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Annual Report 2008

From thePresident's Desk

It is my pleasure to present you the Annual Report ofAfghanistan Investment Support Agency (AISA) whichdetails our achievements during 2008.

In the report you will find a significant increase in the number of new registeredinvestment enterprises, employment resulting from the investments, progress made by our

Industrial Parks Development unit, and AISA's active participation in a number ofdomestic and international investments promotion events.

In order to improve the quality of information disseminated by AISA, we have introducedmeasures to create a new data base system, and a national survey to determine the numberof officially registered and unofficial enterprises operating in Afghanistan.

I am grateful for the tireless efforts of the entire AISA team in their overall contributionand particularly to our Research and Policy Department for the preparation of this report.

Noorullah Delawari

CEO of AISA


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Annual Re ort 2008

1. Organizational Details

1.1 Structure

Afghanistan Investment Support Agency was created under the aegis ofHigh Commission on Investment in September, 2003. In the post conflictenvironment a strong need was felt both by the Government ofAfghanistan as well as the international community engaged in the reconstruction of Afghanistan for a well organized and efficient Agency forproviding investment support services both to the domestic and theforeign investors in Afghanistan. Mr. Noorullah Delawari is the foundingCEO of AISA and prior to his second innings with AISA he had served for

a three years term as the Governor of the Central Bank of Afghanistan(Da Afghanistan Bank). CEO, AISA is assisted by Vice President(Investment) and Vice President (Administration). The organizationalchart of AISA is at Annexure 1.

1.2 Functions

AISA deriving its mandate from High Commission on Investment hasbeen entrusted with the responsibility of providing single windowclearance for the investors seeking registration and investment related

services in Afghanistan. The organization is geared up to the task oftaking pro- active measures to attract investments both domestic aswell as from abroad.

The pre investment delivery of investment support by AISA is reflectedyear after year in the Doing Business indicator complied and publishedby World Bank annually. Though in line with other least developingcountries Afghanistan ranks at 162 position in the year 2009, however,in the Starting a business ranking it is at 22nd position. This is wayahead compared to its neighboring countries like china (151 rank), India(122 rank) and Pakistan (77 rank). AISA as the pre investment facilitator

of business can be credited for this achievement.

2.2 Departments

To attract facilitate and promote investment AISA has been structured infour Departments. The details of these Departments along with itsfunction have been provided in the succeeding paragraphs.

Licensing Department


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Annual Re ort 2008

Investment Promotion DepartmentThe Investment promotion Department disseminates information throughconferences, exhibition and media campaign both with in as well as out side

the country on various aspects of Afghan economy, sector policies andregulations. It also performs the task of match making between the companiesand the investors.

Research & Policy Department

The Research and Policy Department with respect to the investorsprovides them with sector specific investment opportunities afterconducting studies in those sectors. On the other hand as a think tankand reform initiator it analyzes sector issues both of the real sector aswell as the financial, monetary and trade sector. This it does to bring intime bound reforms which in turn would further private sectordevelopment in general and promote investments in particular.

Investor's Support Department

Investor's Support Department provides hand holding services to theindividual investors through the entire pre and post investment phase. Itprovides initial advice and information to the domestic as well theforeign investors on the market situation, legal framework, customduties and procedures, other taxes, availability of inputs and other

support. In addition the Department during the course of establishmentof any unit by the investors provides post investment support in matterslike double taxation, visa and other specific issues.

Industrial Parks Development Department(IPDD)

In recognition of the efficient, effective and business oriented approach,the donor community mainly USAID and the World Bank have entrustedAISA with the task of developing modern and state of art Industrial Parks

in the country. In order to accomplish this task an Industrial ParksDevelopment Department ( IPDD ) was created in AISA in 2003. TheDepartment is currently responsible for three USAID fundedIndustrial Parks in Kabul, Mazarand Kandahar. In addition withthe support of World Bank theDepartment is developingIndustrial Parks one each atHissar-e- Shahi in Ningarhar andKamari in Kabul. In discussion

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Annual Re ort 2008 Ma or Activities

2. Major Activities Conducted During 2008

2.1 Road Shows andSeminars

As part of its investment promotion mandate, AISA during 2008 heldeight international events/ road shows and organized severalinternational and national conferences within the country. The roadshows were attended by about 6060 foreign and around 187 localinvestors.

In these road shows about 40 business match making meetings and 55

business to business meetings were held. These events werebroadcasted by about 28 local and several foreign television channels. Abrief detail on the important international events organized by AISA isgiven in the succeeding paragraphs.

2.1.1 Iran (12th-17th

January, 2008)

Main objective of this road show was to create business to businessrelation between Afghan and Iran businesses, visit to manufacturingunits and making Iranian investors aware of existing investment climate

in Afghanistan. The president and CEO of AISA invited Iran's potentialinvestors to invest in Afghanistan. The Afghan delegation wasaccompanied by different industry sector representatives including fromprivate sector, Chamber of Commerce & industry and mines. AMemorandum of Understanding between Iran Chambers of Commerce &Industries and their Afghanistan counterpart on promotion of trade andinvestment was signed during this event.

2.1.2 Kuwait (4th-7th

January, 2008)

The objective of the road show was to show case investmentopportunities in Afghanistan to businessmen from Kuwait. The Afghan

delegation was accompanied by about 17 representatives of privatesector. This road show

was a follow up toPresident of Afghanistan, HE Hamid Karzai's Statevisit to Kuwait duringDecember, 2007. TheAf han dele ation visited


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2.1.3 Ghana (18th- 21st

April, 2008)

A delegation headed by Dr. Omar Zakhilwal participated in the WorldInvestment Forum (WIF) International Conference in Accra, Ghana from

18-21 April 2008.The conference was organized by WAIPA and UNCTAD.Delegates from about 192 countries which included business leaders,representatives of chambers of commerce and economic consulatesparticipated in the conference. AISA was awarded the second bestactivity award at the WIF event.

2.1.4 France & Netherlands (3rd-19

thJune, 2008)

The investment promotion road show to France and Netherlands washeld from 3-19 June within the framework of Paris Donors Conference

and Paris Business Conference. The Afghan delegation was led by thePresident of Republic of Afghanistan H E Hamid Karzai along with about35 representatives of private sector. Dr. Omar Zakhilwal the President ofAISA also accompanied the President of Afghanistan. The Investmentpromotion Department of AISA provided the opportunities for meeting ofbusiness societies of Afghanistan with investors and chambers ofcommerce and other officials from Holland and France.

