Elimination of export tariffs welcomed

Economists have commended a move by Afghan government’s decision to forgo custom tariffs on exports to enhance trade and transform the country’s war economy into a peace economy. "We reached a conclusion that all goods should for now be exempted from tax and this will go on until trade is boosted and our main aim is to find jobs and food for people," said Afghan finance minister Ashraf Ghani Ahmadzai.

"It’s a good news," independent economist Jamal-udin Khan told IRIN from the northwestern Pakistani city of Peshawar on Wednesday. "It will be very easy for Afghans to export now but a lot depends on the overall tariff package they announce."

Khan explained that promoting exports would benefit the Afghan economy because domestic consumption was very small and it had to rely on selling its products to other countries. Decades of war and disruption mean Afghanistan’s export sector is tiny. It consists of hand-woven carpets, fruits, sheepskins and precious gemstones. Peace and stability could lead to economic diversification into minerals and energy as well as agriculture.

Experts believe that the introduction of a new Afghan currency and the revamping of export tariffs are steps in the right direction ahead of a 60-nation aid coordination meeting in Washington for Afghanistan. "Some more tax holidays might attract considerable foreign investment," he said.

Although dropping export tarrifs may boost this sector of the economy, a key challenge for Kabul's cash-strapped administration would be to regain control of Afghanistan’s huge traffic in imported goods. At present warlords control the major roads into the landlocked state and raise huge revenues for their fiefdoms by imposing import duties that Kabul never sees.

Experts maintain that although Afghanistan is a potential hub for regional trade because of its central location, it needs regional stability, roads and communication networks as well as a strong central government to realise such ideals. "There is a long a difficult journey ahead for the Afghan government," Khan said.