriculture, Regional Development and the Environment signed the closing act and final transfer of the Automated Information System "RVV" - rvv.gov.md, and the functions of maintaining the Register, transmitting ownership to the National Office of Vine and Wine (ONVV). The event marked the end of the warranty period and the provision of financial support from the Czech Republic and took place in the presence of officials from MARDE, ONVV, the Embassy of the Czech Republic in Chisinau, the Central Testing Institute in Signing of the transfer and closing act between MADRE, ONVV, Czech Embassy Agriculture of the Czech and USAID. May 7th, 2019. Credit: ONVV

Republic and USAID.

TOURISM INDUSTRY

OBJECTIVE 1: INCREASED PRODUCTIVITY AND QUALITY (BETTER WORKFORCE AND ADOPTED INNOVATION)

PROGRAM 1. Start-up Tourism Moldova: product development, service quality upgrading and tourism offer diversification

ACTIVITY 1. Wine-Up: Wine Tourism Accelerator Program

UK Sommelier assists wineries to improve wine service and food pairings The MCP Start-up Tourism program focuses on upgrading the quality of Moldova’s gastronomic and wine tourism products to increase customer satisfaction and potential visitor spend. To upgrade the visitor experience at some of Moldova’s most successful wineries, the program supported leading UK Master Sommelier Xavier Rousset to visit Moldova, where he provided trainings in wine service and food & wine pairing and advice on directions for future development. Mr. Rousset provided one-to-one consultancy to MCP-supported wineries Cricova, Chateau Vartely, Castel Mimi, Purcari and Asconi, and provided a half-day Xavier Rousset, UK-based sommelier. Credit: Xavier Rousset training for the wineries’ sales and marketing managers on the UK wine market and new trends in wine consumption. This activity closely follows recent visits by UK chefs Sven Hanson Brit and Kae Shibata as part of the Startup Tourism Program, to improve the quality of wine and hospitality services in the wine tourism sector; train wine and food professionals in current trends in key target markets (UK and Japan); and increase the number of tourists purchasing world-class wine tourism experiences in Moldovan wineries.

UK celebrity chef assists wineries and restaurants to adjust menus to western tastes A survey of foreign visitors conducted by MCP in the fall of 2018 revealed that two of the most popular tourism activities in Moldova are tasting local wines (39%) and eating traditional food (32%). As a result, the MCP Start-up Tourism program focuses on upgrading the quality of Moldova’s gastronomic and wine experience tourism products, to increase customer satisfaction and potential visitor spend. The program brought UK- based celebrity chef Sven Sven Hanson Britt, UK celebrity chef, assisting the chef at Castel Mimi Hanson Britt to Moldova to to upgrade the menu at the winery’s restaurant. Credit: MCP support eight leading wineries to

31 develop gourmet menus using local ingredients and work closely with premier chefs and sommeliers to create optimal food and wine pairing recommendations. Sven is a trendsetter in the social media space, and his Instagram page is growing in popularity (2100 followers), in addition to a successful career working with culinary equipment manufacturer Miele, developing sophisticated menus using ingredients from the CEO’s vegetable garden. These experiences give him unique insight into how Moldova’s excellent local ingredients can be leveraged into world-class gastronomic experiences that can increase visitor spend in the country’s wineries and restaurants.

ACTIVITY 2. Hospitality+ Moldova program: improving tourism hospitality infrastructure

Rural B&Bs reinvent dessert menus with support from MCP UK-based pastry chef Kae Shibata provided consultancy to MCP-supported guesthouses in the Orheiul Vechi tourism hotspot, including Eco Resort Butuceni, Vila Roz, Casa Verde and Casa din Lunca, to improve the attractiveness of their menus for foreign visitors and reinvent their dessert menus using high-quality local ingredients. Ms. Shibata works at the Michelin- starred Ritz Hotel in London, and during her visit she gave targeted recommendations for menu upgrades to take account of current food and allergy trends, including the provision of vegetarian, vegan and gluten-free options; provided gourmet dessert workshops with chefs from leading vineyards; and delivered a practical workshop for tour operators and wineries about the preferences of Japanese Kae Shibata, UK pastry chef, demonstrating a gourmet dessert to rural tourists – a small but growing guesthouse owner Liuba Railan in tourism hotspot Orheiul Vechi. Credit: MCP market for the Moldovan tourism industry. Credit: MCP

Diaspora family returns to Moldova to open Rural Guesthouse A family from Trebujeni village in the Orheiul Vechi tourism hotspot has returned from Russia to open a rural guesthouse, Valea Stancii. The Senin family emigrated to Moscow 13 years ago for work but were drawn back to Moldova due to the recent success of the Moldovan tourism industry, which is growing rapidly thanks to strategic investments from the Moldova Competitiveness Project (MCP). MCP provided the family with complex support worth to redevelop their childhood Veaceslav and Svetlana Sanin, owners of rural guesthouse Valea Stancii in home into an attractive Trebujeni village, Moldova. Credit: MCP

32 hospitality business. The resulting facility can accommodate 20 overnight guests and up to 100 diners and will contribute greatly to the image of Moldova as a sustainable tourism destination abroad. MCP-supported guesthouses like Valea Stancii hosted more than 29,000 visitors in 2018, a 42% increase on 2017, allowing them to create rural jobs and mitigate against the drivers of migration.

Tree of Life tourism calendar acts as catalyst for rural tourism Tourism events promoted by the Tree of Life national tourism calendar have become platforms showcasing local traditions, culture, crafts, products, and tourism attractions. MCP supported the promotion and organization of 10 events, from bike marathons to urban culture, traditional dessert and open-air classical music festivals. These events attracted more than 24,500 local and foreign visitors, and drew visitors out of the capital Chisinau towards rural areas, where they spent valuable tourism dollars and stimulated the local economy.

World-class Moldovan musicians attract 5,500 tourists to rural music festival Moldovan singers known for their performances at the Vienna Opera and Milan’s La Scala took to the stage at the fourth annual DescOPERA open-air classical music festival, attracting a record 5,500 tourists to the Orheiul Vechi rural tourism hotspot. By showcasing global artists from the Moldovan diaspora, the increasingly well-known festival introduces Moldova to a new audience and brings high-spending cultural tourists to the rural area to stimulate the local economy. The region’s eight MCP-supported guesthouses were fully booked over the festival weekend, and the project also brought 20 Polish, Romanian and Italian journalists to Moldova during the festival period, to contribute to its promotion as an international tourist destination. DescOPERA is the only open-air classical music festival in Eastern Europe and operates as a strong public-private partnership (PPP) between the local community, the Moldovan Government, and the tourism private sector. MCP has supported the festival since its inception in 2015 and plays a key role in institutionalizing and strengthening the PPP to ensure the festival’s long-term sustainability.

The second evening of DescOPERA festival starring Moldovan soprano Valentina Nafornita (from the Vienna Opera), and Romanian tenor Florin Guzgă (from the Iasi National Opera) in the opera “The Elixir of Love”. Credit: Ministry of Education, Culture and Research

Graduates of the WFTGA Training of Trainers course deliver tour guide training at leading wineries Tour guides are key stakeholders within the tourism industry value chain, providing valuable services to tourism agencies, tour operators and wineries, and directly to tourists. Moldovan tourism experts have indicated that the quality of local tourism services is not in line with Western standards, and the increase in inbound tourism is causing a shortage of guiding services across the country. Following the World Federation of Tourism Guide Associations (WFTGA) Train the Trainer (ToT) trainings delivered in March to address this issue, six tour guides designed and delivered tour guide trainings at three of Moldova’s leading wineries: Cricova, Asconi and Milestii Mici. These trainings continue the efforts of ANTRIM and MCP to upgrade the skills of Moldovan tour guides and promote the tour guide profession in Moldova and are delivered as part of the Next Tourism Generation platform, which aims to improve the services provided in the tourism industry and are organized in collaboration with Basic tourist guide training delivered at Asconi Winery by graduates of the the Association of Tourist WFTGA Training of Trainer courses. Credit: Elena Balatel Guides, Lectors and Interpreters and ANTRIM.

MCP Startup Tourism program incentivizes local tourism agencies to improve promotion platforms According the World Tourism Association, Moldova is the least visited country in Europe, and the inbound tourism industry must up its game to draw potential visitors away from competitors in the wine, soft adventure and post-soviet market segments. To facilitate this, MCP offers tailored support to Moldovan tourism agencies to upgrade their promotional platforms and products as part of the Startup Tourism program, adjusted to the specific needs of each beneficiary. Eco Village Valeni and Tatra Bis received assistance to create new visual identities that would help them to reposition on the market and improve their promotion to international consumers. MCP also provided strategic assistance to Wine Ways tourism agency to develop its own website for promoting and selling wine tourism experiential products.

ACTIVITY 3. Go-Regional Tourism Start-Up: unveiling the tourism potential of Orheiul Vechi reservation and Purcari region

New tourism signage improves visitor experience in Orheiul Vechi The MCP approach to developing Moldova’s tourism industry focuses on pivotal investments in key tourism destinations to enhance their tourism capacities. Orheiul Vechi Reserve is the most visited destination in Moldova and one of the country’s key tourism hubs, attracting more than 100,00 visitors annually. MCP supported the development and installation of tourism signage in the villages of Trebujeni and Butuceni. The new signage includes an orientation map for the Orheiul Vechi Culture and Nature Reserve, signs directing visitors to the rural guesthouses in the area, and informative panels outlining the rules and restrictions that apply to the protected area. Improved signage will support cross-sales, and divert tourist

34 flows from the famous monastery in Butuceni towards lesser known locations, such as B&Bs in Trebujeni, and nearby Branesti winery.

OBJECTIVE 2: EXPANDED MARKET LINKAGES

PROGRAM 2. Tree of Life Marketing Program: unveiling the hidden gems of Moldova to the world

ACTIVITY 1. Placing Moldova on the map of world tourism: building brand equity and international awareness of Moldova as a tourism destination

Easter #BeOurGuest tourism campaign targets Moldovan diaspora The #BeOurGuest tourism campaign continued its viral reach by creating a seasonal video targeting the Moldovan diaspora, closely tied to this target market’s holiday planning routine. The Moldovan diaspora numbers at least 1 million, and this population makes up the largest number of visitors to Moldova, acting as an important source of foreign currency. The new video showcases Moldovan Easter Traditions and generates a sense of nostalgia for Moldovan viewers, who tend to plan their summer vacations at this time. The campaign invites members of the diaspora to bring a guest on their next visit to the country, and to share Moldova’s traditions with them. Moldova has a distinctive culture, rich heritage and a reputation for warm hospitality, sound footing for developing a thriving tourism economy. Digital marketing campaigns like this boost Moldova’s international awareness, engage the diaspora population and foster local pride, resulting in both increased international visitors to Moldova, and Still from the #BeOurGuest Easter Campaign, inviting members of the more confidence in the Moldovan Diaspora to bring a guest on their next visit to Moldova. Credit: potential of small tourism ANTRIM businesses to stimulate the rural economy.

EU broadcaster screens two documentaries about Moldova, stimulating tourism Highly respected French- German broadcaster Arte released two 45-minute documentaries about Moldova to its French audience – one about the USAID-supported classical music festival DescOPERA, and the other about Moldova’s opportunities for gastronomic and cultural tourism. Arte is known for its cultural programming, and Caption: Screengrab of Arte documentary “Moldova, country of riches” the interests of its core shown on EU broadcaster Arte in April 2019. Credit: Arte.tv audience overlap closely with

35 the key pillars of Moldova’s tourism brand, specifically wine, gastronomy, cultural heritage, and rural soft adventure. Tourism has the potential to be a key driver of economic growth in Moldova’s rural areas, and thanks to sustained USAID support, the industry is seeing vital signs of growth. More than 160,000 foreign tourists visited Moldova in 2018, a 20% increase on 2017, and Bloomberg included Moldova in the top-10 fastest-growing travel destinations in Europe. The promotion of Moldova on European broadcasters such as Arte will increase the number of high-spending European tourists, stimulating Moldova’s rural economy and creating more quality jobs.

CNN Travel profiles Moldova in roundup of innovative tourism destinations CNN Travel showcased Moldova in a profile of the world’s most unspoiled tourism destinations, alongside attractive locations in the Caribbean, South Pacific and elsewhere. The article, which is based on the most recent visitor data published by the United Nations World Tourism Organization encourages readers to visit Moldova and its numerous wine bars, wineries, and festivals like National Wine Day. This demonstrates the success of previous USAID and Sweden-supported PR campaigns focusing on Moldova’s potential for wine tourism. As a result of USAID investment in the wine tourism sector Moldovan wineries hosted over 175,000 visitors in 2017, who spent an estimated $7.5 million in rural areas.

International wine tourism promoters visit Moldova The Moldova Competitiveness Project organized a five-day press trip for international wine tourism promoters Exotic Wine Travel, to showcase the best of Moldovan wine tourism. The two owners of the business, Charine Tan and Matthew Horkey, specialize in visiting unknown and unusual winemaking regions, including Armenia, Bosnia-Herzegovina, Croatia, Macedonia, Montenegro, and Romania, and publishing books, articles and social media videos about wine tourism opportunities and undiscovered wine products. MCP supports press trips like this to raise awareness of wine tourism opportunities in target markets such as the Exotic Wine Travel audience.

MCP helps Moldova to be promoted by high level international journalists and influencers The project continues to support the tourism industry to expand international awareness about Moldova as a tourism destination, especially in target markets Poland, Italy, and Romania. MCP facilitated 10 press trips with a strategic focus on developing quality new content highlighting Moldova’s strengths as a tourism destination, including:

▪ On May 23-28, MCP organized a personalized press trip for Lee Osborne, a high- level British journalist with over 20 years of experience in media and a specialization in photography, fashion, travel and lifestyle. A former Creative Director at Conde Nast Traveler, Lee is well connected to the UK’s top media publications including The Daily Telegraph and The Times. The four-day program included visits to the top tourism destinations in Moldova as well as meetings with emerging young designers. MCP believes that the impact of bringing such high-level journalists will have a spillover effect on the target markets as well.

▪ National Geographic Traveler Poland and 16 other journalists from leading Italian, Polish and Romanian publications visited Moldova on a press trip organized around the DescOPERA Festival, with a focus on local gastronomy and hospitality.

▪ On May 16-21, MCP facilitated a personalized press trip for Massimiliano Rella, a journalist at Gambero Rosso, one of Italy’s most prestigious monthly wine and food magazines. Mr. Rella’s itinerary focused on authentic wine and gastronomy

experiences that will be showcased in a 10-page photo documentary in the September issue of the magazine.

The results of these press trips will be published in internationally recognized travel magazines and online media outlets, and result in hundreds of social media interactions.

ACTIVITY 2. Foster business linkages and expand target markets

Tourism industry creates direct market linkages with Italian tour operators Eight Italian tour operators expressed a keen interest in including Moldova in their new tourism packages following a six-day press trip to key tourism sites, wineries and businesses across the country, organized by tourism association ANTRIM with support from MCP and the Moldova Investment Agency. According to research conducted by MCP, nine percent of all foreign visitors to Moldova live in Italy, and Italian tourists have a strong interest in Moldova’s prime tourism assets, including wine and gastronomy. Following two years of MCP support for strategic marketing and PR activities, Moldova is becoming an established destination in the Italian outgoing travel market. As a result, more than 20 Italian travel companies now offer group tours to Moldova, including Italy’s largest tour operator Francorosso, and Moldova has featured in more than 200 articles across leading Italian travel and media outlets.

