QUARTERLY REPORT JANUARY 1 – MARCH 31, 2018

Moldova Competitiveness Project

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QUARTERLY REPORT

YEAR 3 QUARTER 2 (FY2018 Q2)

JANUARY 1 – MARCH 31, 2018

APRIL 17, 2018

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: Wine of Moldova country “handcrafted” stand at one of the most renowned international specialized exhibition Prowein 2018, made possible with MCP support. The canvas for the stand was entirely hand-embroidered on over 130 meters of canvas, decorated with traditional ornaments inspired from Moldovan carpets, part of UNESCO world heritage. Over 50 Kg of wool, 500 needles and hundreds of thousands of strokes and stitches, 12 artists involved delivering over 2500 man/hours of hand labor Wine of Moldova. COVER PAGE PHOTO CREDIT: Ming Cho

DISCLAIMER

This report was prepared by the Moldova Competitiveness Project. The contents are the responsibility of the creator, and do not necessarily reflect the views of USAID, the United States Government or Sida and the Government of Sweden

2 TABLE OF CONTENTS

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

PROJECT TECHNICAL INTERVENTIONS DURING FY18 Q2 ...... 13

WINEGROWING INDUSTRY ...... 13

Objective 1: Increased Productivity and Quality (Better Workforce and Adopted Innovation) ...... 13 Program 1. Wine quality upgrade ...... 13 Activity 1. ASW Mentorship Program. Support for emergence and development of small wine producers...... 13 Activity 2. ‘PQUP’ Program (Product Quality Upgrading Program): enlarging Wine of Moldova quality portfolio...... 13 Program 2. Wine of Moldova Academy: building knowledge for future growth ...... 15 Objective 2. Expanded Market Linkages ...... 15 Program 1. Wine of Moldova international promotion and export growth ...... 15 Activity 1. Build Wine of Moldova Brand Equity and Increase Awareness ...... 15 Activity 2: Foster Business Linkages and Expand Wine of Moldova Exports ...... 16 Program 2. Stronger domestic wine market and enhanced wine culture ...... 18 Activity 1. Expand number of sommelier and Wine-Friendly restaurants ...... 18 Activity 2. Grow wine culture events ...... 19 Objective 3: Improved Sector-Enabling Environment and Increased Capacity ...... 20 Program 1. Policy upgrading and legal regulatory reforms in the wine industry ...... 20 Activity 1. Wine of Moldova – 2030. Keeping the legend alive with continued policy and regulatory reform ...... 20 Activity 2: Strengthen the role of ONVV as the main professional organization of the wine industry ...... 21 Activity 3: Develop and strengthen the PGI wine associations ...... 21

TOURISM INDUSTRY ...... 22

Objective 1: Increased Productivity and Quality (Better Workforce and Adopted Innovation) ...... 22 Program 1. Start-up Tourism Moldova: product development, service quality upgrading and tourism offer diversification ...... 22 Activity 1. Wine-Up: Wine Tourism Accelerator Program ...... 22 Activity 2. Hospitality+ Moldova program: improving tourism hospitality infrastructure ...... 22 Activity 3. Inbound tour operators’ start-up program...... 23 Activity 4. Go-Regional Tourism Start-Up: unveiling the tourism potential of Orheiul Vechi reservation and Purcari region ...... 23 Activity 5. ‘Tree of Life’ events agenda ...... 23 Objective 2: Expanded Market Linkages ...... 25 Program 2. Tree of Life Marketing Program: unveiling the hidden gems of Moldova to the world ...... 25 Activity 1. Placing Moldova on the map of world tourism: building brand equity and international awareness of Moldova as a tourism destination ...... 25 Activity 2. Foster business linkages and expand target markets...... 26 Activity 3. Enhance domestic tourism and improved access to tourism information...... 27 Objective 3: Improved Sector-Enabling Environment and Increased Capacity ...... 28 Program 3: Re-Think Tourism Moldova. Building a sustainable public-private partnership ...... 28 Activity 1. Reformed Tourism Sector Policies and Regulation ...... 28 Activity 2. Strengthen private sector voice to balance public-private dialogue ...... 28

3 LIGHT INDUSTRY ...... 30

Objective 1: Increased Productivity and Quality (Better Workforce and Adopted Innovation) ...... 30 Program 1. Strengthening ZIPhouse as the flagship institution in workforce development and fashion startup acceleration ...... 30 Activity 1. Enhance ZIPhouse institutional capacity ...... 30 Activity 2. Boost fashion creativity, startups and community building ...... 31 Activity 3. Develop industry skills through quality advanced technical education and training ...... 33 Program 2. SMART (Streamline Manufacturing, Accountability, Resource efficiency, and Transparency) Factory program ...... 33 Activity 1. Implement complex innovative methods to streamline manufacturing and productivity growth ...... 33 Activity 2. Create brands and products aligned with fashion trends ...... 35 Objective 2: Expanded Market Linkages ...... 37 Program 3. Expanding Market Opportunities ...... 37 Activity 1. Reposition Moldova as a full-product manufacturing partner and support internationalization of Moldovan fashion brands on regional markets ...... 37 Activity 2. Consolidate the Din Inima Umbrella Brand and Expand Domestic Market ...... 39 Objective 3: Improved Sector-Enabling Environment and Increased Capacity ...... 40 Activity 1. Assist APIUS to Advocate for Policy and Regulatory Changes ...... 40

INFORMATION TECHNOLOGY, ENGINEERING AND CREATIVE SERVICES ...... 41

Objective 1: Increased Productivity and Quality (Better Workforce and Adopted Innovation) ...... 41 Program 1: Promoting STEAM Education and STEAM fields Careers ...... 41 Activity 1. Pilot the Future Classroom (FCL) Concept in Moldovan schools ...... 41 Activity 2. Expand Educational Robotics Program ...... 42 Activity 3: Support private initiatives for improving STEAM education and promoting STEAM careers ..... 43 Program 2: Build the Ecosystem for Workforce and Entrepreneurship Development ...... 44 Activity 1. Develop Regional Innovation Centers (Balti, Comrat/Cahul, Novateka) ...... 44 Activity 2. Creative Hub Development ...... 45 Activity 3. Makers Space Development and Support ...... 46 Activity 4. Creation of an IT and Engineering Laboratory Cluster within the Technical University ...... 46 Activity 5. Spur industry learning through attending international conferences on mobile, fintech, web, creative, design ...... 47 Activity 6. Improve the Entrepreneurial Ecosystem for Innovation and Creativity ...... 49 Activity 7. Support private-driven initiatives to develop IT Parks ...... 49 Objective 2: Expanded Market Linkages ...... 50 Activity 1. Implement Foreign Market Entry Support Programs and Increase Marketing Skills ...... 50 Objective 3: Improved Sector-Enabling Environment and Increased Capacity ...... 50 Activity 1. Implementation of the Law on IT Parks ...... 50 Activity 2. Strengthen and update industry strategies ...... 51 Activity 3. Capacity Building for Business Support Organizations ...... 51

DELIVERABLES ...... 52

SECTION II ...... 53

PROJECT-LEVEL OUTCOMES AND RESULTS ...... 53

Sector Engagement, Enhancement, and Development (SEED) Fund ...... 53 Access to finance through special channels/USAID Development Credit Authority (DCA) ...... 54 Environmental Protection ...... 54 Public-Private Partnerships ...... 54 Local Capacity Building Program ...... 58 Inclusive Development ...... 58

4 Monitoring & Evaluation ...... 60 Communications ...... 65 SECTION III ...... 73

HIGHLIGHTS OF ACTIVITIES PLANNED FOR FY18 Q2 (APRIL– JUNE 2018) ...... 73

SECTION IV ...... 75

PROJECT ADMINISTRATION ...... 75

Level of Effort Report ...... 75 Administration and Finance ...... 75

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ACRONYM LIST

AA Association Agreement ANTRIM National Association for Inbound Tourism ANAT National Association of Travel Agencies of Moldova APIUS Employers Association of Light Industry ASEM Academy of Economic Studies of Moldova ASW Association of Small Wineries ATIC Moldovan Association of Private ICT Companies B&B Bed & Breakfast B2B Business to Business B2C Business to Company BSP Business Service Provider C&M Cut & Manufacture CEE Central-Eastern European CEED I & II Competitiveness Enhancement and Enterprise Development I & II CIS Commonwealth of Independent States COP Chief of Party CRM Customer Relationship Management DCFTA Deep and Comprehensive Free Trade Agreement DCOP Deputy Chief of Party DMC Destination Management Company DO Development Objective ECP Expert Coaching Program EIB European Investment Bank EU European Union HoReCa Hotel/Restaurant/Café ICT Information Communication Technology IR Intermediate Result ISSPA State Inspectorate for Controls over the Wine and Alcoholic Products ICT Information and Communications Technology ICTCE ICT Center of Excellence (Tekwill) KPI Key Performance Indicators JAA J.E. Austin Associates LOP Life of Project MARDE Ministry Agriculture, Regional Development and Environment MCCI Moldovan Chamber of Commerce Industries M&E Monitoring and Evaluation MICE Meetings, Incentives, Conferences, and Events Tourism MIEPO Moldova Investment and Export Promotion Organization MODART Modular Arrangements of Predetermined Time Standards MOE Ministry of Economy MOU Memorandum of Understanding NTA National Tourism Agency OOH Out-Of-Home 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 RFP Request for Proposal

7 SEED Sector, Engagement, Enhancement, and Development Fund SME Small and Medium Enterprise STTA Short-term Technical Assistance SWM Startup Weekend Moldova TCB Tourism Country Brand TOR Terms of Reference TOT Training of Trainers ToL Tree of Life TR Technical Regulation ULIM Free International University of Moldova USP Unique Selling Point TUM Technical University of Moldova USAID United States Agency for International Development USD United States Dollar USG United States Government VET Vocational Education Training WFD Work Force Development WoM Wine of Moldova WTAP Wine Tourism Accelerator Program Y Year

8 EXECUTIVE SUMMARY

WINEGROWING INDUSTRY

Photo credit: Finewine.md Photo captions: Ion Luca, owner and winemaker at Carpe Diem Winery, MCP Grantee, receiving the “Best of Show” award at Mundus Vini Spring Tasting 2018, international wine competition

MCP improved wine quality through technical training, equipment, and mentoring. With MCP assistance, 28 gold and silver medals were awarded to Wine of Moldova at international competitions. The project invested in viticulture research and knowledge development for key decision makers, and the industry was consolidated at the ONVV annual conference.

Increasing productivity, quality and skills: MCP prepared for the third round of its two-key wine quality improvement programs, ASW Mentorship and PQUP. Graduates of these programs won medals and mentions at domestic and international competitions, including Mundus Vini and Prowein. The project also invested in the viticulture sector, training 58 winegrowersviticulture in the context of climate change and investing in technical equipment for the Association of Small Winemakers.

Improving market linkages: Wine of Moldova was promoted at leading wine trade expos in Europe and Asia. Over 2,000 market linkages were established, and Moldovan wine won 13 gold and 15 silver medals at international competitions. New results indicate that total wine exports have increased by 5 percent in volume and an impressive 16 percent in value. 105 hospitality workers were trained in wine service, and new wine culture events were launched in partnership with the French Culinary College.

Strengthening business enabling environment: MCP supported the ONVV Annual Conference to consolidate the wine industry and organized a study trip to California for key decision makers to learn best practices. The project also funded research into new rootstock varieties and growing methods for the best expression of Moldovan Terroir.

9 TOURISM INDUSTRY

Photo credit: Sublim Studio Photo caption: Awarding of top 10 guides during the Tourism Gala

In Q2Y3, MCP strengthened Moldova’s unique rural, sports, and wine tourism products, leveraged the viral #BeOurGuest marketing campaign to reach new target audiences, and ensured small tourism providers needs were incorporated into a new tourism White Paper.

Increasing productivity, quality, and skills: In Q2, the project focused on strengthening and promoting unique tourism attractions to stimulate inbound tourism. MCP funded 7 new rural B&Bs, approved 7 routes for the National Wine Road, forged a new partnership to enhance the Orheiul Vechi Reservation with world-class landscape lighting, promoted the wine/sport crossover event Cricova WineRun, and developed the Tree of Life 2018 festival calendar, Moldova’s first tool to promote attractive rural and urban festivals in target markets.

Improving market linkages: Moldova was promoted at leading travel expos and B2B events in the target markets of Poland, Italy, Romania, and Finland, with wraparound PR activities in partnership with Wine of Moldova. The project’s incredibly successful #BeOurGuest viral campaign, which achieved two million social media views in its first week, provided a strong marketing framework for all activities. Correspondingly, the Moldovan Government declared 2018 ‘The Year of Hospitality’, complementing Moldova’s status as World Capital of Wine Tourism 2018.

Strengthening business enabling environment: MCP supported the development of a new White Paper to improve regulations and stimulate growth within the tourism industry. Two annual industry events, the ANTRIM Incoming Forum, and the Tourism Gala, further consolidated the industry. With MCP support, the inbound tourism association ANTRIM also voted to expand its portfolio and engage new members, creating a representative voice for the whole tourism industry private sector.

10 LIGHT INDUSTRY

Photo credit: Marina Maximova, Ionel Photo caption: Management of Ionel Copany in discussions with a potential customer during the Premier MAnuafacturing Exhibition, Paris, France

Photo credit: Alina Bradu Photo captions: Moldovan designers select raw materials in Dubai’s biggest wholesale stores, October 15-21, 2017

In Q2Y3, MCP skills development strengthened the competitiveness of emerging fashion entrepreneurs, and investments in manufacturing improvements resulted in a 15 percentincrease in productivity. Moldovan designers signed $370,000 USD in export contracts and consolidated the local market with Moldova Fashion Days Spring/Summer 2018.

Increasing productivity, quality, and skills: MCP fashion hub ZIPhouse partnered with an EU for Business project to deliver workforce development programs, and the Fashion Accelerator, Flying Designers and Z Young Designers Competition continued the skills development of young fashion entrepreneurs. Manufacturing improvements due to the MCP SMART program investment led to an average 15 percent increase in productivity, new contracts, new jobs, and higher salaries.

Improving market linkages: 28 companies attended 13 international trade shows, generating over $350,000 USD in new export contracts to Ukraine, Romania, France, and other regional countries. A ZIPhouse Fashion Accelerator Program graduate penetrated the Chinese market at Harbin Fashion Week and featured in Chinese Vogue. 35 local brands showcased their designs at the Spring/Summer 2018 Fashion Show and reached new audiences with a viral Digital Ambassadors program to promote DININIMA products.

11 INFORMATION TECHNOLOGY, ENGINEERING AND CREATIVE SERVICES

Photo credit: Constantin Mindoglo Photo caption: Members of the Viking Team demonstrating to the Robot Design Judge their strategy to execute Robot game missions during FLL Moldova 2018

MCP continued to strengthen Moldovan STEAM education through investments in skills development and education hubs. The project focused on industry ecosystem development, helping Moldova’s first virtual and physical IT Parks to begin recruiting members, and supporting 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 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 Makers Space. Additionally, new IT and Engineering labs opened at TUM with public-private investment. Moldova’s first physical IT Park began advertising for tenants, strengthening the industry infrastructure and ecosystem.

Improving market linkages: Moldovan creative company Asto Studio fulfilled a graphics export contract to Hollywood following B2B networking activities in Q1. Also, the Youbesc production company developed connections and partnerships at the 2018 Berlinale film festival in Germany.

Strengthening business enabling environment: Moldova’s first Virtual IT park opened its doors on January 1, 2018 and gained 60 members in just three weeks to take advantage of its pro-business benefits. MCP continued to support amendments to the IT Sector Competitiveness Strategy and Law Nr. 77 on IT parks to ensure the whole sectoral ecosystem is supported. The new Creative Industries Association, COR, reached 20 members.

12 SECTION I

PROJECT TECHNICAL INTERVENTIONS DURING FY18 Q2

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 January 1 through March 31, 2018.

WINEGROWING INDUSTRY

Objective 1: Increased Productivity and Quality (Better Workforce and Adopted Innovation)

Program 1. Wine quality upgrade

Today, only one-fifth of Moldovan wines are considered to meet quality levels in line with Western standards. To drive growth of quality wine exports, in particular those meeting Wine of Moldova and PGI quality standards, MCP implements a two-pillar program aimed at supporting quality improvements in two very important tiers of the Moldovan wine sector: small and micro winemaking, and mid- to large enterprises aiming at new business models based on added-value (classified as ‘transitional wineries’).

Activity 1. ASW Mentorship Program. Support for emergence and development of small wine producers.

MCP supports institutional development of ASW to ensure sustainability and continuity of activities. To ensure the health of ASW (the Association of Small Winemakers) as a key pillar of the small-winemaker ecosystem, MCP continues to support the organization to implement modern management standards. In the reporting quarter, ASW autonomously organized two board meetings, at which board members vetted the organization’s activity plan and submission for SEED grant extension. As a result, MCP has extended its allocated in-kind grant to the organization to include procurement of equipment to be used by ASW members during the production season. Rent payments from the equipment will serve as a source of income for the ASW budget, ensuring continuity of activity. New equipment will increase the attractiveness and utility of the association, serving as motivation for other small winemakers to join.

