Kyrgyz High-Tech Park: IT innovation & creativity provides fuel for the Kyrgyz economy without oil & gas
(This article is translated into English, the original can be found here: https://digital.report/park-vyisokih-tehnologiy-kyirgyizstana-v-otsutstvie-nefti-i-gaza-stavka-sdelana-na-it-kreativ/)
The IT-sector in Kyrgyzstan has seen rapid development in the last couple of years. This evidence is backed by an increase in the number of IT companies, tech oriented start-ups & youth immersion in programming. As Kyrgyzstan lacks other opportunities in economic development with respect to its fossil-fuel powered neighbors, this appears to be an explanation of this growing economic niche. The lack of petroleum & other non-renewable resources seems to have also contributed directly to a focus on human resources. The creation of the High-Tech Park (HTP) is a perfect example of this phenomenon, boasting an increase of annual revenue from $1 million to nearly $3,5 million in last 3 years. These figures are considered significant for a small country like Kyrgyzstan with a modest GDP & average monthly wage of barely USD $200. However, this is only the beginning of the countries’ expected long economic journey, starting with the Park’s focus on becoming a major intellectual hub in Central Asia and in the New Silk Road. An excerpt of the discussion held between a correspondent of Digital.Report & the founder of the High-Tech Park of Kyrgyzstan Azis Abakirov (Chairman of KSSDA & owner of Unique Technologies) regarding the mission of the Park, its’ successes in the past year & future plans.
Digital.Report: What was the purpose of launching the High-Tech Park project in Kyrgyzstan?
Azis Abakirov: In 2007, a number of IT companies — including our own — united & formed the Kyrgyz Software & Services Developers Association (KSSDA). We envisaged the mission of connecting these companies with the world. Some companies were already contracted in foreign countries as outsourcing partners by this time & we believed in taking this a step further to harness the human resources potential of knowledge, innovation & creativity to its fullest. Discussions were taking place at the time on key economic issues such as Kyrgyzstans’ inability to compete with its neighbors due to a lack of a petroleum-backed investment source. Therefore, despite the odds, we decided that human resources can not only compensate but eventually replace & succeed the former. We call it human capital. & we have clearly seen this work for IT companies that have reached out in Japan, the United States & even Europe. We can confirm that our country still maintains this great potential.
Digital.Report: When & how was Kyrgyzstans’ High Technologies Park founded?
Azis Abakirov: In 2008, with collaboration from the Ministry of Transport & Communications, we started promoting the idea of creating High-Tech Park. Additionally, the Business Development & Investments Council approved our cause & supported us in this process. Having promoted this project for 5 years, a bill was passed & approved by the former President of the Republic — the honourable Roza Otunbayeva — to realize the concept of the Kyrgyz High-Tech Park as an independent industry. At that point, we began organizing & managing the sector which took us about two years, then in late 2013 we were able to deploy the High-Tech Park which instantly attracted 3 domestic IT-companies. This confirmed our perceived victory when local companies began believing in us & the project. These same companies are now considered amongst the most successful in our IT market.
Digital.Report: Three years have passed since the establishment of the High-Tech Park initiative. Can you tell us about your achievements?
Azis Abakirov: At the end of 2013, as I stated earlier we realized the project & had 3 companies join the High-Tech Park. By the end of 2014, this number increased to 8 with about 60 people working full-time at the park. Just under a year later, this number increased again to 13 with 111 people employed. Last year, we boasted 27 resident companies with 251 employees. In terms of revenue, earnings of KGS 80m (USD $1.16m) were recorded for 2014, followed by KGS 130m (USD $ 1.884m) in 2015, with last year closing in at KGS 241m (USD $3.492m). On average, a single programmer equates to an income of roughly KGS 1m (USD $14,500) annum which is something we believe is worth taking pride in given the national average of USD $2,000 for other professions country-wide.
Digital.Report: What can be said about 2016 for the High-Tech Park?
Azis Abakirov: In 2014 & 2015 we saw a large surge in exports from the service sector to our neighbouring countries. On the eve of 2016, a remarkable phenomenon occurred: companies operating in US, Japanese & European markets demonstrated interest in joining us here in Kyrgyzstan & eventually did so. These initial exports abroad are increasing daily with Kazakhstan being the biggest consumer so far, with the US in second place & Japan following in third. This export list also includes companies located in the UK, China, Hong Kong, Haiti & Russia to name a few more.
Digital.Report: How many companies are breaking-even today?
Azis Abakirov: We had a few companies join the High-Tech Park only to leave shortly afterwards. Although these cases are few & generally represent a minority in the commercial workforce of the park, this is generally attributed to the difficulty of operating on the Kyrgyz markets. Most of the companies that usually join the HTP are already well-established businesses with market experience. This is one of the major differences in knowledge & technology parks located elsewhere since their main customers are start-ups: we have established a system that will tailor to any kind of business model. This business-incubator approach is designed to invest in the technological development of any company regardless of their niche or experience in markets both locally & abroad. This means that we work a little bit differently of course, but this has not deterred locally & internationally established companies from joining our ranks. Our next intention aims to focus more support on start-up business by creating specialized incubators tailored for them.
