Special Economic Zone and Its Impact on Afghanistan GDP, Export, Employment and Revenue

Abstract:

This research report assessed the viability of Special Economic Zone and its impact on Gross Domestic Product, revenue and employment of Afghanistan. A special economic zone (SEZ) is an area in which business and trade laws are different from rest of the country. SEZs are located within a country’s national borders, and their aims include: increased trade, increased investment, job creation and effective administration. To encourage businesses to set up in the zone, financial policies are introduced. These policies typically regard investing, taxation, trading, quotas, customs and labor regulations. Additionally, companies may be offered tax holidays, where upon establishing in a zone they are granted a period of lower taxation.This researcher focused on primary and secondary data that were retrieved from various documents produced by World Bank, Asian Development, Afghanistan Airfields Economic Development Commission, International Monetary Funds and World Free Zone Organization. The study used the non-probability sampling technique where the researcher followed up the convenience sampling method that relies on data collection from population members who are conveniently available to participate in study for the target population of ministries, provinces, private sectors, and civil society organizations.  The study also conducted face to face interviews, telephone calls, email exchange and used questionnaires to collect the data from government, private sector and civil society organizations. This study also reviewed the various articles, research papers, news, and observed various SEZs in Turkey, Iran, China and India that were highly useful inputs in terms of policies, regulatory framework and incentive packages for creating Special Economic Zone in the country. Since Afghanistan is the heart of asia, that connects east asia with west asia, central asia and then to Europe and has rich and untapped natural resources therefore, The report came up with the concept of Special Economic Zone to be established in the strategic airfields of Kabul (Central), Herat (West),  Balkh (North), Kandahar (Southeast), Nangarhar(East) and Helmand.  that will increase GDP by 60 billion USD, Export 45 billion USD, Revenue by 6.1 billion and 655,000 jobs for Afghan people. The majority of the respondent have confirmed that there is a highly positive relationship of SEZ with GDP increase, export promotion, jobs creation and revenue of Afghanistan. The researcher also used the SPSS20 software to analyze impact of SEZ on GDP, export, jobs and revenue through running multiple regression analysis.

The creation of Special Economic Zones (SEZs) in Afghanistan delivers the most effective means to implement immediate, sustainable initiatives to accelerate economic, social, and political transformation.  It will play an important part in transferring of knowledge, technology and skills from top international companies to Afghan people that will bring more efficiencies to produce more with less resources and time and reach afghan products to various regional and global markets. The report also noted that SEZs are no panacea, however it requires a comprehensive SEZ law, regulations, procedures, policies, authority, incentive regime, a detailed implementation plan designed for each SEZ location, and long-term commitment of the Government of the Islamic Republic of Afghanistan (GIRoA). A foundation based upon a sound legal framework and proven private sector business models are the most critical components to the success of SEZs in Afghanistan.

Key Words; Afghanistan Special Economic Zone, Export, Employment, GDP, Revenue,

1. Introduction 

This study intends to assess the impact of SEZs and its impact on Afghanistan Gross Domestic Product, Export, Employment and Revenue.

The Gross Domestic Product (GDP) in Afghanistan was worth 19.47 billion US dollars in 2016. The GDP value of Afghanistan represents 0.03 percent of the world economy. Exports in Afghanistan increased to 571.41 USD Million in 2016 from 570.50 USD Million in 2015. Exports in Afghanistan averaged 350.55 USD Million from 2000 until 2016, reaching an all-time high of 571.41 USD Million in 2016 and a record low of 69.10 USD Million in 2002. Imports in Afghanistan decreased to 7722.80 USD Million in 2016 from 7729 USD Million in 2015. Imports in Afghanistan averaged 4717.57 USD Million from 2003 until 2016, reaching an all-time high of 9069 USD Million in 2013 and a record low of 1966.07 USD Million in 2005.

However, Afghanistan recorded a trade deficit of 7151 USD Million in 2016 and the Unemployment Rate in Afghanistan remained unchanged at 8.50 percent in 2016 from 8.50 percent in 2015.

Afghanistan is ranked 183 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings.

Afghanistan is a landlocked country located within South Asia and Central Asia. Afghanistan is bordered by Pakistan in the south and east; Iran in the west; TurkmenistanUzbekistan, and Tajikistan in the north; and in the far northeast, China and the Pakistani-administered Gilgit-Baluchistan. Its territory covers 652,000 square kilometers (252,000 sq mi) and much of it is covered by the Hindu Kush mountain range, which experience very cold winters. The Afghan papulation is estimated 34 million which has 34 provinces and Kabul is the capital city of the Country.

Looking to the above trade deficit of 7 billion, budget deficit, unemployment rate, less export and low GDP there is need for a long term program which will enable afghan economy to address these obstacles in a very efficient manner.

The main purpose of Special Economic Zone is to attract Foreign Direct Investment (FDI) that will directly positively affect exports, employment generation, revenue and GDP of the Country. Therefore the study undertakes an assessment of Airfields and adjacent land of Kabul, Kandahar, Helmand, Herat, Balkh and Nangarhar provinces. The study will also discuss the steps for establishment of Special Economic Zone, legal framework and business environment. Indeed the study will provide the detail analysis of SEZ and its impact on Afghanistan for the coming thirty years. A special economic zone (SEZ) is an area in which business and trade laws are different from rest of the country. SEZs are located within a country’s national borders, and their aims include: increased trade, increased investment, job creation and effective administration. To encourage businesses to set up in the zone, financial policies are introduced. These policies typically regard investing, taxation, trading, quotas, customs and labor regulations. Additionally, companies may be offered tax holidays, where upon establishing in a zone they are granted a period of lower taxation.

This study focuses on the assessment and analyzes of Special Economic Zone and its Impact on Afghanistan for the coming fifteen years(2020-2034). It will analyze whether SEZ will address the problem of doing business in Afghanistan as it will adopt and apply SEZ law, Regulations, Policies, and Procedures and will provide incentive packages, one stop facility along with basic infrastructure and security.

This study will also assess the viability and significant role of SEZ in creating jobs, increase export, attract foreign direct investment, and increase GDP and revenue of the Country.

A special economic zone (SEZ) is an area in which the business and trade laws are different from the rest of the country. SEZs are located within a country’s national borders, and their aims include increased trade balance, employment, increased investment, job creation and effective administration. To encourage businesses to set up in the zone, financial policies are introduced. These policies typically encompass investing, taxation, trading, quotas, customs and labour regulations. Additionally, companies may be offered tax holidays, where upon establishing themselves in a zone, they are granted a period of lower taxation.

