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Ministry ofIndustry and CommerceIslamic Republic of Afghanistan
AFGHANISTAN’SNATIONAL EXPORT STRATEGY 2018-2022
CARPETS SECTORA competitive sector blooming with looms
AFGH
ANISTAN
• NATIO
NAL EXPO
RT STRATEG
Y - CARPETS SECTOR •
2018-2022
ITC is the joint agency of the World Trade Organization and the United Nations. As part of ITC’s mandate of fostering sustainable development through increased trade opportunities, the Chief Economist and Export Strategy section offers a suite of trade-related strategy solu-tions to maximize the development pay-offs from trade. ITC-facilitated trade development strategies and roadmaps are oriented to the trade objectives of a country or region and can be tailored to high-level economic goals, specific development targets or particular sectors, allowing policymakers to choose their preferred level of engagement.
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AFGHANISTANNATIONAL EXPORT STRATEGY2018-2022CARPETS SECTOR
This project is funded by the European Union
Ministry ofIndustry and CommerceIslamic Republic of Afghanistan
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ACKNOWLEDGEMENTS
The Carpets Strategy forms an integral part of Afghanistan’s National Export Strategy ( NES ). It was developed under the aegis of the Islamic Republic of Afghanistan and the leadership of the Ministry of Industry and Commerce ( MoIC ) and the Afghanistan Chamber of Commerce and Industry ( ACCI ), in close collaboration with the Afghanistan National Standards Authority ( ANSA ) and the Afghanistan Women Chamber of Commerce and Industry. The Strategy benefited from the contribu-tions of sector stakeholders and associations, who played an important role in the consultative process, particularly the Afghan Carpet Exporters Guild ( ACEG ) and the Afghanistan Rugs and Carpet Centre. This Strategy was elaborated thanks to the technical assistance of the International Trade Centre ( ITC ) and falls under the framework of the European Union ( EU )-funded ‘Advancing Afghan Trade: EU Trade Related Assistance’ project.
This document reflects the ambitions of the public and private stakeholders who defined the enhancements and future orientations for the sector with a view to in-creasing export performance and social dividends.
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NOTE TO THE READER
Afghanistan’s NES was developed based on a participatory approach during which over 500 Afghan industry leaders, small business owners, farmers and public sector representatives held consultations to reach consensus on key sector com-petitiveness issues and priority activities. These inclusive consultations were held throughout the country, including in Mazar-e-Sharif, Herat, Kandahar and Kabul, with participation of stakeholders coming from Nangarhar Province.
Besides in-depth research and value chain analysis, these consultations were com-plemented by:
� Factory visits through which supply chain assessments were carried out to gain further knowledge on key issues such as quality procedures, technical skills, lean management, quality of raw materials, access to market, etc.
� Interviews with domestic, regional and international buyers to guide the NES with strategic insights and market intelligence as well as buyers’ requirements in terms of quality standards, food safety, packaging, buying cycles, distribution channels, prices, etc.
� Donor coordination meetings to identify synergies with ongoing / planned ini-tiatives of development partners to eventually result in collaboration during the implementation phase.
In spirit and in action: The NES is aligned with existing national and sector-specific plans and policies and builds on ongoing initiatives in areas related to private sector development, regional integration, investment, and youth and women’s economic empowerment.
Equally important, the NES initiative already accommodates budgeting to support implementation of critical pilot activities identified during the design process. This will ensure that impact and momentum are generated from early on, and support further resource mobilization and confidence-building.
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The principal outputs of the NES Afghanistan design initiative are endorsed, coherent and comprehensive export Strategy documents with a five-year detailed plan of ac-tion ( PoA ) and implementation management framework. These documents include:
1. A main NES document, which contains Trade Support Functional strategies, offering critical support across value chains and acting as enablers for sector development.
2. Individual NES priority sector strategies packaged as separate documents but in alignment with the main NES findings and overarching strategic objectives.
NES Afghanistan
Main NES document comprising Trade Suppor t Functional Strategies:
� Quality management � Trade facilitation � Trade information and promotion � Skills development � Business and professional services � Access to finance
Individual NES priority sector documents:
� Saffron � Fresh fruits and vegetables � Dried fruits and nuts � Carpets � Marble and granite � Precious stones and jewellery
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CONTENTS
Acknowledgements v
Note to the reader vi
EXECUTIVE SUMMARY : AFGHAN CARPETS, WEAVING THE TRADITIONAL AND MODERN ERAS 1
STRATEGIC OPTIONS FOR REVIVING THE SECTOR 1
WHAT IS THE TRAJECTORY OF GLOBAL SUPPLY CHAIN ? 5
DEMAND TRENDS : STEADY GROWTH FOR BOTH CONTEMPORARY AND TRADITIONAL CARPETS SEGMENTS 5
SUPPLY TRENDS : REGIONAL POWERHOUSES POSE SIGNIFICANT COMPETITION 7
AFGHANISTAN CARPET VALUE CHAIN : KNOTTY PROBLEMS 9
VALUE CHAIN ANALYSIS 9
STRICT HIERARCHIES AND TRADITIONAL ARRANGEMENTS MARK SECTOR OPERATIONS 13
INPUTS AND PROCESSING STAGES MARKED BY SIGNIFICANT CROSS-BORDER ACTIVITY 14
EXPORT PERFORMANCE : A WINNER WITHIN A WEAK ECONOMY 15
UNSTEADY INSTITUTIONAL SUPPORT HAS LED TO A WEAKENED SECTOR 18
A SERIES OF CHALLENGES PREVENTING SECTOR GROWTH ( THE 3C’S ) 18
AFGHANISTAN’S DILEMMA : TO COPE OR THRIVE? 27
WHAT ARE THE OPTIONS? 27
Scenario 1 : ( baseline scenario ) 27
Scenario 2 : Focus on the traditional / contemporary machine-made segment 27
Scenario 3 : Focus on the traditional, hand-woven, high-end segment, with high differentiation 27
FINDING THE BALANCE THROUGH FOCUS ON TRADITIONAL, HAND-WOVEN, HIGH-END CARPETS 28
MARKETS : ULTIMATELY DEFINING THE STRATEGIC DIRECTION 29
Short-term priorities ( 1–3 years ) 29
Medium-to-long term ( +3 years ) 33
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STRATEGIC ORIENTATIONS FOR REVIVING THE AFGHAN CARPETS SECTOR 37
VISION 37
STRATEGIC OBJECTIVE 1 : PRESERVE / CAPTURE INCREASED VALUE AT THE INPUTS AND PROCESSING STAGES OF THE VALUE CHAIN. 37
STRATEGIC OBJECTIVE 2 : ENABLE PRODUCTIVITY ENHANCEMENT OF SECTOR OPERATIONS THROUGH INCREASED COORDINATION AND APPROPRIATE SKILLS UPGRADING. 39
STRATEGIC OBJECTIVE 3 : IMPROVE REGULATORY AND INSTITUTIONAL SUPPORT FOR THE SECTOR. 41
STRATEGIC OBJECTIVE 4 : STRENGTHEN MARKET LINKS AND ENTERPRISE ABILITIES TO FORGE / SUSTAIN BUYER RELATIONSHIPS THROUGH IN-MARKET SUPPORT, BRANDING AND STREAMLINING CUSTOMS PROCEDURES. 43
MOVING TO ACTION 45
KEY REQUIREMENTS FOR EFFECTIVE IMPLEMENTATION 45
Establish and operationalize a public and private coordinating body and executive secretariat 45
STRATEGIC PLAN OF ACTION 47
REFERENCES 59
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FIGURES
Figure 1 : Carpet Sector Strategy - Theory of change 3
Figure 2 : Carpet Types, Traditional Afghan carpet type in blue 5
Figure 3 : Major importing countries of carpets worldwide for HS57 ( left ) and HS5701 ( right ) 6
Figure 4 : Price versus differentiation in the global carpet market 8
Figure 5: Main areas of carpet production in Afghanistan 11
Figure 6 : Current value chain 12
Figure 7 : Afghan carpet exports in value, 2005–2016 ( US $ thousands ) 16
Figure 8 : Export basket of Afghanistan ( 2006 ) 16
Figure 9 : Export basket of Afghanistan ( 2016 ) 16
Figure 10 : Classification of exported carpets from Afghanistan 17
Figure 11 : Afghan carpets export destinations, 2006 17
Figure 12 : Afghan carpets export destinations, 2016 17
Figure 13 : Problem tree – challenges to compete 20
Figure 14 : Problem tree – challenges to connect 22
Figure 15 : Problem tree – challenges to change 24
Figure 16 : Price versus differentiation for scenario three 28
Figure 17 : Export potential in Switzerland 32
Figure 18 : Export potential in the UAE 35
Figure 19 : Export potential in the Islamic Republic of Iran 35
Figure 20 : Export potential in Lebanon 35
Figure 21 : Future value chain – strategic objective 1 38
Figure 22 : Future value chain – strategic objective 2 40
Figure 23 : Future value chain – strategic objective 3 42
Figure 24 : Future value chain – strategic objective 4 44
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TABLES
Table 1 : Buyers’ requirements for carpets in key markets 7
BOXES
Box 1: Types of carpets produced in Afghanistan 11
Box 2 : Export potential in selected European markets 32
Box 3 : Export potential in selected Middle Eastern markets 34
Box 4 : Export potential in selected Middle Eastern markets (cont.) 35
Source: ITC
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ACRONYMS
The following abbreviations are used :
ACCI Afghanistan Chamber of Commerce and Industries
ACEG Afghan Carpet Exporters Guild
ANSA Afghanistan National Standards Authority
ARAZI Afghanistan Independent Land Authority
EU European Union
HS Harmonized System
ITC International Trade Centre
MAIL Ministry of Agriculture, Irrigation and Livestock
MoCI Ministry of Commerce and Industries
MoE Ministry of Education
MoF Ministry of Finance
MoLSAMD Ministry of Labour, Social Affairs, Martyrs and Disabled
NEPA National Environmental Protection Agency
NES National Export Strategy
PoA Plan of action
SMEs Small and medium-sized enterprises
TVET Technical and vocational education and training
UAE United Arab Emirates
Source: ITC
[ EXECUTIVE SUMMARY : AFGHAN CARPETS, WEAVING THE TRADITIONAL AND MODERN ERAS ]
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EXECUTIVE SUMMARY : AFGHAN CARPETS, WEAVING THE TRADITIONAL AND MODERN ERAS
Afghan carpets are symbolic of the country’s rich heritage, reflecting both the struggles experienced in contemporary times as well as optimism for the future. It is a storied and resilient sector, with industrial potential and a compelling brand proposition. It is one the country’s largest export sec-tors and an employer of more than 1 million Afghans, of which the majority are women.
Indigenous Afghan designs based on traditional weav-ing methods hold a comparative advantage when sold in international markets. Yet, the limited pre and post-weaving processing capacity currently hin ders gains. Foreign suppli-ers are frequently relied on for the provision of critical inputs whereas semi-finished Afghan carpets are sent to Pakistan for the final stages of production ( par ticularly, washing and cutting ) while losing their brand identity in the process.
The sector must capitalize on its unique offering and distinctive reputation to leverage established trade relation-ships with certain European countries and American buyers while exploiting existing ties in the Golf and Asian markets. Besides strengthening market linkages, this will require enabling appropriate skills-upgrading and productivity en-hancement in order to scale-up production capacity and retain value options domestically.
STRATEGIC OPTIONS FOR REVIVING THE SECTORThe Carpet Sector Strategy is driven by the following overall vision :
“ A competitive sector blooming with looms ”
To achieve this vision, the Strategy focuses on four strategic objectives.
Strategic objective 1 : Preserve / capture increased value at the inputs and processing stages of the value chain.
This strategic objective has the goal of repatriating value currently leaking out of the country ( specifically to Pakistan ).
Initial aims of the Strategy are to increase production of Afghan wool in the medium-to-long term, as well as the do-mestic supply of good quality scoured / spun / dyed yarn for traders and weavers. Upgrading existing and development of new cut / wash / dry facilities will be crucial to achieve the goals of retaining value and building a strong Afghan brand.
The Strategy will also support the Government’s ongo-ing efforts to establish industrial parks for the sector. This includes rectifying infrastructural and technical challenges faced in current initiatives.
Strategic objective 2 : Enable productivity enhancement of sector operations through increased coordination and appropriate skills upgrading.
This strategic objective is focused on improving the sector’s abilities through upgrading in-demand skills, as well as tech-nological enhancement of sector operations.
Sound links between the private sector and education and training institutions will facilitate innovation and growth in the industry. The sector will benefit from increased coop-eration among key stakeholders to foster skills upgrades across the value chain. While traditional weaving tech-niques will be preserved, the adoption of technology will spur improvements to sector competitiveness. Promotion of investment in the sector will be a key measure to achieve technological enhancement of sector operations.
Strategic objective 3 : Improve regulatory and institutional support for the sector.
This strategic objective aims to improve the socioeconomic conditions of the weaving community, reduce child labour in the sector, and provide crucial institutional support in the areas of quality management and land access, among other aspects.
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To gradually counter child labour, the Strategy will bring weaving communities out of isolation into weaving work-shops / centres with better working conditions. Efforts will also be made to increase ‘child labour free’ certifications in the country.
Upgrading the national quality infrastructure is a prerequi-site for the recognition and appreciation of the Afghan carpet brand in international markets. Easing burdensome land regu-lations and streamlining property ownership / leasing will be another focus area addressed by the Strategy. Increasing ac-cess to a more comprehensive range of financial services will also be emphasized, to support improvement of current pro-duction processes and the expansion of the carpet industry.
Strategic objective 4 : Strengthen market links and enterprise abilities to forge / sustain buyer relationships through in-market support, branding and streamlining Customs procedures.
To improve the carpet sector’s position in the global market, it is vital to strengthen market links and enterprise abilities to forge and maintain commercial relationships.
The Strategy aims to expand the export opportunities of Afghan carpet enterprises by improving in-market sup-port services and the dissemination of market intelligence. Strengthening the Afghan carpet brand will also play an es-sential role in this Strategy. The sector will also benefit from the streamlining of export clearance procedures and better communication and cooperation with Customs authorities of neighbouring countries.
Figure 1 captures the carpet sector vision and strategic objectives.
Photo: Carpets, FOX29775.jpg
[ EXECUTIVE SUMMARY : AFGHAN CARPETS, WEAVING THE TRADITIONAL AND MODERN ERAS ]
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Figure 1 : Carpet Sector Strategy - Theory of change
Change Compete Connect
Vision
An organized and competitive sector with well articulated differentiation in terms of high-quality hand-made carpets catering to high-end markets and highly responsive to buyer requirement
1. Preserve/capture increased value at the inputs and the processing stages of
the value chain
2. Enable productivity enhancement of sector
operations through increased coordination
3. Improve the regulatory and institutional support for
the sector
A competitive sectorblooming with looms
4. Strengthen market links and enterprise capabilities to
forge/sustain buyer relationships through in- market support, branding
and streamlining of Customs procedures
Mitigate value
leakage outside the
country
Incentivize collaboration, facilitate skills development,
enhance productivity
Improveworking
capital and investment
needs
Improve socio-
economic conditions
Enable buyer connectivity and respon-
siveness
Differentiation via high-end hand-made
segment
A stagnant sector facing intense competition and eroding competitiveness and brand equity, despite inherit strengths, specially in weaving and design
• Weak ability to add value in country
• Insufficientpre-and post-weaving facilities to meet industry demands
• Scarce domestic supply ofhigh- quality wool and other critical inputs
• Weak capacity to adapt production to buyer require-ments
• Lack of standardization/irreg-ular quality
• Negative image internationally related to child labour and health issues
• Challenges to connect directly with international buyers
• High dependence of Afghan producers and traders on foreign service providers and merchants
• Afghan carpets labelled as foreign
• Weak organization among producers to initiate direct marketing
• Lack of business/marketing skills
• Institutional support neededon market intelligence, in-market support and branding, transport and logistics
• Insufficient access to credit and land result in low levels of investment
• Weak offer offinancial services
• Skills to innovate,such as design skills, are critically needed
• Lack of links between the private sector and education-al institutionst.
IMPA
CTST
RATE
GIC
OBJE
CTIV
ESSI
TUAT
ION
ANAL
YSIS
STRA
TEGI
C TH
RUST
SIM
PACT
Source: ITC
[ WHAT IS THE TRAJECTORY OF GLOBAL SUPPLY CHAIN ]
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WHAT IS THE TRAJECTORY OF GLOBAL SUPPLY CHAIN ?
Figure 2 captures the main types of carpets produced glob-ally, segmented by mode of production, fabrication, dye type and material. Afghan carpets fall primarily under the hand-made, knotted, vegetable dye and natural fibre cat-egories ( Harmonized System ( HS ) 5701 ).
Figure 2 : Carpet Types, Traditional Afghan carpet type in blue
Carpets (HS57)
Production
Hand-made
Machine-made
Fabrication
Knotted (HS5701)
Woven (HS5702)
Needle-Punched (HS5703)
Felt-based (HS5704)
Dye
Vegetable-dye
Chemical dye
Material
Synthetic Fibre
Natural Fibre
DEMAND TRENDS : STEADY GROWTH FOR BOTH CONTEMPORARY AND TRADITIONAL CARPETS SEGMENTS
The global carpets sector is exhibiting steady growth, primarily among developed countries. In 2016, world carpet imports stood at US $ 13.6 billion. World imports of woven, decorative carpets ( relevant to types produced in Afghanistan ) were valued at US $ 1 billion in the same year.
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Figure 3 : Major importing countries of carpets worldwide for HS57 ( left ) and HS5701 ( right )
United States US$2.8 billion
Germany US$1.2 billion
United Kingdom US$1.2 billion
Canada US$741 million
Japan US$569 million
France US$450 million
Australia US$432 million
United States US$324 million
Germany US$80 million
Japan US$24 million
Italy US$20 million
United Arab Emirates US$20 million
Canada US$19 million
United Kingdom US$18 million
Negative growth 2012–2016 ( - ); Medium growth 2012-2016 ( + 0-5 % ); High growth 2012–2016 ( + >5 % )
Source : Trade Map ( 2017 ).
The following key trends have been observed in interna-tional markets :
1. Distributors and retailers are stocking multiple carpet types ( hand-made and machine-made, traditional and modern designs ).
Market demand is not skewed towards a particular segment, especially in the United States of America and EU markets, where the market is large enough to accom-modate different consumer tastes. For this reason, dis-tributors and retailers are increasingly stocking a variety of carpets from different sources.
2. In spite of the rising popularity of modern designs, traditional designs are still in demand.
Modern designs are popular but demand in Western countries for antique and traditional carpets – including traditional, hand-woven high-quality Afghan carpets – has remained stable. Buyers in international markets also appreciate carefully selected materials and up-dated designs inspired by elegant, traditional patterns. This bodes well for Afghan suppliers primarily focused on traditional designs.
3. Rising demand in East Asia.In addition to existing demand in Western markets,
Asian and Middle Eastern markets are exhibiting high demand. The top importer in Asia is Japan, followed by China and the Republic of Korea. National and interna-tional carpet associations have been established in East Asia – predominately in Japan – to promote high-value carpets to high-income East Asian consumers and busi-nesses. Key drivers are the growth of cities, demand from hotels – which are increasingly catering to foreign guests – and increasing consumer appreciation for both traditional and contemporary carpets.
Table 1 indicates the main buyer requirements associated with key markets. The mandatory requirements reflect char-acteristics that must be satisfied before the product can en-ter the market, while the non-mandatory requirements reflect value-enhancing characteristics that can boost price and demand for the product.
Photo: Carpets, www.yashar-bish.com.jpg
[ WHAT IS THE TRAJECTORY OF GLOBAL SUPPLY CHAIN ]
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Table 1 : Buyers’ requirements for carpets in key markets
Main market Mandatory requirements Non-mandatory requirements
United States
• Flammability standards ( for large carpets )• Labelling requirements ( carpets must be labelled with the letter ‘T’; small
carpets and rugs not meeting the standard must be labelled with the statement : FLAMMABLE )
• General Certificate of Conformity : product complies with all applicable statutes, regulations, rules, bans or standards of the United States Consumer Product Safety Commission
• Other requirements apply for certain types of carpets
• Colour, design, type of fibre and price are important attributes
• Colours : earth or natural tones are popular in the United States market
• Kazaks and Chob Rangs in natural dyes would have a market edge
• Contemporary designs such as gabbehs would have market potential*
EU ( Germany, Italy, France )
• Product safety : under the General Product Safety Directive• Labelling – specific rules for textiles : e.g. fibre composition• Chemical substances : azo dyes are illegal
• Europe : sustainability and certification are important to buyers. For carpets, social aspects such as child labour are major issues. Consumer labels such as GoodWeave, STEP, and Care and Fair are important
• Germany : colour, design, type of fibre, and price are important attributes
• Germany : Chobis in natural dyes, as well as contempo-rary carpets in both bright and earth tones, have market opportunities**
United Arab Emirates
( UAE )• UAE conducts carpet evaluations to assess the real historical and financial
value of the carpet and prevent fake carpets from entering the country• Timely delivery is very important among consumers• Prayer rugs could have market potential
Turkey
• Exporter Registry Form• Certificate of Origin ( English )• European Conformity marking, as required under the Construction
Products Directive ( 89 / 106 / EEC )• Textile and apparel products made available on the market must be
labelled or marked to indicate fibre composition
• Popular trends : modern designs, simplicity and minimalism
• Construction companies, in coordination with architects, decide and buy the flooring for newly built flats in Turkey3
Japan
• Household Goods Quality Labelling Act : carpets for household use require labelling including composition of fibres, name and address or telephone of the party responsible for labelling ( see Textile Goods Quality Labelling Regulations )
• Act on Control of Household Products Containing Harmful Substances• Fire Service Act : flame-retardant standards ( for carpets used in facilities
such as theatres and hotels )• Second-hand Articles Dealer Act ( if carpets are antiques ) • Rising importance of eco-friendly carpets4
* United States Agency for International Development (2006). Building a competitive Afghan carpet value chain through informed strategy and productive attitudes. Breakfast Seminar #16, December 16. Available from https: / / microlinks.org / library / building-competitive-afghan-carpet-value-chain-through-informed-Strategy-and-productive-atti.
** United States Agency for International Development and OTF Group (2006). Growth Strategy and Action Plan for the Carpet Cluster of Afghanistan.
SUPPLY TRENDS : REGIONAL POWERHOUSES POSE SIGNIFICANT COMPETITION
The global supply of knotted hand-made carpets ( including both traditional and contemporary designs ) is dominated by the Islamic Republic of Iran, Pakistan, India, Turkey, China and Nepal.
The Islamic Republic of Iran is the leader in hand-made traditional carpets and holds a premium position in the market due to well-differentiated, high-quality products. Exporters usually sell pieces directly to retailers, and the brand equity commanded by Iranian carpets has allowed
the market to be driven by supply rather than demand. The market has so far readily consumed what the country has supplied.
The sector is currently under strain due to sanctions applied after 2011, leading to the loss of the United States market. Coupled with inflation and in-country shortages, the price advantage of Iranian carpets will decrease to some ex-tent. Although Iranian designs and quality will continue to be recognized by markets based on the established brand, the
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differentiation advantage will also decline due to the lack of design innovation. The erosion of competitiveness has also occurred to some extent due to the Iranian Government’s focus on oil-led growth.
In spite of these challenges, growth continues for Iranian carpets in the European, Russian Federation and Middle Eastern markets, and they still occupy the leading global position in terms of overall competitiveness.
Pakistan is the world’s second-largest exporter of hand-knotted carpets of both domestic and Afghan origin. The latter are mainly chobi carpets that constitute approximately 60 % of Pakistan’s carpet production. A major concern for the Pakistani hand-woven carpet sector is the repatriation of master Afghan weavers. Unlike India or China, Pakistan is less able to upgrade to modern machine-assisted carpet production because of deficiencies in power supply.
The area where Pakistan has an advantage over many of its competitors is the ability to maintain strong links to buy-ers in key international markets. With a tight feedback loop between markets and the domestic carpets sector, Pakistani exporters are able to swiftly adapt to changing market re-quirements. It is expected that they will continue to maintain a strong level of differentiation through production of chobi lines; however, the cost structure may need to adapt to the point where Pakistan loses some cost advantages relative to competitors.
India benefits from concerted Government support and an energetic community of weavers, processors and suppli-ers, which enables the sector to supply a variety of products and customized production. These factors have made India a dynamic supplier of carpets. In recent years, India has made the shift towards contemporary designs, necessitat-ing an upgrade in production and processing techniques. India is seen as a flexible supplier that can quickly respond to changes in consumer preferences.
