Challenges in Transit/Transport
The Case in Afghanistan
By: Professor Abdul Wassay Haqiqi
American University in Afghanistan & CEO Haqiqi Auditing & Consulting Co
November 25‐26 , Bangkok, Thailand
Table of Contents
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Introduction
Major Challenges in Transit/Transport in Afghanistan:
Security/Politics Infrastructural Facilities Weaker Transport/Transit facilities Inadequate Legal Framework Insufficient Business Services
Lack of Coordination & Harmonization Across the Borders
Lower Capacity & Insufficient Technical Assistance
Suggestions
Conclusion
1. Introduction
There are so various transit/transport challenges faced by many less‐developed countries, especially in those of landlocked ones with limited trade, but higher costs and many delays. Gael Raballand of the World Bank using the three variables of distance to market via the nearest seaport; number of national borders with coastal countries; and number of border crossing points crossed with a sample of 46 countries over a 5‐year period, has concluded that being landlocked reduces trade by more than 80% using his database method. Many international & regional institutions such as UNECE. UNESCAP, ADB, WB, WCO, WTO, UNCTAD and IDB as well as CAREC, SPECA, APEC, ASEAN, SAARC and ECO have organized various gatherings & dialogues, promoted intensive researches and have provided technical assistances to reduce if not overcome many transit/transport challenges. However, political will, sincere & sustaining cooperation is needed to expand intra‐regional & global trade.
1. Introduction. Continues
Afghanistan is located in central/southern Asia and landlocked among Iran, Pakistan, Tajikistan, Uzbekistan, Turkmenistan & China. While Afghanistan shares the major features of LDCs such as poor physical infrastructure, weak institutional capacities, remoteness from world markets, and a high vulnerability to external shocks, It has prioritized to develop an adequate national transport networks and efficient transit systems, to promote regional or sub‐regional economic integration, and encourage foreign direct investment in economic activities leading to expand trade. Although for the last eight years many reforms in trade, customs
and transport regimes have been carried out in cooperation with donors assistance, much has to be done to overcome those increasing transit/trade challenges stipulated in the 2003 Almaty Program of Action.
Major Challenges in Transit/Transport in Afghanistan:
Thirty years of war, continuous terrorist attacks since 9/11, non‐
stop intimidation by some neighbors, drug trafficking, continuous drought, very low level of literacy and higher rate of unemployment and mortality have accelerated the already negative impacts on economic & commercial activities of Afghanistan. While many international organizations have provided technical assistance in trade facilitation, transit/trade capacity development beside the efforts made by the Government of Afghanistan, the county is facing many challenges summarized in the following paragraphs.
Major Challenges in Transit/Transport in Afghanistan:
Security/Politics Afghanistan’s longest border with Pakistan, more than 2,400 km and with Iran, more than 1,000 km have been subject to many border closures, insurgency/ terrorist activities and drug/human trafficking. This instability along with corruptions & lack of transparency has faced the country with a great challenge in its transit/transport sector and yet with its trade
expansion & economic development to reach the MDGs. Almost 100,000 international and coalition forces along with almost 200,000 army & police are engaged to bring security, law & order, curtailing and securing borders in Afghanistan costing billion of dollars.
Major Challenges in Transit/Transport in Afghanistan:
Infrastructural Facilities While the Government of Afghanistan with donor assistance has invested billion of dollars in roads construction, transit corridors, ICT, and border‐crossing points to be used as a bridge between the Central Asian countries and Indian sub‐
continent, the results have not been quite satisfactory. Alternative transportation modes such as railroad are beginning to emerge with the help of some neighboring countries and IFIs, for connecting Afghanistan with China, Europe , Indian Sub‐continent & Middle Eastern countries within 2‐3 days, reducing transportation costs & delays. One of them is the Khaf‐Sangan‐Herat railroad with total length of the 191 km with 141 km of the path running through Afghanistan valued at $75m will connect Afghanistan with Central Asian countries & Iran ports.
Major Challenges in Transit/Transport in Afghanistan:
Trade/Transit Facilities (TF) It is well known that trade and transport facilitation measures can reduce transactional costs through simplified procedures and the use of modern technology. This task has become more complex in light of increasing security concerns faced by Afghanistan. Some of these concerns can be summarized as follows:
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Less than 70% of TF standards applied
Lack of Bonded warehousing services Lack of coordination within the country
Aging trucking fleet with lack of TIR implementation;
Shortage of coordination in BCPs – single window operation
No insurance coverage and lack of required security
Major Challenges in Transit/Transport in Afghanistan:
Inadequate legal/Procedural framework • Afghanistan in facing many challenges in regulatory & procedural framework in transit/trade activities such as Lack of modern and required laws & rules, shortage of skilled and professional staff, less awareness about transit, customs and trade issues, lack of transparency and weak law enforcement. • While the Government of Afghanistan with the donors assistance have made efforts to reform customs procedures and expand trade facilitation in the Ministries of Finance & Commerce & Industry, more effective & continued donor assistance is needed to enhance the capacity of Afghan legal experts confront ing the Geneva‐based negotiators as negotiations progress and Afghanistan is making effort to join the WTO accession.
