Doing business in Kabul

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Michael Luongo tells us that while investor optimism is on the rise, regulatory uncertainties continue to stunt possibilities.

Mr. Khoja tries to see the bright side of the endless traffic jams, calling them a "sign of prosperity," but he laments the worsening air pollution they produce. But Mr. Preston, the DHL manager, said the broader problem was the absence of enforceable regulations that enabled anyone who could get behind the wheel of a vehicle to get a driver's license.

That lack of oversight can creep into other areas, as well. "It's desperate," Mr. Preston said. "What is there in terms of contract law, or any kind of law?"…

Noor Delawari, director of Afghanistan's central bank, acknowledged the regulatory confusion but said the economy was booming in spite of it, expanding at a projected 14 percent this year, up from 10.6 percent in 2004. Much of the expansion is being fueled by construction as the country rebuilds after nearly three decades of war. Aside from the improving security picture, it is the bustle that is feeding the upbeat attitude of foreign business executives.

Of course, the situation unfortunately immediately deteriorates once you leave the relative security of Kabul. For more, see the Doing Business project.

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