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The Killid Group
Disappearing FactoriesWritten by
Wednesday, 26 May 2010 10:45
by Ezazullah Zaland
The number of Afghan private industries that bankrupt increases dramatically. Lack of electricity, high taxes, insecurity and the need to bribe many along the trading process are among the main causes that are leading factories to close their doors, as Killid's research evidences.
With the beginning of the post Taliban process and President Hamid Karzai's government, several factories were established in major Afghan cities, such as Kabul, Herat, Jalalabad and Kandahar, and have started producing high quality products. However, in the last years most of them have stopped functioning.
The documents and evidence received shows that the Battery Manufacturing Factory in Herat, soap, shoes and plastic industries in Jalalabad, Zaher Plastic Factory in Balkh, blanket, marble and raisins companies in Kabul and several others throughout the country either close doors or are in the threshold of collapsing.
According to the owners of these factories, low market, insufficient support and lack of control on imported goods have been among the main reasons leading them into such a bad condition.
Electricity as a main problem
Zarwali, a relative of Haji Roozi Khan, owner of Paktia Blanket Manufacturing Factory, says that they have stopped producing blankets five years before the establishment of the interim government. Activity was resumed soon after Hamid Karzai was named interim president. Zarwali told Killid that they were manufacturing 800 blankets daily, but since the government didn't pay any attention to it it has faced many problems and will stop functioning.
"We are not only deprived from the economical support which was supposed to be provided by the government, but we are also having great problems with electricity, which is a substantial component for the activity of a factory. How can we run a factory without electricity?" he asked.
While blaming the government he adds that one of the weakest points in the economical policy is the failure in paving the ground for the development of the private sector. "If the situation continues like this, I believe many other factories will be closed soon," he concluded.
Najib Zarab Marble Factory, other private company that has commenced work since the establishment of the interim government, is currently inactive. Sayed Mohammad Rohani, the clerk in this factory says: "We are having serious problems with electricity. We don't have regular access to it, therefore we are unable to work on a regular basis". In order to resolve the problem, "we bought some generators, but it is so expensive that we cannot afford to run it. We cannot even afford paying the salaries of the staff," he added.
According to Rohani, there was a raisins producer located besides the marble factory, in the Sanati Industrial Park, but they, too, reduced 120 of their staff last year.
Other factories located outside Kabul, are not in good condition, either.
Haji Mohammad Qasim, director of a stone factory in Kandahar, complained about the deficiency of electricity, too.
"The government was supposed to provide us electricity on a 24-hour basis. We are currently running the factory with diesel oil and I am unable to settle a regular daily production," he said.
Sayed Sultan Shah Agha, the head of Khosh Dawam Factory, also pointed out to this issue and added: "We do not get electricity in weeks and running a factory with diesel oil is too difficult. We were able to run the factory for eight months, but failed to continue it further".
Nangrahar province faces the same challenges, with some differences, though.
Although Riaz Carton Making Factory is facing many difficulties because of the lack of electricity and of raw material, the managers have taken the firm decision of not stopping work.
Engineer Ghulam Hussain, chairman of the factory, informed that it was established in 2008 and is currently producing five thousand cartons every day that are sold widely in Jalalabad, Laghman, Kunar, Kabul, Helmand, Kunduz, Balkh and other provinces.
He adds, "The machines in the factory are currently using generators. I requested the government to support us by providing regular electricity, so we can bring our goods to the local market in low price".
Killid tried to interview officials of the Ministry of Energy to request their opinion on this but were not available.
There are different reasons why newly established factories are facing many problems and challenges day by day.
Engineer Ghulam Mohammad, a manager at Zaher Plastic Producing Factory identifies the inaccessibility of raw material as a main reason why factories are facing problems and challenges day by day.
"If the government pays attention to the needs of the factory owners and provide them with the raw materials which is their basic requirement, this problem will be solved soon," he said.
But other member of the factory who did not want his name to be revealed, said the government is not taking any action to stop importing goods that compete with local ones. "I think the government should either stop importing similar goods or raise the import tax so that our goods keep a competitive cost in the market," he said.
