KABUL Afghanistan is hoping to kickstart an investment program by offering tax-free incentives to foreign companies to set up business in the war-torn country, AFP quoted Reconstruction Minister Amin Fahang as saying.

Fahang has drawn up a far-reaching policy document, which he will present to interim leader Hamid Karzai's cabinet, that would allow foreign companies to keep 100 percent of their profits in return for creating local jobs.

"It is a very, very liberal economic law," Fahang told AFP Sunday.

"My personal opinion is that foreign companies who put their money and trust into Afghanistan should be able to take their profits back home.

"Western companies should not have to pay any taxes and would be free to transfer their profits back to their own country."

Fahang, who recently returned from 20 years in exile in Germany where he taught as a professor of economics, said that he was also keen to encourage more joint-venture partnerships between foreign companies and Afghan firms.

"We must think of ways to encourage people to put their money into Afghanistan either on a private basis or in a joint venture.

"In the past all aspects of the Afghan economy were in the hands of the government, but now we must change that."

Foreign companies have largely steered clear of Afghanistan since the 1979 Soviet invasion and subsequent civil war.

They were further frightened off by the nosedive of the economy and instability that were two of the hallmarks of the fundamentalist Taleban regime until its demise last November.

Many factories have been plundered or destroyed while Afghanistan's road and telecommunications systems are in ruins.

But Afghanistan remains rich in minerals such as coal, copper, iron ore, chromium and precious stones such as emeralds.

Under the Taleban various companies expressed interest in trying to construct a natural gas pipeline through Afghanistan from Turkmenistan in the north-west down to Pakistan although no deal was finalized.

A 10-man business delegation will accompany German Chancellor Gerhard Schroeder to Afghanistan later this week when he becomes the first Western leader to visit post-Taleban Kabul.

Fahang, who is due to hold talks with Schroeder, said he was particularly keen to attract business from German companies who have long associations with Afghanistan.

The German airline Lufthansa was the first European carrier to fly direct to Kabul, starting in 1937, while the engineering giant Siemens was one of the first foreign companies to establish commercial ties with Afghanistan in the inter-war period.

"We hope that Afghan refugees who return from Germany could set up joint venture partnerships with local firms. They would be ideal partners," said Fahang.

Some 80,000 Afghans are currently living in Germany, according to the minister.