Apr 08 - 14, 2002
Pakistan and Afghanistan are the close door
neighbours having a common border of about 1500 miles, besides common
traditions, culture and religious ties. Being a landlocked country,
Afghanistan has to rely on Pakistan for transshipments of its incoming
and outgoing cargoes.
As the fall out of the historic resistance put up
by the people of Afghanistan against the then Soviet Union, Pakistan
had to suffer in many ways including huge influx of Afghan refugees
within Pakistan territories.
Pakistan had to bear the burden of over 3 million
refugees at the peak of the Afghanistan resistance against the
Soviets. The problem of refugees aggravated further after September 11
with the influx of population from Afghanistan into Pakistan
especially in NWFP, Balochistan that later on dispersed in the urban
centres like Karachi, Lahore, Peshawar, Quetta and other parts of the
Pakistan has a high stake in the situation in
Afghanistan. Political and economic stability to that country is in
the interest not only for the region but also for the rest of the
world. The strategic position of Afghanistan offers a significant link
between Central Asian States and Pakistan. The significance of peace
and stability in Afghanistan reflected in the fact that the
multi-million dollar project of gas pipeline between Turkmenistan and
Pakistan was scrapped due to persistent political disturbances in
Afghanistan. Once the peace and normalcy returns to Afghanistan new
doors for economic development will be open for the entire region
especially for economic development in India suffering from paucity of
In the wake of war against the Soviet, civil war
within the country and now in the aftermath of September 11 events,
the devastating effects of the long time disturbance have paralyzed
the civic life in Afghanistan. More than half of the population was
affected by displacement, forced migration to neighbouring countries.
It is estimated that there is an immediate need of
construction of at least one-lakh houses to provide shelter to the
large number of families in the urban areas alone. Buildings in which
the educational institutions were housed have been reduced to the
ground, industrial units whatsoever in Afghanistan completely
destroyed, irrigation projects damaged and the economy of that country
With the settling down of the dust in Afghanistan
an era of reconstruction begins in Afghanistan. Initially a fund of
dollar one billion has been allocated for the rehabilitation and
reconstruction of the shattered infrastructures, buildings, houses and
Although world's major companies are trying to get
contracts of the reconstruction of different projects, Pakistan finds
itself in a better position to win a major share in the reconstruction
process of that country.
Hafeez Urrehman Butt, Chairman Association of
Builders and Developers (ABAD) told PAGE that trade delegations
seeking their part in Afghanistan are visiting Pakistan to have a
share in the Market. He said that ABAD had recently arranged an
exhibition of building materials produced by Pakistan and quality wise
competitive to international standards.
He said that the construction industry is
associated with over 80 allied industries and if we succeeded in
getting contracts of reconstruction projects, most of the industries
which are running below capacity due to lack of demand will be able to
meet the entire need of material required in the process of
reconstruction of Afghanistan.
Citing the example of Cement industry he said that
this industry is running almost 50 per cent of the capacity due to
lower demand within the local market. Some of the cement companies
have got orders and have started exporting cement to Afghanistan,
however, there are many areas where a collective effort of the
public-private sector is required to get advantage of the situation.
On the government to government level, the two
countries have agreed to cooperate in various areas to strengthen
bilateral relations. Last week, when President Pervez Musharraf
visited Kabul to have talks with Hamid Karzai, the Chairman
Afghanistan's interim government, the two leaders were in complete
unanimity to fight against terrorism and expand economic ties between
the two countries.
During the talks, President Musharraf made it clear
that Pakistan has only one aim i.e. to assist Afghanistan. President
Musharraf is the first head of a country in the region to visit Kabul
after the Karzai's interim government took over in December last.
The two sides have mutually decided to coordinate
efforts against poppy cultivation and in fighting terrorism and also
vowed not to allow each other's country become sanctuary for the
wanted persons. The two sides also agreed to cooperate in a number of
areas through joint ministerial committees to take forward bilateral
ties. On that occasion, President Musharraf urged the international
community to speed up the reconstruction and rehabilitation efforts
and bring real normalcy back to Afghanistan.
President Musharraf, it may be noted, has announced
a $10 million package for Afghanistan.
