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Afghanistan: Commerce Minister, Others Seek Business 'Matches'

A two-day event held outside Washington in early October, titled "U.S.-Afghan Business Matchmaking Conference 2005," brought together government and private-enterprise representatives from both the United States and Afghanistan with the goal of promoting joint ventures, partnerships, and investments in Afghanistan.

The conference included Afghanistan's Commerce Minister and senior adviser to President Hamid Karzai Hedayat Amin-Arsala; Agriculture Minister Obaidullah Ramin, and Mines and Industry Minister Mir Mohammad Sediq.

Looking back to post-11 September 2001 events, Amin-Arsala said the strategic partnership between his country and the international community, led by the United States, brought about the downfall of the Taliban regime and established a democratic system in a country that was the epicenter of international terrorism. Now, Amin-Arsala said, Afghanistan seeks a partnership between business communities in Afghanistan and in other countries.

Amin-Arsala called a "socially responsible" private sector based on a free-market system "essential for the establishment of a free and democratic" society in Afghanistan.

Reviewing his country's economic development since the collapse of the Taliban regime in late 2001, Amin-Arsala said the Afghan economy has enjoyed double-digit growth in the last three years. He attributed this growth to the policies of the Afghan authorities and the end of a long drought that had decimated that country's agriculture-based economy.

Amin-Arsala discussed his country's achievements in establishing a stable currency and passing laws on banking, taxation, and customs. "Our trade regime is the most open in the region," he said.

According to Amin-Arsala, Afghanistan has adopted a policy of special trade preferences with the United States; secured observer status within the World Trade Organization (WTO) and submitted its application for full membership; and recently finished drafting a new investment law that should be presented for approval to the country's cabinet in a "few weeks" and which he predicted would be "the most liberal" in the region.

Amin-Arsala allowed for mistakes by acknowledging that some legislation and other decisions affecting investment in Afghanistan might have problems. But "we are welling to listen" to rectify such problems, he added.

Amin-Arsala urged attendees to consider Afghanistan's geographical location as the connector of landlocked Central Asia to South Asia and the Middle East, and he said potential investors in Afghanistan should "think regionally."

Amin-Arsala stressed that the objective of development in his country cannot be attained without robust participation by the private sector. The presence of many firms in the conference attested to the fact that some investors are seeing that country as a potential business partner, however, unless Afghanistan's overall security situation improves, leading to an improvement of transportation links around that country, most low-risk investors are likely to stay away from long-term commitment there.

Moreover, while Amin-Arsala touched on what he described as the country's investor-friendly approach, some have criticized that country's new tax laws, which impose a flat tax on profits. Some would argue that a country that presents significant security risks such as Afghanistan -- and which is seeking to attract investment -- ought to provide tax incentives and perhaps be thinking in terms of free-trade zones in areas of the country that enjoy relative calm.