Final Tafa Survey Report 2010

FINAL SURVEY REPORT
Knowledge, Attitude, and Practice (KAP) Survey of Afghanistan towards Trade
Sponsored by USAID/TAFA
Conducted by AIR Consulting An Afghan Survey & Research Company Based in Afghanistan
September 2010
Table of Contents
Executive summary Introduction About AIR Consulting Methods and respondent demography Detailed survey results G series questions S series questions I series questions Transcript of deep interviews Annex I: survey questionnaire
Executive Summary This report focuses on Afghans knowledge, attitudes, and practices related to trade and its potential benefits for Afghanistan. In response to a request for proposal by Chemonics/TAFA, AIR Consulting undertook the survey design, data collection, and analysis presented here. It utilized surveys of the general Afghan population across selected provinces and key sub-populations who are involved with various facets of international trade. In addition, in-depth interviews with selected individuals contributed to a deeper understanding of trade issues from the perspective of the government, traders, academia, producers, and other entities in Afghanistan. The main findings include: People see trade as a means for economic growth. Ninety-one percent of survey respondents were positive towards trade. They also stated the biggest benefits to trade are better job opportunities (32 percent) and increased economic growth (31 percent). In addition, regardless of trade status, respondents felt regional trade agreements were beneficial to Afghanistan (traders: 96 percent, non-traders: 92 percent). In-depth interviews, though, provided a mixed portrait of peoples views on trade, market economics, and the future. However, trade prospects are tempered by insecurity and government corruption. About 90 and 50 percent of respondents, respectively, stated insecurity and government corruption are one of the top three obstacles to trade in Afghanistan today. Most people would do business with a female trader (79 percent). In-depth interviews indicated that trade as an occupation for women would be okay, but there were caveats; many thought that travel and other cultural concerns were an impediment and security a concern. However, some interviewees stated that females could be as successful, if not more successful, than men. Impediments to female trading are backed up by survey results: security as a concern was mentioned by 60 percent of respondents and cultural concerns by 48 percent. Respondents have a detailed understanding of what could be done to increase international trade. About 65 percent of survey respondents said building cold storage or buying cold trucks to transport products was one of the top three measures to increase a famers ability to access foreign markets. Moreover, about 50 percent of respondents stated that better technology would be one of the top three measures to improve the sale of Afghan products in international markets. Higher product quality (about 63 percent) and better packaging (about 65 percent) were also mentioned. These results are supported by the in-depth interviews. In addition to the technology, packaging, and quality concerns, in-depth interview respondents were particularly concerned about tariffs and the impact on trade. Respondents were
perplexed by the complicated and detailed tariff schedule on goods (e.g., different tariffs for yellow- and orange-colored hard candies). Respondents advocated for a more simplified system of tariffs. Afghans felt continued strengthening of the market economy in the post-Taliban era was a priority. A nearly universal feeling was that trade plays a large role in economic prosperity. However, in-depth interviews revealed that while many are in favor of market principles and trade in theory, they do not feel that operating within such a system is a practical reality in Afghanistan at this time, under the current conditions. Citing corruption and a lack of government support for constitutionally-identified market principles, many stated that the economy does not currently operate on market principles; rather, people are forced to adjust to the reality of economic operations within Afghanistan, such as corruption, government policy positions, and in some cases, smuggling. Respondents pinned the responsibility of turning towards market principles squarely on the government. While government officials admitted to existing problems, they also pointed to improvements over the years. Government officials seem to have knowledge of market economics and the role trade plays, but interviewees reported that putting that knowledge into practice is more difficult. Anecdotally, in comparison to other questions, in-depth interviews asking about trade as a profession for Afghan females elicited shorter answers. In some interviews, it seemed respondents treated the question lightly, like it was more or less an abstraction. There was disagreement amongst respondents about whether trade was a good profession for women, though most seemed to treat the matter positively. Afghans sense of what would improve the countrys international trade was broad. Many said, both in surveys and in in-depth interviews, that packaging of Afghan goods needed to improve for marketing abroad, while the quality of export goods also needed to increase. In-depth interview respondents often commented that Afghan traders had information about which markets were best, but that product quality and marketing needed improvement. Underlying all findings are Afghans sense of security and their attitude towards the role of government today. Security was a major concern on a number of issues from the survey impediments to trade, threats to female involvement in trade and from indepth interviews. There also seemed to be a strong concern about the government of Afghanistans role in increasing trade. Many seemed impatient for greater economic growth and blamed the government for the lack of opportunities. Others more concretely pointed out government corruption as an impediment to trade growth and yet a potential outcome of more trade in Afghanistan.
Introduction The USAID-funded Trade and Accession Facilities for Afghanistan (TAFA) project, implemented by Chemonics International and its partners, aims to increase Afghanistans ability to develop and implement sound trade policies that provide the foundation for increased trade and investment. In the process, the program also seeks to stimulate greater public awareness, involvement, and understanding of trade-related market reforms. The goal of TAFA is to improve the trade environment, including cross-border trade and transit for Afghanistan, so as to foster increased investment, exports, and market-based employment opportunities. This will be accomplished through (1) increasing Afghanistans ability to participate more effectively in the regional and global economy while maintaining a liberal trade regime; (2) improving the conditions for international and cross-border trade and transit by removing bottlenecks and reforming customs and other border clearance procedures; and (3) helping the government of Afghanistan and the private sector to benefit from greater regional and global trade linkages and economic integration. The TAFA project solicited proposals from qualified research firms and institutions to conduct quantitative and qualitative opinion survey research on market-based reforms and trade-related knowledge, attitudes, and practices within the general population and among key interest groups such as business entities, traders, agricultural producers, educational institutions, civil servants, and the mass media in Afghanistan. Guidelines stipulated the survey cover at least seven provinces, including two each in the North, East, and West regions, plus Kabul, and target people living in the border regions whose livelihoods depended on trade. The survey, in each selected region and border area, needed to be broadly representative of the demographic and urban-rural distribution present in the Afghan population; finally, women and youth needed to be adequately represented. The general survey needed to be supplemented by a smaller, targeted survey of traders, businesspeople, and other stakeholders attitudes and perceptions. TAFAs objective for information derived from this survey research was to: 1. Determine the level of knowledge, attitudes, and perceptions among the general population and interest groups including: business entities (e.g. light manufacturing and agribusiness firms), traders, agricultural producers, educational institutions, civil servants, and mass media about the market economy, trade policy, tariffs, customs rules/procedures, and WTO accession. 2. Design, develop, and implement effective messaging for a public information campaign for key target interest groups and the general public to raise awareness and educate the public about market reforms, trade issues and the governments efforts to improve the trade environment.
3. Tailor TAFA public outreach and capacity building activities and monitor progress.
About AIR Consulting Survey and Research Company: AIR Consulting was established in 2007 by a number of Afghan Fulbright alumni who graduated from distinguished US universities specializing in social sciences, mathematical modeling, and robust decision-making methodologies. Today, AIR Consulting has expanded its network of partnership by partnering with similar institutions for greater regional outreach in a number of other countries in the region. One of the areas of concentration of AIR Consulting is political and economic study of governance and state-building in the context of least-developed countries. In the last three years, AIR Consulting has been working extensively with international institutions such as the Asia Foundation, World Bank, Bearing Point, Brookings Institution, US Institute for Peace, RAND Corporation, Chemonics, Open Society Institute, and a number of other organizations regarding issues related to governance, security, and economic development of Afghanistan. The institution is lead by a team of about 14 senior researchers under the leadership of Ahmad Idrees Rahmani, a PhD candidate in research and policy analysis. The core of the institutions capacity is drawn from a network of about 400 Afghan junior researchers/students from different Afghan universities across the country who work closely with AIR Consulting on many different survey and evaluation projects. The organization also maintains a network of senior researchers from leading US and European think tanks and universities who are brought in when their technical skills and knowledge are necessary and affordable. Currently AIR Consulting researchers are working on a number of survey and evaluation projects related to Afghanistans political and economic development across the country. This survey was, particularly, designed and supervised by Ahmad Idrees Rahmani, the principle investigator, Andrew Hackbarth, the technical advisor, and Mathew Hoover, the survey manager for this project, and Iraj Khaliqi, the deputy survey manager. AIR Consulting is an emerging survey, research and evaluation organization, that is a product of Afghanistans new generation of elites and future potential leaders. For more information about AIR Consulting and its activities, please refer to the institutions brochure and website recently launched at http://www.policy.hu/rahmani/AIR/AIR_Consulting.html and www.AIRPolicyWatch.org
Methods and Respondent Demographics The objectives of our sample design were: (1) to produce survey results that were representative of all Afghans, (2) to take advantage of and investigate systematic KAP differences between residents of interior and border regions, and (3) to complete our survey within the projects time, budget, and security constraints. To accomplish these objectives, we implemented a stratified, cluster sample design. Two strata were used residence in border vs. interior provinces and within each stratum five provinces were selected as clusters. Provinces, then towns or districts within those provinces, were selected as a convenience sample to avoid fielding survey teams in prohibitively dangerous areas; however, representation of Northern, Southern, Eastern, and Western parts of Afghanistan were included to improve the representativeness of the cluster sample. The figure below identifies the provinces sampled.
The following table shows the number of completed survey responses from each sampled province. A total of 1,327 surveys were completed. Province Balkh Baghlan Bamyan Ghazni Herat Jalalabad Location Border Interior Interior Interior Border Border Responses 181 140 151 150 180 175
Kabul Kandahar Khost Paktia
Interior Border Border Interior
250 50 25 25 Total: 1,327
All respondents received a series of general questions about trade (the G-series1), as well as two questions related to information dissemination (the I-series). All respondents also completed a series of demographic questions (the D-series). Some of the respondents (a total of 473, or 36% of the total sample) those likely to have a more exposure to issues related to trade based on their occupation received a series of additional special survey questions (the S-series). Finally, twelve special respondents participated in in-depth interviews with the projects principal investigator. These individuals were chosen from a variety of disciplines including government, academia, trade, and production for their unique knowledge in conjunction with trade regarding Afghanistan. While male respondents were not given incentives to participate in the survey, women were offered $1 or $2 telephone credit cards in order to increase female response rates. (While $1 or $2 cash is not considered a substantial amount of money to Afghans, telephone credit cards for the same amounts are considered valuable.) However, even with these incentives, female non-response rates were much higher than males; approximately one quarter of survey respondents are female. In calculating the sample size necessary to achieve adequately small margins of error, we assumed a design effect of 2.0 and 1.5 for the general and special respondent cohorts, respectively similar to other surveys fielded in similar settings. (The design effect represents the penalty to statistical precision associated with using a clustered sampling design rather than simple random sampling. A higher design effect indicates a higher penalty.) However, these estimates were often substantially lower than the actual design values obtained in our statistical analysis, indicating relatively high agreement (low variance) within the same province and relatively low agreement (high variance) between provinces. Statistically, this resulted in larger margins of error than expected for the answers to some questions. Design weights were particularly high for border provinces, suggesting that attitudes are fairly homogenous within any given border province, but attitudes may vary substantially from one border province to the next. Probability weights for each respondent were calculated based on his or her province of residence. Probability weights represent the inverse probability that the respondent was included in the sample frame; in this case, the sum of the probability weights of all respondents sampled from a particular province is equivalent to the total population of that province.
For more details, please refer to the copy of questionnaire attached as Annex I of this report.
All statistical calculations were performed using the svy suite of commands in Stata version 10.1, by StataCorp LP, and the charts and tables below all properly account for weighting and design effects. Some graphs were created using the CATPLOT module, developed for Stata by Nicholas Cox. The following series of graphs describe the demographic composition of the survey sample:
Question D1: Gender
24%
76%
Male
Female
Note: special incentives were used to increase participation of women in the survey (each female respondent were offered a 50Afghani or 100 Afghani worth of telephone credit card if she was not willing to take the survey. Still sampling among female population was a challenge for the survey in general.
Question D2: Age

1% 15% 24%
28%
31%
Age 18-25 Age 46-60
Age 26-35 Age 61+
Age 36-45
Question D3: Marital status

3%
22%
75%
Married
Not Married
Widow(er)
Question D4: Highest education level

6% 10% 27%
31% 13%
14%
None or Informal Vocational or High School Primary University or Above Secondary No Response
Question D5: Monthly income (in Afghanis)

7% 2% 7% 11%
8%
42% 24%
3000 or less 20,001 - 40,000 Don't Know
3001 - 10,000 More Than 40,000
10,001 - 20,000 No Response
Question D6: Occupation

15% 9%
Note: occupations were given as free-text answers by respondents and categorized by the project team.
22%
11%
10% 12% 9% 3% 4%
Trader Large Business Educator / Student Unemployed Retailer Farmer Government Employee
6%
Small Business Professional Worker Other Employed
Question D7: Size of farmland owned

3%
34%
49%
11% 4%
Small No Land Medium No Response Large
Respondent or family member is trader

1% 24%
74%
Trades
Doesn't trade
No Response
Detailed Survey Results

General questions: were given to all respondents who took the survey.
Question G1: Do you or any members of your family engage in foreign trade?
Respondents may select one option
Yes
0.25
No
0.74
No Response
0.01
Don't Know
0.00
.2
.4 Fraction of all respondents
.6
.8
Response Yes No No response Dont know
Estimate 0.2457 0.7414 0.0106 0.0023
Lower Bound 0.1577 0.6238 0.0028 0.00058
Upper Bound 0.3618 0.8321 0.0395 0.0094 N = 1327
Comments: Despite optimistic views of some policy officials regarding the proportion of Afghan population who are engaged in trade, this survey revels that only one quarter of the Afghan population is directly engaged with trade.
Question G2: If you or your family engage in trade, what do you or your family members trade?
Respondents answering Yes to Question G1 may select one option
Other Construction materials Household items Agriculture or food product Rugs and handicrafts Furniture and wood products Manufactured products No Response Gems and minerals 0.02 0.02 0.06 0.05 0.11 0.17 0.17 0.20 0.22
.05 .1 .15 .2 Fraction among respondents answering Yes to Question G1
Response Other Construction materials Household items Agriculture or food product Rugs and handicrafts Furniture and wood products Manufactured products No response Gems and minerals
Estimate 0.2172 0.1963 0.1693 0.1678 0.107 0.0567 0.0462 0.024 0.0155
Lower Bound 0.1215 0.1474 0.1092 0.0991 0.0636 0.0375 0.0235 0.0102 0.0029
Upper Bound 0.3576 0.2565 0.2531 0.2697 0.1746 0.0849 0.0887 0.0552 0.0798 N = 273
Comments: Note that only respondents that answered Yes to question G1 (Do you or any members of your family engage in trade) were asked this question. Two categories of trade goods composed nearly half of all free-text Other responses: mostly cars or car parts (31%) and computers or other electronics (15%).
Question G3: What are three advantages to trade for Afghanistan?

Respondents were instructed to provide up to three free-text answers
Better job opportunities in trade Overall economic growth More income for the government Improvements to industry / infrastructure Other Access to imported goods More export of Afghan products Better relations with other countries Don't know Low prices in the market Exchange of culture / ideas / knowledge No response Improved security in Afghanistan Important to tradition / religion 0 0.06 0.04 0.04 0.04 0.02 .1 .2 Fraction of all respondents .3 0.09 0.09 0.12 0.11 0.15 0.15 0.15 0.32 0.31
Response Better job opportunities in trade Overall economic growth More income for the government Improvements to industry / infrastructure Other Access to imported goods More export of Afghan products Better relations with other countries Dont know Low prices in the market Exchange of culture / ideas / knowledge No response Improved security Important to tradition / religion
Estimate 0.3188 0.3128 0.1545 0.1521 0.1451 0.1197 0.1144 0.0932 0.0872 0.0594 0.0428 0.042 0.0412 0.0201
Lower Bound 0.23 0.2535 0.0437 0.0921 0.0994 0.0774 0.0593 0.0363 0.0431 0.0296 0.0109 0.0165 0.0178 0.007
Upper Bound 0.4229 0.3788 0.4223 0.2408 0.2071 0.1804 0.2092 0.219 0.1684 0.1156 0.1541 0.1027 0.0925 0.0561 N = 1327
Comments: Note that respondents provided free-text responses to this question, which were later coded by the project team.
Question G4: What are three disadvantages to trade for Afghanistan?

Don't know More low-quality / illegal goods More crime / corruption / insecurity No disadvantage Other No response Domestic producers will be hurt by imports Decrease in wealth / resources Afghan businesses cannot compete Introduction of foreign culture / behavior Goods will become more expensive Increased income inequality Dependence on foreign countries / markets 0 0.04 0.03 0.03 0.03 0.01 .05 .1 .15 Fraction of all respondents .2 .25 0.07 0.06 0.09 0.13 0.15 0.19 0.18 0.25
Response Dont know More low-quality / illegal goods More crime / corruption / insecurity No disadvantage Other No response Domestic producers will be hurt by imports Decrease in wealth / resources Afghan businesses cannot compete Introduction of foreign culture / behavior Goods will become more expensive Increased income inequality Dependence on foreign countries / markets
Estimate 0.2496 0.1902 0.178 0.1525 0.1297 0.0911 0.0716 0.0614 0.0404 0.027 0.0263 0.0255 0.011
Lower Bound 0.1761 0.1284 0.0668 0.0756 0.0751 0.0648 0.0314 0.0278 0.0165 0.0045 0.013 0.0129 0.0053
Upper Bound 0.3409 0.2725 0.3959 0.2836 0.215 0.1267 0.155 0.1302 0.0952 0.1448 0.0525 0.0498 0.0227 N = 1327
Comments: The high frequencies of Dont know, No disadvantage, and No response responses suggest that a large number of Afghansthough perhaps not the majoritydo not see any significant disadvantages to increased trade. (Note that respondents provided free-text responses to this question, which were later coded by the project team.)
Question G4: What are three disadvantages to trade for Afghanistan?

Only respondents who trade or whose family trades
More crime / corruption / insecurity More low-quality / illegal goods Other No disadvantage No response Don't know Decrease in wealth / resources Afghan businesses cannot compete Domestic producers will be hurt by imports Goods will become more expensive Increased income inequality Introduction of foreign culture / behavior Dependence on foreign countries / markets 0.03 0.02 0.02 0.01 0 .1 .2 .3 Fraction among respondents who trade or whose family trades 0.06 0.05 0.05 0.12 0.10 0.15 0.17 0.23 0.31
Response More crime / corruption / insecurity More low-quality / illegal goods Other No disadvantage No response Dont know Decrease in wealth / resources Afghan business cannot compete Domestic producers will be hurt by imports Goods will become more expensive Increased income inequality Introduction of foreign culture / behavior Dependence on foreign countries / markets
Estimate 0.306 0.2338 0.1733 0.1492 0.123 0.104 0.0614 0.0505 0.0501 0.0258 0.0185 0.0164 0.0085
Lower Bound 0.1204 0.1601 0.097 0.0536 0.0557 0.0563 0.024 0.0226 0.0165 0.0114 0.0059 0.0021 0.0022
Upper Bound 0.5868 0.328 0.2903 0.352 0.2501 0.1844 0.1482 0.109 0.1425 0.0573 0.0566 0.1187 0.0329 N = 272
Comments: This chart shows only the responses of those who engage in trade, who might have the best insight into the possible disadvantages of trade. While the precision for this relatively small subset of respondents is low (note the large confidence intervals), traders seem to be most concerned with corruption and illegal activity.
Question G5: Do you think increased trade creates more jobs, wealth, and economic opportunities?
Yes
0.91
No
0.07
No Response
0.01
Don't Know
0.01
.2
.4 .6 Fraction of all respondents
.8
Response Yes No No response Dont know
Estimate 0.9128 0.0676 0.011 0.0086
Lower Bound 0.8178 0.0253 0.0037 0.0032
Upper Bound 0.9606 0.1682 0.0328 0.0229 N = 1327
Comments: The results of this question suggest that an overwhelming number of Afghans view trade positively, at least with respect to economic outcomes.
By province location
Yes 0.88 0.09 0.02 0.01
Border
No No Response Don't Know
Yes
0.95 0.04 0.00 0.01
Interior
.2
.8
Border provinces only:

Response Yes No Estimate 0.8804 0.0931 Lower Bound 0.6946 0.0232 Upper Bound 0.9597 0.3071 N = 611
Interior provinces only:

Comments: Regarding the benefits of trade, residents of border provinces are slightly less enthusiastic than interior province residents. However, support is remarkably high across both groups. Note that border province estimates are much less precise than interior province estimates. (Note the different confidence interval sizes.) The low precision of border province estimate is driven by the fact that, on this question, respondents from the same border province were likely to give the same response, but opinions differed substantially from one border province to the next.
By whether respondent or family trades
Yes 0.97 0.02 0.01 0.00
Trades
Doesn't trade
Yes No No Response Don't Know 0.01 0.01 0.08
0.90
.2
.8
Traders only:
Non-traders only:
Comments: These results are quite intuitive and as expected
Question G5a: Why does increased trade create more jobs, wealth, and economic opportunities?
Respondents may select multiple answers
We can buy things we do not make in Afghanistan The goods in the market come from all over the region and world Trade means prices are lower for goods because businesses compete Getting the important technologies and machines to make life easier Trade builds friendship and ties with other countries We are able to sell more and get more money Trading is our natural role as Afghans and a respected tradition Economic opportunities for women Don't know No response Other 0.03 0.02 0.01 0.46 0.41 0.40 0.34 0.30 0.58 0.57 0.56
.2 .4 .6 Fraction among respondents answering Yes to Question G5
Response We can buy things we do not make in Afghanistan The goods in the market come from all over the region and world Trade means prices are lower for goods because businesses compete Getting the important technologies and machines to make life easier Trade builds friendship and ties with other countries We are able to sell more and get more money Trading is our natural role as Afghans and a respected tradition Economic opportunities for women Dont know No response Other
Estimate 0.5813 0.5712 0.5554 0.4628 0.4076 0.4018 0.3386 0.3021 0.0289 0.0214 0.0129
Lower Bound 0.485 0.4419 0.4836 0.2986 0.2764 0.2441 0.2017 0.1615 0.0114 0.0055 0.0065
Upper Bound 0.6718 0.6914 0.625 0.6356 0.5534 0.5828 0.5092 0.4932 0.0713 0.0799 0.0252 N = 1202
Comments: There is a heavy emphasis on the benefits of increased imports.
Question G5b: Why does increased trade not create more jobs, wealth, and economic opportunities?
Too many low quality and dangerous goods will enter our markets Only businesses with government connections will succeed Afghan producers cannot compete with foreign producers Too many foreign goods and services will enter our market No response Other 0.14 0.07 0.02 0.29 0.63 0.60
Don't know 0.00
.2 .4 .6 Fraction of all respondents answering No to Question G5
Response Too many low-quality and dangerous goods will enter our markets Only business with government connections will succeed Afghan producers cannot compete with foreign producers Too many foreign goods and services will enter our market No response Other Dont know
Estimate 0.6329 0.5997 0.2879 0.1436 0.0655 0.0229 0
Lower Bound 0.5421 0.2641 0.1959 0.0801 0.0145 0.004 0
Upper Bound 0.7152 0.8622 0.4014 0.244 0.2504 0.1217 0 N = 94
Comments: Corruption and low quality goods are considered to be associated with increased trade.
Question G6a: Who will benefit most from increased exports?