The Asian Development Bank (ADB) has also proposed
a $200 million assistance package include a special assistance loan
for rapid impact projects. This assistance is in key areas such as
agriculture and institution building, pilot projects for high priority
regions including earthquake prone areas, to support the construction
of rural access roads, to rehabilitate selected primary schools and to
provide educational materials for school children, the rehabilitation
of small and medium-scale irrigation system and capacity building
within the government.
The Export Promotion Bureau (EPB) is seeking a $50
million worth fund from the government for arranging guarantees and
collaterals for the construction companies aspiring to participate in
the gigantic task of reconstruction of the shattered roads and
buildings in Afghanistan.
Initially, Afghanistan needs at least one lakh new
housing units besides construction of roads and official buildings,
which were badly damaged in the air strikes by US-led allied forces
after terrorist acts of September 11 in New York and Washington.
Tariq Ikram, Chairman EPB says that to facilitate
and provide guidelines to the trade and industry with regard to
emerging situation and opportunities in Afghanistan, the two
committees set up by EPB have started to function.
A separate committee for construction industry set
up at Lahore was a necessity because the government wants to see a
major breakthrough in this sector's overseas performance and
participation. The other committee operating from Islamabad would be
dealing with all materials including food items like rice, wheat,
textiles and pharmaceuticals.
According to Tariq Ikram, Pakistani construction
companies are fully capable of handling international work jobs of a
medium size which are restricted a volume of $50 million to $70
million. But construction companies are constrained with funds and are
not in a position to meet bank guarantees required for participating
in international tenders.
Consequently, the committee set up by the EPB has
recommended that a fund of up to $70 million be arranged by the
government to meet the bank and other guarantees needed by a company
for getting a construction job.
It is not possible for any construction company to
give cash as a collateral against bid bond, performance bond, advance
mobilization guarantee normally required after winning the contract
for reconstruction in that country.
However in the light of Iraq experience where
Pakistan's construction companies had participated in tenders on
individual basis have now started to form a consortium.
During last nine months exports to Afghanistan
stood at $55 million and the government has taken quick measures to
promote trade with Afghanistan by removing negative list and now all
category of goods could be exported to that country.
Area 647, 500 sq. Km
Irrigated 30, 000 sq. km
Border Countries: Pakistan 2,430 km, Iran 936 km, China
76 km, Tajikistan 1206 km, Turkmenistan 741 km, Uzbekistan 137
Natural Resources: Natural gas, petroleum, coal, copper,
talc, barites, sulfur, led, zinc, iron ore, salt, precious and
Highways: 21,000 km
Pipelines: from Uzbekistan to Begram ((Petroleum
From Turkmenistan to Shindad (natural gas) total length 180km
Iftikhar Malik, President of Federation of Pakistan
Chambers of Commerce and Industry (FPCCI) says that Pakistan and
Afghanistan not only share borders, but the hearts of the people of
the two countries beat together. Our relations are historic which
common religion, civilization and culture mark. The Afghani and
Pakistani people have been connected together by strong inter-linkages
and inter-marriages over the years. This relationship has further
cemented with the 35 million Afghan refugees staying at Pakistan's
soil since last several years.
The business community in Pakistan had welcomed the
agreement reached in Bonn, Germany for setting up an interim
government in Afghanistan. We believe that it would bring peace and
stability in the war-torn country and also provide opportunity for
Pakistan to contribute in the reconstruction and rehabilitation of
Afghanistan has been the missing link in the chain
forming this region. With this link now in peace, Pakistan,
Afghanistan, Iran, Turkey and Central Asian States will form a region
with a common goal of progress and prosperity for the people.
Pakistan has political as well as economic
interests in the stability and development of a strong and friendly
Afghanistan. The Pakistan businessmen are ready to avail of the
emerging opportunities and establish long term commercial contacts
with Afghan businessmen for the mutual benefit. FPCCI is of the view
that after the set up of an interim government in Afghanistan, massive
development construction work be undertaken. This would provide a lot
of opportunities not only for Pakistani businessmen but also for the
other countries; Pakistan wants to be associated closely in the
rehabilitation work, which now exists in Afghanistan.
Pakistan has all the resources and capabilities to
meet the needs of that country in all areas of economic activity.