The main purpose of Paris Business Conference was to make theinvestors aware in France and Netherlands about the existinginvestment potential in Afghanistan in different sectors such as

agribusiness, construction, mineral resources, banking & financialservices and trade. The conference highlighted the businessenvironment and major challenges in doing business and investing inAfghanistan and how some of these challenges such as inadequatepower supply and low access to credit can be converted into investmentopportunities for the private investors. The investment promotion roadshow toEurope was aimed at attractingthe Dutch and French investorsand their business societies

interested to investing inAfghanistan. The delegatesfrom about80 countries par ticipatedin this c o n f e r e n c e . I nt e r n a t i o n a l d o n o rcommunity pledged about 20million US dollar fordevelopment projects in the

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2.1.5 Kabul (20th-23rd August, 2008)AISA actively participated as partner in the Kabul International Agro Fair.AISA had a pavilion in the exhibition. A large number of domestic and

international business delegates participated in the Agro Fair.

2.1.6 Kabul (12th October,2008)AISA arranged conference in the Ministry of foreign affairs on 12thOctober, 2008. In this conference 17 executive delegates from UAEincluding the ambassador of Afghanistan in UAE were invited. Thisbusiness delegation met President of AISA and other representativefrom Ministry of mines, water & energy, agriculture & livestock anddiscussed and explored possibilities of funding projects. The basic aim ofthe conference was to study the investment opportunities in thesesectors. UAE promised investment to the tune of 250 million dollars inconstruction, power, agriculture, mines, transport and banking &insurance.

2.1.7 Turkey (23rd-26th October,2008)

Turkey hosted an international exhibition of business and industry inIstanbul. The delegation from Afghanistan included about ten

representatives from the private sector. The private sector participantsrepresented companies doing business in the area of machinery &machine tools, computer, automation, spare parts, electrical devices,leather, carpets, construction, construction materials, furniture, food,and services sectors.

2.1.8 China (5th-12th September,2008)

The 12th

international exhibition of business and investment was

organized in Sheyamin, China. The Afghan delegation besides onerepresentative from AISA comprised of 5 representatives from theprivate sector.


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The products of more than 100 countries were displayed in theexhibition. AISA during the exhibition and the business meetings widelydisseminated information relating to investment opportunities existing

in Afghanistan.

2.1.9 India (14th-24th

November,2008)

The 28th

India International Trade Fair was held between 14th

to 24th

November in New Delhi, India. The Afghan delegation was accompaniedby representatives of about 30 companies from different sectors ofAfghan economy which included dried fruit, carpet, handicrafts,embroidery, precious and semi precious stones, saffron and olive oil.

Saffron from Afghanistan attracted lot of business interest from Indiantraders. National and international media in India welcomed the Afghanproducts especially Afghani carpets, dried fruits and saffron.Representatives of private and public sector of 32 countries participatedin the exhibition. Afghanistan's stall covered about270 M square and was adjusted the second best stall in the exhibition.AISA received the award from the Minister of commerce and Industries,Government of India.

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2.2 Investor SupportActivities

During 2008, AISA offered individual client services for investors in thepre & post investment phases. The services also include mediations andadvice for the investors in different fields' i.e. legal framework, taxationand investment incentives. The main support activities provided by AISAduring the year 2008 have been as under:

? Resolution and settlement of commercial disputes throughmediation for companies registered with AISA.

? Facilitating the issue of visa by the Ministry of Foreign Affairs for

the foreign workers working in companies registered with AISA.? Issuing certificates to the units which are active. This certificate

enables these units to prove their functional status.? Verifying the correct status of the companies through field visits

about their activities, volume of production etc.? Liaison with revenue and custom Departments of the Ministry of

Finance to facilitate the exemption of custom duty for industrialmachinery and resolving issues relating to taxes.

? Assisted in the issuing of work permits to foreign workers from Ministryof works and

Social affairs for companies registered in AISA.? Provided assistance and handholding in the establishment ofpoultry project in

Nangarhar province.? Organized workshops and seminars to guide and solve problems

of investors in the area of income tax, corporation tax andcustom duty payment.

? Introduced international construction companies to the ministof Urban

Development to take part in the construction of Deh Sabz project.

? Facilitate import of raw materials and machinery for companiesby sorting out issues with custom houses across the country.? Shared the problems and obstacles faced by the investors with

the relevant authorities with a view to streamline the system


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Annual Re ort 2008 Industrial Park Activities

2.3 Industrial Park Activities

The Industrial Parks Development Department (IPDD) of AISA is workingto develop and offer modern, strategically located, well equippedindustrial parks. IPDD has developed/ is developing Industrial Parks atBagrami, Mazar-e- Sharif, Kandahar, Hissar-e- Shahi (Jalalabad) andKamari (Kabul). Bagrami Industrial Park is located 7.5 km east of Kabulcovering 24 hectares (52.8 acres). Kandahar industrial park is located 10km east of city of Kandahar and covers about 400 hectare of land. BalkhIndustrial Park is located 7 km north of Mazar-e-Sharif extending over anarea of about 36 hectares. Hissar-e-Shahi Industrial Park is located 22km south east of Jalalabad city. Government of Afghanistan has

approved an improved process of selection of investors, allotment ofplots, pricing of plots, lease tenure and management of Industrial Parksin line with international best practices. The new selection process ofinvestors in the Industrial Parks would be based on measurable criteriawith suitable weights assigned to these criteria. This process wouldeliminate those investor who are not credible to establish industrialunits and carry out production. To ensure transparency process theinvestor's selection committee would be reconstituted so that it hasrepresentatives in the committee from agencies other thanAISA/IPDD. With regard to ownership of plots, the allotment of long term

lease extending up to fifty years will be provided based on internationalbest practices.New ways of financing and developing Industrial Parks would beexplored. In this regard, the Industrial Parks development Authority indue course would experiment with the funding of Industrial Parksdevelopment through Public Private Partnership (PPP). In a PPP venturethe funding of the Industrial Park will be through partnership and costand risk would be shared between the Government and the privatesector companies.

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Annual Re ort 2008 Develo ments Activities

2.4 Human Resource Development.

Staff Training and Career

DevelopmentStrategic skill improvement is a key factor in ensuring the organization'ssuccess in a rapidly changing world. AISA is committed to developingand further nurturing the skills of its employees at a pace that wouldsustain the competitiveness of the organization. Development ofappropriate skills should not just be seen from an individual perspectivebut in the context of its overall usefulness for the organization. Some of

the key training programs attended by various officials of AISA are asunder:

Vice President (Investment)? !Attended Training Program on International Investment Agreements andDispute Settlements (Jordan)

Vice President (Administration)? Went for a study tour on Qualified Investment Zone and SpecialEconomic Zone (Jordan)? Attended South Asian Regional Initiative for Energy Program (Bhutan)

Director, Investment Promotion? Went for WAIPA Study Tour Program (Japan)

Director, Research & Policy? Attended UNITAR Fellowship Program on Organization Development(Japan);? Attended a conference on ECO high level expert group On

privatization of ECO member countries (Pakistan).