With the introduction of machine-supported production, India is increasingly moving towards mid-to-low margin, high-volume production. To respond to recent demand, India has increasingly supplied chobi carpets, which has created competition with traditional chobi producing countries.
Despite a Government regulation increasing weavers’ wages, new industries in carpet-making districts have been attracting labour away from established carpet producers. Additionally, the focus on high production in the mid-to-low segment means that India’s price advantage for the hand-woven segment will decrease to some extent, while differ-entiation will increase with the adoption of technology and product development.
The Turkish carpets sector is undergoing a period of introspection. The sector supplies nearby European coun-tries and is built on a reputation for market responsiveness. A mix of challenges including retiring weavers and migration of human capital to other sectors has hurt the sector, which formerly had a high degree of product differentiation as well
as cost advantages. It is likely that this position will be seri-ously weakened in the near future.
In China, central Government planners have prior-itized machine-made over hand-woven carpet production. Production has shifted to machine-made, tufted products which enjoy a strong reputation for good quality at afford-able prices. This emphasis, combined with rising wages, means that China has become less competitive in the inter-national hand-woven market, to the extent that it is now an importer in this segment. Of all competitors, China exhibits potential for a complete withdrawal from the hand-made, knotted segment, leaving the door open for India and others to fill the vacuum.
Nepal is a relative newcomer in the hand-woven car-pet segment, having started in the 1950s with the influx of Tibetan refugees who specialized in contemporary carpets. Exporters have been able to establish relationships in the lucrative United States and German markets, and products are generally well regarded. The ‘Made in Nepal’ brand, combined with the Tibetan influence, has led to an overall profile that is appealing to buyers. Western buyers – initially sourcing from Nepal due to disruptions in supply from the Islamic Republic of Iran and Afghanistan – now buy Nepali carpets due to responsiveness and quality as well as the established brand.
The sector is facing significant challenges, though. Product development is stagnating due to loss of human capital, government indifference and proliferation of ma-chine-made Chinese carpets in the local market. It is ex-pected that rising competition from neighbouring India in the contemporary carpet segment might push Nepal into the higher margin segment of the market. The competition with India and Pakistan suggests a need for product differentia-tion, although it is not clear if Nepal will be able to adapt as swiftly as in the past.
Figure 4 : Price versus differentiation in the global carpet market
Price vs Differentiation
Diff
eren
tiatio
nRe
lativ
e to
eac
h ot
her)
Excellent
Iran
Turkey
India
Nepal
Pakistan
China
ExcellentPoor
Relative position today Likely position within 5 years
Price(Advantage)
Afghanistan
Source : Leahy, Rob ( 2013 ).
[ AFGHANISTAN CARPET VALUE CHAIN : KNOTTY PROBLEMS ]
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AFGHANISTAN CARPET VALUE CHAIN : KNOTTY PROBLEMS
VALUE CHAIN ANALYSIS
Carpet production
Afghanistan is the home of traditional, high-quality hand-made carpets. According to MoCI, over 1 million Afghans work in the production of carpets, while others work in relat-ed industries such as wool production, cutting, washing and rug design.1 There are some large modern carpet produc-tion hubs supported by the Government; however, home-based producers are responsible for around 95 % of total output. The industry is a great driver of female employment.
Most carpet weaving takes place in rural Afghanistan, while the final product is predominantly sold in urban cen-tres. The majority of Afghan production occurs in the north-ern part of the country, which is the home of traditional and modern carpet design. The carpet production belt in the north, including Mazar-e-Sharif, Sheberghan, Andkhoy, Aqcha and Maimana, accounts for almost 70 % of Afghan carpet output. Kabul, which is the home of traditional carpet showrooms, is a relatively new centre of production. Herat faces declining demand and falling prices, as well as higher costs of labour and inputs. Production in this region has therefore dropped to approximately 5 % of total production.
Afghan carpet weaving has traditionally been a cottage industry. Today, some steps in Afghan carpet production previously done by hand are being undertaken outside the country using cheaper, machine-based methods. For exam-ple, wool processing ( washing, spinning, dyeing ) happens more and more in Pakistan and the Islamic Republic of Iran. Foreign wool ( chobi, Belgian and Pakistani wool ), which is imported and machine-made, dominates the Afghan wool market. The small portion of wool that is processed domesti-cally is produced by hand methods rather than by machine. Chemical colours have gradually replaced traditional natu-ral dyes. It is difficult to estimate how much wool prepara-tion now happens outside Afghanistan and how much is machine-made.
A large quantity of high quality wool is also exported to Pakistan while another share is delivered to weaving
1.– Afghanistan, Ministry of Commerce and Industries ( 2011 ). Implementing the SME Strategy : An Action Plan for Developing Afghanistan’s Carpet Sector.
households. The quality, quantity and style of carpets de-pends on the instructions of the middlemen ( called sub-contractors or carpet traders ) who are connected to large traders. Subcontractors also collect the carpets from weav-ing households. Middlemen provide a link between pro-ducers and exporters. They also control payments made to households and recruitment of weavers to execute the orders. Thus, subcontractors not only connect households to large traders but also create a barrier between producers and the market, leaving little room for weavers to negotiate wages.
Production of carpets in Afghanistan takes place in three distinct ways : profit-sharing, direct buying and sell-ing by weavers, and subcontracting through carpet traders. Profit-sharing is more common in the Faryab market, while subcontracting dominates in Herat. Direct purchase is only found in the Faryab market.
In the case of profit-sharing, the traders provide wool to the weaving households. The wool is considered a loan. Upon completion of the carpet, the trader has the carpet appraised by other traders in the industry. Based on the agreed price, the trader pays the household 50 % of the ap-praised value after deducting the cost of the inputs. The product then belongs to the trader to sell in the market.
Subcontractors also purchase directly from households. In this scenario, weavers have their own looms and enough capital to purchase inputs and produce carpets. Finished carpets are carried to the wholesale market. The price of the carpet is based on the subcontractor’s inspection.
The most common relationship between traders and weavers is subcontracting through carpet traders. The trad-er decides the design of the carpet, purchases the inputs and finds a weaving household to execute the design. After completion, the weaving household delivers the carpet and receives an agreed-upon payment.
Many weavers now organize in workshop spaces rather than working individually from home. This allows them to monitor quality and avoid design plagiarism, which has become more of a problem due to the globalization of the value chain.
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[ AFGHANISTAN’S NATIONAL EXPORT STRATEGY / CARPETS SECTOR 2018-2022 ]
The main production inputs include the following : � Chemical dyes � Vegetable dyes � Cotton – used in carpet wefts, imported or domestically
provided � Carpet design – indigenous designs are provided domes-
tically but foreign patterns are also used for modern rugs � Silk – some high-end carpets are woven with silk, which
gives a much softer and smoother touch. The availability of domestically produced silk is limited so demand is of-ten met through imports
� Local sheep wool � Chobi wool, Belgian wool and Pakistani wool – imported
The quality of a handmade carpet is measured and de-pends upon the quality of wool, the quality of dye and the knots weaved in 1 inch 2 of a carpet. The more the knots are woven, the heavier its volume and the higher its price. The cost of inputs ranges between 5 % and 21 % of carpet costs depending on the quality of wool and dye used for production.2 High quality dye is imported from Belgium and England. The dyes usually imported from Pakistan are because of being cheaper. Local markets produce natural dyes from pomegranate and herbs, the quality of which are excellent but are in short supply and expensive. Therefore, some dye colors are imported. Imported dyes however vary in quality and are uncertain if they give the right color and touch to the finished wool.
As with dyes, chemicals for cutting and washing is partly imported. Estimates show that 150 tons of caustic soda ( so-dium hydroxide ) is imported from Pakistan on a monthly basis, 90 % of which is used for carpet cleaning. The best quality caustic soda is produced in Lahore and Faisalabad, Pakistan.3 Access to high quality wool is crucial for the qual-ity of the finished good. Approximately two thirds of wool used in the carpet sector is imported, which limits value captured in Afghanistan.4
Carpet Processing
Processing facilities recently opened in Kabul, Mazar-e-Sharif, Jalalabad and Herat. After carpets are woven under subcon-tracting agreements, traders collect them in rural areas and pass them to processors. Local processors cut, stretch, wash and finish the woven carpet. Due to cost efficiency and limited accessibility to domestic processing facilities, the majority of Afghan carpets are sent to Pakistan through Pakistani trad-ers who are connected to Afghan middlemen. Sophisticated Pakistani washing, cleaning, cutting, brushing and packaging facilities are able to finish carpets with enormous cost efficien-cies gained through economies of scale. However, carpets
2.– Ibid.3.– Harakat Investment Climate Organization ( n.d. ) Industrial Analysis Project, Joint Research Program ( co-led by J. Joya and A. Ahmady )4.– Afghanistan, Ministry of Commerce and Industries ( 2011 )
finished in Pakistan are often marketed as Pakistani goods, which damages marketing and branding of Afghan traditional rugs. Limited availability of financial resources, organizational capacity, access to chemicals and lack of expertise in cutting and washing has hindered the expansion of Afghanistan’s domestic processing capacity.
Distribution
Retailers and exporters do not directly interact with weaving households so the value chain is highly hierarchical and fragmented. At the top of the carpet industry hierarchy are exporters and large retailers, who are both large traders and final sellers of the product. Middlemen are both subcon-tractors and traders themselves, collecting carpets from weaving households all over the country before passing them on to processors or larger traders connected to end markets. Estimates show that there is USD 100 million in revolving capital within the industry, with a good proportion of Pakistani investments ( the capital includes wool, dye, wo-ven and unwoven carpets, advances, equipment and frame, receivables and cash ). Some 5,000 companies and brokers are involved, of which up to 200 are registered exporters ( 2015 ). Of these, 90 % work for Pakistani traders.
A limited number of Afghan traders have direct linkage and access to the buyers in the international destinations ( except for Pakistan ). Only a few exporters have showrooms, warehouses or logistics partners in the global markets. Carpets are exported, in most cases, when orders are re-ceived or in exhibitions.
Domestic MarketUnfinished and finished carpets enter the domestic market
through retailers, who get their product through middlemen. Some weavers and middlemen sell unfinished carpets directly on the Afghan market at a lower price. Around 70 % of de-mand in the domestic market is for the traditional Chob Rang.
International MarketAfter carpets woven in Afghanistan enter Pakistan for
finishing, foreign retailers deliver the finished carpets to the international market, informally using the “Bilty” trans-port system. It is estimated that at least 75 % of the total exports are not recorded, a majority of which are destined to Pakistan. Pakistani traders positioned at the border receive carpets from middlemen and sell them on in the Pakistani or international markets. After final processing and transporta-tion, the final sales price in Peshawar is US $ 800–US $ 900 per six square metres. In 2015, Afghanistan exported ap-proximately US $ 90 million of rugs in value. Exact numbers are not accessible as it remains unclear how many Afghan carpets cross the border to Pakistan, from where carpets are sent to other international markets. Top export destina-tions, besides Pakistan, are the United States, Germany and Canada. These markets are showing more and more interest in Afghan carpets. Based on their high reputation,
[ AFGHANISTAN CARPET VALUE CHAIN : KNOTTY PROBLEMS ]
11
demand for hand-made, traditional Afghan carpets is in-creasing. Marketing of Afghan carpets in these high-end markets has the potential for high growth and creation of jobs in Afghanistan.
In some cases, low quality hand-woven carpets imported from China and Iran are exported to international markets under the label of “Afghan Carpet,” which harms the market reputation of Afghan handwoven carpets.
Box 1: Types of carpets produced in Afghanistan
Three types of hand-woven carpets are produced in Afghanistan – traditional Afghan, Chob Rang and the kazak style ( to a lesser extent ).
• Traditional Afghan carpets are based on indigenous designs and offer a point of differentiation in the international market. The market demand for this type is limited but constant.
• Chobi carpets are primarily commissioned in Pakistan and sold as Pakistani exports. The carpets are woven in Afghanistan and in refugee camps in Pakistan. Despite the inherent loss of value for the Afghan sector after the carpets pass through to Pakistan, this trade relationship, even if unbal-anced, has served to sustain the sector in Afghanistan.
As indicated in figure 5, the main area of carpet production lies in North Afghanistan, while Kabul has emerged as an important production centre for Chob Rang carpets. Kabul is the main sales point for carpets sold in Afghanistan. While production and do-mestic sales figures are not readily available due to data-collection challenges, it is estimated that domestic sales are stagnant due to the sluggish economy, especially for high-end carpets.
Figure 5: Main areas of carpet production in Afghanistan
NorthThe carpet belt in the north is estimated to
account for almost 70% of Afghanistan’s output.
WestHaving faced declining demand, falling prices and higher costs (of both labor and inputs), the carpet cluster in the Herat area is under threat.Estimated to account for 5% of total production.
CenterProduction in the Kabul area is mainly the newer variety of Chob Rung carpets, with a generally higher portion of men weaving than in other regions. Estimated to account for 25% of total production.
Source: All production estimates by Afghan Carpets Exporters Guild, Mazar office. AA; OTF Group Information; 2005
Sheberghan
Aq Cha
Mazar-e-Sharif
Kabul
Maimana
Andkhoy
Herat
Source: OTF Group (2005); Afg
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[ AFGHANISTAN’S NATIONAL EXPORT STRATEGY / CARPETS SECTOR 2018-2022 ]
Figure 6 : Current value chain
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[ AFGHANISTAN CARPET VALUE CHAIN : KNOTTY PROBLEMS ]
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STRICT HIERARCHIES AND TRADITIONAL ARRANGEMENTS MARK SECTOR OPERATIONS
The market structure of the carpet sector resembles a mo-nopsony, where a few large traders are at the top dominate the sector. These dominant players are almost exclusively male and have sufficient capital and networks to carry on trade. Social and financial barriers to entry contribute to non-competitive behaviour in carpet trading. Moreover, trading networks are often organized along ethnic lines, which in practice further excludes outsiders. This is particularly evident in large-scale trade across specific borders where certain eth-nic groups dominate commerce due to strong relationships in the countries with which they conduct business.
A strong hierarchy characterizes the Afghan carpet value chain, as large traders and exporters do not interact directly with carpet producers. As a result, large traders usually do not have detailed information on the circumstances of car-pet production, including wages paid to weavers and inci-dence of child labour during production.
In Afghanistan, carpet production and trade is mainly done by subcontracting weavers through carpet traders. The role of subcontractors is thus key in the value chain. They provide a link between exporters, large traders and pro-ducers, while commonly working with a network of carpet weavers. In this production ecosystem, the subcontractor is responsible for identifying and contracting the weaver, finish-ing the carpets and then selling them. As finishing services are scarce in the country, Pakistan-based middlemen are often the subcontractors. The responsibilities of the subcon-tractor may include sourcing inputs ( which often includes the loom ) and designs. Thus, if the carpet is destined for the international market, the information regarding size and patterns is transmitted from the buyer to the subcontractor, who passes it on to the weavers. Meanwhile, when carpets are destined for the domestic market, it is the subcontrac-tor who decides the design of the carpet and specifies the desired features to the weavers.
When looms are rented out by the subcontractor, the rental amount is deducted from the wages of the producers or the final price of the carpets. Loans to producers are not limited to renting looms. Additional debts may be accrued in the form of provision of other inputs and advance cash payments. This means the carpet weaver has limited op-portunities to engage with other subcontractors. They are frequently trapped in cycles of debt and tied to subcontrac-tors until the carpet is sold.
Although some bargaining takes place, there are no fixed prices for the final products. Lack of knowledge about the final price is a disadvantage for carpet produc-ers. Subcontractors have the power to decide the payment to the household based on their valuation of the carpets. As producers work in isolation and therefore have limited
access to pricing information and other subcontractors, their bargaining power is restricted. This situation is ag-gravated by the large number of weaving households in the country, which creates pressure on weavers to main-tain productivity in order to preserve business relations with their subcontractors.
The second most common practice in carpet produc-tion and trade is profit-sharing. In this context, the trader provides the raw materials to the producers and then col-lects the carpet on completion. This method occurs when weaving households lack sufficient capital to work indepen-dently of credit. The profit of the carpet is afterwards divided between the producer and the trader. In this arrangement, the trader pays approximately 50 % of the final price to the weavers, deducting the price of inputs. The profit-sharing relationship has become more equitable for weavers since it first started in the 1980s, at which time profits were split 60 :40 in the trader’s favour.
The third and least frequent practice of production and trade is direct marketing of carpets by weavers. In this case, the heads of weaving households themselves sell their car-pets in the wholesale market, where the price is bargained between traders and weavers. In this scenario, weavers have their own looms and sufficient capital to purchase inputs, in addition to having the means to sustain their households during the production. This method is therefore the least common and the number of independent carpet producers is in decline, as capital accumulation is extremely difficult for producers. Notably, in these cases, producers are able to decide the design and quality they wish to produce.
In the case of both subcontracting and profit-sharing, debt – cash or in-kind – is accrued by carpet producers. Further, loans are necessary for carpet production and they stimulate trading of inputs. They are short-term debts, which depend on the duration of the production timeline and trad-ing of the final product. In both scenarios, the main lenders to producers are either subcontractors or traders. This is a result of the limited availability of formal credit tailored to the needs of weavers.
The hierarchical nature of the carpet sector market struc-ture thus allows for a large number of small-scale weav-ers to be locked into trade with subcontractors and traders through debt cycles. Moreover, even when carpet producers are independent and thus able to produce without incurring debt, they still have limited access to large traders in inter-national markets. At the same time, long-standing trading networks ( often forged on the basis of ethnicity ) restrict the ability of new actors to enter into large-scale trading in a sector dominated by a few players at the higher stages of the value chain.
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[ AFGHANISTAN’S NATIONAL EXPORT STRATEGY / CARPETS SECTOR 2018-2022 ]
INPUTS AND PROCESSING STAGES MARKED BY SIGNIFICANT CROSS-BORDER ACTIVITY
Three large stages are identified in carpet production : pre-weaving, weaving and post-weaving processes. Pre-weaving refers mainly to raw wool processing. Weaving is the actual production of the carpet. Post-weaving refers to finishing processes such as cutting and washing the woven carpets.
Pre-weaving operations require a variety of inputs such as wool ( to be converted to yarn ), chemical and / or natural dyes, and spinning machines, in addition to labour, electric-ity and water. An essential raw material is wool. A variety of sheep breeds are available in Afghanistan but certain breeds are specifically used for wool-to-carpet produc-tion. Furthermore, several types of carpets produced in Afghanistan – for example, gabbeh, Chob Rang and kazak – are created based on the tribal affiliations and / or regions of the weavers.
Certain styles are typically produced with specific types of wool, due to their availability in producing regions and the different qualities they possess. For example, wool originat-ing in the province of Ghazni is considered ideal for carpet weaving. It is often described as ‘soft-hard wool’ and its availability results in a competitive advantage for the Afghan carpet sector. Moreover, Ghazni wool is used to produce the Chob Rang carpet, which is highly esteemed in international markets. Among the sheep varieties producing Ghazni wool, there is the Ghaljai breed, found in the southern provinces of Ghazni and also in Paktia, Zabul and Kandahar.
When the Ghaljai sheep is crossbred with merinos, it re-sults in Baluchi sheep, which are found in Nimroz, Helmand and Kandahar provinces. The Baluchi breed produces good quality carpet wool. Both Ghaljai and Baluchi wools are used to produce the Afghan Baluchi ( also Beluchi ) car-pets and rugs including, notably, the Baluchi prayer rug. Further, Afghan weavers traditionally use the Karakul breed to produce carpets such as the Khal Mohammadi. Finally, the Turki breed is also used for wool-to-carpet production. This breed, found in the western provinces of Afghanistan, creates one of the best-quality wools for carpets.
Although there is domestic production of wool, this in-put is often imported from neighbouring countries such as Pakistan and the Islamic Republic of Iran, since years of conflict and drought, overgrazing of lands and inad-equate livestock management have significantly reduced the livestock population in Afghanistan. Approximately 40 % of the wool used in carpet weaving is domestically pro-duced.5 Certain wool is imported from countries such as New Zealand and Belgium. This wool is considered
5.– Nasrat Sayed and Karimi, Abdul Tamim ( 2016 ). The Afghan carpet industry : issues and challenges. Economic Alternatives, Issue 4.
high-quality wool and appreciated by both the consumer and the weaver. For example, Belgian wool is used to pro-duce Khal Mohammadi carpets. However, given the high transportation costs, wool from the Islamic Republic of Iran and Pakistan is preferred by traders supplying inputs to weavers, despite its poor reputation.
As outlined above, the wool for carpet production is ei-ther domestically produced or imported. When the wool is produced in Afghanistan, the following processes take place either in the country or in Pakistan and the Islamic Republic of Iran. In terms of pre-weaving processing, the first steps are wool scouring and then spinning to turn the wool into yarn. Afterwards, the yarn is dyed with chemical or natural dyes.
Step 1 : Wool scouring removes non-wool contaminants such as grease. Water and some type of detergent are nec-essary to carry out this process. Wool scouring is carried out on a small scale in Afghanistan, which has only a few operating factories dedicated to wool scouring. For this rea-son, raw wool collectors frequently send their products to Pakistan for processing.
Step 2 : Traders often contract with local households to spin the wool into yarn, a process typically performed by women. Since they use hand-spinning methods, their output is small.
Step 3 : After spinning, yarns are dyed with either chemical or natural dyes. Chemical dyes are now frequently used be-cause they are less expensive and the process of dyeing is faster. In the past, only traditional vegetable dyes were used in Afghanistan. Vegetable dyes continue to be used for the production of carpets but only on a minor scale. For exam-ple, they are used in the production of Chob Rang carpets. In fact, Chob Rang means ‘wood colour’ in the Dari lan-guage, a reference to their natural colours. The colour yellow comes from the native plant isparak, a wild form of larkspur. Other natural dyes relevant for the sector are madder roots, indigo, tesu flowers, walnut bark and pomegranate rind.
Because there are few large-scale spinning and dyeing facilities in Afghanistan, traders usually import dyed wool yarn from neighbouring countries, particularly Pakistan and the Islamic Republic of Iran. Production and processing of wool is cheaper in these countries. For this reason, there is a significant reliance on imports, particularly from Pakistani suppliers, for the provision of essential pre-weaving inputs.
In Afghanistan, carpets are predominantly hand-made, traditionally using looms. Their hand-made quality is a distin-guishing attribute that benefits the industry. As stated in the previous section, looms are either rented or owned by the weavers. The looms are divided into two types : horizontal
[ AFGHANISTAN CARPET VALUE CHAIN : KNOTTY PROBLEMS ]
15
and vertical. Horizontal looms are widely used in rural areas and by nomadic tribes, while weavers living in towns usually use vertical looms. Weaving is an intricate process that can take two to three months for a standard carpet of 2 x 3 m2. The weaving of the carpet begins once the design pattern, also called the ‘map,’ is provided. Other tools used for weav-ing are metal hooks and carpet combs.
When the weaving is finished, the carpet is cut and washed before it is traded in the national or international market. The process of cutting and washing has a substan-tial weight in the value chain, as it represents roughly 30 % of the value of the carpet.6 Washing the carpet requires certain chemicals, such as acetic acid and sulphuric acid, which are predominantly imported from Pakistan. However, they are difficult to source in light of certain import restrictions in Afghanistan related to their dual use for drug production. After the application of tariffs, the import of these chemicals increases the cost of cut and wash operations for Afghan carpet producers.
Furthermore, the number of cut and wash facilities within Afghanistan is insufficient to meet local demand. The ma-chines and materials required for this process are not acces-sible to the majority of carpet producers because they work on a small scale. One Government measure to overcome this challenge has been the construction of industrial parks under the mandate of the Afghanistan Investment Support Agency. These industrial parks offer cutting and washing facilities to businesses. However, they are still limited in num-ber. Moreover, certain issues have prevented companies from joining existing industrial parks, such as the high op-erating costs due to electricity and water shortages. In con-sequence, approximately 85–90 % of producers are forced to send their carpets to Pakistan for finishing processes. Afterwards, many of these Afghan carpets are re-exported under a Pakistani label.
6.– Afghanistan, Ministry of Commerce and Industries ( 2014 ). Investment Opportunities in Afghanistan. Kabul.