SEZ may focus on Employment Creation, Export Development, Foreign Direct Investment, Industrial Upgrading and Technology Transfer, Foreign Exchange Earnings, Budgetary Impact, Human Resource Development and Trade Liberalization

These mechanisms are all more important with the advent of more technology and production and innovation in distribution and the corresponding reduction in transaction costs. To this end, the Afghanistan Special Economic Zones provide the government with the opportunity to incubate and accelerate policy reform in a controlled manner. It is our belief that given the flexibility and significant advantages of the Afghanistan Special Economic Zones as a valuable tool especially when integrated and the government’s overall trade liberalization strategy.

Accordingly, the dynamic benefits are much harder to measure but are far more important to the long-term contributions and special economic zone development in Afghanistan.

2. Literature Review

Research Article #1: Harakat- AICFO Special Economic Zone Report: To help the Government of Afghanistan (Ministry of Commerce and Industry) and its partners promote ambitious economic and employment generation schemes in the country, this report investigates the economic context for Special Economic Zones (SEZs) in Afghanistan across seven regions in the country: Kabul, Balkh, Nangarhar, Paktia, Kunduz, Kandahar, and Herat. This analysis scores Mazar-e-sharif, Kabul, and Herat as leading options for development of a SEZ, followed by Nangarhar, Kunduz, Paktia, and Kandahar scoring the lowest.“

However, Harakat through Samuell Hall Consulting Firm has written a very good report on SEZ for Afghanistan targeted various places in Afghanistan but the study noted that Harakat report has not focused on the actual impact of Special Economic Zone on Afghanistan GDP, Exports, Revenue and employment. The study also noted that Samuell Hall Consulting Firm provided case studies of different countries where the study noted lots of positive changes in terms of their economy“

Research Article # 2: Special Economic Zone: Performance, Lesson Learned and Implication for Zone Development: “For developing countries, special economic zones (SEZs) traditionally have had both a policy and an infrastructure rationale. In terms of policy, the SEZ can be a useful tool as part of an overall economic growth strategy to enhance industry competitiveness and attract foreign direct investment (FDI). Through SEZs, governments aim to develop and diversify exports while maintaining protective barriers, to create jobs, and to pilot new policies and approaches (for example, in customs, legal, labor, and public private partnership aspects). SEZs also allow for more efficient government supervision of enterprises, provision of off-site infrastructure, and environmental controls.“

The study also noted in the World Bank Group report that SEZ is a tool that can motivate foreign direct investment to the countries and will transfer knowledge from one party to another who needs them.

This study has completely read the above report of World Bank Group where the study observed that SEZ has a direct impact on attracting Foreign Direct Investment to the Country and has close connections with exports and employment. The study noted that SEZ has played a very significant role in the economy of various countries and there is a high potential that it will affect the afghan economy and will play a significant role in bringing peace and stability

Research Article # 3: Rebuilding for Tomorrow: PRIVATE SECTOR DEVELOPMENT IN FRAGILE AND CONFLICT-AFFECTED SITUATIONS IN AFRICA:  “In 2008, with support from the Conflict-Affected States in Africa Initiative, IFC began working on the SEZ program in the Democratic Republic of Congo in partnership with the government. All post-conflict countries share at least one common constraint: the investment climate is generally very poor. A poor investment climate is a major obstacle to economic growth, as it increases the cost of doing business to levels that tend to make most investments unprofitable—which in turn increases the risk of renewed conflict. Even where the will to reform exists, the capacity to do so is often lacking. Well-meaning aid programs can fail simply because it is difficult to implement them. One solution is to establish a Special Economic Zones regime to encourage investment. Congo is Africa’s largest post-conflict country. The civil war (which lasted from the mid-1990s to the early 2000s, with some rebel movements still active  The World Bank’s 2006 Investment Climate Assessment showed electricity, access to finance, general instability, taxation, and transport to be the most important impediments for private enterprises.“

The report suggests that all post-conflict countries share at least one common constraint: the investment climate is generally very poor. A poor investment climate is a major obstacle to economic growth, as it increases the cost of doing business to levels that tend to make most investments unprofitable—which in turn increases the risk of renewed conflict. Even where the will to reform exists, the capacity to do so is often lacking. Well-meaning aid programs can fail simply because it is difficult to implement them. One solution is to establish a Special Economic Zones regime to encourage investment. This Smart Lesson describes IFC’s SEZ program in the Democratic Republic of Congo and shares some of the lessons learned

The report also learned from this literature review that SEZ is needed for a country to increase the GDP, revenue, export promotion, attract FDI and improve the overall economic system of the country. Afghanistan Special Economic might apply most of the policies and reforms mentioned in above study.

Review Literature # 4: Rwanda Special Economic Zone:  The Kigali Special Economic Zone has been set up through the merger of former Kigali Free Trade Zone and the original Kigali Industrial Park projects. The Kigali Special Economic Zone is being developed in two phases. Phase I of KSEZ is on 98 Hectares of land with all the plots (89 in total belonging to 61 investors) fully booked. Some investors have already started operations in this phase. Infrastructure development in phase II of the KSEZ is so far at more than 40% with the main works on access roads construction, electricity roll out and water systems. While one investment project is operational in this phase the rest of the plots are booked by 11 investors up to 60% of the available surface area for investment.  It is generally agreed that serviced infrastructure is key to attracting users of SEZs and different zones will have different infrastructure requirements leading to different costs. In designating a new area as a SEZ, a cost benefit analysis is done to determine whether public investment, including the cost of the public infrastructure required, meets a desired economic rate of return. The GoR is then obliged to provide the public infrastructure in a timeframe mutually agreed with the private developers who in the case of the Kigali   Special Economic Zone are Prime Economic Zones Limited (PEZ). These are regulated by the Special Economic Zones Authority of Rwanda which is the official regulatory organ for the entire SEZ program in Rwanda.

 The report understand that Special Economic Zones, which have certain incentives including more liberal and simplified economic regulations for businesses to physically locate and operate within it Special Economic Zones are generally implemented to meet fiscal, social and infrastructure policy rationales are the considered economic engines.

The most important fiscal goal of an SEZ is to facilitate economic growth through the use of reduced tariffs and more efficient customs controls and Rwanda Kigali Special Economic Zone that SEZ is the economic development engine for a country but has to carefully planned and implemented.

Research Article #5: A guide to Economic Growth in Post Countries:  “USAID provides field missions a multidimensional assessment tool to pinpoint changes needed in the commercial and business regulatory environment. BizCLIR has two applications: 1) an assessment of framework laws and institutions – the commercial legal and institutional law assessment; and, 2) a business regulatory assessment, based on the World Bank’s Doing Business framework. The tool has been used effectively in post-conflict countries, including Afghanistan, Croatia, Kosovo, Nicaragua, and Serbia. 