OBJECTIVE 3: IMPROVED SECTOR-ENABLING ENVIRONMENT AND INCREASED CAPACITY

PROGRAM 3: Re-Think Tourism Moldova. Building a sustainable public-private partnership

ACTIVITY 1. Re-think tourism industry: reformed policies and regulation to ensure sustainable development

MCP works to reduce regulatory burden on tourism SMEs MCP is committed to supporting reforms to the national tourism legal framework to develop a business enabling environment. In the reporting period, the project initiated amendments to Law 356/2006 on tourism activity aimed at easing the regulatory burden on small and medium rural tourism activities, as well as clarifying and streamlining regulations related to tour guides, tourism information centers and removing obsolete regulations requiring mandatory professional certification of all tourism industry staff. MCP also responded to a request from the Ministry of Economy and Infrastructure to support the process defining the role of an automated information system, known as the "Tourism Registry". Specialized local technical assistance will be used to develop the concept of the Registry, using international best practices and UNWTO standards.

ACTIVITY 2. Strengthen private sector voice to balance public-private dialogue

80 tourism industry stakeholders attend training on updates to the Civil Code In 2019, a renewed and updated version of the Civil Code of the Republic of Moldova entered into force, resulting in many changes applying to the operations of tourism SMEs. MCP provided a training on these legal changes for more than 80 tourism industry stakeholders, including representatives of private entities, business associations and public authorities, addressing new rules related to travel packages and tourism contracts. In addition to capacity building the tourism sector, the training provided another opportunity for industry stakeholders to discuss further reforms needed to streamline and ease the regulatory burden on Moldova’s tourism SMEs.

LIGHT INDUSTRY

OBJECTIVE 1: INCREASED PRODUCTIVITY AND QUALITY (BETTER WORKFORCE AND ADOPTED INNOVATION)

Launched in late 2015, ZIPhouse was created to address challenges in industry education, promote fashion startups, and encourage academia-industry collaboration. The center launched under USAID’s support (CEED II) and is managed by the Technical University of Moldova with the participation of APIUS, the fashion industry association. MCP continues to support ZIPhouse with a focus on capacity building and content development.

PROGRAM 1. Strengthening ZIPhouse as the flagship institution in workforce development and fashion startup acceleration

ACTIVITY 1. Enhance ZIPhouse institutional capacity

ZIPhouse becomes associate member of the European Creative Hubs Network ZIPhouse was officially accepted as a 2019-2020 associate member of the European Creative Hubs Network. This membership puts Moldova on the European and International map of the creative world, joining 215 hubs from 38 countries, 13 of which are non-EU member states. The network is co-funded by the European Commission and led by the British Council in partnership with six European creative hubs from Greece, Portugal, Germany, Serbia, UK and Spain. This membership provides ZIPhouse with connections to a global network of similar accelerators and centers of excellence, opens opportunities for participation at conferences and joint initiatives, and provides access to a global network of experts, which will aid ZIPhouse to find international speakers and trainers for its skills upgrade events.

ZIPhouse strengthens capacity building activities for fashion community MCP worked closely with ZIPhouse to develop its four programmatic pillars, with an emphasis on the Fashion Academy Program and Fashion Leadership Program. During the reporting quarter, the hub collaborated with more than ten international trainers to deliver advanced trainings, and strengthened its partnerships with the International Trade Center. ZIPhouse demonstrated its improved capacity for implementing training programs within the UK aid grant to improve women and youth inclusiveness, a collaboration developed in Y3 with support from the MCP technical team. The project also supported ZIPhouse to better structure its activities, including the development of “ZIPatelier”, a distinct identity for activities targeting kids, teenagers and fashion enthusiasts. The hub plans to develop more activities in this area to generate revenues and to strengthen its cashflow.

ZIPhouse provides access to global trends and fashion industry analysis MCP supported ZIPhouse to renew its annual subscription to the WGSN – the online world- leading trend authority, offering ZIPhouse members and students and teachers at the Technical University of Moldova (TUM) access to forecasting and global fashion industry analysis on consumer, design, markets, retail trends. This access enables Moldovan fashion designers to optimally position their products on the global market, ready to increase international exports and revenues within the Moldovan fashion industry.

ACTIVITY 2. Boost fashion creativity, startups and community building

26 Young Designers showcase creativity at Z Generation Young Designers Competition Final The final catwalk of the Z Generation Young Designers competition took place at Artcor, presenting collections from 26 emerging designers to an audience of Moldovan fashion fans. Z Generation is part of the regional International Young Designers Competition initiative based in Kiev, Ukraine, which aims to strengthen the future of the European fashion industry. Participating Moldovan designers received support from international mentors at ZIPhouse over the course of six months, including a training on styling led by British trainer Stella Arion. 39 students and young designers upgraded their styling skills by working on the collections developed within the Z Generation competition, and continued their individual collaborations with the stylist online. The competition participants presented their collections to a jury of industry professionals at the final Z Generation Young Designers final catwalk takes place at Artcor Center for catwalk show, and three Creative Industries in front of an audience of Moldovan fashion fans. finalists were selected to Credit: ZIPhouse represent Moldova at the International Young Designers Final in Kiev, Ukraine, competing against designers from the Czech Republic, Lithuania, Poland, Romania, Slovakia, and Ukraine.

ZIPhouse enhances market penetration of local designers with Pop Up Shops The Z Generation competition final provided a valuable opportunity for the young designers to sell their collections directly to Moldovan consumers via a two-day pop-up shop in the Artcor courtyard over the competition final weekend. Handmade accessories and products made by people with disabilities were sold alongside the results of the Z Generation competition. On- the-spot sales totaled 00 USD, which were returned to the designers and makers of the featured products.

ZIPhouse also partnered with light industry manufacturer and APIUS member Portavita to host a pop-up shop on the roof of the factory, during a public event organized by Moldovan media portal agora.md. The shop exposed participating designers to Consumers and designers exchanging details at the Z Generation pop-up shop for Moldovan designers, organized by ZIPhouse at Artcor Creative Hub more than 400 guests, plus with MCP support. Credit: MCP members of the Moldovan media. The young designers also had the opportunity to take a tour of the factory to discover

39 its production flow, and become familiar with the services that the factory can offer to emerging brands, including pattern making, sewing, fabric sourcing etc. MCP supports industry association APIUS and ZIPhouse Center of Excellence to organize innovative promotional activities like pop up shops to promote sales of Moldovan light industry products on the domestic market, which acts as a springboard for local designers to later develop international exports. The domestic market for Moldovan light industry products has grown by 20-30 percent each year due to MCP support for activities like public catwalks and pop up shops. In FY18, domestic sales of Moldovan own brand companies assisted and monitored by MCP amounted to $27.2 million USD, representing an increase of $6.3 million or 30.6 percent vs. FY17.

Eleven fashion and lifestyle startups enter ZIPhouse Acceleration Program In February, MCP supported ZIPhouse to launch its 2019 Acceleration Program (AP), targeting fashion and lifestyle startups. The program aims to accelerate 11 startups with high potential to succeed on both, local and international markets. During the reporting period, ZIPhouse organized mentorship and coaching sessions for the participating startups with six mentors: three from Moldova and three from France and the UK. The accelerator participants attended more than 10 events organized by ZIPhouse during the reporting period, which introduced the startups to key business concepts, including the myths and realities of entrepreneurship, potential business options, the components of business ownership, business plan basics, digital and ecommerce, and client satisfaction techniques. The startups also received a marketing and export readiness assessment delivered by the program coaches. The Acceleration Program will end in September, with prizes awarded to the startups who achieve the most dynamic progress within the six-month acceleration period.

ZIPhouse Fashion Photography Competition winners to attend regional competition In 2019, the International Youth Design Competition (IYDC) expanded the regional Z Generation young designers fashion competition to include Fashion Photography. In response, ZIPhouse organized its annual Fashion Photography Competition in partnership with the Z Generation Young Designers Competition, connecting young designers with the 15 participating young fashion photographers. On 19th June, the results of the competition were assessed by a local jury across two categories (beginners and professionals), Young Moldovan fashion photographers receive their participation and two winners will travel to awards at the Fashion Photography Competition, organized by Kiev, Ukraine to compete in ZIPhouse with support from MCP. Credit: ZIPhouse the Regional Final organized by IYDC.

ACTIVITY 3. Develop industry skills through quality advanced technical education and training

ZIPhouse trainings upgrade business skills of 200+ fashion industry professionals During the reporting quarter, more than 200 representatives from Moldovan fashion companies upgraded their business development skills at four trainings delivered by international trainers at ZIPhouse Academy.

In June, international trainer Bernard Cheere, CEO of ARTIFEX, a Romanian apparel manufacturer, delivered a one- day training on “Business Development Strategy for light industry companies”. This was followed by a training for fashion professionals, startups, young designers and other members of the Moldovan fashion community on “International Advert for ZIPhouse industry training on “Business development fashion shows - mastery of strategy for light industry companies”, delivered by international presentation” led by UK expert consultant Bernard Cheere with support from MCP. Credit: ZIPhouse Stella Arion. The one-day course was designed to prepare start-ups and businesses to successfully present their brands at international trade shows, and covered topics from product presentation to communication with buyers and potential clients.

In April, Italian expert Fernando Torres delivered a training on “Digital Fashion”, providing recommendations and insights into industry trends in digital marketing, promotion, and online selling. This was followed by a four-day advanced course on “E-Commerce for the Fashion Industry” led by French expert Mohamed Es Fih. Starting with the potential of cross border e-commerce for Moldovan companies, this training mapped the problems faced by Moldovan firms and addressed their potential solutions, before providing specific tips on e- commerce engeneering and pricing strategies, digital marketing, logistics, labeling and packaging, and returns management.

ZIPhouse brings international expertise on Fashion Business Management and Fashion Trends to local industry leaders… Eighteen leaders from the industry attended an intensive three-day training on “Fashion Business Management” at ZIPhouse. Participants studied the specifics of Fashion Business under the guidance of Russian-speaking British fashion consultant Elizaveta Senatorova, who works at the world’s largest fashion forecasting company WGSN in London. The speaker covered a range of topics including branding, marketing, cost formation, sourcing, sales and exports, and the course was organized both in Chisinau and the northern city of Soroca, providing manufacturers from the regions to have better access to advanced education.

Meanwhile, international trainer Polina Stepanova from Polimoda in Italy led a seminar on fashion trends for Autumn/Winter 19/20 and Spring/Summer 2020, crucial for local designers to be able to plan future collections in line with global trends and improve the competitiveness of their products.

…and spurs sales through better merchandising and customer service skills Zoya Smirnova, a trainer and customer service professional globally famous department store Harrods in the UK, delivered a training to sales managers and marketers on the

41 importance of customer service, a key factor in ensuring client satisfaction and repeat custom. The training addressed ‘the Harrods approach’ to customer service, interaction with the unhappy clients, conflict resolutions, and provided a broad overview of the do’s and don’ts of excellent customer service.

Ukrainian expert Vitalyi Stepanenco delivered a seminar on "Multisensory Merchandising”, addressing visual retail merchandising, both on the shop floor and in outdoor and window displays. The training emphasized the emerging concept of multisensory merchandising, which utilizes new generation technologies for a 360-degree customer experience.

ZIPhouse also developed a practical training for sales consultants from stand-alone stores for local brands. The workshop “Sales Techniques” was organized in collaboration with Moldovan trainer Gheorghe Coșcodan, and ZIPhouse aims to offer it on a regular basis in the future. The aim of the training was to improve the quality of customer care at point of sale, increasing the sales of local producers. The trainer provided tips and recommendations on how to communicate with customers, how to gain their loyalty, and how to convert interest into real sales.

These trainings were delivered as part of the ZIPhouse Fashion Academy and Fashion Leadership Program, which facilitates collaborations with leading international fashion experts to develop professional skills across the industry. The trainings were funded by UK aid in partnership with MCP, the International Trade Center and APIUS light industry association. MCP supports training and capacity development activities for Moldova’s emerging fashion industry to bridge the skills gaps and support the transition towards producing higher value-added products. Since its launch, ZIPhouse has trained more than 120 private companies, equating to 27 percent of the fashion industry’s SMEs.

PROGRAM 2. SMART (Streamline Manufacturing, Accountability, Resource efficiency, and Transparency) Factory program

ACTIVITY 1. Implement complex innovative methods to streamline manufacturing and productivity growth

Local and international consultants support four apparel companies to increase production efficiency With the support of Moldovan efficiency consultant Damian Usanli, MCP continued to assist four apparel manufacturers to develop and implement productivity enhancement programs based on Lean Management tools and MODAPTS. These systems will increase the productivity of four apparel companies (Viomas SRL, Loztextil SRL, Luxtore SRL and Bit Program SRL) by eliminating waste and non-value adding (unproductive) operations, and improving the effective utilization of resources and increase labor productivity through the implementation of Business Studio 4.2 software (Bit Program SRL).

Unfinished goods on the factory production line at LozTextil apparel factory (left), and the new, efficient production line following MCP assistance (right). Credit: Demia Usamli

As a result of this assistance, Viomas SRL has increased its average fulfillment of production standards by six percent, and Loztextil SRL has increased productivity by 22.6 percent. Meanwhile, as a result of the MCP partnership with SES Germany, Irmgard Guse, a specialist in production organization and quality control, provided pro bono productivity and quality enhancement assistance to Vistline SRL, which resulted in a new production line set up dedicated to coats.

International consultant supports manufacturer to expand production Successful Moldovan apparel manufacturer Maicom has received intensive consultancy support from the SMART program since 2015, including an assessment in 2017 that the existing workspace is too small to meet its needs, impacting both production efficiency and the storage of raw materials and finished products. International productivity consultant Martin Buecher was approached by Maicom’s owner to support the design and development of a new facility, to enable the company to increase its rate of production and improve working conditions. Mr. Buecher supported Maicom to develop plans for the production departments in the new two-story factory, including floor layouts that meet international efficiency and social responsibility standards. The factory owner, Victor Maican, has stated that his concerns about the future of the company have been solved due to this planning, and he looks with confidence to the future of his company’s growth.

Apparel companies and equipment distributors visit Texprocess Manufacturing Technology Exhibition MCP supported seven Moldovan fashion manufacturers and three light industry equipment distributors to visit Texprocess in Frankfurt, Germany, the leading international trade fair for processing textiles and other flexible materials. The Moldovan delegation discovered and analyzed emerging technologies to reduce waste, improve productivity, and reduce productivity burdens on employees. The visiting companies, accompanied by representatives of the light industry association APIUS, made a shortlist of the most progressive equipment at the exhibition, and began an analysis into how to invest in some of the new technologies. MCP will open a call for grants to co-finance some of these technological upgrades.

International design consultant supports four established fashion manufacturers to improve design skills High-quality design skills are key for Moldovan apparel companies to attract new customers, improve product performance, cut production costs, and provide products with a strong competitive advantage in target markets. As a result, MCP continues to support Moldovan fashion manufacturers to improve their design skills through support from international

43 design consultant Kelly Denooyer via the MCP Flying Designers program. Ms. Denooyer worked closely with designers from four apparel companies – Maicom, Velitextil Plus, Maxi Kids and Milly Mia – to evaluate their Spring-Summer 2019 collections, and to provide input and recommendations on the collections’ designs, fabrics, and accessories. The consultant also reviewed the proposed designs for the 2019/2020 season, and provided feedback on the companies’ most pressing issues, including when to start planning a new collection, and the development of mood boards and sketches and the selection of raw materials and accessories.

Example beneficiary company: Milly Mia With support from Ms. Denooyer, the company selected a color palette for their new capsule collections. The designers then defined key shapes and silhouettes and added sports- inspired pieces into the collection in the Mily Mia style. Finally, accessories and other details were selected to add value to the collection, including detachable collars, embroidered buttons and collars, and screen prints on the newly introduced sportswear.

