Honeymoon for expat serving business in Afghanistan over?

Businesses have already reported a drop in profits of up to 40%.

KABUL: Behind high villa walls in Kabul's heavily guarded diplomatic district, restaurant owner Saju D'Cruz sits in a sun-washed courtyard and gives himself two more years in a country he has called home for a decade.

Like many other entrepreneurs in an Afghanistan bracing for an exodus of foreign troops and aid workers in two years, D'Cruz thinks business can only get worse at his popular Namaste Indian restaurant, as expat customers vanish.

"Our customer base has decreased already. When international forces leave, we'll shut down," he said, gazing out onto a small lawn covered with empty plastic dining tables.

D'Cruz came to Afghanistan from India after the 2001 ousting of the former Taliban government, convinced the inrush of political change would bring with it a demand from both Afghans and foreigners for services taken for granted elsewhere.

While the Taliban had bought only their own austere brand of oppression, Afghanistan's new freedoms saw businesses flourish, transforming Kabul from a city of empty, pot-holed streets and ruined suburbs into one of bustling shops and car-choked roads.

D'Cruz and his restaurant caught the investment wave as more than $50 billion dollars in reconstruction money flooded in, but now, like others, he is preparing for a receding tide, taking businesses with it.

As one of many foreign investors who offers expatriates a taste of comforts they enjoyed at home, D'Cruz employed Indian chefs and imported his foods from India to inject authenticity to his dimly lit restaurant.

With the average monthly salary of an Afghan in Kabul being $300 or less, Namaste's dishes costing up to $18 a plate are out of the reach of the majority of the Afghans who will be left behind after 2014.

"It's a lot to pay for and keep up with, without a steady customer base," he said.

The deputy chairman of Afghanistan's Chamber of Commerce and Industries, Khan Jan Alokozai, said with the end-2014 deadline for NATO's withdrawal telescoping in, D'Cruz's worries were being reflected in hotels, restaurants, guest homes and real estate, and even among companies supplying the Afghan and foreign military forces.

Businesses had seen a 40 per cent decrease in profits already, with the expectation being only for worse, he said.

"We rebuilt Afghanistan. But we rebuilt it for foreigners," Alokozai said. "We didn't look at what our own people needed and now that they are leaving, we'll have to rebuild it again."

Alokozai said while businesses like Namaste had mostly appealed to foreigners, their closing would shut out vital job opportunities in a country where one in three of its 30 million population live below the poverty line.

If D'Cruz shuts his restaurant, for example, eight Afghans will lose their jobs.

Vacant

The World Bank, in its most recent assessment of Afghanistan, said while the economy had been expanding strongly in the past few years, bolstered by big aid flows helping real gross domestic product growth reach 8.4 per cent in 2010/11, the pullout was expected to cut that by about half.

Donors meeting in Tokyo last month promised civilian aid worth $16 billion for Afghanistan over the next four years, but tied to a much stronger effort by President Hamid Karzai's unpopular government to combat the entrenched corruption that has seen millions of aid dollars stolen.

D'Cruz's woes are echoed in Kabul's real estate market, where luxury homes in areas once in high demand by diplomats and foreign workers now have vacancy signs out front.

"Homes that used to up for rent for $10,000 a month are down to $4,000. It's 90 per cent due to the decrease of foreign customers," said Shafikullah Mohammedi, a 35-year-old real estate agent who has just moved to a smaller office to save money.

Mohammedi, who lived for a time as a refugee in neighbouring Iran, returned to Afghanistan in 2005 with his family to work in what was then a booming property market.

Working mostly with foreigners, he used to rent out between two and three homes a month. Now he struggles to let that many in a year.

"I'm not sure what will become of the properties, they're just sitting there," Mohammedi said.

"I haven't been able to rent anything to foreigners, and none of my clients wants to lease their property to Afghans. They'll never see the rent money," he said.

Afghan ministers met Karzai in March to discuss how to restructure the economy to make it less reliant on aid and boost income from potentially lucrative resource exports.

Geologists have identified large untapped mineral deposits in Afghanistan, including iron, copper, lithium and gold, that could be worth up to $1 trillion, if infrastructure and access for miners was improved.

In October, major oil companies will bid for the rights to explore oil and gas blocks in northern Afghanistan, which the Economy Ministry says could produce $12 billion annually in government revenue, and help the country achieve stability.

But for Mohammadi the government's plan may come too late.

"I don't want to plan to leave my country and become a refugee again, but the way things are going I might have to," he said.