Asian Highway investment forum & investment opportunity FOR AFGHANISTAN By: Mohammad Asghar Anwari Legal Expert of IP-WTO Ministry of Commerce & Industry October / 2013
1. Introduction Afghanistan is located in central/southern Asia and landlocked among Iran, Pakistan, Tajikistan, Uzbekistan, and Turkmenistan. It links Central Asia to South Asia, providing most Central Asian countries with their shortest access routes to seaports, chiefly in Pakistan & to Iran ports via Chabahar & Bander Abbas. Poorly managed border crossing points are bottlenecks to the movement of goods & passengers. Administrative management and supply chain security staff must balance the need for revenue collection, trade facilitation and inspection. Reports from many countries prove that required border management reduce costs and time delays at border crossing points and focusing inspections on risk traders and carrier s s increases revenue collection &, expand trade
Challenges Lack of integrated, continuous, result-oriented and comprehensive Master Plan assisted by donor resources. Limited cooperation by neighboring countries despite of Afghanistan membership in ECO, CAREC, SPECA, SAARC and UNESCAP. Additional issues, including terrorism, movement of dangerous goods, arms & ammunition, narcotic and human trafficking as well as transiting energy sources. The lack of training, particularly the technical and professional training necessary for fully functioning borders staff. There is no central body that possesses both the authority and the responsibility to develop, coordinate, or implement a guiding strategy for developing border security, customs operations and ICD requirements.
Role of the Ministry of Commerce & Industry Benchmarking factory-to-ship trade facilitation performance. Identifying trade and transit barriers and working with other Ministries reducing trade and transit barriers. Exercising greater control over the movement of goods across the country s s borders while providing trade facilitation. Improving the capability, proficiency and professionalism of the Ministry by identifying and providing the necessary: regularity services, technical assistance, training and equipments and sustainable support via donor assistance. Cooperating among the governments of the region to expand trade, harmonize transit/customs procedures and utilize best practices.
2.Border Infrastructure-Physical Improvement-1 With its Afghanistan s s position as the central land bridge, it is wise to review through-transport transport corridors in the light of present & future corridors and ring-roads roads being developed by spending hundreds of million dollars connecting Afghanistan to South and North as well as East to West. A) North-South & East-West Corridors: 1) North-South Corridor: This corridor comprises the following three routes: Tajikistan-Afghanistan Afghanistan-Pakistan section (about 2,200 km) via Shir Khan Bandar & Ai Khanum going to Turkam, Spin Buldak & Ghulam Khan Uzbekistan-Afghanistan Afghanistan-Pakistan section (about 2,900 km) via Hairatan going to Turkham, Spin Buldak & Ghulam Khan Turkmenistan-Afghanistan Afghanistan-Pakistan section (about 3,200 km) via Aquina going to Turkham, Spin Buldak & Ghulam Khan.