The lessons learned of the report which are applicable in situations where conflict has been limited to specific geographic regions within a country, such as northern Uganda and southern Sudan. However, because there still is much to be learned about how economic growth programs contribute to ending a conflict, it is unclear whether the concepts presented here also apply in countries currently in the midst of general conflict. Accordingly, the Guide’s programming suggestions should not be applied unquestioningly in mid-conflict situations. The Guide is intended to be practical; it can be applied in the chaotic circumstances that prevail in post-conflict settings. The lesson learned provides recommendations for seven specific sectors:

  • macroeconomic foundations, including both fiscal and monetary policy and institutions;
  • employment generation;
  • infrastructure;
  • private-sector development, including both the private-sector enabling environment and enterprise development;
  • agriculture;
  • banking and finance;

International trade and border management

Research Article #6:  Global Experiences with Special Economic Zones.  “The special economic zones (SEZs) can be an effective instrument to promote industrialization if implemented properly in the right context, as shown in some of the emerging countries, particularly those in East Asia. More and more countries have begun to implement this instrument for their industrialization process, especially as a way of attracting foreign direct investments (FDIs) mostly in the manufacturing sector, creating jobs, generating exports and foreign exchanges, and so on. So far, the results are quite mixed with some countries quite successful such as China, Singapore, Malaysia, South Korea, Jordan, Mauritius, etc., and others still struggling, in particular those in Sub-Sahara Africa (SSA).

This paper is intended to provide a brief overview of the different SEZ experiences in China and Africa, the key lessons that Africa can learn from China, as well as the recent Chinese zones in Africa.

The report noted that many factors contributed to the success of China’s SEZs, and in every case, the situations and factors might be different. However, their success points to some common lessons.

  • Strong commitment and support of the government to pilot market-oriented economic reforms.
  • Land Reforms.
  • Investment incentives and institutional autonomy.
  • Foreign Direct Investment and the Chinese diaspora.
  • Technology learning, innovation, upgrading, and strong links with the domestic economy.
  • Innovative culture
  • Clear objectives, benchmarks, and competitions.
  • Location advantages.

Research Article #7: Institutional Best Practices for Special Economic Zones: An Application to Tanzania:  In common with many other countries in Africa and elsewhere, Tanzania sees the development of Special Economic Zones (SEZs) as a critical element of a program to facilitate private sector investment and transform the manufacturing sector to enhance competitiveness and industrialization for job creation. Indeed, SEZs traditionally have been used to address the very constraints facing investors in Tanzania and as “quick-win” measures to exploit the potential for private sector driven job creation. It is therefore crucial that the policy and institutional aspects of the SEZ regime are designed and implemented effectively to ensure that it delivers on its potential role as a facilitator of investment, competitiveness, and job creation.

This note provides analysis concerning the institutional framework under which the zones program is developed and administered in Tanzania. It examines various institutional and administrative structures for managing an SEZ program, focusing on the alternative approaches taken in different SEZ programs around the world and highlighting both good practices and those that have been less successful, and drawing lessons for Tanzania, which will also be of relevance for other countries in Africa2. The note is structured around four key principles for designing an effective institutional framework for SEZs: 1) clarity in roles and responsibility; 2) autonomy and inclusivity; 3) authority and coordination; and 4) resources and capacity. The note concludes with a review of the existing institutional gaps in Tanzania’s zones program and measures to address them.“

We noted that the operation of an SEZ includes the roles of zone owner, zone developer, zone manager or operator, and zone regulator. Up until the 1990s, when most zone programs remained fully in the hands of governments, it was usual for the same government body to carry out all these roles simultaneously. This approach remains common in many zone programs around the world, particularly in East Asia where most zone programs were established much earlier. However, not only are few governments experienced in planning and developing economic zones, given the large investments required to support zones and their uncertain return, development of zones can be a risky proposition for governments. Private sector development (or public-private partnerships) can not only provide critical expertise, but can reduce governments’ risk in zone programs and ensure greater transparency. With the growing participation of the private sector in zone programs around the world, the multiple mandates of government in the traditional approach to zones is increasingly problematic. Specifically, it creates a conflict of interest, where the government is responsible for regulating and promoting all the zones in a country, including zones developed and operated by the private sector as well as those developed and operated on behalf of the government. Indeed, more often than not it is actually the same government agency responsible for regulation and the development, so in effect they are regulating themselves. Regardless of the transparency or effectiveness of the regulator, a bias will be perceived by the private sector, which acts as a significant barrier to attracting private sector developers, and becomes a point of contention in cases where disagreements arise.

It has been noted that Tanzania government were up to attract Foreign Direct Investment therefore, they started extensive work on Special Economic Zone. The SEZ has positively affected the exports, employment and GDP of Tanzania.

 Research Article #8: Special Economic Zones in Africa:  Despite their weak performance to date, SEZs can still play a valuable role in many African countries. These countries are in need of diversification and either are in the early stages of industrialization or have experienced deindustrialization in recent decades. To diversify, they need to attract private investment, particularly FDI. By overcoming infrastructure and land constraints and facilitating economies of scale, SEZs offer the potential to leverage trade preferences to attract investment and support diversification if they designed and implemented effectively. Sufficient reasons exist for continued support of the SEZ as a policy instrument, but its use should be context-dependent. The environments in which zone programs are developed are complex and heterogeneous, so it is important to avoid overly deterministic approaches. However, it may be useful to establish a clear framework for situations in which SEZs are appropriate, and the likely preconditions for their success. The following are suggested elements of such a framework:

  1. a) Ensure that SEZ programs are focused where they can best complement and support comparative advantage, as validated through a detailed strategic planning, feasibility, and master planning process.
  2. b) Integrate SEZs as part of a broader package of industrial, trade, and economic development policies.
  3. c) Integrate SEZs with support to existing industry clusters rather than as an alternative or Greenfield approach to cluster development. 14 Special Economic Zones in Africa
  4. d) Ensure high-level political support and broad commitment—including the establishment of an interministerial committee to oversee program development—before launching any program.
  5. e) Promote exchange between the zone and the domestic environment through both policy and administrative reforms.
  6. f) Support the provision of high-quality hard and soft infrastructure encompassing zones, key urban centers, and trade gateways. (One possible model is the Ghana Gateway project and its multipurpose industrial park.) The focus should be on leveraging SEZs to support existing and planned infrastructure to facilitate the potential for growth catalysts/poles.
  7. g) Put SEZs on the regional integration agenda, with an emphasis on their role in facilitating regional production scale and integrating regional value chains.
  8. h) Ensure the development of sound legal and regulatory frameworks, and cement them by also addressing the challenges of institutional design and coordination.
  9. i) Promote private sector participation and public-private partnerships

(PPPs), along with technical assistance for structuring and negotiating PPP deals.