Digital.Report: What work ethics & requirements are imposed on employees & resident companies of the High Technologies Park?
Azis Abakirov: Employees of resident companies are required to pay a 5% income tax in addition to a 12% social security contribution on a nationally averaged salary of approx. USD $240. The company pays only 1% of their total revenue to cover High-Tech Park administration fees, & that’s it! There are no sales taxes, profit or value based tariffs. However, it is mandatory that the company participate or be affiliated in the IT sector or maintain IT activities which are usually very diverse & can range from specialized gaming software to call-centre services over the Internet. There is one catch though: the company must create a service export policy of no less than 80% of its production throughput.
Digital.Report: Tell us about the three most successful companies resident in the High-Tech Park?
Free flow of ideas, people, technologies, creativity and innovation
Azis Abakirov: As there is a non-disclosure agreement between most companies operating in the High-Tech Park, I will be unable to touch up on certain sensitive topics unfortunately. However, I would like to tell you about the most interesting company — in my opinion — at the HTP: Zensoft, a US-market oriented outsourcing hub founded by a young man. They provide work for many of our local programmers & even certain experts from Belarus, the Ukraine & Kazakhstan. They have set out on the ambitious task of supplying the biggest information market in the world with software & take pride in engaging on long-term start-up projects. Many of these are the fruit of many years of intense development & have contributed to their overall success in the IT sector.
Yet another interesting company is Japan Consulting — based in Japan — focuses on the online sales of Japanese products in the Russian-, English- & French-speaking markets. Many of our multilingual experts work in their various call-center offices to provide customer service in various languages. They have provided a multitude of jobs for our workers with a focus on international culture awarness & expertises which I believe is a cornerstone in attracting even more organizations to bridge the gap with us here for a very rewarding economic experience.
Just recently, a young man engaged in processing video content for Youtube joined us as an individual entrepreneur. He creates and sells this content as a service which — in my opinion — is a very promising, specialized & cutting-edge business model with a growing demand. As a result, this will shape a demand for programmers in order to support this type of effort, thus further promoting our cause.
Digital.Report: How do you evaluate the dynamics of growth at the High-Tech Park?
Azis Abakirov: We’re seeing a rapid exponential growth curve at the park & this makes us happy. However, we’re not going to stop there: we want to raise the bar & task ourselves with creating a minimum of 50 thousand jobs in the IT sector by the end of 2030. This probably sounds too ambitious to some, but I am confident that we are both in the right direction & can sustain this motivation started back in 2011. To be fair, we are also focusing on actually producing the taskforce to fill these positions by creating an institution to train them: thus IT Academy was born last fall. With Bishkek already graduating some very ambitious & motivated students, we have started planning on opening shop in other regions of the country to expose more youth to the growing IT bubble & culture that is engulfing Kyrgyzstan en masse. There are less rules than with traditional jobs & the work is incredibly appealing while maintaining very focused intellectual challenges. They can live & work from just about anywhere so long as they maintain Internet access. This leads us to yet another initiative in the country pioneered by HTP: providing every home in Kyrgyzstan with Internet access through cooperation with service providers & operators of communications networks.
Digital.Report: What legislative support in other countries are lacking for the High-Tech Park?
Azis Abakirov: When we applied for the law to establish the possibility of a technology park we didn’t really have much in terms of preferences & were really only asking for fair trade agreement. Despite the fact that the state does not help us in any way, we are actually quite content with the way the law works as it provides us with a means to operate now. Although our story has only just begun, some international experts have already commented that at this stage the terms of operation of our park are not only the best regionally but possibly worldwide as well. Our ambitions including bridging the East & West in terms of intellectual cooperation & to create hub & magnet for talent from all around the world. Many foreigners can live comfortably in Bishkek & the High-Tech Park gives them the opportunity to live & work here.
Digital.Report: What are you planning to achieve in the coming year?
Azis Abakirov: We are currently focusing on creating the Supervisory Board of the High Technologies Park which should include 3 members of parliament, 3 government representatives & 3 members of the Software Developers Association. This will allow us to appoint a chairman for the High-Tech Park. Once the stage is set, we intend to challenge ourselves in doubling revenues of the High-Tech Park. Although highly ambitious, all the ingredients for our success are at our disposal: talented people, a motivated workforce & an endless horizon of possibilities. We may not have oil, gas or other non-renewable high-profit industrial resources to finance us or pave the road for us, but one should never underestimate the power of creative thinking, talent, knowledge & innovation which is the undeniable determinant of any long term economic success. Our real mission is to raise a nation of IT specialists who can live in Kyrgyzstan & work with the whole world!
Originally published at medium.com on March 24, 2017.