Manufacturers The government Rug, textile, handicraft makers Transporters Large farmers Small farmers Other Don't know No response 0.06 0.02 0.10 0.37 0.46 0.52 0.52 0.60 0.59
.6
Response Manufacturers The government Rug, textile, handicraft makers Transporters Large farmers Small farmers Other Dont know No response
Estimate 0.595 0.585 0.5236 0.5182 0.4639 0.3656 0.0979 0.0555 0.0213
Lower Bound 0.4297 0.4236 0.2902 0.3831 0.2711 0.2037 0.035 0.0329 0.0104
Upper Bound 0.7413 0.73 0.7471 0.6507 0.6683 0.5649 0.2453 0.0922 0.0433 N = 1327
Comments: It is important to note that people believe the government benefits more than all groups but manufacturers from increased exports.
Question G6a: Who will benefit most from increased imports?

The government Transporters Manufacturers No response Large farmers Rug, textile, handicraft makers Other Small farmers Don't know 0.15 0.14 0.12 0.10 0.09 0.06 0.28 0.49 0.55
.6
Response The government Transporters Manufacturers No response Large farmers Rug, textile, handicraft makers Other Small farmers Dont know
Estimate 0.55 0.4934 0.2818 0.1458 0.1386 0.1151 0.0976 0.0879 0.0555
Lower Bound 0.3984 0.3627 0.1756 0.0828 0.0702 0.0795 0.0329 0.0597 0.0329
Upper Bound 0.6927 0.625 0.4195 0.2442 0.2555 0.1638 0.256 0.1275 0.0922 N = 1327
Comments: Again, government is considered the main beneficiary of more trade.
Question G6b: Who will bear the most cost from increased exports?
No response Small farmers Don't know Large farmers Other Manufacturers Rug, textile, handicraft makers The government Transporters 0.10 0.09 0.07 0.06 0.05 0.05 0.17 0.14 0.49
.1
.4
.5
Response No response Small farmers Dont know Large farmers Other Manufacturers Rug, textile, handicraft makers The government Transporters
Estimate 0.4864 0.1665 0.137 0.1039 0.0889 0.0727 0.0598 0.0531 0.0477
Lower Bound 0.3887 0.1338 0.0971 0.0733 0.0276 0.0422 0.0345 0.0269 0.0168
Upper Bound 0.5851 0.2051 0.1897 0.1453 0.2511 0.1222 0.1019 0.1023 0.1282 N = 1327
Comments: People know little about the cost of increased exports, but do know about the benefits and costs of more imports. This may be related to the smaller volume of exports from Afghanistan currently.
Question G6b: Who will bear the most cost from increased imports?
Small farmers Large farmers Rug, textile, handicraft makers Manufacturers No response Other The government Transporters Don't know 0.09 0.07 0.06 0.06 0.20 0.26 0.36 0.41 0.46
.1
.4
.5
Response Small farmers Large farmers Rug, textile, handicraft makers Manufacturers No response Other The government Transporters Dont know
Estimate 0.2587 0.4568 0.4102 0.356 0.0612 0.0687 0.0933 0.0555 0.2032
Lower Bound 0.1255 0.3735 0.304 0.2097 0.0207 0.0399 0.0298 0.0329 0.1649
Upper Bound 0.4591 0.5425 0.5255 0.5353 0.167 0.1159 0.2563 0.0922 0.2477 N = 1327
Comments: The lack of knowledge about the costs of trade is not present with respect to imports.
Question G7: Which of these measures would best improve the sale of Afghan products in international markets?
Respondent assigns ranks to one or more options
Better packaging Higher product quality Better technology to improve products Pricing information for other countries Better information about foreign markets Other
.2
.4 .6 Fraction of all respondents Third Don't know Fourth No response
.8
First Sixth
Second Not selected
Fifth
"Not selected" indicates the respondent did not select the current item, but selected others. "No response" and "Don't know" indicate the respondent did not select any items.
Response was ranked First Better packaging Higher product quality Better technology to improve products Pricing information for other countries Better information about foreign markets Other
Estimate 0.3543 0.2779 0.1711 0.1085 0.0652 0.0054
Lower Bound 0.2454 0.2252 0.122 0.0734 0.038 0.001
Upper Bound 0.4808 0.3375 0.2347 0.1577 0.1098 0.027 N = 1327
Comments: Note that the point estimate given in the table above (and in similar tables for this type of question throughout the rest of the report) represents the likelihood that respondents would rank that item as their top choice.
Question G8: What are Afghanistan's biggest obstacles to trade?

Security war situation and road checkpoints Government corruption Crime on the roads Transportation challenges Lack of pricing information Unclear customs procedures Lack of production capacity Low quality of goods / inability to meet international standards Other 0 .2 .4 .6 Fraction of all respondents Third Eighth Fourth Ninth .8 1
First Sixth Don't know
Second Seventh No response
Fifth Not selected
Response was ranked First Security war situation and road checkpoints Government corruption Crime on the roads Transportation challenges Lack of pricing information Unclear customs procedures Lack of production capacity Low quality of goods / inability to meet international standards Other
Estimate 0.7561 0.0857 0.0528 0.0264 0.0204 0.0162 0.0147 0.0088 0.0033
Lower Bound 0.6947 0.0663 0.0277 0.019 0.0118 0.008 0.0071 0.0032 0.0007
Upper Bound 0.8085 0.1101 0.0983 0.0365 0.035 0.0327 0.0302 0.024 0.0144 N = 1327
Comments: It is interesting to note that while low quality of products is not considered a major obstacle to trade, in another question when asked about what would improve export of Afghan goods abroad, quality of goods was scored higher.
Question G9: How should the Government help Afghans export?

Improve Afghan Customs Department Improve roads and transportation links Provide training and education to producers Reduce taxes and fees Reduce regulations Other Provide better training to Government officials 0 .2 .4 .6 Fraction of all respondents Fourth Don't know .8 1
First Sixth
Second Seventh
Third Not selected
Fifth No response
Response was ranked First Improve Afghan Customs Department Improve roads and transportation links Provide training and education to producers Reduce taxes and fees Reduce regulations Other Provide better training to Government officials
Estimate 0.4128 0.2142 0.1008 0.0965 0.0335 0.0221 0.0178
Lower Bound 0.3424 0.1583 0.0578 0.049 0.0175 0.0048 0.0108
Upper Bound 0.4869 0.2831 0.1698 0.1815 0.063 0.0956 0.0291 N = 1327
Comments: It is interesting that reducing regulation was not scored as an important issue.
Question G10: What are the most important things that the government could do to promote trade?
Implement trade agreements with other countries Provide finance to exporters Improve Afghanistan's image in foreign markets Provide better information on customs regulations, taxes, and tariffs Provide information on opportunities to traders and producers Share information about product standards Other
.2
.4 .6 .8 Fraction of all respondents Fourth Don't know Fifth
First Sixth
Second Seventh
Third Not selected
No response
Response was ranked First Implement trade agreements with other countries Provide finance to exporters Improve Afghanistans image in foreign markets Provide better information on customs regulations, taxes, and tariffs Provide information on opportunities to traders and producers Share information about product standards Other
Estimate 0.4245 0.1186 0.1111 0.0839 0.0581 0.0325 0.0061
Lower Bound 0.3539 0.0777 0.0675 0.0641 0.0427 0.0162 0.0012
Upper Bound 0.4983 0.177 0.1775 0.1092 0.0786 0.064 0.0305 N = 1327
Comments: Implementing international trade agreements was seen in indepth interviews as an important function of the government with respect to trade as well.
Question G11: Who do you think are the biggest trading partners of Afghanistan?
Respondents may provide up to three free-text answers
Pakistan China Iran India Other Uzbekistan UAE Japan Tajikistan Russia Don't know No response 0 0.14 0.13 0.09 0.07 0.06 0.05 0.04 0.00 0.00 .2 .4 .6 Fraction of all respondents .8 0.69 0.79 0.86
Response Pakistan China Iran India Other Uzbekistan UAE Japan Tajikistan Russia Dont know No response
Estimate 0.862 0.7884 0.6949 0.1441 0.1283 0.086 0.0734 0.0634 0.0528 0.0367 0.0046 0.0038
Lower Bound 0.8143 0.7073 0.524 0.0777 0.0949 0.035 0.0354 0.0454 0.0305 0.0204 0.0016 0.0014
Upper Bound 0.899 0.8517 0.825 0.2516 0.1711 0.1963 0.1459 0.0878 0.0899 0.0654 0.013 0.0104 N = 1327
Comments: As of 2007, Afghanistans three largest export partners were India (23.7%), Pakistan (22.7%), and the US (21.3%); as of 2005, Afghanistans three largest import partners were Pakistan (23.9%), the US (11.8%), and Germany (6.8%).
Information Dissemination Questions: were also given to all respondents:
Question I1: What form of trade and customs information delivery is easiest for you to access?
Respondent assigns ranks to top three options
Television Radio Internet (websites) Outside signs Posters in common places None of the above Other Newspapers Printed materials in the form of booklets, brochures, leaflets Government trade office Public meeting / workshops Text (SMS) messages
.2
.4 .6 Fraction of all respondents Second Don't know Third No response
.8
First Not selected
Response was ranked First Television Radio Internet (websites) Outside signs Posters in common places None of the above Other Newspapers Printed material in the form of booklets, brochures, and leaflets Government trade office Public meeting / workshop Text (SMS) messages
Estimate 0.4185 0.2838 0.0759 0.0718 0.0317 0.024 0.0225 0.0195 0.0138 0.0113 0.0048 0.0027
Lower Bound 0.297 0.2389 0.0444 0.0322 0.0134 0.0085 0.0049 0.0132 0.0042 0.0049 0.0029 0.00099
Upper Bound 0.5507 0.3334 0.1268 0.1523 0.0728 0.0656 0.0977 0.0287 0.0441 0.026 0.008 0.0073 N = 1327
Comments: Newspapers, while very few respondents first choice, were ranked in the top three by 33% of respondents, making it the third most popular medium, behind television (78%) and radio (69%).
Question I2: What new trade and customs information would you like to see in printed materials like leaflets, booklets, and brochures?
General information about trade agreements General information on customs procedures Market price information for key imports/exports at locations in and around Afghanistan Tariff rates for goods coming into Afghanistan Tariff rates for goods entering Iran, Pakistan, India, China, Uzbekistan Information on foreign markets Information on standards for goods for export Information on trade fairs and exhibits Information on WTO accession and other upcoming trade agreements in which the Afghan government is a party Information on getting foreign visas Other
.2
.4 .6 .8 Fraction of all respondents Fourth No response Fifth
First Sixth
Second Not selected
Third Don't know
Response was ranked First General information about trade agreements General information on customs procedures Market price information for key imports / exports at location in and around Afghanistan Tariff rates for goods coming into Afghanistan Tariff rates for goods entering Iran, Pakistan, India, China, Uzbekistan Information on foreign markets Information on standards for goods for export Information on trade fairs and exhibits Information on WTO accession and other upcoming trade agreements in which the Afghan government is a party Information on getting foreign visas Other
Estimate 0.2373 0.1405 0.135 0.0945 0.0613 0.0213 0.018 0.0176 0.0154 0.0144 0.0115
Lower Bound 0.1866 0.0971 0.087 0.0522 0.0373 0.0094 0.0069 0.0091 0.0086 0.0078 0.0045
Upper Bound 0.2969 0.199 0.2035 0.1649 0.0993 0.0475 0.0463 0.0338 0.0277 0.0265 0.0291 N = 1327
Comments: More respondents selected market price information (at any rank) than any other option.
Special Questions: were given only to those who belonged to a special group respondent:
Question S1: Would you do business with a female trader?

Yes 0.59
Yes, only if I know her
0.20
No
0.17
Other
0.02
No Response
0.02
Don't Know
0.00
.2 .4 Fraction of all special respondents
.6
Response Yes Yes, only if I know her No Other No response Dont know
Estimate 0.5906 0.1971 0.1702 0.0184 0.0216 0.0184
Lower Bound 0.4959 0.0783 0.0762 0.0075 0.0111 0.0075
Upper Bound 0.6791 0.4149 0.3378 0.0447 0.0417 0.0447 N = 473
Comments: Similarly, the majority said yes to trading with women during indepth interviews, but it seemed that the response was more driven by what the interviewer was thought to be interested in hearing than the interviewees true perception.

Yes Yes, only if I know her 0.14 0.23 0.03 0.03 0.00 0.62 0.28 0.08 0.01 0.01 0.57
Border
No Other No Response Don't Know Yes
Interior
Yes, only if I know her No Other No Response Don't Know 0
.6

Response Yes Yes, only if I know her No Other Estimate 0.5709 0.1375 0.2347 0.0261 Lower Bound 0.4167 0.0353 0.0846 0.0088 Upper Bound 0.7125 0.4097 0.5044 0.0753 N = 231

Comments: It seems a bit counter intuitive that interior provinces have a more positive attitude than border provinces. However, the confidence intervals are quite large, so one should be cautious with comparisons.

Yes 0.59 0.11 0.24 0.02 0.02 0.00 0.59 0.28 0.11 0.01 0.02
Trades
Yes, only if I know her Other No No Response Don't Know Yes Yes, only if I know her Other No No Response Don't Know 0
Doesn't trade
.6
Traders only:
Non-traders only:
Comments: Respondents, regardless of trading status, seem amenable to trade with women.
Question S1a: What are the impediments to trade for women in Afghanistan?
Lack of security Discouraged by tradition / culture Lack of education Family obligations Lack of economic means Lack of capacity / interest Other Discouraged by government / laws No response Don't know None 0.11 0.09 0.07 0.05 0.04 0.02 0.00 0.26 0.24 0.48 0.60
.6
Response Lack of security Discouraged by tradition / culture Lack of education Family obligations Lack of economic means Lack of capacity / interest Other Discouraged by government / laws No response Dont know None
Estimate 0.5952 0.4779 0.2648 0.2379 0.1138 0.0895 0.0714 0.0499 0.0385 0.0154 0.0028
Lower Bound 0.4965 0.3378 0.1859 0.1353 0.0663 0.0518 0.033 0.0381 0.0121 0.0038 0.00042
Upper Bound 0.6866 0.6216 0.3622 0.3838 0.1885 0.1503 0.1479 0.0652 0.1164 0.0603 0.0185 N = 473
Comments: Note that security is considered more of a problem than cultural and family restrictions.
Question S2: Do you think that international / regional trade agreements benefit Afghanistan?
Yes
0.94
No
0.02
No Response
0.04
.2
.8
Response Yes No No response
Estimate 0.9365 0.0217 0.0418
Lower Bound 0.8345 0.0095 0.011
Upper Bound 0.9773 0.0489 0.146 N = 473
Comments: The highly positive response to this question among special respondents follows the general pattern of positive attitudes towards trade seen among all respondents in question G5.
Yes 0.94
Border
No
0.02
No Response
0.05
Yes
0.94
Interior
No No Response
0.03 0.03
.2
.8

Response Yes No No response Estimate 0.9352 0.0171 0.0476 Lower Bound 0.6573 0.0072 0.0042 Upper Bound 0.9909 0.0405 0.3738 N = 231

Comments: These positive attitudes seem to exist in both border and interior provinces
Yes 0.96
Trades
No
0.02
No Response
0.02
Doesn't trade
Yes
0.92
No No Response
0.02 0.06
.2
.8
Traders only:
Non-traders only:
Response Yes No No response Estimate .9205 .0245 .0551 Lower Bound .7749 .0084 .0134 Upper Bound .975 .0689 .1999 N = 276
Comments: As might be expected, traders are a bit more positive about trade than non-traders.
Question S3: Which measures would improve the ability to transport goods from the farmer to a foreign market?
Respondent assigns ranks to top three options
Improve security Improve roads Build cold storage and buy cold trucks Eliminate roadside checkpoints Improve access to credit Other
.2
.4 .6 .8 Fraction of all special respondents Second Don't know Third No response
First Not selected
Response was ranked First Improve security Improve roads Build cold storage and buy cold trucks Eliminate roadside checkpoints Improve access to credit Other
Estimate 0.4018 0.2967 0.1997 0.0612 0.0288 0.0043
Lower Bound 0.3449 0.2062 0.1166 0.0201 0.0109 0.0014
Upper Bound 0.4614 0.4066 0.3203 0.1718 0.0739 0.0135 N = 473
Comments: Building more cold storage scored high; during in-depth interviews, many stated this would be highly beneficial to farmers.
Question S4: Who benefits from the export of carpets?

Brokers and businessmen 0.83
Weavers
0.32
Sheep herders
0.18
Dye makers
0.09
Other
0.03
No response
0.01
Don't know
0.00
.2
.8
Response Brokers and businessmen Weavers Sheep herders Dye makers Other No response Dont know
Estimate 0.826 0.3177 0.1764 0.0899 0.0346 0.0118 0.0036
Lower Bound 0.724 0.1719 0.0881 0.025 0.0128 0.0053 0.00072
Upper Bound 0.8957 0.5108 0.3219 0.2757 0.0904 0.0257 0.0175 N = 473
Comments: An overwhelming majority thought businessmen and brokers would benefit the most, while it was expected to think every body would gain. It seems relative gain is considered more important than absolute gain.
Question S5: When you hear the word tariff, what do you think it means?
Tax on imports Tax on exports Tax on production Don't know Tax on sale of goods No response Other 0.04 0.01 0.08 0.15 0.22 0.20 0.60
.6
Response Tax on imports Tax on exports Tax on production Dont know Tax on sale of goods No response Other
Estimate 0.5964 0.2236 0.1965 0.1544 0.0798 0.0392 0.0143
Lower Bound 0.4446 0.1006 0.0946 0.0837 0.0377 0.0223 0.0055
Upper Bound 0.7317 0.4256 0.3638 0.2675 0.1611 0.0678 0.0369 N = 473
Comments: Most respondents understood the meaning of tariffs.
Question S6: What do you think of Afghanistan's tariffs?

Import tariffs
Production tariffs
Export tariffs
Sales tariffs
.2
.4 .6 Fraction of all special respondents About right No response Too low
.8
Too high Don't know
Not selected
Import tariff responses Too high About right Too low Production tariff responses Too high About right Too low Export tariff responses Too high About right Too low Sales tariff responses Too high About right Too low
Estimate 0.2798 0.0844 0.0654 Estimate 0.1238 0.0745 0.0305 Estimate 0.0276 0.0643 0.042 Estimate 0.0227 0.0144 0.0017
Lower Bound 0.1515 0.0406 0.0331 Lower Bound 0.0555 0.023 0.0106 Lower Bound 0.0109 0.0159 0.007 Lower Bound 0.0095 0.0057 0.00015
Upper Bound 0.4582 0.1674 0.1254 Upper Bound 0.2536 0.216 0.0843 Upper Bound 0.0679 0.2263 0.2145 Upper Bound 0.0534 0.0359 0.0186 N = 473
Comments: People generally thought that tariffs on raw materials used for domestic production are high, but the average of import tariffs are lower in the region.
Question S7: What have you experienced or heard / about the work of the Afghan Customs Department?
Respondents may provide one free-text answer
Problems with corruption and illegal activity Other negative experience Processes are slow / inefficient Problems with staff knowledge / professionalism Tariffs are too high Problems with inadequate facilities / equipment The department is improving The department operates well Other positive experience 0.07 0.07 0.06 0.03 0.03 0.01 0.01 0.17 0.56
0 .2 .4 .6 Fraction among special respondents providing any answer
Response Problems with corruption and illegal activity Other negative experience Processes are slow / inefficient Problems with staff knowledge / professionalism Tariffs are too high Problems with inadequate facilities / equipment The department is improving The department operates well Other positive experience
Estimate 0.5574 0.1676 0.07 0.0676 0.0553 0.0333 0.0261 0.0143 0.0084
Lower Bound 0.418 0.1007 0.0283 0.028 0.0224 0.0158 0.0099 0.0058 0.0026
Upper Bound 0.6883 0.2659 0.1629 0.1542 0.1301 0.0686 0.067 0.0349 0.0273 N = 267
Comments: The graph and table above excludes respondents who did not provide an answer or reported no knowledge of the Customs Department.
Question S7: What have you experienced or heard / about the work of the Afghan Customs Department?
Problems with corruption and illegal activity Other negative experience Problems with staff knowledge / professionalism Tariffs are too high Processes are slow / inefficient The department is improving Problems with inadequate facilities / equipment The department operates well Other positive experience Problems with corruption and illegal activity Other negative experience Processes are slow / inefficient Problems with staff knowledge / professionalism Tariffs are too high Problems with inadequate facilities / equipment The department is improving The department operates well Other positive experience 0.66 0.12 0.08 0.06 0.03 0.02 0.02 0.01 0.44 0.22 0.12 0.05 0.05 0.04 0.03 0.02 0.02
Interior
Border
0 .2 .4 .6 .8 Fraction among special respondents providing any answe

Response Problems with corruption Estimate 0.6527 Lower Bound 0.4198 Upper Bound 0.8355 N = 125