  1. j) Take into greater consideration the capacity of governments to deliver on SEZ programs, particularly given their integrated and long-term nature. This will require a focus on institutional development and political economy factors that influence zone policy and
  2. k) Establish clear standards with regard to environmental, labor, and social compliance, and identify clear regulatory responsibilities for monitoring and enforcement.
  3. l) Develop and implement a comprehensive monitoring and evaluation (M&E) program from the outset, with safeguards in place to ensure that SEZ program developments remain aligned with strategic and master plans.
  4. m) Recognize the long-term nature of SEZ program development. This means planning beyond short-term project cycles and monitoring progress on an ongoing basis.

Coordination is important. In most cases, no single donor or government will be in a position to support all the financial and technical needs of a country’s economic zone program. Coordination of all actors, including those in the private sector, will help ensure effective delivery, particularly given the limited absorption capacity in many zone authorities.“

We noted that economic zones are normally established to act as catalysts for trade, investment, and wider economic growth. Most often, they aim to improve competitiveness to facilitate the economic transformation of their host countries faster or more effectively than would be possible without them.

In different countries and at different times, however, the specific objectives vary, from attracting FDI to creating employment to experimenting with reforms. These are all possible objectives by which to measure the success of zone programs. In this chapter, we use a framework that draws on each of these principal objectives to assess zone outcomes (see Figure 3.1). The distinction we make in our framework is between objectives whose outcomes are static in nature and those that are dynamic.

We define static economic benefits as those derived in the relatively short term through the use of economic zones as instruments of trade and investment policy. These static benefits are the result of capturing the gains from specialization and exchange. They include employment creation; the attraction of foreign direct investment (FDI); the generation of foreign exchange through exports; and the creation of economic value added. Economic zone programs that are successful in contributing to long-term development leverage these static benefits into dynamic economic benefits, which include the promotion of nontraditional economic

Research Article #9:  The Impact of Special Economic Zones on Exporting Behavior: “With the link between exports and economic growth well established, numerous government policies have sought to encourage exports as a method of increasing productivity and growth.

One such policy that has been widely utilized is the special economic zone (SEZ).1 According to the World Bank (2008), as of 2008 there were over 3500 SEZs which amounted to 68 million jobs and over $500 billion in trade-related value added. As of 2015, the number of SEZs stood at more than 4000 (The Economist, 2015).

The study suggests that the impact of being in a special economic zone (SEZ) on a firm’s probability of exporting, export intensity, and value of exports. At the extensive margin, we find that SEZ firms in open economies are 25% more likely to export than their non-SEZ counterparts, with a large negative effect in closed economies. At the intensive margin, we find that SEZs increase the value of exports, but only in countries with barriers to imports where the estimate increase is 3.6%. Thus, the estimated effect of introducing an SEZ can be meaningful, but is heavily contingent on the local economic environment.

Research Article # 10:  China’s Special Economic Zones and National Industrial Parks — Door Openers to Economic Reform:  The PRC launched its “Open Door” economic reforms in 1978 as a social experiment. It was designed to test the efficacy of market-oriented economic reforms, but to do so within a contained, controlled environment.

As soon as the open door policy was applied then China’s merchandise exports have increased 125-fold and its real gross domestic product (GDP) has grown nearly 15-fold.

China might be the most successful country in terms of leveraging SEZs to achieve far-reaching economic transformations. It started with four zones at the initial stage to experiment with market-oriented economic reforms which involves laws, regulations, taxation, land, labor, finance, customs, immigration, etc.

The SEZs have also played important roles in bringing new technologies to China and in adopting modern management practices. While most lessons in China are positive, such as gradualism with a pragmatic and experimental approach, reform-oriented mindset, strong commitment and active facilitation of the state, open-up to FDI, sound infrastructure, effective marketing and investment promotion, and continuous technology learning and upgrading.

Since the early 1980s, the successful implementation of Special Economic Zones has been an important vehicle for China’s economic growth, attracting foreign direct investment, and transfer of technology, know-how and as a way to create employment. It is estimated that as of 2007, SEZs in China (including all types of industrial parks and zones) accounted for about 22% of national GDP, about 46% of FDI, and about 60% of exports and generated in excess of 30 million jobs. The site where Shenzhen is currently located was a small fishing village transformed into a city of over 14 million inhabitants within 30 years of the establishment of economic zone; with GDP growing a hundred fold, US$ 30 billion of foreign direct investment, and it is considered to be one of the fastest growing cities in the world and having the highest per-capita income of any city in china.“

The report noted that FTZs are the preferred locations for companies involved in export trading and processing. These zones tend to attract, for example, foreign-owned trading operations that use China as a transshipment point – i.e., buying goods produced in China or elsewhere and then selling them to buyers outside of China. They are also attractive locations for third-party logistics providers. In contrast, SEZs are more advantageous locations for manufacturing companies that export most, if not all, of their goods outside of China. These zones are the preferred location, for example, of manufacturing companies that assemble imported components from outside of China into finished goods for sale abroad. SEZs are treated as “outside of China” in terms of VAT and customs duties. Hence, in the case where foreign-owned manufacturers sell more than 70% of their finished goods outside of China, the sale of those finished goods will be treated as a transaction that occurred outside of China and will thus be exempt from VAT and customs duties.

Similarly, the purchase of any raw materials or components as inputs into those finished goods will also be exempt from VAT and customs duties. SEZs and FTZs also diverge in their export rebate policies. If a company within an SEZ buys goods from an enterprise in China, the seller will receive an export rebate and the in-zone buyer will not have to pay VAT. However, companies located in FTZs must pay VAT upfront on any goods sourced in China and then apply for an export rebate only after the goods have been re-exported.

The reports also noted from this literature that China Economy has been positively affected by SEZ. China economy has got 15 fold increase while they launch the SEZ and its incentive packages in the country. China 62% export economy is the contribution of SEZ therefore, it will play a vital role in Afghan Exports.