Preparation for the third intake of ASW Mentorship program deployed. During the reporting period, MCP witnessed an unprecedented uptick in small winemakers wanting to take part in the ASW mentorship program. Inspired by the successes of wineries mentored in the first and second program intakes, as well as positive word-of-mouth, MCP has identified seven prospective applicants for the 3rd program intake. Two winemakers approached MCP directly as a result of recommendations, and another three were proposed by active ASW members. All prospective applicants have submitted their questionnaires and plans, which will be validated after site-visits by MCP, ASW, and ONVV consultants.

Activity 2. ‘PQUP’ Program (Product Quality Upgrading Program): enlarging Wine of Moldova quality portfolio.

MCP and ONVV successfully close 2017 wine production season, receiving special remarks on performance of PQUP wineries. In line with the PQUP program design, MCP

13 and ONVV are gradually decreasing the level of support and consultancy to beneficiaries of the first and second program intakes. In the reporting quarter, support was reduced to “monitoring”, ensuring continuity for the assisted wineries. All wines produced in 2017 by transitional wineries, whether as active members of the program or under monitoring from winemaking consultants, were submitted to three regional tastings organized by ONVV (reported below) within the PGI regions, and one comparative tasting organized by MCP. During these tastings, panels of expert tasters highly appreciated the organoleptic characteristics of the wines provided by all PQUP beneficiaries and forecasted commercial success. Testimonial published by Andrey Novak (Tartcomvin Director) in Facebook after announcement of Mundus Medals and remarks at international wine Vini results contests serve as ultimate proof of a leap forward in quality. With MCP support, all PQUP wineries are encouraged and given priority to submit wine samples to international wine competitions. Three transition wineries received medals at the prestigious Mundus Vini Spring Tasting, and gained the opportunity to showcase their award-winning wines at a highly- visited tasting area at Prowein international wine exhibition. The results from Mundus Vini are as follows: • Vinuri de Comrat: gold for Plai Saperavi Bastardo and silver for Plai Merlot Syrah • Migdal-P: silver for Umbrella Feteasca Alba • Novak Winery (Tartcomvin): gold for Alb de Onitcani The results for Novak Winery deserve special attention, as this is the first time this winery has made a submission to a wine competition (and only following the insistence of MCP). This award is of particular importance as it was given to a very rare indigenous Moldovan grape variety cultivated only by this company.

Wines for another 2 PQUP beneficiaries, Doina Vina and Agrici Winery, were also highly rated by Mundus Vini jury, receiving 85+ points, Quoted excerpt (translation from Russian): normally equal to a silver medal. Despite their “Dear friends!!! I would like very much to thank the people high quality, this year these wineries were who made it possible for us to win a medal, people who unable to take home this award due to believed in us and thanks to whom everything turned out. competition rules that only up to 30% of wines with high points can receive medals. Despite This is our second year participating in the Moldova Competitiveness Project, which takes place in our this, the high scores received by the two winemaking world in the Republic of Moldova. […] thanks wineries are a strong testament to their high to which our team managed to achieve these awards, who quality. take an active part (in all processess – e.n.) and who remain very modest […] Recruitment process for the third intake of the medals that were brought home from this competition the PQUP Program begins. During the by the participants are the national pride of our country!!!!" reporting quarter MCP began to recruit the next round of beneficiaries for the Quality Upgrade Andrey Novak, Program. As such, MCP conducted meetings Director, Novak Winery (Tartcomvin)

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with 2 transitional wineries and received express of interests to begin the conversion from bulk production to a bottled business model. With ONVV, MCP conducted an on-site audit for the third applicant, Vintage Avenue, which enabled the project to tailor a list of equipment acquisitions which fall under a grant awarded to this winery. Currently, PQUP beneficiaries account for 20% of the total wine produced in Moldova, therefore increasing quality within these wineries has a deep impact on the entire industry, strengthening Moldova’s image as a quality wine producer.

Program 2. Wine of Moldova Academy: building knowledge for future growth

The Moldovan wine sector experiences a shortage of qualified workforce needed to increase its competitiveness and respond to new demands in highly cluttered markets, both in the EU and globally. The Wine of Moldova (WoM) Academy aims to address the continuous education needs in the wine industry.

58 vintners are better prepared to face climate change following Wine of Moldova Academy seminar "Pruning and protecting vines in the 2018 winegrowing season". Under the WoM Academy program, MCP supports ONVV to organize trainings and seminars on winemaking and vine growing. This activity is aimed at increasing the knowledge and capacities of the current wine industry workforce, covering the gaps discovered in the "Skills Gap Analysis". In the reporting quarter, ONVV organized a viticulture seminar at the Stauceni Wine Excellence Center dedicated to vine care in the face of climate change. The seminar was led by the chief viticulture expert at ONVV, Mr. Vladimir Corobca, and featured presentations on best practice in vine care and pruning by Italian expert Fabio Sorgiacomo, and integrated vine protection by Dr. Leonid Volosciuc.

Objective 2. Expanded Market Linkages

Program 1. Wine of Moldova international promotion and export growth

Activity 1. Build Wine of Moldova Brand Equity and Increase Awareness

Wine of Moldova represented by unique hand-embroidered stand at world’s leading wine fair ProWein. Moldovan wine is spectacular, but it takes a lot to stand out against the best wines in the world. That is why the Wine of Moldova stand at this year’s ProWein trade fair in Dusseldorf has an extra pinch of Moldovan magic. The stand is in fact a canvas tent, covered in hand-embroidered traditional ornaments found on Moldova’s unique traditional carpets, themselves recognized by UNESCO on their list of Intangible Cultural heritage. The stand took 12 artists sewing for 2,500 hours, using 500 needles, hundreds of strokes and stitches, and over 50kg of wool, embellishing 130 square meters of canvas. This outstanding space hosted 39 of Moldova’s best wineries under the Wine of Moldova national brand, and attracted the attention of the world’s leading sommeliers and wine journalists, reinforcing Moldova’s place on the wine map of the world. The story of creation of the stand hit renowned international publications such as Meininger Wine Business International and even one of the most popular entertainment portals on the web, Bored Panda. The supporting video published on WoM facebook page became the most viewed video in its history, viewed by over 57 thousand unique users and reaching a total of 174,000 wine lovers worldwide.

Wine of Moldova presented in influential international publications and specialized wine press. During the reporting period, Wine of Moldova and individual Moldovan wines featured in numerous articles in the international press and in target export markets, including mentions and reviews in the Wall Street Journal, The Economist, Wine Spectator, and Wine Enthusiast. This coverage is the result of extensive PR campaigns wrapped around Wine of Moldova participation in international wine fairs and B2B exhibitions.

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Third annual Cricova WineRun demonstrates potential to become a flagship tourism event. This year's Wine Run took place under the national tourism brand "The Tree of Life", and the national wine brand "Wine of Moldova. A legend alive", as part of MCP’s tourism promotion strategy. Due to its unique combination of wine, culture, sport, and favorable winter running conditions, Cricova Wine Run has the potential to become a flagship international attraction. To fully capitalize on this crossover event, MCP organized a press trip for two journalists from Poland and deployed a post-PR campaign in target export markets which has resulted in press clips in over 15 publications in Poland, Italy, and Romania, as well as the international press.

Moldovan wines win 13 gold and 15 silver medals at international competitions, demonstrating Moldova’s continued recognition as a high-quality wine producer. During Q2Y3, Moldovan wineries continued their march to the awards podium, bringing home a total of 28 medals from two of the most renowned international wine competitions: Berliner Wein Trophy and Mundus Vini Spring Tasting. At Mundus Vini, small Moldovan winemaker Carpe Diem received a “Best in Show” mention for their new product ‘Bad Boys’. MCP decided to cost share the image of this wine on a specialized banner in the Mundus Photo credit: Finewine.md Vini tasting area at Prowein 2018, Photo caption: Ion Luca, owner and winemaker at Carpe Diem Winery receiving the “Best of Show” ensuring enhanced visibility of award at Mundus Vini Spring Tasting 2018 Moldova’s performance at this event.

Activity 2: Foster Business Linkages and Expand Wine of Moldova Exports

MCP sends Wine of Moldova to world’s largest wine fair with unique stand, attracting international attention. The project supported 39 Moldovan wineries to attend the world’s leading wine fair, ProWein, on March 18-20 in Dusseldorf, Germany. Wine of Moldova was able to stand out in a sea of excellent wine due to its extraordinary physical presence. The country stand was made from canvas covered in hundreds of hours of Moldovan hand- embroidery depicting the Wine of Moldova logo and traditional designs adopted from Moldovan carpet- making. Extensive pre-PR activity and Moldova’s strong out-of-home (OOH) advertising at the fair resulted in the booth being publicized online by international publications Meininger and Bored Panda. Attending the fair allowed industry representatives to hold many successful B2B meetings with some of the world’s biggest Photo credit: Masa Toshi Photo caption: Doina Bors and Daniela Herta form Doina Vin, beneficiary retailers, including Walmart, LCBO of the PQUP program and MCP grantee, exposing the new increased quality wine range at Prowein, Dusseldorf, March 18-20, 2018

16 (the state monopoly of Quebec province), Systembolaget (state monopoly in Sweden), and Biedronka (the largest convenience network in Poland), indicating increased international confidence in Moldovan wine.

MCP helps Wine of Moldova Photo credit: Ming Cho further penetrate the growing Photo caption: Wine of Moldova stand hosts 26 Chinese wine market at leading wineries at China Food and Drink Fair, Chengdu, trade fair. Following Wine of March 22-24, 2018 Moldova’s success at ProWein, MCP supported 26 wine producers to attend one of the most important wine fairs in Asia, China Food and Drinks, on March 20-22. In 2017, the volume of wine exports to China grew by 16% compared to 2016, and China became the second largest export destination. The Asia Pacific region, in particular China, South Korea, and Japan, represents an important growth and export diversification opportunity for the Moldovan wine industry due to its rapid economic development and absorption of ‘western’ tendencies. This presence at China Food and Drinks 2018 is the latest step in a targeted MCP strategy of trade fair participation in Asia.

Over 2,000 market linkages established following Wine of Moldova participation in the most important international trade fairs. In Q2Y3, MCP supported Wine of Moldova to continue its global expansion via participation in trade fairs and B2B events on 3 continents. In March,15 wineries were presented at Vinexpo New York, looking for opportunities to penetrate the North American market. On the other side of the Atlantic, a record breaking 39 participants showcased their wines at the handcrafted Wine of Moldova stand at Europe’s biggest wine exhibition Prowein in Dusseldorf. A further 26 Moldovan wineries demonstrated

Photo credit: Photo collage (Finewine.md, Adrian Digolean, Ming Cho, Andrei Cibotaru) Photo caption: Highlights from participation of Wine of Moldova at Vinexpo New York (March 5-7); Prowein, Dusseldorf (March 19-21); China Food &Drink Fair, Chengdu (March 22-24).

17 their winemaking talents and skills to consumers in Asia during the China Food & Drink Fair in Chengdu. All activities were supported by MCP-assisted PR campaigns, which managed to attract some of the most important people in the wine world to WoM stands, including: Thomas Matthews, Executive Editor, Wine Spectator Magazine; Christy Canterbury, Master of Wine, Wine Journalist, Speaker, and Critic; and Chan Jun Park Wine Writer, Consultant, Lecturer, Director of Asia Wine Trophy.

Wine of Moldova continues to build awareness and loyalty among Polish wine connoisseurs. Poland is a target export market for Moldova’s high-quality wines. In 2017, exports to Poland (Moldova’s main EU market) increased by 6 percent in volume and 10 percent in value, with support from ONVV and MCP. This is an indisputable sign that more high-quality wines can be shipped to this export destination. To maintain the momentum of this growth, MCP is assisting ONVV to implement a country marketing plan. During the reporting period, Wine of Moldova was presented to the Polish press and wine connoisseurs during a dedicated wine and food pairing show held in Warsaw on February 23rd. This event was supported by a targeted ongoing PR campaign designed to build interest, awareness, and loyalty to premium wines from Moldova.

MCP assistance shifts Photo credit: Wine of Moldova Moldovan Wine exports away Photo caption: Sommelier Tomasz Kolecki and Chef Robert Sowa, from traditional CIS markets, presenting how well Wine of Moldova pairs with Polish cuisine, Restaurant 37, Warsaw, February 23, 2018 building value for Wine of Moldova. Preliminary assessments based on data from the National Bureau of Statistics and Moldova’s Customs Service show that total wine exports increased by five percent in volume and an impressive sixteen percent in value. Bottled wine exports increased by seventeen percent in volume and nineteen percent in value. These increases are a direct result of private sector adoption of the ‘quality over quantity’ paradigm, leveraged by MCP assistance for international marketing and promotion efforts. Currently, more than fifty-seven percent of export value (or estimated 70 million USD) is generated by bottled wine exports, seventy percent of which goes to non-CIS countries. This success is underpinned by the repositioning and growth of wine exports in stable and high-margin markets, distancing Moldova from the blocked Russian market and low-value exports to CIS countries. The total geographical reach of exports expanded from 48 countries in 2013 to 63 countries in 2017, with export operations launched in Australia, Denmark, Finland, Qatar, Singapore, South Africa, and UAE.

Program 2. Stronger domestic wine market and enhanced wine culture

A stable and developed domestic wine market is of major importance for any wine producing country. The project’s efforts focus on enhancing wine culture and expanding the number of sommeliers with the European Sommelier Diploma. The existing network of 30 ‘wine-friendly’ restaurants will be boosted with at least ten more, mostly in regions outside of Chisinau.

Activity 1. Expand number of sommelier and Wine-Friendly restaurants

USAID and Sweden bring international sommeliers to develop Moldovan wine culture under Wine Friendly Program educational pillar - Wine Friendly/SMART. Twelve Moldovan sommeliers from the hospitality sector learned how to serve sweet wines

18 produced in Portugal, France, and Moldova, from François Coté, a Canadian member of the Professional Federation of Sommeliers. The master-class formed part of the Wine Friendly campaign, which aims to promote wine culture within Photo credit: Anatol Tomsa, ONVV Moldova. Additionally, in Photo caption: ASE Candidates before their exam for the collaboration with ONVV, Diploma of European Sommeliers, Chisinau, March 02, 2018 Europeans Association of Sommeliers (ASE), Wine School NGO, and the School of Sommelier NGO, MCP has deployed “wine education week”. This included a training course for 12 local sommeliers. After the course, the students received the Diploma of European Sommeliers, a qualification recognized by the European Parliament. In addition, the vice-president of the Association of European Sommeliers, (ASE), Maitre Sommelier Brigitte Leloup visited and performed basic training in wine service in nine restaurants, four of which were outside the capital, in Balti, Cahul, and Tiraspol. As a result, 105 young hospitality workers have been trained in wine service, including 25 women. Also during the ASE representatives’ visit to Moldova, MCP organized a dedicated training for chefs from Wine Friendly Restaurants, and one training on “The Basics of Wine Tasting and Evaluation” for students at the Tourism Faculty of the Academy of Economic Sciences. As a result of these activities, the sommelier community has begun to consolidate. Led by ASE Alumna Anastasia Saratura, and under aegis of the NGO ‘Wine School’, the sommelier community organized four training sessions dedicated to various topics such as: international wine regions, local rose wines, and sparkling Wines. MCP supports the development of a domestic wine culture to stimulate a stable and developed domestic wine market which can serve as a platform for launching and testing new wines and wine vintages by local wine producers, and act as a relatively low-risk earnings cushion for existing producers keen to diversify their offer. The wine sector in Moldova is critical for the economy, as it employs more than 200,000 people, mostly from rural areas.

Activity 2. Grow wine culture events

MCP prototypes high-level gastronomic tourism event in partnership with French Culinary College. Following Wine of Moldova’s successful 2017 trip to Cite du Vin in Bordeaux, France, in March 2018 MCP partnered with the National Office of Vine and Wine (ONVV) and the French Culinary College to deliver a three-day event "SLOW.FOOD.WINE.LIFE." as part of the international ‘Gout de France’ campaign. Three leading French chefs from the Bordeaux region demonstrated how to reinvent Moldovan cuisine and its wine-making traditions to a large audience and provided examples of how Moldova can upgrade its menus in restaurants, B&Bs, and wineries across the country, pairing Moldovan food with its wine. During their trip to Moldova the chefs were involved in the following activities: • Training and gastronomic master classes for Moldovan Chefs from local restaurants, wineries, and B&Bs. The French specialists shared their experience on how to make dishes more sophisticated, while respecting traditional cuisine. • Cooking session with nuns at Frumoasa Monastery in Calarasi. The French chefs cooked traditional dishes with the Monastery nuns, with respect for local and seasonal traditions (specifically Lent), and authentic tastes. The event was filmed and widely promoted on key target markets.

19 • Gastronomic show under the patronage of Wine of Moldova and “Collège Culinaire de France”. The dinner took place at the Radisson Blu Ambassador restaurants, where the chefs cooked and served a five-course menu paired with Moldovan wine. Ambassadors, opinion formers, and top journalists were invited to attend.

Over time, MCP-supported gastronomic events like these will prove themselves on the domestic market and become a draw for international gastronomic tourism, similar to the bi- annual Vernissage festivals for Wine.

Photo credit: Anatol Tomsa, ONVV Photo caption: Photo Collage from events under Slow Wine Food Life program, Chisinau, March 19-21, 2018

Objective 3: Improved Sector-Enabling Environment and Increased Capacity

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

MCP supports the leading role of ONVV in disseminating legal reforms among industry players, and in building the often uneasy public-private dialogue for sustained reform implementation.