International design consultant supports four startups to improve design skills Kelly Denooyer also provided enhanced design training for four fashion startups within the ZIPhouse Fashion Acceleration program. Lale, Feliz, Love and Passion and Alina Druta studied themes and brand identity, mood boards, collection structure, correct implementation of the design process, basic costing and pricing tools, and the wholesale design calendar, which they used to improve their design Accessory and detail recommendations provided to Milly Mia by international designer Kelly Denooyer to increase the value of ideas and inspire their new finished products. Credit: Kelly Denooyer collections.

Four apparel manufacturers adopt International Quality Management Systems MCP assisted four Moldovan fashion companies (“Style by Militta” SRL, “Bevera Nord” SRL, “Mobile” SRL and “Oldcom” SRL) to develop and implement Integrated Quality Management Systems according international standards ISO 9001:2015 and ISO 45001:2018. Three of these companies, (Style, Bevera Nord and Mobile) currently provide manufacturing services for foreign clients, while Oldcom exports under its own label to Regional and European markets. The project supported the development of ISO 9001:2015 Quality Management Systems in each company in line with their internal development policies and strategies, to enable them to meet customer production requirements and increase production efficiency. The companies also developed Occupational Health and Safety Management System in line with ISO 45001:2018 to effectively manage OHSAS risks within the business, including company structure, planning activities, responsibilities, practices, procedures, processes and resources for developing, implementing, achieving, reviewing and maintaining the company's OH&S policy. By demonstrating strong OHSAS policies, these firms have increased their competitiveness on European markets, as European consumers seek manufacturers with good working conditions and health and safety procedures.

German designer supports four brands to improve pattern design German apparel pattern design expert Eva Hilliers supported four Moldovan brands to strengthen their pattern design skills: Vistlinie SRL, Sekana SRL, Sram SRL, and Gratia Stil SRL. Patternmaking is one of the most important processes in the apparel value chain, as it ensures that designer’s ideas are correctly translated into the final product and fit. Good patterns lead to high quality finished goods, and ensure a high level of competitiveness, especially for exports. Ms. Hillers’ visit was organized by the MCP Streamline Manufacturing, Accountability, Resource efficiency, and Transparency (SMART) factory program in partnership with Senior Expert Service (SES) Germany, which supplies pro-bono expert consultants from Germany to organizations around the world. This consultancy builds on a previous trip to Moldova, where she supported 10 Moldovan companies and five start-ups to improve their pattern making skills. MCP intends to work with Ms. Hilliers to create a platform for pattern design services for Moldovan and foreign companies, further strengthening the full-service manufacturing offer of Moldovan mid-size manufacturing companies.

Ambassadorial-level visit highlights good working conditions at rural apparel factory An ambassadorial-level visit to rural apparel company Sekana showcased the results of sustained MCP investment in good working conditions for rural women in the apparel manufacturing sector. USAID Mission Director Karen R. Hilliard, Swedish Ambassador Anna Lyberg, and UK Ambassador Lucy Joyce toured the manufacturing facility Caption: Natalia Melnic, Sekana owner and designer, and Ecaterina Grigor, and interacted with designer at Katea GRI, demonstrate the high-quality finish of their products to Ana seamstresses on the Lyberg, Swedish Ambassador, Karen R. Hilliard, USAID Mission Director, and Lucy factory floor, before Joyce, UK Ambassador, April 4, 2019. Credit: MCP enjoying a private viewing of the latest collections from fashion brands Sekana and Katea GRI. MCP supports apparel companies like Sekana to develop high-quality own-label fashion products, which generate increased value-added and result in higher salaries and safer working conditions for factory employees, over 90 percent of whom are women. Sekana now employs 30 women at its rural production facility, providing an attractive alternative to migration, and keeping rural families together.

USAID Senior Deputy Assistant Administrator for Europe and Eurasia visits leading fashion company Ionel Margot Ellis, USAID Senior Deputy Assistant Administrator for Europe and Eurasia, visited Ionel apparel manufacturer to see the good working conditions resulting from MCP investments in the factory via the project’s Streamline Manufacturing, Accountability, Resource efficiency and Transparency (SMART) program. MCP supports Moldova’s fashion manufacturing industry to create high quality jobs for women and youth, the two groups most vulnerable to the drivers of Margot Ellis, Senior Deputy Assistant Administrator for Europe migration. and Eurasia inspects good working conditions for women at Ionel apparel factory resulting from investments from the MCP SMART program. Credit: MCP

OBJECTIVE 2: EXPANDED MARKET LINKAGES

PROGRAM 3. Expanding Market Opportunities

ACTIVITY 1. Reposition Moldova as a full-product manufacturing partner and support internationalization of Moldovan fashion brands on regional markets

Moldovan designers penetrate Romanian wedding market Moldova is highly competitive within the international wedding sector due to the availability of affordable high-end design, stitching, embroidery and beading skills, vital for quality and attractive bridal products. MCP supports Moldova’s nascent bridal apparel sector to penetrate regional markets, generating high value export contracts. In May MCP supported Moldovan wedding brands Sophie, Alina Bradu, Illette, Martelly and Rodica Braga to participate in “Ghidul Miresei” exhibition in Bucharest, the most popular B2C wedding fair in Romania. The companies made on the spot sales worth $10,500 USD, and also secured pre-orders Advert for Sophie bridalwear company, and positive feedback from Romanian consumers, highlighting their location at Ghidul reconfirming the potential of the Romanian market for Miresei bridal fair in Bucharest, Romania. Credit: Sophie Moldovan wedding-wear designers.

ACTIVITY 2. Consolidate the Din INIMA Umbrella Brand and Expand Domestic Market

Two new DININIMA multi-brand stores open in Chisinau Seven Moldovan apparel companies opened two more multi-brand shops in Chisinau, with MCP support. The first shop, located on Eminescu str, is a boutique showcasing high-end fashion brands Arabadji, Vivi art Boutique, Lavielace and Haskel (a bags and accessories brand). The second shop focuses on casual clothes at medium prices from three further brands: Mobile, Vistline and Vasconi. Together, these new stores demonstrate the increasing maturity of the DININIMA brand and the Moldovan fashion market, New DININIMA boutique in Chisinau, stocking four MCP-supported high- which is now large enough to end fashion brands. Credit: MADEIN.MD support this level of market segmentation.

300+ public figures, journalists and fashion ambassadors attend Fashion Soirée Resort Collections 2019 19 Moldovan designers presented their 2019 resort collections in an open-air fashion show on June 12. To raise the profile of Moldovan brands on the domestic market, the mid-season show featured public figures and members of the diplomatic community as models, who walked the catwalk to live music in front of more than 300 visitors and media representatives. Three winners of the Z Generation Young Designers Competition also presented their collections alongside the established Moldovan designers, acting as an official public launch for the young talent, and bolstering their confidence. Fashion Soirée is organized by the Light Industry Employers Association (APIUS) with support from the MCP. The event acts as a satellite to the bi-annual Moldova Public figures and influencers model resort collections from Moldovan designers at the MCP-supported Fashion Soiree to Fashion Days and aims to strengthen the stimulate the domestic market. capacity of local fashion industry actors, Credit: MADEIN.MD raise the visibility of Moldovan brands, increase local sales and raise the profile of Moldovan fashion on local and international markets.

11 DININIMA brands leverage gastronomic festivals to gain visibility on the domestic market MCP supports Moldovan fashion labels to achieve domestic recognition under the DININIMA umbrella brand. To enhance local visibility, DININIMA organized a stand at the Mai Dulce gastronomic festival in Chisinau. Ten apparel companies took part in the event, offering

47 unique, ‘sweet’ themed products, a raffle, and specialized discounts, and fashion brand Vasconi organized a workshop for children to attract a stronger stream of people to the stand.

OBJECTIVE 3: IMPROVED SECTOR-ENABLING ENVIRONMENT AND INCREASED CAPACITY

ACTIVITY 1. Assist APIUS to Become a Strong Professional and Industry Association

APIUS creates database to promote local suppliers, services and products The first comprehensive Moldovan database of light industry manufacturers has been created with MCP support. Most of the 120+ database members are members of industry association APIUS, and the resource includes detailed information on each company’s production capacities and range of services, as well as the types of products manufactured and sold. The main objective of the database is to support APIUS to promote Moldova as a full-product manufacturing partner and spur exports of services and products. It will also allow the association to strengthen its position as the core organization representing the interests of the light industry to the Moldovan Government and state institutions.

INFORMATION TECHNOLOGY, ENGINEERING AND CREATIVE SERVICES

OBJECTIVE 1: INCREASED PRODUCTIVITY AND QUALITY (BETTER WORKFORCE AND ADOPTED INNOVATION)

PROGRAM 1: Promoting STEAM Education and STEAM fields Careers

ACTIVITY 1. Pilot the Future Classroom (FCL) Concept in Moldovan schools

New Future Classroom Center brings technology to Moldovan schools and equips youth with digital skills of tomorrow The National Center for Digital Innovation in Education, known as “Future Classroom” is the result of a long-term public private partnership between the Government of Moldova, the Moldova Competitiveness Project (MCP) and Orange Moldova Foundation, and will train more than 1000 teachers each year in digital technologies and up-to-date teaching methods. Representatives from the PPP were joined by the Prime Minister and Minister of Education, Culture and Research to officially open the center in front of an audience of students and teachers from the Future Classroom pilot project. The officials then visited a showcase of technology projects from Future Classroom pilot schools across the country, demonstrating students’ skills in robotics, programming, electronics and more.

Based on EU and global best practices, the Future Classroom initiative was launched in Moldova in 2017 to build on the successes of the MCP Educational Robotics program, and to further the promotion of Science, Technology, Engineering, Arts and Math (STEAM) education as outlined in the Government of Moldova’s Education 2020 strategy. Future Classroom equips Moldovan schools with market-driven, transformative technologies, and supports the adoption of cutting-edge digital teaching methods across the school curriculum.

To date, more than 3,400 students and 175 teachers from 11 high schools across the country have tested the approach since then with outstanding results. By training Moldovan teachers to use technology in their lessons, whatever the discipline, the National Center for Digital Innovation in Education will transform the way that Moldovan students learn and equip them with the skills and knowledge required by Moldova’s growing ICT sector.

ACTIVITY 2. Expand Educational Robotics Program

19 Robotics teachers develop advanced programming skills Nineteen experienced robotics teachers upgraded their skills in advanced programming and use of sensors during a training at Tekwill organized by ATIC with MCP support. The training was facilitated by two local expert trainers, Adrian Gradinaru and Irina Ciobanu, and targeted robotics teachers with at least one year of experience in the Experienced robotics teachers learning advanced programming skills at a Educational Robotics Tekwill training organized by ATIC with MCP support. Credit: MCP program.

300 students compete in FIRST LEGO League Junior More than 300 elementary-aged robotics enthusiasts travelled to the Moldovan capital from across the country to take part in the second annual FIRST LEGO League (FLL) Junior Competition. Students from 24 educational institutions in seven cities and nine rural areas formed 49 teams to develop their “Moon Base” projects powered by LEGO WeDo robotics sets. FIRST LEGO League Jr. is a global non-competitive robotics program designed for children aged six to ten, and this year Moldovan youth joined over 55 countries and 126,000 children from around the world to research, develop and test solutions to problems on the topic of Mission Moon and Space Exploration. MCP supports the expansion of FLL programs across Moldova to strengthen youth creativity and skills in engineering, programming, communication, presentation, teamwork and problem solving.

Youth Robotics teams compete at European Championship in Turkey The first and second place teams from the 2019 FIRST LEGO League (FLL) Moldova Final represented Moldova in the FLL Open International Championship in Izmir, Turkey, competing against more than 100 teams from across the world. RoboRangers, from the Moldovan capital Chisinau, are the reigning Moldovan youth robotics champions, and scooped third prize at the FIRST Global Robotics Olympiad in Mexico in 2018, demonstrating their world-class skills. They were joined on the international stage for the first time by FLL Moldova 2019 runners-up Way2Win, from Balti in the north of the country, who are the first regional youth robotics team to represent Moldova overseas. FLL is the largest technology and robotics competition for youth in the world, encouraging students to design and program robots and develop real-world engineering projects. MCP has been investing in Educational Robotics since 2015 to support Science, Technology, Engineering and Math (STEM) Members of Way2Win from the north of Moldova test their robots at the FLL education in Moldova. European Championship in Izmir, Turkey, with MCP support. Credit: Way2Win

5,000+ students receive Robotics training during school year 2018-2019 At the end of the 2018-2019 academic year, MCP and ICT industry association ATIC conducted a monitoring and evaluation activity to survey the beneficiaries of the MCP Educational Robotics. Robotics is taught as elective or extra-curricular course in all school grades, beginning in elementary school. At present, the program is implemented in 124 educational institutions across the country, 12 of which joined the program during the school year. 115 teachers from 94 schools were included in the monitoring program, and reported that they trained 5022 students aged 7 to 17 years old, of which 1824 (36 percent) were girls. It is estimated that a further 600-800 students attended robotics clubs at libraries participating in the program.

MCP also conducted an online survey of program beneficiaries to gain qualitative data. 564 students (11 percent of this year’s beneficiaries) participated in an online impact survey. 61 percent indicated improvement in teamwork skills, 51 percent reported improvement in creativity, 36 percent improved their communication skills and relationships with colleagues, and 35 percent improved their problem-solving skills. Over 70 percent declared they are planning to pursue careers in tech fields, engineering, robotics, programming, etc.

To date, the MCP Educational Robotics program has benefited approximately 15,000 Moldovan youth in 124 or 10 percent of the country’s schools, preparing them for 21st century careers.

ACTIVITY 3: Support private initiatives for improving STEAM education and promoting STEAM careers

Three students from CoderDojo Chisinau win awards at national Scratch Programming Competition The national final of the Moldovan Scratch Programming Competition took place on Saturday April 20, testing the talent of 36 students from across Moldova, following an initial stage of local competitions which attracted 100 applicants around the country. Three participants from the MCP-supported CoderDojo Chisinau program won prizes at the final: Alexandru-Ioan Capalna – second place, Mădălina Gogoi – third place, and Delia Juc – special mention. The competition was organized by the Center for Information and Communications Technology in Education (CTICE), based on the center’s own curriculum, and their knowledge of how Scratch programming is studied in other countries. CoderDojo is a global network of free volunteer-based coding clubs, with over 1,100 verified Dojos in 63 countries. CoderDojo was launched in Moldova in 2014 by private firm Yopeso Ellation, and has expanded to seven clubs across Chisinau with support from MCP. More than 400 youth aged 8 to 16 attended regular weekend coding classes at CoderDojo clubs since 2016, assisted by 24 volunteers. Children attending the clubs learn to code using basic programs like Scratch, HTML5, Python, build websites, create apps and games, exploring technology in an informal and creative National Finalists from the Moldovan Scratch Programming Competition environment, which provides organized by CTICE, including three winning participants from MCP- them with the skills they need supported CoderDojos in Chisinau Credit: CTICE to access 21st century jobs.