Media Manager? Attended a course on Web Design & Management.

Investment Support Manager? Attended World Trade Organization training (Ministry of Commerce &Industry)

Workshop on COMFAR 111 Software (Finance) attended byabout 21 senior to middle level employees.

Global Distance Learnin Network (GDLN) Pro ram


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Annual Report 2008 Developments Activities

2.5 Internship Program

HR Department of AISA is also providing opportunities to the studentsfrom various local and foreign educational institutions to work indifferent departments of AISA and on different issues such asinvestment climate, investment opportunities, investment support andpromotion. The basic aim of this short term internship program is tosupplement the theoretical class room knowledge with practicaltraining. A total of 25 internees have successfully completed theirinternship in AISA during 2008.


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Annual Re ort 2008 Macro Economic Environment

3. Macro Economic Environment

3.1 The Global Macro EconomicScenario

The world economic crises of past one and a half year are having atremendous negative impact on the trade and capital flows todeveloping countries. The turmoil which initially started in the creditmarket of United States quickly snowballed into major world widefinancial and economic crises.

During 2009, as per the Global Development Finance Report of 2009,global output of goods and services is expected to shrink by about 2.9percent. Unemployment which is soaring in the developed countrieswould get transmitted to the export dependent economies of China andother East Asian economies. GDP growth in developing countries isprojected to slow sharply but would remain positive during 2009.However, if India and China are excluded, the growth rate in GDP inremaining developing countries is projected to remain in negativedomain.

The reversal in the capital flow during 2009, the collapse in the stock

markets and deterioration in the financing conditions has broughtinvestment growth in the developing countries to a halt. This is alsoreflected in the private capital FDI into Afghanistan which has comedown to USD108.6 million in 2008 compared to USD 207.4million in 2007.

3.2 Macro Economic Indicators inAfghanistan

During 2008-09 the GDP at constant prices increased by 2.3 percent inAfghanistan compared to an increase of 16.2 percent in 2007-08. Themain reason for the slump in the GDP growth rate during 2008-09 isbecause of 16.5 percent negative growth in agriculture production.

The Industrial production increased by 7 percent in 2008-09 comparedto 7.2 percent in 2007-08. Similarly services sector including othersincreased by 16.2 percent in 2008-09 compared to 14.8 percentincrease in 2007-08. The sector wise growth figures for 2008-09 and2007-08 is given below: Gross Domestic Product at constant prices( 2002-03 prices ) in

Source: Central Statistics Organization of Afghanistan

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Annual Re ort 2008 Sources

Afghanistan is primarily an agriculture based economy. More than twothird of the population subsides on agriculture. The share of agriculturein the gross GDP is about 31 percent, whereas of services sector was 41

percent during 2008-09. Industry with a share of about 25 percent in theGDP ranks third. Since the year 2008-09 was a drought year, the cerealproduction which has a weight of 27 percent in the GDP declined bymore than 20 percent in 2008-09 compared to about29 percent increase in the previous year. In spite of the drought thefruits and livestock production increased by 5 percent and 3 percentrespectively in 2008-09.

The current year is marked by a good harvest of cereals mainly wheatand therefore it is expected that agriculture during 2009-10 maywitness a sharp recovery. With the recovery in agriculture sector the

overall growth rate in GDP would rebound back to earlier levels. Nonethe less for a consistent agriculture growth it is essential to attractinvestment in agriculture. Only about 8 % of the total arable area isirrigated in Afghanistan. Public investment supplemented by privateinvestment is required in irrigation and water harvesting.The contribution of industrial sector in the GDP was about 25 percent in2008-09. With in industrial sector the contribution of manufacturing tothe GDP is 15.6 percent followed by construction at 9.2 percent. Theshare of food and beverages in total manufacturing is about 95 percent.

This means that growth in manufacturing is totally dependent on the

growth of food and beverages sector.The construction sector is considered a part of the Industry sector inAfghanistan, whereas in rest of the countries of the world it is part ofthe service sector. Probably the construction has been included in theindustrial sector because of its linkages with the building materialmanufacturing including cement, steel, bricks, tiles, sand andaggregates, fixtures and fittings, paints and chemicals and constructionequipment. The construction sector in Afghanistan with a weight ofabout 9.2 percent in the GDP has been growing at a rate of about 10percent during 2007-08 and

2008-09. The predominance of construction is not unusual in postconflict countries like Afghanistan. Not only there is need to rebuiltinfrastructure in Afghanistan but often it is directed into constructionbecause of lack of other investment opportunities.

The share of the Services sector in the GDP at 41 percent is highestcompared to other sectors. However, in a classical growth pattern, anyleast developed economy from a preponderant agrarian economyshould first become an industrial economy and finally a service sectordominated economy. One of the inherent disadvantages of service

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Annual Re ort 2008 Investment Overview

4. Investment Overview

4.1 Trend In Initial CapitalRegistration

AISA since its inception in 2003 has been registering businesses alongwith initial proposed detial on capital and employment. The initialcapital registered with AISA since 2003 as furnished by the registeringcompanies, which includes both domestic as well as foreign, is givenbelow:

Table 4.1.1

Total Investment in (Million US$) Registered in Afghanistan(2003-2008)Sector 2003 2004 2005 2006 2007 2008 Total

Total Initial capital 721.98 656.69 565.41 1179.45 646.7 392.12 4162.35

Domestic 239.03 421.88 388.49 770.21 439.34 283.54 2542.49

Construction 52.09 195.42 201.45 131.58 141.41 167.78 889.73

Services 37.91 92.31 43.51 99.36 243.18 70.68 586.95

Industry 131.76 125.04 130.52 531.16 45.39 35.89 999.76

Agriculture 17.26 9.1 13.01 8.1 9.34 9.18 65.986

Foreign 482.95 234.81 176.92 409.24 207.36 108.58 1619.86

Construction 188.75 112.63 74.62 86.61 33.67 54.35 550.63

Services 63.42 88.61 52.53 256.85 130.11 37.97 629.49

Industry 14.87 32.27 48.1 29.62 7.61 13.07 145.54

Agriculture 215.9 1.28 1.65 36.14 35.96 3.19 294.12

The total initially proposed investment in Afghanistan has followed adownward trend since 2003 except for the year 2006. In 2006 bothdomestic as well as foreign investment took an upward swing but againcame down in 2007. The domestic investment in 2007 at USD 439.3million though less than the level achieved in 2006 has been morecompared to all the three years between2003 to 2005. Therefore, if we put a best fit curve the level of initialdomestic investment proposed by the companies would be upward

sloping between the years 2003 to 2007.The foreign direct investment in Afghanistan has been falling all alongexcept for the year 2006. It has fallen from the level of about USD 483million achieved in 2003 to USD 108.6 million achieved in 2008. Most ofthe FDI which comes into Afghanistan is by those companies which areproviding logistics or act as contractors of the UN, USAID, foreign NGOsor other donor agencies.Except for the year 2003 the share of domestic investment compared toforeign investment in the total investment has always been higher.