Activity 1. Wine of Moldova – 2030. Keeping the legend alive with continued policy and regulatory reform

In the reporting quarter, MCP assisted ONVV to continue legal and regulatory reforms. In particular, amendments to Law No. 57 on Vine and Wine, the main law governing the sector, were proposed and published on the MADRE website. ONVV proposed amendments to a connected Governmental Decision on technical regulation 317: “Definition, description and labeling of alcoholic beverages”.

The development of the sectorial strategy “Wine of Moldova. 2030” has been postponed to Q3 and Q4. It is envisaged that the strategy will include important cross sectorial activities addressing sustainability and wine tourism development. To achieve a better understanding

20 in this area, MCP organized a study trip to California’s Napa Valley for representatives of the ONVV coordination Counsel (reported below).

Activity 2: Strengthen the role of ONVV as the main professional organization of the wine industry

National Office of Vine and Wine Annual Conference showcases gains in wine quality resulting from improved technology, innovation, and knowledge transfer. USAID Mission Director, Karen R. Hilliard spoke at the opening of the National Conference for Wine Industry Professionals, an annual general meeting for the wine industry, held by the National Office for Wine and Vine (ONVV) and hosted by the State Agrarian University of Moldova. The one-day conference gathered one hundred Moldovan wine industry professionals, including agronomists, viticulturists, and winemakers to learn about ONVV’s 2017 activities and to gain insight into the state of the country’s wine production, stocks, exports, sales, and quality programs. MCP supports the institutional development Photo credit: mei.gov.md of ONVV, strengthening its role as the Photo caption: ONVV Director, USAID Mission Director and Deputy main professional organization for the Minister of Agriculture and Infrastructure at the ONVV Annual National Moldovan wine industry. Conference

MCP organizes study trip for wine industry’s key decision makers to discover best practices in California. The purpose of the study tour was to enhance Moldova’s strategic planning and innovation by tapping into the global awareness and best practices found in California, one of the most dynamic winegrowing and tourism regions in the world. With MCP assistance, the Moldovan wine industry is engaged in a complex strategic planning process that will culminate with the ‘Wine of Moldova – 2030’ plan, aimed at consolidating sustainable viticulture and winemaking and building on recent successes in reform and trade. The delegation was particularly focused on studying the development aspects of California’s wine and tourism industries, and studied the legal, regulatory, and management reforms implemented in the state which resulted in the sustainable development of its winemaking industry, cost efficiencies for business development, and wine products development. Participating private sector representatives are expected to have gained new insights for the management of their companies, attracting investments, and generating new wine and wine tourism projects tailored to the Moldovan context while also taking into consideration global trends.

Activity 3: Develop and strengthen the PGI wine associations

Research into “Best Grapes” for wines with the best expression of terroir. Under the MCP supported “Best Grapes” project, ONVV seeks to create best practices in vine-growing by implementing and observing different planting schemes, rootstock, bush load, and various vine caring practices on four experimental plots. This research adds to advances made by implementing cutting-edge technologies, including autonomous methodological stations (with risk analysis algorithms) and other pest sensors. Following the 2017 harvest from the experimental plots, ONVV produced 19 types of wine from the collected grapes in microvinification conditions in TUM laboratories. International Expert Mr. Jacques Dupond, a journalist for French Le Point magazine and editor of the addendum Le Special Vin, visited Moldova in January. Mr. Dupond said that these wines express the best Moldovan terroir, and should serve as a benchmark for other wine producers.

21 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

To boost and diversify Moldova’s extremely weak tourism offering, MCP kicked off a complex program in 2016 called ‘Start-Up Tourism Moldova,’ with the goal of fostering quality growth, innovation, diversification, and expansion of tourism services. Through its sub-programs – Wine-UP, Hospitality+, Inbound Startup, and Go Regional – the ‘Start-Up Tourism Moldova’ program benefits wineries, rural guesthouses, B&Bs, artisans, hotels, soft- adventure and activity providers, tourism agencies, and destination management organizations (DMO).

Activity 1. Wine-Up: Wine Tourism Accelerator Program

MCP has identified 7 wine routes that will be included in the Wine of Moldova “Wine Road”. Seven wine routes have been established, taking into account the locations of wineries which already offer tourism services, and wineries in locations with tourism potential. Stefan Voda, Tiraspol, Orhei, Ungheni, Bugeac, Valul lui Traian, and Divin were all selected by MCP to be included in the Wine Road. Each route will include not only the wineries but also natural monuments, accommodation and food structures, traditional craftsmen, folklore workshops, and other tourist attractions.

MCP offers tailored assistance to upgrade existing tourism services. During the reporting quarter, MCP evaluated responses to questionnaires conducted in Q1Y3 to determine the tourism potential of wineries. The analysis determined that wineries frequently offer too many packages with the same, or similar structures, presenting the same number of wines. In addition, the lack of a visitor records system does not allow clear and precise identification of the popularity of certain tourism products. Therefore, in order to improve statistical records and identify traveler profiles, a Visitor Record Sheet was developed and sent out to participating wineries for their use. This step will facilitate the development of new products to attract tourists looking for innovative experiences. Finally, MCP assessed wineries’ online presence (web pages, social networks, and email marketing) and identified the need for further trainings in this area.

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

MCP approves funding for seven new rural B&Bs, bringing the total to 14. According to the MCP funded 2016 tourism exit survey, 71 precent of foreign tourists in Moldova had positive experiences with the hospitality of local people. To help rural entrepreneurs capitalize on this market and meet international standards, MCP will assist the refurbishment of seven new rural B&Bs, bringing the total number to 14 by the end of 2018. Grants have been approved for five guest houses in Orhei Vechi, one winery in Photo credit: Yon Savin, MCP Gagauzia, and one rural B&B in Valeni village Photo caption: Vila Roz, Rural B&B in Trebujeni village in the south of Moldova. Investing in refurbished with USAID and Sweden support

22 Moldova’s underdeveloped tourism sector is a key driver for socio-economic progress, particularly in rural areas, contributing to poverty and emigration reduction.

Activity 3. Inbound tour operators’ start-up program

MCP continues to incentivize local tourism agencies to develop inbound tourism products and attract more tourists. Through an ANTRIM grant agreement, MCP has announced an open call to support info-tours and matchmaking events in 2018. As a result, six tour operators have applied for assistance, with 1-2 applications each. For this activity, MCP support will take the form of promotional activities, and building international business partnerships. In January, MCP supported a Moldovan tour-operator to attend a matchmaking event (B2B) in Helsinki, Finland, a target niche market for inbound tourism. This participation had the purpose of fostering new business partnerships and increasing the number incoming groups of tourists. The tour operator had 35 meetings and established 7 new business partnerships with tour operators from Finland that already included Moldova in their tourism offer. Approximately 150 new tourists are expected to visit Moldova in 2018 as an outcome of this activity.

Activity 4. Go-Regional Tourism Start-Up: unveiling the tourism potential of Orheiul Vechi reservation and Purcari region

MCP continues its complex support for the development of ‘Orhei Vechi’ reservation. Plans to support Orhei Vechi include improving the promotion of the site as an international tourism destination, and developing flagship cultural events such as DescOpera, capable of attracting high-spending domestic and international audiences. In the reporting quarter, MCP started preparations for the DescOpera festival in partnership with the Ministry of Education, Culture and Research and key local partners. MCP initiated a high-potential cooperation on landscape lighting with renowned French lighting architect Alain Guilhot. Mr. Guilhot and his team will design a draft lighting plan for Butuceni (highlighting the main historical sites and landscape) which will be launched at DescOpera. The resulting impact will have a significant effect on the zone's tourism attractiveness, resulting in greater income for the area.

Activity 5. ‘Tree of Life’ events agenda

MCP supported “Tree of Life” calendar of cultural events will increase rural tourism Moldova’s flagship festivals "National Wine Day" and "DescOpera" attract over 150,000 international and domestic visitors every year, but it is difficult for potential visitors to find out about other opportunities in the country. In February, ANTRIM, the inbound tourism association, launched the first centralized calendar of cultural events "The Tree of Life 2018” in partnership with the Ministry of Education, Culture and Research, MCP, and the National Office of Vine and Wine. This calendar highlights 28 cultural events over the course of the year, allowing visitors to plan and orient their trips around different festivals showcasing Moldovan wine, traditions, customs, and important tourist attractions. Over 60 percent of the events take place outside the capital, driving tourists towards rural areas where tourism can boost entrepreneurial activity, create jobs, and attract foreign currency. The “Tree of Life 2018” calendar is being promoted online and at international exhibitions in the target markets of Romania, Italy, Poland, Germany, and Great Britain.

23 Photo credit: MCP Photo caption: Tree of Life cultural events agenda for 2018

Third annual Cricova Wine Run demonstrates potential to become a flagship tourism event. Over 300 people raced through the underground galleries of Cricova Winery in the third annual Cricova Wine Run. Participants ran 10km and reached depths of 100m in the limestone tunnels, enjoying the year- round stable temperatures of 12-14°C (54-58°F) which make them perfect not only for wine storage, but also for Photo credit: Sporter Photo caption: Women running the underground hosting cultural and sporting events 10km race at Cricova cellars during the winter months. This year's Wine Run took place under the national tourism brand "The Tree of Life", and the national wine brand "Wine of Moldova. A legend alive", as part of MCP’s tourism promotion strategy. Due to its unique combination of wine, culture, sport, and favorable winter running conditions, Cricova Wine Run has the potential to become a flagship international event.

MCP supports rebranding of national dance ensemble JOC to enhance role as ambassadors of cultural tourism. MCP supports Moldova’s efforts to increase its visibility

24 as an authentic cultural tourism destination to attract high-spending cultural tourists. The national dance ensemble JOC is the national repository of folk culture and choreography. Since 1945 it has given over 10,000 performances, introducing Moldova’s folk-dance and music to an audience of more than 13 million people in over 63 countries. MCP invested $11,500 USD to help JOC rebrand itself with a new visual identity and development strategy in line with the national #BeOurGuest promotion campaign. This will include more exposure, new concert programs, and a new team of dancers. The new visual identity and strategy represent a long-term approach to JOC’s promotion of Moldova’s image abroad and reaching more potential tourists.

Objective 2: Expanded Market Linkages

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

MCP supports strategic marketing activities in line with the Tourism Marketing and Promotion Framework (TMF), which outlines Moldova’s market positioning and strategic goals and objectives and includes an action plan to take advantage of the opportunities lying ahead. The marketing vision is built on Moldova’s core tourism experiences, addressing the ‘discovering the unknown’ concept While the country lies close to the heart of Europe with a preserved culture and pristine environment, it is practically unknown to the vast majority of the European population.

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

Moldovan Government declares 2018 ‘The Year of Hospitality’ following success of MCP viral marketing campaign #BeOurGuest. At talks about the future of Moldova’s tourism sector, the Minister of Economy and Infrastructure, Chiril Gaburici, stated that tourism is now a key priority of the Ministry of Economy. The minister also declared 2018 a ‘Year of Hospitality’, complementing Moldova’s status as the World Capital of Wine Tourism 2018. This designation follows the runaway success of the MCP vital marketing campaign #BeOurGuest. This social media campaign is part of a complex marketing program, inviting tourists to Moldova, and inspiring locals and the diaspora to invite visitors to discover the country and its heritage. #BeOurGuest went viral, achieving two million social media views in one week, and has resulted in a record of 25,000 unique visitors to the Moldova travel portal, corresponding with the number of foreign inquiries to local travel agencies.

25 Winner of the “BeOurGuest youth Photo credit: Facebook capture video competition announced at Photo caption: BeOurGuest Tourist Information Center in video contest for youth Chisinau. Under the #BeOurGuest announcement social media campaign, MCP launched a youth video competition urging Moldovan students to discover their own country, showcase its most representative destinations, and attract foreign tourists. Thirteen teams presented videos, which were evaluated by representatives from USAID, Sweden, the Ministry of Education, Culture and Research, and social media experts. Pavel Bas's team from Drochia won first prize, which includes a hot-air balloon flight. The winning video showcased 5 key tourism destinations and invited young people to "get out of your comfort zone and discover Moldova". USAID and Sweden support the promotion of Moldova as a tourism destination for foreign, diaspora, and domestic tourists Photo credit: MCP because tourism has the potential to Photo caption: USAID Representatives awarding the Be Our Guest youth video competition first prize to winner spur economic development in the most Pavel Bas remote regions of the country.

Activity 2. Foster business linkages and expand target markets

International travelers discover Moldova via VR 360 tours at world’s most important tourism trade fair. Inbound tourism is an industry with a huge potential for growth and the ability to be a key engine of economic development in disadvantaged regions of Moldova. As a result of continuous MCP investment, Moldova has risen from the least visited country in Europe to being recommended as a ‘top-10 must-visit’ destination by publications such as Lonely Planet. However, it remains unknown to many potential visitors. To showcase Moldova’s myriad tourism opportunities, MCP supported the development of a virtual platform, 360.moldova.travel, to enable would-be tourists to discover hidden treasures from monasteries to historic wine cellars and invite them to discover the country in real life. This ground- Photo credit: 360.moldova.travel Photo caption: Asconi winery virtual tour on breaking platform was launched at the 360.moldova.travel ITB tourism fair in Berlin, the world’s largest and most important tourism trade show, as part of Moldova’s 65 square foot national tourism stand. This is Moldova’s largest presence yet at ITB Berlin. With MCP support, five wineries and nine tourism agencies promoted Moldova alongside the virtual platform, under the #BeOurGuest promotion campaign.

26 Moldova is promoted on Italian and Polish tourism markets, and wins first prize at Polish travel expo. Poland and Italy are two of Moldova’s key target markets for both inbound tourism and wine exports. In February, Moldova took part in these markets’ two biggest tourism trade shows: ‘Tour Salon’ travel expo in Poznan, Poland, and BIT Milano in Italy. The Moldovan country stand showcased several inbound tourism operators and wineries under the “Moldova: Discover the Routes of Life” country brand, and won an award for the best stand at the Polish exhibition. The popular booths offered wine tastings, presented the Photo credit: ANTRIM Photo caption: Moldova’s presentation, attended by fifty innovative “#BeOurGuest” social polish travel journalists, bloggers and agencies media campaign and organized cooking shows to showcase Moldovan cuisine. As a result of MCP-supported promotional activities, Moldova has progressed from one of the least visited countries in Europe to becoming one of the top-10 travel destinations recommended by publications such as Lonely Planet within a span of four years. Tourism has the potential to influence the performance of many Moldovan industries, such as wine, and can provide economic growth and create jobs, especially in rural areas.

Moldova garners tourism success in target market Romania. Moldova presented its tourism offer to great acclaim at the 39th Tourism Fair of Romania (TTR) on February 22-25, 2018. The fair attracted 20,000 visitors who were introduced to 24 representatives of Moldova’s unique wine, food, and soft adventure tourism offer. Moldova’s stand provided wine tastings, offered 360-degree virtual tours of key tourism sites, and organized a press conference featuring the Ambassador of Moldova to Romania, Mihai Gribincea, and representatives of the inbound tourism association (ANTRIM). The press conference referenced Moldova’s viral video #BeOurGuest, which reached unprecedented levels of success on Romania’s TV and social media channels.

Activity 3. Enhance domestic tourism and improved access to tourism information

Moldova Tourism Information Center becomes platform for wine sector events. Several wineries organized promotional events at the new Tourism Information Center (TIC) in the heart of Chisinau. The TIC is the result of a partnership between the National Inbound Tourism Association (ANTRIM), Chisinau Town Hall, the EU delegation, and UNDP with the support of MCP. The TIC contains exhibition and training spaces to promote Moldovan products and build the capacity of the tourism industry. This early adoption of the space by

27 Moldova’s wine industry is a strong indicator of the long-term sustainability of the center.

Objective 3: Improved Sector-Enabling Environment and Increased Capacity

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

Activity 1. Reformed Tourism Sector Policies and Regulation

MCP-led Tourism White Paper development launched at meeting of Tourism Industry Representatives. Moldova’s tourism legal framework requires profound restructuring to align it with international best practices, engage public-private partnership models, and r barriers to entry for businesses such as rural B&Bs. MCP, along with the Ministry of Economy and Infrastructure and tourism industry stakeholders, launched a new initiative, "White Paper: Reforming the Tourism Regulatory Framework". This white paper will highlight actions needed for the continued development of Moldova’s tourism industry and will inform the National Development Strategy "Moldova 2020”. This is the latest stage in MCP’s ongoing Photo credit: MCP support to facilitate transparent Photo caption: USAID EG Director and Minister of Economy and Infrastructure dialogue with the Moldovan heading the tourism sector public discussion Government and advocate for game-changing reforms to improve the tourism business environment.

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

The third edition of ANTRIM Incoming FORUM gathers over 120 representatives of the incoming tourism industry. The Forum took place on March 23 and addressed two current topics affecting the industry. The first panel addressed the impact of the Be Our Guest campaign and its next steps, with a special focus on how viral digital campaigns can contribute to the development of a tourist destination. The second Photo credit: Sublim Studio panel prompted discussions on the Photo caption: Daniel Thomson, Economic Growth Director, USAID Moldova awarding the trophy for the best brand promoting tourism in topic of how to capitalize on local Moldova – the Tree of Life brand, National Tourism Agency wine tourism opportunities in the context of global trends. With MCP support, this event is becoming a platform for discussion and collaboration between tourism industry stakeholders, and an engine for professional development aimed at amplifying tourism industry development.