For these reasons, Afghanistan depends on Pakistan for the provision of critical inputs and carpet finishing, due to the scarcity of pre-weaving and post-weaving facilities and inputs. This severely inhibits the amount of value addition that can take place within Afghanistan, while also costing Afghanistan countless employment opportunities. Finally, as Afghan carpets are often exported from Pakistan, Afghan traders lose an opportunity to build relationships with inter-national buyers and promote the Afghan carpet brand.
EXPORT PERFORMANCE : A WINNER WITHIN A WEAK ECONOMY
The total export value of carpets from Afghanistan stood at US $ 8.6 million in 2016.7 This figure likely underreports exports of unfinished carpets to Pakistan, considering the rampant smuggling taking place along the Afghanistan–Pakistan border. For this reason, statistical statements in this section should be treated with caution.
7.– HS57, mirrored data based on Comtrade. Direct data : US $ 90 million in 2016.
Carpets are one of the most important export products from Afghanistan besides dried fruits and nuts, fresh fruits and handicraft products. In 2006, carpets represented 28 % of Afghanistan’s export basket. Export of carpets accounted for 2 % of Afghanistan’s export basket in 2016.The combi-nation of products in Afghanistan’s export basket has re-mained similar over the past 10 years.
Photo: Carpets, FOX20250.jpg
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[ AFGHANISTAN’S NATIONAL EXPORT STRATEGY / CARPETS SECTOR 2018-2022 ]
Figure 7 : Afghan carpet exports in value, 2005–2016 ( US $ thousands )
0
2000
4000
6000
8000
10000
12000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source : Trade Map ( 2017 ).
Figure 8 : Export basket of Afghanistan ( 2006 ) Figure 9 : Export basket of Afghanistan ( 2016 )
Products ofanimal origin
1%
Exported share in 2008
Works of art6%
Edible fruit28%
Vegetable sapsand extracts
4%
Leather4%
Wool1% Articles
of stone1%
Vegetables1%
Oil seeds2%
Spices0%
Other0%
Articles ofleather
0%
Edible fruit52%
Exported share in 2016
Vegetablesaps andextracts
17%
Raw hidesand skins
1%
Furskins1%
Carpets2%
Oil seeds and oleaginous fruits
3%
Edible vegetables5%
Commodities not elsewhere specified
5%
Coffee, tea, spices
7%
Precious or semi-precious
stones8%
Fruit and nuts45%
Source : Trade Map ( 2017 ).
[ AFGHANISTAN CARPET VALUE CHAIN : KNOTTY PROBLEMS ]
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Figure 10 : Classification of exported carpets from Afghanistan
‘5701 knotted
’5702 woven
‘5703 tufted “needle punched”
’5705 Other
‘5704 of felt
0%
0%2%
9%
89%
Source : Trade Map ( 2017 ).
Most carpets exported from Afghanistan ( 89 % ) are hand-knotted carpets, which achieve the highest price on the in-ternational market. High-quality hand-made carpets based on traditional weaving methods have become increasingly
rare in the international market due to the shift towards ma-chine-supported production. Introduction of machines in the carpet industry made Afghan hand-made carpets an even more precious luxury good in the global market.
Figure 11 : Afghan carpets export destinations, 2006 Figure 12 : Afghan carpets export destinations, 2016
Exported share in 2006
Mexico 1%
Belgium 1%France 1%
Italy 3%
Canada 4%
Switzerland 3%
Norway 3%
Pakistan17% Germany
24%
United Stated32%
Other11%
Exported share in 2016
Other4%
Australia1%
Spain1%
Switzerland1%
Italy1%
UK2%France
5%
Norway1% Belgium
1%
United States58%
Germany11%
Canada8%
Source : Trade Map ( 2017 ).
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[ AFGHANISTAN’S NATIONAL EXPORT STRATEGY / CARPETS SECTOR 2018-2022 ]
Other production subcategories in Afghanistan are woven or needle-punched carpets.
� The US and Germany were the top export destinations for Afghan carpets in 2006 and 2016
� 2006 : » Exports to the US : USD 4.6 million » Exports to Germany : USD 887.000
� 2016 : » Exports to the US : USD 4 million » Exports to Germany : USD 1 million
� Reports indicate that another major export destination is Pakistan
� Comparing export destinations in 2006 and 2016, data reveals that export destinations did not change much in the past 10 years
� Afghanistan exports carpets to traditional export destina-tions in Europe and North America
� The only new top export destination is Turkey, according to 2016 data
� Export to Asia and the Middle East are gradually increas-ing, which would diversify Afghanistan’s export destina-tions for carpets
UNSTEADY INSTITUTIONAL SUPPORT HAS LED TO A WEAKENED SECTOR
The development of the Afghan carpet sector is hampered by a lack of institutional support across the value chain. At the production stage, increased institutional support is re-quired to finance enterprises to support business expansion. Quality management and certification services are crucial to allow Afghan carpets to enter high-end markets. Services that connect Afghan enterprises to international markets are particularly needed. The following section details spe-cific functions that are lacking. These services range from
in-market support to investment promotion in foreign mar-kets focused on the carpet sector.
Moreover, the institutional landscape presents coordina-tion challenges that hamper the limited support provided to the sector. For instance, the carpet standardization process suffers from a lack of interaction and coordination among relevant support institutions. Previous overlapping of servic-es has led to side initiatives on standardization. Certification emanating from these side initiatives is not always accepted in international markets.
A SERIES OF CHALLENGES PREVENTING SECTOR GROWTH ( THE 3C’S )
Key issues constraining the sector’s ability to compete, connect and change
The following section analyses sector challenges across three levels: business capabilities; institutional and trade support; and national environment, policy and regulations. Three dimensions of Afghanistan export competitiveness were analysed.
Compete: Issues limiting the sector’s capacity to compete in national and foreign markets. This includes challenges related to access to inputs, productivity, quality management, national infrastructure and compliance with standards, among others.
Connect: Issues restraining connectivity to suppliers, markets and clients. This dimension includes challenges related to mar-ket information, marketing, trade promotion, branding and trade agreements, among others.
Change: Issues limiting the sector’s capacity to change, innovate and tap into emerging trends. This dimension relates to challenges in accessing trained / skilled labour, institutional support to in-novate, investment promotion, corporate social responsibility, and youth and women’s employment, among other issues.
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As an industry of significant cultural, economic and social importance, the Afghan carpet sector offers significant po-tential for investment and export growth. However, challeng-es related to the sector’s limited post-weaving processing capacity, weak standardization of products, and poor links to international buyers all combine to prevent the sector from achieving its full export potential.
Compete
Limited availability of critical inputs for production and processing of carpets is a major drawback to the competitiveness of the industry.
Some challenges exist for the supply of inputs for both pre-weaving and post-weaving processes. A crucial limiting factor for the production of carpets is the scarce domestic supply of high-quality wool. Years of war and inefficient ani-mal husbandry practices have damaged and disrupted wool production through the loss of grazing lands and diminished domestic breeds of wool-producing sheep. Consequently, most raw wool is imported, primarily from neighbouring countries, where materials are not pure, not graded, and frequently mixed with petroleum products. Quality control of imported wool should be strengthened.
Additionally, the scarcity of medium and large-scale factories producing yarn and increasing difficulty sourcing natural dyes create challenges for the supply of domesti-cally produced dyed yarn, whether the dye used is chemical or natural. It is difficult to access chemicals for washing, i.e. acetic acid and sulphuric acid, due to restrictions on their commercialization which are linked to their dual use for drug production. The limited domestic availability and short shelf life of critical inputs for washing necessitate identify-ing alternative chemicals and / or methods to carry out these activities.
Value chain segment Inputs / production
Severity ● ● ● ● ○
PoA reference Activities 1.1.1 to 1.1.3
Limited processing infrastructure results in limited ability to add value within the country.
Lack of processing infrastructure is the main reason for limited processing capacity throughout the carpet sector value chain. Pre-weaving facilities such as large-scale spin-ning machines and factories to produce dyed yarn are in-sufficient to meet industry demands. The use of traditional, small-scale methods, such as hand-spinning wool, are time-consuming and therefore less efficient.
Another key challenge is the limited availability at the national level of cut and wash services for finishing. Facilities to dry carpets and store them in an environment that is con-trolled for temperature and managed for pest control are also needed. Extremely cold temperatures in certain regions
compromise the drying and proper conservation of carpets. The root causes behind inadequate facilities are low levels of investment due to insufficient access to credit, compli-cated procedures for land acquisition, weak protection of property rights and poor management of industrial parks by the Government.
There are not enough industrial parks focused on the provision of common services and facilities for carpet pro-ducers. Greater availability of finishing services such as cut-ting and washing would be a major asset to the sector, given that the vast majority of small producers are unable to invest in such facilities individually.
Value chain segment All segments
Severity ● ● ● ● ●
PoA referenceActivities 1.2.1 to 1.2.5, 3.4.1, 3.4.2,
3.5.1, 3.5.2
Ability to compete in high-end markets is inhibited by lack of quality control and standardization of production.
Internationally, Afghan carpets compete against Pakistani, Indian, Iranian and Turkish mass-produced carpets. Although Afghan carpets have a high reputation internation-ally, lack of standardization and the irregular quality of final products mar the sector’s positioning and image in global markets. More efforts are required to build and consolidate an Afghan brand for carpets that becomes internationally recognized as synonymous with quality.
Although a system for quality certification of products exists, the fragmentation of production makes training pro-ducers on quality standards and effectively monitoring the quality of final products very challenging. Moreover, existing certification has been created outside any legal framework ( i.e. ACEG certification created outside the framework of ANSA ), which further weakens quality control and carries the risk that existing certification will become meaningless.
Value chain segment Production
Severity ● ● ● ● ○
PoA reference Activities 3.3.1 to 3.3.4
Lack of transparency in the taxation system is an obstacle for sector operators.
Sector producers struggle with the lack of transparency in the Afghan taxation system. The lack of clarity sets the stage for administrative corruption. The taxation system needs to be streamlined and domestic investment in processing facilities encouraged through tax incentives, among other measures.
Value chain segment All segments
Severity ● ● ○ ○ ○
PoA reference Activities 2.1.4 and 2.4.1
20
[ AFGHANISTAN’S NATIONAL EXPORT STRATEGY / CARPETS SECTOR 2018-2022 ]
Figure 13 : Problem tree – challenges to compete
Insu
ffici
ent
avai
labi
lity
of
dyed
yar
n in
Af
ghan
ista
n,
mos
tly im
port
ed
from
Pak
ista
n
Chem
ical
s re
quire
d to
cut
an
d w
ash
impo
rted
(P
akis
tan)
, hav
e a
shor
t she
lf lif
e
Wea
k pr
oces
sing
/sto
rage
infra
stru
ctur
e lim
its s
cale
of/c
apac
ity to
car
ry o
ut
valu
e ch
ain
activ
ities
Insu
ffici
ent s
tand
ardi
zatio
n an
d w
eak
syst
em fo
r qua
lity
cert
ifica
tion
of
prod
ucts
Lack
of
trans
pare
ncy/
ar
bitra
ry ta
x sy
stem
Lack
of
clar
ity/a
war
en
ess
abou
t ta
xatio
n sy
stem
am
ong
sect
or
ente
rpris
es a
nd
inci
dent
s of
co
rrup
tion
At th
e in
stitu
tiona
l lev
el,
wea
k qu
ality
co
ntro
l and
m
onito
ring
At th
e en
terp
rise
leve
l, in
suffi
cien
t tra
inin
g an
d ex
perie
nce
rela
ted
to q
ualit
y am
ong
wea
vers
Year
roun
d pr
oduc
tion
is
diffi
cult
to
achi
eve.
The
co
untry
has
pe
riods
of v
ery
cold
wea
ther
w
hen
it is
diff
icul
t to
dry
car
pets
Exis
tenc
e of
fe
w lo
cal p
ost-
wea
ving
fa
cilit
ies
(few
cu
t and
w
ashi
ng
faci
litie
s at
the
natio
nal l
evel
)
Insu
ffici
ent p
re-
wea
ving
faci
litie
s to
mee
t loc
al
dem
and
(sca
rce
impr
oved
faci
litie
s fo
r woo
l sco
urin
g,
insu
ffici
ent l
arge
- sc
ale
spin
ning
m
achi
nes,
and
la
rge-
scal
e fa
ctor
ies
to
prod
uce
dyed
ya
rn)
Com
mer
cial
iza-
tion
rest
rain
ed
(issu
es re
late
d to
dru
g pr
oduc
tion)
No la
rge-
sc
ale
spin
ning
m
achi
nes
(use
of
hand
-spu
n m
etho
ds)
Disr
upte
dac
cess
to
chem
ical
s fo
r w
ashi
ng (a
cetic
ac
id, s
ulph
uric
ac
id)
Wea
k av
aila
bilit
y of
sm
all w
oode
n sp
inni
ng
whe
els
Lim
ited
know
ledg
e on
th
e us
e of
sp
inni
ng
whe
els
Insu
ffici
ent
larg
e-sc
ale
fact
orie
s to
pr
oduc
e la
rge
quan
titie
s of
dy
ed y
arn
(whe
ther
usi
ng
chem
ical
or
natu
ral d
yes)
Poor
m
anag
emen
t of
indu
stria
l par
ks
by th
e Go
vern
men
t
Lack
of l
and
for
esta
blis
hing
and
co
nduc
ting
busi
ness
es
Lack
of a
dequ
ate
stor
age
to d
ry
the
carp
ets
afte
r be
ing
was
hed,
an
d to
sto
re
finis
h go
ods
Fram
enta
tion
amon
g su
ppor
t in
stitu
tions
and
la
ck o
f co
oper
atio
n w
ith
the
priv
ate
sect
or
Lim
ited
inst
itutio
nal
capa
city
to
cond
uct c
ontro
l an
d m
onito
ring
(e.g
. and
infra
stru
ctur
e,
tech
nica
l sta
ff)
Diffi
cult
mon
itorin
g si
nce
prod
uctio
n is
ho
me
base
d an
d fra
gmen
ted
Cert
ifica
tions
de
velo
ped
outs
ide
the
fram
ewor
k of
AN
SA (e
.g.
ACEG
)
Insu
ffici
ent
effo
rts
to id
entif
y be
tter s
ourc
es o
f ch
emic
als
or
bette
r che
mic
als
for c
ut a
nd w
ash
proc
esse
s
Insu
ffici
ent a
vaila
bilit
y of
/acc
ess
to c
ritic
al
inpu
ts fo
r pro
cess
ing
(e.g
. was
hing
liqu
id:
natu
ral d
ye, y
arn)
Insu
ffici
ent
supp
ly o
f na
tiona
lly
prod
uced
yar
n.
Yarn
is im
port
ed
from
Pa
kist
an/Ir
an
Com
pete
: Lim
ited
proc
essi
ng c
apac
ity to
sca
le-u
p pr
oduc
tion
and
to p
artic
ipat
e in
hig
her-
stag
es o
f the
val
ue c
hain
re
duce
s th
e co
mpe
titiv
enes
s of
the
Afgh
an c
arpe
t sec
tor
[ AFGHANISTAN CARPET VALUE CHAIN : KNOTTY PROBLEMS ]
21
Connect
The ability of Afghan enterprises to connect directly to international buyers is inhibited by dependence on foreign value chain actors.
As explained in previous sections, carpet enterprises strug-gle to connect with international buyers because of the high dependence of Afghan weavers and traders on foreign fin-ishing service providers and merchants, as well as foreign input suppliers.
Connections between Afghan carpet producers and international buyers have been lost as a consequence of products being finished and branded as the product of Pakistan, Turkey or whatever country performed the finishing process. Limited direct connections with buyers inhibits the ability of sector stakeholders to understand and adapt pro-duction to market requirements and also slows the growth of an Afghan national brand for carpet exports.
Value chain segment All segments
Severity ● ● ● ● ○
PoA referenceActivities 1.1.1 to 1.1.3, 1.2.1 to 1.2.5, 3.4.1, 3.4.2, 3.5.1, 3.5.2, 4.1.1 to 4.1.4
Producers have limited capacity to organize and initiate commercial relationships.
Weak organization among weavers and lack of business and marketing skills hinder opportunities for weavers to ini-tiate direct marketing and develop expertise to compete in regional and international markets. Institutional support is needed to facilitate the participation of exporters in interna-tional trade fairs and exhibitions. Market intelligence ( e.g. information on high-demand markets, trends in consumer preferences, etc. ) provided to sector enterprises is weak and insufficiently disseminated across the value chain.
Value chain segment Marketing / distribution
Severity ● ● ● ○ ○
PoA reference Activities 2.4.1, 2.4.2, 4.1.1 to 4.1.4
The national capacity to build a brand in foreign markets is hindered because many Afghan carpets are labelled as foreign.
As a result of the limited post-weaving facilities available in the country, a large share of Afghan carpet production ( es-timated to be around 90 % ) is sent to Pakistan for finishing and is subsequently branded as Pakistani. Inefficient border procedures, such as the lack of data collection on traded products, facilitates both smuggling and altering informa-tion about origin. The fact that many Afghan carpets are not labelled as ‘Made in Afghanistan’ creates major challenges in terms of building an Afghan brand and positioning that brand in foreign markets.
Value chain segment Marketing / distribution
Severity ● ● ● ● ●
PoA reference Activities 4.2.1 to 4.2.3
Not enough support is provided to Afghan exporters to cre-ate and maintain relationships with international markets.
More institutional support is needed to assist carpet produc-ers to connect with international buyers and maintain com-mercial relationships. Given that many Afghan carpets are exported with a foreign label, it is crucial for Afghan exporters to introduce their products directly to global markets. Support is needed in the form of critical market intelligence on trends and consumer preferences in target markets, in order for sec-tor stakeholders to be more responsive to buyer requirements. Given the strict hierarchical structure of the sector, more ef-forts are needed to disseminate market information to carpet producers through subcontractors and associations to sup-port them in making informed strategic decisions. Additionally, carpet exporters need more support to enable them to par-ticipate in trade fairs and exhibitions, where they can sell their products directly and connect with buyers.
Value chain segment Marketing / distribution
Severity ● ● ● ○ ○
PoA reference Activities 4.1.1 to 4.1.4
Severe infrastructure challenges and weak institutional ability to streamline the movement of goods across bor-ders are major constraints to accessing distant markets.
Sector development also requires increased institutional support to facilitate the movement of goods across borders. Afghan carpet exporters struggle to access distant markets due to insufficient transportation and logistics facilities. At the same time, exporters are required by developed markets to offer more timely production and delivery.
Using ground transport routes through Central Asia is feasible for exporting to the European market but sea or air transport is required to access markets in North America and East Asia. However, air transport is exceed-ingly expensive and sea transport requires access to either Chabahar Port in the Islamic Republic of Iran or Karachi Port in Pakistan. Support institutions should strive to co-ordinate with neighbouring Customs authorities to stream-line export clearance in cross-border trade, as cargo is frequently delayed and disrupted because of paperwork issues. Exporters face not only the challenge of excessive bureaucracy but also demands for informal payments to Customs officials. More efforts are also needed to negotiate lower shipping rates with international airlines, such as the memorandum of understanding signed with Turkish Airlines in 2015 ( which was never implemented ).
Value chain segment Marketing / distribution
Severity ● ● ● ● ●
PoA reference Activities 4.3.1, 4.3.2
22
[ AFGHANISTAN’S NATIONAL EXPORT STRATEGY / CARPETS SECTOR 2018-2022 ]
Figure 14 : Problem tree – challenges to connectCo
nnec
t: lim
ited
links
with
inte
rnat
iona
l buy
ers
owin
g to
hea
vy d
epen
denc
y on
fore
ign
trad
ers
and
wea
k in
fras
truc
ture
Wea
k en
terp
rise-
leve
l cap
acity
to
orga
nize
and
initi
ate
com
mer
cial
re
latio
nshi
ps
Natio
nal c
apac
ity to
bui
ld a
bra
nd in
fo
reig
n m
arke
ts is
mar
red
by A
fgha
n ca
rpet
s la
belle
d as
fore
ign
Afgh
an e
nter
pris
es re
lianc
e on
fore
ign
valu
e ch
ain
acto
rs
Insu
ffici
ent s
uppo
rt to
cre
ate
and
mai
ntai
n re
latio
nshi
ps w
ith
inte
rnat
iona
l mar
kets
Poor
tran
spor
tatio
n in
frast
ruct
ure
and
logi
stic
s lim
it th
e ab
ility
of e
xpor
ters
to s
tore
go
ods
and
ship
to o
vers
eas
cust
omer
s
Criti
cal i
nput
s su
ch a
s dy
ed
yarn
are
im
port
ed fr
om
Paki
stan
, tyi
ng
Afgh
an
wea
vers
/trad
ers
to P
akis
tani
m
erch
ants
Loss
of
conn
ectio
n w
ith
inte
rnat
iona
l bu
yers
due
to
Afgh
an p
rodu
cts
bein
g fin
ishe
d an
d br
ande
d as
fo
reig
n (P
akis
tan,
Tu
rkey
)
Wea
k m
arke
ting
skills
am
ong
Afgh
an tr
ader
s
Lack
of
orga
niza
tion
amon
g w
eave
rs
to in
itiat
e di
rect
m
arke
ting
Post
-wea
ving
pr
oces
ses
carr
ied
out i
n Pa
kist
an e
nabl
e ad
ulte
ratio
n of
or
igin
de
nom
inat
ion
Inef
ficie
nt
bord
er
proc
edur
es
allo
w fo
r sm
uggl
ing
of
prod
ucts
(e.g
. la
ck o
f in
form
atio
n co
llect
ion
at th
e bo
rder
)
Wea
k m
arke
t in
form
atio
n se
rvic
es
Lim
ited
mar
ket
prom
otio
n
Insu
ffici
ent
trade
fairs
and
ex
hibi
tions
for
stak
ehol
ders
to
dire
ctly
sel
l th
eir p
rodu
cts
unde
r the
Af
ghan
-mad
e la
bel
Poor
road
in
frast
ruct
ure
(rou
tes
via
Cent
ral A
sia
are
too
slow
fo
r the
Eu
rope
an
mar
ket a
nd to
o co
stly
for t
he
Nort
h Am
eric
an
mar
ket)
No
stre
amlin
ing
of
expo
rt
clea
ranc
e in
cr
oss-
bor
der
trade
Carg
o is
de
laye
d an
d di
srup
ted
due
to p
aper
wor
k is
sues
Insu
ffici
ent
trans
port
atio
n an
d lo
gist
ics
faci
litie
s
Lack
of
perm
anen
t bu
sine
ss
cent
res
in
clie
nt c
ount
ries
limit
the
abilit
y to
sto
ck
prod
ucts
inad
vanc
e
Lack
of
oppo
rtun
ities
to
deve
lop
expe
rtis
e to
co
mpe
te in
re
gion
al a
nd
inte
rnat
iona
l m
arke
ts
Lack
of
stor
age
for
finis
hed
good
s in
key
in
tern
atio
nal
mar
kets
Insu
ffici
ent
abilit
y of
Af
ghan
trad
ers
to m
arke
t pr
oduc
ts
dire
ctly
via
In
tern
et
Lack
of
busi
ness
/mar
k et
ing
skills
Wea
k di
ssem
inat
ion
of m
arke
t in
form
atio
n in
ru
ral a
reas
(e.g
. tre
nds,
pric
es)
Insu
ffici
ent
mar
ket
inte
lligen
ce
prov
ided
to
stak
ehol
ders
(e.g
. new
m
arke
ts, t
rend
s)
[ AFGHANISTAN CARPET VALUE CHAIN : KNOTTY PROBLEMS ]
23
Change
Investment opportunities are poorly promoted.
Investment opportunities in the sector are not promoted and encouraged enough among potential national and international investors., National and foreign firms are also discouraged by security concerns and an environment of lawlessness. More efforts are needed to promote investment in, for example, cut and wash facilities, by offering not only attractive incentives and investment packages but also extra security measures to reassure investors.
Value chain segment All segments
Severity ● ● ● ● ○
PoA reference Activities 2.1.4, 3.4.1
The ability of sector companies to innovate or expand is constrained by the weak offer of financial services to carpet producers.
Carpet producers require access to financing that is tailored to their needs. At present, Afghanistan’s commercial banks have poor incentives to provide loans to carpet producers, as they tend to borrow small amounts of money several times in one year, which is expensive for financial service providers. Land ownership issues also mean producers are incapable of providing collateral. In turn, lack of access to formal capital forces weavers to enter into cycles of debt with traders. This type of loan allows weavers to cover pro-duction costs but not to expand their businesses, as they are unable to accumulate capital.
Value chain segment All segments
Severity ● ● ● ● ○
PoA reference Activities 3.5.1, 3.5.2
Limited access to land hinders sector expansion.
