Cablegate: Acting Commerce Minister Endorses Private Sector and Trade
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FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC 5416
INFO RUCNAFG/AFGHANISTAN COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
UNCLAS SECTION 01 OF 02 KABUL 000465
SENSITIVE
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E.O. 12958: N/A
TAGS: EAID ETRD PGOV PBTS EINV EIND AF
SUBJECT: ACTING COMMERCE MINISTER ENDORSES PRIVATE SECTOR AND TRADE
DEVELOPMENT
1. (U) Summary: In a January 31 meeting, newly-designated Acting
Minister of Commerce and Industries (MoCI) Ghulam Mohammed Aylaqi
told Coordinating Director for Development and Economic Affairs
Ambassador Wayne that the Afghanistan-Pakistan Transit Trade
Agreement (APTTA) is his "highest priority." Ambassador Wayne urged
continued progress on APTTA and agreement prior to the Kabul
Conference. He also highlighted the need to transfer MOCI land for
customs facilities at Torkham Gate to the Ministry of Finance in
order to strengthen trade flows and customs enforcement. Aylaqi
expressed support for private sector and legal-regulatory reforms
through the USAID Economic Growth and Governance Initiative (EGGI)
project designed during former Commerce Minister Wahidullah
Shahrani's tenure. Ambassador Wayne offered continued USG support
to MoCI to promote private sector development and an enabling
business environment. Aylaqi sought further USG assistance from
EGGI in: 1) policy and budget execution; 2) business registration
and licensing; 3) commercial laws and regulations; 4) a commercial
dispute resolution mechanism; and 5) industrial park development and
management. End Summary.
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APTTA, WTO ACCESSION, AND BORDERS PROGRESS
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2. (U) Ambassador Wayne opened the meeting by reiterating USG
support for APTTA, citing the final communiqu from the London
Conference which stressed the importance of completing the
negotiations as soon as possible. He also expressed interest in the
next round and encouraged agreement before the upcoming Kabul
Conference. Responding that APTTA was his "highest priority," the
Acting Minister requested continued U.S. support with the
negotiations and expressed appreciation for USG technical assistance
under the USAID Trade and Accession Facilitation in Afghanistan
(TAFA) project. Aylaqi also noted MoCI progress on World Trade
Organization accession; a questionnaire was received from the WTO
Secretariat in Geneva and MoCI anticipates submission of responses
by mid-April.
3. (SBU) Ambassador Wayne requested that Acting Minister Aylaqi work
with the Ministry of Finance (MoF) to transfer land at Torkham Gate
from MoCI to the Ministry of Finance to speed progress on building
customs facilities that will improve customs clearance and trade
flows. The land is to be used for a new Customs truck processing
area, which will facilitate trade after APTTA is signed. Aylaqi
responded that the processing area is a good idea, but he did not
trust MoF to pay for the land.
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ADVANCING AFGHANISTAN'S PRIVATE SECTOR
AND ENABLING ENVIRONMENT
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4. (U) The USAID Office of Economic Growth briefed the Acting
Minister on the EGGI project, stressing that it promotes economic
growth by emphasizing private sector development to create
sustainable industries and jobs. EGGI provides technical advisors
at MoCI to advance: 1) policy and budget execution, 2) business
registration and licensing, 3) commercial laws and regulations, 4) a
commercial dispute resolution mechanism, and 5) industrial park
development and management. Aylaqi welcomed and strongly supported
continued EGGI assistance with the following:
-USAID senior policy advisor to the Minister for private sector
development. This position will assess and develop a roadmap for
attracting foreign direct investment and ways to improve the
business enabling environment.
-Expanding and improving capacities of the Afghan Central Business
Registry (ACBR). EGGI will provide advisory and equipment
assistance to existing ACBR offices in Kabul, Jalalabad, Mazar-e
Sharif, and Herat, as well as planned offices in Kandahar, Kunduz,
and other potential locations. Aylaqi said he was committed to
improving the ACBR and its capacity, adding that he is in the
process of hiring a director.
-Development and adoption of new commercial laws and regulations as
recommended by international financial institutions. EGGI works
with the MoCI Legal Department on bankruptcy, company, contracts,
and agency laws and amendments to the private investment law. To
ensure adequate understanding and implementation of laws under MoCI
mandate, the USAID representative emphasized that the Department be
properly staffed and financed. EGGI assistance will provide legal
training to MoCI and the greater legal community to ensure broad
understanding and methods of practice.
-Developing a functional and competitive Industrial Parks Authority.
EGGI will conduct a demand study on industrial parks in Afghanistan
and management of the industrial parks system. The advisor will
provide feedback and recommendations for how to move forward based
on international best practices. Acting Minister Aylaqi expressed
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agreement with this approach. He said his vision includes an
industrial park in each of Afghanistan's 34 provinces, although the
USG largely sees this as unrealistic and suggests an assessment of
what currently exists, followed by a phased approached targeting
commercial centers and trade corridors. (Comment: Afghanistan's
institutional arrangements for overseeing Industrial Parks are split
between the government's Ministry of Commerce Industrial Park
Department - with nearly 200 employees - and Afghanistan's
Investment Support Agency (AISA) - a quasi governmental institution
with greater flexibility and dynamism. During the summer of 2009,
President Karzai signed a decree to establish the Afghanistan
Industrial Park Development Authority (AIPDA), which would
consolidate Afghanistan's parks under a new quasi-governmental
institution to reduce confusion and forge a way ahead. Donors are
waiting to see how/if AIPDA will be mobilized to assume this new
function. End Comment)
5. (SBU) Acting Minister Aylaqi highlighted the need for advice and
the importance of training, and asked for help in strengthening the
ministry's capabilities. With a row of senior ministry officials in
attendance, Aylaqi presented the image of a ministry with depth,
although how progressive these senior managers are remains to be
seen. Ambassador Wayne urged MoCI to execute more of its
development budget and to take greater control over its internal
development both in Kabul and in the provinces.
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COMMENT
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6. (SBU) President Karzai's first nomination for Commerce Minister
in December 2009, Aylaqi failed to garner Parliament's support. A
second nominee also did not pass muster, and a third will likely be
presented after Parliament returns from recess on February 21.
Parliament will reportedly not approve the semi-annual budget until
candidates for the remaining unfilled ministerial posts are
submitted. Should a new Minister be appointed, Aylaqi is expected
to remain in the ministry in some capacity -- as a Senior Policy
Advisor or Deputy Minister. Although approaching 70 years in age,
with limited English and educated in the era when command economies
were in fashion, Aylaqi was receptive to legal-regulatory reforms
and USG technical assistance. Whether he is truly committed to
reducing state intervention and transforming the ministry's
state-owned enterprises, such as the Fuel Liquid Gas Enterprise
(FLGE), is not yet known. Conclusion of the APTTA was his stated
"highest priority." To truly manage the process well, however,
GIROA needs a full-time dedicated lead. This is currently held by
Adib Farhadi, who is simultaneously serving as Commercial Attach in
Australia, raising questions about how much time he is spending on
this issue.
EIKENBERRY