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4.3 Sector Wise Trend In Investment (2003 To2008)

As per the available data on total initial investment (FDI and domestic)registration, construction sector attracted about USD 1.4 billion during2003 to 2008, accounting for about 35 percent of the total investment.Services sector registered investment worth USD 1.22 billion (29% ofthe total). Industry with the total of USD 1.15 billion accounted for 28percent of the total registered investment, while agriculture sectorattracted only USD 360 million. The composition of the total registeredinvestment during 2003 to 2008 is given in the pie diagram:

Composition of Total Investment By Sector2003-2008

Agriculture, 9%

Construction, 35%Industry, 28%

Services, 29%

Construction Services Industry Agriculture

Table 4-3.1

4.4 Sector Wise Composition Of DomesticInvestment

Though overall construction sector was able to attract highestcumulative investment (domestic and foreign put together) but in thedomestic investment the industrial sector at about USD one billionaccounted for about 39 percent of the total domestic investmentbetween 2003-08.This was followed by construction (35%), services

(23%) and agriculture (3%). The sector wise domestic composition ofinvestment is furnished below in the pie diagram:

Composition of Domestic Investment By Sector, End December2008

Agriculture, 3%


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Table 4-4.4


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Badakhshan

Baghlan

Bamyan

Faryab

Ghor

Hirat

Kabul

Kapisa

Kunar

Laghman

Nangarhar

Nuristan

Paktya

Parwan

SariPul

Uruzgan

Zabul

Millions

InitialCapitalin

US$

Pe

rce

nta

ge


Percentage Share of Domestic and Foreign Investment (2003-2008)

1

36% 31% 35% 32% 28%0.8

67%0.6

0.4 64% 69% 65% 68% 72%

0.2 33%

02003 2004 2005 2006 2007 2008

Year

Domestic Foriegn

Table 4-1.4

4.2 Province Wise Distribution OfInvestment

The distribution of total investment across provinces has been highlyskewed in favor of Kabul. About 82% of the total private investment isconcentrated in Kabul followed by Herat (4%), Kandahar (3%), Balkh(3%) and Nangarhar (2%). The concentration of new investment in Kabulis because of better infrastructure, improved electricity and bettersecurity compared to the other provinces in Afghanistan. In addition as abig consumption center, Kabul is a preferred investment destination forconsumer goods producing units. Province wise distribution ofregistered investment since 2003 is given below:

Distribution of Total Investment By Provinces (2003-2008)

35003000

2500200015001000500

0

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4.5 Sector Wise Composition Of ForeignInvestment

Total private foreign investment during the period during 2003 to 2008has been USD 1.62 billion. Services accounted for (39 percent) of theFDI, followed by construction (34 percent ), agriculture (18 percent )and industries (9 percent ) The following chart shows the composition oftotal FDI flow into Afghanistan between 2003-08:

Composition of Forign Investment By Sector2003-2009

Agriculture, 18%


Services, 39%

Construction Services Industry Agriculture

Table 4-5.1

4.6. Foreign Investment By MajorDestinations

Out of the total of about USD 1.62 billion registered with AISA as FDI,about 19% has emanated from Turkey followed by UAE (17%), USA(16%) and Canada (16%). The pie chart given below provides details oncountry wise share of FDI:

Composition of FDI By Major Countires, By End 2008

Canada, 16%Kenya, 3%

America, 16%

China, 8%UAE, 17%

England, 2%

Turkey, 19% India, 3%

Pakistan, 7% Iran, 9%

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Annual Report 2008 Investment Overview

Joint venture has been a preferred arrangement of bringing FDI intoAfghanistan. The support of an Afghani partner under a joint venturearrangement has been seen as adding value to the business as the localpartner in the joint venture brings the local knowledge which is so veryessential in any successful joint venture. Out of the total FDI of USD1.62 billion about USD 294 million has come through joint venturearrangement. Out of the total joint venture FDI about26.2% are through Afghan- USA joint venture followed by Afghan- Iran(22.6%). The chart below provides the details on the joint ventureinvestment into Afghanistan.

Composition of Investmetn By Major Joint Ventures, End December 2008

A fghan-Germany, 7.0%

Canada-France,17.0%

A fghan-A merica, 26.2%

A merica-Russia,1.9%

A fghan-Iran, 22.6%

A fghan-Turkey, 9.9%

A fghan-Tajikistan, 2.7%

A fghan-P akistan, 3.6%A fghan-Syria, 5.5%

A fghan-Kazakhstan, 3.8%

Afghan-America Afghan-Iran Afghan-KazakhstanAfghan-SyriaAfghan-Turkey

Afghan-Pakis tanAmerica-Russia

Afghan-TajikistanAfghan-Germany

Canada-France

4.7. Trend in Registration of Companies with AISATable 4-6.2

During 2003 the number of companies registered with AISA was high.

During 2003 a total of3243 companies were registered with AISA out of which 1474 weredomestic and 1769 were foreign companies. The reason for such highlevel of registration was: i) high expectation of investors about futureprospects of reconstruction and economic development in Afghanistan;ii) large number of the then existing companies (especially domestic)also applied for registration. The following table shows the number ofcompanies registered during the past six years:

Total No. of Companies Registered in AISA (2003-2008)

Sector 2003 2004 2005 2006 2007 2008 Total

Total Companies 3,243 1,388 2,486 2,252 2,276 2,720 14,562


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Domestic 1,474 1,139 2,107 1,748 2,083 2,429 11,168

Construction 596 556 1299 1052 1351 1577 6,547

Services 611 149 218 229 375 461 2,075

Industry 118 401 543 421 319 351 2,157

Agriculture 149 33 47 46 38 40 389

Foreign 1,769 249 379 504 193 291 3,394

Construction 796 94 110 168 72 90 1,332

Services 717 118 171 248 93 157 1,506

Industry 30 34 68 79 23 35 269

Agriculture 226 3 30 9 5 9 287

Table 4-7.1

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Total number of companies being registered in AISA emerges out fromthe table given above. Out of 11,168 companies registered with AISAduring 2003-08 about 30 percent are foreign and rests are domestic

companies. Construction companies account for about 54 percent of thetotal registered companies followed by services (25 percent), industry(17 percent) and agriculture (4 percent).The reason for less registrationof companies in 2004 may partially be attributed to war in Iraq whichgenerated negative investment sentiments amongst the investors in thisregion. However as a result of London and Paris conference of donors in2005 and 2008 respectively there has been renewed and enhanceddonor pledges for their contribution towards Afghanistan. This to someextent helped in maintaining positive expectation amongst the investorsand therefore helped in maintaining the registration level of companies

in the range of 2250 to 2750 during 2005 to 2008.

