International Security Assistance Force, Afghanistan
Business in Afghanistan Climate Improving
Brigadier General Mark W. Palzer, Chief, Combined-Joint Logistics
International Security Assistance Force, Afghanistan
Business Climate in Afghanistan: •Current Climate – Afghanistan offers new and expanding business opportunities through franchising, mining, NonGovernment Organization (NGO) investments, and telecommunications •Future Climate – Government of Afghanistan is proposing new pro business legislation, pursuing membership in trade organizations and NGOs, and working to become a regional hub for business •Ease of Doing Business – From war zone to security zone, rules and legislation to tackle public sector corruption, and foreign investments 2
International Security Assistance Force, Afghanistan
Current Business Climate: •Current Businesses •Natural Resources •Nationwide •Contracts
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International Security Assistance Force, Afghanistan
Source: The Asia Foundation, Afghanistan in 2012: A Survey of the Afghan People, page 73
Availability of jobs is a significant problem and access to education for children is more than adequate 4
International Security Assistance Force, Afghanistan
Ten Year Master Franchise Contract with Afghan Businessmen
Distribution Agreements with Afghan Partners
Look Who Is Doing Business In Afghanistan 5
International Security Assistance Force, Afghanistan Estimate of $1 trillion (USD) of Extractable Metal and Mineral Resources
1. Khanneshin – Carbonatite
10. Tourmaline – Tin
19. Kunduz – Celestite
2. Balkhab – Copper
11. Karnak-Kanjar – Mercury
20. Herat – Barite and Limestone
3. Hajigak – Iron
12. Nalbandon – Lead and Zinc
21. Bakhud – Fluorite
4. Takhar – Placer Gold
13. Panshir Valley – Emerald
22. Uruzgan – Tin and Tungsten
5. Anyak – Copper
14. Katawaz – Gold
23. Ghunday Achin – Magnesite and Talc
6. Badakshan – Load Gold
15. Chagai Hills – Travertine, Cooper and Gold
24. Nuristan – Pegmatites
7. Takhar – Evaporite
16. Baghlan – Clay and Gypsum
25. Namaksar – Lithium Salts
8. Kundalyan – Gold and Copper
17. Zarkashan – Gold and Cooper
26. Godzareh (Gaudi Zireh) – Lithium Salts
9. Dusar-Shaida – Copper and Tin
18. Dudkash – Industrial Minerals
27. Dashi Nawar – Lithium Salts
U.S. Department of Defense Task Force for Business and Stability Operations – Project Areas 6
International Security Assistance Force, Afghanistan
Central Asian Regional Economic Cooperation Program (CAREC)
CAREC Afghanistan Investments: •$2.1 billion (USD) CAREC Sector Projects: •Energy – 7 •Trade Facilitation – 3 •Transport – 14 •Transport/Energy – 1
CAREC has and will make $2.1 billion (USD) investments covering 25 projects 7
International Security Assistance Force, Afghanistan Afghan Information and Communication Technologies (ICT) Sector at Glance • Has attracted nearly USD$2 Billion in investment • Accounts for 12 percent of Government of the Islamic Republic of Afghanistan (GIRoA) revenues • Is led by a competent Minister • Has a thriving private sector • Employs over 110,000 people Source: Afghan Telecommunications Regulatory Agency (ATRA)
ICT is the fastest growing legitimate industry in Afghanistan 8
International Security Assistance Force, Afghanistan
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How Afghanistan ranks in comparison to 185 other national economies 9
International Security Assistance Force, Afghanistan
Future Climate: •New investment and company law •Land provision •Accession to World Trade Organization •Asian Development Bank •Mining law •Regional hub for minerals, transit, goods, services, and telecommunications
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International Security Assistance Force, Afghanistan
New investment and company law “Our Investment Law is very investor friendly. We allow 100% foreign ownership of enterprises, easy repatriation of profits, treat foreign investors identically to domestic ones, and we allow accelerated depreciation as well as tax- holidays.” — Dr. Anwar-ul-Haq Ahadi, Minister of Commerce & Industries Government of Islamic Republic of Afghanistan Business Matchmaking Conference 2012
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International Security Assistance Force, Afghanistan
Land provision • “Implementation of a standard legal and administrative framework for land management has a significant impact on private-sector investment, economic growth, and quality of life.” —Jed Barton, USAID Deputy Mission Director • “Amendment of land law will reduce land conflicts, discourage land usurpation, improve access to the government lands, strengthen private sector investment, and improve the overall legal framework for land management, and ownership.” —Minister H.E. Mohammad Asif Rahimi Minister of Agriculture, Irrigation and Livestock
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International Security Assistance Force, Afghanistan
Afghanistan Looking to Access into the World Trade Organization (WTO) Breakdown of Afghanistan’s Economy’s Total EXPORTS
Breakdown of Afghanistan’s Economy’s Total IMPORTS
By main commodity group:
By main commodity group:
Agricultural products
57.6%
Agricultural products
17.4%
Fuels and mining products
0.0%
Fuels and mining products
1.2%
Manufactures
34.6%
Manufactures
32.2%
By main destination:
By main origin:
1.
Pakistan
39.0%
1.
Uzbekistan
21.1%
2.
India
16.8%
2.
China
13.7%
3.
Turkey
9.0%
3.
Pakistan
11.6%
4.
Iran
8.2%
4.
European Union
9.9%
5.
Russian Federation
7.6%
5.
