Last January in Tokyo, Chairman Karzai highlighted the private sector as the principal engine of growth for Afghanistan’s recovery. In Afghanistan as elsewhere in a rapidly globalizing world, the private and public sectors share mutually reinforcing roles in development.

A vibrant, dynamic private sector is needed for the speedy recovery of the Afghan economy, a recovery which is dependent on Afghan self-reliance, entrepreneurship and productivity. But that recovery cannot be sustained without trade and commerce between Afghanistan and its neighbours, both near and far. Hence the purpose of this conference, to examine and stimulate this economic interdependence between Afghanistan and its two close neighbours, Iran and Pakistan, and to address the driving forces of that interdependence – trade, private sector partnerships and public-private collaboration.

It is an honour to speak to this gathering in the dual capacity of Resident Representative of UNDP in Afghanistan, but also as Deputy Special Representative of the Secretary-General of the UN in that country. Wearing both hats, Excellency, may I thank you and your government for the welcome extended to all of us visiting Teheran and for the excellent arrangements made for this important event.

It is an honour for UNDP to be a partner in this endeavour and we hope to be able to play a continuing role in support of this trilateral co-operative initiative. Mr. Lakhdar Brahimi, Special Representative of the Secretary-General in Afghanistan, has also asked me to convey to you his warmest greetings. Unfortunately, the date for this conference coincides with a meeting that he is attending in Geneva on security sector reform and development of the new Afghan army and police force. Assured security is of course an essential ingredient for economic co-operation and trade between Afghanistan and its neighbours.

Mr. Brahimi extends his best wishes to all participants for success in your deliberations, and assures you of the commitment of the United Nations to support expanding peace, political stability and reconstruction in Afghanistan. These processes will create the conditions for private sector investment as well as for regeneration of the country’s productivity, export and trading capacity.

Internal and regional trade have always been vibrant elements of the Afghan economy, and there have always been strong ties of trade and commerce between the three countries. However, official imports and exports between Afghanistan and the two neighbouring countries are a fraction of what they were twenty years ago, while unofficial trade has flourished, even under the harshest conditions. Thus with peace returning to Afghanistan, the opportunities are enormous for expansion of trade and exchange, if governments help to open the door through lowering trade tariffs and barriers. Already Afghanistan has the lowest tariff regime of the three countries.

Business opportunities, especially in contracting for rehabilitation and reconstruction of infrastructure, and for materials supply, are considerable. Infrastructure development is an assured market and investment capital is starting to come in from the international community. The Interim Administration of Afghanistan has clearly provided assurances that it and successor administrations will work with the private sector to create and encourage investment opportunities.

External private sector investment is necessary to generate indigenous private sector capacity through joint ventures and concessionary arrangements, while the country has a vast untapped wage labour pool through which much-needed resources must be injected into local communities, to regenerate the rural and agro-based economy in particular. And global trends also point to private sector management of infrastructure that used to be within the purview of the state – water, electricity and telecommunications, for example.

Mr. Chairman, may I comment on Afghanistan’s efforts to assure four key factors for creating a business-friendly environment which encourages private sector investment. These factors are personal security for investors, safety of investment, assurance of a return on investment, and human capital formation.

First, personal security is linked to the restoration of law and order, the rule of law and respect for human rights. The plans to establish a small professional national army and a disciplined police force are underway. I have already mentioned the discussions taking place in Geneva to seek international support for these necessary initiatives. We in UNDP and the rest of the UN family will continue to support the restoration of civil institutions and reform of government institutions, which are required to encourage investment and safeguard investors.

Secondly, safety of investment. Afghanistan is aiming to develop new investment laws, which will bring to a close past practice characterise by state control and centrally-planned economic activity. Cabinet has already approved a new investment law. Efforts are underway to reform and revive central bank regulation, commercial banking and financial systems. The new national plan, the National Development Framework, makes a forthright commitment to a business-friendly environment and to enabling conditions for a competitive, market-driven economy. With the public sector assuring the necessary legal and statutory framework, Afghanistan will enable its own and neighbouring private sector partners to join hands in a mutually-beneficial development effort.

Thirdly, partners and investors of course anticipate a return on investment. But they must also be prepared to take commercial risks. Are there assured markets for neighbours in Afghanistan? Of course, and some of these have already been mentioned. Are there external markets for Afghan products? Of course – in neighbouring countries and beyond. Governments of the three countries have the opportunity to stimulate formal trading links through lowered tariff regimes and removal of barriers to trade, such as high freight rates. For landlocked Afghanistan, the issue of access to ports is vital, while transit trade is also a central item on the agenda of economic co-operation with its neighbours. Afghan manufacturers and traders in Iran and Pakistan have an important role to play in restoring cross-border trade and commerce, and can also provide knowledge, skills and capital for the reconstruction of their homeland.

Fourth and finally, human capital formation. We in the UN believe that we have a particular contribution to make in training and capacity-building, in social infrastructure support in Afghanistan and elsewhere, from provision of humanitarian assistance to help Afghans return home and re-establish sustainable livelihoods, to demining their fields and pathways, to helping rebuild a health care system which will attack impossibly high rates of child and maternal mortality. But allow me to give particular emphasis to investment in quality education and training at all levels – an absolute necessity for assuring creative private sector leadership, a qualified workforce and discriminating consumers. The economic success of South-East Asia since the 1970s was driven by early and consistent investment in quality education as an essential engine of growth, in everything from universal basic education through vocational education, universities and institutes of technology. If we help students, both boys and girls, to develop questioning, critical thinking, analytical and problem-solving skills, or co-operative work skills, we are helping to stimulate the entrepreneurial spirit which drives the economy and is the foundation of the private sector.

Mr Chairman, the Afghan people are tired of conflict and aspire to the opportunity to rebuild their homes, communities and institutions, to become increasingly productive, to build on their well-known entrepreneurial spirit. I am sure that I speak for my UNDP and other UN colleagues in all three countries represented here today, in reiterating our commitment to support such aspirations in Afghanistan, Iran and Pakistan, and to support the partnership that will be the focus of our discussion in the next two days.

Thank you.