4.8. Trend On Proposed/actual EmploymentCreation

As per the information provided by the investors at the time of renewalof license and grant of initial license more than 600,000 jobs haveeither been created or are proposed to be created by the companiesregistered with AISA. The initial euphoria of 2003 when companiesproposed to create more than 250,000 jobs gave way to more realistic

job creation numbers ranging between47,000 to 90,000 per annum during thesubsequent years.Another reason for the fall in proposed employment could be because ofthe companies engaged in construction sector started shifting to morecapital intensive technology. Increasing use of technology to remaincompetitive in the short to medium term may have had adverse impacton employment creation. This to some extent explains less thanproportionate increase in employment compared to the increase ininvestment. Sector wise employment proposed/ created by the

companies registered with AISA between 2003 to 2008 is given below:

Total No. of Employees Created by Registered Companies in AISA (2003-2008)

Sector 2003 2004 2005 2006 2007 2008 Total

TotalEmployees 254,612 89,752 86,458 67,933 46,812 80,191 627,991

Domestic 83,548 55,008 71,477 42,656 38,151 43,636 336,553

Construction 32916 28611 42759 22885 20080 29359 177,665

Services 31912 8701 7175 5032 8279 4818 66,539

Industry 9695 16580 20508 13736 9003 6970 76,649

Agriculture 9025 1116 1035 1003 789 2489 15,700

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5. Accelerating Domestic And Foreign Investment- The Problems AndWhat Needs To Be Done

5.1 Strong Private SectorGrowth

Entrepreneurial spirit is alive in Afghanistan. Investment opportunitiesare being exploited both by domestic as well as the foreign investorsand jobs are being created. However, keeping in view the opportunitiesthe performance level is still modest.World Bank in partnership with DIFID carried out an Enterprise Surveythat took place from September to November 2008, covering 1066 firmsacross 10 Afghan cities. The key finding of the Survey is that there is a

strong private sector growth in Afghanistan despite poor governance,weak factor markets and lack of innovation.

The Survey while recognizing the constraints inhibiting growth pointstowards a strong consumer demand arising from aid flow and catch upeffects of the economy moving from command to market mode. TheWorld Bank Survey in its key findings mentions that the enterprises areshowing high level of dynamism and are dominated by agribusiness,construction and trading.The latent dynamism in the private sector is well reflected in the Surveyresults were 77 ercent of the surve ed firms have lans to ex and in

6. Major Problems Confronting Private Sector: What Needs To Be Done

The investment climate Report of 2005 and the Enterprise SurveyReport of World Bank points towards certain constraints which needs tobe tackled to create a more conducive environment for growth andprivate sector development in Afghanistan. This Annual Report wouldelaborate on some of the major factors which impinge on private sectorgrowth and investment.

6.1 Improved Access ToInputs

Access to the factors of production like land, finance, skilled labor andinfrastructure items like power and roads are crucial to sustainedinvestment and growth. Improved access will require an expansion inthe supply of and a more transparent process of allocating them.

6.1.1 Access toLand

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fact that in 2005 about 56% of the firms reported access to land as asevere constraint, however, in2008 only 41% of the firms mentioned access to land as a major

impediment. With in sectors, construction sector is relatively moreconstrained with respect to land access. The severity of this constraint isreported to be higher for medium and large firms than for small andmicro firms.

6.1.1.1 Reforms in thePropertyRrightsLand related legal reforms are complex and highly time consuming as itrequires rebuilding and administration of deeds, putting in placesatisfactory dispute resolution mechanism and enforcing judicial

decisions. While Government is committed to establishing a land tenuresystem, the Industrial Parks development has partially ameliorated theland and infrastructure constraint faced by the private investors. Allinvestors in any Industrial Park after fulfilling the conditions relating toallotment of land and paying land charges would get the transfer of landtitle in their favor. Therefore, in the limited context of Industrial Parksdevelopment, access to clear land title is not a major issue.

6.1.2 Access toFinanceAccess to formal source of credit is not very significant despite recentadvances in the financial sector. Though in the last three to four yearsthere has been marked improvement in the access to finance asperceived by the firms. As per the Enterprise survey of World Bankabout 51% firms in2005 had put access to finance as a major constraint. This figure hascome down in 2008 and only about 40% of the respondent firmperceived access to finance a severe constraint. There has beenprogress in terms of financial deepening as about 51% of theenterprises reported having a bank account in 2008 compared to only30% in 2005. What is notable is that about 97% of the enterpriseshaving a bank account are satisfied with the services provided by thebanks.

6.1.2.1 Reforms in the FinancialSectorIn spite of the moderate success in access to finance it also remains afact that only a very small percentage of the Afghan enterprises have aloan with the financial institution. This is reinforced by the findings ofthe World Bank's Doing 2009 report which ranks Afghanistan at 178 of

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available to vast majority of firms until institutions supporting such asystem are adequately developed. Thus reforms in this area mustextend beyond company's law and extend to institutions underlying

transparency and accountability that will give the investors theconfidence to invest.

Not much long term financing is available from commercial banks. Mostoffer a term of year or less. There is a small number of non bankfinancial institutions (15 micro finance institutions, one credit union andone leasing company), but these institutions meet only a very smallfraction of the credit needs. There are no credit bureaus or credit ratingagencies though work is underway through Da Afghanistan Bank (DAB)to initiate the process of launching a credit bureau.

There are no arrangements for valuing and enforcing collaterals (andespecially mortgages) and no information on the credit history of theclients. These deficiencies raise the transaction costs of the banksoffering credit and other services and increase the risk of adverseselection. The currently limited access to finance and high cost offinancing present a major challenge and DAB has recognized theexisting weaknesses and has made efforts towards reforming the legalframework by drafting Secured Transactions and Negotiable instrumentslaws. The Secured Transaction (Movables) Law will address leases, sales

on consignment, vendor sales with retention and bank financing. It willcreate a central registry to register charges and provide for enforcementin liquidating collateral. The Secured Transactions (Immovable) law willclearly define mortgage transactions and Negotiable instruments lawwould cover promissory notes, cheque and bills of exchange. Sincepractically all lending is backed by collateral, legislation to facilitate theuse of collateral is particularly important.

