Mohammad Mirza Kundazi, a goods importer with a sideline in money changing, haggled his own ransom down to $100,000 from $2m seven days after being bundled into a car outside his house last month but his kidnapping, and others like it, are costing his country much more.

On his release from the toilet in which he was chained throughout the ordeal, Mr Kundazi joined a growing band of Afghan entrepreneurs who are moving their businesses to Dubai or at the least scrapping investment projects.

Cases such as his are, the Afghan business community says, damaging the country’s efforts to build its economy, so Afghanistan can pay its own way when the foreign cash that pays for almost everything the government does dries up.

But the private sector is so limited – and so reliant on money spent by international consultants, diplomats and aid workers – that a French restaurant in Kabul catering to the culinary needs of the city’s expats is one of the country’s 100 biggest taxpayers.

Law enforcement officials claim that fear of violence is overblown. Ali Shah Paktiawal, head of criminal investigations in Kabul, says there have been “no more than three” kidnappings in the last year and the Dubai-bound business leaders are just in search of “luxury”.

But Azarakhsh Hafizi, chairman of the Afghanistan International Chamber of Commerce, has a list of almost 30 recent cases of attacks on businessmen or their families. According to his list, ransom payments are as high as $3m, and several children have been killed.

One Afghan entrepreneur is scared enough that members of his extended family believe he is a hotel employee, rather than the wealthy owner of a chain of hotels. He says he has scrapped two multi-million dollar hotel projects in the beauty spots of Bamiyan and Istalif because of security concerns.

The chief executive of Afghanistan’s investment agency, Omar Zakhilwal, says a crime wave is just one problem choking off investments. Another big problem, he says, is the intermittent electricity supply.

Sarah Chayes, a former journalist turned soap manufacturer in the southern city of Kandahar, says that with just four hours of city power every two or three days her staff sleep with the electric lights switched on. When the bulbs light up they leap out of bed and start running the soap press for as long as possible. She says that although she is “swimming in demand” she is unable to increase production.

Saad Mohseni, chief executive of Moby Media, which runs television and radio stations, says another vexing problem is taxes. He recently had videotapes of imported Indian television programmes impounded at Kabul airport because a government agency believed they should be paying on the content.

“The government says it is dealing with these so-called nuisance taxes, but it’s ridiculous that after seven years we are still facing these problems. Why can’t the whole lot just be declared null and void?”

He says his frustration with Afghan government “incompetence” is so great that the company has set up a business division in Dubai.

One leading international logistics company came close to pulling out of Afghanistan last year after it discovered it had been paying taxes to the Ministry of Communications – technically illegal because only the Ministry of Finance is allowed to raise revenue.

Some efforts to improve the tax system have made the situation worse. Draft laws prepared in English by foreign consultants have been mistranslated into Dari – the official language of government. The garbled version is then treated as the law.

A western official, who declined to be named but has worked closely on tax reform issues, said the “cheques had been made out to the ministry of post, which doesn’t exist, so God knows who actually got the money”.

He estimates the cost of business is at least twice the official amount after bribes, corruption and taxes of questionable legality are included.

“There is an internationally imposed taxation system, which is sensible,” he says.

“But then there is a parallel Afghan system which requires the permanent employment of full-time staff to pay bribes. Big international companies just can’t pay these bribes.”

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