Balkh Business Faces Bankruptcy

A large number of investors and manufacturers in the province complain about long black outs and increasing rate of custom’s tax.

A large number of investors and manufacturers in the province complain about long black outs and increasing rate of custom’s tax.
Officials of the Balkh Commerce and Industry Chambers are worried Afghan manufacturers will shy away from the province if the precarious power situation and complex taxation system are not quickly set right.
Factories in Balkh are plagued by erratic and over priced power, said Sayed Taher Roshan Zada chairman of the Balkh Commerce and Industry Chambers. “Each kilowatt costs 9 up to 12 Afs (1 US$ = 46 Afghanis) for manufacturers in Balkh, while it costs 6 Afs in Kabul, (which), represents imposing unfair expenses and (causing) many financial damages,” he explained.
An estimated 400 businesses are officially registered in the northern province. “A number of things such as food stuff, construction materials, soft drinks and others are produced in factories,” Zada said.
Sayed Hadi who owns a factory which imports crude materials from neighbouring countries, said he’s being double-taxed. The Ministry of Finance imposes a tax on crude materials, and another tax on materials supplied in the market. This, he complained, is even though “we annually pay the tax to the Ministry of Finance”.
Another businessman, Sayed Hassan, said he was disappointed by the unreliable power situation in Mazar-e-Sharif since he had moved to the provincial capital from a rural industrial area thinking it would be more reliable. He said this created many problems in an already difficult market for Afghan business. “We have a high quality (of production) but we cannot supply our products in the market due to mass importing of similar products from neighbouring countries.” Afghanistan is competing against more modern factories enjoying 24 hours of power, he said.

More restrictions, long delays
He urged government officials to strengthen domestic industry, and to reduce the low employment rate in Afghanistan.
Zada of the Balkh commerce and industry chamber said Finance Ministry officials have tied up factory owners in more red tape. “The Ministry of Finance has recently demanded handling three-month financial balance, creating a new set of problems for manufacturers,” he said.
Afghan manufacturers are already overburdened by paper work, he said. Instead of ensuring that it is the responsibility of the customs office, leaving businesses free to manufacture, the government has increased its work load. He warned that if the burden is not eased, there will be an increase in corruption and law breaking in domestic production. Also, Afghan entrepreneurs may prefer to shut down businesses.
Already, restrictions on their ability to travel out of the country or send their machines for repair abroad, have caused long delays and work stoppages. Afghan manufacturers have to wait months to get travel visas. Foreign embassies could expedite the process by checking their commercial status, Zada said.
Ahmad Wali Sangar, Afghan economic expert to the Balkh Governor’s office, has singled out the unstable security situation which has made many investors reluctant to invest their money.
In addition, many manufacturers set up factories without either a business plan or understanding how they will market their goods. “The Afghan government should at least assist in delivering business plans,” he appealed.
Sangar may have a point. Roughly 400 factories have been registered in Balkh province over the last 10 years but some of them have already plunged into the red with the Afghan government turning a blind eye. About 80 percent still work, semi-actively in the province. The most crisis plagued are businesses involved in weaving, electricity and fertiliser.