28 MCP supports rural B&Bs and other small businesses from rural areas to participate in consultations for the tourism White Paper. To appropriately develop the White Paper "Reforming the Tourism Regulatory Framework", on March 16-22, the Ministry of Economy and Infrastructure held consultations with different sectoral Committees. These included small accommodation establishments and other service providers from rural areas, wine producers and other producers/service providers for tourists, tour guides, and accommodation units. The struggles of small service providers related to developing and delivering tourist business activities have been included in the White Paper as a result of this consultation. These meetings also established that consultation participants will continue to be informed about the study and its development. If new needs are identified, new consultation sessions will be held.

MCP-supported Tourism Gala awards innovation, quality, and talent in Moldova’s emerging tourism sector. Tourism has been named a priority sector by the Moldovan government, and has the potential to drive economic development in even the most remote regions. The third annual Tourism Gala in March 2018 awarded prizes in 20 leading categories, and was a key opportunity to set the tone for the entire industry. MCP has worked with the Gala since its inception to facilitate its transformation into a true industry- wide platform promoting sustainable development initiatives and reforms within the Moldovan tourism industry. This year, the three leading tourism associations (ANTRIM, FPTM, and APIT) co-organized the competition for the first time, demonstrating growing private sector governance within the tourism sector.

ANTRIM General Assembly Meeting votes to diversify ANTRIM’s portfolio and enable new members to join the association. At the end of March, inbound tourism industry association ANTRIM organized its General Assembly Meeting where members voted to create two new structures inside the organization. One of these newly created structures is the Department for Developing Rural Tourism, which will allow rural B&B’s and small businesses to join ANTRIM. The other new structure is the Administration Council for the Tourist Information Center, which will oversee all the organizational and promotional activities related to the Center. In addition, two new organizations, PRofile and Sporter, became ANTRIM members. Three more organizations are in the negotiation phase, demonstrating ANTRIM’s institutional development. With MCP support, ANTRIM aims to become the leading inbound tourism organization on the local market, while also representing Moldovan tourism abroad.

29 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 was started with USAID support (CEED II) and is managed by the Technical University of Moldova with the participation of APIUS, the fashion industry association. MCP supports 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 members gain access to world-class online fashion education. ZIPhouse is a public-private partnership and key MCP partner, developing light industry skills through access to Photo credit: ZIPhouse facebook page capture technical education and training. Photo caption: Room setup for the webinar with Marc Jacobs ZIPhouse beneficiaries will now have access to webinars and online programs, starting with a Masterclass by Marc Jacobs. MCP invests in design and fashion industry education to support Moldova’s Light Industry to shift from low-value cut-and-make services to own-brand, high-value products and full process manufacturing. This shift produces increasing revenues per worker, incomes, and quality of life for the 20,000 women employed in the sector.

ZIPhouse leverages MCP support to create new EU collaboration to strengthen Light Industry workforce development. As a result of visible success during its first two years of operation, ZIPhouse can act as a reliable partner for other international organizations and donors to consolidate support for Light Industry competitiveness. The Eastern Partnership “Ready to Trade” Project, under the initiative “EU for Business”, aims to provide up to $300,000 of support for Moldovan Light Industry in the next two years. The project has chosen ZIPhouse to deliver its educational component, based on its stellar track record in training and workforce development. The activity plan for this collaboration was presented at a working group in March, with the participation of ZIPhouse, APIUS, and MCP representatives. The potential support will be directed by the ZIPhouse team to strengthen the branded “Fashion Academy” educational pillar.

ZIPhouse helps private companies source better accessories to improve final product quality and achieve higher prices. ZIPhouse has become a platform for suppliers to present their new products and innovations to the private sector. In March 2018, ZIPhouse hosted a presentation from the YKK Group, a Japanese group of manufacturing companies, which is the world's largest manufacturer of zippers and other fastening products.

30 Activity 2. Boost fashion creativity, startups and community building

ZIPhouse enlarges the Moldovan fashion community and stimulates collaboration. The Center continues to strengthen its position as a unique fashion community platform by regularly organizing branded community-building and knowledge-sharing events. During the reporting period, ZIPhouse beneficiaries gained access to webinars and online programs led by renowned experts from the global fashion industry, including: Masterclass on Fashion by Marc Jacobs; Diana von Furstenberg on Building a Fashion Brand; Masterclass on Photography by Annie Leibovitz, Fashion Styling and Image Making by Lucinda Chambers; and The Art and Science of Buying and Merchandising by Susanne Tide-Frater. Four community building and knowledge sharing events took place under the label ‘Fashion Cappuccino’. Special guests spoke at each event, covering Fashion Styling, Fashion Journalism, Fashion Editorial, and Commercial campaigns. In total, ZIPhouse community building events gathered more than 150 participants, strengthening the industry’s supporting ecosystem.

“Business Breakfast” introduces professional discussions to assess challenges and opportunities for Light Industry stakeholders. Business Breakfast is led by the industry association APIUS and ZIPhouse, with the aim of gathering together a community of Light Industry professionals and business owners. This creates a platform to effectively raise awareness of key challenges facing the industry, and present existing opportunities, complex know-how, and knowledge on topics of interest. The first Business Breakfast took place in March and raised the topic of “E-commerce on the local market”. The guest speaker of the event, Roman Stirbu, is CEO of several online marketplaces in Moldova. He presented potential opportunities for the fashion industry to extend its online presence. Z Young Designers Competition encourages and develops future creative talent.

ZIPhouse launched a Young Designers Competition to showcase the extraordinary talents of Moldovan fashion students and to motivate them towards ingenuity, added value, innovation, and wearability in their creations. 32 candidates applied to the competition with a profile of presentations and sketches of the future collection they plan to complete. Of these, 22 were pre- selected for the next stage. The competition includes an educational component, where designers receive feedback on their sketches from Kelly Denooyer, an international designer subcontracted by MCP. Kelly focused on the concept of the collection, its added value, and wearability of the garments. Teachers from Moldova’s specialized universities were invited to attend the feedback session to get access to best practices. The competition will end on May 31, with a catwalk and jury selection. The first two places will win the opportunity to showcase their works during the local Photo credit: ZIPhouse Fashion Soiree catwalk, as well as to Photo caption: Kelly Denooyer, international compete in an international Young designer, providing feedback to a young designer, participant at Z Young Designer Competition Designers Competition in Kyiv, Ukraine in July 2018.

31 MCP supports acceleration of 12 new fashion startups via ZIPhouse. MCP invests in creating fashion brands and products aligned with fashion trends, which can compete on international markets. A key tool is the Fashion Acceleration Program (FAP), which began in 2017. FAP is organized by fashion hub ZIPhouse in partnership with Fashion Technology Accelerator Milan, with MCP support. The program supports fashion entrepreneurs technical design and business training to create competitive designs and improved business models. The first cohort of designers launched 12 companies on the domestic market, and six internationally. In March 2018, a jury of local and international experts selected 12 new entrepreneurs to take part in the 2018 FAP. Candidates were keen to showcase their innovative designs and learn how to penetrate high- value overseas markets. The judges were amazed by the quality of the applicants to the program, representing the wealth of design talent in Moldova. Over 70 new brands have emerged under the DININIMA umbrella brand in the past Photo credit: Nata Eftene, ZIPhouse three years, creating quality jobs for Photo caption: Fashion entrepreneur presenting their business model for the jury at the Fashion designers and seamstresses and Acceleration Program Pitching generating higher value-added.

Young Moldovan designer’s brand Photo credit: dininima.md facebook post EHO features in VOGUE China. Photo caption: EHO collection presented at Harbin EHO, the eveningwear brand from Fashion Week 2018 young Moldovan designer Evgheni Hudorojcov, made its Asian debut at Harbin Fashion Week in China, and was subsequently featured in Vogue China. This success introduces Moldova as a source of new and talented designers for high-value Asian consumers, and opens the door to the Asian market for more Moldovan apparel. EHO is one of the graduates of the first Fashion Acceleration Program (FAP) at ZIPhouse, which has launched five Moldovan fashion startups on the international market.

ZIPhouse cultivates creativity and design thinking in the next generation. In Q2, ZIPhouse organized the first “School of Fashion Design”, a course for teenagers aged 14-19. This course allowed youth to learn the ‘ABCs’ of fashion design, and to find out how to embrace a career in fashion or other creative industries. For 4 weeks, 12 creative young people followed the path of a designer, starting with inspiration and ending with a sketchbook.

32 The training was led by 2 Photo credit: ZIPhouse instructors who recently Photo caption: Working session during the “School of Fashion graduated from the Technical Design” course for youngsters at ZIPhouse University of Moldova and also attended short courses at Polimoda University, in Florence, Italy, organized with MCP support. As a result of this experience, these instructors were able to supply their young students with knowledge and methodology acquired from one of the top leading fashion universities in the world. These types of activities raise the interest of the next generation “I found this course extremely inspirational and useful for me. I confirmed my towards creative areas and interest in design and it helped me to shape my plans. The course offers the develop complex thinking skills, basis for fashion design, and much more: a pleasant atmosphere, young contributing to their future and cool trainers, a place to make friends. I am waiting the next edition to attend and to get some practical skills” career opportunities. Lucian Bivol, 9th grade at school

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

ZIPhouse Fashion Academy delivers three practical workshops to enhance pattern making skills. Local trainers delivered 120 training hours of education to 17 participants, providing beginner and intermediate level trainings for “Gemeni CAD for pattern making”; “Design and Pattern making of womens dresses”, and “Pattern making of garments”.

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

The approach for Y3 is to deepen assistance for selected SME champions committed to improving factory efficiency and product quality, by engaging productivity, design, and pattern making experts. To drive change at the industry-level, assistance will be provided in areas of operational and cost efficiency by eliminating time loss, excessive raw material inputs and preventable defects, reducing lead and cycle times, reducing inventory levels at every stage of production, improving workforce productivity, and optimizing use of equipment and space. In addition, MCP is continuing its “flying designers” program, where international designers and pattern makers help align local designs with global color, style and fabric trends.

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

MCP investment helps four Moldovan apparel companies enhance competitiveness by increasing productivity and reducing waste and energy consumption. Waste and energy management are key topics for the global fashion industry. The MCP Streamline Manufacturing, Accountability, Resource efficiency, and Transparency (SMART) program helps apparel companies increase their sustainability by introducing production engineering and adopting Lean Management tools. The program supported four apparel companies (Coralav Lux, Ennsgern, Tricon, and Intercentre Lux) to save time by centralizing production according to skill center, not product line; increase productivity through physical changes on

33 the manufacturing floor; reduce waste through precision cutting; and reduce energy consumption by introducing new LED lightbulbs. MCP also assisted the companies to improve their technological processes. For example, an improved label application process, resulting from improved finishing processes at Intercentre Lux, has doubled the operator's productivity.

Figure: The process of finishing marks on fabric for labels, velcros and patches, proposed by MCP international consultant Martin Buecher

In the Moldovan apparel industry, introducing SMART program elements lead to 15 percent average productivity gains, with a knock-on effect on competitiveness. This is a key step towards realizing the industry’s vision of becoming high-value manufacturers of sustainable, quality, and value-led products, with a skilled workforce that enjoys higher salaries and a higher quality of living.

MCP grant results in increased productivity, reduced production cycles, and 50 percent higher operators’ salaries at leading Moldovan shoe manufacturer. OldCom is an important shoe manufacturer in Moldova, with a long and traditional history. Until recently, all OldCom products were conceptualized and sketched by a single designer, contributing to a long manufacturing cycle of 70 days. MCP provided OldCom with a grant to install computer assisted design Photo credit: Andrei Sochirca for MCP software, creating a digitalized Photo caption: Women working at the shoe manufacturer OldCom design process and helping the company to reduce its manufacturing cycle to just 10 days, improving its production flow and ability to respond quickly to customer needs. Reduced production times means greater cost efficiency, translating into better wages for OldCom employees. The average salary in the industry is $300 USD, but the increased efficiency due to technology upgrades means that machinists at OldCom can reach an average salary of $450 USD, representing an increase of more than fifty percent.

Computer Assisted Design doesn’t just result in higher salaries, it also creates well paying, quality jobs for emerging professionals. Victoria is a passionate young shoe designer, who recently graduated from the Academy of Fine Arts in Chisinau. Thanks to the MCP supported technology upgrades, OldCom now has a team of three designers working hard to respond to customer requests. This team is led by Victoria who uses her newly acquired education and skills. The introduction of Computer Assisted Design at OldCom also means that it can provide the kinds of employment opportunities highly skilled young graduates are

34 looking for, so designers like Victoria do not need to emigrate to fulfill their passion for modern design.

MCP-assisted apparel companies implement Integrated Quality Management Systems to increase their reputation as a reliable manufacturing partner. MCP started to assist the apparel companies Araco Exim and Instacon to implement the Integrated Quality Management System (QMS) to meet international standards, and ensure a production environment that delivers quality products. The program evaluated the existing quality system with regards to international standards ISO 9000:2015 and OHSA 18000, developed an implementation plan, trained personnel to implement the system, and defined and approved the new quality policy and quality objectives. By adding these two companies that introduce international production and social compliance standards, MCP support was directed in total to four companies. Following MCP support to introduce an Integrated QMS in 2017, local company Artizana and Steaua Reds increased their reputation as reliable manufacturing partners, allowing the companies to attract quality-conscious buyers, resulting in increased exports. Artizana’s major client, the prominent UK brand Barbour, placed a large order which led to an Photo credit: Ala Oberst additional 150 high-quality jobs at the Photo caption: Specialists from the Production Department factory. In addition, Steaua Reds’ of Araco Exim learning the Process Approach

manufacturing client, Italian Industries, increased its order for new articles by almost 20 percent (from 16,000 to 19,000 units). This additional order, for new articles made from knitted textiles combined with fabrics, allowed Steaua Reds to invest in 60 new linear stitching machines and create 60 new jobs for seamstresses, whose recruitment process has already started.

Activity 2. Create brands and products aligned with fashion trends

MCP supports Moldovan Light Industry entrepreneurs to improve designs and create products aligned with global fashion trends. MCP continues to implement its “Flying Designers” program, using international experts to support the creation of Spring/Summer 2018 capsule collections, suggest needed corrections, verify themes, and help participants

Figure: High-fashion techniques and technical finishes suggested by international consultant Kelly DeNoyeer for O’devalle knitwear brand, to increase the value of the collection 35 correctly launch the design process. Since the program’s launch, MCP has assisted 14 emerging companies with design, production, and sales strategies. 19 designers, including 6 emerging designers and 3 start-up designers have improved their design skills to date. As a result of intensive design coaching from international design consultants, designers from the participating apparel companies developed new collections based on their new knowledge, including: • Mood boards, mastering how imagery can translate design inspiration into the final collection, and how rendered sketches can look as a final product; • Adoption of the capsule concept, creating pieces that can be sold alone, but can be used with other garments to create specific looks, and allow the brand to up sell. The resulting cohesive collections sell more products to single consumers, leveraging profits; • Increasing the value of collections while maintaining the company’s production capacities, by adding details, color stories, and improved finishes to raise a brand’s quality.

The international footwear designer Luisa Fazio provided assistance to Figure: The pattern making process on lasts at Cristina Footwear company for a design provided by international 4 footwear companies (Oldcom, consultant Luisa Fazio Cristina, Hincu, and Olsa shoes) to develop their Spring Summer 2018 collections. The goal of the assistance was to present each company with dedicated design work carried out by the international designer at home, based on companies’ design briefs. The consultant developed 8 sketches for each company and reviewed some of the current collections that the companies have been working on. She made recommendations, discussed the designs she had produced for each company, selected materials, colors, and technical issues, and reviewed the beginning of the pattern making process on shoe lasts.

The international consultant worked hard to establish a collection structure template for Oldcom, to create “(Before) I was getting overwhelmed with how to organize my (design) balanced and sustainable collections season after work and the collection, but now I season. It’s a new process for Oldcom, and they have can clearly see the ideas and how to begun to grasp how to implement and structure their develop them into a collection.” collections in this way, to become more efficient in terms of product and quality, and to improve design, Victoria Andries, storytelling, and trends. Designer at OLDCOM Footwear Company

36 International consultant assists Figure: SS 2018 collection new style for BIT Program two bag producers to develop a company Spring / Summer 2018 bag collection. The consultant’s key recommendations to beneficiary companies, Arillu and BIT Program, relate to design consistency, encouraging designers to create more synergy with the work carried out in FW17 so that all the company’s styles look like one coherent collection. The consultant gave designers a clear focus by editing sketches, refining design details, and making recommendations about material selection and color.

Moldovan lingerie companies participate in Interfiliere raw materials exhibition, strengthening sourcing skills to build higher value-added. Access to quality fabrics and accessories is a key factor in creating a competitive product, and is essential for emerging Moldovan brands positioning themselves in fashion niches such as lingerie. MCP supported three lingerie companies to take part in this raw materials exhibition in Paris, France – Olga Ceban, Elmi-SCV, and Antigona. Interfiliere is the leading international event for sourcing lingerie, swimwear, and activewear materials and accessories. The lingerie company Raveti attended the exhibition for the third year in a row with assistance from MCP. The resulting access to raw materials has enabled Raveti to begin production under a private label. Private label production generates higher value-added, and the company now exports 80 percent of its production to the EU. The success of this private label, due to MCP support, enables Raveti seamstresses to earn 30 percent to 100 percent more than the sectoral average of $265, thus improving their quality of life.