Response Problems with corruption Estimate 0.4389 Lower Bound 0.3788 Upper Bound 0.5007 N = 142
Comments: This decomposition by province location suggests that border residents experience or perceive greater levels of Custom Department corruption and illegal activity.
Question S8: In your opinion, how large a problem is each of the following in the Afghan Customs Department?
Respondent assigns a score to each of the options
Slowness at clearing goods Queue lines Poor facilities Lack of service counter or person in tax offices The amount of fees paid at customs Speed at moving goods through customs The process for handling complaints and appeals Low professional qualifications for staff Lack of information on custom duties and procedures Knowledge of customs officers Staff behavior toward citizens and visitors Not enough customs officers Other 0 .2 .4 .6 .8 Fraction of all special respondents 3 Don't know 2 No response 1
5 - Major problem 1 - Minor problem
4 Not a problem
Response was rated Major problem Slowness at clearing goods Queue lines Poor facilities Lack of service counter or person in tax offices The amount of fees paid at customs Speed at moving goods through customs The process for handling complaints and appeals Low professional qualifications for staff Lack of information on custom duties and procedures Knowledge of customs officers Staff behavior toward citizens and visitors Not enough customs officers Other
Estimate 0.3246 0.3198 0.2985 0.2963 0.2906 0.2865 0.2812 0.2374 0.2166 0.1931 0.1484 0.1359 0.0223
Lower Bound 0.2498 0.1721 0.2105 0.1463 0.1276 0.1973 0.1929 0.1621 0.1322 0.1466 0.0978 0.0883 0.0091
Upper Bound 0.4095 0.5152 0.4046 0.5085 0.5344 0.396 0.3903 0.3337 0.3341 0.2501 0.2187 0.2034 0.0535 N = 473
Comments: on average everything is scored the same way, except for the number of customs personal which was relatively not considered to be an issue.
Question S9: What steps would you take to export goods for the first time?
Talk to a successful exporter Contact the local Chamber of Commerce or local business association Contact EPAA or Afghan Customs Department Contact a local government official Other
.2
.4 .6 .8 Fraction of all special respondents Fourth Fifth
First Not selected
Second Don't know
Third No response
Response was ranked First Talk to a successful exporter Contact the local Chamber of Commerce or local business association Contact EPAA or Afghan Customs Department Contact a local government official Other
Estimate 0.6348 0.1756 0.077 0.0636 0.0173
Lower Bound 0.5084 0.0976 0.0433 0.0312 0.0044
Upper Bound 0.745 0.2955 0.1335 0.1253 0.0656 N = 473
Comments: Contacting government officials was one of the least preferred choices.
Question S10: What export-related information would be most useful to your work?
Transport opportunities The customs process Details on trade agreements The visa process The government No response None needed Don't know Other 0.06 0.05 0.03 0.01 0.19 0.29 0.40 0.44 0.44
.1
.4
Response Transport opportunities The customs process Details on trade agreements The visa process The government No response None needed Dont know Other
Estimate 0.4421 0.4352 0.402 0.2887 0.1947 0.0647 0.0475 0.0289 0.0083
Lower Bound 0.2813 0.2864 0.2928 0.1583 0.1125 0.0297 0.0176 0.0092 0.0036
Upper Bound 0.616 0.5967 0.5219 0.467 0.3154 0.1352 0.1216 0.0869 0.0194 N = 473
Comments: Details of trade agreements were considered one of the areas where people thought they need more information.
Question S11-1: Do you know the term: World Trade Organization (WTO)
Yes
0.47
No
0.46
No Response
0.06
.1
.4
.5
Estimate 0.4726 0.4628 0.0646
Lower Bound 0.3579 0.3326 0.0228
Upper Bound 0.5902 0.5983 0.1696 N = 473
Comments: For an outreach campaign, it would be worth reiterating the names of important organizations in trade for familiarity.
Question S11-1: Do you know the term: World Trade Organization (WTO)
Yes 0.40
Border
No
0.56
No Response
0.05
Yes
0.58
Interior
No No Response 0.09
0.33
.6


Comments: While, on average, residents of interior provinces are more likely to know about the WTO, there is great variation across border provinces. For example, in Kandahar, a border province, 87.5% of respondents were familiar with the term, while in another border province, Jalalabad, only 28.7% knew the term.
Question S11-2: Do you know the term: South Asian Free Trade Area (SAFTA)
Yes
0.27
No
0.66
No Response
0.07
.2
.4 Fraction of all special respondents
.6
.8
Estimate 0.2717 0.6609 0.0674
Lower Bound 0.2064 0.5655 0.0232
Upper Bound 0.3485 0.7448 0.1807 N = 473
Comments: SAFTA is known less than WTO
Question S11-3: Do you know the term: Afghanistan Pakistan Transit and Transport Agreement (APTTA)
Yes
0.37
No
0.56
No Response
0.07
.6
Estimate 0.3733 0.5593 0.0674
Lower Bound 0.2144 0.4191 0.0232
Upper Bound 0.5653 0.6906 0.1807 N = 473
Comments: Even APTTA is known more than SAFTA
Question S11-3: Do you know the term: Afghanistan Pakistan Transit and Transport Agreement (APTTA)
Yes 0.52
Trades
No
0.44
No Response
0.04
Doesn't trade
Yes
0.23
No No Response 0.09
0.68
.2
.8
Traders only:
Non-traders only:
Comments: The APTTA is relatively well-known to traders compared to nontraders.
Transcript of Deep Interviews