PROGRAM 2: Build the Ecosystem for Workforce and Entrepreneurship Development *This activity will be co-funded via the Tekwill Project, implemented by ATIC, and funded by USAID and Sweden*

ACTIVITY 1. Develop Regional Innovation Centers (Balti, Regional FabLabs)

80+ students compete in Yep! Moldova startup competition final In October 2018, MCP supported the Yep! Moldova platform to launch, organize and deliver two 3-month startup accelerator programs, benefitting students from six Moldovan universities. Yep! is a regional network of academic business incubators originating in Ukraine, providing business-related education for youth. More than 80 students from the State University of Moldova, the Technical University of Moldova, the Academy of Economic Studies of Moldova, AMTAP, ULIM and USARB formed 12 startup teams to enter the acceleration program. The competition final took place in May, and three winning startups were selected to represent Moldova at the 5th annual Yep! DemoDay in Kiev, Ukraine. First place was won by VIS, an online platform to access drawing courses. The VIS team is made up of four youth: two students at AMTAP, one former student of the Academy of Arts, and a high school student. The team won a grant worth (50,000 Ukrainian Hrivna) and a voucher to develop their website. Second prize was won by NEWTONE, a team of size students who designed a platform matching jobseeker to real opportunities, and third place was won by a team of just three young people who developed NYFEN, a marketplace connecting customers to personalized jewelry designers. The third round of the Yep! Moldova acceleration program will be launched in October 2019.

ACTIVITY 2. Creative Hub – the grand opening

Artcor Center of Excellence for the Creative Industries launched Artcor is a new infrastructure and ecosystem for Moldova’s graphics, design, sound, animation, arts, music and other creative subsectors with high export potential. Artcor was launched during Moldova Design Week with over 1,000 in attendance the first day and 3,000 in the first week. Artcor is a flagship, state of the art project for the creative industry, and will act as a new infrastructure and ecosystem for Moldova’s graphics, design, sound, Olga Radu President of COR Association, Lynn Vega USAID Acting Mission animation, arts, and music Director, Anna Lyberg Ambassador of Sweden, Monica Babuc Minister of Education, Culture and Research, Lucy Joyce Ambassador of UK and Victoria industries, alongside other Melnic, Rector of the Academy of Fine Arts at the launch of the Artcor Center for creative subsectors with Creative Industries, an innovative public private partnership developed with high export potential. support from MCP. Credit: MCP

The center is a groundbreaking public private partnership between the COR Creative Industries Business Association in Moldova, Ministry of Culture, Education and Research and the Academy of Fine Arts, and was developed over the course of two years with strategic support from the Moldova Competitiveness Project (MCP).

Courtyard of Artcor Center for Creative Industries during the launch on June 3, 2019. Credit: MCP

USAID Senior Deputy Assistant Administrator for Europe and Eurasia visits Artcor Creative Industries Center Margot Ellis, USAID Senior Deputy Assistant Administrator for Europe and Eurasia, visited the new MCP-supported Artcor Creative Industries Center during the preparations for its grand opening on June 3rd. MCP supports the development of Moldova’s nascent Creative Services Industry as the provider of more than 8,000 jobs currently, mostly for youth aged 18-35, and paying salaries more than 50 percent higher than other industries. Artcor will enhance the skills of over 1,000 creative industry professionals a year with global knowledge, technology and business skills, contributing to the development of a sustainable, export- oriented Creative Services Industry. MCP supports Moldova’s creative services Margot Ellis, Senior Deputy Assistant Administrator for Europe and Eurasia visits Artcor Creative Industries industries to create high quality jobs for Center alongside USAID and MCP representatives. women and youth, the two groups most Credit: MCP vulnerable to the drivers of migration.

ACTIVITY 3. Fab Lab Chisinau – coaching the ATIC/TUM partnership

40+ students graduate from bootcamp to design self-driving cars More than 40 students and future software engineers from local universities and high schools graduated from a six-week Autonomous Driving Bootcamp at the Chisinau Fab Lab, organized by the Microlab Engineering Club, with support from MCP, private sector partners Ellation, Continental, AROBS Transilvania software and Siemens, and GIZ. The teams of 3- 5 participants, mostly software engineering, engineering, electronics and mechanics students from the Technical University of Moldova, were guided through the process of creating and programming a self-driving race car, addressing technical challenges such as speed, acceleration, braking, avoiding obstacles and recognizing traffic signals. The bootcamp was designed to explore the growing industry of automotive electronics, which has an up to 80 percent overlap with the IT sector, making it an attractive sector for young technical graduates in Moldova. The Moldovan IT industry has grown more than 40 times over the past 13 years, and by 40 percent in the past two years alone, thanks to coordinated strategic investment by the Government, private sector, and donors such as MCP. Activities such as the Autonomous Driving Bootcamp delivered at key public private partnerships like FabLab provide young graduates with the skills they Graduates of the Autonomous Driving Bootcamp pose with representatives from the Moldovan Government, the private sector, MCP and other donors at need to access quality jobs in Chisinau Fab Lab. Credit: MCP IT, which pay some of the highest salaries in the country at MDL 24,000 or $ per month.

FabLab Chisinau launches partnerships with International Businesses Chisinau Fablab held meetings with several international companies, laying the foundation for future public-private partnerships. These included Shado EV from Singapore, a manufacturer of electric vehicles and electric motors and Electroprecizia Holding from Romania, specializing in aluminum casting and electric motors. The hub also met with several Moldovan companies, including Radia Plus, which manufactures composite materials; Hybrid Services, which recycles batteries, and Smarttronic, which develops smart home products. These business devel t meetings demonstrate the increased capacity of FabLab to develop partnerships with the private sector, and to continue to support Moldova’s growing position as a source of quality precision engineering services.

ACTIVITY 4. Support and develop IT and engineering laboratory cluster within TUM

Engineering club attends Autonomous Vehicle Expo in Germany

MCP supported a representative from the Micro Lab Engineering Club in Chisinau to attend the Autonomous Vehicle Expo 2019 in Stuttgart, Germany, as part of an engineering- focused delegation from the Balti Free Economic Zone and the Moldova Investment Agency (MIA). The expo is the largest specialized exhibition of this type in Europe, and the group familiarized themselves with the latest developments in equipment, sensors and software in the field of autonomous driving, which has the potential to add significant value to Moldova’s existing automotive engineering niche The Moldovan delegation, including Micro Lab Engineering Club, attends and create lucrative jobs for the Autonomous Vehicle Expo in Stuttgart, Germany, with MCP support. Moldovan youth. Credit: Micro Lab Engineering Club

ACTIVITY 5. Improve the entrepreneurial ecosystem for innovation and creative services

International Data Corporation (IDC) brands Moldova’s thriving IT industry an attractive destination for international investors A new report “Moldova IT Players Priming for IDC report “Moldova IT Players Priming for Worldwide Presence”, was launched by the Worldwide Presence” funded by MCP, International Data Corporation (IDC), a globally published on April 15, 2019. Credit: MCP trusted provider of market information and consultancy services. IDC offers independent global, regional and local expertise in the field of technology, opportunities and industry trends in over 110 countries, based on the work of over 1,100 analysts worldwide. IDC also published the March 2019 report “Moldova IT Market 2019-2024” and two previous analyses of the Moldovan IT sector in 2011 and 2015, with financial support and expert input from MCP and its predecessor projects. “Moldova IT Players Priming for Worldwide Presence” provides an independent overview of the current strength and potential of Moldova’s IT industry, and acts as a calling card for the Moldovan Government and Moldova’s IT private sector when pitching opportunities to local and international investors, foreign clients and existing IT businesses willing to expand or diversify their IT services. IDC recommends Moldova as a global hub for high-value added IT projects, in verticals such as fintech, automotive, e-government and telecommunications, employing third-platform technologies such as big data, cloud and the Internet of Things. The report also highlights the high potential for growth in the creative industries, innovation-driven projects, R&D and engineering services, following Moldova’s shift from a low-cost time-and-materials outsourcing location to a high-value added destination able to tackle complex, full-cycle, multimillion-dollar projects.

Moldova’s thriving IT services market is estimated to achieve a total value of $182 million USD in 2019, exporting an incredible 78.3 percent of total IT services, and the sector should meet its projected annual composite growth rate (CAGR) of 7.86 percent for 2019-2024,

54 creating new jobs and economic opportunities across the whole country. This success is based on a carefully crafted IT ecosystem, harnessing skilled human capital, emerging infrastructure, active business associations and a pro-business business environment, which supports sectors as diverse as fintech, automotive engineering, telecommunications and the Internet of Things (IoT), and provides full-product services to high-level clients across the EU and USA.

The spectacular growth of Moldova’s IT industry is underpinned by a long-term partnership between the Moldovan Government, private sector players and MCP. Since 2005, Moldova's IT exports have risen 40-fold to $164 million USD in 2018, creating well-paid jobs for more than 23,500 people, mostly youth. The Moldovan Government acknowledges the potential of this ecosystem, Razvan Savu, IDC Romania, Thomas Alveteg, First Secretary of the Swedish and is focusing on accelerating Embassy, Dan Thomson, EG Director USAID Moldova and Chiril Gaburici, industry growth by streamlining Minister of Economy and Infrastructure at the launch of the IDC study on the tax legislation in the form of Moldovan IT market, April 23, 2019. Credit: MCP the IT Virtual Park, simplifying the process of obtaining visas for foreigners who come to Moldova to work in ICT, and supporting the development of world-class IT infrastructure and business facilities such as the Virtual Park and Digital City. To increase awareness of the untapped potential of this sector, the IDC report is poised to be distributed to Romania’s top-100 IT companies, before being shared with international investors at upcoming B2B events.

Chemonics ICT4D Technical Director visits Moldova to analyze opportunities for a future Media Hub Manisha Aryal, Chemonics ICT4D Technical Director, visited Moldova in May 2019 to analyze opportunities for the development of a proposed Media Hub, known as MEDIACOR, to accelerate Moldova’s nascent Digital Media Industry. Like Moldova’s Creative Services Industries, which currently employ 8,000 people, mostly youth, Moldova’s digital media sector is in a startup phase and the industry needs acceleration support to take off and ultimately be successful.

During her visit, Ms. Aryal met with four Moldovan production houses for in-depth interviews about the needs of the media sector, brainstormed with smaller production houses and television stations in partnership with IREX, and mapped out the parameters of the future digital media hub to be located in the capital city, Chisinau. This hub, known as MEDIACOR, will serve as the foundation for Moldova’s digital media and entertainment industry, and act as a base from which the country’s digital export potential is launched. It will house a state- of-the-art recording pavilion, high-value pre- and post-production facilities, and accessible networking, co-working and Report by Chemonics, MCP implementer, into the development learning areas to foster community and of the future MEDIACOR Hub. Credit: Chemonics/MCP

55 catalyze collaboration amongst Moldovan digital media startups and stakeholders. The study visit built on initial market and location research undertaken by MCP, and drew on the various institutional, governance and business models used by ZIPhouse, Tekwill, FabLab and Artcor. As a result, the team narrowed down five possible hub venue options to just two (the State University and Writers Guild) and presented these locations along with the needs of the industry to USAID and the US Embassy.

OBJECTIVE 2: EXPANDED MARKET LINKAGES

ACTIVITY 1. Assist foreign market entry for domestic tech & creative firms and attract tech-based investors to Moldova

Moldovan creative community promoted at Romanian Design Week 20 Moldovan creative projects and companies were presented at Romanian Design Week within a dedicated Moldova Design Week (MDW) ‘capsule’, one of only 15 creative capsules distributed throughout the event. This year marks the seventh edition of Romanian Design week, which brought together more than 200 of the best design projects in the region to an audience of 1000 designers, architects and other creative professionals. Creative industries employ 29.5 million people worldwide, and in Moldova the sector is expanding by 11 percent per year, paying up to 50 percent more than other industries. MCP supports the sector to Moldova Design Week capsule at Romanian Design Week, made possible with support from MCP. Credit: designcafeclub.md participate in regional events like Romanian Design Week to ensure the continued growth of the industry, which offers attractive jobs to Moldovan youth and prevents brain drain.

47 young film professionals attend MILAP Summer Film School MCP supported MILAP Film School in Chisinau to organize a seven-day movie-making summer school for more than 40 Moldovan film professionals, from cameramen to sound engineers. The participants attended masterclasses and workshops delivered by professional filmmakers from the USA, Germany, Romania, and Ukraine, and took practical classes on the logistics of film shoots in Moldova and abroad. The summer school provided the opportunity for students to discover elements of cinematography that are not currently taught in Moldovan film schools, but which are essential for international-quality film production. MILAP is the first summer school devoted to upgrading the skills of professionals in the Moldovan film, and aims to act as a platform to develop the field of cinematography in Moldova by investing in future film professionals. MILAP has signed a collaboration agreement with one of the largest film production companies in Ukraine, Star Media, and ten graduates from the MILAP Film School program will travel to Kiev, Ukraine in July to take part in the production of two films. Meanwhile, a newly introduced cash rebate mechanism will make Moldova an attractive production location for international film makers and will contribute to the development of Moldova’s film industry. MCP invests in skills upgrades for Moldovan film industry professionals, from sound engineers and assistant directors to lighting assistants and make-up artists, to provide capacity for this sector to grow.

Moldovan Design Week shares launch with Artcor Opening Each year, Moldovan creative professionals unite to take part in Moldovan Design Week (MDW), to promote Moldova’s creative industries with workshops, events, parties and other events. MDW 2019 was launched on June 3rd at the opening of Artcor Creative Industries Center, with live music and exhibitions from participants, leveraging awareness of Moldova’s design community.

Moldova’s IT opportunities promoted to 1600 international investors Moldova’s first virtual business park, ‘Moldova IT Park’ was presented to an audience of 1600 international investors at Bucharest Technology Week in neighboring Romania through a targeted series of panels, interviews, marketing materials and a dedicated stand in the conference exhibition center. This trade promotion activity was delivered by a high-level Moldovan delegation including State Secretary of Economy and Infrastructure Vitalie Tarlev, the Administrator of Moldova IT Park, the Moldovan Investment Agency (MIA), and the International Data Corporation (IDC). Moldova’s participation at Bucharest Technology Week was co-funded by Moldovan Investment Agency, MCP and GIZ. This activity built on the success of the previous IT trade promotion event “Beyond Limits” held in Romania in December 2018, and presented the results of the IDC report “Moldova IT Players Priming for Worldwide Presence” to potential investors while reconnecting with regional businesses interesting in accessing Moldova IT Park. MCP supported the delegation to target regional and international companies looking to expand into Moldova, members of the Moldovan diaspora looking to reinvest in Moldova, IT specialists looking for new opportunities, and existing Park residents looking for new partners.

ACTIVITY 2. Support private-driven initiatives to develop IT Parks

Starnet IT Park signs pre-lease agreement for more than 60 percent of its capacity Starnet IT Park has signed pre-lease agreements for more than 60 percent of its capacity, including both co-working and formal office spaces. During the reporting quarter, the Park began to host events for the IT industry, including Startup Campus “Yep! I can”; Academia de Weekend; Student Fest 2019; and Female Founders of the Future.

Audience members and participants attend the Startup Campus “Yep! I Can” event at Starnet IT Park. Credit: StarNet

OBJECTIVE 3: IMPROVED SECTOR-ENABLING ENVIRONMENT AND INCREASED CAPACITY

ACTIVITY 1. Implementation of the Law on IT Parks

Moldova IT Park launches report evaluating first year of activity The Moldovan Ministry of Economy and Infrastructure organized a public presentation of a new report, “Moldova IT Park”, evaluating the performance of Moldova’s first virtual IT park in its first year of operation. 339 Moldovan and International companies are now members of the Park, including 94 new firms and 96 companies with foreign investment. Since Moldova IT Park opened at the start of 2018, sales of IT services by its residents have exceeded $112 million USD (1.9 billion lei), nine percent higher than predicted, and members now have a total of 6,739 employees, mostly engineers. By December 2018, the average salary at firms within the Park exceeded $1,560 USD (MDL 27,900), 4.5 times the national average, demonstrating the potential of the Park to generate attractive employment opportunities in Moldova’s ICT sector.

