ACCI

North Economic Development Conference Discussed Challenges in Business Environment

In the last decade the northern provinces of Afghanistan made tremendous efforts to attract private investment. In order to evaluate and discuss the current challenges for doing business, the Balkh Chamber of Commerce and Industries (BCCI) organized a Development Conference in Mazar-e-Sharif on the 23 June.  Among the participants were Mr. Anwar Ulhaq Ahadi, Minister for Commerce and Industries, Mr. Ata Mohammad Noor, Governor of Balkh Province, Mr. Mohammad Ulla Batash, Deputy Minister for Transport, Mr. Sayed Mobin Sha, Deputy Minister for Finance, and Mr. Rahimi, Director of Policy in the Ministry for Economy. Furthermore, around 350 entrepreneurs participated in working groups to identify challenges and draft policy recommendations. The Federal Government of Germany and Roshan Telecommunication Company funded the Northern Economic Development Conference.

In his speech the governor of the Balkh province highlighted the significant economic growth in northern Afghanistan, but also mentioned some shortcomings in the physical environment for companies such as infrastructure and access to energy. Mr. Noor furthermore pointed out that businesses are constrained by burdensome laws, complicated tax and custom regulations in their activities. These issues related to the regulatory environment decrease the competitiveness of the private sector in northern Afghanistan. Further on, he criticized the government for earning power in supplying power to industrial sites and asked for subsidized energy prices to attract private investment in Balkh.

Mr. Mohammad Qurban Haqjo, the CEO of ACCI, mentioned in his welcome speech that private investment becomes more important considering the finale stage of the transition process. He asks both the public and private sector to cooperate in the endeavors to improve the business environment on the regional and national levels. From his point of view, especially small and medium enterprises play a crucial role for the future economic growth in the country. These companies need an environment, which enables economic growth.

Mr. Ahadi, the Minister for Commerce and Industries, stated that the commercial laws of Afghanistan already refer to international standards.  Particularly, the tax burden is the lowest in the region. Furthermore, Mr. Ahadi advised investors to assess the market before starting their business. He named a few key sectors, which offer comparative advantages to investors. Among them are dried and fresh fruits, gemstones, marble, construction materials, agriculture and leather production.

After the welcome speeches the participants were divided into seven working groups which discussed the challenges for businesses in fields like transport and trade, production of construction materials, mining and gemstones, carpet production, women entrepreneurs, and manufacturing.  After the discussion the selected heads of the working groups presented the  following conclusions and policy recommendation to the plenum:

Transport and Foreign Trade

  • Confusing responsibilities between the Ministry for Commerce and Industries and the Ministry of Transport and Aviation need to be clarified
  • Facilitation of visa or road passes for transport companies is required
  • Complex system in taxes and road tolls needs to be improved

Production of Construction Materials:

  • Introduction of quality standards for domestic and foreign construction materials
  • Quality control of imported materials

Mining and Gemstones

  • Improvement in security to attract foreign investment
  • Initiating an investment promotion campaign to attract foreign investment
  • Rehabilitation of infrastructure
  • Establishment of further training centers in northern Afghanistan to increase the capacity of domestic mining firms
  • Improvement of working conditions for mining
  • Improving the access to foreign and regional markets for gemstones
  • Awareness campaign on the new laws and regulations by the Ministry of Mines
  • Introduction of transparent tender criteria which enable competition in the market

Dried and Fresh Fruits

  • Protection of the domestic market through import substitution
  • Improving the access to foreign and regional markets for gemstones

Women Entrepreneurs

  • Establishment of sites in industrial parks only for women entrepreneurs
  • Facilitation of exposure visits to foreign and regional target markets

Carpet and Export

  • Allocation of a proper site for carpet producers
  • Measures against smuggling of Afghan carpets
  • Visa facilitation for exporters

Manufacturing

  • Provision of long-term loans to manufacturers
  • Extension of validity of business license up to three years
  • Introduction of tax exemptions for raw materials from four to six years.

The high-ranking officials from the public and private organizations stated in their conclusion remarks that they will take into account the proposals of the working groups. Especially, the ACCI promised to follow-up the issues raised during the Northern Economic Development Conference.

At end of the conference, Mr. Haqjo, the CEO of ACCI, presented a crystal trophy to the Governor of Balkh for his efforts toward growth of private sector in northern Afghanistan. Additionally, appreciation letters were presented by BCCI to Roshan Telecommunication Company and Kam Air for sponsoring the conference.