Research Article #11: India: an Evaluation of Special Economic Zones (SEZs) Performance Post SEZs Act 2005

Export Performance of SEZs in India after SEZ Act 2005: Free Trade Zones is not a new phenomenon; different countries started implementing the concept of free trade zones three centuries ago. Gibraltar (1704), Singapore (1819), China (1848), Hamburg (1888) and Copenhagen (1891) are the countries which make use of special zones to strengthen economic development (World Bank, 2008) [22]. India was one of the first countries in Asia to start the Concept of special zones by setting up Export Processing Zone (EPZ) in Kandla in 1965. Another six export processing zones were also set up in different parts of the country during 90’s. EPZ Scheme was not successful in the Indian perspective as it was in other developing countries like China, Taiwan, Singapore, etc. Indian government followed the EPZ scheme as a basis to provide incentives to increase export. There were no committed policy initiatives towards this scheme like other developing countries had (Aradhana Aggarwal 2012)[2]. The EPZs was a failure because of unwanted control, complex clearance process and lack of better infrastructural setup. The SEZ policy was announced in 2000 by the Government of India (GOI) with a view to overcome the shortcomings of the EPZ scheme. The SEZs policy was announced with a view to make SEZs as an engine of economic growth by attracting foreign as well as domestic investment, to generate additional employment, boost up country’s export and to facilitate infrastructural development. SEZs enhances human development through employment generation, skill formation and technology and knowledge upgradation (Aradhana Aggarwal 2007)[3]. SEZs are special areas with better infrastructural facilities and attractive incentive packages, and which is considered as a foreign territory for the purpose of trade. SEZs are eligible to import duty free raw materials and capital goods required for production. A comprehensive Special Economic Zones Act was passed by the GOI in 2005 to strengthen the SEZ Scheme in India. The SEZs Act 2005 came into effect on February 2006 supported by SEZ Policy 2000. The main aim of the Act was to simplify the business procedures and thereby attract more investors to the country. Through SEZ Act anyone could apply for setting up of SEZs in the country which previously was more complex as most of SEZs were owned either by central or state government.”

The report noted that the main feature of SEZs in India is 100% FDI through automatic route in almost all sectors. SEZs in India are largely attracted by the domestic as well as foreign and NRI investors. Since the inception of SEZ Act 2005 there has been a constant increase in the overall investment across the sectors. Notified SEZs have already made an investment of Rs. 318446 crores till December 2014 and 1279131 people were employed. Private zones are better in performance and lesser expensive to establish than that of public zones (World Bank 2008)[22]. The SEZs provide jobs mostly to people around the area. Since the SEZs are spread all over the country it provides a better opportunity to the semi-skilled and unskilled to get jobs in nearby SEZs. The table reveals that the overall investment has rose from Rs. 108903 crores in the year 2008-09 to Rs. 318446 crores in the year 2014, reporting an increase by 192 percent during that period.

3. METHODOLOGY

In light of the potential benefits of SEZs to increase GDP, exports, employment and revenue of the country, and GIROA’s commitment to promoting Private Sector Development (PSD), this report evaluate the feasibility and viability of creating SEZs in Afghanistan and its impact.  Such a study would consider whether Afghanistan would be the eligible and practical country for SEZ in near future.

The research contained two main stages. The first was a desk review of the various reports, and the second stage, we conducted 55 interviews with key stakeholders in Kabul, Kandahar, Helmand, Herat and Balkh including:

  1. a) Government agencies;
  2. b) Business owners, employers, and commercial investment agencies;
  3. c) Civil society organizations;
  4. d) Donors;
  5. e) Think tanks; and
  6. f) Sector experts.

The research covered Secondary data collection under the Desk review of the following sources:

  • Publicly available documents on SEZs and Industrial Parks (IPs) in Afghanistan;
  • Studies on market dynamics, urban development, and labour markets;
  • Harakat-AICFO report on SEZ
  • AAEDC produced documents

Investigation into hypothesis has been done both on interviews and secondary data. However, four hypothesis mentioned above pertaining to the impact of SEZ in Afghanistan are tested on the basis of primary data collected from Government agencies, International donors, private sector and Civil Society Organizations.

Key Informant Interviews (KIIs)

I conducted and interviewed relevant stakeholders, as per the list below from 1st January 2018 to 30th April 2018. Meetings and interviews were standardized in accordance with guidelines. Each meeting and interview normally took between 30 minutes and 1 hour.

Quantitative Mapping Survey

I conducted interviews in Kabul and travelled to Balkh, Herat, Kandahar and Helmand provinces to conduct interviews. In order to cover Nangarhar Province I sent hard copy of the Questionnaires to capture quantitative information to map the region on key metrics. Questionnaires were used for private sector enterprises, donors, civil society organization and government officials.

Site selection: 6 sites were selected in Afghanistan

  1. Kabul (Central),
  2. Herat (West),
  3. Balkh (North),
  4. Kandahar (Southeast),
  5. Nangarhar(East),
  6. Helmand.

Identification of private sector respondents: In each location, the respondents consulted with the Governor of the province to identify and select private sector for an interview.

For government respondents: the sample identification was a bit more planned. From preliminary review, a list of ministries and departments that are stakeholders to PSD in Afghanistan was drawn up. I went to the governor’s office in each location with the list and asked for names and contacts of relevant officials within the departments whom I need information from. Subsequently, the enumerators fixed appointments with the officials to carry out interviews in their official locations.

 

No

Organization

Number of Interviews

1

Office of Chief Executive

5

2

Ministry of Defense

5

3

Ministry of Commerce and Industries

5

4

Ministry of Foreign Affairs

5

5

Ministry of Interior Affairs

5

6

Ministry of Economy

5

7

Ministry of Finance

5

8

Ministry of Transport

5

9

Ministry of Agriculture, Irrigation and Livestock

5

10

Ministry of Urban Development and Housing

5

11

Afghanistan Civil Aviation Authority

5

12

Nangarhar Directorate of Commerce and Industries

2

13

Nangarhar Directorate of Economy

2

14

Nangarhar Directorate of Agriculture, Irrigation and Livestock

2

15

Nangarhar Directorate of Mines and Petroleum

2

16

Nangarhar University Professor

2

17

Helmand Directorate of Commerce and Industries

2

18

Helmand Directorate of Economy

2

19

Helmand Directorate of Agriculture, Irrigation and Livestock

2

20

Helmand Directorate of Mines and Petroleum

2

21

Helmand University Professor

2

22

Kandahar  Directorate of Commerce and Industries

2

23

Kandahar Directorate of Economy

2

24

Kandahar Directorate of Agriculture, Irrigation and Livestock

2

25

Kandahar Directorate of Mines and Petroleum

2

26

Kandahar University Professor

2

27

Herat Directorate of Commerce and Industries

2

28

Herat Directorate of Economy

2

29

Herat Directorate of Agriculture, Irrigation and Livestock

2

30

Herat Directorate of Mines and Petroleum

2

31

Herat University Professor

2

32

Balkh Directorate of Commerce and Industries

2

33

Balkh Directorate of Economy

2

34

Balkh Directorate of Agriculture, Irrigation and Livestock

2

35

Balkh Directorate of Mines and Petroleum

2

36

Balkh University Professor

2

37

Kabul Directorate of Commerce and Industries

2

38

Kabul Directorate of Economy

2

39

Kabul Directorate of Agriculture, Irrigation and Livestock

2

40

Kabul Directorate of Mines and Petroleum

2

41

Kabul University Professor

2

42

Afghanistan Chamber of Commerce

1

43

Afghanistan Chamber of Industries and Mines

1

44

Women Chamber of Commerce

1

45

International Chamber of Commerce

1

Total Population Size

120

 

