Imports Threaten Local Industries

Friday, 18 November, 2005

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Mohammad Jawad

Three months ago, Latif Sediqi decided to invest 70,000 US dollars to expand his 20-year-old tailoring business.

His business – Latif Sediqi’s Tailoring Company – employed 14 workers and produced 10 suits a day. He charged, on average, about 30 dollars, 1,600 afghanis, per suit.

But because of foreign competition, Sediqi finds himself with 300 unsold suits and has been forced to shut down his business.

“Because of the Chinese suits available in the market, we have not been able to sell even one suit, " said Sediqi. Suits manufactured in China sell for an average price of 20 dollars, 1,000 afghanis, in Afghanistan.

The story of domestic producers losing business when cheaper foreign exports flood the market has been told in capitalist economies the world over. Now some of Kabul’s small manufacturers are telling similar tales.

Tailors and shoemakers located in the centre of Kabul, most of whom had about 10 years experience in their trade, told IWPR that they have been losing business, and in some cases their jobs, because of the influx of cheaper Chinese goods. They say while they make a better quality product, they can’t compete on price. China is the main exporter of clothing and shoes to Afghanistan.

Haji Ghulam Hassan Rawshan, head of the handicraft and export development department in the ministry of commerce, said that the Chinese imports are a serious threat to local small businessmen. "It will be a severe blow to our local producers if action isn't taken," he said.

Rawshan said he would appeal to the new commerce minister to impose a ban on all imports from China.

Sardar, a Kabul shoemaker in business for 10 years, sits on a table drinking tea with three of his associates in his12-square-metre shop. He has plenty of time for breaks these days.

“Chinese merchandise has paralysed our product completely. The shoes the traders are importing are really without quality but people buy them because they are cheap," he said. "Our people, with their closed eyes, prefer buying goods that have."

Sardar said his shoes sell for about eight dollars, 400 afghanis, while those from China are sold for three dollars, 150 afghanis.

Waseh, 37, the owner of a second-hand shoe store in Kabul, also complained that “Chinese shoes are of low quality and don’t last long, but they are showy. They are made of plastic, which causes feet to sweat and smell."

But Mustafa Kazemi, the outgoing minister of commerce, defended the government’s current policy on imports. He said the commerce minister must “create the right [economic] conditions so that poor people can afford to buy merchandise from the bazaar, and stop the prices from going sky high.”

Kazemi also argued that the quality of domestically produced goods in general isn’t good enough, and that local manufacturers don’t produce enough to meet the demand.

He said the government should only impose trade restrictions once the quality and quantity of similar Afghan products improves.

"The government has chosen a free-trade policy, and each importer is free to import goods from all over the world without regard for quality or quantity, and which don't have to conform with international standards,” he said.

In fact, Afghanistan does impose tariffs on many imported goods, ranging from 2.5 to 16 per cent. Azizuddin Shams, a spokesman for the ministry of finance, said there is a five per cent tariff on all clothing, including shoes manufactured abroad.

But Saifuddin Saihoon, an economics professor at Kabul University, complained that government’s current trade policy favours foreign businessmen and local merchants who sell foreign goods.

"Our neighbours and the traders are taking advantage of our demand. They supply us with poor quality goods, so our money goes abroad... instead of to our producers,” he said.

“In the current situation we have almost no [local] production. Because we’ve opened up our markets to the world, in fact we are discouraging domestic production, spending our money in a useless way, and taking losses. Our country will remain a consumer forever," he said.

Saihoon said that tailors and shoemakers should form unions and take their concerns to the new government. Currently neither group has its own union. According to Nesar Ahmad Habibi, head of Kabul’s office in charge of markets, there is only one union for private enterpreneurs - the union of craftsmen of Afghanistan.

Such a development can’t come soon enough for Tamim, 22, who’s been sewing suits since he was 12 and now says he can’t find work.

"If I don't find work, I will have to go to Iran," he said.

Mohammed Jawad Sharifzada is an IWPR staff reporter in Kabul.