Actually, the major irritant restraining the foreign investors to move on in Afghanistan were stated to be the alleged disturbed political conditions



Jan 12 - 18, 2004



Afghanistan, under a new and progressive constitution emphasizing more on liberal, market-oriented trade policies giving importance to the human values including women and human rights and plural society, the country has started attracting foreign investors.

Taking advantage of the situation, the banking sector in Pakistan is expanding the branch network in Afghanistan. The initiative in this regard has been taken by the National Bank of Pakistan had established in branch some two months ago and in this short period of time has succeeded in developing a respectable deposit base. According to NBP senior officials, the branch is doing extremely well and is expected to carve an impressive place in Afghan market.

In effect, the State Bank of Pakistan as well as the Central Bank of Afghanistan had allowed four banks from Pakistan to establish their branches in Kabul. These were including National Bank, Aga Khan Bank, Standard Chartered Bank and recently, the Habib Bank of Pakistan after its privatization has been allowed by the Afghan authorities to open their branch in Kabul.

The National Bank, has, however taken lead and the results it has achieved so far are highly encouraging and there are good reasons for other banks to follow suit.

The National Bank within two months of its operations has been able to attract an over 500 million Euro and over $400 million deposit base.

It is worth mentioning that Afghanistan has become a major importer of construction materials including cement, ceramics, tiles and a score allied goods used in building constructions.

The process of reconstruction in Afghanistan substantiated with massive financial support extended by the developed nations of the world has opened economic opportunities for the investors in almost all segments of the Afghan economy.

Actually, the major irritant restraining the foreign investors to move on in Afghanistan were stated to be the alleged disturbed political conditions painted by the Western media. Although there were some incidents of disturbances in Afghanistan, however, the reports appearing in media did not match to the ground realities in Afghanistan said an Afghan official at a recently held seminar in Karachi.

Recently, the Afghan Government has accepted Habib Bank's application for establishing a branch in Kabul. Finance Minister Shaukat Aziz along with the Governor State Bank of Pakistan Dr. Ishrat Husain is expected to visit Kabul within next two weeks to receive the licence, it is reported

Afghanistan Central Bank Governor Dr. Anwar-ul-Haq Ahady stated this while delivering a lecture on "prospects for greater economic integration between Afghanistan and Pakistan" at a seminar held in Karachi recently.

HBL would be second Pakistani bank among six commercial foreign banks already operating in Kabul. The opening of HBL branch in Afghanistan is expected to enhance the legal trade volume between the two countries.

Dr. Ahady said that the Karzai administration was pursuing very liberal and investment friendly policies to offer attractive incentives to foreign investors. He pointed out that contrary to past where banks used to operate under strictly state-regulated policies, the central bank, abolishing all unnecessary restrictions, passed a very liberal banking policy three months ago to open up the banking sector to foreign investors. "We are generous in awarding incense to foreign banks to operate in Afghanistan and have already granted licenses to six foreign commercial banks."

He said that now there are no restriction pertaining to foreign exchange limit or any other such restrictions pertaining to foreign exchange limit or any other such restrictions, except money laundering, which is only concern we have.



He highlighted the large and prospective Afghan consumer goods market and invited Pakistani investors to install manufacturing units there. He said that with a very thin industrial-base, coupled with very flexible trade laws and low tariff structure, Afghanistan market offers vast opportunities to both Pakistan's industrials and traders. In this perspective, he emphasized on greater economic integration between the two countries and referred to NAFTA and European Union as perfect example of economic integration.

He observed that economic cooperation was more feasible and practical on bilateral basis than on any multilateral forum like ECO or SAARC. He suggested that economic integration between the two countries did not only ensure efficient resource allocation but also cause positive political consequences on the relation between the two nations. He conceded that provision of security and infrastructure facilities were pre-requisite to create an investment-friendly atmosphere but denied that there was any such problem in Afghanistan.

With active involvement and heavy foreign financial assistance from various countries of the world, especially USA, UK, Japan, Germany etc in the on-going reconstruction of Afghanistan, the political, economic and social milieu would improve a lot. In this backdrop there was a silent revolution taking place in Afghanistan, transforming all of its fundamental social and traditional values.