Interview with Mr. Sayed Mubin Shah, the current deputy minister of finance for customs and revenue affairs: Q 1: What government policies can improve trade in Afghanistan? A 1: Trade plays very important role in economic development of a country. The theories given by Adam Smith to Ricardo, all the theories of comparative advantage to absolute advantage and opportunity, it is important that we should have trade facilities. Trade facilities in Afghanistan have faced tariff and nontariff barriers. We have had really good achievements in the past few years. For example, our tariff system was really disorganized, but now our tariff system is the lowest in the region, which is good. I am not saying that we have done everything we could and there is nothing to be done anymore, I mean that we need to institutionalize tariff policies. For example, if a trader comes to us and says that the tariffs are high and we need lower tariffs, someone else may come and say that tariffs are low and we want the government to increase them. Manufacturers and producers want the tariff to be increased. That makes our job in setting tariffs difficult. We dont have the manpower or the skill to perform research on the best action; we are trying to employ professional people for this. Our other achievement was improvement of procedures. During the past years, we were able to decrease the number of procedures with the help of our friends. I dont know the number, but in comparison with the last decade, we have decreased the procedures. When a trader comes, a T1 is given to him in a few minutes and then he is done. We have made it automatic. The problems that we have are in non-tariff barriers. In customs regions, we have different offices. We want to establish border management and a single window so we could provide more facilities to traders. Single window means that when trucks come in, we will have border police, National security, Ministry of health, Ministry of commerce and other ministries, together at one point. When the truck comes in, it will be measured on a scale and scanner. All the representatives from these ministries will be in one room and when the trader comes in with paperwork and all the data are entered in the computer, all the representatives will be there to see and check, and then they can provide the certificates and paperwork in a computerized form. We suffer funding problems for this idea though. We dont have laboratories yet but we have some limited funds to establish laboratories in some places. Laboratory funds are needed for infrastructure development of a single window concept. We are thinking how to approach donors to pay for these. We are getting cost estimates for construction, technology, capacity building, and implementation needs. These estimates are the first thing that we need. I have already prepared the policy concept so Karzai could approve it.
Other problems are the transit routes; there are checkpoints which take money from traders. In provinces, municipalities and others get money from traders for different reasons. If you go to Pul-e-Charkhi, you will see that they charge money; I dont know where that money goes to: does it go to the government or is it going to a private pocket? The other problem that our traders face is with the tax system, so we distributed the tax payers to three categories. 1. Large Taxpayer 2. Medium Taxpayer 3. Small Taxpayer We need established offices in Kabul and we have established LTO in some provinces like Herat and Mazar-e-Sharif and we are almost done with its establishment in Jalalabad. We have MTO and STO in four provinces and LTO in one. We call it self assessment, so it could help traders. A trader would come; they would say their income, expenses, net income and this would be the basis for their tax. They pay their tax and we acknowledge receipt. Because our traders dont know the law, its hard for them at the beginning. Just to make sure that they dont lie, we have review procedures, a committee sits and checks to see if everything is correct. Our income department employees are very professional, they have graduate degrees. At the same time we have problems too, I am not saying that we dont have problems. If reviewers check a questionable file, then the client is introduced to the review committee. When introduced to the review committee, over 50% of the files are in violation of the law. Thats why, we think that taxpayers are trying to keep the tax law in mind, and compliance has increased. Every department has its own special guidelines. The trader calculates the tax himself. We give the form and our customer service will guide them. (Idrees) So far the traders that I have interviewed have said that its very complicated. For example its in three languages. You should take a look at it. We will take your suggestions. Our technical tax team will have meetings with traders where we will take their suggestions too. (Idrees) Whom should I follow up with? You can follow up with me (Eftekhar, director of taxes and revenue department). There are some other things which can help to facilitate more trade. We want to open doors to trade in the region and we become member of ECHO or any other regional forum. We have signed over 40 bilateral agreements with neighbor countries in different sectors. Q 2: Is there an average transit for how long it takes goods to get from one border to another? A 2: You should do that calculation; we dont have it at the moment. Our problem at the moment is we dont have a lot of control over traders. Traders have
a free hand at the moment; by having some restrictions on traders, we can reduce traders bringing goods into markets, yet not paying taxes. In most of the cases, out dynamic systems can tell us how many trucks have crossed Torkham or Islam Qala and what customs are they going towards. For example, last month, there was a truck that was supposed to pay taxes in Kabul customs but they were lost on the way to Kabul and they never paid it. SCODA gives us the calculation, which we only use for implementation purposes; there is no report for it. For example, yesterday a trader came to get his tax clearance. When he comes back to see if he is clear, it will be checked in SCODA, and our employees will know that he has imported many trucks but they havent gone through customs. We had a few cases of this yesterday; traders want to run away from taxes. In order to increase their profits they are happy with the disorganization. (Idrees) Understanding tax systems is difficult in the entire world. I agree that there is problem; we need funds for a tax awareness dimension. We have a tax calculation manual, Income tax law, and guide form 08, which explains everything in three languages. Q 3: Ignoring all the government related problems for a second, what are some reasons that Afghans do not trade more now a days? It seems like people are changing sectors, but not so much towards trade. In your opinion, what are the reasons? A 3: I am not sure about the percentages, but I think trade during the war years in comparison with trade in the previous year might have decreased, but in current conditions, you should compare the number of factories now with the past years. Then you should check the percentage and you will find it to be more. (Eftekhar) There are only 30,000 companies in Kabul. I am sorry, but I disagree with this question because only 400,000 Afghans work for the government. And the same number might work for NGOs and the private sector. The rest of the people are all busy in trade, not specifically very high level trade but something like shop keeping or taking something from here to sell in Pakistan, these kinds of things. Most of the people we know, when they have returned from Pakistan, they are not interested in owning a farm or working in an office, they are interested in having a private business or trade. A good example is you. (Idrees) I meant international trade not retail and small business. There is international trade. Invisible trade is very common in Afghanistan. Someone goes to Pakistan and brings goods worth 10,000 Afghanis back and sells it in Afghanistan, which increases their money. Q 4: In your opinion, high or low tariffs are good? Whats the general policy position? A 4: General policy position is that tariffs will change but based on the situation and condition. We will go towards WTO. We have bilateral agreements, but there
is dumping going on. I dont know how many sensitive items we have; we didnt talk about sensitive items in transit agreements. Q 5: What would be the best evidence of accountability of government towards customs and trade in general? For example, publishing figures would show more transparency or punishment of staff who are involved in wrong doing. Do you have any thoughts about what might be the best indicators of governments accountability and transparency? A 5: Reform in every administration is based on four things: 1- Administration consists of human resources. In Afghanistan, first the recruitment process should be reformed. At the moment we can see that recruitment process for all government offices, not only Customs, is wrong. Even the standards the conventional system requires is not enough. I am against the definition of capacity, as its defined solely as knowledge, experience, and skill. But you tell me, if someone is a doctor like you, does having experience and skill but not having commitment, will that person be useful to me? Thats why, there is something else beside this definition of capacity. 2- The reason that we cant improve human resources is that we dont have an incentive system. There is someone who is hungry, he steals but he doesnt know. If you are a court, what would you suggest? Three things are necessary for this person. 1-Education is needed, 2- a reminder that laws should be followed, and 3- the person must be fed because he is hungry. An economic, academic, and legal solution. These three solutions are needed. But how are you going to implement them? We should find some food first, which is an economic solution. The hungry person wont listen to you; even if he does he is not going to understand you. Once you have fed them, then educate them. After education, warn them that if it happens again, we are going to punish you. Capacity building is part of it too, we are trying to make it more transparent. We have created a customs academy and classes where we send our employees to learn. Our new slogan is that Our financial independence is our political independence, lets take part in political independence of Afghanistan. This is to create moral. 3- The third base of management is procedures. Procedures include functions, management actions, and time management commitment to decrease non-tariff barriers. These are ongoing. 4- The fourth base is structure, we have a problem in the structure of administration. We are hoping that we will be able to make it better. Management style is not good. When we do good no one appreciates it, but if something goes wrong, then the whole world finds out about it. For example, the media never talks about our new building or our new procedures; it never covers the new professional staff that we hire, but as
soon as a bomb explodes, then the only thing which is covered is that bombing. Everyone in the U.S. and in the rest of world thinks that the only thing which happens in Afghanistan are bomb blasts, and nothing else. Q 6: According to the definition of capacity building which includes commitment, what percent of those staff do you think are committed in customs? A 6: We might have a good percentage. I cant say specifically, I want to do a survey in this regard myself. Regarding commitment, when the last person came to join customs, I made him take an oath on the Quran, so that he wouldnt commit anything against the law, and if he does, then hell accept the consequences. Q 7: For checking the procedure, do you have independent observation? Do you get any reports outside regular chains of command? A 7: We dont have a very well organized channel. We had planned to hire a foreigner and an Afghan. Theyd use a form that would be given to randomly selected people, who would fill it out in different provinces. Then the evaluation would be done systematically. For example, we have a planning department but dont have safety. We would love to be evaluated by people, and tell us about our weaknesses. We would prefer to have a system from the beginning to prevent this rather than being told by someone, but again, its good if people tell us about our weaknesses. (Eftekhar) Its really easy for us to calculate revenue. For example, we can compare before streamline procedures what was our revenue, and how much we had processed. And then we can compare the this years revenue with last years, as well as the number of forms. We take the feedback ourselves. (Idrees) But the problem is that all policies have side effects and positive effects. And improving procedures for increasing revenue decreases the efficiency because it angers everyone for making it too complicated. Earlier, the deputy said that to achieve that optimal level, you need revenue but also fairly simple procedures. I think, someone who is hired internally it would be hard for them to criticize, because there is no incentive for them to be critical, especially if they are subordinates. (Eftekhar) When we make the procedures, we keep in mind 80% of peoples problems. Q 8: In your opinion, what information is really important to be given to traders and how can we get this information to them? A 8: All information is available on the internet, through TV commercials, and news publications too. We use all our facilities; its not enough though, we need funds. We gather the money but we are not allowed to spend it. Usually, the main distribution source is the internet. We are trying to make tax awareness a key issue. We are trying to work with Ministry of Commerce and Industries, so they could provide these programs too. We will provide them with the tax guide or other important information, then they could provide trainings, because the
Chamber of Commerce is to serve the traders. We can send our people to train Chamber of Commerce if they dont know tax information either. (Eftekhar) Information about large and medium taxpayers: both are available on the internet. For small taxpayers we dont worry as much because they have a union, which is known as the Afghanistan Craftsmen Union. Well meet with them to tell them about the new information. (Idrees) They are not saying that information is not available; they are saying that its not digestible, but it was just a comment. Q 9: Do you think trade is a good job for women in Afghanistan? A 9: Why not, there is no problem. Afghanistan is an Islamic country, Bibi Khadeeja was one of the Muslim women who did trade, and Afghan women can follow her too. Women dont have to travel themselves, they can send one of their employees or they can also travel with their husband or brother. Q 10: Will increasing trade result in an increase in employment? Q 10: We have partial equilibrium and general equilibrium in economics. In different conditions, people have different needs, and based on that it is judged whether utility and productions are maximized. You have to first find a partial equilibrium, and then general equilibrium and stability can follow. Then you can say if trade is good or not. Given money market supply data, one can calculate an answer. At the same time, if you think that home production might employ 100 people, but importing the same thing from outside, we might have 50 people indirectly employed. This needs studying as import substitution can have a negative impact on the goods which were produced here. In that case, it means that trade is not good for employment. Interview with Mr. Qurban Haqjo, the current head of Afghanistans chamber of commerce: Q 1: What government policies could improve trade in Afghanistan? A 1: We have to increase the quality of our products in accordance with market standards. This increase in quality will include the quality of goods themselves, its packaging, and getting them quickly to the market. Its important for our fresh and dry fruits to meet the requirements of quality certification. Second thing, we should have speedy air and road transportation facilities with low prices so our goods can compete with similar foreign products. This includes paved roads, elimination of check points, improvement of airports, and the establishment of a well-equipped cargo system. Another thing is marketing for Afghan products by having conferences, exhibits, and match making events in countries where Afghan products have markets, such
as Europe, the U.S., the Middle East, and in our region. Afghanistan economic capabilities and Afghan products should be demonstrated in these countries so we can develop better markets. Security is important. Without security you cant define you supply and demand. Without security, the government cant define its expenses. Risk of fire and theft by Taliban is high. Second thing is policy. Government shouldnt act as a competitor but should act as a policymaker and a facilitator in the market. Today in trade, government gets money from traders for no reason. Government should have an agenda; it should know of economic growth opportunities, how to best use current resources, and how it can provide growth opportunities for a sector. Government is missing these things today. Lack of a transparent economic policy is another problem. Currently its not transparent at all. Its very complicated. Tax laws should be so simple that people should know how much they have to pay, but its too complicated at the moment. There are different kinds of taxes, with different rates: how to pay, when to pay everything is very complicated. Even the procedures are complicated. Tax forms are in three languages, which itself creates confusion. There is no company in Afghanistan which could meet the demands of the tax forms. All the data on those forms have been copy and pasted from other countries like the U.S. Its exactly why a trader is ready to pay a bribe, he wants to be done with it. Its a great source of corruption. Its not important to have high or low tariff, existence of a good policy is important. First, self sufficiency of Afghanistan in areas where it has competitive advantage should be a priority. Second is a capability of people. A person with 5000 AFS salary from government has 5000 capability to spend, and he cant spend more than that. Thirds, we should study comparison tariffs of our partner countries. We should study what Pakistan does. Whats their trade policy with Afghanistan? With the new agreement, Afghanistan wont be able to import goods from India. In the future there might some changes. But its good that our trucks can go to the ports. Government should provide cooler storage facilities. Today, medicine or other goods are imported as samples first to be checked in Ministry of Public Health. These samples stay in Ministry labs for days. These labs should be in every customs department, which would help quite a bit. Roads, trains, electricity and energy are important core infrastructures that should be established. (Idrees: Is our marketing week?) Yes, its really weak. In fact, we dont have marketing. If we take a look at our businessmen who go to other countries, none of them are professional. They spend their nights in discos and sleep during the day. Instead, they visit a few markets, take product catalogs of Afghanistan, a sample of Afghan products and if
possible inform us about a few exhibits so that we can send our businessmen to take part in it. It will really help in the improving our exports. Q 2: What do you think of the Afghan tariffs? Is it too high, low or reasonable? A 2: Our average tariff rate is 5.5%, which if we compare with the world, its very low. The average for Pakistan is 55% to 60%. Our tariffs are low, and its because we dont have any production inside Afghanistan, our purchasing power is low and we import all our needs. It had and it will have its negative impacts on our agricultural products and small and newly established industries. Q 3: What kind of tariff would help Afghanistan the most in the current situations, low or high? Q 3: At the moment, low tariffs would help Afghanistan the most. Q 4: What would be the best evidence of accountability of government? A 4: The first thing is implementation of the 10th, 11th and 13th articles of constitution. In reality, the government should act as sponsor or facilitator and should oversee the implementation of law in the market. The tenth article is about a market economy, where the government is obligated to support private investors. The eleventh article states that all the imports and exports should be arranged in accordance with the constitution, and should be for growth purposes of Afghanistans economy. The thirteenth amendment obligates government to support small and medium ownerships and handicrafts, and provide them with growth opportunities. Second, implementation of these laws will need clear rules, procedures and creation of related departments, for example creation of ANSA under AISA (for quality control and standardization). Bringing together similar works under one department instead of several ministries creates transparency and improvement in procedures. Next thing is recruitment of individuals who are committed and who believe in a market economy. There are market economy laws, but the implementers dont believe in a market economy; on the contrary, they prevent a market economy implementation. This can be seen practically in Ministry of trade, Ministry of Mines, Ministry of Transport, Ministry of Agriculture, and Ministry of Energy, who are against private sector. According to article 42 of the constitution, government must be very transparent, an equal provider, accountable, and must implement tax laws on everyone. Today, there are certain companies and NGOs who are exempted from import tax. Issuance of such exemptions to companies destroys transparency and competition. This environment becomes corrupt, bribery starts and results in a mafia economy. Once taxes are collected, it should be categorized and then announced. For example: last year, income tax from four telecom companies was $130 million
USD. This should have been announced, same as the revenue from the Ministry of Trade, Ministry of Mines, and other sources. Private sector should know that certain amount have been added to the governments revenue, which provide the children of this country an education, treat the poor in hospitals, and help the government maintain security and law and order. At the moment, people dont know about taxes so how can they be encouraged to pay taxes. There should be transparency in the tax system so that people know how the government is spending their money. People hear that the president has a secret bank account, out of which he transfers $20 million AFS to the governors of insecure provinces every month. This money comes from people, why should it be spent that way? Who is going to be accountable for it? There is a project in Ministry of Finance, through which every sector and every company who has paid taxes will be announced to bring transparency. Q 5: What form of trade and customs information delivery is convenient to deliver important information to Afghan traders? A 5: There are difference ways, but the most convenient to deliver is television. In Afghanistan people dont have postal addresses, they dont answer phones, they dont check internet, and its not that traders will come themselves to get information. Newspapers are useful too. Email and websites are not useful. Q 6: What new trade and customs information do you think traders want to see in printed materials like leaflet, booklet, and brochure? A 6: Contracts, biddings, issues related to tax and tariffs, and import tax rate of other countries international agreements. Those who are interested can download a copy of agreements. Q 7: Is trading a good job for women? A 7: There are around 750 women traders out of 35,000 (total number of traders) who are registered with Chamber of Commerce (around 2.2%). These women work in handicrafts business, family businesses, consultancy services, industries, factories, and some in industrial parks and agriculture sector. Q 8: Generally, are other traders concerned about trading with a woman? A 8: Foreign traders cant trust the Afghan women traders from a business point of view. Women are underestimated. More credits and loans are available to men than women. Their education and work skills are low, but they have an important role in economy of Afghanistan. The annual income from carpet is an average of $150 million USD; 80% of these carpets are weaved by women. Processing of all the dried fruits are done by women. All our handicrafts are done by women. Needle industry and clothes industry are all done by women, but people might not know that.
Trade is not a good job for women. Travel is really important for a trader, and in Afghanistans society, women cant travel unless they have a man with them. But in general they can do business. Q 9: Who would benefit more from free trade with other countries? A 9: Importers, shopkeepers, and consumers will benefit the most. Q 10: Is trade good for employment? A 10: No, it decreases employment. If we focus more on industry, services, agriculture, and mines then employment increases. Trade is all done by a limited number of people. But the smallest company can provide job opportunities for five people. Q 11: Which markets are attractive to our traders at the moment? A 11: India is attractive for exporting. Q 12: What percentages of our imports are re-exported? What promotes reexport? A 12: All the imports are for needs. Any good imported for market purposes cannot be re-exported. Illegal re-exports are not registered. For example: At the moment we are allowed to import right hand cars (Steering on the right, British cars), which are specified by the president that can be imported, but only for spare parts. But instead, cars are smuggled though Khost and Paktika to Pakistan. If traders re-export legally, there will be a high percentage of taxes, and then traders wont have any profit. No trader is going to pay taxes at the time of import and pay again to Pakistan while re-exporting it. The best re-export is in Dubai, where there is no tax and tariffs. You can import and export anything. The only importance for the government is the charges for the services. In the past, borders were open. Goods such as cigarettes, washing machines, refrigerators, and televisions were imported to Afghanistan because tariffs were high in Pakistan. But now Pakistan doesnt allow import of any of these, because Pakistan is producing them. We could export them to Pakistan but the tariffs would be 200% or 300%. Pakistan is protecting its industry. When Dr. Ashraf Ghani came, he increased the tariffs for Pakistan. In return, Pakistan decreased the tariffs on the import goods. So that the goods wouldnt be used in Pakistan and it would return to Afghanistan. For example: Cell phones used to be imported to Afghanistan and then exported to Pakistan, because tariffs were high in Pakistan. But now, when the prices are high in Afghanistan, cell phones are imported from Pakistan. Common routes are Jalalabad and Paktika. Kunar is mountainous, so its hard to get goods there. Q 13: What are main the impediments to trade in Afghanistan?
A 13: Education. Today in general we dont have professionals in education sector. When installing a factory, there are no Afghans to be recruited; everyone needs to be hired from Pakistan, Nepal, and other countries. Its really expensive to pay for this, such as living expenses, visas, transportation, and other expenses. Next problem are the markets in Afghanistan. In Afghanistan markets, nothing is predictable. There are economy mafias; there are people who dont pay taxes. By mafias I mean people who have strong relations with government. They have black money, once they enter the market they knock their competitor out of the market. Mafias have facilities to compete but others dont. Another thing is lack of development in the private sector. Capacities are low; everyone thinks about immediate gains, no one cares about capital. Even the government doesnt think about improving the capital; the government should encourage the traders to increase their capital investments. Q 14: What, do you think, are the biggest reasons why Afghans dont trade more? A 14: I believe that trade has in fact increased. Interview with Prof. Faruqee, the former minister of transport and current professor of economics at Kabul University: Q 1: In your opinion, what can government do to improve trade in Afghanistan? What things they have done so far, negative or positive? What things can government do, but they havent done yet? A 1: First of all, something I believe in is having a strong political agreement from government for accepting a market system and trade freedoms. But unfortunately during the past eight or nine years, in spite of presence of 10th, 11th and 13th articles of the constitution, in most of the cases decisions which are made, that is economic policy decisions, traders are not treated fairly by the system. In most cases, in the past eight or nine years different administrations and departments have caused problems in different sectors of trade and business for different reasons. Government policies regarding trade improvement and trade development should be to move from classic ways and towards the new ways. There are big steps that government has to take regarding trade in Afghanistan. Per the constitution, government is obliged to help the private sector, but unfortunately, government is still shaky in this regard. This unfortunately sends the wrong message to our traders, businessmen, manufacturers, and those who want to invest in Afghanistan. The negative message that government still doesnt believes the way that it has chosen, whether its the right way or not, means we are standing at a crossroads; we act in accordance with market economy one time, but the next, we act in accordance with different systems. Thats why its one of the big problems that out business and trade sector have faced during the past eight or nine years.
Secondly, the government needs to pay attention to law and implementing it. The government has taken big steps in legalizing trade but there are still some laws which need implemented, some that are in the process, and some which are not yet ready to be implemented. Again and again, we follow the laws of previous systems, which is contradictory. This deserves government attention. Our representatives in parliament have created delay and problems in most of the cases. Third is focusing on the trade institutions. Government has treated private institutions as if these institutions will take over the government institutions. Government institutions think of private institutions as their rivals, instead of thinking them as friends or coworkers; this is an attitude that needs to change. Q 2: The attitude that you explaining, do you think its because of lack of understanding of policy solutions, or do you think its because people who work in policy making positions are involved in the market, and thus private sector is treated as rivals instead of colleagues? A 2: There is a third reason beside those two. I strongly believe that beside the lack of understanding, there is no commitment. People who are working in key positions, they dont believe in the market. Its either because of lack of knowledge or due to a lack of commitment as I said earlier. When a minister doesnt believe that a market economy helps increase goods in the market, he will never implement it; even he if he has the knowledge, he wont take actions. You might have heard when our leaders speak in official and non-official ceremonies, they still believe that this system is not the right system in Afghanistan, they use words like we should have the control of the market, we cant leave the market free, etc. When leaders believe in such ways, then obviously they will create big obstacle for trade, they dont believe in the system and they wont take time to implement it. They might show in the presence of law that they are supporting it, but behind the scenes they wont cooperate. These two problems, lack of understanding and knowledge and they dont have believe either are real issues. The issue of competition, or what we call it today as corruption, comes down to which people know the right, influential people. This isnt open and equal opportunity as promised and has a negative impact and sends wrong message. Today, most of the trade factors have been marginalized: creativity factors, new ideas factors, and commitment factors. These factors have been marginalized due to the presence of these policies. Government takes sides instead of being a regulator. In some cases government still sacrifices huge profits in the private sector for the small government institutions. For example, you heard last year that government went against all market principles by supporting Arianna, a governmental institution, and this year they did the same. Last year we showed our strong disagreement but they said that its the policy; our stance was, how can the constitution be in conflict with the policy? In the constitution it says that government will act as a regulator to provide opportunities so all the businesses in
the market will compete equally. We agree that most of the government institutions still need help but if supporting a small government institution goes against national economy policies, it shows where the government commits itself. Thats why government doesnt have a commitment toward privatization and establishment of factories. Government has always backed away, and it is assumed that government is still incapable of handling the market system. So we are at a crossroads, where we pick and choose what we think is best. I strongly insist that this is the biggest problem today. Another problem, which I think government still hasnt been able to deal with it, is appropriate support strategies which could create a good field for competition. For example, from a legal point of view, unfortunately the government has established an organization called AISA, but we still have problems in Customs, Ministry of Finance, Transition and Transport with illegal checkpoints on the road. A trader takes the risk relying on the market information available, whether accurate or not. Q 3: Do you think the main idea behind all these policies is that government is afraid of monopoly businesses, or mainly there is a bad ideology in the central government? A 3: Apparently, they claim that the government is afraid of a monopoly where traders might take over the market and threaten government control. Government must be committed and be ready to act against a monopoly, but this facility is really weak here. We have to accept some risk and loss. If government is not committed, mafias will take over. But as I have studied the past eight or nine years, government still doesnt have the commitment. We have to follow market ways because of the commitment that we have towards the constitution, towards the international community, and towards the Afghan nation. There is no doubt in the benefits of trade today, but as much as we are delaying it, its a loss and it cant be recovered. Q 4: Ignoring all the problems that are caused by the government, beyond that, what are the impediments to trade in Afghanistan? A 4: Another problem regarding trade in Afghanistan is transit. Transit has always been a threat to us. Another problem to trade is unfortunately the services which are provided for the trader, especially in infrastructures like customs, transport, and Ministry of Finance because we are still unable to establish a one window stop all over Afghanistan. Traders face old rules and regulations, checkpoints, bribes, and anti-government groups, which impede trade. Another problem is instability of the currency. Fluctuations against the U.S. dollar cause problems. We are still unable to implement effective monetary policies or to follow ways which can stabilize currency. This can be a threat to trade. The next problem is cheating; cheating in quality control, there is no quality control. You know that today, medicine, consumable goods, electronics, all of
them are brought illegally to Afghanistan markets. This is a big problem which results in some investors leaving Afghanistan, because the investors use resources to introduce a good in the market and import it legally, but then see that someone else brings good in from somewhere else illegally and supplies it for half-price. Its a big problem that we dont have quality control at the moment. Another problem is low quality services within businesses like packaging and facilities to make goods look better in countries located far from us. (Idrees) We chose 7 provinces in Afghanistan and asked people about the problems in trade, and most of the people mentioned the low quality of goods in the market is the most important negative impact of more trade in the Afghan economy. Its really interesting, that most of the people take low quality goods so serious comparing to some other concerns. Q 5: In general, most of the people hypothesize that we if look at the trade 200 years back, if we compare the number of people involved in trade before the wars and after wars, it has decreased, do you think it is true? If yes, what could be the reason? A 5: Yes, it is true that the number of people involved in trade has decreased. Its the threat that traders have faced during the first years of Afghan government. You know that annually hundreds of millions USD was coming into Afghanistan as industrial trade. After the coming of Dr. Ashraf Ghani, as a person who said that this trade is illegal, they worked really hard to close this route. This was smuggling and traditional trade which would benefit Pakistani industries, but unfortunately the conditions didnt change. The products of Afghanistan in the markets of Mandawee, Pul-e-Kheshtee, Baghali Mardan and Bagh-e-Qazi, dont exist anymore due to this illegal trade. Unfortunately, these problems were a big threat to trade. Q 6: Do you think one of the reasons that Afghans claim re-export is their rights is because of the Durand line? A 6: No, it is because of the life of people on both side of the border. The people who are located on both side of the border, this re-export has been their historical right. Q 7: Do you think average tariff rates are high or low? A 7: If we compare to other countries in the region, its low. Its 3% or 4% lower. But in reality it is much higher than it should be. If you look at tariffs independently, its say 20%, 15%, or 10%; then other institutions add to it and it grows, becoming 50% higher than the tariff rates of neighboring countries. These non-tariff extras are high. Q 8: Do you think non-tariffs are good or bad? Is it even bad for protection of industries?
A 8: Its absolutely bad. If countries use polices against our policies, then there should be regulation to prevent them, and I dont think we can protect our industries through tariff. Its very rare that there might be goods which we can protect with tariff, and if there are such goods, they can decrease and make tariffs reasonable if free trade is implemented in the market. Industry experience has shown that if businesses grow under the supportive tariff policies of governments, those trades will lose as soon as tariff policies have changed. Because these businesses have not grown based on actual principles of business, government has always fed them. We cant increase the tariffs on the goods in a country where 50% of the people are below poverty line. Most of the goods which we favor are the goods which are consumed by the people below the poverty line. If we increase the tariff on the traders, they will increase the price on the consumers. Q 9: For a moment, if we look at it from the government point of view, how can government end the problems of unemployment, because government might have to meet the requirements set by IMF? What about unemployment? A 9: Policies of international organizations like IMF, dont have a good impact on countries, but they do need to be followed. Besides this, increases in employment and economic growth are another problem. Policies that IMF has implemented in other developing countries are often for their own needs. IMF has not implemented policies which can increase the employment opportunities. But a country like Afghanistan, which is floating on the most valuable mines, by using them efficiently and effectively, Afghanistan can pass through these conditions quickly. You know that today, the natural resources of Afghanistan need to be developed quickly, so we are not dependent on international aid anymore and we dont have to follow the policies which have a negative impact on us. Thats why I think its possible for us. Other revenue opportunities can be found by looking at the experiences of other countries. At the moment, different sources show the governments revenue to be 1 billion, while the real revenue is 3 billion. These are all due to wrong policies, low capacities, and irresponsibility. If we can organize and manage revenue collection, we can rapidly increase our income, find new means of income, and at the same time move towards using our natural resources. We should really trust our constitution, we should let private sector to play its role; let private sector grow as a backbone of economy. In the past eight years, we went and we tried to invite people to come to Afghanistan and invest, but people didnt do it. Those who did come, they are either here for a short term or they have personal, illegal interests here. Real investors who follow rules and principles will never come with the message that we send them with our actions in the past eight years. If we had trust in this system and we had commitment, today we could have the biggest foreign investors in this country; we should have had invest from the Afghan Diaspora. They would have come rapidly because this is their country, the growth opportunities are much higher here than in other countries; some have already come but the rest are not coming because of security, corruption, lack of government attention, insecurity, lack of infrastructures, and finally because of
these negative messages that we have been sending. If you look around the world, no more than 5% of people are employed in government; during the good days of Afghanistan, we had thread factories, cooking oil factories, and other factories. Even during that time, the percentage of people employed within government was no more than 5%. Even today, if we ask the government today to employ 10% of the people, who is going to hire the remaining 90%? Thats why, its the private sectors responsibility, and we wonder why the private sector is afraid? Is the private sector afraid? No, the private sector is like an migrating bird, they will migrate to wherever they find food. Its just the government who doesnt have the commitment to help the private sector. Q 10: What kind of information do you think is highly needed by our traders and manufacturers inside Afghanistan and whats the best channel to deliver them? A 10: I think there is an organization by the name of CSO, but their research methods, data, and information is out-dated thats why they are not used often. NGOs and organizations have also done some research on specific issues but this information is not collected in one place that would be accessible to everyone. The things you mentioned above might be useful in some cases; those trading based on principles, especially our young traders of today, traders who have seen the world. Not for the traders who have inherited trade from their fathers, they trade in specific circles. For those traditional traders, prices and economy policies of government are important. When they see that tariffs have increased or decreased, thats whats important to them; they think about short term issues. Q 11: In your opinion, do you think trade is a good occupation for women? A 11: Yes, we have created the Afghan women traders organization under the Chamber of Commerce of Afghanistan which has created hundreds of jobs for women. In Afghanistan, there might be several women who are doing international trade. Q 12: Who is going to benefit the most from free trade in Afghanistan? Most of the people think that when trade increases, those who have connections with the government will profit the most, what do you think? A 12: Everyone will benefit, especially the consumers. After consumers, businessmen who are committed and creative will benefit. Middle-sized traders will profit the most, because when trade increases, those trades which are small grow to become middle, and the ones who are already big will be limited in number. When we are talking about free trade, it would illegal if people still benefit from a connection to the government. In these current conditions, only those connected traders will profit the most. Under current conditions, specific traders who import fuel, cooking oil, and maybe some other goods, their numbers might not be more
than ten, but they are the ones who trade illegally. If there are policies and there is real free trade, I think that consumers will benefit the most. Interview with Mr. Noor Khan Haidari, the current CEO of Azizi Commercial Bank in Afghanistan: Q 1: What could government do to improve trade? A 1: The first thing government can do is to provide more facilities in customs. Ministry of Finance and Ministry of Trade, these two organizations should be the priority, but unfortunately they have the lowest capacity, especially in Ministry of Finance. The first thing government can do is to bring professional and qualified people, who have understanding of finance and trade. Nowadays, anyone who comes from another country, has a good command of English, and knows someone influential in the government gets a really good position. This weakness of government is an obstacle towards economic development of Afghanistan. When I was at the Ministry of Finance, I had an officer in the budget department who had a bachelors degree from Peshawar Princeton. Now he has a very high position within a different ministry, even though when he was my officer, he didnt know anything except Excel. We couldnt use him for anything, but now hes important. Its a big shame. Now how can government improve the trade with these kinds of capacities? Another thing is an overall system, which there isnt. There is no system in Ministry of Finance, neither in Ministry of Trade, nor in Ministry of Economy. There are a few things which are really important: 1. 2. 3. 4. System People Human Resources Process
Process is very slow. This process will never speed up; it will always be this long. If it gets faster and shorter, then corrupt employees cant benefit. As long as this process goes and takes time, corruption happens. Everyone is taking advantage of it; no one is trying to make it short. The bank that I work for is a small organization, but I am unable to improve the system because I cant, because the corrupt individuals income channels will end. So, if you imagine this on a larger scale then you will find the same result. These three problems exist. The issue of membership in WTO is profitable for Afghanistan. Most of the people say that this is not beneficial for the business in Afghanistan, but I disagree. Because if doors are opened, in reality we profit because no foreign trade is interested in investing in Afghanistan, no foreign trade is willing to send their goods to Afghanistan because risk is very high. But on the other hand, doors are opened to us. We can export our goods with low tariffs to other countries. I think it will be beneficial for Afghanistan. But again it will depend on how much Afghanistan government will be able to promote this. Government should ease
work opportunities. With the current facilities that we have, its impossible to do it. More trade is good. Q 2: Who would benefit more from increased trade? A 2: Everyone, because when one large business gets the opportunity to sell something or produce something, thousands of other businesses get work opportunities. In international trade, small businesses are the ones who dont get much profit because they dont have the capacity to produce more; as a result profit stays low. But these small businesses are the transformers of raw materials into goods which will help the big businesses to produce. Also, when a foreign country or an Afghan company invests in Afghanistan, the investor and other companies beside will benefit. It will be beneficial for normal people of society, the government, and other members of society. When doors are opened, relations are made, people will be able to get visas more easily, and people will be able to visit its beneficial for the society, indirectly and directly. Q 3: Is more trade good for women at the moment? A 3: Yes, because this society is ruled by men. Gender equality will be implemented the day when women are more involved in society. When doors are opened, its very natural that there will be exchange of ideas, exchange of goods, and visits will have an effect. It will help in education and capacity building of women. We went to Nepal and we observed that women have great influence on the economy of the country, even in Malaysia, Indonesia, and Bangladesh. Even though they are very poor, women have as important a role in the economy as men. Now Afghan women will profit from this as well. Q 4: What are main the impediments to trade in Afghanistan? A 4: Insecurity is the biggest obstacle at the moment, insecurity on the borders and inside the country. Providing security is very important. We talked about the technical ways to facilitate trade, which were Ministry of Finance and Ministry of Trade; non-technical issues require the likes of Ministry of Interior, National Intelligence and Ministry of Defense to provide security. The main source of corruption may be the Ministry of Interior. In the past it was really good, security was not corrupt. People were not worried about security. People in power could do anything, but they didnt because there was law and order. But in Ministry of Interior, starting from soldier to police to commander everyone was a thief and they are still. They would stop you on the road and ask for money. Small and old vehicles which might transport all kinds of illegal stuff are not stopped, but new and big vehicles are stopped to get some money from them. This doesnt provide security. If there is security, traders can work better. This was internal security; external security is not so good because of the Taliban. More security will bring more employment, manufacturing, and trade opportunities.
Q 5: If we compare trade in Afghanistan before the war with the past six to ten year, in your opinion, do you think trade has increased on decreased? A 5: I dont know so much about the old days, but as far as I know, it has increased in the past few years. Because in the past, education was considered very important and interesting, slowly as time went by, population in the cities increased, and people in the cities paid less attention to education. On the other hand, the education level in general is very low; when it gets low, the number of people in universities is low too. As these group increases they have to find a way to get food, so they turn to occupations like trade. From that point of view, people turned more to trade. Also, in the past international relations were not so good. Even though Afghanistan had good security, a better status among nations, people were able to travel easier, get visas easier but transportation, import and export facilities were not as good as it is today. It would cost more or routes didnt exist. Thats why trade has increased more now than compared to the past. Q 6: In your opinion, on average are Afghanistan tariff rates higher or lower from what they should be? A 6: We can say that they are high but some could be considered low. The problem in Ministry of Finance is, working for tariffs and customs department doesnt only require understanding mathematics, statistics, and economics but you also should know your geography. One should know the people of different regions, cultures of different regions, and should be totally familiar with Afghanistan. You should also be familiar with different sectors such as health and education in different parts of the country, so one can make better decisions. But at the moment, people come from all across the world to make tariff laws, that this much tariff should be reduced or taken. No one estimates whether changing this tariff will decrease imports, whether that tariff will create production capacity none of this is studied. When you implement a tariff you calculate the number of manufacturing companies, how much production ability the country has, and in what areas. For example, in Hazarajat, what kind of clothes are people interested in? Or, for example, in the south no one buys Iranian clothes because of the discrimination that exists, or in the north people are not interested in buying Pakistani goods. These are the social factors which no one thinks about it and now cares about it. Most of the people who are here from Pakistan, they dont know anything about Afghanistan, they dont know how many provinces Afghanistan has. Then how can they make a good tax policy? Thats why, in most of the cases when tariffs are made, they are imaginary. On the other end most of the traders are illiterate. Because of the influence in the government, they come to government without any official procedures and ask for deduction in tariffs. If our traders would go officially and were literate, they would not do so. Because the production capacities are very limited in Afghanistan and in all cases, tariffs are high on products which are grown locally too. This is good as it helps to support local Afghan products. There should be no
tariffs on exports; in some cases there are tariffs on exports too, which will have a negative impact on exports. On the other hand, not having good trade relations with other countries will also have a negative impact on trade. For example, when you put a high tariff on Pakistani goods, then they are going to do the same thing, which can price an Afghan out of a Pakistani market. Q 7: In your opinion, are high or low tariffs goods for Afghanistan? A 7: Well, if we come to your first question, if we go to international markets, we cannot increase our tariffs. Lets say we are not in international markets, then we come to the question whether we have the capacity or not. If the country has good production capacity then its good to have high tariffs. In all cases, high tariffs are not profitable in Afghanistan because we dont have the capacity to produce all our goods and needs. Besides, people dont trust local products and prefer to buy foreign products, thats why lower tariffs are better for consumers, not for government though. Q 8: What do you think would improve the sale of Afghan products abroad? A 8: Education for producers on packaging, cleaning, and finishing the product can improve the sale of goods abroad. In Afghanistan unfortunately people think about how to get the job done. For example, if you tell them to nail a nail on the wall, they will only think about getting that nail in the wall, they dont care if nail goes straight or not, they dont care if wall gets dirty, they dont care if wall gets damaged, they just want the nail on the wall. Finishing is not given importance. If you clean the raisins, put in a good looking plastic bag with a label inside it, then everyone will prefer to buy this product. But if you send raisins without packaging, none of them will be sold. Its very important. Q 9: What form of information can help a trader to trader better? For example, information about tariffs in other countries would help better, or information about different rates in the market, information about the trade agreements and their conditions or general information about customs, what would help? A 9: Things that you said might help around 20%, the remaining 80% is the demand of the society. What does society demand, for example? They demand this cup and kettle. Demand exists, but what kinds of demand, what color, and what design. Again, we come back to finishing. They dont care about the demand and its details. They just focus on demand that someone needs this cup and kettle. They dont know that demand in other societies are not only the kettle and cup, but is also for its color and its design as well. Q -10: In case the international community might want to educate Afghan traders about finishing their products and international demands, what channel of
information would be good to contact traders? Website, television, magazine, newspaper, or what? A 10: None of the above, face-to-face training or workshops would work. Television would be too expensive; secondly, when you would be broadcasting the program, traders would be too busy drinking and having fun. But if you want to get them together and make them understand, that would work; they are not literate to read websites. Q 11: What is the best way to reduce unemployment in Afghanistan? A 11: Good question. There are many ways. If everything discussed earlier is implemented, there would be no unemployment. If there is a system, short procedures, existence of law, professional, qualified and experienced personnel, growth of financial system, and security for further investments, unemployment is an afterthought. In Afghanistan for the next 20 years, construction, mining, and transportation will have more employment opportunities. Q 12: What role do you see for banking sector in improving trade? Most of the traders that we have interviewed, theyve complained about interest rates, saying that the minimum is 12% but that it can be as high as 24%. They say they have no access to credit. A 12: Banking is the heart for the trade, its the blood. We are already providing blood. Access to credit is hard for some and easier for others. For example: wherever in the country the head of the bank is from, its easier for groups of people from that area to get loans, and when other groups come, they dont get anything. But access to credit is pretty hard, because here we give money based on collateral, which can be land, etc. Now most of the traders dont have land or a house to place as collateral, and this makes it hard for them to get loans. Another issue is that, there are many restrictions and requirements on loans. The business should have a business plan, cash flow statement, and license; it should have an audited balance sheet for at least two years, which most traders dont have. Traders dont know what computers are, what a balance sheet is, and so if they dont know the requirements or have the needed forms, we cant give them a loan in accordance with the law. Now even small businesses are forced to make up documents, whether legal or illegal, but they just come up with something. It has also increased the employment opportunities for Pakistanis; they come and they make a balance sheet for three thousand USD. There is only one bank which charges 24%, the other banks charge lower interests. For example our bank charges from 12% to 15%. We havent charged more than 15% so far. But there is a bank which has charged even up to 50%. The Afghanistan Bank should force banks to act according to law not in accordance with personal preferences.
Interview with Mr. Sepahee, the current director of handicraftsman and small manufacturers union in Afghanistan: Q 1: What government policies could improve trade in Afghanistan? A 1: One thing which is very clear is to implement a market economy system very quickly; it means that before rebuilding the infrastructures, before reaching an economic growth stage, we open the doors to neighboring countries products; Since we didnt, as a result we were unable to compete with the developed industries of a country like China, with the current facilities and technical equipment. Thats why we faced many losses; most of our small local productions are extinct and even today our industries in Herat are in danger, because Iran and other countries have started implementing dumping policies. Our traders were saying yesterday that if the conditions continue to go like this, around 250 newly established production institutions which are active in Herat (working mostly in food sector) will be closed soon. Thats why the Afghan government should take three issues very seriously: 1. Tariffs policies should favor local products. There should be high tariffs on goods which are similar to goods produced in Afghanistan. Tariffs on raw material and production equipments should be decreased. There should be monetary motivators for private sector, especially newly established businesses to help them stand on their own feet. 2. The second thing which is very important is access to loans and credits, especially in the small business sector. There are some international microfinance institutions that provide small loans to businesses, but considering the expenses of these businesses, the interest rates of the institutions are very high. In some cases the annual interest rates goes up to 24%. In current conditions in Afghanistan, its a very high tax, as a result of which businesses are not encouraged to take loans. Thats why, facilities should be provided for taking loans and interest rates should be decreased to 5% to 10%. These microfinance institutions get their money from international organizations, but because their own operating expenses are very high, they have to increase the interest to make a profit. The only bank with a little lower price of 12% is National Bank of Afghanistan (Bank Millie Afghan). The lowest rate is 12% and the highest rate of interest goes up to 24%. By charging 2% per month, at the end of the year it becomes 24%. 3. The third thing is use of the latest technology. This is a very important issue, but as there are shortages in capital and limited access to loans, businessman cannot use these technologies. Another thing is capacity; most traders have taken over the businesses that their forefathers ran, so its not like trading has become an academic subject to learn. Thats why we cannot be up to date with the latest technology. There are some skills but the capacity building should be done. Markets are very important, our people are not in the condition to buy decorative and luxury goods such as handicrafts, so they need to be sold
in international markets. Due to insecurity there arent many tourists here either. Q 2: What are the main reasons that Afghans cannot trade more in international markets? A 2: One of the big problems is transit routes. We dont have access to water for shipping. Secondly, since we dont have the facilities, we have to ship goods through Pakistan and then Pakistan re-exports our goods under its name. The expenses would increase rapidly if we send the products by air, so to prevent the increasing cost we have to transport them through Pakistan. The carpets are processed further and then Afghan carpets are export under Pakistans name. We have the same issue with azure stones; the stone is Afghan, but when its processed in Pakistan, its exported under Pakistans name. There are certain restrictions in our laws and procedures as well. In Afghanistan one cannot sell and buy azure stone in open markets but people can buy and sell azure stones in Pakistans markets. All our natural resources are exported to Pakistan and then exported to other countries from Pakistan. Taxes are too high; theyve been copied from developed countries but its impossible to implement in the current conditions of Afghanistan. It has been two years that the government is trying but is unable to implement the tax system. Now the government is issuing some new policies which are against the law. These policies and norms are still too high; it decreases the government revenue and it is hard for the traders and private sector. Q 3: If transportation and access to markets were not a problem, do you think Afghanistan could then be able to compete with other countries? A 3: Yes, even now Afghan carpets have many fans in foreign countries. As the carpets are exported through Pakistan, the prices increase. Afghan carpets have increase in quality and design compared with the past. Our gemstones have good quality and their own buyers in foreign markets. Some other things which are not even related to handicrafts, like fruits, are good exports, but we have problems in those sectors too. For example, Pakistan has increased tariffs 15% on Afghans fruits. Also, Pakistan doesnt allow our trucks to enter Pakistan, which results in the fruit spoiling during transport. These are the problems which are caused by our neighbors. Q 4: What are main the impediments to trade in Afghanistan? A 4: Well, the main problem is again the bureaucracy in procedures, even though Afghanistan Promotion department has brought changes to ease the procedures. On the roads there are illegal checkpoints which have created big problems. Another problem related to capacity building is that goods need to be produced in accordance with national standards; it should have better packaging
when supplied to market. Again, we come back to resources, equipment, low skills, and illiteracy. Q 5: In your opinion, in general if we compare the trade conditions today with the past thirty years (before war), were Afghans more involved in trade thirty years ago or today? A 5: Afghans are busy with trades, but its mostly import trade. Our import and export balances are incomparable. Most of our traders try to have quick income. Manufacturing and producing trades needs time; they need time to acquire land and create a company and it wont produce income in the beginning. But if the trader goes to China and brings a container of goods he profits instantly. Thats why, currently in Afghanistan, import are more than exports. We dont have any problem with the market economy, but its implementation needs the right time. Even now, the U.S. and the U.K. still provide its traders with subsidies. For example in the U.K., the government purchases the wheat at a high price and sells it at a low price. Or for example, when the U.S. felt the threat to its textile industrys 3 million workers jobs, the government increased the tariffs on Chinese textile products. Its curious why the U.S. government can do it, but when we try to do such thing, we are prevented by IOM and are told that we should let the market to be free; everyone can bring anything they want and shouldnt be stopped. Now its the same problem with Japan, because China has destroyed the markets in Japan too. The facilities and the resources that China has for cheaper production, other countries might not have. Q 6: In your opinion, in general, should the average tariff rate be high or low? A 6: I am not in favor of restrictions on imports from other countries. Because I think that import of foreign goods have helped our local goods to improve by making our goods as good as foreign goods. We had a furniture exhibit a few days ago, and we exhibited that how our furniture has improved, but if foreign furniture was not imported, then one wouldnt see the improvement in our products. In the past we were only focused on how firm and strong the furniture was, but now we also have to keep in mind how delicate and beautiful it looks. The tariffs should be reasonable so that our local products can compete with imported ones. The reason that our local products are expensive is that all our raw materials are imported. For example our wood, our glue, everything is imported and it costs us a lot. But if we take a look at China, it produces in lower quality and lower price. Q 7: What do you think of the Afghan tariffs? A 7: Afghan tariffs are low. I can give you an example; I was checking some customs department booklets to see the tariff rates for furniture. I noticed that the tariff rate on chewing gum was 2%, which is an unnecessary product. But the tariff on wood, which is used to make furniture, was 2% as well. Now you decide, who would put the same tariff rates on chewing gum and wood? Wood
tariffs should be lower and government can increase the tariff on chewing gum. As chewing gum importers are powerful people, they decide how much the government should charge in tariffs on their imported chewing gums. Or for example if we take a look at non-alcoholic drinks produced in Afghanistan, when the government increased the tariffs on the imports of other drinks, the import didnt increase and the local beverage companies were able to compete better. They competed so well that today our local companies are able to export beverages with 15% tariffs. Now its ok if the prices for tariffs have increased, because the product has found its place in the market. Q 8: What would be the best evidence of accountability of government? A 8: I am not a trader and I am not in much contact with business, thats why I cant say anything. Q 9: What kind of information is helpful and important for importers and exporters from the government? A 9: Information about markets, information about equipment, basically, where traders can find good equipment and machines. Traders should know about the taxes and tariff system of other countries too. Q 9: What is the best way to reduce unemployment? A 9: Strengthening of local industries and agriculture, which will provide employment opportunities. Big investments bring capital and more profit, but it needs time and security. Most of the traders cant dare to invest in Afghanistan. But the local industries and facilities that we have in Afghanistan are an employment opportunity itself for industrial growth. For example, if today we strengthen a local carpentry house to ten workers, it can get increased to twenty and then later on to thirty workers. We can encourage them by providing loans and capacity building programs. Q 11: Who would benefit more from free trade with other countries? A 11: Big industries like Najib Zarab and Alekozay act like the government themselves. For example, if we take a look, President Karzais brothers are involved in cement, oil, and gas. Aseel Fahim, brother of Qasim Fahim owns the biggest natural gas company in Afghanistan. There are some other traders who are not involved in government but they back up the government officials. Q 12: Is trading a good job for women? Q 12: Why not? If its available for men, it should be for women. In this furniture exhibit that we had, we saw that the carpentry workshop which was owned by women had really good furniture and was ranked third in the exhibit. Women today are investing in different fields. They have the capacity and the
ability to work in different fields. But the only problem is that we should consider this in cities; the old cultures in provinces wont let us implement this new idea. Q 13: When thinking of exports, what are the biggest problems that our traders think of? A 13: I dont think traders think of trade so much. Export is done by someone else. Because they dont have the capital, money, and facility to export, mostly traders products are exported by exporters. So the first thing they think of is which exporter is going to export my products at a good price? The producer only produces and exporters only export. Q 14: How many craftsmen are members of the union? A 14: The union has around 48,000 craftsmen, which is distributed in three groups: 1. Those who produce items like carpenters, goldsmiths, bakers, tailors, carpet weavers, etc. 2. Those who repair items like refrigerator repair, mechanics, and any other repair people. 3. Retailers or services like restaurants and grocery stores. This is a very small group in the union.. We are present in 22 provinces and villages. We cannot travel to insecure areas. The other thing is that the culture of being part of unions is weak in Afghanistan. Q 15: What do you do for them? A 15: We protect their rights with the government and other entities. For example, when it comes to tariffs, we go and talk to the government about the tariff rates. If landlords increase the rent, we protect our union members. In general we are here to protect them. Also, we provide services like internet, training, marketing, and ten to fifteen other services. Interview with Mr. Hafizi, the former head of Afghanistans Chamber of Commerce: Q 1: In your opinion, what government policies could improve trade in Afghanistan? You can talk about the things government has done so far, but the most important part is what government can do to improve trade in Afghanistan? A 1: The only thing that government has done is set Afghanistan on the path to a market economy system, which has resulted to some activities. Other than that, they havent done anything. All the achievements that you see are all a result of the market economy system of Afghanistan, even though its not perfect. When the Afghanistan government had control of the telecommunication sector, gas, and oil sectors and had control over retail, conditions were really bad. For
example: we only had 25,000 cell phones which were not even able to connect provinces together. But based on the green light which was given to private sector and international investment, we had a great development in the telecommunications sector. At the moment we have around 12 million cell phones. This private sector infrastructure is really good; its all digitalized and connected to the world with up to date software and equipment. The prices were pretty high but they are low now. Its amazing to compare the 25,000 cell phones which were not able to connect two provinces to the 12 million which connects us every moment to the world, all during the past six years. This is a very small example of effects of a market economy in Afghanistan. Also, our mass media; its an amazing progress in the history of region and Afghanistan. We have over 20 channels, and more than 70 or 80 devices which telecast locally. Today, government doesnt have control over information and freedom of speech which helps with the implementation of democracy. Without freedom of speech, we cant establish democracy. Other than televisions, we have more than 100 radios which broadcast on the FM frequency. All of these are related to the private sector and are not related to the government. We have around 500 daily, weekly, and monthly newspapers and magazines. All of these are great achievements, which helps to increase peoples awareness. There might be some publications which might want to turn the information and news in their own favor, but in general, our publications and broadcasts are totally democratic. Its amazing for a backward country like Afghanistan, not only Afghanistan but amazing in the region as well, at the moment these things are not available in Pakistan, Iran, Central Asian countries, or even China. From this point of view Afghanistan had a big change and development. With the help of private sector, cables in the cities were fixed. The private sector does have its own deficiencies due to expanded corruption in government, such as making illegal payments. For example, specific monopolies under government control, which are the trade of fuel and general gas, directs millions of dollars to pockets of individuals and has taken the opportunities from the medium-sized traders. Regarding airlines and the transportation system, it has been established all over Afghanistan and as you can see its performance has been quite good. There is no problem in transportation, the problem is with security. But something which is missing is national guidance, or the lack of specific policies which could increase industries and help Afghanistan stand on its own feet. Government has not been able to guide the market economy of Afghanistan towards development. Where the government couldnt do anything, due to a misuse of power, bribery, or corruption in the government, that which was possible, didnt end up happening. For example, we created industries, but besides the ending cost, we had to bribe customs, Ministry of Finance, and local government representatives like governors, which would increase the overall price of products. Thats why we
couldnt compete with competitors goods produced in China, Pakistan, or Central Asian counties. Government didnt encourage the investors by providing credit for creating employment, which reduced opportunities. For example, government could create a very good oil refinery in Sheberghan, which could help to answer the needs of international forces in Afghanistan. This refinery could have helped us to refine petrol, diesel, DC1 (airplane fuel), and other products. We could have served the needs of international forces and if we had any extra, we could have supplied it to countries in the region that dont have fuel, like Pakistan and Tajikistan. Even Iran, at the moment has diesel but no petrol. Besides, we could have produced asphalt from the remains of these fuels, which could have been really useful in paving roads in Afghanistan. We could have also established petrochemical industries, for example, a plastics industry and things which are mixed with plastic like plastic pipes used in buildings. No policies were made; there werent even intentions to help Afghanistan become self sufficient. I think our cabinet, even our president and his advisors were not wise enough to think about these things. We have told President Karzai several times that we should do the following: 44% of our work force is unemployed; employment of the rest of the 56% is hidden by unemployment. For example, government employees dont have anything to do besides drink tea. Its a sort of duplication; a place which needs two persons, government has employed 20 people, which slows down the work instead of speeding it up and the documents which need to be signed by one person, has fifty or sixty signatures. All of these results slow down the work process. Thats why we should really think of creating more employment opportunities, increase government capital, and something which could increase in purchasing power of people. The president would ask what that thing is. We would answer that we used to extract fuel which was used in electricity of Khair Khana and the heating system of Meckrorayan. It used to be produced but not on a very large scale, for example, a hundred or two hundred tons. I mean, we have experience in extraction of natural resources; there were wells where we extracted fuel. Also, regarding liquid gas, we used to produce one hundred and forty four billion square meter gas production before the Soviets came. Russians never bought the gas according to the market price; they would buy it cheap in the years of 1987 and 1988. But in the last year of the Communists government, after the Soviets left, we had two hundred and seventy six million dollars in revenue for our gas production. Gas was one of our main products. Now that the consumption of gas is very high in our country we can be self-sufficient. We had to prevent losses by increasing the pipeline to the capital; we would prevent consumption of wood obtained from jungles, to prevent harm to the environment. Government didnt have any specific policies towards this. You know that we have the biggest and the best quality iron ore mine in the world. But for construction purposes in Afghanistan, every year we import 1.5 million ton of low quality iron from other countries. (These imported irons are made from the old iron). Our suggestion to the president of Afghanistan was that, with the savings of