Availability of land is a major challenge in Afghanistan, limiting the development of consolidated production sites such as industrial parks. It hinders business expansion into additional processing activities such as the establishment of cut and wash facilities. The current system lacks clar-ity on property rights and land conflict resolution is weak. Moreover, land ownership is highly informal, as there is an almost complete absence of authentic title deeds.
Value chain segment All segments
Severity ● ● ● ○ ○
PoA reference Activities 3.4.1, 3.4.2
A negative image surrounds the carpet sector due to the prevalence of child labour in carpet production.
The image of the Afghan carpet sector suffers from its rep-utation on child labour issues and the negative effects of weaving on producers’ health. Child labour is very impor-tant for buyers in coveted developed markets, particularly the EU. Although certifications such as GoodWeave and STEP are available in Afghanistan, they have not been used enough and awareness of them needs to be raised. Root causes of child labour in carpet production are economic necessity and social factors. Although some weavers are or-ganized in workshop spaces to increase monitoring, gener-ally such oversight is difficult, as carpet production is largely a cottage industry and large traders usually do not have information about the circumstances of carpet production.
Value chain segment Marketing / distribution
Severity ● ● ● ● ○
PoA referenceActivities 3.1.1 to 3.1.4, 3.2.1 to
3.2.3, 4.2.2
Limited adoption of new trends and preferences in international markets hinders sector production and export potential.
Certain high-end markets such as the United States and Germany assign great value to design patterns and colours. The sector’s weak capacity to adapt production to con-sumer preferences is partly explained by carpet producers’ isolation from the end market and their limited access to different buyers. The limited range of designs offered by Afghan companies is also due to scarce facilities and lack of computerized technology. Carpet producers have weak design expertise and are not trained to use design software. The latter is partly a result of the lack of formal sector-related training available.
Value chain segment All segments
Severity ● ● ● ○ ○
PoA reference Activities 2.3.1 to 2.3.2
Sector expansion, innovation and sustainability are constrained by the low availability of appropriately skilled labour.
Another fundamental area lacking institutional support is the introduction of sector-specific training in the formal educa-tion system. As a cottage industry, producers are trained in a traditional manner, with knowledge passed from gen-eration to generation. The absence of skills training within the education system creates the risk of losing traditional knowledge passed down within families. Formal training would make higher standardization and scalability of carpet production possible. Lack of such training hinders improve-ments in production and product design.
24
[ AFGHANISTAN’S NATIONAL EXPORT STRATEGY / CARPETS SECTOR 2018-2022 ]
Figure 15 : Problem tree – challenges to change
Chan
ge: C
onst
rain
ed s
ecto
r cap
acity
to in
nova
te a
nd u
pgra
de c
arpe
t pro
duct
ion
and
tap
into
em
ergi
ng tr
ends
Lim
ited
inve
stm
ent
prom
otio
nDi
fficu
lt ac
cess
to c
redi
t lim
its in
vest
men
t in
the
sect
or
Lim
ited
acce
ss
to la
nd h
inde
rs
sect
or
expa
nsio
n
Lack
of c
larit
y on
pro
pert
y rig
hts
(land
ow
ners
hip,
te
nure
)
Poor
ince
ntiv
es
to p
rovi
de lo
ans
as p
rodu
cers
bo
rrow
sm
all
sum
s se
vera
l tim
es a
yea
r w
hich
are
cos
tly
to s
ervi
ce
Wea
k ca
paci
ty to
ada
pt
prod
uctio
n to
the
requ
irem
ents
of
the
inte
rnat
iona
l mar
ket
(des
ign,
col
our a
re im
port
ant
for U
S an
d Ge
rman
mar
kets
)
Nega
tive
inte
rnat
iona
l im
age
ofth
e Af
ghan
car
pet s
ecto
r due
to c
hild
labo
ur
(soc
ial a
spec
ts s
uch
as c
hild
labo
ur a
re
maj
or is
sues
in E
urop
ean
mar
kets
)
Sect
or e
xpan
sion
, inn
ovat
ion
and
sust
aina
bilit
y co
nstra
ined
by
the
low
ava
ilabi
lity
of s
kille
d la
bour
forc
e
Secu
rity
conc
erns
Lack
of
conf
iden
ce in
in
vest
men
t pr
otec
tion
syst
em
Few
effo
rts
to
offe
r ext
ra
mea
sure
s to
re
assu
re
inve
stor
s
Wea
k ab
ility
or c
redi
t w
orth
ines
s to
obt
ain
cred
it
Lack
of
loan
s ex
tend
ed to
ca
rpet
pr
oduc
ers
by
com
mer
-ci
al b
anks
Lack
of
loan
s ex
tend
ed to
ca
rpet
pr
oduc
ers
by
com
mer
cial
ba
nks
Lim
ited
rang
e of
des
igns
and
colo
urs
of c
arpe
ts Wea
k de
sign
expe
rtis
e(d
esig
ns
com
e fro
m
Paki
stan
)
Lim
ited
dire
ct
conn
ectio
ns
with
in
tern
atio
nal
buye
rs to
un
ders
tand
m
arke
t re
quire
men
ts
Insu
ffici
ent
com
pute
rized
de
sign
ce
ntre
s
Cert
ifica
tions
of
non
-chi
ld
labo
ur
stan
dard
s no
t su
ffici
ently
ex
tend
ed
Wea
k en
forc
emen
t of
lega
l fra
mew
ork
rega
rdin
g ch
ild la
bour
Heal
th is
sues
am
ong
wea
vers
, for
ex
ampl
e,
rela
ted
to
dust
, are
als
o im
port
ant
Chan
nels
to
trans
fer
know
ledg
e an
d sk
ills o
f car
pet
prod
uctio
n (i.
e.
wea
ving
) are
in
form
al.
Prod
uctio
n sc
alab
ility
is
diffi
cult
to
achi
eve.
Ris
k of
lo
sing
ski
lls a
nd
know
ledg
e
Trad
ition
al fo
rm
of te
achi
ng,
train
ing
and
skills
de
velo
pmen
t for
th
e ca
rpet
sec
tor
is a
bsen
t in
the
form
al e
duca
tion
syst
em
Diffi
cult
to
reta
in s
kille
d w
eave
rs
(40%
of
expe
rienc
ed
wea
vers
ha
ve le
ft th
e in
dust
ry d
ue
to lo
w
sala
ries)
Need
for
tech
nica
l tra
inin
g on
the
use
of d
esig
n so
ftwar
e
Wea
k tra
inin
g of
ca
rpet
wea
vers
in
desi
gn, b
usin
ess
skills
and
mar
ket
inte
lligen
ce
Wea
k te
chni
cal
assi
stan
ce to
id
entif
y in
tern
atio
nal
cons
umer
re
quire
men
ts
for c
arpe
t w
eave
rs a
nd
desi
gn
cent
res
Conc
erns
ab
out h
igh
inte
rest
ra
tes/
refu
sal
to ta
ke lo
ans
due
to
Isla
mic
be
liefs
Conc
erns
ab
out l
oan
repa
ymen
t ab
ility
Beca
use
prod
uctio
n is
hom
e-ba
sed
in
rura
l are
as, i
t is
diffi
cult
to tr
ain
and
crea
te
awar
enes
s of
inte
rnat
iona
l sta
ndar
ds o
n de
sign
and
col
ors
[ AFGHANISTAN CARPET VALUE CHAIN : KNOTTY PROBLEMS ]
25
Skills to innovate in the sector, including design skills, will also become increasingly important to improve production and enhance product differentiation. Stronger links are need-ed between the private sector and educational institutions to ensure sector sustainability through the transmission of traditional weaving techniques to young people. Continuous coordination will enable carpet enterprises to rely on a skilled labour pool capable of meeting evolving market demands. Given the cottage nature of the industry, entre-preneurial training should accompany technical training.
The shortage of skilled labour is aggravated by difficulty retaining skilled producers as a result of low weaver salaries. Greater efforts also need to be made to promote employ-ment of skilled migrant weavers returning from Pakistan.
Value chain segment All segments
Severity ● ● ● ● ○
PoA reference Activities 2.2.1 to 2.2.7
Photo: Carpets, FOX20017.jpg
Source: ITC
[ AFGHANISTAN’S DILEMMA : TO COPE OR THRIVE ]
27
AFGHANISTAN’S DILEMMA : TO COPE OR THRIVE?
WHAT ARE THE OPTIONS?
The competition in both traditional and modern types of hand-woven carpets is stiffening. Externally, regional com-petitors such as India, the Islamic Republic of Iran, Nepal and especially Pakistan are better positioned in terms of re-sources and links than Afghanistan, and are better adapted to respond to global trends. Internally, the gears of the value chain are slowing down. Despite this precarious environ-ment, there are strategic options that can be followed to rejuvenate the sector, as outlined below.
SCENARIO 1 : ( BASELINE SCENARIO )
Under this scenario, the dependence on Pakistan will con-tinue to increase, resulting in steadily increasing value leak-age at the inputs and processing stages, and deterioration of brand and export performance. The sector will continue its current operations, which are directed by Pakistani trad-ers in Afghanistan / Pakistan who are closely connected to Pakistani export houses.
With the repatriation of large numbers of Afghan weav-ers from Pakistan, the pressure on the weaving community will increase. The middle-tier traders who typically contract with the weavers will have their negotiating position strength-ened while the bargaining position of weavers will decrease, ultimately depressing wages and living conditions. In this environment, the inherently Afghan design skills and other factors that differentiate the sector will also deteriorate, sped up by anticipated migration of skills to other sectors.
A select few Afghan exporters with political and financial clout will continue to export to international markets; how-ever, these will be vertically integrated islands rather than reflective of the overall sector. The sluggish pace of the do-mestic market will further drive focus on exports.
Over the medium-to-long term, the sector will lose its differentiation edge to a large extent, while becoming mar-ginally more cost-efficient ( and consequently more price competitive ). Cost advantage will come at a price for the already depressed weaving community. Ultimately, the sec-tor will suffer a decline apart from the few larger companies and will become a subcontractor for Pakistan. At that point, the fortunes of the sector will largely depend on the perfor-mance of Pakistan’s carpets sector.
SCENARIO 2 : FOCUS ON THE TRADITIONAL / CONTEMPORARY MACHINE-MADE SEGMENT
This scenario envisages a shift in production from the cur-rent cottage industry to an industrial base with a focus on a mid-to-high volume of carpets priced to compete with their Indian and Chinese counterparts.
The challenge with this scenario is multifaceted. First, the centralized focus that has driven the Chinese and, to a lesser extent, the Indian model will be difficult to achieve due to weak institutional capacity and with the focus of the Afghan Government on other priorities. There is also sig-nificant resistance to regulatory requirements to curtail child labour and to the imposition of minimum wages for weav-ers. Additionally, the essential equipment and technological upgrades required for this model would not be feasible for at least the next 5–10 years. A crucial success factor for this model is market responsiveness and this would take time to emerge. As a result, Afghanistan would not be able to com-pete with the industrial powerhouses of China and India with regards to machine-made carpets, even in the long term.
SCENARIO 3 : FOCUS ON THE TRADITIONAL, HAND-WOVEN, HIGH-END SEGMENT, WITH HIGH DIFFERENTIATION
This scenario adopts a cautious yet comprehensive ap-proach to examining the competitive drivers and challenges faced by the Afghan carpets sector in addition to the overall trends in the carpets segment. The Afghan carpets sector faces a complex dilemma regarding where to position itself in terms of price points and designs.
Proliferation of machine-made carpets from China, which typically do not compete based on quality, is taking place on the global market. Improved technology and productivity levels are also leading to better quality machine-made car-pets. Afghanistan cannot compete with a low-price strategy because of high production costs stemming from a weak
28
[ AFGHANISTAN’S NATIONAL EXPORT STRATEGY / CARPETS SECTOR 2018-2022 ]
business environment and dependency on imports. Also, any price reduction measures will put additional pressure on weavers, causing socioeconomic distress.
The high-end, hand-made, traditional design segment is ideally suited for Afghanistan in the long term. High-end carpets – especially traditional, hand-woven, natural wool
carpets – have a constant and stable demand in the mar-ket, and their value can even increase over time. While the Afghan traditional design is essential to the sector, efforts must be made to cater to the contemporary design seg-ment as well.
Figure 16 : Price versus differentiation for scenario three
Price vs Differentiation
Diff
eren
tiatio
nRe
lativ
e to
eac
h ot
her)
Excellent
Iran
Scenario 3(Selected)
Scenario 2
Turkey
India
Nepal
Pakistan
China
ExcellentPoor
Relative position today Likely position within 5 years
Price(Advantage)
Afghanistan
Scen
ario 1
Source : Leahy, Rob ( 2012 ).
FINDING THE BALANCE THROUGH FOCUS ON TRADITIONAL, HAND-WOVEN, HIGH-END CARPETS
Scenario 3 involves retaining focus on traditional, hand-woven carpets while targeting the higher end of that market in terms of quality and price. The sector can aspire to and make strides in this direction during the Strategy time frame. To accomplish this, the following considerations must be kept in mind.
� Compete on the basis of quality and cater to the high-end market : Afghanistan cannot afford to compete on the basis of price due to inherent deficiencies in the pro-duction structure and business environment, and to avoid additional pressure on the weaving community. Rather,
the future lies with highly differentiated products compet-ing on the basis of quality and traditional / unique designs that appeal to high-end markets, for which there is ample potential.
� Mitigate leakage of value : As long as the inputs supply chain ( machine and hand-spun Afghan wool, chemicals used in treatment, etc. ) remains dominated by imports, the cost of production will remain high. This impacts the bottom line for exporters and ultimately exerts downward wage pressure on the most vulnerable actors in the val-ue chain – the weavers. Similarly, significant value loss is
[ AFGHANISTAN’S DILEMMA : TO COPE OR THRIVE ]
29
caused by the lack of cut / wash / dry facilities in the coun-try, which is directly affecting the Afghan carpet brand in addition to decreasing export value.
Shifting processing back to Afghanistan, as well as producing more inputs domestically, will increase pro-duction as well as capturing value. By developing supply and value chains on the inputs and processing sides, the sector will reduce dependency on external sources, reduce costs and improve margins, while simultaneously strengthening the Afghan brand.
� Improve production volumes in absolute terms in order to make the sector competitive again. Increasing pro-duction volume will require policy adjustments to main-tain decent wages and working conditions that will attract labour to the sector. It will also require improvements in technology and expertise. In addition, productivity gains would result from reducing isolated weaving operations and instead enabling greater collaboration between weavers, traders and weavers, and exporters and traders, among other relationships. This would involve enabling a mix of integrated models such as weaving cooperatives, shared service centres and industrial parks, while sup-porting traditional models in the short-to-medium term.
� Enable productivity gains through enhanced skills development and improved methods and models of pre-weaving, weaving and post-weaving activities. Productivity gains will be accompanied by socioeco-nomic dividends for weavers ( women workers ) and other stakeholders in the value chain. Limited innovation oppor-tunities in neighbouring Pakistan will result in expanded opportunities for Afghanistan.
� Gradually develop competencies in the contemporary design segment. Competition in the contemporary seg-ment from India, Nepal and Pakistan is high. Afghanistan will not be able to compete in the near term, as market links take time to be strengthened. Over time, Afghan
carpet producers will be able to enter this market, primari-ly through lead firms that demonstrate success and serve as case studies for other companies. However, this is a long-term objective. Afghanistan is already competent in the Chob Rang segment, and this can be nurtured and expanded to contemporary design abilities in the future.
� Meet financing and investment needs : The sector is in dire need of private / public financing as well as work-ing capital. This problem will need to be resolved before growth can occur. In the short term, donor or govern-ment sector funding will be required in addition to existing informal financing options. In the medium-to-long term, private sector commercial funding and buyer-financed working capital funding can take over.
� Improve developmental considerations : By improving the socioeconomic conditions of weavers, the majority of whom are women, and resolving to end the use of child labour, the sector will not only benefit from a so-cioeconomic and developmental perspective but also from the international access that certifications such as GoodWeave bring.
� Develop relationships with buyers and improve respon-siveness to their evolving needs : Beyond maintaining quality and on-time order fulfilment, Afghan carpet ex-porters must be flexible in adapting to client needs and requirements. For example, if a wholesaler in the United States requests a particular design, the supply base must be flexible enough to cater to that request. This also en-sures that forward integration can potentially take place, involving supply of working capital from a buyer based on relationship trust levels.
� Open air cargo corridors with India, and the US : Such corridors would provide an avenue for developing on-time delivery of goods to these markets and at the same time reduce dependence on Pakistan.
MARKETS : ULTIMATELY DEFINING THE STRATEGIC DIRECTION
The following analysis is divided into two broad phases : one related to the immediate, short-term perspective and the other to the medium-to-long term outlook, when it is expected that a significant portion of the NES and the sec-tor PoA will have been implemented. This phased approach is aimed at alignment with the evolving capacities of the sector’s trade and investment support institutions and en-terprises as NES implementation moves forward.
SHORT-TERM PRIORITIES ( 1–3 YEARS )
Short-term priorities are product–market combinations which are exporting well but could either : a ) be better per-forming in existing markets with implementation of shorter-term improvements recommended in this Strategy; or b ) be translated into quick success with promising markets through variations on successful products.
30
[ AFGHANISTAN’S NATIONAL EXPORT STRATEGY / CARPETS SECTOR 2018-2022 ]
Domestic market
Afghanistan produces around 2 million square metres of car-pets annually, of which the majority is exported to Pakistan, Europe, the United States and Asia. Some merchants have established direct contacts with Western importers and dealers to achieve higher prices.
Only a small portion of demand comes from domestic buyers. Domestic demand comes from high-income house-holds, public facilities and hotels, mainly in major Afghan cit-ies. Carpets are sold domestically in local bazaars, including traditional outlets and Kabul’s famous Chicken Street retail-ers. Carpet centres in Jawzjan, Herat, Nangarhar and Kabul, as well as showrooms in major Afghan cities, are the most important domestic distribution channels.
Pakistan
Pakistan is strategically important because it is the major export destination for unfinished Afghan carpets. It is esti-mated that more than 80 % of high quality carpet produced in Afghanistan is sold to Pakistan on less attractive prices. The majority of exports to Pakistan are for value addition purposes rather than exports of finished goods. Pakistani traders in Afghanistan export the majority of Afghan handi-crafts and have direct contacts with weaving households. Carpet producers mostly work with Pakistani markets, get raw materials from them, distribute the raw materials to the weavers, in many cases they get advances from the Pakistani traders and pay advances to the weavers.
Based on the tight trade relationship and existing ties to carpet production, the Pakistani market will continue to be an essential destination for Afghan carpets in the future. The difference will be that finished rather than unfinished carpets will be exported in the medium-to-long term, thus retaining value and brand equity for Afghanistan. In the short term, however, the current links through which Afghan weavers function as contractors will serve to keep the Afghan carpets sector buoyant, and therefore the link will remain important in the interim until sector capabilities are built.
In order to strengthen exports of Afghan carpets to the consumer market rather than for value addition pur-poses, the following considerations will be particularly important :
� Monitor the value addition of Afghan carpets and reimport to enhance branding under the Afghan name.
� Gradually substitute foreign value addition with do-mestic value addition in order to export finished in-stead of unfinished goods.
� Target niche markets in Pakistan and focus on ex-port of unique, hand-made traditional carpets.
Target market Market segment Distribution channelAfghan carpet exports
in 2016 ( US $ )Annual growth of sector
imports ( 2012–2016 )
Pakistan
Private carpet traders, resellers, households,
value addition facilities
Export traders in Afghanistan, retailers, private carpet weaving
households with contacts in Pakistan 90 million* - / -
* Based on Direct Data on Comtrade as Mirror Data is not available in the Statistics. Source : Trade Map ( 2017 ).
Europe ( focus on Germany )
Germany is the host and organizer of DOMOTEX, the car-pet sector’s primary international carpeting and flooring trade fair. The country has shown great interest in hand-made carpets from Afghanistan and has established trade relationships with Afghan carpet exporters. As the host na-tion of DOMOTEX, Germany has a high regard for Afghan carpets. This was reflected when Afghan carpets won the Carpet Design Award – the ‘Oscar’ of the carpet industry – at DOMOTEX in Hanover in 2008, 2009 and 2014. According to United Nations Comtrade data, Germany imported
US $ 926,000 of carpets from Afghanistan.8 However, since 2012 exports to Germany have declined 15 % annually due to competition from the Islamic Republic of Iran, India and Turkey. Nevertheless, based on export experience, the high reputation of Afghan carpets is now recognized in neigh-bouring European markets such as France, the United Kingdom of Great Britain and Northern Ireland, Norway, Italy, Belgium, Switzerland and Spain. The European market thus brings the best opportunities for market diversification in the short run. Europe reports overall stable demand despite the decline in exports to Germany.
8.– Based on Mirror Data on Comtrade, 2016
[ AFGHANISTAN’S DILEMMA : TO COPE OR THRIVE ]
31
In 2016, the EU imported around 43 % of the total value of world carpet imports, which makes the region the largest carpet consumer. The European market is an important ex-port destination due to its recognition of Afghan carpets as a high-end product, along with the market’s willingness to pay high prices for hand-made, high-quality products. Afghan carpets tend to achieve higher prices in European markets, where prices start from US $ 250 per square metre. Many households, as well as hotel chains, restaurants and other facilities, demand traditional and decorative Afghan carpets. Afghan carpets are mainly distributed through specialized carpet retailers in large European cities as well as whole-salers trading oriental carpets. Many wholesalers, such as Akbar Trading GmbH, or AWT Trading GmbH, are located in Hamburg, Germany, and act as a pipeline to the European market. In addition to the long-established distribution chan-nels, online supply companies have started to emerge as another popular source for distribution.
To maintain recognition of Afghan carpets in the European market and compete against other oriental carpets, the following considerations will be important :
� Establish the Afghan carpet as a hand-made, high-end brand to compete against machine-made, cheaper carpets from other countries.
� Follow product safety standards under the General Safety Directive and improve labelling of fibres and chemical substances.
� As quality, origin and social issues are important to European buyers, attach certificates assuring, for example, that child labour was not used in pro-duction ( labels such as GoodWeave, STEP, Care & Fair ).
� Follow design trends in this dynamic market and update designs, colours and type of fibre frequent-ly, especially when targeting the German market. » Chobi rugs in both bright and earth tones
showed high market opportunities.
Target market Market segment Distribution channelAfghan carpet exports
2016 ( US $ )Annual growth of sector imports 2012–2016 ( % )
Germany
Private households, hotels, restaurants, and other
facilities Wholesalers, retailers
926 000 -15
France 397 000 71
United Kingdom 208 000 34
Norway 110 000 -4
Italy 106 000 40
Belgium 72 000 - / -
Switzerland 71 000 0
Spain 70 000 2
Source : Trade Map ( 2017 ).
Photo: Carpets, Afghanistan Matters, Beauty Upon Beauty.jpg
32
[ AFGHANISTAN’S NATIONAL EXPORT STRATEGY / CARPETS SECTOR 2018-2022 ]
Box 2 : Export potential in selected European markets
The ITC export potential assessment revealed that Switzerland is an interesting market for Afghan carpets. The market has hardly been explored yet, as over 85 % of the full export potential remains unrealized. Afghanistan has a small tariff advantage in the Swiss market. The unit value relative index is 0.9, indicating that Afghan carpets are imported at a lower price than carpets from competitor
countries. The Swiss market is expected to grow over the next few years. However, Afghan carpets need to undergo inspections and seek special authorization, register and obtain an export certifi-cate for the Swiss market. If Afghanistan is able to overcome this hurdle, Switzerland is a high-potential market.*
Figure 17 : Export potential in Switzerland
Switzerland: HS 570110 – Carpets and other textile floor coverings, of wool or fine animal hair, knotted, whether or not made up
UNTAPPED EXPORT POTENTIAL
APPLIED TARIFF
COMPETITION
Concentrated
equivalent suppliers
Main suppliers: Iran, Germany, India
MARKET ENTRY REQUIREMENTS
UNITED VALUERelative index: 0.9
DEMAND
USD 25.1 mn2011-2015
2020
13%
USD 470 tsd
• Custom inspection, processing and servicing fees
(https://www.admin.ch/opc/fr/classi-fied-compilation/19850243/index.html)
• Special authorization requirement for SPS reasons
(https://www.admin.ch/opc/fr/classi-fied-compilation/20121348/index.html)
• Product registration requirement• Certification requirement• Inspection requirement
(https://www.admin.ch/opc/fr/classi-fied-compilation/20121349/index.html)
Afghanistan: 0% Ø other suppliers: 1%Tariff advantage: 1pp
Source : ITC ( 2017 ) : Reconnecting Afghanistan to global markets – An ITC assessment of export potentials and
trade obstacles.
