No one can ignore the vital role of industries in the economic development of underdeveloped countries; historical documents show that industries have developed almost all countries, and they are areas which require lots of attention. Since the start of industrial revolution, countries tried to have stronger and better economies through industries, and promoted the sector by allocating and zoning estate or property for them; so that, industrialists can easily start their businesses and industries. The Property generally has various names such as the Industrial Pak, industrial zone and economic zone. These parks are located at the outskirts of the cities with proper infrastructural access and close to transportation infrastructures. Some of the reasons for setting aside Industrial Parks are as follow:
- To enhance dedicated centralization of infrastructure in one area to reduce the business costs related with infrastructure;
- To attract start-ups by provision of an integrated infrastructure in one area;
- To decrease the environmental effects of industrial disposals;
To keep up with the world, Afghanistan also pursued the notion of putting aside estate for Industrial Parks to provide cheaper land for industries.
Afghan IPs Status quo: There are 34 Industrial Parks in Afghanistan covering thousands of acres of area. 11 of these parks are fully operative; 12 of them are under construction. The remaining 11 parks are fully sketched and need some attention. In more than 7 provinces, we have feasibility of building industrial parks.
Most of these IPs are quite successful. For example, according to the General Directorate of Industrial Parks, Pol-e-Charkhi industrial parks with 1350 acres area has 115 plots which is home to 360 factories. 225 of the factories are actively engaged in manufacturing. Another example would be the Herat’s IPs that cover 4,741 acres of land with 969 plots. 896 of the plots have been distributed and there are 279 active firms.
Moreover, concrete steps have been taking by the Ministry of Industry and Commerce of Afghanistan to make them more practical and convenient for Industrialists. The steps consist of legal reforms, lowering the property price, and distribution of land for customers.
Legal reforms in the legal legislations of IPs: Laws and regulations are significantly handy for economic development of countries, since every venture needs better and clear regulations. Industrial parks being the platform for industrialization of Afghanistan requires legal frameworks that help businesses and industries operate smoothly.
MoIC Legal Affairs Directorate has developed the IP’s Procedure (Tarzulamal), as a legal roadmap, for better management and operation of IPs all over the country. However, it needed further development. Since, the inception of developing IPs procedure, the document was amended and revised many times, in each revised version of the procedure serious gaps and loopholes were covered regarding investment conditions, legal terminologies, and IP’s development and maintenance. In addition, more clarifications were added to some ambiguous articles; additional articles were added to the procedure in each upgraded version.
This current legal procedure was prepared and revised by a team of technical experts with close coordination and cooperation of IP’s stakeholders. Unfortunately, the procedure still requires some reforms. To develop new industrial parks and expand the new ones, separate procedures are required for PPP IP’s, private IP’s, IP’s, and for the development, operation & maintenance of these IP’s. In addition, some annexes should be also added to the present procedure.
Low prices of plots: With the amendment of IPs’ legislations, there has been a decrease in prices of plots in these IPs. Now, every business minded individual can acquire property for their business activities wherever they desire with a nominal price of 50 AFS per square meter. This is to attract investment and encourage entrepreneurs.
Plot distribution: After the dramatic decrease in property prices of plots, land distribution started in the IPs under certain conditions.
So far, 620 of the industrialists have acquired application forms for plots in the IP’s from the MoIC of Afghanistan; the documents of 509 companies’ applications for plot in 6 IPs are registered to the MoIC IPs directorate, so far. After evaluating 181 of these documents 130 of them were approved by the High economic council; 382 plots are approved by the High Economic Council. These companies invest about $232 million; they employ 6,438 workers directly and 43,729 workers indirectly. However, 175 companies have not been able to meet the standards set by procedure of IPs and other 12 companies’ documents are against the procedure.
According to the IPs directorate of Ministry of Industry and Commerce, there are 2,779 plots available in 12 IPs for distribution which covers 12,652 acres.
Conditions for plot acquisition: There are two different types of conditions for businesses. For big businesses: the conditions for acquiring a plot of one acre include $100,000 investment capital, employment opportunities for at least 15 individuals, a bank statement with the company’s name stating that the company’s monthly business transactions totals to $30,000, for start-ups a bank statement with the company’s name and $20,000 capital, and full data on the amount of demanded plot.
For small business the conditions, however, are fewer and simpler which include $3000 investment capital, and data on the amount of demanded plot.
Challenges in the IPs in Afghanistan
Infrastructure: When there is no infrastructure, then there is no operation. Each enterprise need edifices, roads, health centers, sewerage, and other facilities which we notice a shortfall of them in our industrial parks. Lack of infrastructure caused great troubles for industrialists. It has also caused some of investors to change their minds regarding investment in Afghanistan. Therefore, the challenge of infrastructure needs to be dealt with if we want prosperous industries; and, subsequently, a developed economy.
Electricity: according to DABS (Da Afghanistan Brishna Sherkat) Afghanistan has the potential to generate 23,000 MW of hydro power, 3,000- 4,000 MW of gas based power, 66,000 MW of wind power, and 222,000 MW solar power. However, the current power generation of Afghanistan reaches 240 MW, which covers 20% of electricity need of Afghanistan; the country consumes 1150 MW of electricity annually. The remaining 80% is imported from neighboring countries; it costs Afghanistan $240 to $300 million. Lack of electricity is a major challenge for industries in Afghanistan. Most of the IPs are suffering as well.
Nevertheless, the Afghan government and the DABS are trying change the trend of electricity from importing to exporting. The government has invested millions of USD on constructing water dams, solar power plants and wind power plants. We are hopeful that one day we can fulfill our electricity needs and export it to other countries.
Security: another major obstacle on the way of industrialization of Afghanistan is insecurity; which damages its economy more than anything else. The security of investors, traders, industrialists and other individuals who are involved in economic ventures is worrying and threatening their lives on daily basis. It has caused some of the businesspeople to be disheartened and transfer their capital out of the Afghanistan. Therefore, the Afghan government needs to provide security to the business community as soon as possible.
Industrial Parks around the Globe
A country’s economy is based on its industries. Here we would take a loot at two economic giants of the world and how they benefited from industries- China and the Emirates.
China, the second largest economy of the world has three industries as its main economic drivers-the manufacturing, agriculture, and telecommunication. For instance, in 2015 China manufactured 80% of the world’s air-conditioners, 70% of its cell-phones, and 60% of its shoes. The agriculture in China makes up about 10% of the country’s GDP, and China has more than 300 million farmers. In 2015, telecom sector added $750 billion to China’s economy and comprised 5.5% of Chinese GDP. Even though China is a communist country where everything is controlled by the central government, it has create a special industrial or economic zone that allows foreign investors to do business with hardly any government intervention.
The Emirates provide free economic zones for investors. They also offer 100% foreign ownership in these zones. A good example is the Kizad or Khalifa Industrial Zone. The Park is located almost midway between Abu Dhabi and Dubai; the Khalifa Industrial Zone is part of multibillion-dollar project by the Abu Dhabi Government to launch industrial park and ports operation to create economic diversification by 2030. The main goal is to attract foreign investment and create more jobs.
The park has a strategic location which links the east and the west. Its intermodal infrastructure connects sea, air, rail and roads. This will give the investors the opportunity of efficient access to over 4.5 billion consumers within four different time zones.
In conclusion, industrial Parks are crucial to the economy of a country and it helps generate a sustainable and rapid growing economy. The sector has provoked most countries to invest large sums of money in these areas, and the outcome has been much bigger than they expected.