Pakistan can send engineers, doctors, architects and builders as well
as trained manpower to reconstruct the devastated country. Pakistan
can also meet the requirements of material like iron & steel,
cement, and all other fixtures and accessories required in building
construction besides engineering goods especially in automobile
It may be recalled that a high powered Turkish
delegation visited Pakistan recently. The members of the delegation
showed great interest in entering into agreement with the Pakistani
companies to undertake joint projects in Afghanistan. The FPCCI
arranged their meetings with the Pakistani contractors and
construction companies, which proved a great success.
Investors from countries are also approaching the
private sector in Pakistan to facilitate them in undertaking joint
construction projects in Afghanistan. This growing interest of the
foreign investors is because of the fact that Pakistan has better
understanding of the region and is the gateway to the landlocked
Afghanistan. As such the world realizes those Pakistani companies can
only be the best business partners for exploring investment
opportunities in Afghanistan.
The private sector in Pakistan would be very much
interested in building the physical infrastructure projects like
roads, highways, schools, and hospitals. For this purpose the private
sector in Pakistan is in a position to supply quality construction
materials such as cement, iron, steel, bricks etc, It can also meet
the demand of vegetable oil, sugar, fertilizers, wheat, medicines,
plastic material, rice, electronic appliances, clothings, crockery and
many other consumer goods.
The government in Afghanistan could also gainfully
utilize Pakistan's expertise in banking and insurance sectors. It is
reassuring that Pakistan government has expressed its willingness to
establish bank branches in Kabul, Kandhar and Jalalabad. Opening of
these branches will boost the existing trade between the two
The interim government in Afghanistan is also
considering setting up banks in Pakistan particularly in Peshawar and
Quetta, which caters to the major share in trade with Afghanistan. The
government of Pakistan is providing all kinds of incentives to the
private sector to promote trade with Afghanistan. In this respect it
has allowed trade in Pakistani rupee or in convertible currency with
duty drawbacks, abolished the permit system and added new products on
the list of items to be exported to Afghanistan.
In addition to banking services, Pakistan is also
very much interested in establishing bonded warehouses in Afghanistan
not only to meet the food and other requirements but also to access
the markets of Central Asian States.
Despite having an area of 30,000 km under
cultivation Afghanistan does have any permanent crop representing its
agriculture sector, hence apart from occasional crops, 45 per cent of
the agricultural lands are used for pasture. In order to improve
agriculture side, Khair Muhammad Junejo feels that because of close
proximity Pakistan and Iran both were in an ideal position to help out
Afghanistan to rebuild its devastated agriculture infrastructure.
Pakistan has already offered its services to
Afghanistan to rebuild the ravaged agriculture sector. Pakistani
engineers having an experience of developing world's largest
irrigation system have all the credentials to develop small dams that
to re-build irrigation system in Afghanistan enabling it to use its
rich lands for growing cash crops in that country.
Representatives of the private sector are of the
view that in order to discuss the issue of reconstruction of
Afghanistan and to display the depth of construction and relevant
industries in Pakistan, international seminars should be organized at
various levels in Pakistan. Situation demands and large-scale
exhibitions of the construction goods and services available within
the country are also imperative to attract the international companies
to get supplies from Pakistan.
Pakistan has a strong industrial base in a large
number of items such as cement, iron and steel sector largely
supported by the huge complex of Pakistan Steel and world's one of the
largest base of ship breaking industry, electrical appliances, tiles
& ceramics, glass and aluminum, wooden crafts, plastics and paints
etc. International exhibition of these items at a large scale at major
cities would certainly help attracting international buyers not only
for Afghanistan but rest of the world also.
Leaders in trade and industry while appreciating
the understanding between the two countries on the government to
government level said that good official relations are certainly
helpful in improving bilateral relations in all respects. However,
professional marketing approach is needed to apply for winning
economic gains out of the situation. In this connection they suggested
that instead of relying on official delegations, the private sector
and representative bodies of the trade and industry should take the
initiative with the setting up of business offices well as close
liaison with trade bodies or business representatives in Afghanistan
to penetrate into the emerging openings.
In this connection, a large trade delegation consisting of 35
leading businessmen is also to visit Afghanistan shortly to explore
business opportunities in that country.