* ITC (2017) - Yvan Decreux, Maria Del Mar Cantero and Julia Spies: Reconnecting Afghanistan to global markets –
An ITC assessment of export potentials and trade obstacles.
[ AFGHANISTAN’S DILEMMA : TO COPE OR THRIVE ]
33
North America ( United States )
Exports to the United States increased from US $ 2.9 mil-lion in 2012 to US $ 5.0 million in 2016. Demand rates indi-cate that exports have the potential to increase to US $ 40 million.9 Afghan carpets first became popular as a sou-venir brought home by returning American soldiers and the Afghanistan / United States Carpet Conference held in Dubai in 2012 contributed to the popularity and reputation of Afghan carpets in the United States. Many Afghan carpet companies have already established strong ties and even opened showrooms and trading offices in the United States. To increase the reputation of Afghan carpets, there are even companies such as Ariana Rugs that issue licences for certified child-labour-free rugs made in Afghanistan. Such initiatives significantly contribute to export opportunities for Afghan carpets, as reflected in the increasing export value to the United States. Looking at the last five years, the United States has shown a positive trend in carpet imports, with an annual growth rate of 7 %. In 2016, Afghan carpet exports to the country reached a remarkable US $ 5 million.
Similar to the European market, primary North American market segments include residential households, hotel chains, restaurants and other facilities. Carpets exported to the United States are usually sold at a cheaper price
9.– Leahy, Rob ( 2012 ). Understanding the market for Afghan rugs, November 7. Available from www.charlestonrugsblog.com / 2012 / 11 / 07 / understanding-the-market-for-afghan-rugs / .
( average US $ 150 per square metre ) than in the European market, as not only very high-end products but also medi-um-quality carpets find buyers in this market. Specialized carpet retailers and wholesalers trading in oriental carpets serve as the main distributors of Afghan carpets in the coun-try. The majority are located in the San Francisco Bay area. In addition to established distribution channels, online sites have started to emerge as another popular way to access Afghan carpets.
To penetrate the United States market, the following considerations will be important :
� Meet flammability and labelling standards for large carpets.
� Consider the General Certificate of Conformity, which ensures that a product complies with all ap-plicable regulations and standards of the United States Consumer Product Safety Commission.
� Follow colour, design, type of fibre and price trends, as these are important indicators for exports : » Kazaks and Chob Rangs in natural dyes of earth
and natural tones have market edge. » Contemporary designs such as gabbehs show
market potential.
Target market Market segment Distribution channelAfghan carpet exports 2016
( US $ )Annual growth of sector
imports ( 2012–2016 )
United States
Private households, hotels, restaurants, and other
facilities Wholesalers, retailers 5 million 16 %
Source : Trade Map ( 2017 ).
MEDIUM-TO-LONG TERM ( +3 YEARS )
The markets listed in the short-term section above also have export potential in the medium-to-long term, unless speci-fied otherwise. However, additional market research, product development and Strategy implementation would be re-quired and is unlikely to be completed in less than two years.
Japan
Japan is showing increasing interest in oriental rugs, includ-ing Afghan carpets. A select few leading Afghan firms have started to establish a foothold in Japan. Japanese carpet im-porters have also tested imports of Afghan hand-made prod-ucts. The majority of Afghan carpets reach Japanese buyers through wholesalers and retailers based in Tokyo who have di-rect contacts with Afghan export traders or carpet enterprises.
The market for Afghan carpets in Japan is currently small; however, there are significant opportunities. Japan imported US $ 569 million in carpets in 2016, compared with US $ 520 million 10 years ago. Afghanistan has been increasing its export share in Japan with an annual increase of 11 % since 2012, with exports reaching US $ 28,000 in 2016.
By establishing further ties with the Japanese market, Afghanistan has a great chance to increase its exports to Japan in the medium term. The market includes not only high-income buyers in private households but also major hotel chains, shops, boutiques and restaurants.
Most carpet retailers in Japan offer online sales, which could be expanded for the East Asian market. Additionally, strengthening visibility through participation at trade fairs in Japan would help to establish the reputation of Afghan carpets in Asian markets.
34
[ AFGHANISTAN’S NATIONAL EXPORT STRATEGY / CARPETS SECTOR 2018-2022 ]
To penetrate the Japanese market, Afghan carpet ex-porters should consider the following :
� Respect the Household Goods Quality Labelling Act for carpet sales for household use, which re-quires labelling the composition of fibres as well as the name, address and telephone number of the party responsible for labelling.
� Align with the Textile Goods Quality Labelling Regulations.
� Fulfil requirements of the Act on Control of House-hold Products Containing Harmful Substances and the Fire Service Act for flame-retardant standards, especially for carpets used in public facilities.
� Market the eco-friendliness of production, as this is an area of increasing interest.
Canada
Based on existing ties with the United States market, there are spillover effects to the Canadian market. Expansion of online marketing in the United States simultaneously con-tributes to market penetration in Canada. North American countries import 29.5 % of carpets globally, which makes them the second-largest carpet-importing bloc in the world. Canada imported US $ 686,000 of Afghan carpets in 2016. Imports of Afghan carpets have increased 9 % annually since 2012. Similarity to the United States market allows exports to be distributed to the Canadian market through existing American marketing channels. Given positive export trends
and established trade links, Canada is a promising export destination in the medium term. Once Canadian carpet trad-ing hubs are established, trading channels with Afghanistan can be strengthened. Target buyers are high-income house-holds, hotel chains, restaurants and other facilities.
Middle East
Carpets are historical symbols of wealth in Middle Eastern culture and Middle Eastern consumers understand the val-ue of hand-woven carpets. The high-end luxury industry, to which carpets belong, is flowering in the region. Exports to the UAE have been slowly increasing over the past 10 years, with Afghan hand-made carpets steadily building a high reputation for quality. Exports in 2015 were valued at US $ 527,000. Market penetration in the UAE can open the door to the Middle Eastern market, which shows increasing interest in carpets.
India
As one of the most important export destinations for Afghan products, India is a potential export market for the Afghan carpet industry. Afghan carpets are not yet established in the Indian market, which is unsurprising considering that India has its own prominent domestic carpet industry that satisfies most local demand. Nevertheless, this does not mean that Afghan carpets cannot penetrate the Indian market, espe-cially when making use of the recently established air cor-ridor between the two countries. Strong existing trade ties in India will also help to establish the reputation for hand-woven Afghan carpets. Adding carpets to the existing export basket to the Indian market would help Afghanistan to diversify its exports to one of its most important export destinations.
Box 3 : Export potential in selected Middle Eastern markets
The UAE has been revealed as the main market with untapped potential, with over 47 % of its US $ 3.7 million export potential still unrealized. Emirati importers are increasing imports of carpets. Current imports of US $ 49.2 million are expected to increase by 22 % until 2020. Afghan products are imported at a cheaper price than competitor products. To realize the great export potential in the Emirati market, Afghan exporters have to overcome various non-tariff measures, ranging from sanitary and phytosanitary issues to labelling requirements.
The Islamic Republic of Iran is another attractive market for Afghan carpets, with an unrealized potential of US $ 1.5 million. Despite
Afghanistan facing a high tariff of 50 %, it does not suffer from a tariff disadvantage as other competitors also face a 50 % average tariff. The Iranian market has a positive outlook with expected growth of 18 % by 2020.
The Lebanese market is another hardly explored market with an unrealized export potential of over 85 %, even though Afghan carpets are imported at a higher price than their competitors’ products. Nevertheless, Afghan carpet exporters can benefit from the growing Lebanese market in the future and establish the Afghan brand by penetrating an untapped market opportunity.*
* ITC (2017) – Yvan Decreux, Maria Del Mar Cantero and Julia Spies: Reconnecting Afghanistan to global markets
– An ITC assessment of export potentials and trade obstacles.
[ AFGHANISTAN’S DILEMMA : TO COPE OR THRIVE ]
35
Box 4 : Export potential in selected Middle Eastern markets (cont.)
Figure 18 : Export potential in the UAE
United Arab Emirates: HS 570110 – Carpets and other textile floor coverings, of wool or fine animal hair, knotted, whether or not made up
MARKET ENTRY REQUIREMENTS
UNTAPPED EXPORT POTENTIAL DEMAND
USD 1,763 tsdUSD 49.2 mn2011-2015
2020
22%
APPLIED TARIFF
Note: information on non-tariff measures and unit values is not available for all countries.
Afghanistan: 5% Ø other suppliers: 5%
Tariff advantage: 0pp
COMPETITION
Concentrated
equivalent suppliers
Main suppliers: Iran, India, Afghanistan
• Special authorization requirement for SPS reasons • Certification requirement• Prohibition for TBT reasons• Authorization requirement for TBT reasons• Import monitoring and surveillance requirements and other automatic licensing measures• State trading enterprises, for importing• Registration requirements for importers• Storage and transport conditions • Product registration requirement• Inspection requirement• Requirement to pass through specified port of customs• Import monitoring and surveillance requirements and other automatic licensing measures• Labelling requirements
(Original documents available at www.macmap.org) UNITED VALUERelative index: 0.8
Figure 19 : Export potential in the Islamic Republic of Iran
Iran: HS 570110 – Carpets and other textile floor coverings, of wool or fine animal hair, knotted, whether or not made up
UNTAPPED EXPORT POTENTIAL DEMAND
USD 1,586 tsd
USD 7.8 mn2011-2015
2020
18%
APPLIED TARIFF
Afghanistan: 50% Ø other suppliers: 50%
Tariff advantage: 0pp
COMPETITION
Concentrated equivalent suppliers
Main suppliers: Germany, United Arab Emirates, Italy
Figure 20 : Export potential in Lebanon
Lebanon: HS 570110 – Carpets and other textile floor coverings, of wool or fine animal hair, knotted, whether or not made up
UNTAPPED EXPORT POTENTIAL DEMAND
USD 225 tsdUSD 9.1 mn2011-2015
2020
15%
APPLIED TARIFF
Afghanistan: 5% Ø other suppliers: 5%
Tariff advantage: 0pp
COMPETITION
Concentrated
equivalent suppliers
Main suppliers: Iran, Pakistan, IndiaUNITED VALUE
Relative index: 5.6
Source : ITC ( 2017 ) : Reconnecting Afghanistan to global markets
– An ITC assessment of export potentials and trade obstacles.
Source: ITC
[ STRATEGIC ORIENTATIONS FOR REVIVING THE AFGHAN CARPETS SECTOR ]
37
STRATEGIC ORIENTATIONS FOR REVIVING THE AFGHAN
CARPETS SECTOR
VISION
The Afghan carpets sector is united by the following vision :
“ A competitive sector blooming with looms ”
In order to fulfil this ambitious vision and the bottom lines described above, the following strategic objectives have been identified. These objectives provide a framework for developing solutions over the next five years. They are as follows.
STRATEGIC OBJECTIVE 1 : PRESERVE / CAPTURE INCREASED VALUE AT THE INPUTS AND PROCESSING STAGES OF THE VALUE CHAIN.
This strategic objective has the goal of repatriating value cur-rently leaking outside the country ( specifically to Pakistan ) through the inputs and processing stages of the value chain.
On the inputs side, the paucity of high-quality, well-treat-ed domestic wool has created a dependence on imports that is untenable. Afghan wool – especially from Ghazi – is of high quality but supply is weak. For this reason, the mar-ket is dominated by imports of high-quality and expensive wool from Belgium and relatively low-quality and cheap-er wool from the Islamic Republic of Iran and Pakistan. Recommendations to address this situation include estab-lishing shared service centres that can supply good quality scoured / spun / dyed yarn to traders and weavers, and pro-viding assistance to sheep breeders in the area of animal husbandry, enabling them to increase the volume of Afghan wool in the medium-to-long term.
To achieve the goals of value retention and building a strong Afghan brand, it is imperative that the cut and wash finishing process is brought back to Afghanistan. Currently, 90 % of Afghan carpets are sent unfinished to Pakistan for
a combination of reasons, which include Pakistani exper-tise in finishing, readily available chemicals for finishing, processing facilities, low cost of labour, year-round warm weather and the proliferation of Pakistani traders that have established networks in international markets. These carpets – primarily from the Chob Rang line – do not carry the Afghan brand once they are finished and shipped.
To counter this significant leakage of value outside Afghanistan, support for upgrading existing cut / wash / dry facilities and developing new ones will be proposed, both through integrated production facilities ( such as the shared service centres mentioned above or the industrial parks be-ing established by the Government ) and through individual enterprises. The development of these valuable services will increase the number of carpets finished within the country ( around 5 % at present ), which will, in turn, retain value inside the sector and spur job creation and a rise in income. The Strategy will also support the Government’s ongoing efforts to establish industrial parks for the sector, in particular by re-viewing and rectifying infrastructural and technical challenges.
38
[ AFGHANISTAN’S NATIONAL EXPORT STRATEGY / CARPETS SECTOR 2018-2022 ]
Figure 21 : Future value chain – strategic objective 1
Inpu
tsPr
oduc
tion
Asse
mbl
yPr
oces
sing
Dis
trib
utio
nD
omes
tic m
arke
t
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Rang
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lk m
anuf
actu
rers
Impo
rts
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put
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(& Ir
an)
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l man
ufac
ture
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Chem
ical
and
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ural
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man
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ture
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ian
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t tra
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Han
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ving
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ader
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igne
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iler
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rter
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estic
Mar
ket
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ng c
ompr
ises
70%
of t
rade
d vo
lum
e b
y va
lue
- Afg
han
trad
ition
al c
arpe
ts
Reim
port
Cutte
rsTo
tal E
xpor
t USD
90.
2 m
illio
nTo
p Ex
port
Des
tinat
ions
(S
ourc
e Co
mtra
de P
akis
tan:
di
rect
dat
a, re
st m
irror
ed
data
)- P
akis
tan
USD
77.6
mill
ion
- USA
USD
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ion
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man
y US
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anad
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ed S
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ign
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able
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ign
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ign
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es fo
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/ w
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eing
tech
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gy
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ving
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tmen
t
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zing
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n
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band
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ort
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ease
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entio
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t
Inte
rnat
iona
l mar
ket
[ STRATEGIC ORIENTATIONS FOR REVIVING THE AFGHAN CARPETS SECTOR ]
39
STRATEGIC OBJECTIVE 2 : ENABLE PRODUCTIVITY ENHANCEMENT OF SECTOR OPERATIONS THROUGH INCREASED COORDINATION AND APPROPRIATE SKILLS UPGRADING.
This strategic objective is focused on improving the sector’s capacity through upgrading skills demanded by the market and enhancing technology in sector operations. The fact that carpets are a traditional sector in Afghanistan means that skills need to be formalized and upgraded to ensure a proper and sustained human capital supply to the industry, but there is currently no cooperation between private sector stakeholders and educational institutions. Hence, there is no relevant training for the sector in any formal education.
Sound links need to be established between the private sector and education and training institutions to facilitate innovation and growth in the industry. Dialogue and coor-dination will be fostered through the engagement of edu-cational institutions in developing courses required by the sector. Further, international exchanges will be promoted to increase the pool of skilled labour with design expertise.
Operationally, this translates to several activities, includ-ing scholarships and exchange programmes for students and professors with foreign design institutes. Upgrading skills in the carpet value chain will also be fostered through the launch of a practical training initiative targeting car-pet exporters in order to increase their entrepreneurship and marketing skills as well as their financial knowledge. Building the capacity of carpet producers to adapt to buyer
requirements through the provision of computerized de-sign training is also an activity to be implemented. Another key measure will be the creation of a master weavers pro-gramme that will have the dual objective of transferring the expertise of skilled weavers to the younger generation while rewarding the skills of these experienced weavers by provid-ing additional income.
Traditional weaving methods can be maintained within the industry as a differentiating attribute among competitors. However, this does not impede the adoption of technology to scale up production and add value at higher stages of the value chain. In operational terms, technology enhance-ment will be achieved by promoting investment in the carpet industry. Tailored incentives will be created to encourage the Afghan diaspora to invest in the carpet sector.
Another key measure will be to improve access to fi-nance, which can enable capital accumulation and busi-ness expansion. A first step to achieve this operational objective will be to sensitize commercial banks on sector stakeholders’ financial needs, as well as encourage banks to develop financing products that are appropriate for the industry. Finally, activities aimed at strengthening collabo-ration among carpet producers will also be implemented under this strategic objective.
Photo: Carpets, FOX29886.jpg
40
[ AFGHANISTAN’S NATIONAL EXPORT STRATEGY / CARPETS SECTOR 2018-2022 ]
Figure 22 : Future value chain – strategic objective 2
Inpu
tsPr
oduc
tion
Asse
mbl
yPr
oces
sing
Dis
trib
utio
nD
omes
tic m
arke
t
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Rang
Woo
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lk m
anuf
actu
rers
Impo
rts
of In
put
Paki
stan
(& Ir
an)
Woo
l man
ufac
ture
rs
Chem
ical
and
nat
ural
dye
man
ufac
ture
rs
Belg
ian
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l
Paki
stan
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ool
Inpu
t tra
ders
Mac
hine
-mad
e
Prof
it-sh
arin
g
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Han
d-m
ade
Mid
dlem
en:
Subc
ontr
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r/ c
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t tra
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stri
al P
ark
Conn
ecte
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ving
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chas
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h
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ader
s
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rs
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irmen
Des
igne
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iler
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Larg
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s
Dom
estic
Mar
ket
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ompr
ises
70%
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rade
d vo
lum
e b
y va
lue
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han
trad
ition
al c
arpe
ts
Reim
port
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rsTo
tal E
xpor
t USD
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2 m
illio
nTo
p Ex
port
Des
tinat
ions
(S
ourc
e Co
mtra
de P
akis
tan:
di
rect
dat
a, re
st m
irror
ed
data
)- P
akis
tan
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77.6
mill
ion
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ion
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man
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Inte
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ket
[ STRATEGIC ORIENTATIONS FOR REVIVING THE AFGHAN CARPETS SECTOR ]
41
STRATEGIC OBJECTIVE 3 : IMPROVE REGULATORY AND INSTITUTIONAL SUPPORT FOR THE SECTOR.
This strategic objective aims to improve the socioeconomic conditions of the weaving community, mitigate child labour in the sector and provide crucial institutional support in the areas of quality management and land access, among other goals.
The weaving community – primarily comprised of wom-en – shoulders significant burdens. These include unhygien-ic working conditions, depressed wages with limited scope for negotiation, and a deeply entrenched culture of using child labour. The goal of the Strategy is to gradually counter child labour through an approach that incentivizes rather than punishes an already suffering weaving community. The approach is to bring weaving communities out of isolation and into weaving workshops / centres, where working condi-tions are healthier ( using good industry practices such as vertical versus horizontal looms ) and wages are fair ( daily wages rather than output-based ). The Strategy proposes a framework of existing carpet cooperatives or other forms of
associations where possible. These centres will have sup-porting infrastructure such as day care facilities for children while mothers are gainfully employed.
Certifications such as GoodWeave that have a pres-ence in the country can be a useful instrument to incentivize traders to employ decent practices in contracting weavers, through the promise of increased international access and recognition that comes with GoodWeave certification.
This strategic objective is also geared towards improv-ing the quality management infrastructure in the sector. This will be accomplished by developing / revising and deploying Afghan standards, strengthening the capacity of ANSA to cater to the needs of the sector, and developing an imports surveillance regime to ensure proper quality and grading of imported wool, among other activities. Finally, easing burdensome land regulations and streamlining property ownership and leasing will be a focus area addressed by the Strategy.
Photo: Carpets, FOX29798.jpg
42
[ AFGHANISTAN’S NATIONAL EXPORT STRATEGY / CARPETS SECTOR 2018-2022 ]
Figure 23 : Future value chain – strategic objective 3
Cutte
rs
Reta
iler
Expo
rter
Repa
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Des
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Stre
tche
rs
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s
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tal E
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t USD
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nTo
p Ex
port
Des
tinat
ions
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e Co
mtra
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akis
tan:
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rect
dat
a, re
st m
irror
ed
data
)- P
akis
tan
USD
77.6
mill
ion
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USD
4.9
mill
ion
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man
y US
D 92
6,00
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anad
a US
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urke
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ranc
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[ STRATEGIC ORIENTATIONS FOR REVIVING THE AFGHAN CARPETS SECTOR ]
43
STRATEGIC OBJECTIVE 4 : STRENGTHEN MARKET LINKS AND ENTERPRISE ABILITIES TO FORGE / SUSTAIN BUYER RELATIONSHIPS THROUGH IN-MARKET SUPPORT, BRANDING AND STREAMLINING CUSTOMS PROCEDURES.
To improve the carpet sector’s capacity to position itself in the global market, it is of utmost importance to strengthen market links and enterprise abilities to forge and maintain commercial relationships. Several factors contribute to the limited links between Afghan carpet companies and interna-tional operators, including the lack of opportunities to con-nect with potential buyers and develop expertise to compete in regional and international markets. Therefore, improving in-market support for enterprises is a prerequisite for ex-panding export opportunities.
In operational terms, this objective will be reached by facilitating the participation of Afghan carpet exporters in in-ternational fairs and exhibitions, along with business-to-busi-ness meetings in key target markets such as the UAE, the United States and Germany. Financial and logistical support will be provided through a grant mechanism for selected Afghan companies to participate in key events. To maximize business opportunities, beneficiary companies will also re-ceive assistance in the form of coaching to understand the market, support visa applications and facilitate one-on-one meetings with buyers, among other things.
Another key component of this strategic objective will be enabling trade attachés in key markets to provide relevant in-market support. Through this activity, Afghan companies will have access to reliable and tailored market informa-tion and will receive support to identify and connect with international partners. To improve dissemination of market intelligence to Afghan carpet exporters, market profiles for target markets will be developed and disseminated through mechanisms such as newsletters. This measure will promote the understanding of, and compliance with, import laws and regulations among Afghan carpet exporters.
As Afghan carpets are frequently exported under the label of a foreign country, strengthening the brand of the Afghan carpet sector is also a priority. A key component will be to explore the feasibility of establishing geographical in-dications for Afghan carpets in order to offer better legal pro-tection to domestic production. A careful examination should be undertaken to determine which Afghan carpet types linked to specific geographical regions within the country have the highest probability of, and potential benefits from, being awarded such legal protection. Geographical indica-tions can help increase the quality and marketing of specific Afghan carpet styles, since they are also a tool for branding and market promotion. Case studies in the region, such as the geographical indication provided to Pochampally Ikat
( sarees ) in India, should be studied to take advantage from lessons learned in other carpet-producing nations. Under this operational objective, sector-specific catalogues show-casing the attributes of the Afghan carpet industry will also be developed and disseminated.
Finally, it will be vital to streamline export clearance for the carpet sector. In operational terms, this objective will be reached by identifying and addressing the most bur-densome Customs procedures and common non-tariff measures that currently hinder carpet exports. Enhancing communication and cooperation with Customs authorities in neighbouring countries such as Pakistan will also be ex-plored. It is essential to improve data collection on cross-border trade of carpets, as well as to prevent and counter illegal activities damaging to the industry, such as smug-gling of carpets.
Photo: Carpets, FOX29796.jpg
44
[ AFGHANISTAN’S NATIONAL EXPORT STRATEGY / CARPETS SECTOR 2018-2022 ]
Figure 24 : Future value chain – strategic objective 4In
puts
Prod
uctio
nAs
sem
bly
Proc
essi
ngD
istr
ibut
ion
Dom
estic
mar
ket
Cob
Rang
Woo
lSi
lk m
anuf
actu
rers
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rts
of In
put
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stan
(& Ir
an)
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l man
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ture
rs
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ical
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ural
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ture
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ian
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stan
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t tra
ders
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hine
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it-sh
arin
g
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Han
d-m
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Mid
dlem
en:
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r/ c
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ving
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seho
lds
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han
trad
ition
al c
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ts
Reim
port
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rsTo
tal E
xpor
t USD
90.