Population Sample

 

The researcher distributed 92 questionnaires among the 120 population (respondents) in order to ask some relevant questions about the SEZ performance in the country. Different types of questions were asked. Each questionnaire had 4 main questions and then 12 sub-questions regarding GDP, Export, Revenue and Employment that would be created with the help of SEZ in Afghanistan.

Sampling Method.

Sampling is the process of selecting a representative group from the population under study.

The researcher has used the non-probability sampling technique. Where he has followed up the convenience sampling method. Convenience sampling (also known as availability sampling) is a specific type of non-probability sampling method that relies on data collection from population members who are conveniently available to participate in study. The researcher also got help from a systematic (i.e. orderly / logical) way where he selected.

Data Collection

Both primary and secondary data have been used while collecting the data from the relevant respondents. Academic articles, books and government documents gathered in desk research. Both books and academic articles mainly were collected in libraries and through the University Library Catalogues and google. This data have been collected with the help of questionnaires, interviews, observation and visited to different SEZs while closely observing the positive or economic performance of the country.  The study is mainly based on primary data. A questionnaire and sets of interviews used as tools to collect the data from the government institutions, private sector, NGOs and ordinary people.

Primary Data collection:

As for as the type of research is concerned; Since many country experienced SEZ where sufficient data and statistics are available therefore, I have used descriptive and applied research to collect the current available data, statistics on GDP, Exports, Revenue and Employment. To find out frequenciesaverages and other statistical calculations I conducted the investigation survey and Qualitative research. To study and test the hypotheses, I have collected the primary data from Afghanistan Airfields Economic Development Commission (AAEDC), Governmental entities, private sector, NGOs and ordinary people. Primary data is collected on sample basis. A questionnaire was developed for data collection. I used the interviews method for other related and depth information from an internal stand point. The data is collected through direct personal interviews with each respondent. In this survey, questions is asked to the managers, directors, Deputy Ministers regarding the SEZ impact and its development in the region. In the employee’s survey, all the sampled employees is asked to state their age, marital status, etc.

Tools Used for Data Collection

In order to undertake the analysis both at the national and international levels, the secondary data published by various government agencies, World Bank, Asian Development Bank, Afghanistan Airfields Economic Development Commission and Embassies are used. The secondary data used for the present study from various sources which are given below.

  • Government Agencies, World Bank and Asian Development Bank
  • Websites and Google
  • Search – Engines
  • Encyclopedia
  • E – Libraries etc.
  • Articles (published and non-published) written by some of the great research scholars. Ø Journals
  • News-Papers/E-news-papers
  • Magazine: Economic Survey, the Economist, the Economic Times, SEZ Horizon etc. Ø Books

A combination of a number of tools was used to collect data for this study depending on the background of people from whom data was to be collected. Structured interview schedule was used to elicit information and opinions from government officials, International agencies, Donors and Private sector. The researcher developed Questionnaire through which useful data and information were collected from different stakeholders.

4. Analysis

This research was conducted to assess the whether SEZ would be a viable option for Afghanistan. This research also included the SEZ impact on Afghanistan’s GDP, Export, Employment and Revenue for the coming 15 years.

The researcher has used different applicable approached and instruments to collect the data from Government Agencies, Private Sector, Donors, and Civil Society Organization on central and local level within 2 months.

Question: The SEZ impact on Gross Domestic Product (GDP) of Afghanistan

In order to collect the first hand information whether SEZ can lead to increase the GDP of the country, therefore, the researcher conducted interviews with 92 respondents from Government, Private Sector, Donors and Civil Society Organization. 26.6% of the respondent were female and 73.4% respondents were male (25-60 years of age).

77% respondents reported and agreed that Special Economic Zone has positive impact on the GDP of the country, 23% respondent report neutral since they are uncertain about the stability and regulatory framework for SEZ.

In order to collect the first hand information whether there is a positive relationship between GDP and Special Economic zone establishment, therefore, the researcher conducted interviews with 92 respondents from Government, Private Sector, Donors and Civil Society Organization. 26.6% of the respondent were female and 73.4% respondents were male (25-60 years of age).

77% respondents reported and agreed that Special Economic Zone has positive impact on the GDP of the country, 23% respondent report neutral since they are uncertain about the stability and regulatory framework for SEZ

In order to collect the first hand information Special Economic Zone (SEZ) attract Foreign Direct Investment (FDI), therefore, the researcher conducted interviews with 30 respondents from Government, Private Sector, Donors and Civil Society Organization.  26.6% of the respondent were female and 73.4% respondents were male (25-60 years of age).   77% respondents reported and agreed that Special Economic Zone has positive impact on the attracting foreign direct investment to the country, 23% respondent report neutral.

SEZ Impact on GDP Afghanistan

The SEZ impact on GDP of Afghanistan

Agree

Disagree

Neutral

77%

0%

23%

Question: The SEZ Impact on Revenue of Afghanistan

In order to collect the first hand information Special Economic Zone Can Contribute to the Revenue of the Country, therefore, the researcher conducted interviews with 92 respondents from Government, Private Sector, Donors and Civil Society Organization. 26.6% of the respondent were female and 73.4% respondents were male (25-60 years of age).

77% respondents reported and agreed that Special Economic Zone Can contribute to the Revenue of the Country, 23% respondent report neutral. They were on the view the SEZ provide more incentive therefore, it will attract less revenue to the country.

77% respondents reported and agreed that Special Economic Zone (SEZ) has a positive correlation with per capita income, 23% respondent reported neutral.

73% respondents reported and agreed that SEZ can contribute in bringing Foreign Expertise and Technology which will contribute to the revenue in form of taxes, 23% respondent reported neutral.