ACTIVITY 2. Strengthen and update industry strategies

Industry strategies await political stability The Ministry of Economy and Infrastructure initiated several policy initiatives to strengthen Moldova’s ICT sector during the reporting period, but these were put on hold as a result of the Parliamentary elections and resulting political instability in Moldova. The list of initiatives included optimizing public procurement regulations to increase the consumption of local IT products and services; simplification of export procedures for IT services; and development of a policy framework for future IT excellence and innovation centers.

ACTIVITY 3. Capacity Building for ATIC and COR business associations

COR and Artcor increase capacity for good governance MCP assisted COR Association of Creative Industries to build its capacity to manage the newly launched Artcor. Executive teams from both COR and ARTCOR were trained and consulted during the process of developing their internal procedures for procurement, accounting, hiring and contracting. As a result, COR is in process of hiring two additional staff members - Marketing & Community Building Manager and Technical & Events Manager. MCP continued to provide support to ARTCOR to apply for international financing and grants.

Artcor joins European Creative Hubs network Artcor was officially accepted as an associate member of the 2019-2020 European Creative Hubs Network. This puts Moldova on the European and International map of the creative world and opens a whole new range of regional and international opportunities for learning and collaboration. The opportunities allow Artcor to join trend setting international creative industry conferences and talks, benefit from bespoke training programs and hub management toolkits, and to tap into the talented human capital within the network – more than 1600 creative hub managers & staff – to support Artcor’s own programs, for example finding international speakers and trainers for events. As an umbrella organization, the Network adds critical mass and a coherent voice to Moldova’s Creative Services sector and can assist with advocacy for policy support and raising the profile of the industry in Moldova. The European Creative Hubs Network is a peer-led network and the first network of creative hubs in the EU, connecting 215 hubs from 38 countries, 13 of which are non-EU member states. It is co-funded by the European Commission and led by the British Council in partnership with six European creative hubs from Greece (Bios), Portugal (Addict), Germany (Betahaus), Serbia (Nova Iskra), UK (Creative Edinburgh) and Spain (Factoria Cultural). The European Creative Hubs Network aims to champion the creative sector, and demonstrate

58 that creative hubs contribute to the growth and the resilience of the creative sector and to the economy as a whole.

DELIVERABLES

During the reporting quarter, the project submitted the following deliverables to USAID as per contract requirements:

1. Quarterly Report, FY19 Q2 2. Monthly Report, April 2019 3. Monthly Report, May 2019 4. Revised Monitoring and Evaluation Plan

SECTION II

PROJECT-LEVEL OUTCOMES AND RESULTS

Sector Engagement, Enhancement, and Development (SEED) Fund

During the quarter, the SEED Fund focused on implementing the recently increased SEED Fund budget of . In April-June 2019, the SEED Fund disbursed a total of US covering 23 existing grant beneficiaries across all industries. To date, the SEED Fund has disbursed a total of or 60% of the total USD. The SEED Fund allocated with USAID approval: o Seven new grants in rural and wine tourism sector to:

1. Tanixcom SRL (G-SIM-056) located in Ciuciuleni, Hincesti, Codru Region to improve the quality of the guesthouse’s tourism services by equipping with new and well- designed goods and materials the existing and new bedrooms, bathrooms, and kitchen. 2. A.O. Mester Faur, operating under the name guesthouse “La Mester Faur” (G-IKG- 062) located in Cioburciu, Stefan Voda, Stefan Voda Region to improve the quality of the guesthouse’s tourism services by equipping with new and well-designed goods and materials the new bedrooms and the kitchen. 3. A.O. Vintul de Est, operating under the name guesthouse “Eco Pensiunea Horodiste” (G-IKG-061) located in Horodiste, Rezina, Codru Region to improve the quality of the guesthouse’s tourism services by endowing the kitchen of the guesthouse with equipment, goods and materials ensuring its full functionality. A.O. Vintul de Est is a non-government organization (NGO) founded in 2011 that works towards reduction of rural outmigration by improving the social and economic situation, changing the mentality of the rural population, and increasing social responsibility. 4. Podgoria Vin SRL (G-SIM-048) in the wine and wine tourism sectors located in Lingura village, Cantemir, Valul lui Traian Region to initiate the tourism component within the winery by developing a wine tasting area. The grantee exports wines to various countries including the EU and at MCP’s encouragement, is poised to combine its wine production with tourism development, which would enhance their reputation among local and international wine connoisseurs and tourists. 5. Fautor SRL (G-SIM-053) located in the village of Tigheci, Leova district, Valul lui Traian wine region to initiate the tourism component within the winery by developing a wine tasting area. Fautor wines are exported to numerous countries across North America, Europe, and Asia. The high-quality of Fautor wine is confirmed by numerous international awards including the recent 2019 Berliner Wein Trophy, where it was awarded gold for two of its wines - Aurore Rara Neagra 2016 and Aurore Feteasca Regala 2017. 6. Salcuta SRL (G-SIM-058) located in the village of Salcuta, Causeni District, in the Stefan Voda wine region to initiate the tourism component within the winery by developing a wine tasting area, including a wine tasting room, wine cellar and winter garden. 7. Asconi SRL (G-SIM-058) located in the village of Puhoi, Ialoveni, in the Codru wine region to expand its existing tourism component by developing accommodation services for tourists in the form of rural guesthouses called the “Moldovan Village”.

SEED Fund Performance through Grant Allocation by Industry June 2019 through June 2019 (by value) Wine Total Disbursed Tourism

Wine Tourism Total awarded, not yet ICT Cluster disbursed*

Remaining Light Industry Budget Crosscutting *at the ER of June 2019 of 1 USD = 17.80 MDL 118 grants have been awarded through June 2019

Local Capacity Building Program

Over the years, MCP has worked with 11 business associations to stimulate inter-industry cooperation, consolidate private sector vision and voice, and increase their role in quality, skills and/or trade support, all of which would further enhance the overall competitiveness in targeted industries. By working with associations and member-based organizations, MCP can build their capacity to advocate for legal and regulatory changes, serve as clearinghouses for information, coordinate initiatives within targeted industries, and provide services such as organizing trade and investment missions, trainings, and/or conferences for their members.

The Organizational Capacity Assessment tool (OCA), updated and used by MCP, allows supported sector associations – APIUS, ATIC, ANTRIM, ASW, and as of 2019, COR Creative Services Industry Association – to reflect upon their successes and identify areas for improvement by assessing themselves annually against a list of criteria that includes governance, management, strategic vision, member services and satisfaction, etc. In Y4Q2 MCP launched the 2019 OCA self-assessment process to further evaluate the progress made and set new development goals in line with the five evaluation criteria such as governance, financial management and fundraising, administration, and others. The rate of growth of each association is clearly visible in the tracking table listed below and demonstrates MCP’s successful approach to support the capacities growth of these key associations.

Averages of OCA self-evaluation tool % increase in Supported capacities Associations 2016 2017 2018 2019 2016 vs. 2019 ANTRIM 1.73 2.05 2.9 3.10 79% APIUS 1.6 2.28 2.33 2.77 73% ASW 1.68 2.22 2.6 2.65 58% ATIC 2.93 3.18 3.68 3.78 29% COR n/a n/a n/a 1.47* n/a* Average 1.99 2.43 2.88 3.08

* 2019 is the benchmark OCA year for COR Creative Services Industry Association, against which MCP will evaluate the Association's progress in Y5 and Y6. The Association's 2019 scores are not included in the 2019 averages as the comparison across the years would be skewed.

Environmental Protection

During the quarter, MCP developed and received USAID approval for Environmental Review Checklists (EMMP) and Environmental Mitigation and Monitoring Plan (EMMP) for: • nine grant beneficiaries in the tourism sector: Patent Holder Gonciari Vasilii, Artic Nova SRL, GT Ciolacu Victor, Lazar Agrotur SRL, II Hanganu Ion, AO Vantul de Est, AO Mester Faur, GT Zaharia Triboi, and Tanixcom SRL, and • 13 beneficiaries in wine tourism: Vinaria Milestii Mici SRL, Doina Vin SRL, Est Euro Vitis SRL, Vinia Traian SA, Tartcomvin SRL, Tomai Vinex SA, Fautor SRL, Podgoria Vin SRL, Winemd SRL, Fragolino SRL, Vinfoteca SRL, Maestru DC SRL, and Crama Mircesti SRL.

Following the conclusion of several grants, MCP is working with the Grantees on generating environmental monitoring reports. Furthermore, the light industry RFA concluded in June 2019, which will result in new selection committees and an inflow of new potential grantees. These will also be vetted by ERC and most will require EMMP as well.

Anti-Corruption

During the quarter, MCP continued to support increased transparency of operations in the selected industries, by advocating for appropriate and transparent policies that reduce government rent seeking. MCP similarly advocates for a level playing field among firms, large and small, to better ensure that firm growth and profits are based on enterprise productivity and innovation, not connections. Furthermore, Chemonics and its employees maintain high standards of ethical conduct in the selection, award, implementation, and oversight of Project activities. MCP employees complete on an annual basis the mandatory Chemonics training on “Code of Business Conduct”; the training is set to be conducted in the fall of 2019.

Access to finance through special channels/USAID Development Credit Authority (DCA)

Ongoing support provided to financial institutions with DCA agreements. MCP assists the implementation of the Development Credit Authority (DCA) Figure. DCA in Energy Efficiency: loan guarantee program, which is a Performance throught June 2019 USAID special mechanism to increase access to finance. DCAs cost-share Total Awarded the risks of providing long-term loans, allowing local companies or individuals Total Disbursed to have access to financial resources Remaining DCA that are otherwise difficult to obtain. amounts MCP continued its ongoing support to Moldovan financial institutions, and submitted the required Accrual reports to USAID. To date, no borrowers have defaulted on their loans, and USAID has received zero claim requests from the financial institutions with DCAs supporting targeted industries (that no longer place loans under guarantee) and energy efficiency. In Q3Y4, the DCA in energy efficiency with Prime Capital saw an additional loan of USD placed under guarantee and disbursed to a new borrower, for investment in business development with an energy efficiency impact. To date, the financial institution has

62 placed 62 loans under guarantee valued at , of which have been disbursed.

Photo credit: Prime Capital Photo caption: Arvetis-Com company’s investments in the reconstruction of a building with energy efficiency impact as result of taking a loan from Prime Capital within DCA in Enenrgy Efficiency

Public-Private Partnerships

MCP focuses on the development of public-private partnerships (PPPs) to encourage systemic and sustainable change. In total, MCP facilitated 39 public-private partnerships, which collectively leverage $39 million USD worth of resources for shared objectives in reform, trade promotion, workforce development, and economic growth. The sustainability of these PPPs is ensured by maintaining strong relationships with government ministries, educational institutions and private partners.

Table. PPP progress in Q3Y4

Industry PPP name Progress in the quarter Winegrowing ONVV During Q3Y4, the PPP organized a session of the ONVV Industry Coordination Council and a meeting to discuss strategy development. ONVV organized the submission of wine samples to four international wine contests, and the PPP supported Moldovan wine companies to participate in three trade fairs and three B2B matchmaking sessions. ONVV also organized training for wine industry professionals and a study trip to Veneto. Winegrowing WoM The PPP organized the participation of WoM in trade events in Industry Marketing Beijing, China; Chicago and New York, USA; Brasov, Romania; and Platform Kiev, Ukraine.

Winegrowing WoM The PPP organized 13 events including trainings, seminars and Industry Academy study trips, upgrading the skills and knowledge of 559 sector specialists. Winegrowing Best Grapes The PPP identified locations for seven new demo plots and issued Industry two news bulletins. Winegrowing FlaveDor The PPP edited a report containing the conclusions drawn from Industry surveillance of 300 ha of vineyards, including recommendations on vineyard protection, treatment and quarantine.

Winegrowing Terroir A Memorandum of Cooperation with the National Institute of Origin Industry and Quality of the French Republic was signed. 22 authorized tasters were trained to detect and identify wine typologies. Tourism Orhei Vechi- MCP supported the development and installation of tourism signage Industry Heritage in the villages of Trebujeni and Butuceni. The new signage includes Tourism Hub an orientation map for the Orheiul Vechi Culture and Nature Reserve, signs directing visitors to the rural guesthouses in the area, and informative panels outlining the rules and restrictions that apply to the protected area. Tourism Tree of Life MCP supported the promotion and organization of 10 events, from Industry festivals bike marathons to urban culture, traditional dessert and open-air calendar classical music festivals. These events attracted more than 24,500 local and foreign tourists, and drew visitors out of the capital Chisinau towards rural areas, where they spent valuable tourism dollars and stimulated the local economy. Tourism Tourism The TIC recorded 2,390 visitors and trained 40 young volunteers, Industry Information who were actively engaged in organizing the events promoted in the Center (TIC) Tree of Life calendar, including Mai Vin and DescOpera Festival. International tourists visiting the center travelled from Germany, Italy, Romania, Great Britain and Poland in order of frequency. Tourism DescOPERA The 2019 DescOPERA Festival attracted 5,500 local and foreign Industry Festival visitors. The region’s eight MCP-supported guesthouses were fully booked over the festival weekend, and the project also brought 20 Polish, Romanian and Italian journalists to Moldova during the festival period, to contribute to its promotion as an international tourist destination. Tourism Wine Road ONVV, in partnership with MCP, developed a list of wineries to Industry Signages include in the second phase of the Wine Road Signage project. The list includes 25 wineries across Moldova that will soon open tourism facilities. The second phase of the project will start after the political situation in Moldova becomes clear, and the public institutions involved in the process are fully functioning. Light Industry DININIMA During the reporting period, the DININIMA initiative developed promotional targeted PR, communication and advertising campaigns, combined campaigns with special events, offers and popups. The PPP collaboration generated two popups organized mainly by APIUS; a pre-collection catwalk organized by APIUS members; and participation at the gastronomic festival “Mai Dulce” with a shared stand under DININIMA umbrella brand. MCP contributions constituted 26 percent of the total amount, with APIUS and private sector contributions covering the remaining 74 percent by sharing the cost of the events. Light Industry ZIPhouse All members of the PPP continued to support and invest in ZIPhouse Design and to secure its institutional capacity and ensure its continued content Technology development. TUM contributed by providing the space, paid Center workforce, utilities and other additional materials needed to organize and deliver activities. APIUS provided opportunities for ZIPhouse residents to participate in Fashion Soiree catwalk, at a reduced price. UK aid contributed to ZIPhouse’s content development, providing women and youth with educational opportunities, and stimulated market penetration through the organization of pop-up shops and supporting the inclusion of young designers. MCP contributions amounted to 18.8 percent, while UK aid provided 41.6 percent and TUM 39.6 percent of total costs in both cash and in-kind contributions. Light Industry DININIMA This PPP is the key partnership promoting exports and market international linkages for Moldova’s light industry. During the reporting quarter, the markets PPP had a value of . MCP financed only one participation at an international trade fair (a bridal exhibition), as most international fashion and exhibitions and trade fairs occur in Winter and Autumn. PPP member APIUS supports the cost of

