Afghanistan: Investing

FDI in Figures

Statistics in relation to FDI are not available and/or not reliable in this country. According to the UN, most of the public investments are the ones financed by international aid.

According to Afghan law, all foreign companies have the same investing opportunities as the domestic ones. However, the political violence, weak regulations regarding property protection, a substantial lack of skilled manpower, under-developed financial markets and insufficient infrastructures limit the potential attractiveness of the country.

Despite that these perspectives are not so favorable, at the end of 2011 the signature of several projects in the energy sector has shown an enthusiasm from the international participants in Afghanistan. China, through the CNPC (China National Petroleum Corporation) has invested in oil (70% of the profits will go to the government). India, on its side, has invested in the mining sector through the Steel Authority of India. It is estimated that the Afghan mining sector will represent from 42 to 45% of GDP by 2024 and that the revenues from this sector will be of USD 1.5 billion in 2016 and USD 4 billion in 2024.

Country Comparison For the Protection of Investors

	Afghanistan	South Asia	United States	Germany
Index of Transaction Transparency*	1.0	4.4	7.0	5.0
Index of Manager’s Responsibility**	1.0	4.4	9.0	5.0
Index of Shareholders’ Power***	1.0	6.3	9.0	5.0
Index of Investor Protection****	1.0	5.0	8.3	5.0

Source: Doing Business - Last Available Data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

Foreign Direct Investment	2008	2009	2010
FDI Inward Flow (million USD)	300	185	76
FDI Stock (million USD)	1,364.6	1,549.6	1,625.2
Number of Greenfield Investments***	2.0	6.0	-
FDI Inwards (in % of GFCF****)	8.3	5.3	-
FDI Stock (in % of GDP)	10.8	10.3	-

Source: UNCTAD - Last Available Data

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

Tax Rates

Sales Tax: 2% - 5%
Company Tax: Exempted
Withholding Taxes: Dividends 20%, Interests 0%, Royalties 5%.
Bilateral Agreement: Afghanistan and Lebanon are not bound by a taxation agreement.
Social Security Contributions Paid By Employers: None

Country Comparison For Corporate Taxation

	Afghanistan	South Asia	United States	Germany
Number of Payments of Taxes per Year	8.0	31.1	11.0	16.0
Time Taken For Administrative Formalities (Hours)	275.0	282.9	187.0	215.0
Total Share of Taxes (% of Profit)	36.4	39.9	46.8	48.2

Source: Doing Business - Last Available Data.

Investment Opportunities

Tenders, Projects and Public Procurement: Asian Developement Bank, Proposed Projects in Asia
DgMarket, Tenders Worldwide
Setting Up a Company: Consult Doing Business Website, to know about procedures to start a Business in Afghanistan.
Useful Resources: The Afghan Investment Support Agency (AISA)

Business Setup Procedures

Setting Up a Company	Afghanistan	South Asia
Procedures (number)	4.00	7.10
Time (days)	7.00	24.60

Source: Doing Business.

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