Role of government

In order to push private firms to perform well (i.e. . . . to decrease their price and to increase their quality of production) the afghan g0vernment, especially the ministry of mines should take the following steps:

1. the MOM should provide strong incentives for quarries to increase their production and output such a supply -side policy will encourage the firm to employ modern technology and use more efficient extraction method to benefit from the incentive this in turn will enable the firms to benefit from the inventive this in turn will enable the firm to benefit from the economics of scale to decrease their total cost to supply at a lower price and thus to increase their competitiveness moreover employing modern technology will also hove positive effect on the quality of their products.

A simple incentive mechanism can be offering discounts on the royalty fees for each additional amounts of marbles products .for example quarry a is supposed to extract 10,000 tones of marbles per year according to its contract with the ministry of mines if this firm, extract 20.000 tones within a year the monastery of mines should give a 50% royalty discount on the additional amount (i.e. 10.000 tones) for the next 10,000 additional tones of marble, the ministry should offer a 75% discount.

such a mechanism can provide strong incentive for quarries to produce more afghan firms will benefit from the economies for scald and will have lower total cost they can thus easily sell at a lower and competitor price, an ell be able to compete with Pakistan marbles evenly afghan firms can increase their share at the local market .and even at foreign markets.

Nonetheless, the decrease in royalty revenue of the government will be more than offset by an increase in income/sales tax, business receipt tax (BRT) and other types of taxes due to increased production of marble in the economy.

2. The Ministry of Mines must prohibit the use of explosive materials in extracting marble. Prohibition of explosive devices can save 50 to 70 of waste and prevent damage to the entire deposit. It can also push the quarrying firms to use standard technology which is more productive and safe.

3. Ministry of Mines should also provide incentives for the use of standard technology (e.g. a royalty discount) or prioritize in the bidding process those companies which employ standard technology and modern machineries.

4. The Afghan government should adopt policies which promote domestic marble usage and encourage purchase of Afghan marble products throughout their procurement system - by adopting “Afghan product first” policy. Such policies increase domestic demand for Afghan marble and ensure a sustainable expansion of Afghan marble market.

5. Ministry of finance (MOF) should increase export tax on row marble (unprocessed marble blocks). This will insure continuous supply of marble for processing firms as well as encouraging value added activities to take place within the country.

6. In order to promote private investment in marble industry, the government should provide necessary public goods and access to factors of production for marble producers. Infrastructure, land, and capital are such goods need to be facilitated by the government. Below, specific policies have been proposed for each factor or services.

Factors of production :

By factor of production we mean all inputs, such as land, labor, machinery and equipment, machinery and equipment, capital and entrepreneurship that produce finished and final products such a marble slabs, tiles, scriptures, tables, etc.

· Entrepreneurial skills: in today's challenging business environment entrepreneurial skills are the key to success and survival of a business. however in Afghanistan marble producer neither hove efficient entrepreneurial skills (including large firms) nor they have any intention to build such capacity within their enterprise they following entrepreneurial skills are the essential Requirement for those who run a marbles company in order for them to grab the opportunities which exist in local and foreign markets.

management skills must have the ability of efficiently manage time and people like the production process ,operation ,activity of the firms ,strategic decision making and planning ,financial literacy market research skills which assess the market demand ,supplier, customers and competitors ,market techniques innovation idea method and techniques are using for the management ability to developed and success fully business plan for new venture and willingness to take risk and willingness to change their routines behavior if necessary awareness of low and regulations.

· technology: One of the most important factor of production in marbles industry is technology (i.e., machineries and equipment in use) Due to the nature of business machinery play a big role in the success and productivity of firms by employing standard machinery they can enormously increase their productivity e.g. a firm with standard machinery can produce10 times more marbles then a firm with old system of operation.