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illio
nTo
p Ex
port
Des
tinat
ions
(S
ourc
e Co
mtra
de P
akis
tan:
di
rect
dat
a, re
st m
irror
ed
data
)- P
akis
tan
USD
77.6
mill
ion
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4.9
mill
ion
- Ger
man
y US
D 92
6,00
0- C
anad
a US
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0- T
urke
y US
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ranc
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In-m
arke
t sup
port
[ MOVING TO ACTION ]
45
MOVING TO ACTION
KEY REQUIREMENTS FOR EFFECTIVE IMPLEMENTATION
The development of the future value chain for the carpets sector is a five-year project defined through a consultative process between Afghan public and private sector stake-holders. Achieving the strategic objectives and realizing the future value chain depend heavily on the ability of sector stakeholders to start implementing and coordinating the activities defined in the Strategy’s PoA.
The Strategy in and of itself will not alone suffice to en-sure the sector’s sustainable development. Such develop-ment will require the coordination of various activities. While the execution of these activities will allow for the Strategy’s targets to be achieved, success will depend on the ability of stakeholders to plan and coordinate actions in a tactical manner. Apparently unrelated activities must be synchro-nized across the public sector, private sector, non-govern-mental organizations and local communities in order to create sustainable results.
To ensure the success of the Strategy, it is necessary to foster an adequate environment and create an appro-priate framework for implementation. The following section presents some of the key success conditions considered necessary for effectively implementation.
ESTABLISH AND OPERATIONALIZE A PUBLIC AND PRIVATE COORDINATING BODY AND EXECUTIVE SECRETARIAT
Carpets sector steering committee
A key success criterion for the Strategy is the ability to coor-dinate activities, monitor progress and mobilize resources for implementation. It is recommended that a steering com-mittee comprised of key public and private sector entities be formed or supported ( if such a committee already exists ). This will function as a platform with balanced representation of all major carpet stakeholders to share information openly.
It is proposed that the steering committee be responsible for the following tasks related to Strategy implementation :
� Coordinate and monitor the implementation of the Strategy by the Government, private sector, institutions or international organizations to ensure implementation is on track;
� Identify and recommend allocation of resources neces-sary for the implementation of the Strategy;
� Assess the effectiveness and the impact of the Strategy; � Ensure consistency with the Government’s existing
policies, plans and strategies, and align institutions’ and agencies’ internal plans and interventions with the Strategy PoA;
� Elaborate and recommend revisions and enhancements to the Strategy so that it continues to best respond to the needs and long-term interests of the national business and export community;
� Propose key policy changes to be undertaken, based on Strategy priorities, and promote these policy changes among national decision makers;
� Guide the sector secretariat for the monitoring, coordi-nation, resource mobilization, and policy advocacy and communication functions to enable effective implementa-tion of the Strategy;
� Provide the sector secretariat with the mandate and the necessary resources to fulfil its functions effectively.
Composition of the carpets sector steering committeeIt is recommended that the steering committee be com-prised of key entities involved in the sector, with special fo-cus on ensuring equitable involvement of both the public and the private sector.
Secretariat
A secretariat will assist the steering committee by acting as an operational body responsible for the daily coordination, monitoring and mobilization of resources for implementing the PoA. It is proposed that it takes on this role with tech-nical support from key ministries and technical agencies. The secretariat will be composed of one to two technical operators.
46
[ AFGHANISTAN’S NATIONAL EXPORT STRATEGY / CARPETS SECTOR 2018-2022 ]
The core responsibilities of the sector secretariat should be to :
� Support functioning of the carpets sector steering com-mittee;
� Collect and manage data to monitor the progress and impact of Strategy implementation;
� Liaise with and coordinate development partners for Strategy implementation;
� Elaborate project proposals and build partnerships to mobilize resources to implement the Strategy;
� Follow up on policy advocacy recommendations from the steering committee;
� Ensure effective communication and networking for suc-cessful Strategy implementation.
Both the carpets sector steering committee and its secretar-iat will work hand-in-hand with existing entities established to streamline Government operations and enhance donor operations. These include the NES secretariat and others. It is possible that the secretariat is accommodated as part of an existing entity with an extended mandate and resources allocated to it
Photo: Carpets, FOX29717.jpg
STRATEGIC PLAN OF ACTION
48
[ AFGHANISTAN’S NATIONAL EXPORT STRATEGY / CARPETS SECTOR 2018-2022 ]
Stra
tegi
c ob
ject
ive
1 : P
rese
rve /
capt
ure
incr
ease
d va
lue
at th
e in
puts
and
pro
cess
ing
stag
es o
f the
val
ue c
hain
Oper
atio
nal O
bjec
tives
Activ
ities
Prio
rity
1=hi
gh2=
med
3=lo
w
Impl
emen
tatio
n pe
riod
Targ
et*
Lead
and
Sup
porti
ng
Impl
emen
ters
2017
2018
2019
2020
2021
2022
1.1.
Impr
ove
the
prov
isio
n of
goo
d qu
ality
inpu
ts in
th
e se
ctor
.
1.1.
1. C
arry
out
a p
ilot p
rogr
amm
e to
sup
port
shee
p br
eede
rs in
hus
band
ry a
nd
prod
uctiv
ity.
• Id
entif
y ke
y as
socia
tions
and
coo
pera
tives
to s
erve
as
nucle
i for
the
pilo
t pro
-gr
amm
e in
main
carp
et-pr
oduc
ing p
rovin
ces.
• Ev
aluate
the r
each
of sh
eep b
reede
rs an
d the
ir pa
st wo
rk in
the ca
rpet
value
chain
. Ev
aluate
the i
mpl
emen
tatio
n ca
pacit
y of s
electe
d as
socia
tions
and
crea
te a p
ro-
file f
or ea
ch o
rgan
izatio
n.•
Deve
lop
the
train
ing
cont
ent (
curri
culu
m ) a
nd te
achi
ng m
ateria
ls. P
rogr
amm
e wi
ll inc
lude
train
ings o
n di
fferen
t area
s to
supp
ort t
he ca
rpet
indus
try, s
uch
as :
–Br
eed
impr
ovem
ent
–Ov
ergr
azin
g pr
even
tion
( e.g
. im
porta
nce
of re
sting
pas
ture
s an
d ro
tatin
g liv
esto
ck )
–Go
od p
ractic
es in
hus
band
ry an
d pr
oduc
tivity
–Di
seas
e prev
entio
n an
d m
anag
emen
t –
Raise
awa
rene
ss to
enc
oura
ge th
e pr
oduc
tion
of w
hite
shee
p wo
ol th
roug
h tar
geted
out
reach
info
rmati
onal
sess
ions
–Im
prov
e qua
lity o
f woo
l pro
ducti
on.
–La
unch
the p
ilot p
rogr
amm
e.
2•
Pilo
t pro
gram
me
set u
p an
d op
era-
tiona
l in
five
majo
r carp
et-pr
oduc
ing
prov
ince
s, in
clud
ing
Kabu
l, Ja
wzjan
an
d He
rat•
At le
ast 5
–10
shee
p br
eede
rs’ or
gan-
izatio
ns id
entif
ied a
nd a
sses
sed
and
prof
iles c
reated
MAI
L, M
oCI
ANSA
, Min
istry
of E
nerg
y an
d W
ater,
Min
istry
of R
ural
Reha
-bi
litati
on a
nd D
evelo
pmen
t, In-
depe
nden
t Dire
ctor
ate o
f Loc
al Go
vern
ance
1.1.
2. Ex
plor
e alte
rnati
ve m
ethod
s to w
ool s
cour
ing th
at ca
n im
prov
e the
effic
iency
, co
st-eff
ectiv
enes
s an
d wa
ter re
cove
ry / re
-use
in th
e wo
ol s
cour
ing
proc
ess
( e.g
. dr
y woo
l sco
uring
).
• Co
nduc
t a fe
asib
ility
study
.•
Asse
ss th
e pos
sibilit
y of c
ollab
orati
ng w
ith re
gion
al an
d inte
rnati
onal
instit
ution
s.De
velo
p pi
lot i
nitiat
ives a
nd ap
ply p
ilot d
emon
strati
on tr
ials u
sing
new
wool
scou
r-ing
tech
nolo
gies
.
3•
Five p
ilot in
itiativ
es de
velop
ed an
d five
co
rresp
ondin
g pilo
t dem
onstr
ation
tri-
als ar
e ope
ratio
nal
Afgh
anis
tan
Rese
arch
and
Ev
alua
tion
Unit,
MoC
I
1.1.
3. To
overc
ome t
he la
ck of
orga
nizati
on an
d as
socia
tions
in th
e woo
l sec
tor a
nd
the l
ack o
f pre-
weav
ing fa
ciliti
es, e
stabl
ish sh
ared
servi
ce ce
ntres
that
prov
ide s
er-vic
es su
ch as
woo
l sco
uring
, spi
nning
and d
yeing
of ya
rn to
prod
ucer
s’ as
socia
tions
in
majo
r woo
l pro
ducti
on ar
eas.
The f
ollo
wing
will
appl
y to
oper
ation
s with
in th
e cen
tres :
• Co
nduc
t fea
sibili
ty stu
dies
to s
elect
land
on w
hich
to e
stabl
ish th
ese
cent
res,
cons
ider
ing ac
cess
to w
ater a
nd e
lectri
city i
n ad
ditio
n to
strat
egic
loca
tion
vis-
à-vis
the r
est o
f the
supp
ly ch
ain.
• Fa
cilit
ate a
cces
s of
dye
ing
tech
nolo
gy to
sm
all o
pera
tors
; and
dev
elop
dye
-in
g, c
olou
r and
sha
de m
atchi
ng fa
ciliti
es to
impr
ove
the
colo
ur a
nd q
ualit
y of
fin
al pr
oduc
ts.•
Poten
tially
, the
se sh
ared
servi
ce ce
ntres
coul
d als
o of
fer cu
t and
was
h fac
ilitie
s.Th
e cen
tres c
ould
also
pro
vide :
• Sh
owro
oms t
o en
able
weav
ers t
o se
ll th
eir p
rodu
cts•
Stor
age f
acili
ties f
or fi
nishe
d pr
oduc
ts an
d raw
mate
rials
–De
sign
cent
res.
2•
Esta
blis
h at
leas
t five
sha
red
ser-
vice c
entre
s in
key p
rovin
ces s
uch
as
Jawz
jan, K
undu
z, Fa
ryab
, Her
at, a
nd
Kand
ahar
MoC
I, M
inist
ry o
f Ene
rgy
and
Wate
r, M
AIL,
ACC
I, AC
EG a
nd
asso
ciatio
ns
* Targets are indicative only and will be the subject of further refinement at beginning of the Implementation Management stage
Sim
ilarly
, the
lead
and
sup
port
ing
impl
emen
ters
col
umn
rem
ains
indi
cativ
e as
the
impl
emen
tatio
n w
ill re
quire
col
lect
ive
effo
rts,
for w
hich
add
ition
al in
stitu
tions
may
be
adde
d.
[ STRATEGIC PLAN OF ACTION ]
49
Stra
tegi
c ob
ject
ive
1 : P
rese
rve /
capt
ure
incr
ease
d va
lue
at th
e in
puts
and
pro
cess
ing
stag
es o
f the
val
ue c
hain
Oper
atio
nal O
bjec
tives
Activ
ities
Prio
rity
1=hi
gh2=
med
3=lo
w
Impl
emen
tatio
n pe
riod
Targ
et*
Lead
and
Sup
porti
ng
Impl
emen
ters
2017
2018
2019
2020
2021
2022
1.2.
Impr
ove
sect
or a
bilit
y to
und
erta
ke p
ost-
wea
v-in
g pr
oces
ses
insi
de t
he
coun
try.
1.2.
1. U
nder
take a
n ind
epen
dent
stud
y to
iden
tify t
he m
ain g
aps a
nd fl
aws i
n m
an-
agem
ent o
f gov
ernm
ent in
dustr
ial pa
rks de
dicate
d to c
arpets
. Ass
ess l
evels
of se
rvice
su
ppor
t, tec
hnica
l cap
aciti
es an
d ac
tivity
impl
emen
tatio
n, am
ong
othe
rs.Ba
sed
on id
entif
ied m
ain g
aps a
nd c
onstr
aints,
dev
elop
and
impl
emen
t cor
recti
ve
polic
y mea
sures
( e.g
. esta
blish
ing po
wer g
ener
ators
) and
tailo
red ca
pacit
y-bu
ilding
wo
rksho
ps ( e
.g. o
n im
prov
ing bo
okke
eping
) to k
ey go
vern
men
t offic
ials,
acco
rding
ly.
1•
An in
depe
nden
t stu
dy is
pre
pare
d to
as
sess
indu
strial
park
s•
Mea
sures
and
polic
ies ar
e dev
elope
d an
d int
egrat
ed, a
ccor
ding
ly
MoC
I, M
inis
try O
f Fi
nanc
e ( M
oF ),
Afgh
anist
an In
depe
nd-
ent L
and
Auth
ority
( ARA
ZI ),
Af-
ghan
istan
Cha
mbe
r of In
dustr
ies
and
Mine
s,AC
EG / a
ssoc
iatio
ns1.
2.2.
Laun
ch a
mul
titier
pro
gram
me t
o sup
port
the u
pgrad
e of e
xistin
g an
d th
e de-
velo
pmen
t of n
ew cu
t and
was
h fac
ilitie
s.Inc
rease
acce
ss to
cut
and
wash
facil
ities
with
in th
e co
untry
( as s
tand-
alone
bus
i-ne
sses
) thr
ough
this
mul
titier
pro
gram
me,
which
will
nee
d to
invo
lve :
• As
sess
men
t of e
xistin
g fac
ilitie
s, in
term
s of fu
nctio
ning o
f ope
ration
s, as
well
as
a mark
et an
alysis
to ev
aluate
incr
easin
g th
eir o
perat
iona
l cap
acity
.•
Feas
ibili
ty stu
dy o
f bus
iness
opp
ortu
nities
for t
he e
stabl
ishm
ent o
f new
cut
and
wash
facil
ities i
n main
prod
uctio
n pro
vince
s, inc
luding
the d
evelo
pmen
t of a
busi-
ness
mod
el wh
ere a
wash
and c
ut co
mpa
ny is
linke
d to s
mall
prod
ucer
s and
offer
s se
rvice
s suc
h as
qua
lity c
ontro
l and
labe
lling
( gen
eral
/ cus
tom
ized )
.•
Deve
lopm
ent o
f spe
cific
finan
cial s
chem
es.
• Te
chno
logy
tran
sfer.
• Tra
ining
on op
eratin
g and
main
tainin
g the
mac
hines
by cr
eatin
g link
s with
tech
nical
and
voca
tiona
l edu
catio
n an
d tra
ining
( TVE
T ) in
stitu
tions
in th
e area
. –
Entre
pren
eursh
ip fu
ndam
ental
s, am
ong
othe
r asp
ects
inclu
ding
con
tract
ne-
gotia
tion
skill
s.
1•
At le
ast fo
ur cu
t and
was
h fac
ilities
are
deve
lope
d / up
grad
ed p
er ye
arM
oCI,
ANSA
, Nat
iona
l Env
i-ro
nmen
tal P
rote
ctio
n Ag
ency
( N
EPA )
, Min
istry
of E
nerg
y and
W
ater, M
inistr
y of R
ural
Reha
bili-
tatio
n an
d De
velo
pmen
t, AR
AZI,
ACCI
, ACE
G / as
socia
tions
1.2.
3. Fa
cilita
te bu
sines
s-to
-bus
iness
links
betw
een c
ut an
d fini
sh se
rvice
supp
liers
and
carp
et pr
oduc
ers t
hrou
gh :
• Th
e or
gani
zatio
n of
fairs
and
exh
ibiti
ons
to b
ring
toge
ther
sup
plier
s an
d in
ter-
ested
par
ties.
–Th
e de
velo
pmen
t of a
dire
ctory
of c
ut an
d fin
ish se
rvice
supp
liers
to b
e di
s-se
mina
ted to
carp
et pr
oduc
ers t
hrou
gh w
ebsit
es an
d br
ochu
res.
2•
Two f
airs p
er ye
ar or
ganiz
ed in
six k
ey
prov
ince
s, su
ch a
s Ka
bul,
Jawz
jan,
Ku
nduz
, Fary
ab an
d He
rat•
A dir
ector
y is d
evelo
ped a
nd di
ssem
i-na
ted. D
irecto
ry up
dated
annu
ally
MoC
I ACC
I, ACE
G / as
socia
tions
1.2.
4. D
evelo
p str
ict op
erati
ng an
d en
viron
men
tal g
uideli
nes f
or q
ualit
y cut
ting
and
wash
ing o
f carp
ets.
Diss
emin
ate to
ser
vice
supp
liers
and
car
pet p
rodu
cers
thro
ugh
work
shop
s, br
o-ch
ures
and
webs
ites.
Enco
urag
e de
velo
pmen
t of s
ettlin
g po
nds t
o se
para
te to
xins f
rom
the
water
befo
re it
is di
scha
rged
.
2•
Guid
elin
es fo
r qua
lity
cutti
ng a
nd
wash
ing o
f carp
ets d
evelo
ped
• Tw
o wo
rksho
ps co
nduc
ted p
er ye
ar
NEPA
, MAI
L, AC
EG
1.2.
5. C
ondu
ct te
chni
cal s
tudi
es o
n im
prov
ed m
ethod
s an
d in
puts
to b
e us
ed in
po
st-we
aving
pro
cess
es.
• Fa
cilita
te co
llabo
ratio
n be
twee
n na
tiona
l and
forei
gn re
searc
h ins
titut
ions
on
re-se
arch
of u
pgrad
ed m
ethod
s and
inpu
ts to
be u
sed
in cu
t and
was
h pr
oces
ses.
• Co
nduc
t tec
hnica
l stu
dies
on
impr
oved
meth
ods a
nd in
puts
to b
e us
ed in
pos
t-we
aving
pro
cess
es.
Diss
emina
te rec
omm
enda
tions
to ca
rpet
prod
ucer
s and
asso
ciatio
ns th
roug
h sh
ort
cour
ses.
2•
Four
tech
nical
studi
es co
nduc
ted•
Four
shor
t cou
rses d
elive
red to
carp
et pr
oduc
ers a
nd as
socia
tions
MoC
I
50
[ AFGHANISTAN’S NATIONAL EXPORT STRATEGY / CARPETS SECTOR 2018-2022 ]
Stra
tegi
c ob
ject
ive
2 : E
nabl
e pr
oduc
tivity
enh
ance
men
t of s
ecto
r ope
ratio
ns th
roug
h in
crea
sed
coor
dina
tion
and
appr
opria
te s
kills
upg
radi
ngOp
erat
iona
l Obj
ectiv
esAc
tiviti
esPr
iorit
yIm
plem
enta
tion
perio
dTa
rget
Lead
and
Sup
porti
ng
Impl
emen
ters
1=hi
gh2=
med
3=lo
w
2017
2018
2019
2020
2021
2022
2.1.
Stre
ngth
en c
oop-
erat
ion
amon
g se
ctor
op
erat
ors.
2.1.
1. P
rom
ote
the
form
ation
of c
arpe
t pro
duce
rs’ a
ssoc
iatio
ns a
nd in
crea
se th
e m
embe
rship
of e
xistin
g as
socia
tions
• En
cour
age t
he fo
rmati
on o
f carp
et pr
oduc
ers’
asso
ciatio
ns th
roug
h th
e org
aniza
-tio
n of
aware
ness
-raisi
ng se
mina
rs an
d op
en-h
ouse
mee
tings
.•
Prom
ote,
thro
ugh
the
sam
e ch
anne
ls, th
e ex
pans
ion
of m
embe
rshi
p in
exis
t-ing
asso
ciatio
ns.
1•
Two s
emina
rs pe
r yea
r con
ducte
d in
four
main
pro
ducin
g are
as, s
uch
as
Jawz
jan, K
undu
z, Fa
ryab
and
Herat
MoC
I, M
AIL,
ACCI
, ACE
G /
asso
ciatio
ns
2.1.
2. Es
tablis
h a hi
gh-le
vel c
oord
inatio
n plat
form
amon
g sec
tor su
ppor
t insti
tution
s, inc
ludi
ng A
CEG
and
busin
ess a
ssoc
iatio
ns.
• Co
ordi
natio
n pl
atfor
m to
form
alize
per
iodi
c m
eetin
gs to
disc
uss
and
com
mun
i-ca
te on
new
pol
icies
and
any d
evelo
pmen
ts wh
ich h
ave a
n im
pact
on th
e sec
tor,
amon
g ot
her i
ssue
s.
1•
Coor
dina
tion
platf
orm
estab
lishe
d•
Quar
terly
mee
tings
are c
ondu
cted
MoC
I, M
AIL,
ACCI
, ACE
G / a
sso-
ciatio
ns, M
oF
2.1.
3. E
stabl
ish c
omm
unity
-bas
ed w
eavin
g co
oper
ative
s / w
eavin
g ce
ntre
s wh
ere
wom
en ca
n wor
k tog
ether
in a s
afe an
d con
duciv
e env
ironm
ent r
ather
than i
n iso
lation
.
• Ad
here
to b
est p
ractic
es an
d sa
fe eq
uipm
ent (
such
as ve
rtica
l loo
ms )
.•
Abilit
y to b
uy in
put s
uppl
ies at
who
lesale
costs
and t
hereb
y im
prov
e the
ir m
argins
.•
Wag
e-ba
sed
labou
r rath
er th
an p
er u
nit co
st.•
Estab
lish d
ay ca
re fac
ilities
in cl
ose p
roxim
ity to
com
mun
ity-b
ased
wor
king f
acili-
ties t
o pr
ovid
e a sa
fe en
viron
men
t to
care
for c
hildr
en w
hile w
omen
are w
orkin
g.Fe
male
-led c
oope
rative
s wou
ld be
Goo
dWea
ve lic
ense
es w
ith th
e add
ition
al be
nefit
of
acce
ss to
inter
natio
nal m
arkets
.
2•
A ce
ntre i
s esta
blish
ed in
each
of th
e fiv
e m
ain p
rodu
cing
prov
ince
s, in
-clu
ding
Kab
ul an
d He
rat
Min
istr
y of
Wom
en’s
Affa
irs,
Min
istr
y of
Lab
our,
Soci
al A
f-fa
irs, M
arty
rs a
nd D
isab
led
( MoL
SAM
D ), M
oCI, A
CCI, A
CEG
/ ass
ociat
ions
2.1.
4. C
reate
tailo
red
ince
ntive
s to
pro
mot
e di
aspo
ra p
artic
ipati
on in
the
carp
et ind
ustry
.Cr
eate
tailo
red in
cent
ives t
argeti
ng th
e di
aspo
ra to
dire
ct th
eir re
mitt
ance
s tow
ards
inves
tmen
ts in
the c
arpet
secto
r. Th
is m
easu
re to
be i
mpl
emen
ted in
harm
ony w
ith
othe
r inv
estm
ent p
rom
otio
n m
easu
res ta
rgeti
ng A
fgha
ns ab
road
. Inc
entiv
es ca
n po
-ten
tially
inclu
de th
e fol
lowi
ng su
gges
tions
:
• Ta
x reb
ates /
subs
idies
. Exp
lore a
nd as
sess
sim
ilar m
easu
res in
neigh
bour
ing co
un-
tries
, e.g
. Pak
istan
, and
their
appl
icabi
lity t
o th
e Afg
han
carp
et se
ctor.
–Di
aspo
ra b
onds
. Ide
ntify
and
eva
luate
exa
mpl
es, e
.g. I
ndia
or Is
rael.
Ass
ess
poten
tial a
pplic
abili
ty fo
r the
Afg
han
carp
et se
ctor.
3•
List o
f inc
entiv
es is
dev
elope
d an
d in
plac
eM
oCI,
Min
istry
of R
ural
Reh
a-bi
litati
on an
d De
velo
pmen
t, M
oF,
carp
ets as
socia
tions
2.2.
Est
ablis
h se
ctor
-spe
-ci
fic tr
aini
ng p
rogr
amm
es.
2.2.
1. S
et up
an in
stitu
tiona
l and
tech
nical
fram
ewor
k with
in th
e sec
tor c
oord
inatio
n pl
atfor
m fr
om ac
tivity
2.1
.2.,
such
as a
carp
et sk
ills c
ounc
il, to
be
resp
onsib
le fo
r pl
annin
g and
mon
itorin
g of in
dustr
y-rel
ated t
rainin
g and
skills
deve
lopm
ent. T
he ca
r-pe
t skil
ls co
uncil
to be
form
ed by
priva
te se
ctor r
epres
entat
ives,
relev
ant u
niver
sities
an
d TVE
Ts, a
s well
as m
inistr
ies in
relat
ed se
ctors
and t
he M
inistr
y of W
omen
’s Af
fairs.
