|Industrial development increased substantially after
World War II (1939-1945). With the opening in 1965 of a large West
German-built wool mill, woolen-textile production more than doubled. Among
the other factories located primarily in Kabul are plants manufacturing
textiles (the most important manufactured export product) and footwear;
government-operated cement plants; a fruit-processing plant; a plant
making coal briquettes; and several cotton gins. As with other aspects of
the economy, the war has been a major obstacle to industrial expansion.
Manufacturing, value added (% of GDP) in Afghanistan was 11.82 as of 2016. Its highest value over the past 14 years was 18.75 in 2002, while its lowest value was 11.82 in 2016.
Last Published: 4/17/2016
Afghanistan is eager to establish a low-cost, labor-intensive manufacturing sector that can employ many Afghans. Industries suitable for investment are those that can first supply the local market and later become export products. The following manufactured products are all imported into Afghanistan, which indicates that a market currently exist within the country:
Industrial and automotive tools and supplies
Textiles, apparel, and footwear
Afghanistan's major import partners are Pakistan, Russia, Uzbekistan, and Iran.
Carpets are still among Afghanistan's most important exports. The industry has a centuries-old tradition that enjoys world renown. Afghan carpets are internationally competitive, even with the challenges of a post-war economy-a reflection of the capabilities of generations of skilled Afghan weavers. The government places a high priority on the development of the carpet sector, particularly because of its importance as a source of income for the rural population, including women, and refugees.
Production is concentrated in several regions of the country. While some carpet factories have been established in urban centers in the last two years, production remains primarily home-based and fragmented. A lack of available and appropriate land has inhibited the development of consolidated production sites.
As few local post-weaving facilities exist, most Afghan carpets destined for overseas markets are exported as unfinished products to Pakistan to undergo the final steps of washing, trimming, and drying. The carpets are then exported from Pakistan as Pakistani products to overseas markets. This process amounts to millions of dollars in lost revenue for Afghanistan.
Hand-knotted Afghan carpets enjoy preferential access to important overseas markets. No customs duty is levied on their import into the United States, Canada, or the European Union.
The Afghan carpet industry offers high potential for investment, particularly in re-establishing those elements of the production chain that now take place outside the country. It is estimated the value of sector exports could increase two to five times if goods were sold directly to foreign markets rather than through intermediaries.
Post Weaving Facilities: Washing, Trimming, Finishing
Facilities for washing, trimming, and finishing carpets are scarce in Afghanistan. The absence of such facilities has created a major bottleneck in the development of direct access to overseas markets. As a result, Pakistan-based middlemen dominate the carpet sector. The establishment of such facilities in Afghanistan represents the largest investment potential in this sector.
While a few carpet factories exist, the industry is still largely dependent on home production. The establishment of additional factories means increased productivity and increased quality control.
Wool Scouring and Spinning
Quality carpets require quality wool and yarn. While most producers of high quality carpets strive to exclusively use local, handspun wool, supply is insufficient to meet demand. Growing numbers of livestock in Afghanistan have created the potential for investment in additional wool scouring facilities. Spinning of high quality yarn, either from local or imported wool, also represents substantial opportunities.