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Speech by His Excellency Doctor Mohammad Jalil Shams, Ministry of Economy, at The Enabling Environment Conference (Kabul, Afghanistan)

05 June 2007

 

Please also see: Related material

Bismillah-ir-Rahman-ir-Rahim

Your Highness Aga Khan,
Your Excellency, Prime Minister Shaukat Aziz,
Your Excellency the Vice President Mr. Massoud,
Your Highness Prince Amyn Aga Khan,
Professor Nadiri,
Your Excellencies,
Ladies and gentlemen,

Let me at the outset repeat the thanks of the Government of Afghanistan to his Highness the Aga Khan, to AKDN, to the Steering Committee and Co-Chairs, to the ANDS and to all those who made this august gathering possible and organised it so excellently.

Excellencies, Ladies and Gentlemen, as we all know, Afghanistan has opted for a market economy in its Constitution, and the private sector is the pillar on which the market economy is actually built. And when I say private sector, I mean not only for-profit institutions, but also non-profit institutions. So because of this mandate, the Government’s primary goal is to substantially increase employment and raise incomes through economic growth and private sector development, as His Excellency Mr. Shaukat Aziz already explained.

The Government’s policy has been expressed in a paper which we have distributed to you. These are measures which the Government agreed upon and, when you have read this paper, you will see that the Government of Afghanistan will support the private investors through focused investment, promotional activities, more effective incentives, and increased trade promotion activities and an extension of opportunities for Public Private Partnerships.

The Government Policy focuses on the key issues of access to land; access to finance; access to skilled workforces; infrastructure; entering domestic markets; greater access to regional and international markets; and an enabling regulatory and legal environment.

Of course in yesterday’s meetings and the breakout groups, you discussed all of these aspects and you came out with results which were presented today in the morning. I tried to incorporate those deliberations to the Government Policy as formulated and I found out that the Government Policy reflects in major parts the results of these deliberations.

There have been some issues discussed which concern civil society and the relationships between civil society organisations themselves which cannot be addressed and should not be addressed by Government intervention or policy. And, there was one issue which came out of the Conference that was not included in the Paper which we have to consider, and that is a regulation concerning the creation of one point for collecting taxes and other revenues. This concerns the ministry of finance which will surely consider it.

And there are, of course, some matters in the Policy Paper which have not been discussed in your deliberations in the past two days, so there is a sort of broadening of the policy of the Government towards promoting the private sector.

I will try here to mention the policies of the Government in a series of headlines due to the shortage of time, so I will not go through the reasoning and through all the details.

Concerning access to land, the Government will implement measures to substantially simplify the transfer of land, the registration of titles and reduce transfer taxes. We have already done a lot in this respect and we will do still more.

The Government will: make it practical for investors to lease Government land for longer terms; establish an independent authority for industrial parks and ensure that Government-owned parks adopt flexible market-based principles, pricing and leasing terms; institute polices to reform land use and zoning regulations, accelerate the land-titling programme, and establish a clear simple system to obtain building permits.

In regard to access to skilled labour, the Government will: substantially expand vocational training and a skills development programme; ensure that training and education programmes meet the needs of the private sector; introduce incentives for businesses to take on graduates and to train their workers; encourage the establishment of privately-owned facilities for vocational and professional training; and establish a regulatory framework for education and training, including accreditation standards.

In regard to access to capital and finance, the Government will: explore the establishment of a private investment fund; enact laws to cover secured transactions, mortgages and negotiable instruments; enact bankruptcy and leasing laws; support the expansion of SME finance programmes; improve awareness and understanding of borrowers; improve the education and training of lenders; support the establishment of a credit information system; and establish the legal and regulatory framework for the effective mobilisation of capital.

Concerning infrastructure, as His Excellency the Prime Minister of Pakistan already mentioned, it is the most important thing to develop to bring the economy forward. And in that respect the Government will: introduce a regulatory mechanism that will accelerate private investment and power generation, natural resources development and transportation infrastructure; increase power generation capacity using coal, gas and hydro; increase access to power in rural areas through non-renewable energy systems; and establish facilities to provide technical engineering and scientific information and material testing.

In order to strengthen the domestic markets, the Government will: introduce the Standards Law and encourage the rapid development of ANSA, the Afghan National Standards Agency; increase opportunities for local procurement of goods and services by the public sector and the internationally funded projects; and encourage the establishment of trade and commercial transportation insurance.

For greater access to regional and international markets, the Government will, in consultation with the private sector: enact policy to increase regional and international trade; expand trade capacity development for the private sector; pursue increased preferential trade access for Afghan products through regional trade agreements; ensure that customs procedures are consistently applied, reduce the time and transaction costs associated with the import and export of goods; accelerate efforts to complete WTO accession and deepen and expand the scope of regional trade agreements.

With regard to an enabling legal and regulatory environment, the Government will: submit to Parliament this year the pending key commercial laws; establish a single low-cost registration process for establishing private entities; establish a consultation process with the private sector concerning the formulation of laws and regulations; for all new laws and regulations, put in place a process to make them public on the internet before they come into force; establish the financial tribunal to address disputes in the banking and telecommunications sector; ensure effective implementation of recently passed arbitration and mediation laws; considerably strengthen commercial courts; establish a tribunal to resolve disputes between Government and private sector; and continue to review the NGO and civil society laws and regulations.

Of course when the Government goes all of that way, it expects also the private sector to abide by a code of conduct in many areas. It cannot be a one-way road; the private sector side must also be forthcoming.

And that is, especially in the use of land, which could be facilitated by laws, and should not be used for speculation purposes. Once they get it, they shall use it for the purpose it is intended. And, that is only one example.

With regard to the Employment of labour, for the time being, most of our companies here do not go out of their family circles in employing labour, so they should open the market and employ according to the abilities, and explain to the Government their needs for labour so that the Government could create suitable vocational training programmes and professional training programmes.

And in the case of the mobilisation of finance and capital, establishment of corporations or share holding companies will help to attract idle money.

One other issue which is very important is to strengthen the High Commission on Investment in a way that it can effectively promote private investment in Afghanistan ; and to separate that one-stop shop job out of the High Commission on Investment in order to make it concentrate on the policy and leave execution for another office.

At the end I would like to mention the necessity of creating a follow up mechanism for the implementation of the decisions taken by this conference. I would suggest that a committee representing the government and the private sector, both foreign and domestic, should come out of this conference which would get together regularly and discuss matters, as well as report the results to the President and to the co-chairs.

Thank you very much.

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