Recent Legal Changes in Afghanistan Affecting Your Business

Francisco A. Laguna & Wojciech Kornacki

As the Islamic Republic of Afghanistan emerges from political, military and economic turmoil, it aims to become more self-sufficient and business-oriented by passing new legislation making the country more competitive. Afghanistan is rich in natural resources, enjoys a central location in Asia, and benefits from duty-free exports to the United States.

Inside the Afghan National Assembly, known as Wolesi Jirga or House of People.  Courtesy of http://www.pajhwok.com

Inside the Afghan National Assembly, known as Wolesi Jirga or House of People. Courtesy of http://www.pajhwok.com

According to the 2012 U.S. Department of State Investment Climate Statement , Afghanistan has recently enacted important commercial laws on trademarks, transportation, the Chamber of Commerce and competition.

Last year, new telecommunications law was enacted, and either this year or next, Afghanistan will have new legislation addressing electronic commerce and cyber security. Despite the new legislation, the primary challenge for the Afghan Government remains implementation and enforcement of the new and existing laws.

This year, Afghan legislators have focused their attention on mining legislation and already-awarded mining contracts. Afghanistan possesses substantial amounts of coal, salt, zinc, precious stones including emerald, red garnet and ruby, and other natural resources. It also possesses substantial natural gas and petroleum reserves. In all, some experts estimate that the total value of Afghan natural resources exceeds $1 trillion. As of last month, the country began producing its own oil. Thus, proper implementation and enforcement of the new mining laws will be critical for the future of Afghanistan. Companies operating in Afghanistan must be aware of their legal obligations, regardless of whether they are currently implemented or enforced by the Government.

The Afghan National Assembly is as diverse as the population of Afghanistan.  In addition to representing many ethnic minorities, it also represents hardliners, women, religious minorities, and an increasing number of special interests.  Courtesy of www.nytimes.com.

The Afghan National Assembly is as diverse as the population of Afghanistan. In addition to representing many ethnic minorities, it also represents hardliners, women, religious minorities, and an increasing number of special interests. Courtesy of http://www.nytimes.com.

The United States has special agreements with Afghanistan allowing Afghanistan to export most products produced in the country to the U.S. duty free under the Generalized System of Preferences Program. In addition, European Union tariffs on Afghan goods are very low. These laws offer significant low. This represents important opportunities for companies that produce goods in Afghanistan at low cost and then export them to Western markets.

Mining is not the only industry in Afghanistan holding many opportunities for foreign investors.  Transportation, telecommunication, and construction are also expected to grow.  Newly renovated Dudkash mine entrances.  Courtesy of Afghan Investment Company.

Mining is not the only industry in Afghanistan holding many opportunities for foreign investors. Transportation, telecommunication, and construction are also expected to grow. Newly renovated Dudkash mine entrances. Courtesy of Afghan Investment Company.

While the emerging domestic and international legal framework offers many investment opportunities, violence and corruption continue to plague the country. Corruption is rife, despite recent efforts to curb it. In 2008, Afghanistan acceded to the United Nations Convention Against Corruption; however, it is not a party to the OECD Convention on Combating Bribery of Foreign Public Officials. In 2011, Afghanistan established the Independent Monitoring and Evaluation Committee (MEC) for Anti-Corruption. Yet, it is widely known that government officials continue to ask for and accept bribes. American companies and businesses must remember that under the Foreign Corrupt Practices Act they are prohibited from bribing any Afghan government official.

If you are interested in learning more about new legislation in Afghanistan and what opportunities it creates for your business, or staying compliant under the Foreign Corrupt Practices Act, contact TransLegal . We specialize in advising corporations and individuals on unique aspects of foreign and domestic laws and regulations, including assisting corporations into entering into new markets and obtaining all the required permits.

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