Editor in Chief: Moh. Reza Huwaida Thursday, December 3rd, 2020

Afghan Mining Investment Opportunities

Afghan market is open to domestic and foreign entrepreneurs for investment in all areas, including mining sectors, and has attracted the attention of private companies due to its favorable investment conditions.
Placing a high priority on the energy and mining sectors, the Ghani administration launched large mineral, oil, and gas development projects and the development process has been stepped up to a great extent. As a member of the Word Trade Organization, the Afghan government has enforced one of the most liberal investment laws in the region and is committed to offering low taxes and tariffs to promote trade and investment in the country. In other words, trade and transport agreements with neighboring countries, preferential trade arrangements internationally, and passage of a customs reform package makes Afghanistan one of the most open economies in the region by simplifying the tariff structure and reducing tariffs and taxes.
Both domestic and foreign investors are satisfied with regulatory issues such as business registration, tax administration, and labor law, which are clear and efficient.
A draft paper issued by Afghanistan Ministry of Industry and Commerce Investment promotion and support Directorate said that the country “highly supports the private investment in Afghanistan through its strong commitment for Investment Climate Reforms and Ease of Doing Business.” It adds, “Afghanistan provides the following incentives for investors: 0% duty on import of machineries, 1% duty on import of raw materials, carry forward of losses.” The draft said, “All approved enterprises, domestic and foreign, are treated equally by the law, unless the legislation specifically provides otherwise. In other words, once a foreign investor has been granted a license for an investment project, the government extends national treatment to that investment.”
With this in mind, China is one of the heavyweight trading partner of Afghanistan. In a commentary titled “China Contributes to the Development of Afghanistan”, published in Daily Outlook Afghanistan Newspaper on 15 March 2016, Wang Daohao, the then Economic and Commercial Counselor in Chinese Embassy in Kabul, wrote, “China is now the largest investment origin country in Afghanistan. Chinese companies have invested a lot in different sectors in Afghanistan, generating government revenues and creating thousands of job opportunities.” He added, “In the mining sector, China National Petroleum Corporation (CNPC) have invested hundreds of millions of dollars in Amu Darya Oil Project and is ready to invest more. Metallurgic Corporation of China (MCC) and Jiangxi Copper Corporation have invested about $360 million and are going to invest billions of dollars more to develop Aynak Copper Mine. Huawei Technologies and ZTE have been operation in Afghanistan for many years, and contribute a lot to the great improvement of the telecommunication services in Afghanistan.” Wang also mentioned the active participation of China Railway Shisiju Corporation, China 19th Metallurgic Corporation, and Xinjiang Beixin Road & Bridge Corporation in the infrastructure development in Afghanistan.
It should be noted that there are some obstacles before the investment, which include lack of skilled labor forces, railroad networks, and protracted conflict. As a result of the lack of skilled labors, national firms will find it very difficult to compete with those of the international. Although some returning Afghans have brought with them significant technical skills, the challenges still exist. Despite the fact that Afghanistan’s central location in Eurasia makes it a hub for goods and services and the country is benefiting from its bilateral and multi-lateral trade agreements, lack of railroads is still felt. To fill the vacuum, Afghanistan is connecting itself with neighboring and regional countries through opening air corridors for imports and exports.
However, telecommunication and banking systems are not a problem at all. Thus, Afghanistan is changing from a “land-locked” to a “lank-linked” country.
The conflict is also cited as a challenge before the mining, except for the secure provinces. Recently, the government has reportedly stepped up its struggle to stop illegal mining, which is carried out by the militants or local strongmen. The militants are believed to excavate mines illegally and smuggle Afghanistan’s mineral resource to some neighboring countries. But they are not able to gain access to large mineral resources or disrupt the legal mining. 
Afghanistan’s huge economic potential and untapped mineral deposits are beyond doubt. It is a very attractive destination for investment. Hence, foreign investors in general and domestic investors and businesspersons in particular should not miss this opportunity for investment.
The government should further support the businesspersons, uphold domestic products, and make the atmosphere more secure.