6.1.3 Access toElectricityElectricity is a major constraint in conducting efficient business inAfghanistan. The World Bank Survey indicates that about 66% of thesurveyed enterprises in 2008 indicated power outages as majorimpediment to doing business compared to about 64% in 2005.Although several initiatives have been undertaken to improve thequality and quantity of electric supply yet it remains a major obstacle togrowth of business operations.

6.1.3.1 Reforms Issues in the Power

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Human development and training programs are being conducted toimprove and update employees' skills to enable them work efficientlyunder a commercially oriented work program.

The T& D losses in the power sector in Afghanistan is huge. It would bethe endeavor of the commercialized company to bring down the T&Dlosses to acceptable limits. This would be done by making investment inthe transmission and equipments. It is imperative that all power supplyto the consumers is metered on top priority basis. Energy audits needsto be carried out to identify areas where there is maximum opportunityto reduce losses and thereby collect more revenues. It is critical thatrequisite baseline data such as category wise consumption levels, T&Dlosses, quality of receivables and collection efficiency is accurately

assessed at regional/zonal/sub zonal levels.

The reforms may also emphasis on demand side management with theobjective of improving efficiency in end-use of electricity. Focus ondemand side management reduces the need for additional generationcapacity. Electricity saved is more beneficial than electricity generatedparticularly considering the benefits of avoided T&D losses and saving infuel through positive impact on environment. DABM should takeextensive consumer awareness campaigns on energy conservationmeasures.

The key element of reform needed in the power sector is tariffrationalization to enable the sector to move towards recovering itsaverage cost of supply. The broad guidelines in this regard may include:i) tariffs should progressively reflect the cost of supply, ii) consumersinterest should be safeguarded while reducing cross subsidies, iii)competition, efficiency and economic use of resources should beencouraged.

The process of reforms in the power sector cannot achieve the desired

results overnight, nor the changes be brought overnight. The reformsin the power sector have been initiated with the corporatization ofDABM. However, it would take about four to five years of reforms tomeet the objectives of reforms process. The success of reforms in thepower sector would depend on its acceptance by all stakeholdersincluding, Government, donors, consumers, and the employees.

6.1.4 Trade andInvestmentA countr 's trade olic is a ke to effective artici ation in the lobal

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delays and administrative delays are eliminated. It is basically with thisidea that Government of Afghanistan is actively considering building upof Export Processing Zones (EPZs). Government of Afghanistan is also

aware of the immense possibilities in export promotion which would begenerated consequent to creation of Reconstruction OpportunityZones (ROZs) which would cover whole of Afghanistan. All goodsproduced in the ROZ would have duty free access to the US markets. Forexport promotion the EPZs besides having well developed infrastructurewould also have 100% custom duties exemption on import of rawmaterial and machinery being used by the EPZ units. AISA in this regardhas carried out a preliminary exercise and has identified some defunctSOEs which can be converted into Economic Zones/EPZs.

6.1.5 Present Tariff Structure in Afghanistan Is it Conducive to IndustrialGrowthIn 2004, Afghanistan passed new custom legislation in compliance withinternational standards and best practices and became a member ofthe World Customs Organization (WCO). Harmonized System (HS) ofclassification (HS2002) was introduced. The new tariff schedule had sixtariff bands with rates varying from 2.5% to 16% with some prohibitedgoods. About50% of the tariff lines had duty of 2.5% or less and about 43% with duty

rates between 2.5% to5%. The duty rates were of less cascading and, therefore, inverted innature i.e. on several raw materials and intermediate goods the dutyrates were higher than on finished goods. This anomaly to some extenthas been removed in 2007 when a cascading duty structure wasintroduced. However, the number of tariff lines went up from 7 to 12.

The details of the present tariff schedule are as under:

Afghanistan Tariff Schedule, 2007

Tariff Rates No. of tariff lines Percent of tariff lines

Prohibited 43 0.830% 25 0.48

2.50% 1671 32.14

3.50% 46 0.88

5% 2104 40.47

8% 27 0.52

10% 1087 20.91

12% 5 0.10

16% 170 3.27

20% 6 0.12

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There is a scope of reducing the number of tariff lines and bring it inline with the tariff lines existing in other countries of this region.However, the cascading rate structure should continue. At any point of

time, tariffs on inputs should be lower than (or at least equal to) thetariff on finished products. More generally, tariffs on products arevertically linked through input-output relations should have a cascadingshape from high to low according to their position in the productionprocess. The domestic producers (FDI or domestic) in Afghanistan sufferfrom certain inherent bottlenecks in terms of poor infrastructure, highskilled labor rates, transportation and logistics and, therefore, levelplaying field demands that on these products the duty rate should besuch that it compensates at least partially the domestic producersagainst the extra cost incurred for the bottlenecks.

Afghanistan Government is aware that in a vertically linked industrialstructure, protecting one industry often hurts the other. Upstreamprotection impairs the competitiveness of downstream industriesthrough higher cost. Unbridled protection is also against the interestof the consumers. The Government, therefore, bears in mind the trade-off in tariff policy formulation. In this regard it would be the endeavorof Government of Afghanistan to strike a balance between two interestgroups i.e. producers and the consumers, information about theindustry including rough estimates of the cost and benefit of

protection, are again valuable.

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Annuzal Report 2008 Annexes

Annexes

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Annual Re ort 2008 Annexes

Total Investm ent By Provinces (FD I+D D

I)

