SMEDA Business Guide Series

Procedure for Export to Afghanistan

Revised on November 10, 2005

Prepared By: Policy & Planning

Small and Medium Enterprise Development
Authority
Ministry of Industries, Production & Special Initiatives
Government of Pakistan
www.smeda.org.pk

HEAD OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE

LAHORE SINDH NWFP BALOCHISTAN

6th Floor, L.D.A Plaza, 5th Floor, Bahria Complex 2, Ground floor Bungalow No. 15-A
Egerton Road M.T.Khan Road, State Life Building Chaman Housing Scheme
Lahore-54792 Karachi The Mall, Peshawar Airport Road, Quetta.
Tel: 111-111-456 Tel: (021) 111-111-456 Tel: (091) 9213046-47 Tel: (081) 2831702/2831623
Fax: (042) 6304926 Fax: (021) 5610572 Fax: (091) 286908 Fax: (081) 2831922
helpdesk@smeda.org.pk helpdesk-khi@smeda.org.pk helpdesk-pew@smeda.org.pk helpdesk-qta@smeda.org.pk
 Procedure for Exports to Afghanistan Policy & Planning

Table of Contents

1. Introduction of SMEDA 03
2. Role of Policy & Planning & Strategy Department 03 - 04
3. Introduction to Exports 05
4. Afghanistan – A Potential Area for Exports 05
5. Government Notification for Exports to Afghanistan 05 – 06
6. List of Exportable Items 06 - 07
7. Required Documents 07
8. Export Procedure 08 - 09
9. Advantages of Exporting through Proper Channel 09
10. List of NGOs 10 - 11
11. List of Afghan Traders 11
12. Process Flow Chart 12
13. Annex 1(Form V 18) 13 – 14
14. Annex 2 (Form V 19) 15
15. Annex 3 (Form E) 16 - 18

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 Procedure for Exports to Afghanistan Policy & Planning

Introduction of SMEDA
The Small and Medium Enterprise Development Authority (SMEDA) was
established with the objective to provide fresh impetus to the economy through
the launch of an aggressive SME development strategy.

Since its inception in October 1998, SMEDA had adopted a sectoral SME
development approach. A few priority sectors were selected on the criterion of
SME presence. In depth research was conducted and comprehensive
development plans were formulated after identification of impediments and
retardants. The all-encompassing sectoral development strategy involved
overhauling of the regulatory environment by taking into consideration other
important aspects including finance, marketing, technology and human
resource development.

After successfully qualifying in the first phase of sector development SMEDA

reorganised its operations in January 2001 with the task of SME development
at a broader scale and enhanced outreachreach in terms of SMEDA’s areas of
operation. Currently, SMEDA along with sectoral focus offers a range of services
to SMEs including over the counter support systems, exclusive business
development facilities, training and development and information dissemination
through a wide range of publications. SMEDA’s activities can now be classified
into the three following broad areas:
1. Creating a Conducive Environment; includes collaboration with policy
makers to devise facilitating mechanisms for SMEs by removing
regulatory impediments across numerous policy areas
2. Cluster/Sector Development; comprises formulation and implementation
of projects for SME clusters/sectors in collaboration with industry/trade
associations and chambers
3. Enhancing Access to Business Development Services; development and
provision of services to meet the business management, strategic and
operational requirements of SMEs

SMEDA has so far successfully formulated strategies for sectors, including

fruits and vegetables, marble and granite, gems and jewellery, marine fisheries,
leather and footwear, textiles, surgical instruments, transport and dairy.
Whereas the task of SME development at a broader scale still requires more
coverage and enhanced reach in terms of SMEDA’s areas of operation.

Along with the sectoral focus a broad spectrum of services are now being offered
to the SMEs by SMEDA, which are driven by factors like enhanced interaction
amongst the stakeholders, need based sectoral research, over the counter
support systems, exclusive business development facilities, training and
development for SMEs and information dissemination through wide range of
publications.