2.Border Infrastructure-Physical Improvement-2 2) Eat-West Corridor: This corridor comprises the following three routes: Tajikistan-Afghanistan Afghanistan-Iran section (about 2,800 km) via Islam Qala or Zaranj going to Bandar Abbas or Chabahar. Uzbekistan-Afghanistan Afghanistan- Iran section (about 3,200 km) via Islam Qala or Zaranj going to Bandar Abbas or Chabahar. Turkmanistan-Afghanistan Afghanistan- Iran section (about 2,600 km) via Islam Qala or Zaranj going to Bandar Abbas or Chabahar. The two phases rehabilitation/reconstruction of ICDs:. Phase One: The rehabilitation of the followings : Traffic separation sign postings; Gates for Border Police control zone; Border Police/Custom checkpoint booths for passenger/freight control; A parking spaces for buses with inspection platform;
2.Border Infrastructure-Physical Improvement-3 Phase Two: This phase requires the provision of a two-level Customs Building with the following facilities: Terminal/warehouse Vehicle parking with vehicle inspection kits Communication facilities Emergency generators and public amenities Traffic control equipment with two-way way radio communications Drug test kits along with personal radiation detection (PRD) pagers Heavy cargo weighing and handling equipment
Border Mapping
B) Prioritizing Border Crossing Categories: Although some of the ICDs have already been under rehabilitation or reconstruction by various donors, the border development should be carried out on the basis of existing or potential volumes as shown in the table. Border with High volume Border with Middle volume With Growth potential Border with Low volume Islam Qala, Spin Boldak Hairatan Shir Khan Bander, Torgundy, Aquina Zarang & borders with Badakhshan Ghulam Khan
Major Issues to be Covered in RTAs Trade/customs procedures & customs and regulatory bodies Provisions for control procedures related to import, export, transit and transport Neceseties relating to the movement of persons & dangerous goods Requirements pertaining to payment procedures & the use of ICT Provisions relating to the commercial practices and the use of international standards
Technical Assistance Needed a) Capacity-building to assist the Government integrates into the global economy in a manner consistent with the country s s development needs, including those identified in ANDS; (b) Preparations for multilateral negotiations on trade and the implementation of the results thereof; and (c) Support for economic and commercial cooperation agreements among developing countries at the regional and interregional levels, while considering the country s s landlocked situation having structurally weak and small vulnerable economy;
General Recommendations 1. To develop a strategic plan that addresses all aspects of implementation of the border management, including detailed cataloguing of resources, equipment, training, and so forth required to expand trade, capture revenue and secure borders; 2. Establish clearly required authorities, responsibilities, and roles of the stakeholders to install appropriate management mechanisms; 3. To decide on a single authority that recruits a Port Manager at each BCP, from that lead ministry, who will be the focal point for all operations within the BCP; 4. Pursue the IBM framework, including border security, customs, anti- and counter-terrorism, terrorism, anti-smuggling operations, intelligence and data sharing; 5. To Carry an aggressive campaign for attracting additional donor support for those areas currently under-resourced resourced.
Calendar of Events for the years 2009-2010 Trade & Investment i) First Priority Sr.No. Event/Activity Remarks Venue/Date 1 a) 4 th ECO Ministerial Meeting on Kazakhstan offered to Astana, 1 st half of Commerce/Foreign Trade host these three 2009 b) 5 th HLEG on Trade and Investment events back-to-back and other related matters during the 1 st half of c) Workshop on Potential Benefits of 2009 ECOTA 2 2 nd Meeting of the ECOTA Cooperation Council. 3 rd Meeting of the ECOTA Cooperation Council. 3 Trilateral Interim Committee Meeting on Establishment of ECO Reinsurance Company Turkey offered to host. Afghanistan may host as decided by 1 st Meeting of ECOTA Cooperation Council Pakistan will host the signing ceremony of the Articles of Agreement. Ankara Date to be determined To be determined To be determined 4 2 nd meeting of the Heads of Central Banks Iran 2009 of ECO Member States 5 7 th meeting of ECO Council of Heads of Pakistan confirmed to To be determined Customs Administration and 3 rd meeting of host in 2009 the Sub Committee of Experts (SCOEs) of Customs Administrations. 