SEZ impact on Revenue of Afghanistan

The SEZ impact on Revenue of Afghanistan

Agree

Disagree

Neutral

77%

0%

23%

 

Question:  The SEZ Impact on Employment of Afghanistan

In order to collect the first hand information Special Economic Zone (SEZ) has an economic potential in terms of job creation, therefore, the researcher conducted interviews with 30 respondents from Government, Private Sector, Donors and Civil Society Organization. 26.6% of the respondent were female and 73.4% respondents were male (25-60 years of age).

77% respondents reported and agreed that Special Economic Zone (SEZ) has an economic potential in terms of job creation, 20% respondent reported neutral and 3% respondents reported disagree.

77% respondents reported and agreed Special Economic Zone (SEZ) lead to skill development of the local people, 20% respondent reported neutral and 3% respondents reported disagree.

77% respondents reported and agreed Special Economic zone (SEZ) has a multiplier effect on job creations in a country, 20% respondent reported neutral and 3% Disagree.

SEZ impact on Employment of Afghanistan

The SEZ impact on Employment of Afghanistan

Agree

Disagree

Neutral

83%

3%

14%

Question:  The SEZ Impact on Export of Afghanistan

In order to collect the first hand information Special Economic Zone (SEZ) can play a major role in promoting Exports in the country, therefore, the researcher conducted interviews with 92 respondents from Government, Private Sector, Donors and Civil Society Organization. 26.6% of the respondent were female and 73.4% respondents were male (25-60 years of age).

77% respondents reported and agreed Special Economic Zone (SEZ) can play a major role in promoting Exports in the country, 15% respondent reported neutral and 7% Disagree.

77% respondents reported and agreed Special Economic zone (SEZ) can produce high quality products for high value markets, 15% respondent reported neutral and 7% Disagree.

77% respondents reported and agreed Special Economic Zone (SEZ) can contribute positively in trade balance of a country, 15% respondent reported neutral and 7% Disagree.

SEZ impact on Export of Afghanistan

The SEZ impact on Export of Afghanistan

Agree

Disagree

Neutral

77%

7%

15%

Conclusions

This research has covered all of the possible factors and variables which can affect the establishment of SEZ in the country. The existing literatures are highly in the favor of SEZ establishment in different context and setup particularly in the context of developing and under developed country like Afghanistan. The establishment of SEZ will be having huge positive impact on the overall economy of the country, particularly on GDP increase, Employment creation, Export promotion and Revenue generation.

As it is obvious that most of the developing countries are highly dependent on imports from other countries, therefore, they are facing huge trade deficits in term of the difference between export and import. Therefore, to reduce this huge difference between export and import; the SEZ establishment has been experienced as one of the most successful strategy in different part of the world. So, in this era of globalization most of the developing countries are witnessing a shift away from an import substitution based strategy to export oriented economy to reduce this huge gap of trade deficit to minimum level. The establishment of SEZ has been successfully tested in different part of the world for the purpose to boost export, create jobs, increase GDP and generate extra source of revenue to government. As part of their policy instrument to promote exports, many of these countries are vigorously promoting and developing Special Economic Zones (SEZs). Establishing SEZs are seen as a key instrument not only for promoting exports and earning foreign exchange but also a good mean for stimulating economic growth through additional investments, technology transfer and employment generation. There were 176 such zones across 47 countries in 1986. In 2003 the number of zones increased to over 3000 across 116 countries (ILO 2003). A majority of new zones have taken root in developing countries.

The Government of Afghanistan is also intended to establish multi-purposed SEZs for the first time in the history of Afghanistan. In its initial plan, the government has targeted six different provinces for the establishment of SEZs, which include Kandahar, Mazar, Kabul, Herat, Jalalabad, and Helmand. The establishment of these Zones will have huge positive impact on the economy of Afghanistan, which will contribute 60 billion in GDP, 45 billion in Export, 1.6 billion in Revenue and will create 655,284 employment in the coming 15 years. These direct employment will further generate indirect employment one way or the other way. It will also lead economic stability which will further decrease the poverty level in the country and low dependency on foreign aid. It will also help in strengthening the regional cooperation and connectivity between Afghanistan and regional countries.

Thus, after analyzing the data collected through different sources including the primary data collected through questionnaires; almost all of the alternative hypothesis have accepted in terms of SEZ impact on GDP increase, Revenue generation, Export promotion, and Employment generation. These are the main dependent variables which has direct connection with the establishments of special economic zone in the country. There is a positive relationship between the dependent variables and independent variable. The analyzed part of the research which includes different graphs and charts clearly indicates a positive results. The overall literature review and analysis are in the favor of establishing SEZ in Afghanistan, and it is obvious that its impact on the economy will be huge.

Special economic zones have long been publicized as a method of increasing exports, GDP, employment and, as a result, improving the level of development in a country. While there are numerous case studies on the issue and the above Research Article of 12 different reports, books and essays it has been understood that Special Economic Zone can play a significant role in the country macro and micro economics. It has been noted that SEZ has positive relationship with Gross Domestic Product, Revenue, Employment and Export promotion of the country.

At the extensive margin, SEZs increase the likelihood of exporting by as much as 25%, but only for firms in relatively open economies and in closed economies, we find the opposite effect, something that might be consistent with differing patterns of enforcement across countries.

SEZ also bring easiness and doing business through providing streamlined procedures and one stop shop facility. It is well-known that special economic zone (SEZ) is an area in which business and trade laws are different from rest of the country to attract Foreign Direct Investments. Indeed SEZs are located within a country’s national borders, airports, and their aims include: increased trade, increased investment, job creation and effective administration.

It was observed that financial policies are introduced differently to attract more tenants. These policies typically regard investing, taxation, trading, quotas, customs and labor regulations.

I have learned from the literature review that SEZ has contributed approximately 62% to the export economy of China and the China Economy was automatically increased 15 folds by the time China Government established SEZ and announced open door policy in the country. 30 million of labor force currently deployed in Chinese SEZs in various sectors.

Moreover, it was realized that Indian has notified approximately 502 SEZs and more than 200 are currently functional and operational. Indian SEZ plays an important role in the employment creation, export promotion and GDP of the country. In fact Indian SEZ contributed 30% to the export of Indian economy and has attracted new technology and skills from all over the world.

The studies relating to global experience of SEZs examined the performance of SEZs in terms of employment generation, export promotion, attracting investment (both domestic and foreign), technology up gradation and skill formation.

In fact these six zone will increase the current GDP by 60.9 billion USD in 15 years where the contribution of Kandahar zone will be 11.6 billion USD, Kabul zone will be 8.1 billion USD, Helmand-Bastion zone will be 14.2 billion USD, Jalalabad zone will be 2.6 billion USD, Mazar-e-Sharif zone will be 7.01 billion USD and Herat zone will contribute 17.2 billion USD.