Objective 2: Expanded Market Linkages

Program 3. Expanding Market Opportunities

MCP and industry partners are striving to reposition Moldova as a full-product manufacturing partner for European clients, and to internationalize the fashion brands emerging in recent years, starting with regional markets which are better understood by Moldovan designers. MCP remains focused on supporting exports of higher value-added contract manufacturing and Moldovan-branded fashion products by supporting their participation in international tradeshows.

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

MCP supports apparel companies to sign orders worth $170,000 USD with famous French men’s retailer. MCP supports home-grown fashion brands to penetrate international fashion markets through targeted participation in trade shows and partnerships with key retail chains. With MCP support, two Moldovan apparel companies - Ionel and Ridiager – tookpart in the Premier Manufacturing international exhibition in Paris, France. Ionel attracted a new French client, Celio, and signed a contract for pret-a-porter male suits worth a total of 145,000 Euro, or $170,000 USD.

37 Moldovan wedding wear & accessories fashion niche conquers Romanian market and starts exports into the EU. In the wedding wear industry, high attention to detail and quality manual work is critical to obtain a unique end-product. Moldovan designers have access to both of these skills, creating a niche for outstanding Moldovan-made wedding wear. MCP has successfully consolidated the Moldovan wedding-wear market, sending eight apparel and accessories companies to the three most important wedding fairs in Romania: “Targ de Nunti” in Iasi, and “Ghid Mariaj” and “Mariage Fest” in Bucharest. Customers placed on-the- spot orders worth $51,500 USD, and participating producers agreed to further export opportunities. Ilet’te, which produces wedding dresses, signed a contract with an official distributor in Romania. Rodica Braga jewelry will be exhibited in two important Romanian cities, Bucharest and Pitesti, and July Anne Millinery will collaborate with a concept store in Bucharest.

Photo credit: Victor Lisii Photo credit: Iuliana Chirosca Photo caption: Moldovan wedding wear designers Photo caption: Moldovan wedding exhibiting at Iasi Wedding Fair Exhibition wear designers exhibiting in Romania

Moldovan shoe and accessory manufacturers penetrate regional markets and sign over $150,000 USD in export contracts at international trade fairs. MCP supported six shoe companies from Moldova, including Transnistria, to take part in important trade shows in the region, including “Kabo exhibition” in Brno, Czech Republic, ‘Leather and Shoes’ in Kyiv, Ukraine, and Lviv Footwear and Leather Accessories exhibition in Lviv, Ukraine. This participation resulted in contracts and pre-orders worth $150,000 USD and generated over 200 business contacts. Participating in international exhibitions and tradeshows is one of the most effective ways for Moldovan manufactures and brands to expand market linkages and increase exports, key to increasing revenues and providing better outcomes for the entire workforce.

38 Young designer Katea Gri, a participant in MCP Flying designers’ program, explores export opportunities in Ukraine. MCP helps home-grown fashion brands penetrate regional and international fashion markets through targeted support for marketing and design. Moldovan designer Katea Gri worked closely with an MCP-provided Flying Designers consultant to align her work with international fashion trends and calendars. On February 7, 2018, she presented her AW18 collection in Kyiv at Ukrainian Fashion Week. As a result of this presentation, Katea Gri received an offer to collaborate with a popular Ukrainian platform which promotes young designers. With over 500,000 followers on Instagram, collaborating Photo credit: Katea Gri Instagram with this platform offers an unrivalled opportunity for Photo caption: Backstage from the Ukrainian exposure on the Ukrainian market. The MCP ‘Flying Fashion Week where Moldovan young Designers’ program streamlines Moldova’s fashion designer Kate Gri showcased AW2018 collection production by strengthening design skills in 14 own- brand fashion companies.

Moldovan designer selected as a top- 25 trendsetter at Bijorhca Paris international jewelry expo. With MCP Photo credit: Ana Popova, Rodica Braga, Marinelle Photo caption: Moldovan brand exhibit at Bijorhca support, young Moldovan handmade Paris jewelry exhibition in Paris jewelry designer, Rodica Braga, participated in the Bijorhca Paris jewelry exhibition in France alongside 214 other European companies. Her designs were selected as a top-25 trend for 2018. This is just the latest success for the brand, which has also won success at jewelry fairs in Spain, and bridal fairs in France, with MCP support. Participating in these international trade fairs validates Moldovan accessories’ price point, quality, and competitiveness, proving that Moldovan hand-made accessories have the potential to become a high-growth export segment within Moldova’s light industry.

Activity 2. Consolidate the Din Inima Umbrella Brand and Expand Domestic Market

31 Digital Ambassadors promote Spring/Summer 2018 collections from Moldovan designers in new target markets. Increasing sales of Moldovan brands on the domestic market is a key MCP objective, providing a financial sales cushion and market confidence for entrepreneurs to penetrate regional and international markets. Spring/Summer 2018 collections from leading Moldovan brands were presented to great acclaim at Moldova Fashion Days and enjoyed further reach throughout the country through promotion on social media by 31 social media influencers. These #DigitalAmbassadors, including journalists, bloggers, and fashion vloggers were engaged via MDF and DININIMA digital platforms. During MDF, the Digital Ambassadors dressed in DININIMA brands and promoted themselves via a viral ‘Instagram party’ that allowed participating brands to access new

39 targets and harness the Ambassadors’ reach, influence, and reputation. The success of this initiative will continue during 2018 as the Ambassadors fulfill their commitment to further promote DININIMA brands on their platforms and channels.

MCP supported the Spring/Summer 2018 Fashion Show. Moldova Fashion Days, initiated and continuously supported by MCP, is the most important event in the Moldovan apparel industry calendar. The Spring/Summer 2018 edition took place in Chisinau on March 17-18. 35 Moldovan designers, from established brands to emerging companies, showcased their spring fashion collections to a large local audience and broad media attention. Moldova Fashion Days focuses on ready-to-wear concepts, enabling consumers to go directly to retailers to buy a catwalk look, boosting local sales. The US Government has been supporting Moldova’s fashion industry since 2005, prompting the transition from simple manufacturing towards the development of own-label fashion brands which earn higher value- added and generate higher salaries. Moldova’s Photo credit: MFD apparel industry employs over 23,000 women, and Photo caption: Lorina Balteanu collection at the investment in this sector contributes to migration Spring Fashion Show, March 18, 2018 prevention and female empowerment.

Objective 3: Improved Sector-Enabling Environment and Increased Capacity

Activity 1. Assist APIUS to Advocate for Policy and Regulatory Changes

Previously MCP has contracted a collaboration with the European Business Association (EBA) and American Chamber of Commerce (AmCham) to provide mentoring, coaching, and advocacy support to APIUS representatives for strengthening the business enabling environment. During the reporting period, this collaboration has been paused because of a transition period at APIUS as a result of executive management changes.

40 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

MCP continues to implement several STEAM initiatives at the pre-university level, aimed at showcasing modern educational approaches replicable through the whole education system, promoting STEAM fields, preparing youth for modern careers and increasing future graduates’ employability. Educational robotics remains the core of STEAM initiatives, as it has proven to be a program with high impact.

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

30 teachers enhanced their teaching capabilities using cutting edge technology within the MCP-piloted Future Classroom Lab. Moldova’s current school curriculum lacks adequate exploration of Science, Technology, Engineering, Arts Photo credit: MCP and Mathematics (STEAM) Photo caption: Teachers engaged in practical exercises to subjects, resulting in graduates demonstrate how to use technology for teaching lacking the technological skills Moldova’s growing ICT industry needs. MCP supports a Future Classroom Lab (FCL) pilot creating classrooms equipped with technology like Raspberry Pi3, where students can explore core curriculum subjects while gaining practical technological skills. In February, 30 teachers from 11 schools in the FCL pilot program learned how to use technology and digital equipment to design innovative project-based activities, to teach anything from IT, physics, and math to geography, biology, and chemistry, enhancing their teaching capabilities and the technology skills of their students.

High School students from the Photo credit: Diez.md South of Moldova showcase Photo caption: Use of MakeyMakey technology at the Future Classroom Lab in Leova their new interest in Science due to Future Classroom Lab. The MCP-supported Future Classroom Lab (FCL) pilot equips classrooms with technology, which enables students to explore Science, Technology, Engineering, Arts, and Mathematics (STEAM) curriculum subjects while gaining practical technological skills. In March, the Mihai Eminescu High School in Leova, in Southern

41 Moldova, opened its doors to showcase how students use its FCL to explore everything from robotics and dance to conductivity and sound waves. Students demonstrating different technologies, including Ozobot and MakeyMakey, created an electric 'piano' using fruits and vegetables and programmed their weather station to measure and predict meteorological changes. The success of this event demonstrates how FCL is a key step towards keeping young people engaged in STEAM subjects in high-school and beyond, ensuring a pipeline of qualified candidates for Moldova’s growing ICT industry.

Activity 2. Expand Educational Robotics Program

MCP-supported Robotics competition becomes international, with two teams traveling from Romania to compete. A record number of 365 youths took part in the FIRST LEGO League (FLL) national competition February 24-25, 2018. Fifty youth teams from 21 schools across Moldova, plus two from Romania, took on the Water Challenge, using technology to solve a real-life problem. The US Ambassador to Moldova awarded the Champions Cup to the best team - RoboRangers, flanked by the Swedish Charge d ’Affairs and the Moldovan Minister of Education, Culture, and Research. The winning team, will represent Moldova at the FLL Estonian Open International Championship in June 2018. In March 2018, MCP supported RoboRangers to take part in FIRST LEGO League (FLL) Photo credit: Dumitru Doru Romania 2018. Following their Photo caption: Champions of the FIRST Lego success at FLL Moldova 2017 League Moldova 2018 competition and 2018, the team won the 1st place for robot performance, scoring in 'Robot Game' twice as many points as the runner up. This success further underlines the capacity of Moldovans in technical fields at the regional level. As a world-famous youth science and technology competition organized in 88 countries, FLL is the key part of MCP efforts to build technology skills in young Moldovans and promote tech careers, which will contribute to the growing competitiveness of the ICT sector as an export industry and employer of youth.

Robotics teachers move to the next level following training with leading Estonian experts. MCP, together with ATIC, organized a 2-day training for teachers of robotics to build skills in using LEGO MINDSTORMS EV3. This training was designed for teachers who already have at least one year of experience teaching robotics in afterschool or curriculum settings. The qualitative goal was to allow them to progress to higher level programming concepts in graphical languages, and adopt best practices for teaching with robots. Twenty- five teachers, including 16 women, attended the training, conducted by two of Estonia’s leading robotics trainers. A similar activity was conducted in Y2 for another group of teachers, with very positive feedback from teachers as well as the students involved in more advanced robotics classes.

New international competition-based learning model will promote STEM to primary school students. MCP together with industry association ATIC decided to organize Moldova’s FIRST LEGO League Junior (FLL Jr.) competition, involving educational institutions already working with LEGO WeDo robotic sets provided by the project. FLL Jr. is designed to introduce STEM concepts to children aged 6 -10, while exciting them through a

42 brand they know and love − LEGO. The competition gives early elementary school students and their adult coaches the opportunity to work and create together while they explore science and technology concepts. Research has shown that even at an early age, this program positively impacts students throughout their education and even into their careers. To launch this program in schools, ATIC organized a training with teachers to familiarize them with the concept and rules, and to motivate them to prepare teams for the event. Twenty-seven teachers attended the training and are now working with their students to prepare for the FIRST LEGO League Moldova Junior competition on June 1, 2018.

Moldovan youth robotics team wins $10,000 grant to attend FIRST LEGO League World Festival in Detroit. In April, five students from the small village of Stefanesti, in the south of Moldova, will see their dreams come true as they attend the FIRST LEGO League World Festival in Detroit. The students, aged 12-15, are part of a 10-strong robotics team, emerging from the Robotics Club at their school, part of the MCP Educational Robotics program now operating in 112 schools and 13 libraries across Moldova. Through this program, the team from Stefanesti has developed a passion for building and programming robots. Their talent and ability led to high scores in national competitions, and has resulted in the award of a LEGO Photo credit: Yon Savin, ATIC Foundation grant worth $10,000 Photo caption: Stefanesti Robotics Team and their awards at the to enable the team to take part national FIRST Lego League competition in Chisinau, Moldova in the festival in Detroit, where more than 30,000 high- performing students from around the world will put their robots to the test with the help of mentors and professional engineers. Only one team in one other country in the world was awarded such a grant, demonstrating not only the talent of the team, but also their achievements in the context of significant economic hardship.

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

MCP supports CoderDojo mentors to improve teaching skills and continue to build programming skills for the future of Moldova’s ICT sector. MCP supports extra- curricular activities aimed at developing digital skills and promoting STEM careers. As part of this effort, MCP is supporting the expansion of the CoderDojo initiative in Moldova – a network of free of charge coding clubs for the age 8-16. In Y2 of the project, mentors involved in CoderDojo activities lacked training and education in how to teach children, and were reported to have encountered difficulties in their classes with young CoderDojo attendees. To improve the effectiveness of CoderDojo for both mentors and participants, MCP organized a psycho-pedagogical training, where mentors were presented with effective teaching techniques and ways to handle different age groups of children. The seminars were held at Tekwill and were attended by 21 CoderDojo mentors. To date, over 300 Moldovan youth have been involved in CoderDojo activities, and are being shown the way into the world of IT by their volunteer mentors.

43 22 students attend Virtual Reality Hackathon supported by the Technical University of Moldova and MCP. Moldova is perfectly positioned to be a leading exporter of software and technology-enabled services, and MCP works to increase the share of high-value tech and creative services originating from the country. With support from Photo credit: Rift Time USAID and Sweden, the Photo caption: Students developing and testing their VR Technical University of Moldova and AR projects (TUM) in partnership with a private Moldovan company, Rift Time, organized a Virtual Reality Hackathon in March 2018. A total of 22 students presented their Virtual and Augmented Reality projects in a pitching competition. Activities like the Virtual Reality Hackathon ensure that Moldova stays at the cutting-edge of technological development, maintaining its export potential in the face of nearshoring competition from neighboring countries such as Romania and Ukraine.

Program 2: Build the Ecosystem for Workforce and Entrepreneurship Development

To build a strong ecosystem for workforce and entrepreneurship development, MCP focuses on developing infrastructure for the Makers Space, Creative Hub, and Technology and Innovation Center, defining and strengthening their operational models, and attracting partners (both private and public) and donors.

Activity 1. Develop Regional Innovation Centers (Balti, Comrat/Cahul, Novateka)

MCP made progress in the development of the Balti Innovation Center, and with three Community Innovation Centers known as ‘FabLabs’. MCP advanced the Balti Center project in two key areas. In the first pillar, focusing on the Center’s physical infrastructure, MCP signed a contract with the architectural and civil design company that is developing the design of the Center. The architectural design addresses the needs of a cutting-edge innovation center and includes a fabrication lab, co-working spaces, training rooms, event area, small offices for startups, a café, parking, etc. This design will be finalized in May 2018. Following this, the Regional Development Agency will initiate the public procurement process for construction works. In the second pillar of the project, focusing on developing content and engaging private partners with the activities of the Center, MCP engaged an international consultant to define the concept of the Center, and hold a series of meetings with the representatives of the Government, academia, private sector, and other donors. These meetings will allow the activities of the Center to be appropriately planned and organized, and ensure that stakeholder efforts are coordinated to achieve maximum impact.

A memorandum of understanding was signed between Balti University, thr Regional Development Agency North, yhr Ministry of Economy and Infrastructure, the Ministry of Education and Culture, yhe Ministry of Regional Development, the Association of Private IT Companies, the Association of Industrial Manufacturers, Balti Municipality, and MCP to ensure the development of the Innovation Center. The Government ministries will provide necessary political support for the Center, ATIC will implement programs related to

44 workforce development and IT startups, the Association of Industrial Manufactures will attract its member companies to implement programs in the Center and will ensure the administration and management of the Center, the Regional Development Agency is contributing $680,000USD for the construction of the Center, and the Balti Municipality will provide support in clearing all the construction authorizations and necessary permissive documents for the building and operation of the Center. During the reporting period, MCP also signed a grant agreement with the Balti University to provide an in-kind grant of $350,000USD for endowment of the Center.

Activity 2. Creative Hub Development

Chisinau Mayor’s office issues construction authorization for the Chisinau Creative Hub and the architectural design of the new construction was finalized. Based on the architectural design, MCP announced an RFP for construction services and identified the service provider that will build the new building of the Creative Hub. In parallel, the renovation of the space provided by the Academy of Arts for the first phase of the Creative Hub is registering Photo credit: Maxim Calujac, architecture progress. The plastering of walls Photo caption: Creative Hub mock up and floors was finalized, the electrical and ventilation network were installed and the rest of the works will be finalized in May 2018.

Creative services industries employ 29.5 million people worldwide, and in Moldova the sector is expanding by 11% a year, paying young Moldovans 20% more than other industries. To support Moldova to access this economic growth, MCP is providing financial and technical support for Moldova’s first Creative Hub. Following the authorization from the mayor’s office, construction will take 15 months, and the Hub is expected to open its doors in early 2019. The Hub will join more than 300 others across Europe, providing access to world-class networking, training, and business development expertise to accelerate Moldovan creative start-ups.

