Formalising the Afghanistan Economy - Efforts of the Ministry of Commerce and Industry

The Ministry of Commerce and Industry is dedicated to fostering private sector development, aiming to ensure an equal and transparent environment for doing business, and to improve the investment climate. Hence we are committed to encourage the development of the formal economy and drive the process of formalization in Afghanistan. The overall objective of these efforts would be to promote sound business practices consistent with international standards and to enable a business environment in which a competitive private sector can develop and thrive, at the same time ensuring increased revenue for the government, an orderly business environment, improved statistics, and, more generally, economic development and growth.

The Ministry of Commerce and Industry is committed to act as a bridge between the Government and the private sector, helping to implement Government policy in a way that is sensitive to the best interests of all parties. In the context of formalization, this implies that businesses will gradually start to comply with the laws and regulations applicable in Afghanistan, and the government will provide incentives in the form of streamlined and transparent laws and regulations, simplified implementation and compliance procedures, reduced burden and cost of doing business (fees, taxes, registration / licensing cost and procedures, etc.), provision of better services and efforts to reduce and suppress corruption.

In view of the multidimensional nature of formalization and its scope and forms in Afghanistan, the problem should be addressed in stages through cooperation with the private sector. The MoCI will lead on a cross-government, long-term commitment to formulate and implement a country-wide formalization strategy, taking into account an understanding of the drivers of the informal economy in Afghanistan, existing institutional and regulatory resources and barriers, possible incentives and disincentives, as well as the attitudes and constraints of key stakeholders.