It will also contribute to the current exports by 45.2 Billion USD, in 15 years where the contribution of Kandahar zone will be 9 billion USD, Kabul zone will be 5.5 billion USD, Helmand-Bastion zone will be 11.8 billion USD, Jalalabad zone will be 2 Billion USD, Mazar-e-Sharif zone will be 4.9 billion USD and Herat zone will contribute 11.7 billion USD.

We are also expecting a huge impact on the employment of the country which is estimated that these six zones will generate 655,284 jobs where the contribution of Kandahar zone will be 135,870 jobs, Kabul zone will be 66,444 jobs, Helmand-Bastion zone will be 153,510 jobs, Jalalabad zone will be 70,980 jobs, Mazar-e-Sharif zone will be 125,160 jobs and Herat zone will generate 103,320 jobs.

Moreover, the above mentioned six SEZs will have direct impact on the revenue of the country by 1.659 Billion USD in which the contribution of Kandahar zone will be 610 million USD, Kabul zone will be 137 Million USD, Helmand-Bastion zone will be 410 million USD, Jalalabad zone will be 62 Million USD, Mazar-e-Sharif zone will be 161 million USD and Herat zone will contribute 275 Million USD.

In conclusion, the SEZ of each country all has the same direction. Its objectives are to enhance the investment, reduce barriers of operation, and facilitate investors. Hence, during the mid-20th century, the developing countries had used the policies of establishing the SEZ to be the crucial strategies for the country development. The result is that some countries get benefits, but some countries encounter the problems and complexity from the establishment of SEZ, It is necessary to understand all aspects of SEZ as well as the impact of SEZ which might have shape the country in the future. The success factors, which associated with each environment and each country, is also investigated and carefully adopted.

6.    Recommendations:

In order to successfully establish SEZ in the country, following are the main recommendations to the government of Afghanistan to take it into consideration.

  • Establishment of SEZ Authority

In order to successfully establish SEZ in the country, the establishment and existence of SEZ authority is outmost necessary and required. SEZ authority will be the governing body for all Economic Zones which may include Special Economic Zones, Industrial parks Export Processing Zones, Free Trade Zones and Bonded Areas which will be defined in Afghanistan Special Economic Zone Law. SEZ Authority shall be a body responsible to manage and control all the planning, administrative, development, management, operational and promotional activities. It will administers incentives to developer/operators and locators in world class, ready to occupy, environment friendly, secured and competitively priced Afghanistan Economic Zone.

SEZ authority will be responsible for the formulation and implementation of policies, plans and programs of the authority, including the establishments and implementation of rules, regulations and standards governing the establishment and operation of Special Economic Zones. Special Economic Zone Authority will regulate, supervise, facilitate and oversight SEZs through the administration, issuance of guidelines and directions to developers, occupants and zone users. It will provide policy direction for the development and sustainability of SEZs, attract new and diverse investment, and establish efficient business environment, one-stop shop facility and single window clearance. SEZ authority will be the single regulatory body which will be responsible to manage and control the planning, administrative, development, management, operational and promotional activities of SEZs in Afghanistan.

AEDA will play a significant role in economic integration by providing efficient services to private sector and public sector under one roof. 

  • Incentive regime

In order to attract potential FDI to Afghan SEZs, the provision of a competitive and most attractive incentive regime is required. We need to propose a suitable tax incentive regime for Afghanistan Special Economic Zone (ASEZ) to attract foreign direct Investment (FDI) that will contribute to export promotion, employment creation, and GDP increase and revenue generation in Afghanistan.  The incentive regime perform significant role in attracting FDI, GDP increase, revenue generation, employment creation, export promotion and overall economic development of the country.

  • SEZ law

In order to practically implement the SEZ concept in the country, the existence of Special Economic Zone law, regulations, procedures and policies are highly required and necessary. The government of Afghanistan need to develop Special Economic Zone Law package including its regulations, procedures and policies for the first time in the history of Afghanistan.

  • Infrastructure

One of the main objectives of the SEZs is to improve the infrastructure facilities. Infrastructure means facilities needed for development, operation and maintenance of the SEZ and includes industrial, business and social amenities like development of land, roads, buildings, sewage and effluent treatment facilities, ports including storage tanks and inter-connecting pipelines for liquids and gases, warehouses, airports, railways, transport system, generation and distribution of power, telecommunication, data transmission network, hospitals, hotels, educational institutions, recreational and entertainment facilities, residential and business complex, water supply including desalination plant, sanitation facility, etc. this things will attract more FDI to SEZ of Afghanistan in order to process the local materials and convert them into finished products.

  • Establishing best Business environment for attracting FDI

There should be a good business environment where we can easily attract FDI to the country. It includes best business and friendly environment creation. Incentive regime and other equipments where we can easily attract FDI to the country.

  • Marketing:

Marketing strategy should be based on the highest demanded goods in the specific markets. Promotional schemes and exhibitions can play an important role for making markets for Afghan products abroad. Market segmentation should be made based on the competition of the products in the regional market.

  • Labor skill

Labor skills is mandatory for quality production in the special economic zones in order to compete with the regional players. Afghanistan government should provide best hiring mechanism for both national and international skills labor.

  • Supply: Afghanistan Special Economic Zones will be a brand for supplying quality and durable goods. The quality supply of goods and services will encourage the trust of the consumers by purchasing these goods and will truly satisfied their needs.
  • Regional and international market analysis for export purposes

Afghanistan is rich with agricultural and mineral resources and there is high demand for Afghan products both in the regional and international markets. The businessmen operating in Afghanistan Special Economic Zones should target their regional and international markets for the highest demanded goods in that specific markets.

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Mr. Nasrullah Sahibzada has over ten years’ experience in various leadership capacities on program management, Planning, economic development, Special economic zone, women empowerment and has extensive knowledge of working in Afghanistan. He currently works as Executive Director- AAEDC presidential palace ARG and has worked as Senior Project Manager for Harkat-DFID, Project Analyst with (ADB), National Project Officer with UNESCO, Program Manager with BEST/CPI/USAID, Support Center Officer with AWRC, and HR Officer with HWW and Project Assistant with WRC. He contributed Afghans in terms of economic development, women empowerment, capacity building, and awareness campaign. Nasrullah holds Master of Business Administration (MBA) specialization in project management from IMSR-University India and 2nd Master of Business Administration (MBA)- specialization in Public Administration from Dunya University Kabul Afghanistan. Nasrullah has also worked in as professor for Maryam University in the fields of strategic management, project management, organizational behavior, general management and banking. Nasrullah was an active member of the Friedrich-Ebert-Stiftung Youths leadership Forum in 2010/2011.

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