Information on Afghanistan Reconstruction

Afghanistan Investment and Reconstruction Taskforce

A significant international effort to reconstruct Afghanistan is currently underway, led by the United States and other international donors. Substantial short-term opportunities for U.S. firms are linked to the donor reconstruction effort. U.S. firms are advised to monitor programs established by international financial institutions such as the World Bank and the Asian Development Bank as well as projects that may be established by the U.S. government's $1.2 billion acceleration program.

Limited Afghan purchasing power will hinder large scale U.S. exports to this country for the foreseeable future, although there will be niche markets for specific products. The nascent commercial banking system, lack of proper telecommunications, developed transport links and a functioning legal system make this a difficult market, but one with substantial opportunities for U.S. business.

Business infrastructure, while virtually non-existent in Afghanistan, is improving rapidly. In September 2002, President Hamid Karzai signed his country's new "Law on Domestic and Foreign Private Investment in Afghanistan", allowing, among other things, 100% foreign ownership, full transferability of profits outside of the country, international dispute resolution mechanisms, and stream-lined investment licensing procedures. Since the passage of the investment law, over 5,700 investment licenses have been approved.

Afghanistan's Ministry of Commerce inaugurated in September 2003 the Afghan Investment Support Agency (AISA), a "one-stop shop" for foreign investors to receive necessary documents and other information for establishing a business venture. The Afghan government has considered privatization of state industry and the development of oil, gas, and precious and semi-precious stones to attract foreign investors, but progress in these areas has been limited.

Business development in Afghanistan is not easy for those with little international trade experience. Basic tools of doing business – from telecommunications to local staff to a decent hotel room – are in short supply and only now beginning to make the steep climb to international standards. Decision-making in the Afghan government is slow, bureaucratic, and at times non-transparent. Given the transient security situation throughout the country, insurance companies are very hesitant to issue coverage for cargoes consigned to or transiting Afghanistan. Political violence remains a general concern and needs to be factored into each business case.

For more information on commercial and financing opportunities in the Afghanistan Reconstruction effort, please visit the U.S. Department of Commerce's Afghanistan Investment and Reconstruction Task Force at
http://www.export.gov/afghanistan/index.html.

To contact someone regarding Afghanistan Reconstruction, please visit http://trade.gov/afghanistan/.