Afghanistan: Opportunities for investment abound

| April 4, 2015 | 0 Comments
Carpets are among the items Afghanistan currently exports to Canada.

Carpets are among the items Afghanistan currently exports to Canada.

Afghanistan occupies a key strategic location, linking Central Asia with South Asia and providing China and the Far East with a direct trade route to the Middle East and Europe. Due to its strategic location as a “land bridge,” our government believes strengthening regional co-operation will contribute to stability and prosperity. To that end, Afghanistan has joined several regional trade organizations, and has, with partner countries, signed more than three dozen agreements, protocols and memorandums of understanding on trade, commerce, regional co-operation, transit and transport.
Since the collapse of the Taliban government in 2001, we have established trade relations with North America, India, Pakistan, Iran, Turkmenistan, the EU, Japan, Uzbekistan and others.
The total value of imports from Canada to Afghanistan is approximately $41 million and includes meat, electronics, vehicles and non-alcoholic beverages. The value of exports from Afghanistan to Canada is between $3 million and $4 million and includes dried fruits, carpets and marble.
At the embassy, we aim to expand on existing trade relations. For example, Afghanistan bought its financial management information system from Ottawa’s Free Balance Inc. Its government taxation software came from Quebec’s CRS Sogema Inc.
But Canada and Afghanistan can do better. Afghanistan’s private sector has introduced Canadian canola oil, a raw material used in everything from paper to pulses, but it is imported through secondary markets in Malaysia and Dubai.
There is potential for Canadian companies in Afghanistan’s infrastructure plan for railways, airports and highways. These bids are mostly financed through the Asian Development Bank, World Bank and the international community.
The natural resources sector is another that Canadian companies can explore. The value of Afghanistan’s natural resources is estimated at up to $3 trillion. It boasts extensive deposits of natural gas, petroleum, coal, marble, gold, copper, chromites, talc, barites, sulfur, lead, zinc, iron ore, salt, precious and semi-precious stones and many rare-earth elements. Geologists have also found indications of abundant deposits of coloured stones and gemstones, including emerald, ruby, garnet, lapis, kunzite and tourmaline.
In 2008, Afghanistan signed a copper mine deal with Metallurgical Corp. of China Ltd. for a $2.8-billion project and an annual income of about $400 million to the Afghan government. In addition, Hajigak iron-ore mine, 210 kilometres west of Kabul, is believed to hold between 1.8 billion and two billion metric tonnes of the mineral used to make steel.
Similarly, AFISCO, an Indian consortium led by the Steel Authority of India Limited (SAIL) and Canada’s Kilo Goldmines Ltd., is expected to jointly invest $14.6 billion to develop the Hajigak mine. Afghanistan also has several coal mines, but they need to be modernized. New hydrocarbon and mineral laws, meanwhile, give generous incentives to those investing in the mining sector. Companies involved in training in mining and its safety are in particularly high demand.
Afghanistan has set up a good banking system that should rapidly boost the economy. The government recently passed anti-money-laundering laws and invites Canadian banks to open branches and work with local banks in capacity building.
Further, the government is committed to transforming Afghanistan’s economy from one that consumes to one that exports. Economic policies aim to establish a sustainable relationship based on trust and continuous co-operation between government and the private sector. Private-sector competition is not enough and to that end, we have developed a comprehensive export strategy that will solve the challenges investors encounter.
The new government will improve the trade and transit relationship with regional countries and decrease the industrial operation costs, ensuring that capital is circulating inside the country.
So far, our biggest corporate investors have been Coca-Cola, Pepsi Co., ING, Standard Chartered, DHL, KPMG and Ernst & Young. Canadian investors include Kilo Goldmine, Ellis Don, Appleton Consulting Inc., Canaccord Financial Inc., Heenan Blaikie LLP and Canada Rail, which recently won the Afghanistan Rail project with Tajikistan.
There are many good reasons to invest in Afghanistan:
• The country offers a pro-business environment with legislation favourable to private investments, specifically the taxation regime;
• Afghanistan is rich in natural resources;
• It has one of the lowest customs tariffs in the region, low tax rates, freely exchangeable currency with stability (USD1=AFA57), liberal investment law that allows 100 percent foreign ownership and profits to be taken outside the country;
• Afghanistan is a gateway to investment in Central Asia.
Your investment is a business venture, and an investment in regional stability.

Sham Lall Bathija is ambassador of
Afghanistan. Reach him at 613-563-4223.

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Sham Lall Bathija is ambassador of Afghanistan. Reach him at 613-563-4223.

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