company participation in exhibitions, including travel and accommodation, and sometimes co-shares entry costs. MIA (formerly MIEPO) and MCP contribute by covering space and/or booth rent, registration fees, and co-sharing the cost of additional equipment and lighting, etc. MIA and MCP collaborate and merge their efforts to strategically target key export markets, and co-share participation in a pre-agreed list of exhibitions, to ensure high-impact market support. Light Industry Moldova During the reporting period, the PPP delivered the Fashion Soiree Fashion Days community catwalk, and the PPP was valued at of which MCP contributed 11.3 percent. The event gathered 19 established brands and young designers to showcase their resort collections to a large local audience, which also received broad media attention. ZIPhouse made an active participation to the PPP, organizing a catwalk presentation for Z Generation Competition finalists, who are emerging designers receiving support via a grant from UK aid. Light Industry DININIMA The PPP grew on the domestic market by opening new common common multi-brand stores under the DININIMA umbrella brand. This PPP is stores a partnership between MCP and the fashion private sector (in the form of the industry association APIUS), and delivers joint marketing initiatives to develop local retail revenues by opening common multi- brand retail spaces. The PPP aims to increase sales of Moldovan products on the local market; increase the consumption of local products; stimulate deeper understanding of the efficiency of multi- brand stores; increase absorption of new knowledge and skills in visual merchandising; and improve local understanding of the retail sales model. The PPP launched two new common stores in Chisinau during the reporting period: one on M. Eminescu street -"Capsula" with four local brands (APIUS members Haskel, Lavielace, Vivi Art Boutique and Arabadji) and the second on Izmail street with three local brands (APIUS members Vistline, Cojocari Grup and Mobile). TO ADD PPP FIGURES IT, CSI and IT Strategy The IT Competitiveness Strategy 2019-2023 is the main strategic PE 2019-2023 document of the Moldovan Government guiding the development of the IT industry. The Ministry of Economy and Infrastructure initiated several policy initiatives which were put on hold due to the Parliamentary elections and resulting political crisis in Moldova. These initiatives included optimizing public procurement regulations to increase the consumption of local IT products and services; simplification of the export procedures for Moldovan IT services; and the development of a policy framework for future IT excellence and innovation centers. IT, CSI and Virtual IT The Virtual IT Park “Moldova IT Park” reached more than 450 PE Park members, of which more than 30 percent are companies using foreign capital. IT, CSI and Future The National Center for Digital Innovation in Education “Future PE Classroom Classroom”, at the State Pedagogical University I.Creanga was Lab officially launched. The launch event received high-level support from the Moldovan Government and other members of the PPP, including the Prime Minister of Moldova, the Minister of Education, Culture and research, the USAID chief of Mission, and the Swedish Charge d’Affaires. The official launch ceremony was followed by a practical conference and workshops dedicated to the innovative teaching methods and uses of technology in the classroom demonstrated within the FCL pilot. Monitoring and evaluation of the schools taking part in the pilot was conducted at the end of the school year 2018-19, addressing three semesters or 1.5 academic years’ worth of teaching. This research revealed that 3427 students have benefited from 618 innovative integrated classes, with

extensive use of digital technologies. These educational activities were prepared and facilitated by 175 teachers from the pilot schools. IT, CSI and FabLab in MCP endowed the three regional FabLabs with additional equipment PE Cahul and provided strategic guidance to support their activities. As a IT, CSI and FabLab in result, more than 3,000 people now benefit from FabLabs activities in PE Ungheni the regions, engaging about 30 volunteers. These regional FabLabs IT, CSI and FabLab in are on their way to becoming fully autonomous as a result of MCP PE Drochia support. IT, CSI and Robotics PPP MCP supported the implementation of the FIRST LEGO League PE Junior robotics competition. 300 students in 49 teams representing 24 schools from across the country demonstrated their projects at Tekwill. Meanwhile, the Champion and Vice-Champion Teams of the 2019 FIRST LEGO League (FLL) Moldova competition represented Moldova in the FLL Open International Championship in Izmir, Turkey, competing against more than 100 teams from across the world. Nineteen experienced robotics teachers upgraded their skills in advanced programming and use of sensors. During the program period, 115 active teachers from 94 schools trained 5022 students, 1824 of which were girls. 564 students (11 percent of this year’s beneficiaries) participated in an online impact survey. 61 percent indicated improvement in teamwork skills, 51 percent reported improvement in creativity, 36 percent improved their communication skills and relationships with colleagues, and 35 percent improved their problem solving skills. Over 70 percent declared they are planning to pursue careers in tech fields, engineering, robotics, programming, etc. IT, CSI and CIRCLE Lab MCP facilitated a partnership between the Technical University of PE at TUM Moldova (TUM) and the Cluj IT Cluster in Romania to develop the CIRCLE Laboratory Cluster at TUM. Through this new partnership, the laboratories will be endowed with additional equipment, and professors from TUM will exchange experience and learn from their peers at two of the largest universities in Romania. IT, CSI and Creative Hub Artcor was launched on June 3, 2019. Artcor is a groundbreaking PE public private partnership between the COR Creative Industries Business Association in Moldova, Ministry of Culture, Education and Research and the Academy of Fine Arts, and was developed over the course of two years with strategic support from MCP. The flagship, state of the art platform will support the development of Moldova’s Creative Services Industries, acting as a new infrastructure and ecosystem for Moldova’s graphics, design, sound, animation, arts, music, and other creative sectors with high export potential. IT, CSI and Balti Blueprints for the Center were developed and verified by the State PE Innovation Service for Verification of Construction Projects. The total Hub construction budget was split into two phases in order to fit budget constraints. Of a total projected project cost of the first phase will cost an estimated

IT, CSI and StartNet IT StarNet Digital Park signed pre-lease agreements for 60 percent of PE Park (Digital its available space, which will be occupied starting from September Park) 2019. IT, CSI and Law on IT More than 20 IT companies from the Balti region became residents PE Parks of the Moldova IT Park. The number of residents from the IT and Creative Services industries exceeded 450 companies.

Inclusive Development

MCP recognizes and affirms our donors’ commitments to inclusive development and provides all project beneficiaries with equal opportunities to participate in its activities and to benefit from project-funded assistance.

Inclusive Development Highlights, Q3Y4 results

➢ 45 per cent of participants in capacity building programs are women ➢ 94 per cent of activity participants are youth ➢ 41 per cent of the total 251 firms assisted in Q3Y4 are women-owned ➢ 11 companies from Gagauzia and Transnistria involved in MCP supported activities

Empowering Women and creating opportunities for Youth involvement

MCP designs its activities using a non-discriminatory approach, with the goal of including groups that have been historically excluded or disadvantaged, especially women and youth. Project activities are designed to interest and attract women and youth, and motivate them to develop themselves and their careers in-country, providing an attractive alternative to migration.

Table. Women and Youth participation in MCP activities in Q3Y4, by industry

Light Winegrowing Description Tourism IT cluster* TOTAL industry Industry

Total participants 337 604 118 9,298 10,357 per industry 300 271 82 4,058 4,711 Women 303 385 93 8,974 9,755 Youth *data for IT cluster include also figures from annual monitoring ans evaluation of the MCP Educational Robotics Program and Future Classroom Lab

All MCP programs focusing on the Wine Industry seek the inclusive development of women and youth. In this respect, the Project’s ASW Mentorship program is designed to stimulate young winemakers to launch small wineries and/or to support the development of emerging small wineries (Carpe Diem, Minis Terrios, Gogu Winery, Atu Winery, Crama Mircesti, Unicorn Estate, Teba Prim). In addition, under the Wine of Moldova Academy and Wine Friendly/SMART initiatives, in Y4Q3 MCP supported knowledge upgrade activities and trainings for 604 industry professionals, 63 percent of which were youth and 45 percent of which are women.

All MCP programs focusing on the Tourism Industry seek to inclusively develop women and youth. In this respect, MCP has conducted a number of trainings on such topics as birdwatching as a soft adventure activity for foreign tourists, civil code updates on travel packages and tour guide trainings. As a result, in the reporting quarter 109 young people and 73 women were included in the capacity building program Start-up Tourism. Gender inclusive capacity building was also achieved through a training conducted by Master Sommelier Xavier Rousset on the peculiarities of the UK wine tourism market, where six out of the nine participants were women representing Moldovan wineries. From the total of 118 participants, 69% are women and 79% are youth.

In Light Industry, the project provided technical assistance to and supported activities at the innovative hub ZIPhouse - a platform for students, young designers, start-up companies and professionals in Moldova’s light industry. MCP supported the implementation of 15 work- skills development activities, which resulted in knowledge upgrades and trainings for about 300 industry specialists and community building activities for about 40 participants. From the total of 337 participants, 89% are women and 90% are youth. As part of the ZIPhouse activity plan for Y4Q3, MCP assisted ZIPhouse to launch the Z Generation Young Designers Competition which targeted young people and spurred their motivation to succeed in fashion. The competition also encouraged people with disabilities to take part in ZIPhouse activities. As a result, five people with disabilities took part in fashion popup shops organized by ZIPhouse with MCP support.

In the IT cluster, MCP undertakes continuous efforts to promote tech and creative career opportunities, deliver capacity building programs and aid entrepreneurs of both genders, demonstrating that they have equal opportunities and chances to succeed in these fields. The gender inclusion rate in the project’s educational robotics program and Future Classroom Lab is very promising at over 35%, and is much higher than IT industry average. MCP places a very strong emphasis on skills development programs for youth, to prepare them for 21st century careers. During Q3Y4, six activities targeting youth and women were carried out: three in IT, one in Precision Engineering and two in the Creative Services subsector. In addition, annual monitoring and evaluation of the Robotics Program and Future Classromm Labs was conducted. In total, MCP-supported activities in the IT cluster had 9,298 participants, 70 percent of which were youth and 43 percent were women.

Support economic development of Transnistria and Gagauzia

MCP provided technical assistance to three wine companies in the Gagauzia region (Vinuri de Comrat, Tomai Vinex and Tartcomvin) to participate in project activities. The companies, which are owned by ethnic Gagauzians and located in Comrat, Gagauzia, were supported to submit wine samples to two leading international wine competitions: Mundus Vini Summer tasting and International Wine Contest Bucharest. MCP also assisted these companies to participate in Kiev Wine Festival; Wine of Moldova Festival in Brasov, Romania; and Top Wine in Beijing, China.

In the tourism industry, MCP continued to support the integration of Transnistria into key tourism routes by organizing international press tours, and familiarization trips for foreign tour operators. Because Transnistria has genuinely distinctive characteristics reminiscent of Soviet times, MCP supports the integration of Transnistria in promoted itineraries as a ‘Back to USSR’ experience, including the city of Tiraspol, Kvint winery, Aqua Tir sturgeon farm, and Casa Karaman. MCP also includes destinations in Gagauzia, such as Gagauz Sofrasi rural guesthouse and Vinuri de Comrat and CGL-Prim wineries to showcase the cultural diversity of Moldova.

In Q3Y4, MCP supported two Transnistrian apparel companies – Odema and Artex Grup, to visit Texprocess in Frankfurt, Germany, the leading international trade fair for processing textiles and other flexible materials. The two apparel companies discovered and analyzed emerging technologies to reduce waste, improve productivity, and reduce productivity burdens on employees. They made a shortlist of the most progressive equipment at the exhibition and began an analysis into how to invest in some of the new technologies within their own firms. MCP also supported the opening of a new multi-brand DININIMA store located on Eminescu str, showcasing four high-end fashion brands, including Arabadji, created by Gagauz designer Ala Arabadji.

Currently, the MCP Educational Robotics program is implemented in two schools in Gagauzia, and 26 youth benefited from robotics classes in Q3Y4. MCP identified a new school in Transnistria which is keen to implement the educational robotics. Theoretical lyceum “Stefan cel Mare” from Grigoriopol is currently located in Dorotcaia village, after being moved in 2002. Students at this school travel by bus from five different communities in Transnistria to study the official curriculum of Moldova. Being included in the robotics program could contribute greatly to their tech and creative skills, and increase their overall interest in school, bridging the digital divide. After training an ICT teacher at the school, MCP donated five robotics sets to the school, and they will be able to start teaching robotics in the new academic year.

Monitoring & Evaluation

Ongoing Monitoring and Evaluation (M&E) activities were conducted to document project results and new achievements. During the quarter, all activities implemented with MCP support were documented and included in the project’s M&E database, with results verified for accuracy. Bi-annual data on sales, investments, number of employees and financing accessed, were collected from monitored companies, reviewed and included in M&E database. Along with data collection and analysis, reports were generated for each quarterly indicator showing progress against established targets. Progress against each established target was included in the MCP Quarterly Report, providing an overview of current data and data analysis. MCP prepared and submitted an updated MCP trade events tracker to USAID, including data on new exhibitions attended by assisted companies, new contacts, new contracts and new sales realized.

Monitoring and Evaluation Plan (MEP) was revised. In result of project extension, the MCP Monitoring and Evaluation Plan (MEP) was reviewed and updated, being elaborated targets for Year Six and new Life-of-Project (LOP) targets. The document was submitted to USAID on May 24,2019.

New achievements were registered by MCP in Q3Y4. MCP expanded its outreach to a further 48 enterprises, either directly or through its association counterparts. The project now assists an impressive 743 enterprises, 241 or 32 per cent of which are women-owned.

MCP assisted enterprises, by sectors

800 743

700

600

500

400

300 241 235 200 177 200 129 131 100 54 39 19 0 TOTAL Winegrowing Tourism Light IT cluster

Total assisted companies Women-owned assisted companies

From 743 enterprises, MCP assistance has helped 347 unique SMEs increase their sales Illustrative international trade shows and make 15,041 new market linkages. In and B2Bs in Q3Y4 Y3Q4 alone, MCP implemented 22 sales facilitation activities benefitting 122 • Light Industry: Holde Textil Expo, companies, of which 14 are new companies, Bucharest, Romania; Ghidul Miresei, with a total of 323 event participations resulting in Bucharest, Romania. 2,828 market linkages. These results were achieved by supporting assisted companies to • Winegrowing: Kiev Wine Festival, Ukraine; Moldova presents" trade fair, participate in international exhibitions, B2B Brasov, Romania; B2B Matchmaking matchmaking sessions, press trips and local in Chicago and New York, USA; B2B promotional activities such as Wine Vernissage, Matchmaking, Belgium. local festivals and pop-up shops.

