Special Economic Zones/Multimodal Transport and Logistics Facilities

The Special Economic Zones / Multimodal Transport and Logistics Facilities project will facilitate increased trade and transit along regional corridors that pass through Afghanistan, by establishing inland cargo consolidation and distribution centered as a pivot of export-led growth and economic development. Alongside tax breaks and other efficiency measures associated with Special Economic Zones status (used to attract foreign direct investment), the Multimodal Transport and Logistics Facilities component will consist of an inland cargo terminal from which railway and truck operators can accomplish their transport needs similar to a traditional waterway port.  These “dry ports” are proposed because high market delivery costs caused by fragmentation of supply chains, poor logistic service levels, and low levels of connectivity within the wider region prohibit Afghanistan from emerging as a trade and transit hub. They would provide a range of services, including: (i) cargo consolidation and distribution; (ii) temporary storage of containers; (iii) customs clearance; (iv) connectivity between formal transportation nodes; (v) issuance of bill of lading in advance of clearance; (vi) inventory management; and (vii) potential pre-customs clearance.  Beyond spurring direct investment in key border areas around Afghanistan, this proposed initiative will help to reduce the average transit costs between countries in the region, lowering import costs and making exports more price competitive. Though a comprehensive feasibility study is still needed, dry ports funded by the ADB and World Bank have an estimated Economic Rate of Return of between 15-22%. One Afghanistan focused study estimates—over a twenty-year period, 2016-2036—the generation of USD $57 billion in increased GDP growth and USD $6.2 billion in public revenue.

Current Status

Ongoing discussions with the Afghan Government are focused on possibly locating the Special Economic Zones / Multimodal Transports and Logistics Facilities in Kabul, Jalalabad, Mazar-i-sharif, Herat, Aqina, Toraghundi, and Zaranj or Delaram—for which the Afghan government is in the process of acquiring land or considering the rehabilitation of dry ports with under-developed infrastructure and burdensome procedures. One recent assessment found that out of Afghanistan’s current twelve dry ports, only four are actively working (with Hairatan among the most active; it, along with Toraghundi and Aqina are managed by the Strauss Company). Since 2013 Dubai’s DP World has expressed an interest in developing Hairatan and Torkham dry ports. The challenges and problems within each dry port varies, however the recurring issues are mainly political, security, land grabbing, lack of equipment and the quality of roads that affect the transportation of goods. Several government ministries are supporting a coalition of Afghan business leaders to form a Public-Private-Partnership for development and operation of three of the facilities in Kabul, Jalalabad, and Mazar-i-Sharif and a plain air cargo hub at Kabul International Airport.  NATO bases could also be converted into dry ports, allowing for a continued economic and physical presence and a cohesive transference process. The project forms a central part of the Afghan Government’s Private Sector Development and Infrastructure and Connectivity Development National Priority Programs.

Recommended Actions by RECCA-VII and Beyond:

  • Undertake a comprehensive feasibility study (assessing locations, functions, cost-structure, net present value, economic and financial rates of return, and a flexible PPP governance model) required to build the business case for a combination of public and private investment in a few select Multi-Modal Transport and Logistics Facilities in a few select locations across Afghanistan.
Budget & Funding Status Feasibility study first required
Institutional Partners Afghanistan (Ministry of Commerce and Industry and Ministry of Public Works), Strauss Company, and Pakistan has expressed in interest in developing dry ports at Torkham and Ghulam Khan

Close