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 Procedure for Exports to Afghanistan Policy & Planning

ROLE OF POLICY & PLANNING DEPARTMENT

The Policy & Planning department of SMEDA is the hub of policy and regulatory
research that feeds national, provincial and local government institutions, SME
associations, industrial clusters and individual entrepreneurs with the ultimate
objective of creating a conducive business environment. It has a mandate to
identify and where suitable initiate strategic projects. The Policy & Planning of
SMEDA plays a key role in providing an overall policy direction to SMEDA,
under which SMEDA provides support to SMEs. The PP provides guidance
based on field realities pertaining to SMEs in Pakistan and other parts of the
world. Information resource center of SMEDA is an integral part of Policy &
Planning department while development of Regulatory Procedures is a part of
an overall information dissemination function of the department.

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 Procedure for Exports to Afghanistan Policy & Planning

Introduction to Exports
To Export means to sell in another country. This involves complex procedures,
including filing and exchange of documents, both in the country of Export (from
where items are to be shipped/dispatched) and in the country of Import (where
these items are to be discharged/delivered). The requirement of documentation
arises due to the fact that the items that are exported are to be sold to some one
who is thousands of miles away, speaking a different language, having different
customs, preferences, currency and import regulations. In order to facilitate
trade with other countries, certain sets of rules have been developed by the
trading nations over the centuries, which are normally followed in foreign trade
today. The International Trade is governed by rules made by the World Trade
Organisation (WTO). Details on WTO can be obtained from Information Advisory
Centre (IAC) of the EPB.

Afghanistan – A Potential Area for Exports

Afghanistan is undergoing a period of restructuring and reconstruction. This
provides ample opportunity to countries for exports. Pakistan, being a neighbor,
realizing the importance of the huge Afghan export market and enjoying land
access to Afghanistan has simplified procedures for exporters to export goods to
Afghanistan. It is expected that Pakistani exports to Afghanistan will cross the $
1 billion mark by the end of this year. Afghanistan being a low tech market
provides ample opportunity for low tech firms in Pakistan to export. Its
proximity to Pakistan and low cost of transport gives Pakistani exporters a
competitive edge. This document has been developed with the scope to facilitate
exporters and streamline the procedure of exports. The relevant policies are
extracted from Ch.XII of Foreign Exchange Manual, State Bank of Pakistan and
Export Policy & Procedure 2002-2003

Government Notification Regarding Export to Afghanistan1

The government of Pakistan is providing various incentives regarding exports to
Afghanistan. In this regard,
1. In Pak Rupee, Export of all commodities produced or manufactured in
Pakistan, excluding those manufactured in manufacturing bonds, would be
allowed via land route, against Pak-rupee on filing of regular shipping bills
without Form “E”. Such exports shall not be entitled to;
 Zero rating of Sales Tax on Taxable goods
 Rebate of central excise duty
 Repayment of drawback of customs duty

2. In Convertible Currency, all items and commodities produced or

manufactured in Pakistan exported, via land route or by air against

1
The original text of Export Policy & Procedures Order 2002-2003 Page # 7-9, Para 8 (1) & (2)
complete and Foreign Exchange Manual 2002, Ch XII Para 13, 24 & 25 is available at
www.cbr.gov.pk

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 Procedure for Exports to Afghanistan Policy & Planning

irrevocable letters of credit, or advance payment, in convertible foreign

currency, shall be allowed;
 Zero-rating of sales tax on taxable goods
 Rebate of central excise duty
 Repayment for drawback of customs-duty

Exports shall be subject to the following conditions:

The Pakistan Embassy or consulate in Kabul, Kandhar and Jalalabad would

verify the arrival of export consignments from Pakistan. This condition of
verification from Pakistan missions would remain suspended until these
Missions or Sub-Missions become fully functional

The Central Board of Revenue would strictly monitor the exports to Afghanistan
and in case of any misuse of the facility the item involved would be taken out of
the permissible list by the Ministry of Commerce

Packages or retail packing would be clearly marked with the expression “For
Export Only”, provided that:
 Only duty drawback rates or rebates would be available
 Export would be allowed only through authorised export routes i.e. Torkhum
and Chaman
Export of goods which are made by or on behalf of International Relief
Organizations against International Tenders as relief goods to Afghanistan
would be allowed the facility of normal duty drawback, subject to the following
conditions:
 The Export proceeds are realized in foreign currency
 Each individual packing of consignment bears indelible and prominent
marking “For Export Only – supply for aid to Afghanistan (insignia of the
organization) not for sale in Pakistan.