MCP develops public-private partnerships and implements initiatives to provide sustainable and scalable local solutions to grow assisted industries. In Q3Y4, MCP achieved the following to strengthen the Moldovan business enabling environment: • MCP-facilitated 39 transformational partnerships PPPs collectively leveraged funds worth over $4,805,678 USD reported in Q3Y4. Partnerships’ sustainability is ensured by strong relationships with government ministries, educational institutions and private partners. • Three new MADRE decrees were published and five project-assisted public-private sector dialogue platforms conducted in winegrowing industry for improving sector- enabling environment. MCP achieved the following results due to targeted project activities in all four supported industries:

PERFORMANCE MONITORING: TARGET VS. ACTUAL

MCP INDICATORS

YEAR 4 Life of Indicator Project Cumulative (LOP) Target Cumulative Cumulative Target Q3Y4 Target Result versus Result Result Project Purpose: Grow and Expand Targeted Competitive Industries

Objective 1: Increased Productivity and Quality (Better Workforce and Adopted Innovation) IR 2.2: Improved Private Sector Competitiveness in Selected Industries Sub-IR 2.2.1: Increased Productivity Number of enterprises receiving 4 assistance to improve knowledge, 700 550 743 193 48 processes, technologies and practices Assisted enterprises applying improved 5 370 290 317 27 16 knowledge, processes, and technologies Assisted enterprises following recognized 6 180 150 117 -33 0 product or process standards Individuals receiving job skills aligned 7 40,000 28,500 40,317 11,817 10,362 with industry needs Objective 2. Expanded Market Linkages

IR 2.2: Improved Private Sector Competitiveness in Selected Industries Sub-IR 2.1.2: Increased Access to Finance Number of assisted enterprises in Data reported 10 targeted industries with increased 190 160 N/A N/A annually financing Financing accessed by assisted Data reported 11 N/A N/A enterprises annually Sub-IR 2.2.2: Expended Market Linkages Increased value of sales facilitated on Data reported 2 N/A N/A behalf of assisted enterprises annually Number of enterprises with sales 9 350 310 347 37 14 facilitated through USG assistance Value of new private sector investment in Data reported 3 N/A N/A assisted enterprises annually Number of assisted enterprises in Data reported 12 targeted industries with increased 250 180 N/A N/A annually investment Objective 3. Improved Sector –Enabling Environment and Increased Local Capacity

IR 2.1: Improved Economic Foundation for Growth

Sub-IR 2.1.1: Improved Business and Trade Enabling Environment Number of regulations and administrative 13 procedures eliminated, streamlined or 45 28 42 14 3 simplified with USG support Number of Public-Private Partnerships 14 40 39 39 0 0 established Value of Public-Private Partnerships 15 established +60% over +50% over Data reported 16 Improved capacity of local institutions** N/A N/A baseline baseline annually Project-assisted public-private sector 17 50 43 52 9 5 dialogue platforms conducted

OTHER INDICATORS COLLECTED BY MCP

YEAR 4 Life of Project Indicator Cumulative (LOP) Cumulative Cumulative Q3Y4 Target versus Target Target Result Result Result

Project Purpose: Grow and Expand Targeted Competitive Industries

Objective 1: Increased Productivity and Quality (Better Workforce and Adopted Innovation) IR 2.2: Improved Private Sector Competitiveness in Selected Industries Sub-IR 2.2.1: Increased Productivity Percentage change in specified Data 8 productivity measure (sales per 20% 24% reported N/A N/A employees) annually Objective 2. Expanded Market Linkages

IR 2.1: Improved Private Sector Competitiveness in Selected Industries Sub-IR 2.2.2: Expended Market

Linkages Data Value of domestic and export sales in 1 N/A N/A reported N/A N/A targeted sectors* annually Increased number of market linkages 18 N/A N/A 15,041 n/a 2,828 established with donor assistance* Objective 3. Improved Sector –Enabling Environment and Increased Local Capacity

IR 2.1: Improved Economic Foundation for Growth

Sub-IR 2.1.1: Improved Business and Trade Enabling Environment Data Number of innovations supported 19 100 100 reported N/A N/A through USG assistance annually Number of innovations supported Data through USG assistance with 20 90 90 reported N/A N/A demonstrated uptake by the private or annually public sector

Communications

In Q3Y4, MCP delivered a complex suite of communication activities to keep donors informed about key progress within the project, and to raise awareness of the project’s activities, target industries and donors among the Moldovan public. In addition to implementing communications activities directly on behalf of the project, the communications team also assisted key industry partners to develop and deploy complex campaigns surrounding public events, from press coverage and TV spots to pre- and post-event social media campaigns. These activities simultaneously increased the visibility of the project, of the publicized locations (from rural guesthouses to industry hubs); and of the project donors themselves, resulting in greater awareness of the project and its impact. Key results:

• Communications strategy and campaign implemented for the launch of the National Centre for Digital Innovation in Education, including the targeting of the audience, key messages and tools (event cover, agenda and invitation, video documentary on the results of the FCL in 11 schools, video message from European Schoolnet, FCL schools fair, training of the volunteers, visual materials, press and post press releases, speeches, quotes, post PR TV shows, social media campaign). • Communications strategy and campaign implemented for the launch of the Artcor Creative Center, including social media, pre-PR and post-PR with event’s identity on invitation, agenda, materials, T- shirts, posters, flyers, making-of video, event’s script and concept, design of the branding plaques Artcor Facebook page with 2.5k likes in only one month of social media and Artcor Awards, campaign for the launch of the Center. Credit: Artcor Facebook page. script and speeches writing, etc.

Donor Communications: As a result of MCP donor communications activities, project donors were kept up to date with and provided with key materials and information to facilitate messaging about their activities to key donor audiences, including donor country taxpayers and the Moldovan public. Key results:

• Prepared and submitted regular communications to USAID, Sweden and UK, including bi-weekly communication reports, snapshots of current project achievements and activities, and success stories about specific beneficiaries; • Developed new branding and marking plaques for MCP-supported locations, sites and beneficiaries, and oversaw branding changes on MCP-supported websites of the business associations and centers of excellence.

High Level Donor Representation at MCP-supported events: MCP developed decision memos, scene setters and talking points to support high level donor representation and participation in key MCP-supported industry events, to raise the profile of project donors and MCP-supported industry events with Moldovan audiences.

Key results: • April 18, 2019 - USAID Mission Director Karen R. Hilliard, US DCM Martin McDowell, Head of Sweden Cooperation Adam Amberg and First Secretary of the Swedish Embassy Thomas Alveteg attended the Wine Vernissage Spring edition.

• April 19, 2019 - USAID Mission Director Karen R. Hilliard opened the National Center in Digital Innovation in Education Future Classroom, alongside Prime Minister Pavel Filip; Minister of Education, Culture and Research, Monica Babuc; First Secretary of the Swedish Embassy Thomas Alveteg; USAID Mission Director Karen R. Hilliard opening the National Center in Digital Innovation in Education Future Classroom, alongside Prime Minister Pavel Filip, Minister of Education, Culture and Orange and Research, Monica Babuc, First Secretary of the Swedish Embassy Thomas Alveteg and Moldova CEO Orange Moldova CEO Julien Ducarroz. Credit: Orange Foundation Julien Ducarroz.

• April 23, 2019 – USAID EG Director Daniel Thomson and First Secretary of the Swedish Embassy Thomas Alveteg launched the IDC Study on the Moldovan ICT Market, alongside Minister of Economy and Infrastructure Chiril Gaburici. • April 25, 2019 – First Secretary of the Swedish Embassy Thomas Alveteg and Programs Manager of the UK Embassy Eugen Burdelnii awarded certificates at the FABLAB Autonomous Driving Camp. • May 29, 2019 – Head of Programs of the UK Embassy Chris Perkins visited Ionel apparel factory. • May 29, 2019 – Head of Sweden Cooperation Adam Amberg and First Secretary of the Swedish Embassy Thomas Alveteg awarded diplomas to the finalists of the MILAP cinematography workshops at Artcor Creative Industries Center. • June 3, 2019 – Swedish Ambassador Anna Lyberg, UK Ambassador Lucy Joyce and USAID DCM Lynn Vega opened the state-of-the-art Creative Industries Center Artcor alongside Minister of Education Culture and Research Monica Babuc. • June 4, 2019 – First Secretary of the Swedish Embassy Thomas Alveteg and Head of Programs of the UK Embassy Chris Perkins presented awards to the finalists of the Z- Generation Young Designers Competition. • June 14, 2019 – Head of Sweden Cooperation Adam Amberg and First COR President Olga Radu, USAID DCM Lynn Vega, Swedish Ambassador Anna Secretary of the Swedish Lyberg, Minister of Education, Culture and Research, Monica Babuc, Ambassador of Embassy Thomas Alveteg UK Lucy Joyce, Rector of the AMTAP Victoria Melnic receiving the Artcor Awards at the opening ceremony on Jun e3, 2019. Credit: livestreaming video of the launch opened Valea Stancii, a Privesc.eu newly refurbished rural guesthouse in Trebujeni village, Orheiul Vechi. • June 15-16, 2019 – High Level officials from the Swedish and UK Embassies attended DescOpera festival • June 25, 2019 - First Secretary of the Swedish Embassy Thomas Alveteg attended the opening of Capsula DININIMA common store in downtown Chisinau.

• June 26, 2019 – Swedish Ambassador Anna Lyberg and UK Ambassador Lucy Joyce promoted the new soft adventure tourism trail and visited the lavender field and oil processing plant in Minceni village; the cheese factory and forthcoming guesthouse for tourists in Horodiste village; and the newly opened La Titiana guesthouse in Lalova village. • July 1, 2019 – Swedish Ambassador Anna Lyberg and First Secretary of the Swedish Embassy Thomas Alveteg visited RiDiager and Arabadji apparel factories in Comrat, Gagauzia.

Swedish Ambassador Anna Lyberg, UK Ambassador Lucy Svetlana Sanina, owner of the rural B&B and Swedish Head of the Joyce, USAID Senior Programs Manager Rodica Miron and Cooperation Adam Amberg unveiling the plaque at the newly First Secretary of Sweden Thomas Alveteg taking part in a refurbished rural guesthouse Valea Stancii in Trebujeni village. sarmale-making gastronomy master class in Lalova village. Credit: MCP Credit: MCP Public Communications: As a result of complex communications activities across social media, Moldovan radio, TV and online news portals and international news organizations, MCP has raised awareness of developments within Moldova’s Wine, Tourism, Light Industry and ICT industries in both domestic and international audiences. Increasing awareness in these groups, and increasing trust in MCP-supported institutions, is key for building the confidence of Moldovan and international investors and ensuring continued sectoral growth.

Key results:

• Printed and disseminated MCP success stories, case studies and reports to target audiences, in Moldova and overseas. • Coordinated interview spots to raise awareness of key MCP activities: o Tourism manager Ana Efros appeared on Moldovan TV station TVR Moldova to discuss recent tourism industry successes resulting from MCP support; o Communications manager Olesea Galusca appeared on Moldovan TV station TVR Moldova to discuss the launch of the Artcor Creative Center; and o MCP COP Doina Nistor took part in a live TV show on Publika TV to discuss IT Opportunities for youth in Moldova. • Facilitated press tours to recently opened guesthouses in Trebujeni and Lalova villages.

• Facilitated media relations for the ZIPhouse activities, such as Z Generation Young Designers Competition, and coordinated a feature story for Daria Golvena, the winner of this year’s Z Generation. • Coordinated the production of success stories to promote small winemakers and transition wineries on the online portal Agrobiziness.md (Vinia Traian and Vinuri de Comrat winery in Gagauzia). • Facilitated communications around flagship industry events Moldova Fashion Days (light industry) and First Lego League Moldova (ICT), including media invitations, media management at the event, and coordination with donors. • Provided support for the USAID and Sweden communications teams to develop social media posts (status updates, videos, pictures, hashtags, links from media).

MCP representatives appearing on Moldovan TV programs. L-R: Olesea Galusca, Communicataions Specialist, TVR Moldova; Doina Nistor, MCP COP on Publika TV, and Ana Efros, Tourism Manager, on TVR Moldova. Credit: TVR and Publika

Success stories

In the Y4Q3, MCP developed a series of success stories from the winegrowing industry based on the beneficiary’s successes or field visits. (Annex II)

SECTION III

HIGHLIGHTS OF ACTIVITIES PLANNED FOR FY19 Q4 (JULY- SEPTEMBER 2019)

Winegrowing Industry • Launch the fourth round of MCP Quality programs by deploying technological audits and site visits at new ASW Mentorship and PQUP beneficiary wineries (local STTA - TBD); • Assist ONVV to organize training and study trips under Wine of Moldova Academy (associated budget – ); • Assist ONVV to organize key wine culture events: Open Cellars Fest and National Wine Day (local STTA – TBD, associated budget – ); • Assist ONVV, MARDE and the wine private sector to continue strategy development for the sector (int STTA – Robert Joseph, associated budget ).

Tourism Industry • Organize a digital campaign to activate the Diaspora in August (associated costs – ); • Finalize the upgrading of the national tourism portal www.moldova.travel (associated costs – ); • Present the discoveries of the Tourism Exit Survey conducted in the fall of 2018 (associated costs – ); • Continue providing assistance for proposals to amend tourism industry legislation in the field of regulation, and supporting the development of the national Tourism Industry Strategy.

Light Industry • Support two apparel companies to continue implementing Integrated Quality Management Systems (local STTA Ala Oberst); • Support two apparel companies to gain the Integrated Quality Management System certification (associated costs – ); • Support apparel company Luxtore in productivity enhancement activities (local STTA Demian Usanli); • Support Olga Ceban Lingerie producer to visit Interfiliere specialized international exhibition (associated costs – ); • Support light industry association APIUS to organize DININIMA related events, including participation in IA mania, a fashion photography virtual party, and Moldova Fashion Days (associated costs – ); • Support APIUS to organize member participation in international exhibitions, including Leather&Shoes, Marions Nous, Bijorhca, Homi, Fashion Central Asia, Premier Vision, and ModExpo Bucharest, (associated costs – ); • Support ZIPhouse to implement its Plan of Activities for the quarter (associated costs – ); • Support light industry business association APIUS to finalize updates for its website apius.md and develop a database of APIUS members, including launching the promotion campaign (associated costs – ).

IT cluster • Conduct the selection of new schools to be included in the Future Classroom Lab pilot project, together with Orange Moldova Foundation and Ministry of Education, Culture and Research;

• Organize the CoderDojo Summer Camp and Robotics teachers Summer Camp (associated costs – ); • Launch public procurement for the development of the Balti Innovation Center • Kick off the educational and entrepreneurship development programs at Artcor Creative Hub; • Support three Creative Services Industry (CSI) companies (Rift Studio, Braziliero, LAMA.MD) to attend the Siggraph 2019 Conference in Los Angeles (associated costs – ).

SECTION IV

PROJECT ADMINISTRATION

Level of Effort Report

The following tables provide summary of the project LOE utilization and estimated expenditures.

MCP LOE utilization

MCP Budget and estimated expenditures

Percentage Contract Y4Q3 Expenses to Forecasted Obligation of Obligation Value Expenses* Date* Expenses Spent*

* Y4Q3 financial data has not yet been finalized. The data includes estimated expenditures for June 2019.

Administration and Finance

During the quarter, the project’s administrative and financial systems are running smoothly with key, professional and support positions aligned to the needs of the Project. Several new recruitments were initiated in Q3 to fill two technical positions in the Creative Services and Light Industry Manufacturing. Expected start date for these positions is July-August 2019. MCP’s budget assimilation is balanced and the resources well-distributed across the remaining years with 62%* of the total contract ceiling expended through June 2019. However, per the Y4Q4 forecast, MCP’s current obligation – which is at 93% – is not sufficient to implement the planned activities. SEED Fund absorption is also on par with the total contract expenditures with 60% of the total US Fund already expended. Remining funds will be utilized across the remaining 2+ years of implementation through September 2021.