Ident
ify a
priva
te se
ctor i
nter
locu
tor t
o be
resp
onsib
le fo
r com
mun
icatio
n wi
th ac
a-de
mia.
The
inter
locu
tor m
ust h
ave
influ
ence
and
supp
ort f
rom
oth
er p
rivate
secto
r sta
keho
lder
s.
1•
Carp
et sk
ills c
ounc
il es
tablis
hed
Min
istr
y of
Edu
catio
n ( M
oE ),
ACCI
, ACE
G, M
oCI
[ STRATEGIC PLAN OF ACTION ]
51
Stra
tegi
c ob
ject
ive
2 : E
nabl
e pr
oduc
tivity
enh
ance
men
t of s
ecto
r ope
ratio
ns th
roug
h in
crea
sed
coor
dina
tion
and
appr
opria
te s
kills
upg
radi
ngOp
erat
iona
l Obj
ectiv
esAc
tiviti
esPr
iorit
yIm
plem
enta
tion
perio
dTa
rget
Lead
and
Sup
porti
ng
Impl
emen
ters
1=hi
gh2=
med
3=lo
w
2017
2018
2019
2020
2021
2022
2.2.
Est
ablis
h se
ctor
-spe
-ci
fic tr
aini
ng p
rogr
amm
es.
2.2.
2. C
arpet
skill
s cou
ncil
to co
nduc
t a sk
ills g
ap st
udy o
n th
e sec
tor.
Cond
uct a
rapi
d ass
essm
ent o
f the s
ecto
r thr
ough
field
cons
ultati
ons w
ith pr
oduc
ers,
buye
rs, yo
ung
peop
le an
d tra
ining
insti
tutio
ns to
:
• Id
entif
y th
e sk
ills
dem
ande
d by
the
mar
ket i
n th
e di
ffere
nt s
tages
of t
he c
arpe
t va
lue c
hain.
• M
ap th
e exis
ting f
orm
al tra
ining
offer
, esp
ecial
ly in
traini
ng in
stitut
ions i
n the
north
as
well
as in
Her
at an
d Ka
bul.
Asse
ss th
e int
erest
of yo
ung
peop
le to
enga
ge in
the c
arpet
secto
r.
2•
Skills
gap s
tudy c
ondu
cted,
focu
sing
on th
e main
prod
ucing
area
s, inc
lud-
ing H
erat
and
Kabu
l
MoE
, ACC
I, AC
EG
2.2.
3. C
urric
ulum
dev
elopm
ent w
ith st
anda
rds a
nd ce
rtific
ation
sche
mes
adop
ted.
Base
d on t
he fin
dings
of th
e skil
ls ga
p stud
y, tra
ining
insti
tution
s will
be su
ppor
ted to
:
• De
velop
and i
mpr
ove c
urric
ula re
levan
t to th
e carp
et se
ctor i
n area
s suc
h as w
eav-
ing an
d ca
rpet
desig
n, in
cludi
ng co
mpu
terize
d de
sign
traini
ng.
• Int
egrat
e ent
repren
eursh
ip an
d int
rodu
ctory
busin
ess m
anag
emen
t mod
ules
.Al
ign
with
nati
onal
or in
terna
tiona
l stan
dard
s an
d ce
rtific
ation
sch
emes
to e
nsur
e rec
ognit
ion
of th
e qua
lifica
tions
and
mee
t mark
et req
uirem
ents.
2•
Curri
cula
deve
lope
dM
oE, A
CCI,
ACEG
, ANS
A
2.2.
4. R
oll o
ut m
arket-
relev
ant T
VET t
rainin
g pr
ogram
mes
.En
hanc
e and
roll
out t
echn
ical s
kills
traini
ng p
rogr
amm
es re
lated
to th
e carp
et se
c-to
r to
Afgh
an y
outh
, inc
ludi
ng s
choo
l dro
pout
s an
d re
turn
ees.
The
skill
are
as w
ill
be b
ased
on
the c
arpet
secto
r skil
ls ga
p as
sess
men
t and
the e
nhan
ced
curri
cula
in or
der t
o en
sure
align
men
t with
mar
ket r
equir
emen
ts. T
he tr
aining
pro
gram
mes
will
be
dep
loye
d th
roug
h :
• Ex
isting
loca
l trai
ning
instit
utio
ns en
gage
d in
carp
et se
ctor s
kills
deve
lopm
ent.
• Co
mpu
ter-b
ased
train
ing o
n ca
rpet
desig
n, en
trepr
eneu
rship
and
trade
.Sk
ills c
ompe
titio
ns an
d aw
ard m
echa
nism
s for
carp
et de
sign.
2•
Traini
ng pr
ogram
mes
focu
sed o
n the
ca
rpets
secto
r dev
elope
d an
d av
ail-
able
in fiv
e TVE
Ts
MoE
, ACC
I, AC
EG
2.2.
5. Pa
rtner
ship
s for
train
ing in
stitu
tions
. Esta
blish
arran
gem
ents
betw
een A
fgha
n tra
ining
insti
tutio
ns an
d reg
ional
/ int
erna
tiona
l trai
ning i
nstit
ution
s, pa
rticu
larly
with
co
untri
es w
ith e
xper
tise
in th
e ca
rpet
secto
r suc
h as
Indi
a, as
well
as in
terna
tiona
l co
mpa
nies p
rodu
cing n
eces
sary
techn
olog
y and
equip
men
t for
the c
arpet
secto
r to :
• Ex
chan
ge te
chnic
al kn
owled
ge o
n ca
rpet
desig
n an
d we
aving
• Co
nduc
t trai
ning
of tr
ainer
pro
gram
mes
to b
uild
instru
ctor c
apac
ity•
Acce
ss n
ew tr
aining
reso
urce
s•
Facil
itate
techn
olog
y and
equip
men
t tran
sfer.
3•
Two m
emor
andu
ms o
f und
erstan
ding
signe
d wi
th re
gion
al / i
nter
natio
nal
traini
ng in
stitu
tions
MoC
I, AC
CI, A
CEG
/ ass
ociat
ions
2.2.
6. A
ppren
tices
hip sc
hem
es in
carp
et de
sign
and
weav
ing. C
reate
a pro
gram
me
of m
aster
wea
vers
to tr
ansfe
r trad
ition
al sk
ills a
nd kn
owled
ge o
n ca
rpet
weav
ing.
Crea
te a s
hort-
term
paid
appr
entic
eship
pro
gram
me w
ith m
aster
craft
speo
ple t
o :
• De
liver
han
ds-o
n sk
ills t
rainin
g in
carp
et de
sign
and
weav
ing an
d en
sure
form
al kn
owled
ge tr
ansfe
r.Pr
ovid
e cer
tifica
tion
for t
he kn
owled
ge g
ained
.
3•
Mas
ter w
eave
rs pr
ogram
me c
reated
an
d ope
ration
al in
five T
VETs
scho
ols
/ ins
titut
ions
MoE
( TV
ET ),
MoL
SAM
D, A
CCI,
ACEG
/ as
socia
tions
52
[ AFGHANISTAN’S NATIONAL EXPORT STRATEGY / CARPETS SECTOR 2018-2022 ]
Stra
tegi
c ob
ject
ive
2 : E
nabl
e pr
oduc
tivity
enh
ance
men
t of s
ecto
r ope
ratio
ns th
roug
h in
crea
sed
coor
dina
tion
and
appr
opria
te s
kills
upg
radi
ngOp
erat
iona
l Obj
ectiv
esAc
tiviti
esPr
iorit
yIm
plem
enta
tion
perio
dTa
rget
Lead
and
Sup
porti
ng
Impl
emen
ters
1=hi
gh2=
med
3=lo
w
2017
2018
2019
2020
2021
2022
2.2.
Est
ablis
h se
ctor
-spe
-ci
fic tr
aini
ng p
rogr
amm
es.
2.2.
7. S
ensit
ize yo
ung p
eopl
e on s
kills
deve
lopm
ent a
nd ec
onom
ic op
portu
nities
in
the c
arpets
secto
r, pa
rticu
larly
retur
nees
, thr
ough
:
• Ra
dio
show
s with
loca
l cha
mpi
ons i
n th
e sec
tor.
• Ex
hibiti
ons a
nd fa
irs to
pro
mot
e the
secto
r am
ong
youn
g pe
ople.
• So
cial m
edia
and
othe
r onl
ine p
latfo
rms w
ith h
igh
yout
h pr
esen
ce.
3•
Four
loca
l cha
mpi
ons i
dent
ified
and
recru
ited
for r
adio
show
s•
At le
ast s
ix ra
dio
show
seg
men
ts de
dica
ted to
loca
l cha
mpi
ons
• On
e exh
ibiti
on a
year
in at
least
four
un
ivers
ities
, inc
ludi
ng b
ut n
ot li
m-
ited
to K
abul
Min
istr
y of
Com
mun
icat
ions
an
d In
form
atio
n Te
chno
logy
, M
oCI,
carp
et as
socia
tions
2.3.
Fac
ilita
te te
chno
logy
up
grad
e th
roug
h en
ablin
g ac
cess
to
com
pute
rize
d de
sign
ing
2.3.
1. D
esig
n a p
ractic
al tra
ining
initi
ative
targ
eted
at im
prov
ing th
e des
ign
abili
ties
of A
fgha
n ca
rpet
firm
s. Th
e init
iative
will
aim
to u
pgrad
e sec
tor t
echn
olog
y thr
ough
th
e use
of c
ompu
terize
d de
sign.
• Ca
rpet
skill
s cou
ncil
to b
e res
pons
ible
for t
he tr
aining
initi
ative
.•
Orga
nize
train
ing
and
expl
orato
ry m
issio
ns to
neig
hbou
ring
coun
tries
, e.g
. the
Isl
amic
Repu
blic
of Ir
an a
nd In
dia,
to id
entif
y th
e be
st-su
ited
info
rmati
on te
ch-
nolo
gy a
nd s
oftw
are s
ervic
es fo
r com
puter
ized
desig
n to
be
prov
ided
to w
eav-
ing co
mpa
nies.
• De
velo
p a
curri
culu
m fo
r sho
rt co
urse
s on
the
use
of c
ompu
terize
d de
signs
for
carp
et pr
oduc
ers a
nd as
socia
tions
.•
Hire
desig
ners
on a
cont
ract b
asis
to d
evelo
p de
signs
for s
electe
d m
arkets
.
2•
Prac
tical
traini
ng in
itiati
ve la
unch
ed
and
oper
ation
al, in
cludi
ng :
• Tw
o tra
inin
g an
d ex
plor
atory
mis-
sions
org
anize
d pe
r yea
r•
Two
shor
t cou
rses o
n co
mpu
terize
d de
sign
per y
ear
MoE
, Min
istry
of H
ighe
r Edu
-ca
tion,
MoC
I ( A
CEG
), Ka
bul
Unive
rsity
2.3.
2. A
s par
t of t
he tr
aining
initi
ative
on c
arpet
desig
n, st
rengt
hen l
inkag
es w
ith in
-ter
natio
nal f
oreig
n de
sign
instit
utes
thro
ugh :
• De
velo
ping
an
exch
ange
pro
gram
me
betw
een
Afgh
an s
tude
nts
and
stude
nts
of
forei
gn d
esig
n ins
titut
es, e
.g. I
ndia.
• De
velo
ping
and
rolli
ng o
ut a
sche
me t
o aw
ard sc
holar
ship
s to
traine
es.
• De
velo
ping
an ex
chan
ge p
rogr
amm
e for
pro
fesso
rs of
forei
gn d
esig
n ins
titut
ions
to
teac
h at
Afgh
an in
stitu
tions
• Pr
ovid
ing d
esig
n so
ftware
and
spec
ialize
d de
sign
plot
ter ( p
rinter
) to
carp
et pr
o-du
cers
( 50 )
2•
At le
ast t
wo m
emor
andu
ms
of u
n-de
rstan
ding
sign
ed w
ith fo
reign
de-
sign i
nstitu
tions
to im
plem
ent a
n ex-
chan
ge p
rogr
amm
e•
One
sche
me
to a
ward
sch
olar
ship
s de
velo
ped
• At
leas
t two
mem
oran
dum
s of
un-
derst
andi
ng si
gned
with
forei
gn d
e-sig
n in
stitu
tions
on
exch
ange
pro
-gr
amm
es fo
r pro
fesso
rs
MoE
, Min
istry
of H
ighe
r Edu
-ca
tion,
MoC
I ( A
CEG
), Ka
bul
Unive
rsity
2.3.
3. O
rgan
ize a
com
petit
ive b
iddi
ng p
roce
ss to
facil
itate
and
diss
emina
te ac
cess
to
com
puter
ized d
esig
n for
carp
et pr
oduc
ers a
nd as
socia
tions
. Des
ign a
mec
hanis
m
( e.g
. par
tial g
rants )
to fa
cilita
te ac
cess
at m
inim
um co
st.
2•
Softw
are de
velop
ed an
d acc
esse
d by
50 s
mall
and
med
ium
-size
d en
ter-
prise
s ( SM
Es ) /
carp
et as
socia
tions
MoE
, Min
istry
of H
ighe
r Edu
-ca
tion,
MoC
I ( A
CEG
), Ka
bul
Unive
rsity
2.4.
Enh
ance
ent
repr
e-ne
urs’
ski
lls.
2.4.
1. In
crea
se c
arpe
t exp
orter
s’ en
trepr
eneu
rship
skill
s. Co
nduc
t sho
rt co
urse
s to
train
carp
et ex
porte
rs in
busin
ess a
nd ex
port
man
agem
ent,
spec
ifica
lly :
• Un
derst
andi
ng b
usine
ss in
Afg
hanis
tan : l
icenc
es, t
ax re
gim
es.
• Un
derst
andi
ng ex
porti
ng : e
xpor
t pro
cedu
res an
d do
cum
entat
ion,
Inco
term
s. –
Nego
tiatio
n sk
ills :
pric
ing, n
egot
iating
and
proc
uring
ord
ers.
2•
Thre
e sh
ort c
ours
es a
re ro
lled
out,
targe
ting
20 to
30
carp
et ex
porte
rs
annu
ally
MoC
I, AC
CI
2.4.
2. D
evelo
p ca
rpet
expo
rters’
bran
ding
and
mark
eting
skill
s. Co
nduc
t bas
ic an
d ad
vanc
ed tr
aining
cour
ses o
n :
• Br
andi
ng, m
arke
ting
sales
and
clie
nts
relat
ions
hips
: cre
ating
and
dev
elopi
ng a
br
and,
reac
hing
out
to p
oten
tial b
uyer
s, pr
esen
ting
the
carp
et po
rtfol
io th
roug
h up
-to-d
ate m
arketi
ng p
ractic
es.
2•
Two
shor
t cou
rses
are
rolle
d ou
t, ta
rget
ing
20 to
30
carp
et e
xpor
t-er
s ann
ually
MoC
I, AC
CI
[ STRATEGIC PLAN OF ACTION ]
53
Stra
tegi
c ob
ject
ive
3 : Im
prov
e th
e re
gula
tory
and
inst
itutio
nal s
uppo
rt fo
r the
sec
tor
Oper
atio
nal O
bjec
tives
Activ
ities
Prio
rity
Impl
emen
tatio
n pe
riod
Targ
etLe
ad a
nd S
uppo
rting
Im
plem
ente
rs1=
high
2=m
ed3=
low
2017
2018
2019
2020
2021
2022
3.1.
Pro
gres
sive
ly im
prov
e w
ork-
ing
cond
ition
s in
the
sect
or.
3.1.
1. La
unch
an ad
voca
cy c
ampa
ign
to e
ncou
rage
trade
rs to
pro
gres
-siv
ely o
ffer w
ages
rath
er th
an p
er-un
it pa
ymen
t. Inc
entiv
ize th
is th
roug
h th
e opt
ion of
beco
ming
a Go
odW
eave
licen
see,
which
facil
itates
acce
ss
to in
terna
tiona
l mark
ets.
3•
One a
nnua
l cam
paig
n is r
olled
out
MoC
I, M
oLSA
MD,
ACE
G
3.1.
2. C
ondu
ct tw
o ro
und
tables
annu
ally,
targe
ting
30 p
rodu
cers
and
10 tr
ader
s.2
• Tw
o ro
und
table
s co
nduc
ted
an-
nuall
y, tar
getin
g 30
pro
duce
rs an
d 10
trad
ers
MoC
I, M
oLSA
MD,
ACE
G
3.1.
3. D
evelo
p a
posit
ion
pape
r aim
ed a
t lob
byin
g th
e Go
vern
men
t to
intro
duce
and
enf
orce
labo
ur re
gulat
ions
spe
cifica
lly ta
rgeti
ng c
arpe
t we
aving
.
3•
Posit
ion p
aper
dev
elope
d an
d di
s-se
mina
ted th
roug
h a s
emina
rM
oLSA
MD,
ANS
A, M
oCI, A
CCI,
ACEG
/ as
socia
tions
3.1.
4. To
impr
ove
the
healt
h co
nditi
ons
of a
rtisa
ns, c
reate
a s
chem
e to
add
ress
the
welfa
re re
quire
men
ts of
wea
vers
with
resp
ect t
o he
alth
and
insur
ance
.
2•
Sche
me i
s crea
ted an
d ope
ration
alM
inis
try
of P
ublic
Hea
lth,
MoL
SAM
D, M
oCI,
ACEG
/
asso
ciatio
ns3.
2. G
radu
ally
red
uce
the
pres
-en
ce o
f chi
ld la
bour
in th
e se
ctor
.3.
2.1.
Exten
d the
reac
h of n
on-c
hild l
abou
r cer
tifica
tions
such
as G
ood-
Wea
ve at
the n
ation
al lev
el.Su
ppor
t and
facil
itate
the
exten
sion
of n
on-c
hild
labo
ur c
ertif
icatio
ns
for c
arpe
t pro
duct
ion
in th
e co
untry
thro
ugh
natio
nal a
ware
ness
-rais-
ing ca
mpa
igns
.
2•
An an
nual
natio
nal a
waren
ess-
rais-
ing ca
mpa
ign
is ro
lled
out
MoC
I, M
oLSA
MD,
ANS
A, M
inis-
try o
f Pub
lic H
ealth
, ACC
I, AC
EG
3.2.
2. C
reate
incen
tives
such
as gr
ant s
uppo
rt to
facil
itate
the p
artic
ipa-
tion
of c
ertif
ied ‘n
o-ch
ild-la
bour
’ carp
et ex
porte
rs in
inter
natio
nal f
airs
and
exhib
ition
s.
2•
List o
f ince
ntive
s is d
evelo
ped a
nd
oper
ation
alM
oLSA
MD,
MoC
I, AC
CI, A
CEG
/ ass
ociat
ions
3.2.
3. C
ondu
ct co
mm
unity
-bas
ed aw
arene
ss-ra
ising
and e
duca
tion w
ork-
shop
s aim
ed a
t cha
lleng
ing
the
norm
of c
hild
labo
ur a
nd a
ssoc
iated
pr
actic
es in
the s
ecto
r.
3•
Two
works
hops
per
yea
r are
con
-du
cted
in fi
ve m
ajor
pro
duct
ion
prov
inces
MoE
, MoL
SAM
D, A
CEG
/ ass
o-cia
tions
, MoC
I
54
[ AFGHANISTAN’S NATIONAL EXPORT STRATEGY / CARPETS SECTOR 2018-2022 ]
Stra
tegi
c ob
ject
ive
3 : Im
prov
e th
e re
gula
tory
and
inst
itutio
nal s
uppo
rt fo
r the
sec
tor
Oper
atio
nal O
bjec
tives
Activ
ities
Prio
rity
Impl
emen
tatio
n pe
riod
Targ
etLe
ad a
nd S
uppo
rting
Im
plem
ente
rs1=
high
2=m
ed3=
low
2017
2018
2019
2020
2021
2022
3.3.
Impr
ove
qual
ity m
anag
emen
t at
the
inst
itutio
nal a
nd e
nter
pris
e le
vels
.
3.3.
1. C
onsid
er th
e de
velo
pmen
t of a
nati
onal
prod
uct c
ertif
icati
on
sche
me (
volu
ntary
) for
carp
ets b
ased
on
estab
lishe
d sta
ndard
s.
• Se
t up
an in
stitu
tiona
l and
tech
nica
l fra
mew
ork
with
in th
e se
ctor
co
ordi
natio
n pl
atfor
m fr
om a
ctivit
y 2.
1.2.
, suc
h as
a c
omm
ittee
on
quali
ty sta
ndard
s fo
r car
pets,
form
ed b
y pu
blic
and
priva
te s
ecto
r sta
keho
lder
s.•
Revis
e th
e qu
ality
stand
ards a
nd c
ertif
icatio
n sc
hem
e de
velo
ped
by
ACEG
.•
Revie
w th
e na
tiona
l stan
dard
s alr
eady
ado
pted
by
ANSA
app
licab
le to
the c
arpet
secto
r.•
Unde
r the
lead
ersh
ip of
ANS
A an
d in c
oope
ration
with
carp
et pr
oduc
-er
s’ an
d ex
porte
rs’ a
ssoc
iatio
ns a
nd o
ther
key
stake
hold
ers,
asse
ss
wheth
er ad
dition
al sta
ndard
s are
need
ed. P
oten
tial fo
cus c
ould
be on
: –
Quali
ty of
inpu
ts –
Quali
ty req
uirem
ents
for t
hrea
ds –
Proc
ess-
orien
ted s
tanda
rds
for w
eavin
g, w
ashi
ng a
nd /
or c
ut-
ting
carp
ets.
If suc
h stan
dard
s are
requir
ed, r
eque
st AN
SA to
inclu
de th
em in
the a
n-nu
al wo
rkplan
.
• AN
SA to
dev
elop
any
miss
ing
stan
dard
s th
roug
h th
e Te
chni
cal
Com
mitt
ee, i
nclu
ding
all
relev
ant p
ublic
and
priv
ate s
takeh
olde
rs,
with
carp
et as
socia
tions
as a
mem
ber.
• Di
ssem
inate
the e
stabl
ished
certi
ficati
on sc
hem
e thr
ough
: –
Deve
lopm
ent a
nd d
issem
inati
on o
f a g
uide
on
Afgh
an n
ation
al sta
ndard
s for
the p
rodu
ction
of c
arpets
. –
An aw
arene
ss-ra
ising
cam
paig
n, in
volvi
ng w
orks
hops
for p
rodu
c-er
s’ as
socia
tions
and
exp
orter
s, pa
rticu
larly
in m
ajor p
rodu
ction
co
mm
uniti
es an
d we
aving
cent
res.
• Ide
ntify
key p
ublic
and
priva
te se
ctor i
nstit
utio
ns w
hich
are th
e mos
t su
itabl
e to s
uppo
rt th
ese w
orks
hops
, con
sider
ing th
eir in
fluen
ce an
d rea
ch in
main
pro
ducin
g reg
ions
.•
Cond
uct w
orks
hops
for t
rader
s as w
ell, s
o the
y effe
ctive
ly dis
sem
inate
this
infor
mati
on to
pro
duce
rs th
ey w
ork w
ith.
1•
Natio
nal
prod
uct
cert
ifica
-tio
n sc
hem
e is
dev
elop
ed a
nd
oper
ation
al•
A gu
ide
is cr
eate
d an
d di
ssem
i-na
ted
thro
ugh
news
lette
rs a
nd
webs
ites
• A
com
preh
ensi
ve c
ampa
ign
is ro
lled
out,
incl
udin
g tw
o wo
rk-
shop
s pe
r yea
r con
duct
ed in
at
least
five m
ain pr
oduc
ing pr
ovinc
es
ANSA
, MoC
I, MAI
L, AC
CI, A
CEG
/ ass
ociat
ions
, NEP
A
3.3.
2. S
treng
then
the
capa
city o
f ANS
A to
eva
luate
and
certi
fy co
mpl
i-an
ce w
ith ca
rpet
stand
ards.
• As
certa
in th
e co
mpe
tenc
ies a
t ANS
A to
eva
luate
com
plian
ce w
ith
carp
et sta
ndard
s.De
velo
p an
d im
plem
ent c
apac
ity-b
uildi
ng p
rogr
amm
es to
brid
ge te
ch-
nical
capa
city g
aps.
1•
Tech
nical
asse
ssm
ent is
carri
ed ou
t an
d re
com
men
datio
ns a
re p
ut in
pl
ace a
ccor
ding
ly
ANSA
, MoC
I, MAI
L, AC
CI, A
CEG
/ ass
ociat
ions
, NEP
A
3.3.