List of Exportable Items

The following is a list of items as per SRO No.31(1)/2002 that can be exported
to Afghanistan and through Afghanistan to the Central Asian Republics via land
route:
1. Cement
2. Rice
3. Pharmaceuticals
4. Glass sheets
5. G.I. pipes
6. Hardware items
7. Safety matches
8. Furniture (Wood, plastic, metal and fibre glass)
9. Water storage tanks (Fibreglass, plastics & metal)
10.Tobacco leaf (in crate & cartons)
11.Gur
12.Agricultural machinery, electric motors, pumps, fans & transformers
13.Leather manufacturers and footware
14.Confectionary items, jams, juices and pickles

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 Procedure for Exports to Afghanistan Policy & Planning

15.Soaps & detergents

16.Ghee and cooking oils
17.Electric fans, wires and cables
18.Aluminum utensils, all plastic goods including shopping bags, PVC shoes,
PVC pipes and polyethylene sheets
19.Adhesive tapes
20.All cotton and woolen textile products including cloth, garments and made-
ups
21.Carpet yarn, carpets (machine made knotted), blankets (woolen and
synthetic) and canvas
22.All plastic products including PVC shoes, zippers, pipes, mats, ropes and
polyethylene sheets
23.Construction material, construction steel, chipboard, formica (HPL), Lasani
Board, etc., hardware items, sanitary ware, building lights, electric fittings,
marble and granite tiles and products, white chalk, FC sheets for low cost
roofing, shelters, etc., FC pipe systems for water supply, sewerage, etc., gas
distribution, polypropylene pipe systems for hot and cold water supply an
industrial effluents
24.All machinery, electric equipment, goods and appliances including
threshers, electric wire and cables, video and audio cassettes
25.Cartons and packaging paper (all items including kraft paper), X-ray films,
and repro films
26.All herbal and allopathic medicines and pharmaceuticals
27.Plastic utensils
28.Pesticides
29.Poultry feeds
30.Veterinary medicines
31.Pulses
32.Surgical instruments
33.Stationary items

Export Procedure
The process of exports to Afghanistan is similar to that of exports to other
countries. However due to the change in world economic scenario, after
September 11, to support the on going reconstruction process in Afghanistan
and due to Pakistan’s close proximity and access to land routes, the export
process has been simplified.

Required Documents
The following documents are required while undertaking exports to
Afghanistan:
1. Invoice
2. Form V 19
3. Form V 18
4. E-form (To claim duty drawbacks etc)
5. Packing list
6. Verified Certificate of Origin

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 Procedure for Exports to Afghanistan Policy & Planning

Export Procedure
Following is a stepwise guide for exporting goods to Afghanistan:

1. There is now a banking system in place in Afghanistan. Habib Bank Limited

has opened a branch in Kabul and the National Bank of Pakistan has
opened two branches one in Jalalabad and the other in Kabul. Fund
transfer facilities are available however LC facilities have not yet been
started. The systems of Hundi or Hawala are still being used alongside new
commercial banking facilities.
2. All exports to Afghanistan are mostly undertaken against advance cash
payment. However, some buyers are also using Dubai banking channel for
remitting Foreign Currency as advance payments.
3. The importer contacts the local authorized dealer/bank of the exporter and
deposits advance money in the account of the exporter. He also fills out a
form V 19 (Annex 1) which is an undertaking on part of the importer and
exporter of the transaction to be made.
4. The authorized dealer/bank, after verifying the documents pays the exporter
in Pak Rupees (against dollars as deposited by the importer).
5. The exporter fills out another form V 18 (Annex 2) which includes details of
the exporter, his contact address, goods to be exported etc. This form is
reported by Authorised Dealer (A.D) to The State Bank of Pakistan for
Exchange Return purposes.
6. A certificate of origin, verified from the Sarhad Chamber of Commerce and
Industry is required that ensures that the exporter is a listed exporter and
can undertake the transaction.
7. Once the payment has been received, in advance, the Form E (Annex 3) is
certified and endorsement of advance payment is made by the bank. The
shipping documents i.e commercial invoice of goods and packaging list is
prepared by the exporter.
8. After completion of documentary requirements, the goods are loaded in
trucks and transported to the Pakistani border at Torkhum and Chaman.
The Afghan authorities usually do not allow any transport company to
operate its trucks in Afghanistan. All transportation companies operating in
Afghanistan are Afghani. If a Pakistani transportation company has brought
goods to the border, they are then reloaded into Afghani trucks that take on
the goods further in Afghanistan. However sometimes major transport
companies from Pakistan carrying goods are allowed into Afghanistan and
they do not have to reload their goods into Afghani trucks. The Pakistani
government has allowed Transportation companies from Afghanistan to
operate in Pakistan in order to ensure smooth flow of goods.
9. Once the goods reach the Pak border, the Shipping Bill/Bill of
Exports/Pakistan Good Declaration (PGD) of the consignment is submitted
to the Deputy Superintendent (DS) customs for clearing.
10.After clearance from DS customs, the consignment is marked to the
Inspector Customs who after examination gives his report on the shipping
bill and marks the case again to DS.
11.After approval from DS the shipping bill is then again forwarded to the

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 Procedure for Exports to Afghanistan Policy & Planning

political agent and Khyber Rifles for further verification.

12.Once the goods have been cleared by officials at the Pakistan border, they
are allowed to cross over into Afghanistan.
13.As the goods cross Pakistan’s border, all documents i.e Copy of Truck
Receipt, Shipping Bill, Commercial Invoice, Duplicate & Triplicate Form E
are sent to the authorized dealer/bank by the exporter within 21 days from
the date of Form E certification or 14 days from the date of
shipment/dispatch of goods which ever is earlier. The A.D is to verify that
the export of goods has been made and the entire export transaction is
complete. Finally the A.D issues EPRC (Export Proceeds Realization
Certificate) to Exporter and also sends a copy of shipping documents to the
State Bank of Pakistan so that they can close their books of account and the
entire export process is documented there.

Advantages of Exporting Through Proper Channel

Afghanistan is in initial stages of reconstruction. Following a period with limited
banking services, the formal financial sector in Afghanistan has started adding
commercial banks and services. There are now three Pakistani banks operating
in Kabul and jalalabad, however they do not offer LC facility. The following are
the advantages of exporting goods to Afghanistan using the formal channel of
exports through land route:

1. Goods being exported can be insured against damage and other calamities
2. International arbitration available in cases of dispute.
3. Secure channel of trade.

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 Procedure for Exports to Afghanistan Policy & Planning

List of NGOs Working and Facilitating Reconstruction in Afghanistan

Following is a list of NGOs and multilateral agencies working for the

reconstruction of Afghanistan:

Action Country La Faim “ACF” Danish Demining Group

7-F Khushal Khattak Road, Afghanistan
University Town, Peshawar House No. 4, street No. 12, F/6-3,
Fax: 091-5845470 Islamabad
Fax: 051-2870021
Afghan Aid “A.A”
5-B, Gulmohar Road, University Mr. Shabbir Ahmed Zahine
Town, Peshawar Development & Humanitarian
Fax: 091-5840322 Services for Afghani ‘DHSA’
House No 26A Chinar Road
Agency Coordination Body for University Town, Peshawar
Afghan Relief “ACBAR” Fax: 091-5841378
2 Rehman Baba Road
University Town International Rescue Committee
Peshawar “IRC”, 12 A Chinar Road, University
Fax: 091-5840471 Town, Peshawar
Fax: 091-5840283
Aid Medical International “AMI”
45 D-3 SJ Afghani Road, Mr. Jaffer Ahmed Abdullah Maki
University Town, Peshawar Islamic Relief Agency “ISRA”
Fax: 091-5840419 68/D-2, SJ Afghani Road,
University Town, Peshawar
Basic Education for Afghan Fax: 091-5840429
Refugees “BEFAR”
8-Tatata Road, Rahatabad Save the Children “SC”
Peshawar 60 C-5 University Road
University Town, Peshawar
CARE International “CARE” Fax: 091- 5840522
6-Parklane, Park Road
University Town Shelter Now International “SNI”
Peshawar 60-E Canal Road,
Fax: 091-581826 University Town, Peshawar
Fax: 091- 5840522
Coordination of Humanitarian
Assisstance “CHA” Swedish committee for Afghanistan
House No. 95, Street No.6, N-3, “SCA”, 24-D chinar road
Phase-IV, Hayatabad, Peshawar University Town, Peshawar
Fax: 091- 5840519
Mr. Thomas Thomsen
Danish committee for Aid to Mr. Batin Shah Safi
Afghanistan “DACAAR” Swiss Aid for Afghans “SAA”
10 Gulmohar Lane, University Town House No. 77, Muradabad Jamrud
Peshawar Road, Peshawar
Fax: 091-840516 Fax: 091- 5842187