Photo credit: Maxim Calujac Photo caption: Interior Design of the Cube (Creative Hub)

45 Activity 3. Makers Space Development and Support

Construction activities at the Makers Space entered their final phase during the reporting period. Work is already complete on the project’s engineering networks and structural infrastructure. MCP is working closely with TUM on the space’s final finish and visual decorations. The space is expected to be fully endowed with processing equipment, furniture, and basic consumables in April 2018. In Q2, the Project worked with key stakeholders from TUM, Tekwill, and the private sector to define the functional areas and develop an initial work plan, ensuring that they meet the needs of the previously established audience.

Based on this work, the project decided to register the space in the international “Fab Foundation” network, as the specifics of proposed activities fall under the concept of a FabLab. While a Makers Space is oriented towards community building for hobbyists and enthusiasts, a FabLab is a mix of community and professional engineering approaches. FabLab is the educational outreach component of MIT’s Center for Bits and Atoms (CBA), an extension of its research into digital fabrication and computation. A FabLab is a technical prototyping platform for innovation and invention, providing stimulus for local entrepreneurship, but it is also a platform for learning and innovation: a place to play, to create, to learn, to mentor, to invent. Connecting this space to the FabLab concept means connecting to a global community of learners, educators, technologists, researchers, makers, and innovators. Because all FabLabs share common tools and processes, the program is building a global network which will become a distributed laboratory for research and invention. Moldova will be marked on the global map of over 2000 FabLabs, gaining access to international expertise in running such a space, consultancy regarding activities, free access to professional software and international recognition. To kick-start this process, MCP established a partnership with a regional FabLab in Odessa, Ukraine to obtain expertise for the process of FabLab Chisinau registration. MCP plans to officially open the FabLab in May 2018, during the visit of Brock Bierman, the USAID Assistant Administrator.

Activity 4. Creation of an IT and Engineering Laboratory Cluster within the Technical University

The CIRCLE IT and Engineering Labs at Technical University of Moldova open doors with MCP support. Since 2005 Information Technology has grown 20-fold and now accounts for over $100 million of exports each year. This growth is slowed by a shortage of qualified technical and engineering specialists. Therefore, in March 2017 MCP entered into a partnership, with the Technical University of Moldova and the leading global firms in internet security and engineering, Siemens and Bit Defender, to design and endow a cluster of cutting-edge ICT/Engineering laboratories on campus. With these labs, over 1,000 students will learn fundamental IT and Photo credit: Anatol Tomsa, MCP engineering disciplines in an Photo caption: Margot Ellis shakes hands with a robot at CIRCLE laboratory interactive, hands-on way, mastering up-to-date technology and understanding real world constraints. The 600 sq.m. facility includes educational and research laboratories that will serve as a resource for 25 specializations covering IT, Electronics, Communications, Engineering, Transport, and Architecture. This $230,000

46 investment replaces outdated labs, supports the development of a real-world curriculum, and will ensure the employability of graduates with industry-related skills.

The new labs, named CIRCLE, were opened on March 20, 2018 by Chiril Gaburici, Minister of Economy, Igor Sarov, State Secretary of the Ministry of Education, Margot Ellis, USAID Deputy Assistant Administrator, Europe & Eurasia Bureau, Adam Amberg, Head of Sweden Cooperation, and Viorel Bostan, TUM Rector. The officials lit up the CIRCLE logo using an app programed by the students on Android and a sensor installed on the logo lamp.

The new CIRCLE cluster of laboratories consolidates USAID and Swedish investments in the existing Tekwill IT Excellence Center and the forthcoming Moldova FabLab. Together, these will give young Moldovans access to the most progressive international developments in technology, science and automation, will support high paid jobs at home and will ensure Moldova’s IT industry has enough qualified workers to continue its exponential growth.

Photo credit: Anatol Tomsa, MCP Photo caption: CIRCLE partners

Activity 5. Spur industry learning through attending international conferences on mobile, fintech, web, creative, design

Moldovan entrepreneur learns how to take his startup to the next level at international start-up conference in California. After winning an ICT start-up program in Chisinau, young entrepreneur Iulian Gulea attended the Startup Grind Global Conference in Redwood City, CA, USA, in February 2018 with MCP support. His product “Gaus”, an app which uses artificial intelligence to create an interactive job-hunting app for millennials, was one of the 25 start- ups competing in “Founder Institute Chisinau”, a program supported by USAID and Sweden to spur Photo credit: Iulian Gulea Facebook profile innovation and entrepreneurship in Photo caption: Iulian Gulea attending Startp Grind Moldova’s ICT sector. Startup Grind conference, CA, USA

47 is a global startup community designed to educate, inspire, and connect entrepreneurs, and is powered by Google for Entrepreneurs. ICT is one of Moldova’s fastest growing industries, and MCP works to promote the emergence of successful startups in the sector.

14 Moldovan Creative Agency designers attend Design Identity Intense Course at Kyiv Academy of Photo credit: Seul Vasile Media Arts. The Design Identity course Photo caption: Moldovan delegates at KAMA Course took place in February 2018 in Kyiv, Ukraine and offered participants valuable theoretical information about design identity, and a practical workshop coordinated by some of the best professionals and agency representatives in the Ukraine Design Market. The course upgraded the specialists' skills, contributing to the competitiveness of Moldovan creatives on local and international markets. Kyiv Academy of Media Arts is Ukraine’s first and largest alternative education institution specializing in creative industries. It provides focused courses in the creative services sub-sectors and offers practical laboratories, dedicated lectures, hands on experience, and case studies to upgrade the skills of young creative specialists.

20 young Creative Industry entrepreneurs benefit from British Council Creative Enterprise Program. The Creative Enterprise Program was organized by the British Council in partnership with the Moldova Competitiveness Project and the Creative Industries Association in Moldova (COR). The three-day training session was dedicated to emerging entrepreneurs who are running businesses in any of the creative and cultural industries, or for creatives who wish to do so. The training agenda was based on a methodology designed by Nesta, and a successful Creative Enterprise toolkit. The main aim of the program was to help creative entrepreneurs acquire the knowledge and skills they need to strengthen their businesses, and/or transform a creative idea into a sustainable enterprise.

Photo credit: MCP Photo caption: Creative Enterprise Program

48 Activity 6. Improve the Entrepreneurial Ecosystem for Innovation and Creativity

MCP supports “GoSocial” Agency to organize Mad Marketers Conference. The conference enabled 414 students, Photo credit: PhotoGo Social credit: Agency Go Social Agency startups, young entrepreneurs, and Photo caption:Photo Mad caption: Marketers” Mad Conference Marketers” DeploymentConference Deployment Creative Industry Sector representatives to learn about current trends and tools for building business communications on social media platforms, so they can reach target audiences in a more efficient way. The event took place at Tekwill in March 2018.

22 students gain new skills in a Virtual Reality Course & Hackathon. MCP supported a new member of COR (Creative Industries Association in Moldova) to organize a VR Course for Photo credit: Rifttime students at the Technical University of Photo caption: VR Course Deployment Moldova in March 2018. The course gave 22 students a theoretical training in VR, followed by a practical workshop. Students learned about key aspects of VR installation development such as User Interface, Environment building, VR development, Lighting, Light Properties, UI Creation, Modeling, Adaptation of 3D Models, Optimization, Object Building, Sound, and Prefabs.

Activity 7. Support private-driven initiatives to develop IT Parks

Moldova’s first physical IT Park begins advertising for tenants, nearing end of first phase of the construction project. Significant progress was made in the MCP-supported initiative to deliver the first physical IT Park in Moldova. The IT Park is being implemented by Starnet, Moldova’s leading private internet provider. In 2017, MCP helped Starnet obtain a 4.5 million Euro loan from a Moldovan commercial Figure: Office space visualization withinin the Digital Park bank, and the company began construction works for the first phase of the IT Park, generating 6,000 square meters of office space. The construction has made good progress, and the building will be finalized in May 2018. In parallel, Starnet launched a marketing campaign to attract future residents of the IT Park. Pre-lease agreements are necessary for the company to obtain an additional bank loan to construct phase 2 of the IT Park. MCP has played a key role in the construction of the park, by facilitating Starnet to obtain a DCA bank loan guarantee worth 9 million USD.

49 Objective 2: Expanded Market Linkages

Activity 1. Implement Foreign Market Entry Support Programs and Increase Marketing Skills

Moldovan creative company exports to Hollywood due to MCP assistance. A Moldovan graphic design company – Asti Studio, which employs 30 designers - fulfilled an export contract to create the graphics for the LIP SYNC show held at Paramount Studios in Hollywood. This is the same theater here the Oscars are held, and the prestigious event, Photo credit: Lidia Scarlat facebook post demonstrates the world-class Photo caption: Capture of the Lip SYNC show with background graphics made quality of Moldovan creative by Moldovan graphic artists services companies. This export contract for LIP SYNC is a direct result of the B2B networking event COLLIDER organized by MCP in Fall 2017, connecting US entrepreneurs with Moldovan creative services startups. Creative Services are an MCP priority industry within the ICT cluster, with 11% annual growth, clear export potential, and the ability to leverage productivity in other areas of the Moldovan economy including wine, tourism, and light industry.

Youbesc Studio takes part in prestigious Berlinale Festival 2018. MCP Supported Sergiu Cumatrenco, the director of Photo credit: Sergiu Youbesc Studio, a film & video production company and member Cumatrenco of COR (Creative Industries Association in Moldova), to take part Photo caption: Cumatrenco at Berlinale Film Festival in the Berlinale Film Festival 2018. Berlinale is one of the most important events in the film industry calendar. The program of events includes film screenings, programs, workshops, panel discussions, joint projects with other social and cultural actors and many opportunities for networking. Mr. Cumatrenco established many good contacts for future collaboration with key players in the film industry and shared information about Moldova and its video and film production potential with many other sales agents, representatives, distribution assistants, and producers.

Objective 3: Improved Sector-Enabling Environment and Increased Capacity

Activity 1. Implementation of the Law on IT Parks

Moldova’s first virtual IT Park gains 60 members in first three weeks of operation. The first Virtual IT park in Moldova opened on January 1, 2018 and by end of March 2018 more than 150 companies become members of the park, employing about 6,000 young people. A minimum of 10 new IT companies are applying to join each week to take advantage of the IT Park’s pro-business benefits, including a 7% flat tax (compared to 15% of company turnover outside the park). Tax incentives are big motivations for foreign and Moldovan companies to invest in Moldova, and for young people to stay and work in the industry. This high demand for IT park membership validates the Government of Moldova’s Law on IT Parks and non- linear growth strategy (supported by USAID), which will double and triple exports with the same number of employees, eventually shifting Moldova from its current position as a

50 competitive outsourcing destination to a country that provides high value-added services and products.

Activity 2. Strengthen and update industry strategies

In December 2017, MCP assisted the Ministry of Economy and Infrastructure to draft the new IT Sector Competitiveness Strategy. The new Strategy is a logical continuation of policy initiatives and interventions for the development of the IT sector, such as strengthening and developing the industry ecosystem, innovation infrastructure, tax regime and country level IT sector promotion. As a result, the draft strategy was submitted to key ministries for a Governmental review, in order to align the activities of the new strategy with the broader Government agenda. The Strategy was adjusted according to the review and feedback received from other ministries, and will be submitted for Government approval in April or May 2018.

MCP also supported the amendment of Law Nr. 77 on IT parks. The amendments include adding additional activities which bestow eligibility for IT Park residency. These new activities include research and development in engineering, physics, mathematics, bioinformatics, and nanotechnology, and activities from the Creative Services industry such as digital animation and specialized graphic design. The addition of these new activities will allow other companies critical for the IT industry value chain to benefit from the same 7% flat tax on total sales and to compete on global markets. The Law was approved by the Government on March 28, 2018 and was submitted for approval to the Parliament. It is expected that the law amendments will be approved by the Parliament in May-June 2018.

Activity 3. Capacity Building for Business Support Organizations

45 Creative and Fashion entrepreneurs discover how to turn their vision into reality at a British Council training program. In February, MCP launched the first edition of the Creative Enterprise international training and mentoring program, delivered by the British Council using trainers from the UK and Ukraine, and accredited by the British agency Nesta. The two waves of the program, first for Creative Industries and the second for Fashion Startups, delivered a three-day entrepreneurial simulation exercise for 45 creative entrepreneurs, improving participants’ business skills and Photo credit: Nata Aftene, ZIPhouse introducing them to new platforms Photo caption: Workshop under the fashion track and technology. This international for the Creative Enterprise Program Creative Enterprise program is part of a suite of MCP activities to develop Moldova’s creative industries, delivered in partnership with the Association of Creative Companies of Moldova (COR). The program is currently being implemented in Nigeria, Brazil, the United Arab Emirates, Russia, Vietnam, Macedonia, Albania, Turkey, China, Israel, and Ukraine.

51 COR, Creative Industries Association in Moldova reaches 20 members. In March 2018, the recently created Association, which represents companies from Moldova’s Creative Sector, reached 20 members. Companies joining the association represent the broad spectrum of Creative Industries in Moldova, including Animation, Graphic Design, Video Production, PR, and Web Design, and have great potential to cooperate with external markets.

Figure: COR visual & Cor members

DELIVERABLES

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

1. Monthly Report, January 2018 2. Monthly Report, February 2018 3. Quarterly Report FY18Q1

52 SECTION II

PROJECT-LEVEL OUTCOMES AND RESULTS

Sector Engagement, Enhancement, and Development (SEED) Fund

During this quarter, the SEED Fund focused on implementing existing grants and on awarding several new ones. • In Y3 Q2, the SEED Fund disbursed a total of $330,911 To date: covering 15 existing grant beneficiaries across all • 74% of total $5 million awarded industries. To date the SEED Fund disbursed a total of • 52% of total $5 million paid $2,616,282 or 52% of the total SEED Fund of $5 million • 70% of awarded grants paid and awarded a total of $3,712,968* or 74% of the total SEED Fund. • The Fund allocated, with USAID approval, several new grants: o Two new grants in the wine industry to Vinaria Nobila and Vintage Avenue companies to improve the quality of their wines; o One grant in the tourism sector to Benzing Grup company operating under the name Casa din Lunca to restore and convert into a Bed and Breakfast (B&B) a traditional rural house in Orhei Vechi; and o One grant in the light industry to Vistlinie company to improve the quality of their women’s coats production. • The Fund awarded a funded modification to sector association, ASW, to endow it with innovative equipment such as a bottling machine, barrel washing equipment, pumps, bottle openers and others. • The Fund awarded a funded modification to fashion excellence center, ZIPhouse, to: o Enhance ZIPhouse capacity by developing its library and Strengthening ZIPhouse and APIUS collaboration through events, talks, mentorship. o Boost Creativity, Entrepreneurship and Community Building through the organization of various events, trainings, competitions, conferences, etc. Support professional development through access to advanced education for professionals, professors and students through accessing educational opportunities mainly within Italian universities such as University Polimoda and International Institute of Fashion Design & Marketing in Florence as well as European Institute of Design (IED).

SEED Fund Performance snapshot

SEED Fund Performance through Grant Allocation by Industry through March 2018 March 2018 (by value) Wine 1% 9% Tourism $1,287,032 Total Awarded* 0.3% 20% ICT

34% 14% Fashion $2,616,282 $3,712,968 Total Disbursed Creative

21% Precision Remaining Budget Crosscutting

*at the average ER of Project Years 1, 2 & 3: 1 USD = 18.81 MDL A total of 86 grants have been awarded through March 2018

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

Ongoing support to financial institutions with DCA agreements was provided. MCP assists the implementation of the Development Credit Authority (DCA) loan guarantee program, which is a USAID special mechanism to increase access to finance. In Q2Y3: - USAID approved for a client a 6-months loan term extension, respective changes being made Figure. DCA in Energy Efficiency in the Credit Management System. Performance throught March 2018 - USAID approved the maturity extension of another loan by 84-months, through this helping the client to increase the production stock in the period when some buyers delated the payments. $715,600 - There are no defaulted borrowers to date and Total Awarded USAID has received zero claim requests from financial institutions. $701,466 Total Disbursed - $10,000USD were disbursed for existing loans $2,811,737 within the ongoing DCA for Energy Efficiency. Remaining Budget To date, the financial institution has placed 56 loans valued at $715,600 under the DCA in Energy Efficiency, of which $ 701,466 have been disbursed. Environmental Protection

During this quarter, the SEED Fund focused mainly on implementing existing grants as opposed to awarding new ones covering all sectors supported by MCP. MCP submitted a modification to the existing environmental review checklist (ERC) and Environmental Mitigation and Monitoring Plan (EMMP) for a grantee in the Wine industry, CGL Prim, for the inclusion of additional goods and materials aimed to improve the wine quality. This modification was approved by the Mission Environmental Officer (MEO) and Bureau Environmental Officer (BEO). During Y3Q3, MCP will shift focus to awarding new grants, which will result in a greater flow of new ERC/EMMP.

Public-Private Partnerships

MCP is focused on public-private partnerships (PPPs) to encourage systemic and sustainable change, facilitating critical partnerships for shared objectives in reform, trade promotion, workforce development and economic growth. MCP is currently a partner in 27 PPPs. During the reported quarter, progress was recorded in the PPPs presented below.

