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Afghanistan: After Three Years Of Reconstruction, Government Says Country Is Back In Business

A small business operator in Kabul The Afghan government is holding a series of promotional seminars throughout the United States in an effort to woo U.S. investors with promises of efficient business registration, favorable taxation, improved security, and opportunities for investment in the food, tourism, and textile industries. After three years of reconstruction, the government says, Afghanistan is back in business. It says the economy has been growing at an average annual rate of 20 percent and that growth is forecast to remain strong over the next decade. The main selling points are the country's central location and the determination of the current government to establish a better investment climate than those in neighboring Central Asian states. RFE/RL attended a recent Afghan investment seminar in New York and filed this report.

New York, 10 October 2005 (RFE/RL) -- The Afghan government says that, in the last two years, more than 3,000 new investment projects have been registered in the country, totaling $1.3 billion. Almost half of that money, it says, comes from foreign investment.

Afghan Commerce Minister Hedayat Amin Arsala told RFE/RL that Afghanistan's location makes it a natural transportation hub for joint energy projects -- for instance, for delivering oil and gas from Turkmenistan or Kazakhstan to India or Pakistan.

"The pipelines will have to go through Afghanistan because that's the shortest route to India and to Pakistan," Arsala said. "And Afghanistan can also serve as a bridge between Central Asia and South Asia. So, for all those [reasons], I think, we're in a very good position. I mean, we're all in a good position to have trade from all the way from Russia to India, from Central Asia to India."

Without naming countries, Arsala expressed disappointment with the travel and commercial arrangements Afghanistan has with some of its Central Asian neighbors.

"The trading arrangements, the transit arrangements, and things like that have not been worked out as we would like to see them work out," Arsala said. "And at the same time, of course, they are going through a process of change, and change, of course, takes time. And I think that there's enormous potential in those countries. It would be a shame not to realize the advantage of all that potential."

The rugged terrain of Afghanistan, Arsala said -- combined with its rivers, mountains, and rare wildlife -- make it a perfect spot to develop eco-tourism:

"Tourism is going to be one of the greatest possibilities in Afghanistan and in that region, particularly if we work together [and] organize tourism arrangements," Arsala said. "My feeling is that security is not really a big problem. It's exaggerated when people talk about these things outside Afghanistan."

Security Concerns

Security is, nevertheless, a major concern for potential investors in Afghanistan. More than 1,200 people have been killed in fighting across southern and eastern Afghanistan since the spring -- most of them suspected neo-Taliban fighters. In the latest violence, a prominent former militia commander and three other people were killed today by a suspected suicide bomber in the southern city of Kandahar, and another blast followed within hours.

There are currently some 12,000 NATO-led troops in Afghanistan, plus a separate force of more than 20,000 U.S.-led troops. Plans are under way to increase deployment of NATO-led troops by next year in southern Afghanistan.

Omar Zakhliwal is the president of the Afghan Investment Support Agency, which has been established within the framework of Commerce Ministry to facilitate and promote investment in Afghanistan. He said the overall security situation in the country is not being accurately portrayed by the media.

"Yes, we have incidents here and there, but people are going about their lives," Zakhliwal said. "There are already investors who are on the ground and doing business. In the past three years that I've been in Afghanistan, I do not have an example of an investor coming to Afghanistan and then leaving for security reasons. That's the indicator of the situation we have on the ground."

Corruption An Issue

Afghanistan, Zakhliwal said, is known for its hospitality toward non-Afghans, and he said there are more than 10,000 foreigners enjoying life in Kabul today.

Corruption is an issue, he conceded, but he said the government is determined to tackle the problem.

"There are corruption problems," Zakhliwal said. "Given the background of Afghanistan, it is only to be expected. But lots of improvements have taken place. I say one example of this [is] that anybody entering Afghanistan will get their [business] licenses within three to four days, without a penny being paid for bribes or anything like that."

Mariam Nawabi, the commercial attache at the Afghan Embassy in Washington, pointed to the importance of engaging female entrepreneurs in investment opportunities. Despite the image of oppressed Afghan women, she said, there is an entire class of female entrepreneurs working in the construction, transportation, and food industries.

At this point, she said, most of the businesses are family-related and locally operated. The main challenge for women, she said, is to become integrated into the business system and to get more global exposure.

For female entrepreneurs coming to Afghanistan from abroad, she told RFE/RL, the overall experience has so far been positive.

"For women who are trying to do business in Afghanistan coming from the outside -- foreign women coming -- the challenges are the same as the ones that the men may have when they enter Afghanistan," Nawabi said. "Just finding local partners, information, finding out how to best take their project forward. And I have met many American businesswomen who are moving forward with their projects. When they go to Afghanistan actually, they have not expressed to me any problems that they’re having dealing with the men."

The lack of infrastructure and a suitable transportation network remain major challenges for foreign investors in Afghanistan, as well as the limited know-how and global perspective of Afghan entrepreneurs. Current law also does not permit land ownership for foreigners. They can lease land for up to 99 years.

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