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 Procedure for Exports to Afghanistan Policy & Planning

Eng. Mohammad Mustafa

World Assembly of Muslim Youth Mr. Jim White
“WAMY” Mercy Corps International “MCI”
U.P.O. Box No. 1055, Peshawar Arbab Karam Khan Road
Fax: 091- 5840385 Quetta

Kuwait Joint Relief Committee Norwegian Church Aid “NCA”

“KJRC” 7-A Gul Mohar Road
Abdara Chowk, Jahangerabad University Town, Peshawar
Jamrud Road, Peshawar Fax: 091- 5840304
Fax: 091-5840521
Ockenden International “OI”
Mr. Muzamil Mohammad 98-E, Abdara Road,
Lajant Al-Dawa Al Islamiah “LADAI” University Town, Peshawar
P.O.Box No.906. Fax: 091-584119
University Town, Peshawar
Fax: 091-5285983 Peshawar Kai (Japan) Medical
Services “PKJMA”
Medicins sans Frontiers “MSF” Aabdara Road, University Town
25-Syed jamaluddin Afghani Road Peshawar
University Town, Peshawar Fax: 091- 5841167/5843600
Fax: 091-5840251

List of Afghan Traders for Joint Venture Agreement with Local

Manufacturers, Traders & Exporters for Trade with Afghanistan

Mr. Zia ul Haq Sarhadi Mr. Sarwar Momand

M/s Zia Custom Agency Sunny Enterprise
Mewa Mandi, Peshawar Ground Floor, Amin Mansion
Tel: 091- 2219280 G.T.Road, Peshawar
Fax: 091- 2211980
Mr. Malik Niaz Ahmed
Mr. Zahid Ullah Shinwari M/s S.S.Polypropylene
M/s Agro Pack Industrial Estate, Jamrud Road
Amin Mansion G.T.Road Peshawar Peshawar
Tel: 091-2211871 Tel: 091- 5824857
Fax: 091- 2560571 Fax: 091- 5824858

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Procedure for Exports to Afghanistan Policy & Planning

Process Flow Chart

The importer deposits advance payment in exporters

local account and fills form V 19. The bank after
verifying the documents pays the exporter in Pak
Rupees

The exporter fills form V 18, which is sent to The

State Bank of Pakistan. The authorized dealer/bank
certifies/endorses Form E and invoice and packing
list of goods is prepared.

The goods are loaded in trucks and transported to

Pakistani border at Torkhum and Chaman where the
exporter files shipping bill to the customs authority.

The Deputy Superintendent Customs marks the case

to superintendent whom after verifying marks the
case to DS for approval.

The shipping bill is then again forwarded to the

political agent and Khyber Rifles for further
verification

After completing documentary requirements, goods

are reloaded in Afghani trucks and are allowed to
cross the Pakistan border. Forward the copy of
shipping documents to A.D for close out of case and
reporting to SBP

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Procedure for Exports to Afghanistan Policy & Planning

Annexure 1

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Procedure for Exports to Afghanistan Policy & Planning

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Procedure for Exports to Afghanistan Policy & Planning

Annexure 2

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Procedure for Exports to Afghanistan Policy & Planning

Annexure 3

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Procedure for Exports to Afghanistan Policy & Planning

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