Industry PPP name Progress in the quarter

Winegrowing ONVV ONVV organized the National Conference for Wine Industry Industry Professionals, an annual general meeting for the wine industry, held by the National Office for Wine and Vine (ONVV) and hosted by the State Agrarian University of Moldova. The one-day conference gathered one hundred Moldovan wine industry professionals, including agronomists, viticulturists, and winemakers, to learn about ONVV’s 2017 activities and to gain insight on the state of

54

Industry PPP name Progress in the quarter

the country’s wine production, stocks, exports, sales, and quality programs. Winegrowing "WoM During the reporting quarter, ONVV organized the Industry Marketing participation of Moldovan wineries at 3 trade fairs, under Platform" the umbrella of the national wine brand “Wine of Moldova”. 43 wineries participated in total, contributing an estimated $305 thousand USD to this PPP. State contribution was estimated at $139 thousand USD and MCP contribution - at $46 thousand USD. ONVV obtained additional funding from the Governmental export promotion authority, MIEPO, valued at $21 thousand USD. Winegrowing "WoM One training was organized under this PPP during the Industry Academy" reporting quarter. The event was a training dedicated to caring for vines in the face of climate change. 58 professionals attended and received updated knowledge and skills. Winegrowing "WoM Within the reporting quarter, ONVV developed Industry Advocacy amendments to law no. 57 “On vine and wine” (the main platform" law governing the wine sector), and to the subsequent technical regulation No. 317. ONVV participated in a work session to develop the state policy on subsidies in agri- food sector and was consulted by the government on the appraisal and modification of the National Agrifood Development Strategy 2014-2020. Moreover, along with MARDE, ONVV advocated and participated in a working group aimed at implementing the mandatory fulfillment of the Association Agreement between the Republic of Moldova and the European Union regarding the protection of Geographical Indications, namely the prohibition of the use of PGI: Cahor, Cognac, Champagne, etc. Winegrowing "National MCP and ONVV organized a study trip to California for Industry Strategy in representatives of the Government and the private sector. Wine and The delegation was particularly focused on studying the Vine Sector development aspects of the wine and tourism industries, consultation and studied the legal, regulatory and management reform platform" areas implemented in California, which resulted in the sustainable development of the winemaking industry. The value of this PPP has increased, as follows: MCP contribution $ 28.3 thousand, Private sector cash and in- kind contribution: $ 28.3 thousand, state contribution - $1.8 thousand. Tourism Tree of Life MCP created a “Tree of Life” calendar of cultural events to Industry festivals increase rural tourism, in partnership with the Ministry of calendar Education, Culture and Research, and the National Office of Vine and Wine. In the reporting quarter, the Calendar was officially launched and promoted both national and in international target markets (Poland, Italy, Romania). Out of the 27 events included in the calendar, three of them have already taken place (Cricova Wine Run, Underland

55

Industry PPP name Progress in the quarter

Music and Wine Fest, and Martisor Festival) attracting over 37,000 people. Tourism Tourism MCP gave strategic support to the National Inbound Industry Information Tourism Association (ANTRIM), in partnership with Center (TIC) Chisinau Town Hall, the EU delegation, and UNDP to open Moldova’s first TIC in the heart of Chisinau in November 2017. Since opening, the Center has hosted over 15 events related to the tourism industry. In the reporting quarter, ANTRIM created an Administration Council for the Tourist Information Center to oversee all the organizational and promotional activities related to the Center. The members of the Council are: Visit Moldova (representing tour operators), Asconi (representing wineries), Berd’s Design Hotel (representing the hospitality sector), Chisinau Town Hall and MCP. Tourism DescOpera DescOpera Festival is a flagship cultural event, capable of Industry Festival attracting high-spending domestic and international audiences. In the reporting quarter, MCP started preparations for the DescOpera festival in partnership with the Ministry of Education, Culture and Research and key local partners. MCP initiated a high-potential cooperation on the subject of landscape lighting with renowned French lighting architect Alain Guilhot. Mr. Guilhot and his team will design a draft lighting plan for Butuceni (highlighting the main historical sites and landscape) which will be launched at DescOpera. In cooperation with PARC Communications, MCP has started work on the festival website, which will be used for international promotion. Tourism Tourism MCP, along with the Ministry of Economy and Industry Development Infrastructure and tourism industry stakeholders, in Platform February launched a new initiative, "White Paper: Regulatory and Regulatory Framework for the Tourism Industry". This white paper will highlight actions needed for the continued development of Moldova’s tourism industry and will inform the National Development Strategy "Moldova 2020”. This is the latest stage in MCP’s ongoing support to facilitate transparent dialogue with the Moldovan Government and advocate for game-changing reforms to improve the tourism business environment. In the reporting quarter, the first Sectorial Committees were established and conducted the first working meetings where the needs of the stakeholders were addressed. Light Din Inima Five promotional campaigns and events were organized Industry promotional under the Din Inima PPP within the reporting quarter. The campaigns PPP value amounted to $6,400 US, with MCP contributing 33% and private parties (mainly APIUS) contributing the remaining 63%. The most prominent and impactful activities under this partnership were: Rubens Women and Spring Precollection fashion catwalks, the Din Inima popup

56

Industry PPP name Progress in the quarter

at Underland Fest, and promotion of innovative marketing materials (look books, videos etc.) Light ZIPhouse 18 events took place at the ZIPhouse PPP during the Industry Design and reporting period, including professional training, Technology workshops, competitions, and community building events. Center The value of this PPP came to about $38,400 US during the quarter. All parties (APIUS; TUM; MCP) continue to support and invest in ZIPhouse to ensure its institutional capacity and content development. TUM contributes space, workforce, utilities and materials to deliver activities. APIUS provided logistics and organizational support to five events. In this quarter, MCP contributed an in-kind grant worth 66% of the PPP total value. Light Moldova Moldova Fashion Days Spring/Summer 2018 edition was Industry Fashion organized under this PPP within the reporting quarter. The Days PPP value amounted to $43,665 US. MCP contributed 14%, while private contributions (mainly APIUS) made up 25%. MIEPO contributed 11%, while the remaining 51% of total value was covered from additional partners and sponsors of the event attracted by the organizers. MFD gathered 35 Moldovan designers, from established brands to emerging companies to showcase their spring fashion collections to a large local audience, and broad media attention. Moldova Fashion Days enjoyed further reach throughout the country through a new promotion campaign #dininima #digitalambassadors on social media by 31 social media influencers, including journalists, bloggers, fashion vloggers. IT, CSI and Robotics As competition-based learning is an important part of the PE PPP robotics program approach, MCP continued to support the organization of FIRST LEGO League (FLL) competitions. These competitions aim to use robotics as a tool to promote IT education and tech careers among youth. The fourth edition of FLL Moldova was successfully organized at Tekwill. Fifty teams from 26 communities attended the competition, including two from Romania. The main partners supporting this competition were MCP, the private sector (represented by ATIC industry association and other private companies), the Technical University of Moldova, the Ministry of Education, and participating schools or local public administrations, leveraging in total over $45,000 USD. IT, CSI and Creative Hub The Administration Council of the Creative Hub was PE Development established, consisting of representatives of the Academy of Arts (4 members), representatives of the Association of Creative Companies (4 members) and the Ministry of Education and Culture (1 member). IT, CSI and Balti In January 2018, a Memorandum of Understanding for the PE Innovation creation of the Balti Innovation center was signed by all Hub stakeholders, including the Ministry of Economy and Infrastructure, the Ministry of Education and Culture, the

57

Industry PPP name Progress in the quarter

Ministry of Regional Development and Infrastructure, the Regional Development Agency North, ATIC, the Association of Industrial Manufacturers, Balti Municipality and MCP.

Local Capacity Building Program

In Y3Q2, the SEED Fund initiated the 2018 Organizational Capacity Assessment (OCA) for four sector associations – APIUS, ATIC, ANTRIM, and ASW. OCA allows the associations to reflect upon their successes and areas of improvement by assessing themselves against a list of criteria such as governance, management, strategic vision, member services and satisfaction, etc. The self-evaluation scores will be available in Y3Q3, allowing the Project to compare the scores and determine the level of improvement.

Inclusive Development

MCP recognizes and affirms USAID and Sweden’s commitments to inclusive development and provides all project beneficiaries with equal opportunities to participate in its activities and to benefit from project-funded assistance. In this respect, the Inclusive Development Q2Y3 Highlights Project designs activities which use a 215 non-discriminatory approach, and ➢ 43% of total 1,926 participants in include groups that have been capacity building programs are women historically excluded or disadvantaged, especially women ➢ 41% increase in participants in MCP and youth. There is a special focus supported activities compared to previous on increasing the participation of quarter women-owned companies in project activities. The Project also ➢ 77% of total 1,926 activity participants are collaborates with companies from all youth Moldovan regions, including Transnistria and Gagauzia. ➢ 35% of the total 222 firms assisted in Q2Y3 are women-owned Empowering Women and creating opportunities for Youth ➢ 10 assisted companies are from Gagauzia involvement. Through its activities, and Transnistria MCP aims to reduce gender disparities in economic opportunity by to empowering women to enhance their careers, increasing the capacity of women and girls, and to cultivating leaders in business. MCP also focuses on youth, as this group demonstrates the highest level of outmigration, and are also the active population within Moldova. Therefore, Project activities are designed to interest and attract youth, motivate them to develop themselves and their careers in-country, and to create opportunities for youth involvement.

58 Table. Women and Youth participation in MCP activities in Y3Q2, by industry

Description Light industry Wine Tourism IT, PE, CSI TOTAL

Total participants 248 496 0 1,182 1,926 per industry 198 158 0 470 826 Women 221 305 0 962 1,488 Youth

All MCP programs focusing on the Wine Industry seek 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 Y3Q2 MCP supported knowledge upgrade activities and trainings for about 500 industry professionals, 62% of which were youth and 32% of which are women.

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 from light industry. MCP also provided on-the-job trainings as part of the SMART Factory program implementation. As result of 12 work-skills development activities implemented with MCP support, the project contributed to knowledge upgrades and trainings for about 250 industry specialists, 78% of which were youth and 90% of which are women. MCP assisted ZIPhouse to launch the “Z. Young Designers Competition” as part of the ZIPhouse activity plan for Y3Q2, which targeted young people and spurred their motivation to succeed in fashion. The project worked with ZIPhouse to launch the first fashion course for teenagers in Moldova, to help them develop their career objectives within the sector.

In the IT cluster, 15 activities targeting youth and women were carried out in Y3Q2, registering high youth participation. MCP-supported activities recorded about 1,200 participants, 81% of which were youth and 40% were women. During the reporting period, MCP, together with ATIC, organized the FIRST LEGO League competition, where over 30% of team members and coaches were women and 80% were youth. Moreover, more than 70% of the teachers participating in robotics and other trainings were women. MCP supported the “GoSocial” Agency to organize the Mad Marketers Conference. This conference provided an opportunity for 414 students, startupers, young entrepreneurs and Creative Industry Sector representatives to learn about current trends and tools for building business communications on social media platforms, to reach target audiences in a more efficient way.

Support economic development of Transnistria and Gagauzia. In Y3Q2, MCP provided technical assistance to 10 Gagauzia and Transnistria-based SMEs from the wine and light industries, primarily focused on product quality, factory efficiency and/or trade growth. This assistance is provided at the firm-level and as part of industry organizations, namely the National Office for Vine and Wine, and the industry associations ANTRIM and APIUS.

• In the wine industry, MCP provided technical assistance to four wine companies in the Gagauzia region to participate in project activities. Two companies owned by ethnic Gagauzians and located in Comrat, Gagauzia (Vinuri de Comrat and Tartcomvin) were supported to submit wine samples to leading international wine

59 competitions: Mundus Vini Spring Tasting and Decanter World Wine Awards. MCP also assisted two Gagauzia based companies - Tomai Vinex and Vinuri de Comrat - to attend and showcase their wines at Prowein 2018. The Project also provided support for Tartcomvin, Vinuri de Comrat and Vinia Traian to participate in China Food and Food and Drink Fair 2018 in Chengdu, China. In Transnistria, one training on “the basics of wine service” was organized in Hotel Russia in Tiraspol, hosted by Maitre Sommelier Brigitte Leloup under the Wine Friendly/SMART program, attended by 25 hospitality staff.

• In light industry, MCP supported six Transnistria and Gagauzia-based companies to participate in international tradeshows, including Kabo International Exhibition in Brno, Czech Republic (Tellus and Tellus A), Leather&Shoes exhibition, Kyiv, Ukraine (Tellus, Tellus-A, Floare, Tighina), Galychyna International shoes exhibition in Lviv, Ukraine (Floare and Tighina), Kyiv Fashion international exhibition (Intercenter Lux), Premier Manufacturing in Paris, France (Ridiager SV) and Panorama Berlin, Germany (Intercentre Lux). MCP also supported light industry companies to visit the Lineapelle sourcing exhibition at the SIMAC Equipment and Technology Exhibition in Milan, Italy (Tellus, Tellus A, Floare, Tighina). In January, the MCP SMART Productivity program began its support to Intercenter Lux. The MCP productivity expert carried out a productivity audit and identified areas for improvement. Within the Flying Designers Program implemented by MCP, the Gagauzia-based apparel company Ridiager-SV was assisted to develop its capsule SS18 collection.

Monitoring & Evaluation

Monitoring and Evaluation (M&E) activities were conducted for documenting results. Main M&E activities conducted during the quarter included:

• Ongoing monitoring of project activities – monthly data were collected, verified for accuracy, and included into M&E database. The Quarterly M&E report for 2017 was prepared, and data analysis was included in the MCP Quarterly Report. • Reporting on the USAID request for FY16 and FY17 on two new indicators “Number of innovations supported through USG assistance” and “Number of innovations supported through USG assistance with demonstrated uptake by the private or public sector”. • Conducting Data Quality Assessment (DQA) for MCP indicators. According to the MCP Performance Monitoring Plan, a Data Quality Assessment (DQA) of all indicators shall be conducted by the project after the finalization of the second year of activity. The conclusions were reported under the DQA Checklists for each indicator.

New achievements were registered by MCP in Y3Q2. Through its activities, MCP achieved the following results:

➢ Increasing productivity and skills: • MCP expanded its outreach to a further 58 SMEs, either directly or through its association counterparts. The project now assists an impressive 544 SMEs, 166 or 31% of which are women-owned. This cumulative number exceeds the Life-of- Project target of 450 SMEs by 21%, and Y3 cumulative target of 350 SMEs by 55%. This outreach was possible due to the Project’s approach of working with industry associations, delivering sustainability and long-term impact, and enabling the Project to reach a wider number of SMEs.

60 MCP ASSISTED ENTERPRISES, Q2Y3 UPDATES

Total assisted companies Women-owned assisted companies

544

170

166

145

119

110

87

35

29 15

TOTAL WINE TOURISM LIGHT IT, PE, CSI

MCP’s robust assistance to SMEs focuses on MCP has surpassed its 5-year advancing their knowledge and technology, LOP indicator #4 “Number of improving the quality of their products and enterprises receiving assistance services, and growing their sales domestically and to improve knowledge, processes, abroad. Improving product quality is key in technologies and practices”. It preparing Moldova’s private sector to compete on now assists 544 SMEs, the EU and other high-value markets, enabling exceeding the 5-year target of Moldova to take advantage of EU DCFTA benefits. 450 by 21%.

• The project progressed well in delivering capacity building programs. During the reporting quarter, 1,926 people, of whom 77% are youth and 43% are women, participated in educational activities, trainings to enhance job skills, and community building events delivered by the project. Activities in IT (clustered with Precision Engineering and Creative Services Industries) delivered the majority of reported participants (61% of total). These programs are instrumental in shifting mentalities and improving knowledge industry-wide. To date, 17,608 people have participated in MCP- supported capacity building programs, exceeding the four-year cumulative target of 15,000 people by 17%.

➢ Improving market linkages: MCP assistance has helped 279 unique SMEs improve their sales and make 7,753 new market linkages to date. In Y3Q2 alone, MCP implemented 17 sales facilitation activities benefitting 123 companies (44 from the wine industry, 57 from light industry, and 22 from tourism), resulting in 2,960 market linkages. These results were achieved by supporting participation in international exhibitions, and local promotional activities. MCP International trade shows attended by MCP-supported companies include Vinexpo New York, China Food and Drinks Fair 2018, Prowein 2018 (Wine industry); Panorama Berlin, Germany, Premier Manufacturing in Paris, France, Kabo international exhibition in Brno, Czech Republic Leather&Shoes exhibition, Kyiv, Ukraine, Galychyna International shoe exhibition in Lviv, Ukraine, and Kyiv Fashion international exhibition (Light Industry); and Poznan Tour Salon 2018, and BITMilano, ITB Berlin (Tourism).