While outlining that companies do not receive any assistance from the government in the marketing sector, he added "if the situation continues like this, the remaining factories will be closed, too, and Afghanistan will once again face a crisis."
Abdul Naseer Nabizada, the chairman of Hari Ansar Company also accused the government for not paying attention to the internal production. For him, it is this the main reason why their activities have stopped.
"Several decisions have been taken [by the government], but none has been implemented," he added. He also considered that because of the open market other countries are able to export low quality products to Afghanistan with which the Afghan factories are not able to compete and close down.
Engineer Mohammad Qasim Yousufi, the chairman of the Chamber of Commerce in the eastern provinces said that the price of salt extracted in Taloqan Salt Factory is significantly higher than the salt smuggled from Pakistan. He added that if the government doesn't allow them to export salt from Pakistan, the factory will soon stop functioning.
The owner of Speenghar Iodine Salt Factory, Haji Hakimullah Arab, informed that his factory has stopped functioning and most of its workers have been fired. "The cost of raw material is too high and that is why we are not able to produce even a bag of salt," he said. "I have lost all my money in this venture".
Engineer Mohammad Akram Ghiasi, the deputy and acting Minister of Mines states that based on a President's decree, the import of goods that are produced or available in the country is strictly forbidden and that is why the Ministry does not allow importing salt from Pakistan.
He ensured Killid that if the representatives of producers sit with him for negotiations he can ensure reducing the cost of all goods including salt. "We will also explore similar ways for raw materials", he added.
Hamidullah Farooqi, a lecturer in the faculty of economics said that in order to pave the ground for the private sector factories, "we have to take strict measures such as strengthening the national economy, exploring ways for marketing and for access to raw materials." Meanwhile, there should be legal and economical guarantees issued by the manufacturing countries overseas. He added that all these factors would pave the ground for the development of national economy.
Corruption and Fraud
Haji Gul Hakeem, the person in charge of Speenghar Plastic Manufacturing Factory speaks of high income taxation, corruption in the customs and policemen asking for bribes as the other major issues in addition to the high cost of raw materials.
"When we import raw materials from Pakistan, policemen on the highways are teasing us and are asking for money," he said. According to him, several times he has been asked for money on the highways, but he did not name anyone.
The clerk of Najeeb Zarab Marble Factory accused custom officials of corruption: "It has increased significantly in the custom house, even the guards are asking for money now". He avoided informing the amounts of extra taxes he has been paying illegally to the revenue departments.
The Ministry of Finance does not deny that corruption in the customs and in revenue departments exist, but states that they have accelerated their combat against them. The Minister of Finance, Omar Zakhilwal, said recently: "We declare today that we won't bear corruption anymore. As a result of our serious actions, we were able to raise the customs income from 1.6 billion Afghanis to 3 billion Afghanis".
Many claimed that their activity is seriously affected by the lack of security.
The juice producing factory started functioning in Kabul city in 2009 and is able to export 25,000 tons processed fruit and 50,000 tons fresh fruit overseas. Mustafa Sadeq, the director, considers insecurity as the major challenge against factory owners and industrialists.
"The government should provide us security; we can manage the power supply anyhow. No matter if our income is low," he said. This problem exists not only in Kabul, but also in other provinces particularly in Kandahar.
Gul Ahmad Faizi, member of Kandahar Factory Union said that they "had an approximate number of 129 factories registered in the past, but only 25 are running currently."
Abdul Khaliq, in charge of Hewad Plastic Producing Factory in Kandahar said that industrial companies are located in remote areas of the province and are suffering serious security problems.
"I have been working in this factory for five years and I know the situation here more than anyone else. There is no security; vehicles, power cables and several other things have been stolen from us. The government doesn't care and have never asked about our problems," he said.
Engineer Sanaullah, chairman of Industrial Factories in Kandahar, endorsed the problems faced by factory owners and added that they have warned they will submit their license back if the government doesn't pay any attention to their security. "Security plays a significant role, so if there is no security, all economic activities will be stopped and this will pave the way for corruption, crime, poverty and many more bad things," he concluded.