people in the bank, you should make a policy which could give priority loans to those who invest and work towards economic development. For example: we could have established iron manufacturing factories which could have improved during five or six years. Even if we could produce 5 million tons, we could have used 1.5 million of it; our imports would have been reduced by 1.5 million tons, with a surplus of 3.5 million ton. This industry would have created 35,000 direct employment opportunities and 60,000 indirect employment opportunities, total 95,000 employment opportunities. You know that when opportunities increase, purchasing power increases and it creates circulation in the economy. But unfortunately good actions havent been taken. Q 2: For a moment, lets keep the government aside with all the things it can do but isnt doing for whatever reason; what type of impediments towards business in Afghanistan do you see? A 2: Mechanization of an agricultural economy or business in Afghanistan is impossible without government assistance. For example, 3.9 million hectare of good land in Afghanistan that used to be used for economic agriculture is under the control of government. Government doesnt give this land to anyone else beside their family members. Practically they have taken the land of Afghanistan. If they had given the land under certain conditions, it would have resulted in many big investments. Our agricultural needs would have been satisfied and we would have 100,000 ton of cotton to export per year. We had 20,000 animal wool exports, a thousand to two thousand ton of thread exports for Kashmira (Cloth) per year, which can cost 60,000 USD per ton. Government must make an agricultural economic development program a priority and give some of the lands to investors and then help set up canals for irrigation. One of the negative policies of the Afghan government is whenever there is an organization without corruption that has a good professional staff, the government becomes afraid that this organization might show the backwardness and corruption of the government. They want to give the world a picture that Afghanistan cant be without corruption and when there are organizations without corruption, all the government offices try to close that organization. This is called a negative balance, it means that a weak person always uses people weaker than him, and that weak person will use the weakest. As a result of which the administration and management quality goes down. Those who are left in the margins are national cadre. Here we should have an understanding and knowledge of lower than medium quality, and should not disturb medium level people, otherwise competition is created and works are either improved or gets worse. Thats why the corrupt unite and remove those making examples of the system. Problems in administrative, economic and security are due to this behavior of government. Government recruits people to the cabinet who have no idea about their ministries. They dont have specific policies about their ministries. They dont know what to do themselves, so how are they going to lead and guide a ministry where so much is expected from them? The presidents choices are based on interest and agreement, people are promised that they will be given three
ministers and it doesnt matter if they get a farm animal as minister. The president just approves them. Professionalism is ignored and instead relations are given importance, which results in the coming to power of people who are not well qualified for the job and keeps them from doing their one important job, which is serving people. Q 3: In your opinion, on average do you think Afghan tariffs are high or low? A 3: If you look at tariffs, in comparison with the region, tariffs are low, not very low but low. But the problem with tariffs in Afghanistan is that it doesnt encourage industries in Afghanistan, it even kills the industries in Afghanistan. For example: at the beginning when the traders used to import finished goods, the tariffs used to be 2.5%, but 5% on raw materials. It means that the government would fine the manufacturers for producing. It means that the government is telling the traders not to produce anything; they should keep the market open for their friends on the other side of the border to produce. Q 4: Keeping in mind the current economic, political and security conditions of Afghanistan, in your opinion, will increasing tariffs help? No, increasing and decreasing tariffs has to be economic logic. Economic logic is that when we become self sufficient, to make sure that our produced goods are sold in the country and to keep the employment in the country we increase the tariff. In cases of necessary goods, when the tariffs are increased, the poor consumer who has a low income will have to pay relatively more for it. Last year, the minister tried to get the famers on his side and announced that farmers wheat should be bought in higher prices but instead, the government bought the donated wheat by WFP (which was donated for free) from thieves at a high price. People sold the wheat that they had kept instead of distributing it and government never bought the wheat from farmers. Farmers wouldnt sell the wheat anyways, because they produced in quantities just for themselves and their family. Our medium-sized farmers only grow as much as they need. Currently 95% of our famers are medium-sized farmers. The remaining 5% sells their wheat in the market to make money to buy other necessary goods like tea and sugar. Increasing tariffs will have a negative impact on the poor of society and the NGO employees with less income. If government wants to improve the agricultural sector, they should buy wheat directly from farmers in high prices and store them in strategic stores. Every provincial government has a strategic store of 1000 to 1500 tons of wheat. Government should buy the wheat from farmers at a high price and distribute the old wheat from the store at the market price. Even if there were good policies, because there is no implementation, problems still exist; implementation of the law needs happen, not just be a piece of paper. Q 5: In your opinion, what Afghan product can be marketed outside of Afghanistan? A 5: We did some research to focus on the question of what can Afghanistan produce that is good for the country that we can further develop later, and what
are sectors where the country wont have much of an advantage. For example, if we produce Mercedes Benz in Afghanistan, its duplication and ending cost would be too high; the ending price would be higher than it might cost to produce in Germany. Producing a car is not a good idea for Afghanistan. But in our research, we found out that we can have a comparative advantage in exporting fresh and dried organic fruits. If certified, we can sell it 300% higher in the international markets. All Afghanistan pistachios are raised in natural circumstances; no chemicals are used in growing them or to kill pests; this is true with walnuts too. If government was able to stop cutting down pistachio groves, or government could recover the areas where pistachios were looted, people would come here to buy pistachio trees roots, which is ten times more expensive than regular wood. People would go and take pistachio trees out of the roots and sell it, later on people found out that it was a very well planned strategy. If government could recover those areas, or at least had given it to the private sector so they could manage these pistachio groves, businesses could take advantage and expand it over time. No one would be able to compete with us in this sector. Q 6: What do we need to export our fruits to international markets? A 6: The first thing we will need is implementation of transit agreements that we have with neighboring countries. In most cases when we want to send our fruits to India through Pakistan, fruits often get spoiled in Pakistan. Secondly, we need to pack in accordance with international standards. We must provide training to our farmers about packaging. For example, at the moment our farmers gather the raisins from the soil, and then later on they have to wash it if they want to pack it. Sometimes other things get mixed up with raisins, which cant happen for international export. Then we can process it according to market needs. Our packaging is really bad; its better if we improve our capability to do this packaging inside the country. In most cases our products are exported to Pakistan and India and then the products are packaged. Q 7: In your opinion, what kind of information is necessary for our traders and whats the best to way get that information to them? A 7: As it is in the other parts of the world, the Chamber of Commerce should have a database of all the traders. The Chamber of Commerce should be in contact with international businesses and the WTO, to bring up the local businesses to international level, and bring to the attention of international markets these traders. I think the best way is to have the Chamber of Commerce deal with these tasks with understanding, knowledge, and honesty. Honest people can open the door of Afghanistans economy to the world and can be a real help to small and medium enterprises; larger traders may not needs this, as they are already in international markets. The main task of the Chamber of Commerce is to create a strong medium sized group. These medium groups dont have access to many things, for example, as I told you, many of our agricultural products are made of agricultural products
themselves, for example thread from cotton. Our farmers dont know where to sell their agricultural products at a good price. We need a good network of shops, retailers, stores, and buyers, so that we have good mechanism running, and our market doesnt turn to a monopoly in search of profit. At the moment we have three problems: 1- Anti-monopoly laws have not been established or implemented. 2- Quality control laws, which could guide our traders and producers, should be established and implemented in all our trade ports, which should be equipped with laboratories. At the moment you can even import poison and there will be no restrictions on it. 3- Equal competition opportunities should be provided. For example, a person who is in power can take up to 20,000 yards of land and a medium size trader cant even have 5 yards for building a factory. This has resulted in Afghanistans market economy growing negatively. Q 8: Will free trade increase employment or will it create more problems? A 8: We have 93% negative trade balance, our registered and non-registered imports is more than 5 billion USD but our exports in 2008 were 619 million USD and in 2009 they were 540 million USD and this year it is down to 400 million USD. Thats why our negative trade balance is 93%. If we continue like this and foreign forces move out of here, or their logistical supply chains get their support from somewhere else, this amount wont be even 50,000 USD. Dollar price is not based on national economy but is based on a few customs revenues, which is an extraordinary condition. Government should think about self sufficiency, real and stable rates, as a national security issue for Afghanistan, but nothing has been done in this regard. We need two kinds of industries: We need industries which will satisfy our national needs. We need industries for export purposes. We should export our quality goods that can be sold in international markets. At the moment, we can establish a steel industry because we have iron in high quality. If we transform it to big blocks of iron, we export 5 million ton to our neighboring countries like China, Pakistan and India. This can be done with having a factory with five plants, we can have rebar, beam, pipes, and even we can have nails, nuts and bolts, and car bodies.
Q 9: If free trade increases in current conditions, what sector do you think will benefit the most? A 9: By trade if you mean the current conditions, except a few specific importers and traders, no one else is going to benefit. At the moment we have more shops than we need. You might never see 10 shops of cloth beside each other in any other country. If you look at Maiwand road, you will see that its all dishes or clothes stores, where we might need only five on that road. It has only profit to a few rich consumers, other than that it doesnt have any impact on the national economy.
Q 10: Do you think trade is a good job for women? A 10: All the jobs are good for women. When I used to work in Chamber of Commerce, four of the directors on the board were women, and its not that we had just given the positions to them, but they had fought to be elected to their positions. They were really good in their daily business deals too; they had really good experience and management skills. There are women in Afghanistan who work in service, freight forwarding, and handicrafts. Women can be seen more in services and there are a very limited number of women in imports and exports. There are women in production too; there are no obstacles in their way. Q 11: Overall, in spite of all the problems and corruptions, do you think trade is beneficial for Afghanistan? A 11: Yes, trade is a beneficial in anyway. More trade brings more facilities and more choice, only if prices arent fixed. Interview with Mr. Alekozai, the current deputy head of Afghanistans Chamber of Commerce and famous trader: Q 1: Before starting the interview, I would like to ask you some other questions that, per Haqjo, only you can answer. The questions are about re-export which is not done through routine transit routs. What are the incentives for this business? Is it the difference of tariffs between Pakistan and Afghanistan, which can create an arbitrage opportunity for the people? What else can cause this? From the economic point of view, if we stop it how much loss and profit does each country have to bear? A 1: I would like to talk about this from a historical point of view first, thats why this trade is continuous. When the Durand line was created, there were three decisions, which are registered in Ministry of Foreign affairs: 1. Political Section 2. Military Section 3. Economic Section The person named Durand who was working on this Durand line, had already studied the social lives on both sides, and had also studied the economic condition of the people. Based on studies, he made the line between Afghanistan and British India of that time, which created the political line. Second was military. Both sides agreed not to create problems for each other. And, neither side would harbor Englands enemies. Third was the economy. It was stated that as there arent any employment opportunities from Kunar to Helmad, it was suggested that this area should be a
free trade zone. To relieve people from their traditions in this free trade area and to implement the law, the trade should be performed on the two sides of the road but not on the road. Because people were jobless on both sides of the country, Englishmen intentionally drew this line to provide job opportunities for people. Once they had employment, the people on both sides wouldnt fight with each other and caravans which passed wouldnt be looted. These were the historical aspects of this issue. As it had turned to a profession for people, it had made it really easy for the people to take goods from Islamabad and Lahore and bring it to Kunar. There are 150 routes on foot and by vehicles. These 150 routes are the main and important routes in this 2,000 kilometer road. Q 2: Are there any lists available for these routes? A 2: Yes, if you try, you might find one in the Ministry of Tribes. These 150 roads are specifically to travel on foot or by vehicles. We have excluded the routes for cattle; if one counts those, there are 300 to 400 routes. These hundred and fifty routes are routes such as Bargeematal, Kamdesh, Barekot, and Nawa that are connected to Chatral. There are more routes when as you go further. People used to travel by horses and donkeys in the past, but now they travel by vehicle. Same in Jalalabad, Khost, Jaji, Uruzgan, Kandahar, and Helmand, there are routes. Out of these 150 routes, only ten to fifteen of them might not be suitable for car travel. Small cars can travel but not big ones. One reason for the trade is it provides the needs for the region. These people who are stuck within these nine areas dont have a human life at all. There is no electricity, people live on mountains, no natural resources, and people dont even have water in Bajaowr and Khaybar. So to satisfy these needs, people turned to trade. Traders import and export from these routes to earn the money that they would pay as tariffs. For example, to import one container from Pakistan though regular routes would cost them 1,500,000 RS, but from these routes it would cost the traders 1,100,000 RS. Traders would pay 200,000 RS out of this difference of 400,000 RS to the local people who have transported materials with donkeys. Traders will sell their goods for 100,000 RS less in the market to compete better. This is mostly done by Pakistani traders. There are two kinds of traders in Pakistan, one who manufactures and the other who sells and exports the goods. The security agencies take advantage of these traders. For example, a militia soldier of Pakistan is not going to work for 15,000 to 20,000 RS, as he has daily income of 5,000 RS from these trades, thats why he is ready to protect the border from Taliban and others. If Pakistan bans this trade, the soldier is not going to work. So from one point of view, its a way to keep border secure too. At the moment, we have around 5 to 6 billion dollars in trade revenue with the world, out of this amount around 1.5 or 2 billion dollars comes from Pakistan. The rest is from Central Asia and Iran. According to our estimations, around 2
billion dollars in goods are smuggled to Afghanistan. This includes food, clothes, and textiles. If you take a look at the textile market in Afghanistan, none of the textiles from Pakistan have gone through customs. Daily, only from Lalpur area, around 250 Datsun cars are filled with sugar; exactly 250 cars. Every Datsun has 250 sacks of sugar. Daily, more than 500 Datsun fertilizers are imported. Plastics, all kinds of plastics, cooking oil, sugar, tea, electronic washing machines, refrigerators, fans, and all other Pakistani goods come through this route. In return, the goods that we send, they are all taken to India, through Arghistan. The tariffs of Pakistan are lower than the tariffs in India plus the markets in Pakistan are smaller in comparison with Indian. Thats why people take goods from Sri Nagar, Sial Kot, and Waga to India. Because India is a manufacturing country, its government tries to prevent the import of other goods by increasing the tariffs. In addition to that, Pakistanis bring the Indian products in return. Goods which are exported from Afghanistan to this country are cigarettes, spare parts, tires, black tea, and Chinese and Indian clothes. All these goods are exported to Pakistan by mule and in packs. Nothing is transported by vehicle. In the last six months, even pack animals havent been able to cross. Therefore, a deal which traders used to make for 60 RS, now it impossible for them to do it for 600 RS. As the prices have increased, its not profitable for the traders anymore. Now that its costs the 1,500,000 RS to transport it through this way, he will be willing to pay to the government and take an official route. Q 2: In your opinion, whom can we ask for more information about these 150 routes? A 2: Local people would know it the best. At the moment, the goods are mostly exported through Jalalabad and Wesh ( ,)due to security reasons its hard to export through Khost and Kunar now. Almost 90% goes through these borders. Local people know about it. Its not that Pakistan is preventing it; they may prevent it officially, but in reality, Pakistan has a good income from it. Their political groups and their militias and soldiers all of them earn money from it. And its because of the money that their political groups are doing their job. Q 3: Pakistanis cannot import through this route, can they? A 3: No, they cant. Afghans like Shinwari, Afridi, Achakzay, and Khosti have licenses. For example, I trade through that way; a Pakistani asks me to move their goods up to Jalalabad. Its a bad deal for me since I will have to pay the tariff and then bring it up to Jalalabad. Then the Pakistani knows what to do with it. Pakistanis wont be even able to cross the Afghan border; it has become a source of employment for Afghans. Another example: A Pakistani trader might want an Afghan traders license number to import fuel into Afghanistan; once the fuel enters Afghanistan, then its handed over. The traders on this route might be 20% Afghans who take the goods to Karkhano, the rest of the 80% are Pakistanis. Goods are Pakistani, Afghan traders only take the goods to Pakistan border, then its bought by Pakistanis on the border. Afghans dont have the ability to sell the
goods in Pakistan. We cant interfere in Pakistani markets, only Pakistanis can sell the goods in Pakistan. Q 4: Which market is best for Afghan traders to sell in (for Afghan exports)? A 4: I should tell you that our trade is very traditional. We have three categories of traders: 1- The first group is the big investors and traders, who have their own logo, agency, products, and goods. These goods used to be imported in small scale by their fathers, and as time passed, they increased their trade and later on they got introduced to companies. Then they hired agents with bonuses and responsibilities. They trade in the area, which is real trade or what we can call modern trade. They have documents, paperwork, and material. The percentage for these kind of traders might be 15% percent. These 15% traders include Abdul Rahman Alekozay, Habeeb Gulzar, and Safi, or Abdul Rahman Ter. Many other people too. These are the people who bring their own goods to the market. These businesses are not new, they have worked for years and now they have a place in the market. These traders can do international trade and some rules and restrictions dont change anything for them, because their goods are standard. For example: We import tea, we give this tea to 150 people, 100 in Kunduz and 50 in Mazar-e-Sharif. Once we have the prices for our products, we explain the increase in price to our traders. 2- The second category is traders whose annual capital is from 100,000 USD to 500,000 USD or maximum of 1,000,000 USD. These traders have made their trade professional. They likely have a store in Kabul. This category travels less in comparison with the first category. The first category might import 100 containers of goods in a month but this category might import only 1 container and will import once they have sold this one. Generally, our traders are busy with this kind of trade. It has a big impact on tariffs too. Because its capital is small and not in circulation, the small changes in the tariffs and tax systems have a big impact on their business. As a result the trader will have 20% to 25% loss. 60% to 65% of these traders have small businesses. Their capital is from 50,000 to 100,000 USD, and their trades are not stable. They dont have goals and are not professionals. They would import oil, flour, and whatever else was in the market. This category focuses more on increasing corruption as they want more profit. This category believes that their income is not very much with the import of 3 containers in a year, so the only way for them to increase their profit is by bribery and not paying the tariffs as much as possible. Corruption starts with this group. Law is not clear with respect to this group. There are laws that even the administration doesnt know how to implement. Dawood Khan and Zahir Khan had specified the laws in the past. Two kinds of law. a- Weight
b- Varying rate tarrif Under weight laws imported goods were taxed based on weight in tons. One would import food, clothes, milk, or even stones and everyone would pay the same per ton. There would be a difference in the price per ton though. For example: 1 ton of milk was 1,000 USD and 1 ton of stone was 50 USD. Government has ended the dealing between the government employee and trader. It was very transparent. Traders would ask why they should pay bribe if they were asked to. All tariffs were per ton. Now its not clear, since there isnt a given target. There are different types of rates for different candies. If this trader argues with the government employee, that employee can charge up to 500,000 and if the trader didnt argue he would be charged 50,000. Thats why the trader is forced to make up with the government employee, no matter what. Another type of tariff is a varying rate for when the good was imported and then a tariff would be charged. I am trying to say that these 60% to 65% of traders, who have many deals with people but their capital and businesses are small, they face many losses in some cases, thats why they often have complaints. Those people whose capital is 500 million or 600 millions USD is very simple if there is a change in the price for flour. They will keep their flour and know that the tariffs will change and will supply when the tariff rates turn back to normal. The first category traders wont lose but the second category traders wont have anything to do if their only capital is stored and not circulated. Thats why there should be more options in tariffs for the second category traders. 3- The third category are the people who export goods, they dont have their own capital. They have a license, also around forty or fifty thousand USD and a shop too. They go to Karkhano or Karachi to get peoples goods with a guarantee by putting their money with money dealers that in case of something going wrong, they have the money to pay for it. They bring their goods, annually their circulation of capital is 50 million dollars to 100 million dollars but they dont have their own money. Their only income is by getting commission for transporting the goods to Afghanistan. Their total commission is 50 to 60 thousand. This group says that we have already paid the tariffs in customs, I have given the goods to a Pakistani, and they were Pakistani goods which they are going to sell in Pakistan. I had taken 50,000, and instead of giving you 20% of it, I have already given you 45%, what else do you want? Thats when this sector starts to have problems and Ministry of Finance cant understand it. MoF has not considered the conditions before implementing the law and tariffs. In the past these people would tear and through away the license, they would take the goods, would take the commission, and would keep the tariff which they should hand pay to the government. We suggested to the Chamber of Commerce that the government should make it cash, now that the government has turned it to a prepaid system, but people are lost. These were the four categories of trade and the creation of markets. Because the third group is a service company, they will have to pay at the end on the profit
that they have made. These are commission workers. Goods are someone elses but these companies take it to Torkham. You just send the paperwork on my name, but I dont know about its purchase, sale, quality, and goods but its not my profession. Once it might be spare parts, next time it might be clothes, next time it might be cigarettes, next time it might be paan, next time it might be cooking oil, and next time sugar. Pakistanis come and ask for how much these companies will transport the goods. One of these companies might say 45,000. These companies are service companies. Government is right too, these companies should give a balance of their business. Government charges 2% business receipt tax, for example: if I import goods of 10,000 USD, the tariff will be 1,000, 10,000+1,000 will be charged 2% and another 2%. One 2% tax on sales, the other 2% is prepaid tax, that the company should pay 20% on the profit. This prepaid is received no matter if the business has made a profit or not. Later on then the government asks for the balance, and the business then says what balance should I give? I have received 50,000 from the dealer in Pakistan. 20% of the interest would be 10,000, I have already give you 40,000 which is the 2%, what else do you want then? Now customs employee will ask the trader to pay 10,000 per million for the circulation of capital, and the trader will have to end his profession. There are two million people working in this field, how many should leave this re-export profession? These two million people are made up of drivers, traders, people who move the goods, and people who move the goods by mules and others. This is the main problem which results in corruption; traders say that whatever you are charging, charge it at once. Q 5: In your opinion, what tax policy can end these problems? A 5: I think Dubai is a very good experience. Everything has 4% tax in Dubai. Or they should make it to two categories: 1- Consumer and luxury goods 2- Construction goods, medical goods, and agricultural goods Consumer goods are things like food and clothes. This should be made very clear. You know that Dawood Khan and Zahir Khan with their very limited personnel, didnt have any corruption. I had never thought that corruption would increase to this level. Back in those days, if someone would ask for 20 AFN bribe, they would get it very secretly and employees were ashamed to receive bribe. But now theres pride in bribes, its not even considered bad. Receiving and giving bribes is worse than an alcohol drinker, prostitute, or unconscionable person. I am saying that tariffs should be reduced. During the time of Dawood Khan, tariff laws were not more than 25 pages, Saeed Mir Jan knows about it, who is still working in customs. It has been 35 years that Saeed Mir Jan has been working with the customs but still doesnt own a house and doesnt use a computer or the internet. Ask him about the tariffs now the tariff laws are about 500 to 800 pages. 800 pages tariffs itself is corruption! It should be decreased. Everything is in too much detail, for example if a candy is lemon flavor it has a different tariff, if a candy has orange flavor it has a different tariff. At most candies should be divided into
three groups, high, medium, and low quality. What do they want with all these kinds of candy tariffs? Another example is milk that has to be categorized based on fat content. This system is very modern and is made for very developed countries. Secondly, I would like to say that exported goods should be given leniency. What difference would it make if we paid a border tariff? In 2003, Abdul Rahman Alekozay imported 12,500 containers of goods when the tariffs were low. In 2005 restrictions were instituted and he brought in 400 containers. For 12,000 containers we need 12,000 vehicles, for 12,000 vehicles we need 12,000 people. So much employment has been created. The government charged for 400 containers, increased the tariffs, but the government decreased the employment in the country; what are these people going to do now? All these unemployed will be a burden on the government. The only thing that Afghans think of is that how they can increase their own money. Today in all over the world, the tariff on cigarettes is 200% and its 10% here; kids milk is 10%. What kind of policy is this? Anyone would know that if its not in profit of government then why would the government support this. The importers of cigarettes were the biggest donors to Karzais campaign. They donated around 9 billion dollars to his campaign. For Gods sake, government puts a 16% tariff on flour and 10% on cigarettes. There are tens of items which are increased and the rest are decreased. On this basis, people dont trust the government and they feel no one should pay taxes. People believe that the money that pays for taxes is not given to clinics. Karzai has made an organization, if I am not wrong, where there are 400 and something district governments, each village has a council which consists of 40 members and for all forty members Karzai pays a 200 dollar salary. Where does he get the money for it? Zakhel Wal claims that he doesnt have money, Dawood Khan, Zaher Khans governments had the same amount of money and it was sufficient for them, even the Communists had the same amount and it was sufficient and they would go to war with this amount of money as well. Government has made its budget in accordance with a bourgeois country. Multiply 40 by 4000 then by 200, in each province there is provincial council beside the implementing council consisted of 100 members. All the members of implementing council get 300 USD salaries. If one is poor, they dont keep this many servants, they dont increase their personnel so much. They are increasing the personnel day by day and are getting it back from traders and the poor. Its very hard. Insecurity increases, people will support those who are against the government. We are from Kunar where there is a war. Recently we an American military base was established where the land was provided for free. Our people say that who should we pay the taxes to? To someone who cant differentiate between enemy and a friend? They say that the president supports those people who used to rob until recently. Even the councils that he is supporting are not educated people, who could sit and decide how many clinics and schools do we need? They are the same commanders and Mujahidin of yesterday who are paid to stop war again. This is not how the governments are run.
Q 6: Whats the main problem that traders dont prepare for? A 6: Bureaucracy is the main problem. People know their calculations, we know everything. MoF can check traders accounts. Its the same in Pakistan, the seller, exporter, and manufacturer provides the balance, and the importer doesnt pay any tax. If you go to Karachi customs department, they will charge you tax separately and tariffs separately, then they will say you are done. Then Customs department of Pakistan follows up the goods with where the trader is going to sell these goods. Once they know the buyer of the imported goods, it will be entered in their system. In Afghanistan they cant track the retailer so they get all the taxes from the importer. It has negative impact on all four categories. Hajji Zarab Gul, Hajji Gul Zaar, and Abdul Rahman Alekozay never complaint, they say whats done is done, they have their own companies. The problem is that currently the rights of the majority are ignored, and only those who are in power or are influential, can influence decisions. Interview with Mr. Kaminzada, the current director of union of Afghanistans industrialists: Q 1: What do you think government could do to improve trade in Afghanistan? A 1: First of all, thanks for your question and coming here. I would like to introduce myself first, my name is Kaminzada and I am the owner of Tanweer Naweed Limited and Baheer Publishing Company, which is the biggest publishing house in the country; Im also the head of the Afghanistan Industrialists Union. I would like to answer your question briefly. People think differently, some people might think that they can solve this problem of Afghanistan by bombs and weapons while a manager might say that we can solve it by managing it, someone else with another profession like police might say that we can solve the problems by bringing rules and regulations, and some people might want to solve these problems politically, but we are telling you that the problems of Afghanistan can be solved with an increase in employment. We see the solution from an economic point of view; we truly believe that as trade increases and people get busy with work, problems of Afghanistan will be solved from an economic point of view. For example, Afghanistan is different from other countries in Europe and the United States of America, because the breadwinners of the family in those countries are all the members of a family. Even though families in those countries are comprised of no more than three members, both the husband and wife work. But in our country there are families comprised of twenty members, ten members or may be fifteen members, and out of all these people only one or two of them have work that can feed the rest. When there is no job for him, no water for him to irrigate field, then what is he going to do? Due to his problems and needs, he is misused by terrorist organizations, and when he is given five hundred or eight hundred USD, he will be willing to do anything. I have talked about this issue with American generals and colonel. I told a colonel one day that families are
different in Afghanistan; if a family has ten members and only one breadwinner, he will take ten thousand dollars and will do suicide bombing. He would say that I am going to die from hunger anyways, why shouldnt I kill myself by suicide bombing, at least the other nine members will have something to eat. Thats why we are saying that more trade, industries, and business will have a positive impact and is in benefit to everyone. The amount that they are right now spending on the ammunitions, if even half of it is spent towards economic growth, I believe that you wont even hear a noise the day after it. Q 2: If we accept that improvement in business is the solution, in your opinion what can government do to improve trade? What has government done so far and can it do even more to improve it? A 2: I think government unfortunately hasnt done anything. The only thing government has done is the pavement of a few roads, like the ones from Kabul to Jalalabad, Herat to Kabul, and Mazar-e-Sharif to Kabul. This is an achievement. Government now wants everyone starting a business to pay taxes from the very first day. Even though industry and business rules dont accept this, I wont go too technical; I am going to give you a very simple example. When we grow wheat, we leave it for a year before we could get benefit from it; we dont expect to get wheat right away. Or for example, we have a slaughterhouse where we keep five sheep; we wait for the sheep to get fat and chubby before we slaughter them. But in our government, they want to kill the sheep on the first day; it means that when someone wants to establish an industry, their industry hasnt even been active for a few months before the government comes for all kinds of taxes and balances. The government hasnt provided electricity, land, security, and now they want high tariffs on raw materials how can a business develop and grow? It means that this government, either unintentionally or intentionally, has not allowed Afghan industries to get chubby and rich; once they do, then you can charge them more in taxes than what you are charging now. For example: Now that you are charging the factories 100 AFN, later on after a few years when the company is fully established, when it wont go anywhere outside the country, then you can charge them a 10% or 20% tax. If the tax you are charging right now is 100,000 USD, it might be 1,000,000 USD by then. But at least give them a chance. Government hasnt helped the investors with anything. Government hasnt provided them with credit. There is no bank where traders and investors could get credit and loans. By availability I mean with low interest rates. There is no institution. There isnt even any institution, where you could go ask them for security. Even raw materials, for example, when we import raw materials like plastic, its better to import finished goods instead because the tariffs are the same for both. Then why should we trade? A factory can benefit thousands of people, but government hasnt pushed that development route. Government is not paying attention. Out of this society, 80% of it is either part of the mafia or are from the poor of the society; show me if there is anybody else. Government hasnt realized that thousands of youth are unemployed. We are not a country who has lost one thing, but we have lost education, culture, and professionalism. We dont even have professional staff. Now, we import some professional staff from outside the
country to do the work for us, which government doesnt allow. So, unemployed Afghans could be employed. Let three foreigners come from other counties so they could train three hundred local nationals here. Now they are against it too. During the past ten years I have come to the conclusion that either there is a very strong hand behind all this, i.e. those who dont wants us to develop, or our leaders dont even know how to eat their food. I am really disappointed in them. Our leaders dont know that a factory can employ five hundred people, and these five hundred people can have a job because of three foreigners. These three foreigners havent been in war for thirty years, but instead they have learned for thirty years. Now that we want to bring them to train our illiterate employees, Ministry of Foreign Affairs doesnt allow us to bring them. What they are doing is due to their lack of knowledge and information or they are doing this intentionally to ruin this country. Thats why it has been many years I have been with these factories and industries, since 1991. Since 2000 I havent seen anything from this government which could show that they care for increasing employment. How have they increased employment? If doing something is only giving licenses, then the government doesnt cares about its electricity or its raw material. Other countries like Canada, the EU, and China give you citizenship if you invest in their country. Q 3: Lets put aside what government has done or hasnt done, what are the impediments towards the development of trade in Afghanistan? A 3: I think no investor and trader is ready to put himself at risk. See this world has changed from what it used to be in the past thirty years; now that I have money, I will see wherever my profit was high, I will close everything here and I will go to Dubai, India, Indonesia, Malaysia, or Canada. We were not able to invest in the past, but now we can go anywhere and invest, now a Chinese can go to Canada to invest. We can go to China for investment; they send us information every day about the facilities that they are providing to investors. Every day. The biggest impediments are: 1. One investor 2. Government Government cant do anything without an investor in these times; government cant develop at all. And investor without government means an investor invests and government cant provide security and the investor loses its investment. If credit facilities are not provided by the government, investors will never invest. If there is no profit for the investor, again investor wont invest. Why should they? In the old days, people were forced to stay in Afghanistan; how are they forced now? Provide money and you can go to any country you want. I mean that if international community and government want to build this country, then they should create employment for these people. Traders and investors are like flies, government should pour some honey so it gathers all the investors. Wherever there is food, you will have the flies there. If investors know that there is electricity, security, and credit in Afghanistan, then they will invest. But if they
know that they are in danger then they wont do anything and will go back. At the beginning, five hundred factories were established in industrial parks. Go and see now, you wont find even a hundred; all of them closed and investors left. At the beginning people started to send their money to Afghanistan from all over the place, like Pakistan and Dubai, but when they saw that they are not going to profit out of this, then they transferred their money back. I know hundreds of people like this. Q 4: If we compare the past eight or nine years with the times before war, do you think most of the people in Afghanistan were busy with trade before the war or busy right now? A 4: I think people were busier in the old days. I am not talking about trade only, back then people were busy with their own jobs. People could earn a piece of bread to eat, but now they are not able to. Afghanistans population back then was 16 million, but we didnt have as many unemployed citizens. Now that the population has increased to 30 million, unemployment has increased significantly. Even though we had billions of dollars flowing into Afghanistan, by now we should have no unemployment in the country. Where does all the money go to, are people transferring their money to Europe as soon as they earn anything? People are killed because of their money, havent you noticed? I had no idea what a weapon was, but now I have to move around with two bodyguards. I cant go out. I have a factory but I cant go to my factory, am I crazy? Now, investors will invest their monies in Afghanistan to earn it back in six months and then leave. No factory wants to invest for ten years, now they just want to bring the machines in 10 days, get whatever they can out of it and then go back once they earn a few AFNs. Q 5: In your opinion, what can government do to get the trust of investors? A 5: Government should provide investors with land and electricity. These promises should be fulfilled and shouldnt be only on a piece of paper. They should give electricity, land, and credit. Now that I have invested, I have bought my own land and pay more tariffs on the raw materials. Now they have a new rule that when someone imports raw material, whatever percentage that they charge in tariff, the government receives 3% in advance of the balance youll need to pay at the end. They block investors money for a year, and next year when you deserve a tax return they tell you that once the money has gone to the governments vault it never comes out. Is this how support is? Is this how they want to build this country? We are in industrial parks of Kabul. These parks were established during the time of Dawood Khan. I remember during Taliban times, the Minister of Mines of the Taliban government distributed factories to the people. He told the owners of the factories that they should start and get running the factories in six months. The minister himself would go and visit the factories to see if they had been established. He would ask about the problems, if its electricity then he would provide you first with electricity. Even though they were fools, even though they were not accepted by the international community or Afghans, its amazing what happened. Those people who were fools and didnt know anything,
considered the factories as their top priority; these people with all this knowledge and their talks, well, the minister hasnt even seen the factories to see how they are doing, to ask them if they are alive or dead, or to see if they can work or not. It means that only in these industrial parks we have gathered 30,000 people; we have saved the government of providing jobs to these 30,000 people. If these 30,000 people are not provided jobs, they will either get together with mafias, they will either join terrorist groups, or they will cause some other kinds of problem for the government. Q 6: You mentioned tariffs a few times; do you think on average Afghan tariffs are high or low? A 6: See, we should first ask ourselves why do we pay taxes? Whatever government takes is for serving its citizens. This government serves nothing, then why are you charging us taxes? Its the tenth year that Ive paid municipality taxes but I havent seen them even once in these ten years; we clean the roads ourselves. Then why should we pay taxes? We are humans, we are from this country, and we are Afghans. When the drive in front of my house is clean by me every day, why would I pay 5,000 every month to the government? I would certainly pay them, if I knew theyd clean in front of my house every day. We are humans and follow favors. In other countries services are good too; when someone pays taxes in return the government provides them with services too. Here, government cant show us the services that they have done. They always compare Afghanistan to USA and Europe. Whenever you tell them about taxes in Afghanistan, they give you the example that in developed countries people pay 50% taxes. In the United States there should be 100% taxes, because the government knows about the health of its citizen, about their education, knows about its companies, knows about its factories, and knows about its insurance. What has our government done? Today if Iran seizes our goods or our goods gets lost in Pakistan, is our government aware of it? No. Then what are they charging us taxes for when there are not services. Whenever they improve their services then they should start charging taxes. We are telling them that you should provide good services to the people for a few years, till then you should also give a chance to the investors so they could invest. Then the government can tell the trader that, for example your goods are coming, I have to process them I will need to charge you for that. Municipalities should come and say that I have cleaned your road and I am charging you for it. At the moment we are begging municipalities to come and clean. Because when in front of our door is dirty, we have to ask someone to come and clean, why shouldnt we call the municipality? When government doesnt perform services, obviously we will say that we are not going to pay its taxes. Q 7: In general do you think tariffs are good or bad for the economy?
A 7: It is good for the economy but its not good for a country like Afghanistan. We are saying that government is nothing without a private sector, factories, and companies. How is the government going to make revenue? But there is a way, at the moment we are in a condition that we should be really focused on bringing investors to Afghanistan. In this situation we should give up something obviously. Sixty billion dollars was given to this country during the past ten years and government should have encouraged people to make the country better. These were foreign countries money. People should have invested so their life standards could have improved, even if after a few years the foreign aid was ended. Then the government should have asked the factories that could have started to start paying taxes to the government. Everyone would give then. Unfortunately, at the moment, government has started gathering taxes when the company is newly established. Even if the company makes a loss now, government officials still insist on the traders to paying a tax. A company beside our company burned down, no one even asked if they needed anything. How can investment increase in this country? I am sure that if the foreign aid ends, this government wont be even able to pay the salaries of its government employees. The government gives salaries in U.S. dollars too; these salaries are not comparable to neighboring countries. The government has to sell itself to pay these salaries; government will have to destroy itself to pay the salaries of its employees. Q 8: In your opinion, what can increase Afghan exports to foreign markets? A 8: Everything, I can say this with a guarantee that if the government supports development, and by support I dont mean false promises, through decreased taxes and increased employment, then people will start accessing private markets for health care and even education. For example, government will not need to worry about the people anymore, because when the people have money, then they will travel in private cars, instead of government buses. When employment has increased for the nation, government hasnt lost anything. Government expenses will decrease, everyone will mind their own business, thats why, I think that in the current situation the only thing that government should focus on is how to get investors, and how to protect them. Support means that make industrial parks. But they should reduce tariffs, so it could be profitable to traders. So that people could be convinced that if we invest in Afghanistan we will have profit. For example first they will think that they will have 50% profit, and then slowly, slowly government should increase competition so that the profit comes down from 50% to 10%, then 2.5%, until it becomes stable as it is in the rest of the world. But at the beginning, government should show honey (incentives) to the investor, that we have honey here, like Dubai. Q 9: But from quality and packaging points of view, do you think we can compete with the countries in the region? A 9: Why not, you just talked about packaging. I have made the biggest packaging company in Afghanistan. You wont even find a company like this in
the neighbor countries. But how has the government helped me? See, I import packaging paper and boxes; when I import boxes, I pay a 2% tariff on the boxes and 5% tariff on the paper. Why cant we do packaging? Q 10: In your opinion, what information is useful for traders and manufacturers of Afghanistan? A 10: Brother, when people start business today, they already know all the information prior to opening a business. There is no need for information. Government should just show the honey instead of information, such as the government will provide land. For example: the government should give land, and the government should explain that if your annual income is 100 AFN, give 20 to us and you keep the 80. Two years later, government should say that, 50% for business owner and 50% for the government. For example, government should tell the traders and investors that come invest here and will give you these facilities. Government should actually show them in action. Q 11: How can traders be informed? Through what channel, for example, radio, television, newspaper, website, or some other sources? A 11: These traders have experience, when they trade, they have all the information; they have rates from Pakistan and India, the countries they need. That when they send this fruit to Dubai, how much are they going to profit, will I be able to sell this good or not? Our trade representatives are just useless; they dont know whats happening in the world. But our own Afghans are really well experienced, because these thirty five years of immigration resulted in Afghans scattered all over the world. They have gathered really good ideas. They just need the government to show them that if they invest, what will the government provide them in return? Other than that, government cant do anything; they dont even know how to bring changes in the tariff rates. If I am a trader, I know about rates myself, that if I sell grapes, where I can sell them with most profit and how I should package them, and which countries have grapes and which ones dont. I cant export grapes to Tajikistan; I know that I should send grapes to India, because its near to me. I know that we send grapes to Karachi and that we send it to Dubai. I know the ways: I know that I shouldnt export grapes to France, because they have their own grapes. Q 12: Is trade good in creating employment? A 12: Manufacturing is good. Manufacturing is good because if we look at the agriculture sector, we need tractors and industrial equipment for agriculture. If we think of giving tractors at a good price to farmers, we should think of producing the tractor ourselves. We should have electric saws, so we dont have to use manual labor anymore; we should think how to produce saws. If we produced fertilizer, then a persons land will have a lot of harvest at the end of season. Trade is practical, if this country is a free zone like Dubai, where government will charge only 2% tax, then we can import goods so that we could send it back to
Tajikistan, Uzbekistan, and other Central Asian countries, otherwise trade wont work in Afghanistan. What should people import now? Q 13: If free trade increases in Afghanistan, who is going to profit the most? A 13: The rich will have the most profit. 80% of trade money goes back to traders, while when an industry is established, the most that the owner will get back is 50%. The rest is to the people. For example, there are no stones like the stones in Afghanistan. Our Helmand stone is exported to Karachi, where it gets polished and cut, and then its exported as a gem to the rest of the world. We couldnt even polish and cut the stones so we export it; if those skills are learned, then millions of people could have worked. Because I know that in Dubai, 80% percent of stones are imported from Italy and Afghanistan. Believe me that no country has stones as fine as ours. We have copper, and when we process copper then we can manufacture cables. Dont give it to the Chinese, give it to us, we can process copper and produce cable and export it to the whole world. We have the raw material. We have iron is something you wont find it anywhere else in the world. Q 14: Is trade or manufacturing good for women? A 14: Look, at the current conditions, poor women have many problems. It is true that women must trade; they are humans too. But this culture should be introduced to this country first. At the moment women cant do anything, women cant come out of the houses, how can they trade? But its very effective, if women are involved in business. For example, I have made a company; I think women will be more successful than men in that company. For example, I want to process dried fruits and package them and I am sure that women will do a much better job than men. 100% better than men, but when I take them to Pul-e-Charkhi, its hard for them to get there but even when they are ready and they get out of their houses, they are stared at. When they come to factories, whom are we going to protect first, our individual self or women? How will she dare to go and do this job? For example, today how hard are these shirts to make; we could sew these shirts too. Werent we used to exporting shirts and all kinds of clothes to Soviet Union? We didnt have anything back then, but now that we have everything we cant even produce our own clothes, instead we import Chinese clothes. Q 15: How many members are in the union? A 15: We have more that 500 factories in Afghanistan which are active. This includes the industrial parks of Kabul, industrial parks of Juma Muhammad Muhammadi, industrial parks in Jalalabad, in Mazar-e-Sharif, in Herat, and in Kandahar. 500 are the active members which are registered with us, if we count the total number of factories, there might be more than 1,000. Q 16: What is the average amount of investment?
A 16: Brother, I dont know the average amount; there were many investments but most them are now gone. Each factory might have an average of 500,000 USD. The all pay a membership fee, 1000 AFN per month. Q 17: What services do you provide to them? A 17: We dont provide any service to these poor people, the only thing that we are doing is that we protect them against the government. Sometimes the government creates problem for their lands, sometimes police creates problems, and then twenty of us get together and we go to the government. For example, if the government has imprisoned a manufacturer, or if the government has increased tariffs, we go to them so they could decrease it, we go to them but they dont listen to us. We are afraid that government might take everything from us, thats why we have established a union to protect ourselves. Believe me that, thirty five factories have been attacked, the land was given to the manufacturers but then different departments from the government came to the manufacturers and said that this land was their land. Thirty five factories were taken over by someone else. Therefore to protect ourselves from this we established the union. Q 18: So you dont have a mechanism at the moment, for example, to provide credit for each other? A 18: It can happen if factories have at least grown a little bit, only one factory cant do anything. If you are talking about motorcycles, 80% of it is imported but its assembled in Afghanistan. I am not saying that its bad, but I am saying that we cant build the country with one motorcycle or cold drinks factory. In ten years, the whole world can change, but we have made only two companies. This is not what we call investment. Interview with Mr. Dawood Musa, former trader and well-known author about Afghan trade and economy: Q 1: What items and goods are important for exports? A 1: There are two kinds of goods which are imported to make export goods: 1. The first kind is raw materials which are used in industries. These are chemical goods. 2. The second group of goods is ready-made items, like spare parts, tires, electronics, cigarettes, tea, and some expensive clothes. These are item which are exported. Now there are two kinds of exports too: 1. The first one is when the country where we export knows about it. We can send tea and cigarettes to Northern countries. They come and pay the tariffs and take it to their countries.
2. The second one is when we bring the goods, we pay for the tariffs, and then we can distribute the goods all over Afghanistan. Then the people on the border like Afridis can smuggle the goods. Not Sindhis, not Punjabis, and not Baloochis, only the people on the border do it. These people on the border are controlled by Pakistan, even though we might say that they are on the other side of Durand line, but Pakistan would say that this area is theirs and at the moment its in our control. But Pakistanis cannot control this, because it was written in the Durand Agreement that the people on the border can take items with them. The other thing is that, there is no specific line which could be called the Durand line. The people on the border will buy their bread if the bakery was on that side and will buy their meat with the butcher on this side. So these are the types of exports which we have which are mostly exported to Pakistan and to an extent, Iran. In return they send their own goods. From needles to cooking oil, to refrigerators, and even fans, all are made in Pakistan. Which are exported (smuggled) into Afghanistan. It comes up 15 kilometers to border in vehicles and then the goods are transported by mule. At the moment there are 190 - 195 routes across the border, for vehicles. In Kunar, there are 8 routes. Q 2: If we send a team for surveying, in your opinion what are the best questions that these teams can ask people? A 2: Do you know that Americans have provided a budget of several million dollars to study the smuggling trade of Afghanistan? The irony part is that Americans want to determine the areas though which smuggling is done, but smuggling uses routes which are hidden. If it was clear to everyone then it wouldnt be smuggling anymore. We told them that our friends in Chamber of Commerce are from Kunar, we will have you in a car with us and we will take you to the crossing point. You will see that our mules take the goods to other side of the border and comes back, even though they have military and ISI on the border. We just have to bribe the military of Pakistan and ISI. Another problem is, the only people across the border of Pakistan and Afghanistan who want peace, are the smugglers. The moment the government closes this route, these smugglers have guns and they will rise against the government. They will claim that government has taken their income from them. (Idrees) So there is no logic in stopping the smuggling. Not only is there is no logic in stopping it, but the government wont be able to stop it either, because if it were possible, the Pakistan government would have stopped it by now. The biggest logic in this matter is that powerful Pakistani people have a big hand in this trade; otherwise, the routes would have been closed a long time ago. Once these goods are loaded on the buses and trucks, they will be
checked on their way to Karachi, but they wont be stopped. High ranking people in Pakistan are involved in this trade. Q 3: So if we send a survey team, it is not going to be effective, is it? A 3: You can go to safe provinces, as I told you before. You can go to any safe province on the border. Go with some local people and pretend that you are their guests. You will see that goods come and go. Smuggling of Afghan goods is the biggest loss, because our trees are hundreds of years old, they are worth gold but they are taken down and sent to Pakistan. There are 194 ways where trucks can travel. Q 4: In that case, how far can vehicles go from the Afghanistan side? Are they our vehicles or Pakistans? A 4: Its not whose vehicle it is, it is about who is allowed to take the goods across Pakistan. Except Warakzai, Bajawar, Mohmand, etc. others are not allowed. If an Afghan trader can take these goods all the way across Pakistan and is not stopped by police, its amazing. If they stop our vehicles once then we wont send our vehicles the second time. Q 5: Where are the main markets where these goods are loaded? A 5: The worst case is when goods come from Karachi; it is processed in Karachi customs. These good comes from port and stays in Karachi. But the paper works comes from Karachi to Peshawar, gets processed, comes to Torkham for processing, and gets processed in Kabul, and then goes back to Karachi. This is the worst case. In this case, both Pakistan and Afghanistan loses. The second case is when the goods are lost on their way. Pakistan had complaints about this issue, so in new contracts we decided to install a tracking device both on containers and trucks. So that if someone steals it on the way, we get to know that it has been removed. The third problem, in earlier case the paperwork was processed in Torkham, now its processed in Jalalabad, or in Kandahar, or in Kabul, or maybe even in the north. There have been times when Pakistan closed its borders to prevent export and import of goods. So, we had to import from Iran. As much as the price increases in Afghanistan, the difference between us decreases and the goods are no longer profitable for smugglers. At the moment Pakistan has given us four options that we either have to pay some tariffs same as Pakistan, or there should be a quota for the goods which enter Pakistan, or let them collect our tariff or letter of credit. All of these were to increase the total price in Afghanistan so that smugglers cant smuggle. We didnt accept them because it will decrease our profits. For example, if we had made our tariffs as theirs, at the moment half of our budget is provided by the IMF, and they tell us we need to decrease the tariffs, not increase them. On the other hand we
want to be part of WTO; we have submitted our application. Again, they say that we should totally end tariffs. The same with the letter of credit: it will increase the prices. The economy of Afghanistan is based on smuggling, and those who have a hand in this trade are those who have great influence on government. They will influence the government to keep tariffs low so they could smuggle. During the years of war, when people went to India, Pakistan, and the Middle East, their children learned that in the long run Afghanistan should have industries. They came back and were asking for increased tariffs so their goods so were able to compete. There are cases where father says something and son says something else. At the moment, as the fathers has more power so they have kept the tariffs low. Its going to be having a negative impact in the future, as Afghanistan will be dependent on Pakistan. At the moment, anything that is made in Pakistan, you can find in Afghanistan. If you go to Jalalabad, you wont find any other piece of cloth but the ones made in Pakistan. And none of the clothes have gone through customs. All the mens clothes in Afghanistan come from Pakistan, while in the past ten years we were not able to establish one textile factory. Who can compete when the goods are imported without being processed through customs? We had 14 plastic companies; none of them are open today. Q 6: Which markets can represent better the amount of goods imported from Pakistan? A 6: When textiles go through customs, they get stamped. The shopkeeper will have to open the clothes and re-wrap it so he has the stamp at the end. Go to textile markets and ask the shopkeeper if he can show you a cloth which has a custom stamp on it. Check how many are stamped. Q 7: Is the stamp system the same for all the goods as clothes? A 7: Its different for all goods. Q 8: How can we tell if someone brings flour from Kazakhstan, if someone smuggles flour to Afghanistan from Pakistan, or someone who brings the flour legally? Do they all sell in one price? A 8: No, if someone already brings something in at a lower price through smuggling routes, why should someone else import the same good at a higher price, unless its of different quality. We cant tell from the prices if goods are smuggled or not. For example, if I smuggle the good and you bring the same good legally, I am going to sell it 10AFN lower than what you sell. No one is going to buy from you and next time you will smuggle too. Q 9: Who has most information about smuggling on the border? A 9: People who are involved in this wont give you information.
Q 10: How about indirectly? A 10: There are people who have shops. If you go there and get his confidence, then he can tell you everything about it. But there are people who are involved in this. You know that the younger brother of Din Muhammad, and Abdul Qadirs son gets 3,000 from every bull. Will they tell you how many bulls they import and how much do they pay to Abdul Qadirs son? At the moment, Din Muhammad gets 10,000 for every truck. Karzai found out about it, he asked Din Muhammad for reasons and Din Muhammad provided him with 10 traders who said that they give the money to Din Muhammad by their own will. Because of 10 people, he earns millions of people. People on both sides of the border in power take the most advantage. These billion of dollars that we are talking about is not ours, its Punjabis and Sindhis money. They give the order; I as a commission worker get the money and order the tires. When the tires get to Herat, they have their own people there to transport it from there on. It used be in Torkham first, but when the Taliban closed the route, they immediately chose Herat and sent their agents. Their offices in Herat have Pakistani employees, who bring their goods to Torkham or wherever they want. Its all financed by Pakistan, we dont have the money. Interview with Mr. Frootan, the current director of legal compliance at the Kabul Bank in Afghanistan: Q 1: What can government do to provide better opportunities for trade and traders? A 1: First is security and second is the elimination of bribery. Third are trade facilities such as electricity and fourth is a work force or labor, especially skilled labor being allowed to enter Afghanistan if there arent any in Afghanistan. At the moment government has set some restrictions in letting foreigners in Afghanistan. Industrial parks should be made for factories along with a market to sell goods. The government should then increase the tariffs on similar goods which are imported in Afghanistan to strengthen the local products. Q 2: What do you think of taxes? A 2: Taxes are good, only if the government provides services in return, then the people wont run away from taxes. But when the government cant provide the people with the services that it should then its inappropriate to charge people taxes. It will result in insecurity, no development, and no private sector development. Today the government is not providing the public with the services that it should but its charging very high taxes. But if the government provides the services then public will be ready to pay taxes. Q 3: One thing that the traders are thinking and emphasizing is that the government should provide traders with credit and loan opportunities, because
traders think they will need to get loans, but there arent any sources to get loans and if there are any, the rates are too high. A 3: Government has its own problems, traders have their own problem, and banks have their own problems, but the government has worked in this field to solve the problems. For example: during the transitional period the interest rates were 20% to 25% but today the rates are 10% to 15%. There are banks who provide loans with 10% interest. Many traders are illiterate. They are not in accordance with standards that a trader should be and are not familiar with the repayment and interest rates calculations. They just love to get the money and come back in a year to pay back if they have the money, and if they dont they would just not pay. But they dont understand that how they need to show the inflow and outflow of cash in their accounts; they dont know that they need to provide financial statements, Tazkera, license, business plan, and guarantees. We need time to educate them. Both loan providers and the loan takers have to pay taxes on the guaranteed properties. 3% at the beginning and 3% at the end. But governmental banks do not pay those taxes. Q 4: What are the main impediments to trade in Afghanistan? A 4: Security and bureaucracy which both belong within the government domain. If there is security, a trader will invest and then invest some more. There is bureaucracy in government offices. Something which should be done in five minutes is done in hours. By bureaucracy I mean delay of work and corruption. Corruption is so high that while a Tazkira is a right of every Afghan, he/she has to pay money to get it. Even if the person doesnt exist at all, you can just provide them with a photo, and they will get you the Tazkira. Corruption has reached its maximum level. Q 5: In your opinion, in general if we compare the trade conditions today with the past thirty years (before the war), were Afghans more involved in trade thirty years ago or today? A 5: In comparison with the past years, trade has increased today. Back then, trade used to be limited to a very small number of people who were related to the kings family, but today, all levels and groups of people in Afghanistan are trading. There are traders from all regions and nationalities today which shows that trade has increased in comparison with past years. Q 6: In your opinion, in general, are Afghan government tariff rates are high or low? A 6: They are a little bit high. Q 7: Do you think high tariffs would help or hurt the Afghan economy?
A 7: It moves people away from trade. If there is a reasonable tariff rate, trade will grow. Q 8: What do you think would improve the sale of Afghan products abroad? A 8: Improving the quality of products would help. Norms and standards departments capacity should increase to make sure the standards for Afghan products are high. Marketing should be performed and foreign travel facilities should be provided. Until we have improved the quality, packaging and traveling routes wont be important. Q 9: What would be the best evidence of accountability of government? A 9: The government should provide reports of economic development with proof. Today the reports are all only on paper, but if we look at the reality, only 10% of what it says on paper is actually done. Its better to have figures with proof. For example, if government claims that they have spent money on roads, then they should prove that they have built those roads. Transparency, improvement, and better growth opportunities for banks would be accountability of government towards banks (from banks point of view). Q 10: What form of information is important to Afghan traders? A 10: There are different types of information, for example general information about trade, different sectors of trade, interest rates, markets in the region, region and world tariff rates, trade laws, and accountability rules. Information about new agreements which are signed between countries, for example, if we take the latest agreement which has been signed between Afghanistan and Pakistan, people should know what facilities the new contract will bring, what transit routes, do people pay tariffs on transit, what are the goods available in the other countrys market, how the payments are going to be made, and other important information that traders need to know. Traders should know that when a good is exported to another country, what kind of paperwork they will need; these are the things that our traders should know. Our traders dont even have accounting books. Q 11: In your opinion, what economic sector can increase employment? A 11: Industries are the best ways to increase employment. Afghan villages will be able to work too. In Afghan villages, each has their own industry and products. In Bamyan, Afghan traditional dresses are produced which can be sold at a very good price in international markets. Agriculture can increase employment too. There were two carpet exhibits which were held in Dubai and Moscow. The traders who had participated in these exhibits, they didnt come back empty handed because the quality of carpets was high and all carpets were handmade. If Afghanistan handmade products industry increases it will have a really good result. There are more markets for it.
Q 12: For those traders who cant travel outside the country, what would you suggest? A 12: Agricultural banks should be established and small & medium loans should be provided to farmers. In return, their land or goods should be taken as a guarantee. Microfinance institutions can provide loans, but they are not focused on agricultural banks. We should have agricultural banks, because they are specialized in providing agricultural loans. We used to have an agricultural bank, but due to some problems it couldnt renew its license and the bank was closed. Unfortunately closing this bank was a big mistake. Establishment of an agricultural bank, which will only provide agricultural loans, could increase the employment. Q 12: Who would benefit more from free trade with other countries? A 12: Banks will benefit more. All the levels of society will benefit accordingly. If its a small business the profit will be small, if its a big business the profit will be big. Everyone will benefit according to their share in the business of the society. Q 13: Dont you think people who have connections with the government will benefit the most? A 13: Yes, only if corruption and bureaucracy continues. The most influential people will profit the most. Q 14: What about ordinary people, will they benefit or lose? A 14: They wont lose anything but the profit will be very low. Q 15: In current conditions of Afghanistan, is trading a good job for women? A 15: In current conditions its not a good profession as there is insecurity. Women can only work in Kabul today, but they cant work in other provinces. Even if there are women traders in other provinces, its very limited. A society which has suffered 30 years of war, trade is not an appropriate profession for women. As time goes by with better security conditions and improvement in our culture, trade can be good for women. Today we have all kinds of people in our society and a woman is starred at when she goes out in the crowd but people dont even care if she goes somewhere else. Today if a women says that she is a trader; police will create a lot of problems for her. Q 16: Out of the total number of people who have accounts in bank, what percentage makes the business community? A 16: To round off the number of customers, we have 750,000 customers out of which there are around 35,000 are corporate accounts.
(Idrees) Its a very interesting way to measure the percentage of people involved in business. No business is without a bank account, if we find out the number of business accounts in each bank we could estimate the percentage of people that are busy in trade. Its more than 5% - it should be between 10% to 15%. Most of the women who trade, they incur losses because of our culture and society. Our society creates problems. A women trader named Meena Sherzoi had a clothes store; at the beginning her business was really good but now she is in debt to banks. Now she has to sell her properties to pay bank loans. Not only didnt she make a profit but she had to sell her property to pay her debts. Q 17: Do you think its because she was a women, or is it because the business couldnt make it? A 17: Society is not built for her business; very limited number of people would go to her store, which resulted in her business losses. She had to go back and get a job. Even in Abaseen Zadran Market located in Kote Sangi, women wanted to have shops but they were not given any. Its used be to be around fifty shops owned by women, but today there is no more than two or three. Our culture is very low. A woman who is dressed well, when she comes in to the market, everyone stares at her. But if you go to a place like Helmand, you wont even find one woman without a burqa. You go to Kandahar there is another culture. But if you go to Jaghori, you will find women more open in comparison with Kabul. I didnt realize that I was in Afghanistan, but when I saw the unpaved roads I realized again that I was in Afghanistan. Interview with Prof. Haqiqi and prof. Saihoon, both professors of economics at Kabul University did not happen because they either declined to be interviewed or were not available during the time of interview.
Annex I: FINAL-DRAFT SURVEY QUESTIONNAIRE