MCP Project mapping

ANNEX I. RISK ASSESSMENT

Risk Risk description Likelihood Impact Risk Risk mitigation Change since last quarter? Category The new coalition and the Maia Sandu-led Government directly impacts the MCP-led policy initiatives. - The appointment of new Ministers and state secretaries Implementing partner will causes an information gap and loss of institutional promote business-driven memory. USAID articulated the MCP-driven policy reforms by working with and priorities in tourism, ICT, winegrowing and workforce strengthening business development during its courtesy calls with the new associations in target industries. Government. Political climate is The implementing partner will - The MCP-led tourism industry legal/fiscal policy uncertain, and fragility of work with business associations improvements and industry strategy were (re)introduced to pro-European vector to improve their advocacy skills, Political/ Moderate to Moderate the new Minister of Economy, and subsequently prioritized threatens economic Moderate build formal and informal External High to High by the Ministry. A national working group was created for reforms and channels of public-private Tourism Moldova 2030 strategy. These initiatives will be development in MCP- dialogue for bettering business advanced in the following quarter. target industries environment and aligning with - MCP’s flagship initiatives in STEAM – Robotics and Future EU framework. Stronger Classroom – are advancing well, given strong support at collaboration between the department level of the Ministry of Education and businesses and government will Orange telecom sponsor (private sector) that transcends provide direct input to policy political re-appointments. MCP is working on a new MOU decisions. with the Ministry of Education alongside all initiative partners for the national phase of Future Classroom and Robotics through 2021. ARTCOR – The Ministry of Education honored its financial commitment for ARTCOR endowment. Future commitments will be negotiated with the newly appointed Minister and State Implementing partner will assist Secretary for Culture. Public funding the relevant Government committed for the joint counterpart with budgeting, Balti Innovation Center (Tekwill extension) – The Ministry of initiatives, such as public procurement and other Agriculture and Regional Development and Regional ARTCOR, Balti steps to ensure allocation and Development Agency North reconfirmed their commitment to Delivery Moderate Moderate Moderate Innovation Center, disbursement of funding. co-fund the Center’s infrastructure alongside MCP funds. In Future Classroom and/or Mitigation measures will be August 2019, they will launch the public acquisition for the trade promotion, is not included in the activity budget, 11.7M lei for Balti Center reconstruction out of the regional disbursed that enable to complete activity development funds. with reduced funding. Moldovan Investment Agency is struggling with institutional startup, lack of experienced personnel, and adequate funding, which is impacting their capacity to strategically align to

consistent and impactful marketing activities, in particular for tourism, IT and light industry. The risk is that the modest public funds are not invested efficiently in trade promotion, resulting in dispersed efforts. MCP is working towards strengthening the business associations to provide their capacity in trade promotion to MIA. ANTRIM and APIUS are implementing MIA funds for international tradeshows and press work, merging with MCP funds, for joint efforts and stronger end result. Still investment attraction in these industries is being uncovered. New executive leadership in APIUS. APIUS light industry Implementing partner will work association had a change of its Executive Director this spring. with the strongest and most The newly-appointed Director Dorina Margine has economic representative business background but lacks fashion industry experience. MCP is associations in the assisted supporting this transition to minimize institutional gaps and the industries. It is key that these learning curve by working with the APIUS Board and the are not politically biased. existing executive team. Robust capacity building will be

provided, including embedded COR Creative Industries Association expands team. MCP expertise, trainings, coaching. continued to support capacity building of the young COR Through a targeted OCA Industry associations Association, that is critical for driving future development of (Organizational Capacity and other key local Moldova’s creative potential. Efforts are focused on Delivery Moderate Major Major Assessment) tool, the counterparts display governance, internal procedures and team capacity. The COR Implementing Partner will institutional weakness Association hired a director, Viorica Cerbusca, to lead and screen each institution on an manage the newly launched ARTCOR Creative Industries annual basis to ensure Center. MCP is also engaging Luka Piskoric, co-founder of transparent governance, strong successful Slovenian-based Poligon Creative Center, for executive body, and financial executive coaching & mentoring of ARTCOR during the sustainability, as well as startup phase. This will mitigate and prevent the ARTCOR progress on their performance institutional risks associated with industry, technological and improvement plan. Grants to resource uncertainty. The end goal is to develop an array of local counterparts will comprise ARTCOR services and content that are demanded by the conditionalities related to industry and have market potential, thus ensuring its long- institutional strengthening. term sustainability. Implementing partner will New and improved rural guesthouses. To overcome undertake a rigorous Moldova’s deficit in high-quality rural tourism experiences, assessment of business MCP launched a new call for small grants, selecting an Assisted enterprises do readiness to export for the additional pool of 13 guesthouses in Moldova’s high potential not meet target market Delivery Moderate Major Moderate target markets, before engaging tourism regions (Orhei, Stefan Voda, Hincesti, Ungheni, requirements in trade promotion assistance. Cahul). To mitigate the implementation risks associated with Complex assistance will be low capacity of rural entrepreneurs, MCP infuses grants with provided first to upgrade the critical mentorship and technical assistance for rural product product/service to meet market development, business and tax models, architecture and

requirements, including better design. In addition, MCP is requesting cash grantee productivity, quality and contribution, at least 50 percent of the project, to mitigate the managerial capacity of financial risk for completing the infrastructure project, as well businesses. In addition, the as demonstrate ownership and commitment. Implementing partner will work together with the private sector to select initially those markets where existing products have the highest potential to succeed, for instance Romania for apparel, or Italy for tourism.

Project Assumptions

Context: Moldova has experienced tremendous political and economic turbulence over the last two years, with the funneling of more than $1 billion USD out of three Moldovan banks in 2014 and the replacement of five governments in 2015 alone. Moldova’s economy is led by private consumption and is fueled by remittances. Moldova faces a sharp demographic decline, requiring structural reforms for private sector growth and job creation. The ongoing political crisis adds political barriers to improving economic performance.

Economic Development Challenges and Risks: With the June 2014 signature of the Association Agreement (AA) and the Deep and Comprehensive Free Trade Agreement (DCFTA) with the European Union (EU), Moldova opened duty-free access to one of the world’s most prosperous markets. Moldova’s alignment with the EU has the potential to promote increased investment and modernization, create a more transparent business climate, and spur innovations through heightened competition and exposure to new technologies. While Moldova’s trade with EU is building up, reaching an impressive 70% of its exports in 2018, entering these EU trade agreements brings high risks to Moldovan businesses that are used to sell product and services to Russia and other low-value added CIS markets. Moldovan enterprise and industries are still not as strong as they need to be to withstand external economic shocks and face tough global competition. To compete in higher-value markets, the Moldovan government and the business community need to make critical investments to adjust legislation, product quality and marketing in line with new market requirements. Moreover, many businesses and even industries in Moldova engage low-value added business models, leading to low wages and investments. For instance, the garment industry, the third largest exporter and top employer of women, is dominated by ‘cut-and-make’ sewing services, with an estimated 80 percent of industry’s $400 million exports being low cost labor for Western brands.

Workforce Development Challenges and Risks: Moldova is torn by heavy (e)migration and brain drain, especially of its younger population. One quarter of Moldova’s population lives abroad either temporarily or permanently, which makes Moldova among the countries with the highest migration per capital in the world. Many Moldovan citizens are still leaving the country to pursue education and higher- wage jobs elsewhere. Although sluggishly increasing, the average monthly wage in Moldova remains low, 6,000 lei in 2018 (approx. 300 Euro), making insufficient household income to meet living standards. Employers and industry associations in Moldova agree that their primary challenge, outside of Moldova’s need for business regulatory reforms, is to find sufficient skilled workers. This underscores the need for the public and private sectors to come together to prioritize economic development, availability of better paying jobs, and most importantly enhancing skills of the workforce.

Opportunities: Continued and focused improvements of Moldovan SMEs to diversify production, expand trade, increase quality and productivity will lead to exponential gains for Moldova’s competitiveness, especially in European and other high-value added markets. Many Moldovan SMEs displayed readiness to transition to higher value-added business models, such as original designs in the garment industry that result in seamstress wages 10 to 50 percent higher compared to country average. Emerging innovation-based industries in Moldova

84 have strong growth and high earning potential. Such as Information Technology (IT) that recorded exponential development, with software exports having grown 20-fold since 2005, striking $117 M in 2017 (40% increase vs. 2016), while industry’s tech engineers earning 24,000 lei per month in 2018 or 4 times the country average. IT, clustered together with other non-traditional emerging industries, such as Engineering and Creative Services, have a unique role in creating quality jobs and addressing brain drain. Tourism is another overlooked industry, with untapped potential in Moldova, that is fast growing worldwide. Moldova is the least visited country in Europe, and yet its rich heritage, distinctive culture and reputation for warm hospitality, are sound footing for developing a thriving tourism economy, in even the most remote rural regions, contributing to a reduction in poverty and migration.

ANNEX II. SUCCESS STORIES

Photo caption: The Agrici family with their THREE YOUNG SISTERS successful range of bottled wines Photo credit: Eduard Bigzu for USAID DRIVE FAMILY WINERY TO EXPORT SUCCESS

Thousands of young people leave Moldova’s rural areas each year to find employment abroad. The women of the Agrici family have chosen the opposite path, using their entrepreneurial skills to transform the family winemaking business into a successful producer of quality bottled wine, exporting to high-value markets in the EU and China.

“When women take care of things, we do things a little differently”.

Growing grapes and making wine is the backbone of the Moldovan rural economy and provides income and employment for more than 200,000 people. However, two Russian trade embargoes in 2006 and 2013 had a catastrophic impact on the wine industry, resulting in an extensive recession and a three-fold shrinking of wine exports. The recession provided yet another reason for young people to leave rural areas, often migrating abroad to find work to support their families.

After the embargoes, and new approach In 2000, Efim Agrici and his wife Nadejda bought an old soviet-style winery in the village of Milesti Mici which had been producing and selling wine since 1958. Efim was an experienced winemaker, and the business seemed like a good investment, but the family was hit hard by the effects of two Russian trade embargoes, which had a catastrophic effect on the bulk wine export market. embargoes. His wife, Nadejda, a schoolteacher, saw an opportunity for change. “My husband was working hard in the business, but I wanted to bring something of my own: when women take care of things, we do things a little differently”.

In 2016, the couple knew that they needed to adopt a new strategy for the business and applied to the Moldova Competitiveness Project (MCP) Product Quality Upgrade Program (PQUP) for support. “The consultants from the program explained the value of transitioning to producing bottled wines for export because they can generate much higher revenues” says Nadejda, “but we were used to producing bulk wine. It seemed like an overwhelming change”. The PQUP consultants and mentors worked hand in hand with the family through every step of the process, from discovering new winemaking methods and quality controls, to investing in new winemaking equipment, developing a wine brand and marketing materials, and finally supporting the company on its path to export.

A family business, powered by women The process resulted in the wine brand “Agrici”, after the family name, and Efim and Nadejda’s three daughters Ala, Tatiana and Felicia also joined the venture. Together, they have transformed Agrici Winery into a fully-fledged producer of quality bottled wines. “We now produce six varieties of wine, each named after a member of the family, including my niece” says Tatiana, pointing to six bottles decorated with hand- MOLDOVA COMPETITIVENESS PROJECT | MARCH 2018 drawn calligraphy. "I decided to get more involved, to bring my contribution to this business, to promote our wines and bring new ideas into future projects," her sister Felicia explains further. “Now the main markets for our wines are Sweden, Switzerland, China and Romania. We have a huge potential to grow our wine production and marketing business”.

Ala, the third sister and the company’s commercial director agrees. “In the future, we are planning to continue what we have begun. With our sisters we are working to promote the range of wines we already produce, and to launch a new range".

Expanding to markets in the EU, Asia and Moldova

This female powerhouse has had outstanding success. Agrici Winery began exporting to high value markets in the EU and Asia just two years after they started the transition to making quality bottled wines, and the business can now afford to reinvest in their local community. Most of the grapes that go into their award- winning wines are bought from local farmers, and the winery employs 20 people, as well as supporting the local football team!

Wine tourism is the fastest growing segment of Moldova’s tourism sector, and provides opportunities for established wineries to diversify further, creating more jobs in rural areas. In line with their innovative business model, the Agrici family recently won a grant from MCP as part of the MCP Wine Tourism Accelerator. “Wine tourism is our next project, and it gives us hope” says Ala, and her sister Felicia agrees: “We encourage other people to develop their own winemaking businesses and stay here in Moldova”.

Supporting the backbone of the rural economy Wine accounts for 5% of all Moldovan exports and is the only export product with the entire value chain completed in-country. The Moldova Competitiveness Project, funded by USAID and Sweden, builds on the success of two previous USAID-funded projects to support the wine industry following the shocks of the two Russian trade embargoes and resulting industry recession. MCP programs like Product Quality Upgrade (PQUP) and the Wine Tourism Accelerator work to support and strengthen these rural entrepreneurs, developing high-value, export-oriented SMEs which can provide good quality jobs in rural areas and provide opportunities for young people like the Agrici sisters to stay and work at home in Moldova.

Photo Caption: Ala Agrici tests the quality of wine in the new tanks funded by MCP. Photo credit: USAID, Eduard Bigzu

MOLDOVA COMPETITIVENESS PROJECT | 2019

YOUNG MOLDOVANS

GAIN CONFIDENCE TO Photo caption: Vlad Vutcarau, owner of ATU winery, Chisinau, Moldova Photo credit: Anatol Tomsa, MCP OPEN FIRST URBAN WINERY

Winemaking is the backbone of Moldova’s rural economy, but rural life is unattractive for young people. With support from USAID and Sweden, Victor Vutcarau and Vlada Balica have created Moldova’s first urban winery, ATU, proving that small winemakers can thrive in the city too.

“I’m from a family of winemakers, we’ve always made wine” says Victor Vutcarau, co-founder of new wine startup ATU. “This meant we had access to really good quality grapes. So, with this access we decided to open a winery”.

Moldova’s heritage wine industry provides income for over 50,000 people, mostly in rural areas. Until 2006, Moldova successfully exported large volumes of bulk produced, low-quality wine to former CIS countries. However, two Russian import embargoes in 2006 and 2013 hit hard, causing an industry-wide recession, and $200 million total estimated direct losses with a catastrophic impact on grape growers and winemakers across the country. In response to the crisis, USAID, and later Sweden, began to support this crucial, heritage industry, helping it pivot towards the production of high-quality bottled wine suitable for export to high-value European and Asian markets.

Small wineries like ATU are a key component of this strategy, as they provide fresh, new products that keep international consumers interested in Moldovan wine and support the growth of the industry as a whole. “There is a big difference between wine made by a large winery, and wine produced by a small winemaker” says Arcadie Fosnea, President of the Moldovan Association of Small Winemakers. Arcadie Fosnea credit: Anatol “With small winemakers, it is important to see the person behind the wine, to get Tomsa, MCP to know them personally”.

USAID and Sweden’s strategic approach first advocated for changes to the law which enabled small winemakers like ATU to emerge, and then provided investment and consultancy to these small winemakers to turn them into successful businesses. This strategy has resulted in a strong wine industry with confidence in its future. “In addition to the financial support we received from USAID and Sweden, we have taken strength from their sustained investment in the wine industry. This support shows us that the sector has a future” says Vlada Balica, marketing specialist and co-founder of the family winery ATU.

“We applied to the Moldova Competitiveness Project grant program because we needed to buy first class equipment to make quality wine. Now we can make our wine under perfect winemaking conditions. The final product comes out much better than the wine we previously made at home”.

MOLDOVA COMPETITIVENESS PROJECT | FEBRUARY 2019

Potential customers don’t have to take Vlada’s word for it: international wine experts agree. “We only produce high quality ‘author wines’” Vlada explains. “With support from the National Office of Vine and Wine and MCP, we sent our wine to the AWC Vienna international wine competition in Austria. From four wines in the contest, we won three medals: one silver and two bronze”. Vlada Balica ATU winery is still emerging from its startup phase, but it already has strong Credit: ATU sales on the domestic market, and now exports to Austria, Romania, France and Switzerland. However, the business is not resting on its laurels. In 2018, ATU diversified into Wine Tourism with support from USAID and Sweden’s Wine Tourism Accelerator Program, providing an additional income stream to ensure the success of this thriving young wine business. ATU has proved that young people can create success in this heritage industry, and do it their way, bringing thousands of years of history into the 21st century.

The Moldova Competitiveness Project (MCP) is supported by USAID and Sweden and supports Moldova’s wine industry to pivot towards producing high value-added bottled wines suitable for export to markets in the EU and Asia. Thanks to the project’s work in partnership with the Association of Small Winemakers, the number of small winemakers like ATU has quadrupled since 2014. These assisted winemakers saw a 71% increase in sales and a 173% increase in exports in 2018, protecting the livelihoods of the 50,000 people employed in the sector, and reducing the drivers of migration.

ATU Winery tourism facility. Tourists have wine tasting in the factory\s production room. Tourists on bike at the ATU Winery road sign Photo credit: ATU winery Photo credit: ATU winery

ATU Winery view from above Photo credit: ATU winery

MOLDOVA COMPETITIVENESS PROJECT | 2019