Harnessing the Export Potential of Indigenous Products to Lift Rural Economies

Thailand’s OTOP, modeled after that of Japan, stimulates the rural economy by supporting locally made products—ranging from handicrafts to agro-food products and other household items. Subcommittees at the district and provincial levels identify promising products for development, which are integrated into their respective development plans and annual budgets. Local communities receive official support, such as training and soft loans.

OTOP products are evaluated and awarded based on several factors, including export-worthiness and their relevance to the local society and culture. Top performers tend to gain better access to financial support, training, and provision of production equipment. As of 2020, the Thai government continues to invest in OTOP. Despite allegations of the OTOP functioning as a conduit for patronage politics, it has been emulated as a best practice model in other Asian countries, such as the Lao People’s Democratic Republic and the Philippines.

Similarly, in Viet Nam since 2006, OVOC has been developing villages’ capacities to offer place-specific goods and services. OVOC has not only stimulated rural entrepreneurship but also empowered local authorities with more autonomy to reverse rural depopulation. It is also correlated with tourism development, increasing handicraft sales as well as stimulating the growth of related industries, such as transportation and tour provision. Some of the handicrafts have gained popularity both within and outside Viet Nam.

Several reasons compel the CAREC—GMS comparison: Kazakhstan, Mongolia, Thailand, and Viet Nam have comparable GDPs per capita, rural populations, continued reliance on state-owned enterprises (SOEs), and levels of value-added agricultural activities (except for Kazakhstan). There is much policy learning to be compared and contrasted. For example, Mongolia and Kazakhstan can emulate the GMS’s growing integration with wealthier, more advanced East Asian countries to usher in additional investment and technology, as well as stronger commercial and socioeconomic exchanges.

Camel wool from Mongolia

Camel wool faces not only competition from cashmere but also multiple production challenges. Herding, harvesting, and processing camel wool entails multiple complicated processes. The wool itself also varies both in quantity and quality from herd to herd, depending on not only herding practices but also environmental factors, such as temperature, pasture type, and dust pollution.

But camel wool has its advantages. Camels have far more sustainable dietary habits, and their wool costs a tenth of cashmere but has excellent thermostatic properties, durability, and lightness.

Mongolia has its own One Settlement, One Product program, which has helped finance, develop and market camel wool and related products. It has also developed and improved livelihoods in rural herder communities, bringing in benefits, such as pasture rehabilitation, ecosystem support, and maintenance of traditional nomadic culture. Progress has also been made to raise camel wool’s value, such as identifying baby camel wool as a premium product, developing new harvesting and processing methods and standards, creating new product lines and streamlining production, and establishing certifications and incentives—all converging in a growth in camel herd sizes.

The value of adult camel wool can also increase with enhanced harvesting and processing methods, selective breeding, and finding more uses for camel wool. It offers a cruelty-free alternative to goose down in bedding and outerwear. Its coarser hair can be developed into construction insulation materials and other marketable products, such as souvenirs. However, these will require additional research, integrated involvement, and institutionalization on multiple fronts via the OSOP initiative. Geographical indication verification and traceability systems can also create more value for Mongolian herders.

Halal lamb in Kazakhstan

Kazakhstan has yet to implement its own program, but it is holding discussions with the Kyrgyz Republic to learn from the latter’s OTOP experience. The program would support locally made products and create demand in domestic and international markets. If the program takes off, a large number of Kazakhstani rural households is expected to benefit from an expanded and premium halal lamb industry.

As halal meat requires careful attention and strict adherence to regulations, it is important to maintain standards through proper halal certification. However, the halal certification process in Kazakhstan is currently underdeveloped. The OTOP program can start with standards and certification by unifying its various standards to ensure product integrity. It can also look into subsidizing halal-specific certification of facilities for premium household lamb. A long-term solution involves developing an identification-cum-tracking system to depict the lifecycle of purebred native lamb. This is critical to ensure gene-to-fork traceability, which is especially important for virtually all premium products.

1. A geographical indication program requires steadfast, consistent leadership from the national and local governments, and comprehensive policy development. These are essential for fostering and catalyzing dialogue with foreign partners. Timely, committed state support (financial and technical) will also help ensure that policies and developments are sustainable.
2. Initiatives should be driven by the local communities because they are the ones with on-the-ground knowledge (e.g., whether goals should be more economic- or social-centric).
3. At the early stage, it is worthwhile to target communities that will most likely yield results, creating “easy” wins. Once such easy wins are attained and demonstrated, more private sector players would be drawn to the industry. The importance of private sector participation must be reiterated as one of the key goals of programs like OTOP, which encourages bottom–up entrepreneurship.
4. As Mongolian camel wool and Kazakhstani halal lamb meat are highly place-specific products, any related policies must carefully consider issues pertaining to their locales.
5. Checks and balances should be installed. For example, there should be clear objectives and reasons to justify granting of incentives and sunset clauses to prevent wastage and inefficiency. Products should be evaluated and awarded through a committee involving multiple ministries as well as the private sector. These measures will ensure private sector contribution, rather than relying entirely on government support.
6. While national governments can provide policy development and coordination for implementation and product premiumization, as well as facilitating trade and research and development, local governments also play an instrumental role. They can operate local OTOP centers, allocate subsidies, educating, and streamline support for herders, certification, and quality assurance. Such community-based capacity-building programs will rely heavily on the groundwork laid down by the local governments.

The road ahead will likely be full of challenges, especially given the COVID-19 pandemic, but the flip side is that both Mongolian camel wool and Kazakhstani halal lamb meat are projected to be in-demand when regional and global economies recover. Both countries can take full advantage of this as an opportunity for rural industrialization. In turn, rural development can help alleviate overcrowding and ensuing issues, such as healthcare concerns in the urban hubs.

L. Yin-nor and G. Lim. 2021. Community Entrepreneurship in Central Asia: Learning from the “One Tambon, One Product” Program in the Greater Mekong Subregion. Xinjiang. CAREC Institute.