Doing Business in Afghanistan

I recall in my youth an Afghanistan of political turmoil. It was not an infrequent occurrence to see marches outside my bedroom window, the protestors chanting whatever mantra they happened to believe in at the time. It was an environment where Communists, Islamists, Republicans, Socialists, Feminists, and staunch Capitalists headquartered within feet of each other.
Such a powder-keg, of course, is bound to ignite.
As an Afghan-American and an attorney, I get asked the question often of what can be done with Afghanistan. Is peace even possible? The short answer is, yes. Peace is always possible. And the cornerstone for any lasting peace has always been, and will always be, business.
When various groups benefit from a harmonious relationship where each seeks their own benefit without infringing the natural rights of the other, peace is a natural consequence. The reason such disparate groups as atheist Communists and Islamists where able to coexist peacefully in the 1970s was this very principle. It was only when one group, the Communists, obtained power over the others and the mutually beneficial relationship was broken that Afghanistan began what would lead to its darkest days, first under the Soviets and then under the barbaric Taliban.
Business and a free-market economy is the key to saving Afghanistan. Investment into Afghanistan from foreign sources has been slowly rising since the fall of the Taliban in 2001. For those of you that see the potential in a virtually untapped market and are willing to take the plunge and invest your dollars in an Afghan enterprise, I offer you this basic primer to get started.
Getting a Business License
Your first task is to obtain a business license from the government. The Afghanistan Investment Support Agency (AISA) handles issuance of these permits and the fees range from 100 USD to 5000 USD. The process is intended to take no more than 6 days, but could take longer as the Agency must cross-check for existing companies, obtain the shareholders or proprietors criminal historys, and check the tax identification number with the Ministry of Finance.
Once the company has become operational, you will have to go back to AISA and obtain your operations license. To obtain this license, you will have to show proof of your equipment and the activities you plan to engage in. Expect to pay 100 USD.
AISA will then visit your operations and do an inspection. You should not have to pay anything extra for this inspection.
Paying Taxes and Getting Workers
Unfortunately, taxes are something one cannot escape anywhere, even in a nation as hungry for foreign investment as Afghanistan. Expect a 20% corporate income tax and a 2% sales tax. There are also road toll taxes, fuel consumption taxes, and municipal taxes. However, a knowledgeable accountant or attorney may be able to minimize the impact of these taxes for you. You should consult one before investing.
Hiring employees is a different matter. In this regard, Afghanistan is perhaps less restricted than the industrialized nations. An employer may hire or fire employees as they see fit, however they must provide notice to various government agencies if firing employees with a certain number of years under their belts. But there is no mandated minimum wage as of this writing. An employer may hire an employee for whatever they are willing to work for, usually far less than in all but the poorest regions of the globe. The current average wage in Afghanistan is 200 USD per year.
Exporting Goods
Exporting goods from Afghanistan is a simple and low cost process. The documents required are typical to the industrialized nations, such as a bill of lading, duties exemption form, certificate of origin, insurance certificate, packing list etc. Even with hiring an attorney to prepare the documents and with the associated fees of customs clearance and inland transportation, exporting a shipment of goods should cost significantly less than most nations around the globe. Anywhere from 1000 USD to 4000 USD.
Enforcing Contracts
Afghanistan is notorious for being a nation in which it is difficult to enforce contracts. However, the courts do hold power; the problem is having them exercise that power to your benefit. For example, in many regions it is not uncommon to have to pay the prosecutor to prosecute a crime or pay the judge to enforce a contract. Someone familiar with the system should be able to act as a guide to increase your chances of enforcement.
Candy
A new term has entered the vernacular of doing business in Afghanistan: Shirni or Candy. It is, to put it simply, a bribe. Make no mistake; a well run business in Afghanistan will not be able to function without the payment of bribes. The truck driver bringing your goods may get lost and need some money to find his way to you. The bureaucrat issuing your business license may deny you until you have paid him a gift. Your supplies may be stolen from your worksite unless you have paid the police for protection.
If your business is based in Great Britain or Germany, you have no problem. The bribes you pay to foreign government officials and private individuals are in fact tax deductible.
Here in the States, we are not so farsighted. The Foreign Corrupt Practices Act makes it illegal to pay a bribe to foreign government officials for the purpose of getting or keeping business. Does it put American companies at a severe disadvantage in foreign markets? Absolutely. Will the government change it? Not in the foreseeable future.
If you are an American company, you will have to consult with an attorney familiar with the landscape to find a way to keep your business operational and not violate the FCPA.
Is it Wise to Invest in Afghanistan Right Now?
This is the million dollar question. And your answer depends on your view of the future of that country, as well as American foreign policy.

If Afghanistan stabilizes, and by that I mean inflation decreases and employment and security increase, it can be an extraordinarily vibrant market as it was in the 1960s and 1970s. If, however, it declines and falls back into the hands of Islamic extremists, there will be no free-market; only black-market goods trafficked through corrupt government channels.
So should you invest in Afghanistan? Each investor and entrepreneur must answer this question themselves. The risk is great, but the rewards could be even greater. But there is a lesson to keep in mind: in the history of business, it is often the ones that have a positive look on the future that make the greatest fortunes.
ABOUT THE AUTHOR: S. Yossof Sharifi
S. Yossof Sharifi is a partner at the firm of Sharifi & Baron, based in Salt Lake City, Utah and serving clients in Utah, New Jersey, Southwest Asia and South America. He practices business, corporate and criminal law, serving both a domestic and an international clientele.