6 2 nd Meeting of ECO Heads of TPOs Azerbaijan offered to 2009 host 7 EGM on Exchange of Technical Expertise Pakistan offered to To be determined by on SPS/TBT among ECO Member States host. Pakistan 8 a) 4 th ECO Business Forum; and b) 3 rd Buyers/Sellers Meeting on Building Material/ Auto Parts Industry under the implementation of 2 nd Phase of ECO Project on Expansion of Intra-regional Trade. Member States may volunteer to host. To be determined 9 3 rd ECO Trade Fair Kazakhstan Astana 10 1 st ECO Printing and Packaging I.R. Iran Tehran Specialized Fair September/October 2009. 11 2 nd EGM on Corruption and Money Kyrgyz Republic To be determined Laundering 12 Orientation Seminars on ECO Trade Net for NFPs and officials of Economic Ministries 13 Seminar on ECO Women Entrepreneurship Development To be hosted by all Member States March-June 2009 Uzbekistan To be determined by Uzbekistan 14 1 st Meeting of ECO Heads of Tax Iran To be determined
Transit Priorities The Top Three Routes: The top three routes with the potential of being the most commercially viable (in relative terms compared with the other routes). The routes were ranked in the following order of attractiveness, taking into account all factors (cost, time, reliability, and security): 2)Pakistan (Karachi Port) via rail 1)Turkmenistan Turkmenistan-Azerbaijan- Georgia (Poti Port) 3)Uzbekistan Uzbekistan-Kazakhstan-Russia- Latvia (Riga Port) Turkmenistan, in light green, is Afghanistan s most efficient route to the markets of Europe, according to an analysis conducted by TAFA. TAFA is supporting the Afghan government in identifying the best method to govern transit and trade between the two
Cross Border Transport Agreement (CBTA) Tajikistan and Kyrgyzstan are the first signatories of CBTA for Corridor 5; later Afghanistan joined. Afghanistan is prepared signatories have ratified. to ratify once Original Developing an action plan to implement key provisions Harmonizing some key documents Improving joint border cooperation with Tajikistan Working to establish Transport & Trade Facilitation committee according to the provisions of CBTA. Developing future routes (e.g. Corridor 6) for further transport facilitation in CAREC region with neighboring countries and beyond Further integrating into CAREC region through CBTA
Why is APPTA Important for Afghanistan? As a landlocked country, Afghanistan heavily relies on international trade and dependent on neighboring countries for access to sea transportation. Increase exports and speed up imports Reduce delays at border Modernize business practices and harmonize standards Promote foreign investment and economic growth
Afghanistan Pakistan Transit Trade Agreement (APTTA) 1965 Agreement ATTA replaced by APTTA signed on Oct, 2010 and enforced on 12 th June 2011. Facilitate Transit Trade for Afghanistan and gateway for Pakistan for the transit trade to Central Asia. Afghanistan gains access to Indian and Chinese markets via access to sea ports and land crossing points 1. Sost to China 1.2 billion Chinese. 2. Wagah in India 1.1 billion Indians 3. Seaports at Karachi, Port Qasim and Gawadar
Investment Promotion: Enhancing Investment Services Image Building and Branding Afghanistan Promote investment through a single agency providing one-stop stop-shop shop services Initiating PPP, B2B partnerships, Matchmaking, Lobbying and Identifying potential investors Advertising, Mass media compaigns and Investor forums Reducing Costs through improvement of inputs and capital goods Special tariff release schemes Special Economic zones (Industrial parks) Support for inputs to exports Attracting foreign direct investment Good governance, the key to investment promotion
REGIONAL TRADE Regional Economic Integration Goals To facilitate increased regional cooperation To play the central role as a land bridge between Central Asia and South Asia, the Middle East and the Far East. To connect land locked energy rich Central Asia with warm water and deep sea ports and energy deficient South Asia. Afghanistan is a member of international organizations that work on strengthening cooperation on trade, transit and transportation, such as ECO, CAREC and SAARC. Afghanistan plays a key role as a land link within the Region. As such it can help overcome bilateral problems including those concerning border trade.