61 Table. Performance Monitoring: Target vs. Actual

YEARS 1-2 YEAR 3 Indicator Cumulative Cumulative Cumulative Y1-Y2 Y1-Y2 Target Target Y1-Y2 Target Target Result Y3Q2 Result versus versus Established Established Achieved Result Achieved Result Result (Y1- (Y1+Y3) (Y1+Y2+Y3) Y3) Project Purpose: Grow and Expand Targeted Competitive Industries

Value of domestic Data reported 1 and export sales in $500,000,000 $702,802,016 $202,802,016 $530,000,000 N/A N/A annually targeted sectors*

Increased value of sales facilitated on Data reported 2 $50,000,000 $59,596,831 $9,596,831 $50,000,000 N/A N/A behalf of assisted annually enterprises

Value of new private Data reported 3 sector investment in $16,000,000 $42,860,621 $26,860,621 $24,000,000 N/A N/A annually assisted enterprises

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 assistance to

4 improve knowledge, 250 439 189 350 544 194 58 processes, technologies and practices

Assisted enterprises applying improved

5 knowledge, 130 232 102 210 266 56 22 processes, and technologies

Assisted enterprises following recognized 6 product or process 30 59 29 70 59 - 11 0 standards

Individuals receiving

7 job skills aligned 7,000 14,319 7,319 11,000 17,608 7,608 1,926 with industry needs

Percentage change in specified Data reported 8 productivity measure +4% +34% +30% +6% N/A N/A annually (sales per employees) Objective 2. Expanded Market Linkages

62 IR 2.2: Improved Private Sector Competitiveness in Selected Industries Sub-IR 2.2.2: Expended Market Linkages Number of enterprises with

9 sales facilitated 120 249 129 210 279 69 23 through USG assistance IR 2.1: Improved Private Sector Competitiveness in Selected Industries Sub-IR 2.1.2: Expended Market Linkages Number of assisted enterprises in Data reported 10 targeted industries N/A N/A 60 110 50 110 annually with increased financing Financing accessed by Data reported 11 $1,300,000 $37,156,415 $35,856,415 $2,000,000 N/A N/A assisted annually enterprises

Number of assisted enterprises in Data reported 12 targeted industries N/A N/A 60 186 126 120 annually with increased 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 procedures 13 eliminated, 11 27 16 18 29 11 0 streamlined or simplified with USG support Number of Public- Private 14 Partnerships 15 25 10 25 27 2 0 established

Value of Public- Private 15 $1,000,000 $13,656,278 $12,656,278 $3,000,000 $15,183,369 $12,183,369 $1,449,937 Partnerships established

Improved capacity +10% over +28% over +18% over +10% over Data reported 16 of local N/A N/A baseline baseline baseline baseline annually institutions**

Project-assisted public-private

17 sector dialogue 8 27 19 12 28 16 1 platforms conducted

Increased number of market linkages 18 established with 100 3,771 3,671 150 7,753 7,603 2,960 donor assistance

63 Enhanced impact of project activitities across country was demonstrated through GIS maps. During the reporting period the web-based map for the MCP-supported National Robotics Program was updated, creating a geographical representation of the 112 educational institutions that implement STEAM education for youth, and the total number of trained youngsters by region. The map can be accessed at the following link: http://geocenterusaid.org/mapviewer/?2f8rqview

Figure: The updated web-based map for the MCP-supported National Robotics Program

MCP also updated the web-based map “Building Enterprise and Workforce Competitiveness” with FY16-FY17 data. This map shows the support provided by MCP to 486 assisted SMEs in target industries and 112 Educational Institutions assisted in implementing STEAM education across the country. The map can be accesses on the following link: http://geocenterusaid.org/mapviewer/?37dvsview.

64 Figure: The updated web-based map Building Enterprise and Workforce Competitiveness presenting MCP support country-wide support, in all assisted industies

Communications

Site Visits and Industry Events. During Y3Q2, MCP actively informed USAID and Sweden about the material impacts of the project through a regular series of Site Visits, which are in turn covered by Moldovan media to reinforce the role of USAID and Sweden in the successes of the project and its target industries. A regular program of industry events and product launches also serve this purpose. As the coordinator of Industry Events and Site Visits, MCP plays an instrumental role in developing Scene Setters for USG and Swedish Government representatives, providing detailed timelines, technical expertise, background knowledge and talking points or remarks. MCP ensured high-level participation in key project events, as follows: - Ambassador James D. Pettit (USA) – FIRST LEGO League (Feb 25) - Ambassador Signe Burgstaller (Sweden) – Tourism Gala (March 23), Moldova Fashion Days (March 17-18), - USAID Mission Director Karen Hilliard - Moldova Fashion Days (March 17-18), - Swedish Head of Development Cooperation Adam Amberg - FIRST LEGO League (Feb 25), Moldova Fashion Days (March 17-18), CIRCLE Inauguration of TUM Laboratories for students (March 20) - Minister of Education Culture and Research, Monica Babuc - FIRST LEGO League (Feb 25)

65 MCP organized a field visit for donor representatives to project beneficiary OldCom, a Chisinau-based shoe manufacturer. Mihai Dirtu, director of the OldCom factory welcomed Sergiu Botezatu, USAID Senior Project Manager; Beth Browson, USAID Program Officer; Irina Nasalciuc, USAID EG Assistant; and Thomas Alveteg, Project Manager at the Swedish Embassy to the premises. The delegation visited OldCom’s production halls, saw equipment bought with MCP support, and interacted with seamstresses and machinists Photo credit: Andrei Sochirca, MCP benefitting directly from donor Photo caption: Mihai Dirtu, OldCom Director, demonstrating investments. One inspiring stop was samples of shoes to Thomas Alveteg, Beth Browson and Doina Nistor during the factory visit in February 2018 in the OldCom design room, where Victoria, a young designer, showed the representatives her inspiration wall and the sketches of shoes and bags she and has been working on with her team of three people. Victoria’s skills and abilities were developed after MCP supported her to attend a two-week course at POLIMODA University in Italy, coordinated by ZIPhouse.

During the reporting period, MCP organized another progress visit to the Chisinau Creative Hub, currently Photo credit: Olesea Galusca, MCP under construction. Sergiu Botezatu, Photo caption: Vasile Braga, COR executive director leading the tour of the under-construction Creative Hub for the USAID Senior Project Manager USAID and Sweden delegation learned about the issuance of the Hub’s construction authorization by Chisinau Mayor’s office alongside Swedish Embassy Project Managers, Thomas Alveteg and Nina Orlova. Vasile Braga, the executive director of the Creative Industry Association (COR) and Doina Nistor, MCP COP showed the visitors the 600 sq. m. space which will become the Hub, located within the Academy of Fine Arts. The delegation made a tour of the future co-working space, library, office, conference room and other offices based on the architectural plans.

In March, USAID Deputy Administrator for Europe and Eurasia Margot Ellis came to Moldova and visited Asocni winery, StarNet IT company, Chisinau Tourism Information Center, MODA fashion store and the flagship Moldova Fashion Days event. Ms. Ellis officially inaugurated the CIRCLE laboratories at TUM alongside the Minister of Economy Chiril Gaburici, State Secretary at Photo credit: Anatol Tomsa, APIUS. the Ministry of Education Igor Photo caption: USAID Deputy Administrator for Europe and Eurasia Sarov, Head of Swedish Margot Ellis visited Moldova and paid a visit to the Tourism Information center

66 Cooperation Adam Amberg, and TUM Rector Viorel Bostan.

Branding. In Y3Q2 the project developed branding plaques for Mockup of the logo wall at TUM wineries, apparel factories and tourism B&B. All equipment purchased with MCP funds is branded in line with USAID and Sweden regulations.

MCP also developed a branded logo wall for the CIRCLE – TUM laboratories.

Media. In advance of Moldova Fashion Days, Swedish Ambassador Signe Burgstaller and USAID Mission Director Karen R. Hilliard showed their support for the fashion industry and DININIMA brands by offering an interview for the online portal EA.MD and participating in a spectacular photo shoot wearing locally made brands.

Picture: Screenshots of Ea.md interviews with DININIMA Ambassadors Signe Burgstaller and Karen Hilliard

New success stories. Folowing the visit at the OldCom shoes manufacturer, MCP developed two success stories for the donor’s webpages.

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Photo credit: Andrei Sochirca, MCP PhotoPhoto caption credit: :Andrei Mihai Dirtu,Sochirca, managerMCP of OldCom shoe factoryPhoto captionin Moldova: Mihai Dirtu, manager of OldCom shoe SOCIALLY RESPONSIBLE factory in Moldova MANUFACTURING BRINGS SUCCESS

Investments in modern production equipment lead to reduced waste and shorter production times, and increased salaries for some of Moldova’s most vulnerable workers.

Mihai Dirtu is the manager of one of Moldova’s most famous shoe manufacturers, OldCom, which employs 189 people, including 150 women. In the past 10 years, OldCom has transitioned from producing low-value technical and work footwear, to fashionable, modern shoes, but the people and processes in the factory struggled to keep up with demand. Until recently, all OldCom’s products were conceptualized and sketched by a single designer, and materials were cut by hand, resulting in a long manufacturing cycle of about 80 days, wasted materials, and low salaries for workers. The Moldova Competitiveness Project (MCP), funded by “Thanks to investments USAID and Sweden, provided OldCom with grant to install in technological computer assisted design software and incentivized the upgrade, we have company to invest in an automatic cutting machine. The learned to make a newly digitized design process combined with machine better product both cutting allowed OldCom to reduce its manufacturing cycle economically and in four times, to just 20 days, and cut waste to just 15%. terms of design quality, Reduced production times and less waste means greater which adds value to our cost efficiency, translating into fairer wages for OldCom products and to the employees. Machinists in the Moldovan apparel brand as a whole”. manufacturing industry are low-skilled laborers, 90% of Mihai Dirtu, whom are women, and earn an average salary of just $300 USD a month. The increased efficiency resulting from the OldCom Manager technology upgrades at OldCom means that their machinists can reach an average of $460 USD a month, an increase of more than 50%. “Now we are able to react more quickly to market requirements, which has proved extremely important. Since installing the modeling software and the cutting machine, all of our production has gone digital. Thanks to this, we have learned to make a better product, both economically and in terms of design quality, which adds value to our products and to the brand as a whole” says Mihai. Moldova’s apparel manufacturing industry is the country’s largest employer of women, but the majority of its production is based on low-value stitching and assembly services, using outdated technology and inefficient production methods which result in low salaries and poor working conditions. For the industry to succeed in the long term, it is critical for it to invest in advanced technology and shift towards producing fashionable, own-brand products like OldCom’s new lines of shoes. The value added for own-brand is 6.8 times higher, enabling higher profitability, investment and better paid jobs, and an industry based on own-brand production is more resilient than stitching and assembly services in a globalized manufacturing labor market.

68 MCP delivers investments in productivity and efficiency gains in apparel manufacturers like OldCom through its Streamline Manufacturing, Accountability, Resource efficiency and Transparency (SMART) program. The program incentivizes technical upgrades like CAD and automatic cutting machines though its SEED grant program, to improve product quality and manufacturing efficiency, reduce waste, and most importantly, ensure fair wages and living standards for the thousands of Moldovan women working in apparel production units. For Mihai, this new technology will allow OldCom to become a more competitive player in the regional shoe market, expand on its total of 12 stores in Moldova, Romania and Ukraine, and create more jobs. “This technology allows us, to begin with, to increase the speed of reaction to everything that is happening on the market”, he says. “We currently have 160 models of shoe, and we also want to develop accessories such as backpacks and handbags”. MCP is funded by USAID and Sweden, and supports competitivity gains in Moldova’s four key industries, including apparel production, to create a sustainable and thriving economy in the poorest country in Europe. To date, 15 apparel companies have used MCP SEED Fund grants to invest in 180 units of more complex and higher precision equipment, creating 245 new jobs, and 23 apparel manufacturers have installed high-end production engineering technology, leading to 20-25 percent average productivity gains,

Photo credit: Andrei Sochirca, MCP Photo caption: Seamstresses working in the OldCom shoe production unit in Moldova

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Photo caption: Victoria using CAD to design NEW SKILLS ALLOW shoes at OldCom Photo credit: Andrei Sochirca, MCP YOUNG MOLDOVAN DESIGNER TO FIND WORK AT HOME

Victoria Andries is just 23 years old, but already she heads up a three-person design team at Moldovan shoe company OldCom, using Computer Aided Design (CAD) to create fresh, casual shoes destined for customers in Moldova, Romania and Ukraine. “I have been passionate about fashion since I was a child”, she says, “and soon my achievements will be on sale in stores.” Thousands of young Moldovans emigrate each year due to a lack of quality jobs, and an education system which doesn’t meet the skills needs of Moldova’s key industries, including apparel manufacturing. Globalization offers many opportunities for the Moldovan apparel sector to grow into a fully-fledged export industry, but to take advantage of them companies need workers who can operate modern equipment, and create up-to-date designs. The Moldova Competitiveness Project (MCP), funded by USAID and Sweden, invests in targeted design, technology and business knowledge training for workers in the fashion industry, addressing education gaps and equipping them with creative and technical skills to increase the competitiveness of companies like OldCom.

Victoria’s passion allowed her to find her dream job in her home country, at Moldova’s leading shoe company OldCom. “In Moldova, it takes a lot of ambition and double the work to reach your goals. My greatest achievement is that I have this job, in Moldova”. Victoria now leads a team of three designers using Computer Aided Design software, technology bought by OldCom with a grant from MCP. “OldCom is a company with a modern vision, Photo credit: Andrei Sochirca, MCP Photo caption: Victoria during the creative process, that’s why I got this using skills she learned at Polimoda chance” says Victoria. The combination of her new skills with the CAD technology, provided to OldCom by MCP grant and other companies’ investment in automatization equipment, has revolutionized OldCom’s manufacturing processes, reducing the product development cycle from 80 days to 20. This improved the company’s ability to respond to customer needs and create modern designs which can command higher prices. Own-brand products, like OldCom’s shoes,

70 generate 6.8 times more revenue than the traditional stitching and assembly services traditionally provided by Moldova’s light industry, which in turn improves salaries across the whole company. MCP helped Victoria attend a training course at a leading fashion university, Polimoda, in Italy. “Even though it was a short, two-week course, it has influenced me enormously. I learned to think out of the box”, she says. “These two weeks helped me to change my approach to many things or processes. At Polimoda, they are not limited, they have no [creative] barriers, and most importantly, they taught us to escape ours”. The combination of her new skills with the CAD technology, provided to OldCom by MCP grant and other companies’ investment in automatization equipment, has revolutionized OldCom’s manufacturing processes, reducing the product development cycle from 80 days to 20. This improved the company’s ability to respond to customer needs and create modern designs which can command higher prices. Own-brand products, like Victoria’s shoes, generate 6.8 times more revenue than the traditional stitching and assembly services traditionally provided by Moldova’s light industry, which in turn improves salaries across the whole company. MCP is funded by USAID and Sweden, and supports competitivity gains in Moldova’s apparel industry, to create a sustainable and thriving economy in the poorest country in Europe. Victoria is one of 12800 apparel Industry employees from over 170 companies who have received advanced training in product quality, efficiency, and fashion management, critical for the industry to be able to shift toward value-added business models and create more, better quality jobs for Moldova’s women and youth.

Photo credit: Andrei Sochirca, MCP Photo caption: Victoria and her team of young designers

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SECTION III

HIGHLIGHTS OF ACTIVITIES PLANNED FOR FY18 Q3 (APRIL– JUNE 2018)

Wine Industry • Conduct third in-take by deploying technological audits and site visits of ASW Mentorship and PQUP programs (local STTA - TBD); • Deploy promotional programs and marketing activities to promote ASW and ‘author wine concept’; • Assist ONVV in organization of Wine of Moldova participation at international trade fairs - Arvinis and Vinexpo Hong Kong; • Assit ONVV in organization of spring edition of Wine Vernissage 2018; • Support Export Champions and New Generation Wineries to expand/penetrate target export markets; • Support new generation wineries in increased penetration of target export markets.

Tourism Industry • Organize the Descopera Festival; • Organize a press trip for international journalists (associated costs – 15,000 USD); • Implement BeOurGuest campaign second phase (associated costs – 4,000 USD); • Upgrade the Moldova.travel website (associated costs -– 12,000 USD); • Implement White Paper suggested reforms (associated costs – 3,000 USD); • Start renovating new rural B&Bs (associated costs – 30,000 USD).

Light Industry • Support Moldovan apparel companies to visit the biggest wholesale stores in Dubai and textile warehouses in Pratt region of Italy (associated costs - $6,500); • Advance SMART Program in four apparel companies (int. STTA - Martin Buecher); • Advance in implementing the Integrated Quality Management System in two apparel companies (local STTA - Ala Oberst); • Provide social audit of Ionel apparel company (associated budget -$1,650); • Implement the Flying Design Program (int. STTA - Kelly Denooyer and Liusa Fazio); • Assist ZIPhouse to implement the Acceleration Program, Young Designers Contest, Window Display Contest, and professional workshops (associated costs - $10,000); • Assist ZIPhouse to organize short term courses in top Italian Universities (associated costs - $10,000); • Support APIUS in organizing the Fashion Soiree (associated costs - $1,500); • Support Din Inima campaign and local events (associated costs - $ 15,000).

IT, PE and CSI cluster • Coordinate activities under STEM Discovery Week; • Finalize the impact analysis of the Robotics program and the design proposals for the FCL pilot institutions; • Assist in coordinating a study visit to Estonia of FCL pilot institutions representatives; • Organise FabLab Chisinau official opening; • Initiate the Creative Hub construction.

Other Technical Activities • Provide ongoing support to Prime Capital for the energy efficiency DCA agreement; • Monitor DCA in industry growth; • Support Starnet to capitalize the DCA quarantee.

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