Japan
9.6%
Source: World Trade Organization, September 2012
WTO members expressed their willingness to make Afghanistan accession a priority in 2013 13
International Security Assistance Force, Afghanistan
Asian Development Bank Loan Projects Afghanistan: Contractors/Suppliers Involved in ADB Loan Projects, 1 January 2007 – 31 December 2011 Contractor/Supplier
Sector
Contract Amount ($ million)
Mumtaz Construction Group
Agriculture and Natural Resources
7.99
Gulf Home Base
Transport and ICT
7.50
Fayz Construction Company Ltd.
Transport and ICT
6.40
Shahran Construction and Engineering Ltd.
Agriculture and Natural Resources
4.89
Amin Qasim Ltd.
Transport and ICT
2.96
Human Knowledge Consulting LLC (HKC)
Transport and ICT
1.92
Samander Construction and Producing Ltd.
Agriculture and Natural Resources
1.83
Homadi General Trading Co.
Transport and ICT
1.32
Omulblad Engineering Group (OEG)
Multi-sector
1.28
Brotheran Afghan Construction Company (BACCO)
Multi-sector
0.85
Source: Asian Development Bank, Afghanistan Fact Sheet, December 2011 14
International Security Assistance Force, Afghanistan
Mining Law • Mineral rich Afghanistan has revised their Extractives Law and it will be sent to the Cabinet and then to the Parliament by second quarter of this year. The new Extractives Law is Best Practices and combines exploration and production. Operators in the country say with the passage of the revised law a "gold rush" could be sparked in the country. • Developing a vigorous mining sector in Afghanistan will create jobs, develop infrastructure, generate domestic revenue and ensure economic growth for the benefit for all Afghans. 15
International Security Assistance Force, Afghanistan Re-Establishing Afghanistan as Regional Hub of Transit and Trade Asian Development Bank (ADB) Lending: Sector (No. of loans)
Amount ($M)
%
Agriculture (8)
167.80
17.62
Energy (3)
70.50
7.40
Finance (1)
5.00
0.53
Industry and Trade (1)
5.70
0.60
Public Sector (1)
48.00
5.04
Transport and ICT (7)
338.10
35.50
Multisector (2)
317.18
33.31
TOTAL (23)
952.28
100.0
ADB Adds $754 Million to Infrastructure Projects in Afghan Road and Rail Sector 16
International Security Assistance Force, Afghanistan
Ease of Doing Business: •Security increasing •Corruption limited in corporate sector •Rule of Law •USAID
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International Security Assistance Force, Afghanistan
Source: World Bank: Doing Business 2013, Economy Profile: Afghanistan, page 7.
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Ease of Doing Business Scale
185
How Afghanistan ranks in comparison to neighboring national economies 18
International Security Assistance Force, Afghanistan From “War Zone” to “High Security Zone” How is the security situation in your mantaqa?
How safe do you feel traveling outside your mantaqa during the day?
Please tell me, in the future, do you think the conditions of your life will improve?
Source: Afghan National Quarterly Assessment Report Wave 17, Sept. 2012
Everyday Afghans are feeling positive about their safety and life prospects. 19
International Security Assistance Force, Afghanistan Views on government corruption and costs spent on bribes
Source: Afghan Business Attitudes on the Economy, Government, and Business Organizations 2009-2010 Afghan Business Survey, page 21.
Corruption is a significant issue and 48 percent of those surveyed say they pay bribes 20
International Security Assistance Force, Afghanistan Tokyo Conference, July 8, 2012: $16 billion USD Over 4 Years •
“Mutual accountability” is the basis of the Tokyo Declaration of July 8
•
Donors agreed to provide a very large amount of civilian aid to Afghanistan, $16 billion USD over four years, or $4 billion USD per year on average
•
Improve the effectiveness of aid over time by putting more 50 percent of total aid through Afghan budget channels
•
Aligning 80 percent of donor aid with Afghanistan’s priorities as embodied in the National Priority Programs
•
The Afghan government has committed to taking a number of actions and achieving certain benchmarks, primarily in governance and political spheres
The international community has committed substantial monies to improve Afghanistan 21
International Security Assistance Force, Afghanistan
July 8, 2012 Tokyo Conference and the Afghan Commitment to Anti-Corruption
Afghanistan President Hamid Karzi’s 23-page decree highlights: • Orders ministries, prosecutors, and the judiciary to fight bribery, nepotism, and cronyism. • Instructs officials to clear the attorney general's office and the courts of languishing corruption-related cases and do more than talk about bringing dishonest figures to justice. • Requests that high-ranking government officials or their relatives not be granted rebuilding contracts.
Afghan President Karzai, "We will fight corruption with strong resolve, wherever it occurs". 22
International Security Assistance Force, Afghanistan
Back Up Slides
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International Security Assistance Force, Afghanistan Confidence in Government is Bell-Weather for Political Stability
Source: Afghan National Quarterly Assessment Report Wave 17, Sept. 2012
More than two-thirds of Afghans surveyed currently think the government is going in the right direction 24
International Security Assistance Force, Afghanistan Metal & Mineral Contracts • 302 contracts for metal and mineral exploitation • 67.6 percent of Afghanistan’s Provinces have contracts for the exploitation of metal and mineral resources • 50.7 percent of contracts are for exploitation in Kabul Province • 8.6 percent of contracts are for exploitation in Nengarhar Province • 40.1 percent of contracts are for Construction Stone • 14.2 percent of contracts are for Gravel and Containing Soil
Source: Afghanistan Ministry of Mines and Industries 25