Code of interviewer: Time of interview: Province: Special group code: Demographics Questions (7 Qs) D 1: Respondents gender (DONT ASK) 1. Male 2. Female D 2: Age in Years ANSWER CODE) 1. 18 25 years 2. 26 35 years 3. 36 45 years 4. 46 55 years 5. 56 60 years 6. More than 60 years 98. NR 99. DN D 3: Marital status 1. Married 2. Not married 3. Widower/Widow 4. Divorced 98. NR D 4: Highest education level 1. Never went to school (no form of education) 2. Informal education 3. Incomplete primary education 4. Complete primary education 5. Incomplete secondary education 6. Secondary education 7. Vocational education 8. Incomplete high school 9. High School 10. University education or above (please denote) 98. NR (PUT AGE AND CIRCLE CORRESPONDING Date of interview: Location: District: Questionnaire code:
99. DK D 5: Please indicate your family average monthly income. 1. Less than 2,000 Afghanis 2. 2,001 to 3,000 Afghanis 3. 3,001 to 5,000 Afghanis 4. 5,001 to 10,000 Afghanis 5. 10,001 to 15,000 Afghanis 6. 15,001 to 20,000 Afghanis 7. 20,001 to 25,000 Afghanis 8. 25,001 to 40,000 Afghanis 9. More than 40,000 Afghanis 98. NR 99. DK D 6: What is your current occupation? D 7: How many Jeribs of farm do you have? 1. Small 2. Medium 3. Large 4. Do not have land 98. NR 99. DK If occupation indicates that respondent belongs to one of the special groups, then ask both G-series and S-series questions. Otherwise, ask only remaining Gseries and I-series questions. D-series questions are asked from all. General Questions (14 Qs) G 1: Do you or someone in your family engage in foreign trade? 1. Yes 2. No 98.NR 99.DK G 2: If yes, what do you or your family members trade? 1. 2. 3. 4. 5. Agriculture or food product Rugs and handicrafts Manufactured products Gems and minerals Furniture and wood products
6. Household items like clothes or cleaning materials 7. Construction materials 8. Other: ________________________________ 98.NR 99.DK G 3: What are the three advantages of trade for Afghanistan? 1. 2. 3. 98.NR 99.DK G 4: What are the three disadvantages of trade to Afghanistan? 1. 2. 3. 98.NR 99.DK G 5: Do you think increased trade (export and Import) create more jobs, wealth, and economic opportunities? 1. Yes 2. No 98.NR 99.DK G 5a: If yes, why? 1. The goods in the market come from all over the region and the world. 2. We can buy things that we do not make in Afghanistan. 3. Trade means prices are lower for goods because farmers and businesses compete. 4. We are able to sell more and get more money for our goods by selling to our neighboring countries. 5. Getting the important technology/machines to make life easier. 6. Economic opportunities for women 7. Trading is our natural role as Afghans and is a respected tradition. 8. Trade builds friendship and ties between us and other countries.
9. Other: _____________________________ 98. NR 99. DK G 5b: If no, why? 1. Too much of low quality and dangerous goods will come to our market 2. Too many foreign goods and services will come to our market 3. Afghan producers can not compete with foreign producers 4. Only businesses with the government connection will succeed and benefit 5. Other 98. NR 99. DK G 6a: Who will benefit most from increased import/export? Export 1 2 3 4 5 6 7 98 99 Manufacturers Small Farmers Large Farmers Rug, textile and handicraft makers Transporters (truck drivers, freight forwards) The government Other NR DK Import
G 6b: Who will bear the most cost of increased import/export? Export 1 2 3 4 5 6 7 98 99 Manufacturers Small Farmers Large Farmers Rug, textile and handicraft makers Transporters (truck drivers, freight forwards) The government Other NR DK Import
G 7: Which of these measures would best improve the sale of Afghan products in international markets? (PLEASE RANK)
a. ( ) Better packaging b. ( ) Pricing information for other countries c. ( ) Better information about foreign markets
d. ( ) Higher product quality e. ( ) Better technology to improve products f. ( ) Other