3 Su
ppor
t pes
t con
trol i
n ca
rpet
storag
e fac
ilitie
s :
• De
velo
p an
d im
plem
ent a
n int
egrat
ed p
est m
anag
emen
t pro
gram
me
for c
arpet
storag
e fac
ilitie
s to
prev
ent a
nd m
anag
e pes
t inf
estat
ions
.Ide
ntify
and
train
respo
nsib
le sta
ff on
the
impl
emen
tatio
n of
integ
rated
pe
st m
anag
emen
t for
car
pet s
tora
ge fa
ciliti
es. R
eleva
nt st
aff m
embe
rs
to b
e trai
ned
in co
njun
ction
with
ACE
G an
d as
socia
tions
.
2•
Integ
rated
pest
man
agem
ent is
de-
velo
ped
and
oper
ation
al•
At le
ast 5
0 re
spon
sible
staf
f are
tra
ined
on
inte
grat
ed p
est m
an-
agem
ent f
or c
arpe
t sto
rage
facil
i-tie
s thr
ough
shor
t cou
rses
Min
istr
y of
Pub
lic H
ealth
, AN
SA, M
oCI, M
AIL,
ACCI
, ACE
G / a
ssoc
iatio
ns, N
EPA
[ STRATEGIC PLAN OF ACTION ]
55
Stra
tegi
c ob
ject
ive
3 : Im
prov
e th
e re
gula
tory
and
inst
itutio
nal s
uppo
rt fo
r the
sec
tor
Oper
atio
nal O
bjec
tives
Activ
ities
Prio
rity
Impl
emen
tatio
n pe
riod
Targ
etLe
ad a
nd S
uppo
rting
Im
plem
ente
rs1=
high
2=m
ed3=
low
2017
2018
2019
2020
2021
2022
3.3.
Impr
ove
qual
ity m
anag
emen
t at
the
inst
itutio
nal a
nd e
nter
pris
e le
vels
.
3.3.
4. D
evelo
p Afg
han t
echn
ical r
egula
tions
for i
mpo
rted w
ool to
ensu
re pr
oper
grad
ing o
r qua
lity a
ssur
ance
.
• De
velo
p Af
ghan
spec
ifica
tions
for w
ool i
mpo
rts.
• Es
tablis
h an
impo
rt ins
pecti
on re
gim
e. As
sess
the t
echn
ical c
apac
i-tie
s and
equip
men
t nee
ded
to co
nduc
t ins
pecti
ons,
verif
icatio
ns.
3•
Afgh
an te
chni
cal r
egul
ation
s ar
e cr
eate
d an
d en
forc
ed th
roug
h an
im
port
inspe
ction
regi
me
ANSA
, MoC
I, M
inistr
y of P
ublic
He
alth,
MAI
L, A
CCI,
ACEG
/ as
-so
ciatio
ns, N
EPA
3.4.
Fac
ilita
te im
prov
ed a
cces
s to
land
.3.
4.1.
Fac
ilitat
e inc
rease
d ac
cess
to g
over
nmen
t lan
d wi
th se
cure
titles
as
an in
terim
step
until
the on
going
proc
ess o
f doc
umen
ting p
rivate
land
tit
les is
fina
lized
. Thi
s will
invo
lve c
lear a
nd tr
ansp
arent
pro
cess
es fo
r pu
rcha
sing
and
leasin
g lan
d.
• De
velo
p an
inve
ntor
y of a
vaila
ble
land
for p
oten
tial n
ation
al an
d fo
r-eig
n inv
esto
rs ( e
.g. d
iaspo
ra ) i
n the
secto
r, tak
ing in
to ac
coun
t main
ca
rpet
prod
uctio
n are
as, b
asic
infra
struc
ture
ava
ilabl
e ( w
ater,
elec-
tricit
y ) an
d tran
spor
t rou
tes. D
evelo
p a co
mpr
ehen
sive c
orres
pond
ing
repor
t for
each
iden
tified
avail
able
land
area.
• Di
ssem
inate
the lis
t thro
ugh w
orks
hops
and o
ther d
issem
inatio
n cha
n-ne
ls, su
ch as
pos
ters a
nd n
ewsle
tters,
at th
e na
tiona
l and
pro
vincia
l lev
els. T
arget
audi
ence
sho
uld
be A
CEG,
ass
ociat
ions
and
pro
duc-
ers,
and
dias
pora
asso
ciatio
ns. P
rovid
e as
sistan
ce fo
r lan
d reg
istra-
tion
as re
quire
d.
2•
An
inve
ntor
y of
av
aila
ble
Gove
rnm
ent l
and
in a
t lea
st fiv
e pr
ovinc
es is
crea
ted•
At le
ast 1
5–20
repo
rts a
re d
evel-
oped
and
diss
emina
ted
ARAZ
I, M
oCI
3,4,
2. La
unch
a ca
mpa
ign
to p
rom
ote l
and
regist
ratio
n.
• De
velop
infor
mati
onal
mate
rial th
roug
h diffe
rent c
omm
unica
tion c
han-
nels,
inclu
ding
new
slette
rs an
d we
bsite
s of A
CEG
and
asso
ciatio
ns,
to c
omm
unica
te ad
mini
strati
ve p
roce
dures
for l
and
regist
ratio
n an
d ac
quisi
tion.
Con
duct
traini
ng se
ssio
ns fo
r carp
et co
mpa
nies o
n pr
o-ce
dures
for l
and
acqu
isitio
n an
d ad
mini
strati
on, c
urren
t lan
d ref
orm
ini
tiativ
es, d
isput
e sett
lemen
t mec
hanis
ms a
nd th
eir la
nd ri
ghts.
2•
A na
tiona
l cam
paig
n is
deve
lope
d an
d ro
lled
out a
nnua
lly
ARAZ
I, M
oCI
3.5.
Impr
ove
the
prov
isio
n of
fi-
nanc
e in
the
sect
or.
3.5.
1. In
crea
se a
ware
ness
of c
omm
ercia
l ban
ks a
bout
the
carp
et se
c-to
r’s fi
nanc
ial se
rvice
nee
ds.
• Th
roug
h bila
teral
mee
tings
and w
orks
hops
, cap
acita
te lea
ders
of AC
EG
and a
ssoc
iation
s to p
eriod
ically
com
mun
icate
with
indu
strial
lend
ers
to lo
bby f
or fi
nanc
ial su
ppor
t for
the c
arpet
secto
r.
2•
Two
work
shop
s tar
getin
g le
ader
s of
ACE
G an
d ass
ociat
ions p
er ye
arDa
Afg
hani
stan
Ban
k, A
fgha
n-ist
an B
anks
Ass
ocia
tion,
MoF
, M
oCI,
Afgh
anis
tan
Cham
ber
of In
dustr
ies
and
Min
es, A
CCI,
ACEG
/ as
socia
tions
3.5.
2. A
ssist
bank
s in a
sses
sing b
usine
ss pr
opos
als fr
om ca
rpet
com
pa-
nies t
hrou
gh ta
ilored
wor
king
sess
ions
out
lining
secto
r fina
ncial
need
s. Ex
plor
e ava
ilabl
e cred
it sc
hem
es in
neig
hbou
ring
coun
tries
such
as In
-di
a ( i.e
. con
cess
ional
credi
t for h
andl
oom
s ) an
d ass
ess a
pplic
abilit
y for
th
e Afg
han
carp
et se
ctor.
Desig
n an
d de
velo
p ap
prop
riate
finan
cing
mec
hani
sms (
inclu
ding
Is-
lamic
finan
cing p
rodu
cts an
d par
ticul
ar em
phas
is on
wom
en’s
acce
ss ).
2•
Two w
orkin
g ses
sions
are h
eld be
-tw
een
sect
or a
ssoc
iatio
n le
ader
s an
d ba
nks r
epres
entat
ives
Da A
fgha
nist
an B
ank,
Af-
ghan
ista
n Ba
nks
Asso
ciat
ion,
M
oF, M
oCI,
ACCI
, Afg
hani
stan
Wom
en C
ham
ber o
f Com
mer
ce
and I
ndus
try, A
CEG
/ ass
ociat
ions
56
[ AFGHANISTAN’S NATIONAL EXPORT STRATEGY / CARPETS SECTOR 2018-2022 ]
Stra
tegi
c ob
ject
ive
4 : S
treng
then
mar
ket l
inka
ges
and
ente
rpris
e ca
pabi
litie
s to
forg
e / s
usta
in b
uyer
rela
tions
hips
thro
ugh
in-m
arke
t sup
port,
bra
ndin
g an
d st
ream
linin
g of
cus
tom
s pr
oced
ures
Oper
atio
nal O
bjec
tives
Activ
ities
Prio
rity
Impl
emen
tatio
n pe
riod
Targ
etLe
ad a
nd S
uppo
rting
Im
plem
ente
rs1=
high
2=m
ed3=
low
2017
2018
2019
2020
2021
2022
4.1.
Enh
ance
in-m
arke
t sup
-po
rt fo
r car
pet e
xpor
ters
.4.
1.1.
Fac
ilitat
e par
ticip
ation
of c
arpet
expo
rters
in int
erna
tiona
l fair
s and
exhib
ition
s, in
com
bina
tion
with
bus
iness
-to-b
usine
ss m
eetin
gs in
key t
arget
mark
ets.
• De
velo
p a g
rants
mec
hanis
m th
roug
h wh
ich fi
rms c
an ap
ply f
or m
oneta
ry an
d lo
gis-
tical
supp
ort t
o th
e ev
ents
( exa
mpl
es in
clud
e th
e Int
erna
tiona
l Car
pet E
xhib
ition
in
Xinin
g an
d DO
MOT
EX ).
• Pr
ovid
e coa
ching
and
orga
nizati
onal
supp
ort f
or :
–Pr
e-ev
ent c
apac
ity-b
uildi
ng w
orks
hops
on m
arket
intell
igen
ce, In
coter
ms,
nego
tia-
tion
skill
s, ho
w to
mee
t and
follo
w up
with
forei
gn b
uyer
s, am
ong
othe
rs. –
Visa
appl
icatio
ns w
here
nece
ssary
. –
One-
on-o
ne m
eetin
gs w
ith b
uyer
s. –
Deve
lopi
ng m
arketi
ng co
llater
al.
1•
Four
car
pet e
nter
prise
s ar
e su
p-po
rted
to p
artic
ipate
in tr
ade
fairs,
pe
r yea
r
MoC
IM
inis
try o
f For
eign
Affa
irs,
ACCI
,AC
EG /
asso
ciatio
ns
4.1.
2. C
apac
itate
trade
atta
chés
in ke
y int
erna
tiona
l mar
kets
to e
nabl
e th
em to
pro
vide
relev
ant i
n-m
arket
supp
ort.
• At
taché
s to
prov
ide b
usine
ss su
ppor
t ser
vices
to in
teres
ted ca
rpet
expo
rters,
such
as :
–Cr
eatio
n of a
list o
f the
host
coun
try’s
impo
rt reg
ulati
ons a
nd re
strict
ions
, and
a lis
t of
pot
entia
l im
porte
rs / d
istrib
utor
s. –
Prep
are gu
idan
ce on
prici
ng of
carp
ets to
ensu
re co
mpe
titive
ness
in ta
rget
mark
ets
while
max
imizi
ng p
rofit
s.•
Cont
act d
etails
of k
ey b
uyer
s in
the t
arget
mark
et.
1•
At l
east
15
trade
atta
chés
are
tra
ined i
n key
inter
natio
nal m
arkets
, inc
ludi
ng P
akist
an, I
ndia,
UAE
and
the U
nited
Stat
es
MoC
IM
inis
try o
f For
eign
Affa
irs,
ACCI
,AC
EG /
asso
ciatio
ns
4.1.
3. C
ultiva
te int
erm
ediar
ies –
profe
ssion
al co
nsult
ants
– wh
o can
help
com
panie
s ove
r-co
me t
echn
olog
y and
lang
uage
barr
iers,
and
forg
e rela
tions
hips w
ith b
uyer
s.
• Cr
eate
a sho
rt co
urse
tailo
red fo
r the
Afg
han c
ontex
t on m
arketi
ng, s
ales a
nd cl
ient r
e-lat
ions
hips,
inclu
ding
curri
culu
m an
d tra
ining
mate
rials.
• De
liver
shor
t cou
rse to
staff
of co
nsult
ing co
mpa
nies a
nd in
depe
nden
t con
sulta
nts ( e
.g.
on b
usine
ss ad
visor
y ser
vices
) in
Afgh
anist
an.
2•
Two
shor
t cou
rses
are
con
duct
ed
per y
ear
MoC
I,
ACC
I,
ACEG
/
asso
ciatio
ns
4.1.
4. T
hrou
gh a
feas
ibili
ty stu
dy, e
valu
ate th
e po
ssib
ility
of e
stabl
ishin
g wa
reho
uses
an
d sh
owro
oms
in ke
y ex
port
mar
kets
as P
PP. L
aunc
h a
pilo
t in
a ke
y m
arke
t and
ex-
pand
it, a
s req
uired
2•
Feas
ibili
ty s
tudy
and
pilo
t de
velo
ped
MoC
I, AC
CI, G
uild
/ Ass
ocia-
tions
, MCI
T, co
mm
ercial
bank
s
4.1.
5.De
velo
p a p
ilot i
nitiat
ive o
n e-
com
merc
e for
the c
arpet
secto
r.
• Ex
plore
e-co
mm
erce p
otenti
al for
carp
ets th
roug
h a se
ctor s
tudy,
analy
sing e
-com
merc
e rea
dines
s, m
arkets
and a
vaila
ble o
nline
mark
et too
ls, pa
ymen
t pro
vider
s, log
istics
firm
s an
d inf
orm
ation
tech
nolo
gy in
frastr
uctu
re co
mpa
nies.
• Se
lect k
ey ta
rget
mark
ets an
d ex
amine
cons
umer
pro
tectio
n an
d e-
trans
actio
n law
s.•
Iden
tify
and
selec
t firm
s / c
oope
rativ
es, w
hich
will
ben
efit f
rom
the
pilo
t ini
tiativ
e. Co
mpe
titive
selec
tion
to b
e bas
ed o
n se
veral
facto
rs, in
cludi
ng ex
port
readi
ness
.•
Prov
ide
capa
city-
build
ing a
nd te
chnic
al as
sistan
ce to
sele
cted
firm
s / c
oope
rativ
es,
inclu
ding
: –
Setti
ng u
p a w
ebsit
e –
Onlin
e pay
men
t mod
ality
–Or
der f
ulfil
men
t•
Othe
r fun
ction
s, as
requ
ired.
3•
Five
firm
s /
coop
erat
ives
are
se
lected
• Pil
ot in
itiati
ve is
rolle
d ou
t
MoC
I, AC
CI, A
CEG
/ ass
ocia-
tions
, Mini
stry o
f Com
mun
ica-
tions
and I
nfor
mati
on Te
chno
l-og
y, co
mm
ercial
ban
ks
[ STRATEGIC PLAN OF ACTION ]
57
Stra
tegi
c ob
ject
ive
4 : S
treng
then
mar
ket l
inka
ges
and
ente
rpris
e ca
pabi
litie
s to
forg
e / s
usta
in b
uyer
rela
tions
hips
thro
ugh
in-m
arke
t sup
port,
bra
ndin
g an
d st
ream
linin
g of
cus
tom
s pr
oced
ures
Oper
atio
nal O
bjec
tives
Activ
ities
Prio
rity
Impl
emen
tatio
n pe
riod
Targ
etLe
ad a
nd S
uppo
rting
Im
plem
ente
rs1=
high
2=m
ed3=
low
2017
2018
2019
2020
2021
2022
4.2.
Pro
vide
han
d-ho
ldin
g su
ppor
t to
deve
lop
the
Af-
ghan
Car
pets
bra
nd.
4.2.
1. D
evelo
p tar
get m
arke
t pro
files
ser
ving
as a
n es
sent
ial s
ourc
e of
up-
to-d
ate a
nd
relev
ant m
arket
intell
igen
ce in
form
ing A
fgha
n ca
rpet
expo
rters.
• To
pics t
o inc
lude c
onsu
mpt
ion tre
nds a
nd pr
eferen
ces (
e.g. c
odes
of co
nduc
t, cer
tifica
-tio
ns ),
prod
uct d
iversi
ficati
on op
portu
nities
, impo
rt req
uirem
ents
( e.g
. qua
lity, fl
amm
a-bil
ity st
anda
rds,
labell
ing re
quire
men
ts ) an
d pro
cedu
res. A
dditio
nal to
pics c
ompr
ehen
d int
erior
desig
n tren
ds, in
cludin
g sele
ction
of pa
ttern
s and
colou
rs pe
r sea
son o
f the y
ear
A su
stain
able
mec
hani
sm fo
r upd
ating
and
dep
loyin
g th
e m
arke
t pro
files
will
be
de-
velo
ped.
Vari
ous m
edium
s for
dep
loym
ent t
o be
use
d, in
cludi
ng w
ebsit
es, n
ewsle
tters
2•
Ten
mar
ket p
rofil
es a
re d
evelo
ped
and
depl
oyed
• M
echa
nism
for u
pdat
ing
mar
ket
prof
iles i
s in
plac
e
MoC
IAC
CI
4.2.
2. D
evelo
p an
d pr
int li
teratu
re, b
roch
ures
and
prod
uct-s
pecif
ic ca
talog
ues a
nd p
re-pa
re sh
ort f
ilms t
o di
ssem
inate
info
rmati
on re
gard
ing
the
‘mad
e in
Afg
hani
stan’
carp
et ind
ustry
, with
the i
nten
tion
of b
uildi
ng an
d pr
omot
ing A
fgha
nistan
’s br
and
in th
e sec
tor.
Diss
emina
te inf
orm
ation
thro
ugh
relev
ant m
inistr
ies’ w
ebsit
es, c
onsu
lates
, and
in e
xhi-
bitio
ns an
d fai
rs.
2•
A co
mpr
ehen
sive
cam
paig
n is
deve
lope
d, ro
lled
out a
nd u
pdat-
ed a
nnua
lly, i
nclu
ding
the
deve
l-op
men
t of a
t lea
st on
e sh
ort f
ilm
on th
e ‘m
ade
in A
fgha
nista
n’ c
ar-pe
t ind
ustry
Min
istr
y of
For
eign
Affa
irsM
oCI,
ACCI
4.2.
3. C
ondu
ct a f
easib
ility
study
/ as
sess
men
t to
exam
ine
the
poten
tial e
stabl
ishm
ent
/ cos
ts an
d be
nefit
s of g
eogr
aphic
al ind
icatio
ns fo
r sele
ct typ
es o
f Afg
han
carp
ets. T
he
scop
e of
the
asse
ssm
ent w
ill in
clude
the
natio
nal a
s well
as su
bnati
onal
level,
in o
rder
to
affo
rd b
etter
lega
l pro
tectio
n to
Afg
han
carp
ets an
d fac
ilitat
e acti
on fo
r inf
ringe
men
ts.
3•
A fea
sibilit
y stud
y is c
ondu
cted a
nd
polic
ies /
mea
sure
s ar
e in
plac
e,
as re
quire
d
MoC
I ( In
telle
ctua
l Pro
per-
ty O
ffice
)
4.3.
Red
uce
Cust
oms-
rela
t-ed
cha
lleng
es fa
ced
by c
ar-
pet e
xpor
ters
.
4.3.
1. Id
entif
y the
mos
t bur
dens
ome C
usto
ms p
roce
dures
and
com
mon
non-
tariff
mea
s-ur
es co
nstra
ining
expo
rt of
carp
ets.
• Co
nduc
t a re
vision
of C
ustom
s leg
islati
on af
fectin
g carp
et ex
porte
rs in
parti
cular
thro
ugh
a sur
vey,
in or
der t
o str
eam
line e
xpor
t pro
cedu
res. D
evelo
p co
unter
mea
sures
acco
rd-
ingly,
such
as el
ectro
nic su
bmiss
ion o
f trad
e doc
umen
ts an
d tra
nsit-
relate
d pa
ymen
ts to
redu
ce th
e risk
of c
orru
ptio
n.•
Crea
te a t
rade o
bstac
le ale
rt sy
stem
to al
low se
ctor o
perat
ors t
o aler
t relev
ant a
uthor
ities
abou
t trad
e-rel
ated
obsta
cles t
hey f
ace
and
post
reque
sts fo
r ass
istan
ce ( e
.g. d
elays
in
receiv
ing e
xpor
ting
docu
men
ts ). M
echa
nism
to b
e co
ordi
nated
with
a wi
der i
nsti-
tutio
nal n
etwor
k ( in
cludi
ng th
e Ex
port
Prom
otio
n Ag
ency
of A
fgha
nistan
, Afg
hanis
tan
Custo
ms D
epar
tmen
t ).•
Incre
ase
trans
pare
ncy
of tr
ansit
and
bor
der r
egul
ation
s, in
cludi
ng th
e pu
blica
tion
of
fees a
nd fo
rmali
ties f
or ex
porti
ng ( e
.g. p
oster
s in
Custo
ms o
ffice
s ).
• Tra
in C
usto
ms
pers
onne
l on
bord
ers
which
are
key
for t
he c
arpe
t sec
tor (
e.g.
with
Pa
kistan
) on s
tream
lining
expo
rt cle
aranc
e fro
m A
fghan
istan
. Con
duct
aware
ness
-raisi
ng
works
hops
/ ca
mpa
igns
aim
ing to
chan
ge th
e mind
set o
f per
sonn
el.De
velo
p an i
nitiat
ive to
prov
ide s
pecif
ic tra
ining
and m
ento
ring s
ervic
es to
carp
et ex
port-
ers t
o en
able
them
to u
nder
stand
exp
ort p
roce
dure
s and
lega
l obl
igati
ons u
nder
cro
ss-
bord
er C
usto
ms a
utho
rities
.
2•
Revis
ion
of C
usto
ms l
egisl
ation
is
cond
ucted
• Qu
arter
ly tra
ining
s are
pro
vided
to
bord
er C
usto
ms p
erso
nnel
• Ini
tiativ
e is d
evelo
ped a
nd tr
aining
/ m
ento
ring
of 3
0 ex
porte
rs pe
r yea
r
MoF
, MoC
I, AC
CI, A
CEG,
as-
soci
ation
s, Af
ghan
istan
Cus
-to
ms D
epar
tmen
t
4.3.
2. Im
prov
e coo
rdina
tion
with
Cus
tom
s aut
horit
ies o
f neig
hbou
ring
coun
tries
.Th
roug
h bi
later
al di
scus
sions
and
the
estab
lishm
ent o
f coo
pera
tion
mec
hani
sms
and
agree
men
ts ( e
.g. C
usto
ms c
omm
ittee
s for
med
by t
wo n
eighb
ourin
g co
untri
es’ C
usto
ms
auth
oriti
es ),
facili
tate :
• Da
ta ex
chan
ge o
n ca
rpet
trade
betw
een
neig
hbou
ring
coun
tries
.Co
ordi
natio
n with
neig
hbou
rs thr
ough
the e
stabl
ishm
ent o
f an a
ction
plan
for c
ompl
iance
, sm
uggl
ing p
reven
tion
and
coor
dina
ted co
ntro
ls.
3•
Bilat
eral
Custo
ms
com
mitt
ees
are
form
ed w
ith at
leas
t two n
eighb
our-
ing co
untri
es•
Actio
n plan
is de
velop
ed in
coor
di-na
tion
with
Cus
tom
s aut
horit
ies o
f at
least
two n
eighb
ourin
g cou
ntries
MoF
, MoC
I, M
inist
ry o
f For
-ei
gn A
ffairs
, ACC
I, AC
EG /
as
socia
tions
Source: ITC
[ REFERENCES ]
59
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FSC is an independent, non-governmental, not for profit organization established to promote the responsible management of the world´s forests.
Printed by ITC Digital Printing Service on FSC paper, which is environmentally-friendly paper (without chlorine) using vegetable-based inks. The printed matter is recyclable.
Street address: ITC 54-56, rue de Montbrillant, 1202 Geneva, Switzerland
Postal address: ITC Palais des Nations, 1211 Geneva 10, Switzerland
Telephone: +41-22 730 0111 Fax: +41-22 733 4439E-mail: [email protected]: www.intracen.org
This project is funded by the European Union:
ADVANCING AFGHAN TRADEEU Trade-Related Assistance
In collaboration with:
AFGH
ANISTAN
• NATIO
NAL EXPO
RT STRATEG
Y - CARPETS SECTOR •
2018-2022