U.S. Chamber of Commerce opens in Kabul

KABUL Thu Dec 9, 2010 10:45pm IST

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KABUL (Reuters) - The American Chamber of Commerce has opened an office in Kabul, aiming to show investors that there is money to be made in Afghanistan, despite its security problems and corruption.

At a lunch in Kabul's five-star Serena hotel on Thursday, U.S. ambassador Karl Eikenberry chatted with a former Central Bank governor and businesspeople working in bottled water, logistics and commercial law.

More unusually for a Chamber of Commerce gathering, the speeches included praise for the role of the aid sector, a reminder of the challenges Afghanistan still faces as it attempts to rebuild the economy after decades of conflict.

Violence across the country is at its highest since the overthrow of the Taliban in 2001, and the insurgency is spreading to once peaceful parts of the north and west, but the capital has remained relatively insulated.

Eikenberry praised the advances of the last eight years and singled out agriculture and information technology as growth areas.

But he also acknowledged to journalists that security concerns, the lack of a strong legal framework for business, and weak infrastructure after decades of conflict were all obstacles to investment:

"Afghanistan still is a country that -- although great improvements have been made in the last seven or eight years in building the infrastructure that can facilitate commerce: roads, power, access to water -- that still remains challenging."

Corruption is also a major problem, although businesspeople were wary of discussing it. Some said that steady reforms of legal and government systems to limit the room for it to flourish might be more effective than public pressure on President Hamid Karzai.

The anti-corruption watchdog Transparency International ranks Afghanistan as the world's second most corrupt country, equal with Myanmar and behind only Somalia.

OPPORTUNITIES AND CHALLENGES

Businessmen already working in Afghanistan said it offered good opportunities and that, in Kabul at least, security and governance were improving.

"I've been here for two years and things are definitely looking better," said Abdul Walid Qargha, an Afghan-American who left as a teenager but moved back to work with his cousin at Elite P&L, a procurement and logistics firm.

Afghanistan offers a chance to break into sectors that in other countries are already dominated by major players.

And because it is a landlocked nation, the high cost of importing goods boosts the competitiveness of local products on the domestic market.

"So if you can produce certain goods locally, although the cost of production relative to other countries may be a little higher, you can still have a sustainable business," Farid Maqsudi, Vice Chairman of the Chamber's Afghan branch, AmCham Afghanistan.

He acknowledged that attracting investors without personal ties to the country was a challenge, and said a strong legal framework was vital:

"The way you get American investors, and European investors, is that they have to believe that there is a fair environment to do business."

(Editing by Paul Tait and Kevin Liffey)

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