In quarrying activity, blasting is the old method of production while diamond wire cutting is the new method of quarrying; with blasting quarries not only lose 50 to 80 percent of the material they also cause great damage to the entire quarry by enforcing micro-fractures throughout the entire deposit . whereas with diamond wire saw cutting the percentage of waste can be reduce to percentage while diamond wire saw cutting, the percentage of waste can be reduced to 7 percent, while creating no damage to the marbles deposit .slandered machineries required for quarrying marble are listed below .however it does not imply that all these machinery are necessary to have to be able to start a quarrying operation

o Pneumatic steel drillers need for vertical, horizontal or inclined drilling manual or mounted on special devices.

o pneumatic down -the - hole hammer drillers required for making vertical holes for introducing the diamond wire

o large small diamond wire machine for cutting large blocks

o chine saws as it best works for fast straight forward vertical and horizontal cuts on large quarry fronts

o Hydraulic jacks for moving block & hydraulic splitting wedges for splitting up drilled section

o derrick cranes to handling the blocks or heavy equipment

o stationary wire saws machine is needed for black-squaring

o front-loaders-lift blocks excavators for cleaning and excavation and dump trucks

Land: Land is the first required factor of production, and marble processing business needs over 2500m2 of land. Finding and leasing such large area of land in and around Kabul city is the biggest barrier for new entries and for existing firms to employ more machinery. Therefore, there is a strong need to build a specialized industrial park for marble industry. All neighboring countries including Pakistan, India, and Iran have especial cities for marble and granite industry. For instance, Pakistan has 5 big marble cities. In 2005, the Government of Pakistan created an industrial park for marble and granite which brought the country a great success in terms of attracting investment and increasing marble production and exports.

When we look at the strategies of regional countries (such as India, Malaysia and Iran) in attracting investment and promoting growth, we find that their top priority has been to develop special economic zones (SEZs). It should be emphasized that without having enough SEZs, Afghanistan cannot rebuild and nurture its industries which play a substantial role in achieving a sustainable growth. Therefore, in order to find a permanent solution for the lack of industrial land in Afghanistan, the Government of Afghanistan should take a comprehensive approach by creating an independent Industrial Parks Development Authority. For the construction and development of industrial parks, prioritizing industrial sectors, distribution of land plots, and all relevant services.

This paper emphasizes that the creation of an independent and competent agency for the development of industrial parks will be a big achievement for the Afghan government. The agency could play an important role in the development of Afghan industries, and shape Afghanistan’s future industrial growth path. Nevertheless, for the time being, Afghanistan Investment Support Agency and the Ministry of Commerce and Industries – which both have departments for the development and administration of industrial parks – should allocate land plots for marble and granite processing plants in one of their industrial parks. but now a day the industrial park distributing land for investor in marbles sector and these land and parks are created by the help of AISA organization and ministry of agriculture and ministry of mines which totally special one park that AISA Organization industrial park development department take the decision to dedicate one industrial park special for marbles in Maydan Saher which the work is on the progress on it but we have more the 15 other companies which they are doing their operation in different provinces industrial parks .

Labor: As mentioned in the previous chapter, there is no vocational and technical training centre in Afghanistan to train workers for marble quarrying activities. Therefore, the Afghan ministries such Ministry of Mines, Ministry of Labor and Ministry of Education should collaborate to build such training centers. This will not only provide know-how skills to the market but it can also increase investment in the mining sector.

Required capital: the amount of reburying and processing activities generally quarrying business required less capital compared to processing however, the required capital varies from one side to another depending on location availability of road and geological circumstances.

According to our survey the minimum capital required for quarrying activity (employing standard technology and not blasting ) is around $250,000 whereas for the processing plant and minimum capital required is over $400,000 it should be noted that with $400,000 of investment one can hove very good machinery which are almost 10 times more productivity then average old processing plant . This is turn can provide competitive edge for the investor.

Access to capital remains restricted in Afghanistan commercial banks do not offer large-size , long- term credit and business find it hard to borrow from abroad lack of capital is thus, a major constraint in this business in Afghanistan

Entrepreneurial skills: As emphasized in the previous chapter, entrepreneurial skills are the key to success and survival of a business. Afghan firms remain less competitive and less productive, due to their inefficient management techniques. Therefore, the Afghan government should provide capacity development programs to Afghan industrialists, and help them increase their managerial skills and technical efficiency. AISA can be the relevant institution in this regard.

Date: 2015-01-29; view: 700