98.NR 99.DK G 8: What are Afghanistans biggest obstacles to trade? (PLEASE RANK).
a. b. c. d. e. f. g. h. i.
( ) Security war situation and road checkpoints ( ) Lack of pricing information. ( ) Crime on the roads. ( ) Transportation challenges ( ) Lack of production capacitysay another way. ( ) Low quality of goods/inability to meet international standards ( ) Unclear customs procedures ( ) Corruption from government ( ) Other 98.NR 99.DK G 9: How should the Government help Afghans export? (PLEASE RANK)
a. b. c. d. e. f. g.
( ) Improve Afghan Customs Department ( ) Improve roads and transportation links ( ) Provide training and education to producers ( ) Reduce taxes and fees ( ) Reduce regulations (On what? Please specify) ( ) Provide better training to Government officials on what? specify ( ) Other 98.NR 99.DK G 10: What are most important things that the government could do to promote trade? (PLEASE RANK)
a. b. c. d. e. f. g.
( ) Implement trade agreements with other countries. ( ) Provide better information on customs regulations, taxes, and tariffs. ( ) Provide information on opportunities to traders and producers. ( ) Improve Afghanistans image in foreign markets. ( ) Provide finance to exporters. ( ) Share information about product standards. ( ) Other 98.NR 99.DK
G 11: Who do you think are the three biggest trading partners of Afghanistan? (Open ended). 1. 2. 3. 98.NR 99.DK Special Questions (12 Qs) S 1: Would you do business with a female trader? 1. Yes 2. Yes, but only if I know her 3. Other 4. No 98.NR 99.DK S 1a: What are the impediments to trade for women in Afghanistan? 1. 2. 3. 98.NR 99.DK S 2: Do you think that international/regional trade agreements benefit Afghanistan? 1. Yes 2. No 98.NR 99.DK S 3: Which measures would improve the ability to transport goods from the farmer to a foreign market? (PLEASE RANK TOP THREE)
a. b. c. d. e.
( ( ( ( (
) Improve roads ) Eliminate roadside checkpoints ) Improve security ) Build cold storage and buy cold trucks ) Improve access to credit
f. ( ) Other
98.NR 99.DK S 4: Who benefits from the export of carpets? (Select all that apply) 1. Weavers 2. Sheep herders 3. Dye makers 4. Brokers and businessmen 5. Other ________________________________ 6. No one 98.NR 99.DK S 5: When you hear the word tariff what do you think it means? 1. Tax on production 2. Tax on imports 3. Tax on exports 4. Tax on sale of goods in the market 5. Other ________________________________ 98.NR 99.DK S 6: What do you think of Afghanistans tariffs? 1. Too high 2. Too low 3. About right 98.NR 99.DK S 7: What have you experienced or heard about the work of the Afghan Customs Department? (Open ended)
S 8: In your opinion, how large a problem is each of the following in the Afghan Customs Department?
0 NOT A PROBLEM AT ALL, 1 MINOR, 5 MAJOR PROBLEM Score a b c d e f g h i j k l m Low professional qualifications for staff The process for handling complaints and appeals Staff behavior toward citizens and visitors Lack of service counter or person in tax offices Not enough customs officers Knowledge of customs officers Slowness at clearing goods Queue lines Poor facilities Lack of information on custom duties and procedures Speed at moving goods through customs The amount of fees paid at customs Other ____________________________ 012345 012345 012345 012345 012345 012345 012345 012345 012345 012345 012345 012345 012345 98/ 99
S 9: What steps would you take to export goods for the first time? (PLEASE RANK)
a. b. c. d. e.
( ) Talk to a successful exporter ( ) Contact a local government official ( ) Contact EPAA or Afghan Customs Department ( ) Contact the local Chamber of Commerce or local business association ( ) Other 98.NR 99.DK S 10: What export related information would be most useful to your work? 1. The customs process 2. The visa process 3. Transport opportunities 4. Details on trade agreement 5. The government 6. I dont need any export related information 7. Other 98. NR 99. DK S 11: Do you know what the following terms mean? 1. World Trade Organization (WTO) Yes No
2. South Asian Free Trade Area (SAFTA) 3. Afghanistan Pakistan Transit and Transport-Agreement (APTTA) Information Dissemination Questions (2 Qs)
Yes No Yes No
I 1: What form of trade and customs information delivery is easiest for you to access? (PLEASE RANK THE TOP THREE)
a. b. c. d. e. f. g. h. i. j. k. l.
( ) Outside signs ( ) Posters in common places ( ) Radio ( ) Television ( ) Newspapers ( ) Printed materials in the form of booklets, brochures, leaflets ( ) Government trade office ( ) Text (SMS) messages ( ) Public meeting/workshops ( ) Internet (websites) ( ) None of the above ( ) Other________________________________________ 98.NR 99.DK I 2: What new trade and customs information would you like to see in printed materials like leaflet, booklet, and brochure? (PLEASE RANK AS MANY AS YOU WANT)
a. b. c. d. e.
( ) General information about trade agreements ( ) General information on customs procedures ( ) Tariff rates for goods coming into Afghanistan ( ) Tariff rates for goods entering Iran, Pakistan, India, China, Uzbekistan ( ) Market price information for key imports/exports at locations in and around Afghanistan f. ( ) Information on WTO accession and other upcoming trade agreements in which the Afghan government is a party g. ( ) Information on standards for goods for export h. ( ) Information on foreign markets i. ( ) Information on trade fairs and exhibits j. ( ) Information on getting foreign visas k. ( ) Other__________________________ 98.NR 99.DK