% age Share % age

N o. of N o. of of Share of

S.No Province Initial C apital C o m panies E m p loyees Investm ent C o mpany

1 Badakhshan 5,507,479 59 775 0.1% 0.5%

2 Badghis 2,265,524 18 264 0.1% 0.1%

3 Baghlan 17,595,846 106 1,578 0.4% 0.8%

4 Balkh 105,777,411 530 16,330 2.7% 4.2%

5 Bam yan 2,989,900 56 563 0.1% 0.4%

6 Daikondi 50,000 1 4 0.0% 0.0%7 Farah 9,037,153 73 1,565 0.2% 0.6%

8 Faryab 4,495,504 43 834 0.1% 0.3%

9 G hazn i 8,204,053 99 2,323 0.2% 0.8%

10 G hor 1,715,400 16 151 0.0% 0.1%

11 Helm and 34,604,194 225 4,711 0.9% 1.8%

12 Hirat 154,012,964 846 21,194 3.9% 6.7%

13 Jawzjan 14,769,650 57 2,243 0.4% 0.5%

14 Kabul 3,278,326,851 7,854 290,077 82.5% 62.4%

15 Kandahar 142,486,428 818 22,402 3.6% 6.5%

16 Kapisa 3,026,572 38 473 0.1% 0.3%

17 Khost 22,954,650 184 5,922 0.6% 1.5%18 Kunar 5,775,500 96 1,287 0.1% 0.8%

19 Kunduz 20,245,144 146 3,025 0.5% 1.2%

20 Laghm an 2,998,118 46 859 0.1% 0.4%

21 Logar 1,762,640 18 474 0.0% 0.1%

22 Nangarhar 90,581,612 821 23,056 2.3% 6.5%

23 Nim roz 4,058,070 16 385 0.1% 0.1%

24 Nuristan 518,000 13 101 0.0% 0.1%

25 Paktika 4,316,100 51 892 0.1% 0.4%

26 Paktya 8581822 111 2645 0.2% 0.9%

27 Panjshir 1197000 5 66 0.0% 0.0%

28 Parwan 10552304 95 7339 0.3% 0.8%

29 Sam angan 1525000 9 245 0.0% 0.1%

30 Sari Pul 1240000 8 77 0.0% 0.1%

31 T akhar 4008015 42 822 0.1% 0.3%

32 Uruzgan 1735000 17 212 0.0% 0.1%

33 W ardak 1341500 29 450 0.0% 0.2%

34 Zabul 5907000 35 593 0.1% 0.3%

Total 3,974,162,404 12,581 413,937 100% 100%Source: RP D , AIS A

, K abul

D ate: January 2009

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Afghan-Lebanon 3,220,001 6 558 0.08%

Afghan-Latvia 100,000 1 7 0.00%

Afghan-Macedonia 7,850 1 9 0.00%

Afghan-Nepal 1,240,650 8 82 0.03%Afghan-Netherlands 4,368,500 11 331 0.11%

Afghan-New Zealand 700,000 1 24 0.02%

Afghan-Norway 5,080,020 6 107 0.13%

Afghan-Pakistan 10,518,900 43 748 0.27%

Afghan-Philippines 1,940,000 3 148 0.05%

Afghan-Poland 4,500,000 4 74 0.12%

Afghan-Russia 13,915,000 12 937 0.36%

Afghan-Slovakia 200,000 1 5,000 0.01%

Afghan-Sierra Leone 100,000 1 7 0.00%

Afghan-Singapore 470,000 1 103 0.01%

Afghan-Sweden 10,000 1 6 0.00%

Afghan-Switzerland 1,208,000 3 19 0.03%

Afghan-Syria 16,100,000 2 291 0.42%

Afghan-Tajikistan 7,850,000 12 222 0.20%

Afghan-Turkey 29,199,801 43 2,283 0.76%

Afghan-Turkmenistan 200,000 1 10 0.01%

Afghan-Uganda 200,000 1 66 0.01%

Afghan-Ukraine 11,528,600 10 416 0.30%

Afghan-Uzbekistan 2,367,600 7 231 0.06%

Afghan-Yugoslavia 10,000 1 9 0.00%

Albania 70,000 2 7 0.00%

America 110,916,697 135 30,743 2.89%

America-Bulgaria 7,500 22 0.00%

America-Canada 1,400,000 3 277 0.04%

America-China 8,000 1 8 0.00%

America-Dubai 3,100,000 2 6 0.08%

America-England 600,000 4 701 0.02%

America-Germany 1,500,000 1 15 0.04%

America-India 250,000 3 557 0.01%

America-Iran 200,000 1 5 0.01%

America-Israel 16,000 1 20 0.00%

America-Korea 10,000 1 7 0.00%

America-Lebanon 11,000 25 0.00%

America-Pakistan 1,318,100 4 443 0.03%

America-Russia 5,600,000 4 530 0.15%

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Afghanistan Investment Support Agency

Research and Policy Department

Total Investment By MajorProvince(2003-2008)

Major ProvinceInitial Capital in No. of No. of %age Share of

US$ Companies Employees Investment

Kabul 3,278,326,851 7,854 290,077 82%Hirat 154,012,964 846 21,194 4%

Kandahar 142,486,428 818 22,402 4%

Balkh 105,777,411 530 16,330 3%

Nangarhar 90,581,612 821 23,056 2%

Helmand 34,604,194 225 4,711 1%

Khost 22,954,650 184 5,922 1%

Kunduz 20,245,144 146 3,025 1%

Total 3,848,989,254 11,424 386,717 97%

Source: RPD, AISA, Kabul

Date: January 2009

Afghanistan Investment Support AgencyResearch and Policy Department

Investment By Country, End December2008

CountryInitial Capital in

No. of Companies No. of Employees%age Share of

US$ Initial Capital

Afghan-America 77,182,541 96 5,602 2.01%

Afghan-Australia 1,575,000 4 103 0.04%

Afghan-Austria 2,550,000 2 42 0.07%

Afghan-Azerbaijan 5,500,000 8 226 0.14%

Afghan-Bulgaria 1,200,000 1 300 0.03%

Afghan-Canada 4,108,000 6 183 0.11%

Afghan-China 14,779,400 11 713 0.39%

Afghan-Croatia 1,030,001 4 46 0.03%

Afghan-Czech Republic 80,000 1 20 0.00%

Afghan-Dubai 320,000 3 26 0.01%

Afghan-Egypt 80,000 2 38 0.00%

Afghan-England 4,133,001 17 3,397 0.11%

Afghan-France 2,509,940 16 517 0.07%

Afghan-Germany 20,575,901 40 1,718 0.54%

Afghan-India 3,014,600 24 448 0.08%

Afghan-Indonesia 20,000 1 5 0.00%

Afghan-Iran 66,557,739 82 2,180 1.74%

Afghan-Italy 100,000 1 203 0.00%

Afghan-Japan 140,000 2 650 0.00%

Afghan-Jordon 150,000 1 18 0.00%

Afghan-Kazakhstan 11,100,000 9 358 0.29%

Afghan-Korea 650,000 5 525 0.02%

Afghan-Kyrgyzstan 500,000 1 10 0.01%

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America-Sweden 500,000 1 115 0.01%

