New Delhi: Afghanistan may be poised to turn a corner with global private investors seemingly ready to overlook the risks of investing significant amounts of money in the war-torn country in areas as varied as mining, healthcare, education and telecom.
An Afghan Investment Conference in New Delhi on Thursday drew more than 270 private sector firms and consultancies from India and Afghanistan besides regional and global partners, according to Indian organizers. Five senior government ministers from Afghanistan in charge of key economic portfolios such as mining, commerce and finance were present at the meet.
The conference was the first India has organized for inviting investment in another country and aims to help Afghanistan transition from an economy sustained by donor handouts to one sustained by private investment. It follows a conference in Chicago on meeting security challenges after the pull-out of international troops and precedes an international meeting of donors to Afghanistan in Tokyo on 8 July.
Playing facilitator: (Left to right) Afghanistan commerce minister Anwar-ul-Haq Ahady, Afghan foreign minister Zalmai Rassoul and his Indian counterpart S.M Krishna in New Delhi. AP
“Even if Afghanistan was not emerging from three decades of civil war and not facing an existential threat of terrorism that could affect the region and also the world, it would still need help, given that it is a landlocked and a least developed country,” said a foreign ministry official, who did not want to be named. “How far could it be dependent on foreign aid in a situation of economic crisis, public fatigue? So the idea was to bring in investment, given Afghanistan’s huge potential in the mining and agriculture sector.”
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The Delhi conference is also the first India has organized on Afghanistan in recent years, having preferred to keep a low profile so as not to rile regional rival Pakistan that is accused of supporting a Taliban resurgence to ensure it has a say in Afghan politics after the withdrawal of US-led global troops in 2014. With ties between the US and Pakistan fraying due to a series of incidents, including the killing of Al Qaeda ideologue Osama bin Laden by US troops in Pakistan in a secret raid, the US administration has been openly supporting a greater Indian involvement in stabilizing Afghanistan. Earlier this month, India and the US agreed to hold a trilateral dialogue with Kabul to discuss issues relating to Afghanistan.
“The opportunities in Afghanistan are plenty. Unless we expose our members to investment opportunities, what are the laws, they will not know what the opportunities are,” said Sushant Sen, principal adviser at the Confederation of Indian Industry, the organizer of the day-long Delhi Investment Summit on Afghanistan. “Firms operating there are making good profit,” he said, adding that about 100 Indian firms were already in Afghanistan with a combined investment of $25 million since 2002.
Uttam K. Talapatra, vice-president, Synergy group, which has interests in education, renewable energy, biotechnology, infrastructure and food, said the conference had served to provide “an insight into what the investment climate in Afghanistan is like. We’ve just woken up (to the possibilities).” Brushing aside security concerns, he said: “When people will go in there, they will learn to tailor their investment programmes accordingly. Problems are there, they have to be faced and solved.”
The sentiment was echoed by the other participating investors as well. “The combined effect of global technology trends and social adaptation will produce a very positive impact,” said Paul Stevers, president of the US-based Think Renewables Inc., a firm working in the area of renewable energy. “The Taliban may be able to outwait the international troops,” he said, adding, “it is entirely possible if all donors pull out, Afghanistan could collapse. But I don’t think young Afghans are crazy about having another three decades of war and this is bigger than the issues of corruption (dogging the Afghan government), security issues and the strategic mistakes made by the international community in the past decade.”
The comments came after presentations by the Afghan ministers of commerce, mining and finance. In his remarks, Anwar-ul-Haq Ahady, commerce minister, noted that even when “we take into account the high level of risk, the return on investment there is greater than in most other parts of the world”. Listing the measures taken by his country to draw investors, Ahady said his government had adopted a very liberal, investor-friendly foreign-exchange system; allowed banks to open foreign-exchange accounts; permitted 100% foreign ownership of enterprises; easy repatriation of profits; and treating foreign investors on par with domestic ones. The Kabul government was also working on infrastructure, including roads and railways connecting Central Asian and South Asian countries, Ahady said. “Your investment will not only benefit you and your employees but also create conditions that will promote peace and stability in Afghanistan and the wider region,” he said.
Ahady’s colleague Wahidullah Shahrani spoke of opportunities in mining where Indian firms are bidding for gold, coal and gold concessions. He also spoke of substantial reserves of rare earth element deposits that would shortly open to foreign firms.
A consortium of Indian firms led by Steel Authority of India Ltd (SAIL) won the bidding for three iron ore blocks in Hajigak in November and plans to set up a $10.8-billion project that includes a power plant, a road and rail link as well as a steel plant to be built by SAIL. Another consortium has been shortlisted to bid for copper and gold deposits, and the government is also eyeing coal deposits in Afghanistan.
Indian foreign ministry officials, seemingly buoyed by the “overwhelming” response, did not seem discouraged that the meeting may not result in any of the deals fructifying. “The memoranda of understanding and pledges of investment may happen. I can’t say,” said a second official, who didn’t want to be named. “We (the conference) are playing the role of facilitator, of bringing investors and the Afghan government on one platform. The conference will produce a plan of action that will be presented at the Tokyo meet,” the official said.