Afghanistan Pakistan Transit Trade Agreement (APTTA) 1965 Agreement ATTA replaced by APTTA signed on Oct, 2010 and enforced on 12 th June 2011. Facilitate Transit Trade for Afghanistan and gateway for Pakistan for the transit trade to Central Asia. Afghanistan gains access to Indian and Chinese markets via access to sea ports and land crossing points 1. Sost to China 1.2 billion Chinese. 2. Wagah in India 1.1 billion Indians 3. Seaports at Karachi, Port Qasim and Gawadar
Investment Promotion: Enhancing Investment Services Image Building and Branding Afghanistan Promote investment through a single agency providing one-stop stop-shop shop services Initiating PPP, B2B partnerships, Matchmaking, Lobbying and Identifying potential investors Advertising, Mass media compaigns and Investor forums Reducing Costs through improvement of inputs and capital goods Special tariff release schemes Special Economic zones (Industrial parks) Support for inputs to exports Attracting foreign direct investment Good governance, the key to investment promotion
Practical yet Beneficial Recommendations 1. Coordination of donor assistance via drafting, implementing, monitoring and evaluating a Master Plan; 2. Supporting each border by ICD (Inland Clearance Depot) totaling more than 12 with ICT interfaces; 3. Improving secondary legislation in consultation with stakeholders while reforming and making effective use of trade & transit agreements (bilateral, multilateral & regional) ;. 4. Developing performance indicators while expanding the use of the best international practices, including international standards and conventions. 5. Actively participating in the various regional organizations on economic and commercial cooperation, including ECO, CAREC, SPECA, SAARC and EurAsec.
Concluding Remarks 1. During the last ten years, private investment has had a strong and rapid growth in the country. Share of private investment increased from 1.3 percent of GDP in 2003 to 8.6 percent in 2011. 2. WTO Membership will allow Afghanistan to (i) fully integrate into the World Economy and the multilateral trading system, (ii) find and play effectively its role in the global economy and to (iii) greatly increase and fully exploit its economic,trade and investment potential. 3. As far as investment priorities are concerned, the extractive industries, which already attract growing interest of private investors, as well as others of Afghanistan s s productive sectors, such as agriculture and energy, will be crucial in attracting private sector investment in the interest of sustainable, inclusive economic growth and job creation in Afghanistan. 4. Afghanistan has become a very active participant in regional economic co-operation operation and integration in recent years
LAND LOCKED COUNTRY Pakistan and Iran are currently the two main countries for access to a sea port: Pakistan : ports of Karachi, Port Qasim and Gawadar; Iran : ports of Cha Bahar and Bandar Abbas Presently, the Pakistan routes handle most of the relief and donor cargo while the Iranian routes handles most of the commercial freight 26
LAND LINK COUNTRY Afghanistan has a strategic location: for linking Central Asia with South Asia a crucial transport link between Pakistan and Central Asia, and, provides most of Central Asia with its shortest access to the sea, in comparison with routes to the Black sea, Europe and China 27
ACTIONS TAKEN BY AFGHANISTAN (CON T) 2. Streamlining border crossing formalities to reduce high transit costs at the borders. The objective is to: require a minimum of documentation and formalities; controls not to cause excess slowing down or a prolonged stoppage allow rapid transit without bureaucratic delays; clear the goods with maximum speed and minimum documentation; and, eliminate the cost and uncertainties introduced by numerous checkposts, taxes, fees and informal payments 28
ACTIONS TAKEN BY AFGHANISTAN (CON T) Link Road 1100km to link the Ring road with the border posts of surrounding countries: Kabul Jalalabad - Torkham 224 on going construction Kabul Gardiz 125 km survey on going Gardiz Khost 105 km design completed Khost Ghulam Khan 70 km planned Jalalabad Asmar 130 km Survey completed Kandahar - Spin Boldak 104 km (funded by ADB) will be completed by end 2004. The first layer was completed by end of Dec 2003; Dileam Zaranj 212 km survey Completed Haeat Islamqala :120 km completed Harat Torgundi 119 km planned Pulikhun Sher Khan Bandar 169 km on going construction Pulilhum Hairtan 265 km on going construction 29
ACTIONS TAKEN BY AFGHANISTAN 1. Constructing new links, or rehabilitating the existing networks Ring Road of 2237 km road will be constructed to connect most of the provinces to each other Kabul Kandahar 485 km completed Kandahar Herat : 456 km on going survey Herat Andikoy 550 km : on going construction Pulikhun Dushi 43 km planned Dushti Kabul : on-going construction 30
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