America-Ukraine 1,050,000 1 26 0.03%

America-Uruguay 1,000,001 1 14 0.03%

America-Uzbekistan 200,000 1 27 0.01%Australia 432,000 10 1,237 0.01%

Austria 21,700 1 11 0.00%

Austria-Finland 5,000 1 78 0.00%

Azerbaijan 5,665,800 3 317 0.15%

Bangladesh 10,400,000 5 3,826 0.27%

Belgium 1,100,000 1 70 0.03%

Belize 2,500,000 1 2 0.07%

Brazil 9,500 1 15 0.00%

Canada 111,880,000 9 210 2.92%Canada-Australia 10,000 1 6 0.00%

Canada-France 50,008,000 2 269 1.30%

Canada-Albania 5,000 1 5 0.00%

Canada-Lebanon 1,000,000 1 250 0.03%

Canada-Pakistan 28,000 2 23 0.00%

China 57,846,100 39 2,124 1.51%

China-India 15,000 1 8 0.00%

China-Turkey 1,000,000 1 200 0.03%

Croatia(Hrvatska) 1,000,000 1 10 0.03%

Denmark 4,951,600 7 182 0.13%

Dubai 122,053,000 12 740 3.18%

England 17,259,070 47 8,019 0.45%

England-Australia 1,130,000 4 1,083 0.03%

England-Canada 25,000 2 7 0.00%

England-China 20,000 2 8 0.00%

England-Dubai 150,000 1 55 0.00%

England-German 80,000 1 5 0.00%

England-India 1,260,000 2 114 0.03%

England-Iran 8,000 1 4 0.00%

England-Jordan 250,000 2 4,008 0.01%

England-Lebanon 50,000 1 8 0.00%

England-Pakistan 40,000 2 35 0.00%

England-South Africa 8,000 1 229 0.00%

England-Syria 40,000 2 41 0.00%

France 525,000 15 795 0.01%

France-Lebanon 20,000,000 1 410 0.52%

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France-Philippine 8,000 1 3 0.00%

Germany 8,285,496 43 746 0.22%

Germany-Belgium 500,000 1 25 0.01%

Germany-Denmark 10,000 1 4 0.00%India 22,592,200 60 2,917 0.59%

India-Pakistan 15,000 1 40 0.00%

Iran 61,667,202 110 3,086 1.61%

Iraq 1,000,000 1 56 0.03%

Israel 1,700,000 2 18 0.04%

Italy 2,157,538 8 284 0.06%

Italy-Iran 100,000 1 4 0.00%

Japan 7,764,600 6 176 0.20%

Jordon 50,000 1 22 0.00%Kazakhstan 1,662,000 5 38 0.04%

Kenya 20,000,000 1 50 0.52%

Korea 2,297,501 9 70 0.06%

Kuwait-India 1,000,000 1 24 0.03%

Kyrgyzstan 1,100,000 1 330 0.03%

Lebanon-Macedonia 100,000 1 110 0.00%

Lebanon 1,650,000 15 211 0.04%

Lithuania-Uzbekistan 500,000 1 6 0.01%

Malaysia 500,000 1 7 0.01%

Nepal 128,000 5 43 0.00%

Netherlands 13,475,000 11 255 0.35%

New Zealand 19,500 3 17 0.00%

Pakistan 52,365,300 96 2,652 1.37%

Philippine 150,000 4 53 0.00%

Poland 100,000 1 70 0.00%

Russia 7,409,000 12 883 0.19%

Russia-India 10,000 1 7 0.00%

Russia-Tajikistan 200,000 1 70 0.01%

Russia-Uzbekistan 7,000,000 2 74 0.18%

Saudi Arab 80,000 1 15 0.00%

Sierra Leone 480,000 3 134 0.01%

Singapore 10,000 1 16 0.00%

South Africa 4,288,000 6 169 0.11%

South Africa-NewZealand 50,000 1 40 0.00%

Sweden 1,028,000 3 17 0.03%

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Switzerland 5,156,000 4 2,382 0.13%

Tajikistan-Kazakhstan 1,000,000 1 10 0.03%

Turkey-Kazakhstan 100,000 1 15 0.00%

Turkmenistan 10,050 1 60 0.00%Ukrain 5,070,000 5 72 0.13%

Uzbekistan 989,600 3 35 0.03%

Total 3,835,607,060 12,428 399,913 100%Source: RPD, AISA, Kabul

Date:January 2009

Afghanistan Investment Support Agency (AISA)


Investment of Major Countries, end December 2008%age share

Country Initial Capital in US$ Companies Employees of Initial

CapitalAmerica 110,916,697 135 30,743 2.89%

UAE 122,053,000 12 740 3.2%

England 17,259,070 47 8,019 0.4%

India 22,592,200 60 2,917 0.6%

Iran 61,667,202 110 3,086 1.6%

Pakistan 52,365,300 96 2,652 1.4%

Turkey 131,834,344 133 12,520 3.4%

China 57,846,100 39 2,124 1.5%

Canada 111,880,000 9 210 2.92%

Kenya 20,000,000 1 50 0.5%

Total 708,413,913 642 63,061 18%

Source: RPD, AISA, KabulDate:Janaury 2009

Afghanistan Investment Support Agency (AISA)


Investment of ECO States in Afghanistan, End December2008)

S.No CountryInitial Capital in

No. of Companies No. of EmployeesUS$

1 Azerbaijan 5,665,800 3 317

2 Iran 61,667,202 110 3,086

3 Kazakhstan 1,662,000 5 38

Kyrgyz4 Republic 1,100,000 1 330

5 Pakistan 52,365,300 96 2,6526 Tajikistan 5,503,000 12 414

7 Turkmenistan 10,050 1 60

8 Uzbekistan 989,600 3 35

9 Turkey 131,834,344 133 12,520

Total 260,797,296 364 19,452


Date: January 2009

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ECO Joint Ventures in $US In Afghanistan(End December2008)

S.No Joint VentureInitial Capital No. of No. of

in US$ Companies Employees

1 Afghan-Azerbaijan 5,500,000 8 2262 Afghan-Iran 66,557,739 82 2,180

3 Afghan-Kazakhstan 11,100,000 9 358

4 Afghan-Kyrgyzstan 500,000 1 10

5 Afghan-Pakistan 10,518,900 43 748

6 Afghan-Tajikistan 7,850,000 12 222

7 Afghan-Turkey 29,199,801 43 2,283

Afghan-8 Turkmenistan 200,000 1 10

9 Afghan-Uzbekistan 2,367,600 7 231

Tajikistan-10 Kazakhstan 1,000,000 1 10

11 Turkey-Kazakhstan 100,000 1 15Total 134,894,040 208 6,293


Date: January 2009



Total Investment in $US (ECO States + Joint Venture) in Afghanistan(End December2009)

Initial Capital No. of CompaniesNo. of

Employees

260,797,296 364 19,452Total Investment of Eco States

134,691,336 208 6,293Total Investment of Eco Joint Venture

Total Investment (Individual + Joint395,488,632 572 25,745

Venture)


Date: January 2009



Investment of Canada and Joint Venture(Registered in AISA until end of December 2008)

Country Initial Capital No. of Companies No. of Employees

Canada 111,880,000 9 210

Afghan-Canada 4,108,000 6 183

America-Canada 1,400,000 3 277

Canada-Australia 10,000 1 6

Canada-France 50,008,000 2 269

Canada-Albania 5,000 1 5

Canada-Lebanon 1,000,000 1 250

Canada-Pakistan 28,000 2 23

England-Canada 25,000 2 7

T t l 168 464 000 27 1 230

Documents

Annual Reprot