Major Challenges in Transit/Transport in Afghanistan:
Insufficient Business Services Shortage of financing & credit a long with insurance & marketing
services are other challenges faced due to high risk and lack of strong demand. Although Afghanistan has more than 16 modern bank, two out of which are state banks there seems to be a credit crunch situation due to extreme level of risk. manly political one, making credit very expense. The country lacks accounting & auditing companies IFRS. Mean while the insurance business is in a very infant level. The
life insurance does not exist and the health insurance is very limited. Property & liability insurance is in infant level. The private public partnership is in initial stage in joining to resolve major challenges in transit, trade and border management activities. Most of the freight forwarding services are carried by more than 250 private companies.
Major Challenges in Transit/Transport in Afghanistan:
Lack of Border Coordination & Harmonization
The simplification, standardization and harmonization of procedures, especially across the border are the important ingredients of TF prescribed by the UN/CEFACT. However, it was found in the TF Assessment Needs Workshop sponsored by UNCTAD in Afghanistan , that the country’s uncoordinated existing border crossing point procedures with its neighboring countries having different administrative, legal, customs, and trade and transit methods and documents making crossing Afghan borders slow, burdensome and restrictive. In addition, with no proper Integrated Border Management (IBM) and improper land border station zoning having separate tasks and responsibility assigned by zoning border areas, Afghanistan is facing another transit challenge.
Major Challenges in Transit/Transport in Afghanistan:
Lower Capacity & Insufficient Technical Assistance
The Government of Afghanistan facing many transit & transport challenging must improve the capability, proficiency and professionalism of the Ministry of Finance( Customs) & Ministry of Commerce & Industry by identifying and providing the necessary: regularity services, technical assistance, training and equipments(including ICT) and sustainable support via donor assistance.
While many technical assistance are provided by donors, Afghanistan needs high calibre to implement various reform programs designed to facilitate trade and overcome many trasit/transport challenges.
3. Suggestions
Several suggestions can be made to overcome transit/transport challenges:
• Improving security throughout the country both for persons and property;
• Completing the main road rehabilitation connecting BCPs, • Constructing a modern ICT systems and ensuring that after reconstruction maintenance is undertaken for sustainability; • Streamlining of border crossing procedures for speedy clearance and anti‐corruption measures;
• Reestablishing formal financial and insurance systems including an effective clearance and settlement system;
• Designing and implementing major capacity‐building programs to develop skills and professionalism in transit activities while adopting an iintegrated approach to trade facilitation and public‐private partnerships ;
3. Suggestions. Continues
• Publishing and placing on government webs border‐crossing rules and customs procedures for transparency;
• Developing capacity to monitor trade logistics performance and report findings;
• Reducing discriminatory measures against foreign transport operators to bring about the reciprocity principle;
• Designing, developing & expanding other transport means such as railway, ferry & air transport while making maximum usage of North‐South & East‐West corridors;
• Making a continuous efforts to achieve consensus on the formal mechanisms needed to carry the regional cooperation dialogue forward;
• Moving toward single window operation while expanding ASYCUDA implementation;
Conclusion
As one of the least developed land‐locked countries but with very strategic location in Central Asia, in coordination of donor assistance , the Afghan Government must draft, implement, monitor and evaluate a Master Plan for transit/trade facilitation to expand its trade & capitalize on its transport/transit modern corridors. The Government must support each border by ICD (Inland Clearance Depot) with ICT interfaces. It has no choice but to further improve secondary legislation in consultation with other agencies.
While expanding the use best international practices, including international standards and conventions, it should develop performance indicators. Although it has participated in the various regional organizations on economic and commercial cooperation such as ECO, CAREC, SPECA, & SAARC , the Government must reform and make effective use of trade & transit agreements (bilateral, multilateral & regional).
Conclusion. Continues
The reform of the Afghan Transit Trade Agreement (ATTA) of the 1965 is a ground breaking transit agreement with joint efforts by the governments of Afghanistan & Pakistan to be concluded in a very near future. Other trade & transit agreements are under intensive reform process with donor technical assistance . The reactivation of TIR is also under review with the support of IRU & UNCTAD.
During the past eight years the Government of Afghanistan has taken very liberal approach with its trade partners and has expanded its trade volume from less than US$300 million in 2001 to more than US$3.5 billion in 2008.
While identifying and reducing trade and transit barriers for ensuring trade facilitation, the Government of Afghanistan
shall exercise greater control over the movement of goods across the country’s borders for curbing smuggling & the imports of dumped & sub‐standards and hazardous products.