Special Economic Zones/Multimodal Transport and Logistics Facilities

Special Economic Zones, Multimodal Transport & Logistics Facilities

The Special Economic Zones /Multimodal Transport and Logistics Facilities project aims to increase trade and transit along regional transport corridors that crisscross Afghanistan, by establishing specified land-based commerce areas and implementing inland cargo storage / distribution hubs pivotal to export-led growth. SEZs are located within a country’s national borders, and their aims include: increased trade, increased investment, job creation, and effective administration. To encourage businesses to set up in the zone, specialized policies and rules/laws are introduced. These typically involve investing, taxation, trading, quotas, customs, and labor regulations. Through SEZs, Afghanistan can aim to develop and diversify exports while maintaining protective barriers, to create jobs, and to pilot new policies and approaches (for example, in customs, legal, labor, and public-private partnership aspects).

Therefore, the Afghanistan Airfield Economic Development Commission (AAEDC) was established in mid-2015 to responsibly transfer strategic airfields status and convert them to SEZs/dry ports in terms of providing a proper business environment, attractive incentives regime, sufficient infrastructure, skilled labor, and security. A comprehensive feasibility study is still needed; however, based on an initial AAEDC-focused study it is estimated that over a thirty-year period, SEZs will increase the current GDP, exports, jobs, and revenue by sizable increments.

Multimodal Transport and Logistics Facilities comprise inland cargo terminals from which railway and truck operators can take care of their transport needs in a process similar to that of a traditional waterside port. These so-called “dry ports” offer a range of logistical services, including: (i) cargo consolidation and distribution; (ii) temporary storage of containers/cold storage facilities; (iii) customs clearance; (iv) connectivity between formal transportation nodes; (v) issuance of bill of lading in advance of clearance; (vi) inventory management; and (vii) pre-customs clearance. Beyond spurring direct investment in key border regions 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.

Current Status

The Afghan Government is developing Special Economic Zones / Multimodal Transports and Logistics Facilities in Balkh, Kabul, Kandahar, Helmand, Herat, Jalalabad, Mazar-i-sharif, Nangarhar, Aqina, Toraghundi, and Zaranj, for which the Government is in the process of obtaining land and/or possibly rehabilitating extant dry ports with under-developed infrastructure. A key timely analysis concluded that out of Afghanistan’s current twelve dry ports, only four are actively operating. Of these the most active is Hairatan, which is managed by the Strauss Company—along with Toraghundi and Aqina—while Dubai’s DP World has expressed interest in developing dry ports at Hairatan and Torkham. Multiple government ministries are supporting a coalition of Afghan business leaders to form a Public-Private-Partnership for development and operation of three facilities in Mazar-i-Sharif, Jalalabad, and Kabul as well as an air cargo hub at Kabul International Airport. These efforts have expanded to the airfields of Balkh, Kandahar, Helmand, Herat, Kabul and Nangarhar , which are being targeted by the AAEDC. The Bastion-Helmand (Shorabak Camp) and Shindand-Herat airfields have been fully transferred to the Government, and the Commission is working to transform these unused pieces of land into usable facilities. This multi-pronged project forms a central part of the Afghan Government’s Private Sector Development and National Infrastructure Plan.

Budget & Funding Status Feasibility study first required
Institutional Partners Afghanistan (MCI, MPW, and the AAEDC), Pakistan, and the Strauss Company

Recommended Actions by RECCA-VII and Beyond:

  • Undertake an omnibus feasibility study required to build the business case for a combination of public and private investment in Multi-Modal Transport and Logistics Facilities across Afghanistan.
  • Complete the feasibility studies for building Special Economic Zones / Multi Modal Transport and Logistics Facilities in Zaranj and Aqina.
  • Complete feasibility studies at several other key SEZ/MMTLFs that are being examined from a PPP perspective and targeted by the AAEDC, namely the airfields in Kabul, Kandahar, Herat, Jalalabad, and Mazar-i-Sharif.