KUALA LUMPUR (Bernama) – Afghanistan, which has been ravaged by 25 years of civil war, has set to rebuild itself from the ruins and is inviting Malaysian investors to look at the business potential in food production, electricity generation, construction and mining.

Hassan Abdollahi, deputy minister of the all-important ministry rural rehabilitation and development entrusted with rebuilding the country, says there is a lot to learn from Malaysia in terms of revitalizing its rural areas.

Therefore, it is looking for technology transfer in a number of areas which Malaysia has expertise.

Afghanistan's major food crops are maize, rice, barley, wheat, vegetables, fruits and nuts. The industrial crops are cotton, tobacco and sugar beets. The country is also strong in sheep farming where it exports wool and sheep hide.

Afghanistan, with a population of about 30 million living in 34 provinces, is also rich in mineral resources like precious stones, copper, coal and natural gas.

Hassan recently led a group of 22 high-level officials from Afghanistan for a study tour to Malaysia to learn from the Malaysian best practices in agro-based industries under the auspices of the United Nation Development Program (UNDP) and Marditech Corporation.

The study tour was also part of the UNDP's program to support the Malaysia-led Technical Co-operation with southern countries.

"Within agro-based industries, we're looking at areas such as quality control and standards, scientific research and development as well as marketing and exporting, especially in the dried fruit processing sector," Hassan told Bernama in an interview.

Naseem Akbar, director of investment promotion at the Afghanistan Investment Support Agency (AISA), said his country had progressed in many areas and major reconstruction efforts are underway.

AISA, as a 'one stop shop' for investors, is being tasked to attract, promote and register all new investments in Afghanistan and providing comprehensive services to investors.

"Politically, Afghanistan has adopted a new constitution, improved the security situation and increased legitimacy of the central government. Physical infrastructure such as highways, airports, power and telephony networks have been installed," Naseem said.

Economically, he said Afghanistan recorded more than 50 percent growth after the end of conflict and for 2005/2006, its gross domestic product (GDP) is estimated to be at a robust 14 percent.

The government under President Hamid Karzai had also adopted strong fiscal discipline and a prudent debt policy, which had resulted in low inflation and a stable currency, Naseem said, adding that the country had also enacted commercial banking laws.

"Despite the difficult business environment, Afghanistan's industry is steadily recovering and existing firms are coping well. The government is removing entry-barriers and create conditions that encourage existing firms to invest more," Naseem said.

He said Afghanistan experienced a 67 percent increase in employment over the last five years.

In a survey conducted by AISA, 70 percent of the surveyed firms invested in new equipment and machinery last year, one third introduced a new product line in the last two years and more than 40 percent upgraded an existing product line in the last two years.

Since October 2003, he said AISA registered 3,500 new investment projects worth $1.3 billion, created 150,000 new jobs, especially in the manufacturing and service industries.

The multinationals that have moved into Afghanistan include Standard & Chartered, ING Group, Alcatel, Coca Cola, KPMG, DHL and Hyatt Hotel.

However, Naseem said almost 90 percent of economic activity in Afghanistan is informal and per capita GDP is only $315.

There is some small-scale production of textiles, soap, furniture, shoes, fertilizer, cement and handwoven carpets.

"Lack of technology, skilled workers and managers have also resulted substantial component of our exports to be re-exported by third countries," he disclosed.

Other challenges are the relatively weak insurance framework, inadequate quality of testing facilities and poor transportation links in the land-locked country whose neighbors include Pakistan, Iran, Tajikistan, Turkmenistan and Uzbekistan.

"The government is aware of challenges and the private sector is seen as the engine of growth. There many factors that stand Afghanistan in good stead -- its location, which is in the heart of West Asia, and Afghans are natural-born entrepreneurs," he said.

For investors interested in investing in Afghanistan, a seminar on business opportunities between Malaysia and Afghanistan will be held in Kuala Lumpur on March 14 and 15.

It will be organized by the UNDP in collaboration with the Ministry of Foreign Affairs and the Afghan Embassy here. So far some 300 top local business officials have confirmed their participation.