Final Tafa Survey Report 2010

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Final Tafa Survey Report 2010

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FINAL SURVEY REPORT

Knowledge, Attitude, and Practice (KAP) Survey of Afghanistan towards Trade

Kabul Kandahar Khost Paktia

Interior Border Border Interior

250 50 25 25 Total: 1,327

Question D1: Gender

Question D2: Age

Age 18-25 Age 46-60

Age 26-35 Age 61+

Question D3: Marital status

Question D4: Highest education level

Question D5: Monthly income (in Afghanis)

3000 or less 20,001 - 40,000 Don't Know

3001 - 10,000 More Than 40,000

10,001 - 20,000 No Response

Question D6: Occupation

Question D7: Size of farmland owned

Respondent or family member is trader

Detailed Survey Results

.4 Fraction of all respondents

Response Yes No No response Dont know

Estimate 0.2457 0.7414 0.0106 0.0023

Lower Bound 0.1577 0.6238 0.0028 0.00058

Upper Bound 0.3618 0.8321 0.0395 0.0094 N = 1327

.05 .1 .15 .2 Fraction among respondents answering Yes to Question G1

Question G3: What are three advantages to trade for Afghanistan?

Question G4: What are three disadvantages to trade for Afghanistan?

Question G4: What are three disadvantages to trade for Afghanistan?

.4 .6 Fraction of all respondents

Response Yes No No response Dont know

Estimate 0.9128 0.0676 0.011 0.0086

Lower Bound 0.8178 0.0253 0.0037 0.0032

Upper Bound 0.9606 0.1682 0.0328 0.0229 N = 1327

No No Response Don't Know

0.95 0.04 0.00 0.01

No No Response Don't Know

.4 .6 Fraction of all respondents

Border provinces only:

Interior provinces only:

No No Response Don't Know

Yes No No Response Don't Know 0.01 0.01 0.08

.4 .6 Fraction of all respondents

Comments: These results are quite intuitive and as expected

.2 .4 .6 Fraction among respondents answering Yes to Question G5

Comments: There is a heavy emphasis on the benefits of increased imports.

Don't know 0.00

.2 .4 .6 Fraction of all respondents answering No to Question G5

Estimate 0.6329 0.5997 0.2879 0.1436 0.0655 0.0229 0

Lower Bound 0.5421 0.2641 0.1959 0.0801 0.0145 0.004 0

Upper Bound 0.7152 0.8622 0.4014 0.244 0.2504 0.1217 0 N = 94

Question G6a: Who will benefit most from increased exports?

.2 .4 Fraction of all respondents

Question G6a: Who will benefit most from increased imports?

.2 .4 Fraction of all respondents

Comments: Again, government is considered the main beneficiary of more trade.

.2 .3 Fraction of all respondents

.2 .3 Fraction of all respondents

.4 .6 Fraction of all respondents Third Don't know Fourth No response

Second Not selected

Estimate 0.3543 0.2779 0.1711 0.1085 0.0652 0.0054

Lower Bound 0.2454 0.2252 0.122 0.0734 0.038 0.001

Upper Bound 0.4808 0.3375 0.2347 0.1577 0.1098 0.027 N = 1327

Question G8: What are Afghanistan's biggest obstacles to trade?