BY OUR COMMERCE REPORTER
Former Chairman of Pakistan Association of Auto Parts and Accessories Manufacturers (PAAPAM) and former Executive Committee Member of the Lahore Chamber of Commerce & Industry Mumshad Ali on Tuesday gave a SOS call to the government to save dying tractor industry.
In a statement, Mumshad Ali said that tractor sales are expected to witness the lowest sales in a decade as economic downturn and poor agri income hits this industry hard. The major tractor plants in the country are officially and effectively closed in December. Similar situation was witnessed last year also.
He said that the worst hit are the 200 plus sme engineering units manufacturing parts for the 2 main tractor assemblers of the country ie Millat tractors Ltd and Alghazi tractors Ltd. This sector forms the backbone of the country’s engineering industry, and is located around Lahore region and its neighboring towns and cities.
The demand started to drop in august at the back of poor crop yields of cotton and rice, which were super imposed on the over all economic environment of the country and the slow down of the CPEC projects.
Mumshad Ali said that these 200 vending units producing Thousands of parts for the tractor assemblers are family owned sme s employing Thousands of skilled workers operators and engineers. Over 90 percent of the parts that go into a tractor are locally produced and these tractors have found markets around the world.
Currently all the specialized tractor part manufacturers are closed and have sent many skilled workers home with more redundancies to follow. As the tractor plants stand closed these part makers have not been paid for over 2 months now and are facing severe cash crisis. Many units are struggling to meet their bank and supplier liabilities.
Former Chairman PAAPAM said that this industry has been marred by such down turns over the last 2 decades as government support plays a key role in its growth. Tractor loans and subsidies increase tractor sales while taxes, poor crop yields and low commodity prices affect it negatively.
He said that the government should take notice of the grave situation that prevails in the tractor industry and take steps to save the tractor industry from the current crisis.
He said the 2 things government should do in the short term is to release the sales tax refunds which have been withheld by the government for the last many months, and release funds to ZTBL to finance tractors at single digit mark up rates.
In the long term, construction and development activity needs to restart so that tractor demands in non agri sector rises. Pakistan’s trade missions should also get active in marketing this product in the world agri markets.
Mr Ali warned that if steps are not taken immediately many of the part manufacturing units might not be able to restart their operations because of bank defaults and losses due to repeated and prolonged industry closures.
The industry is currently operating at below 50% of its production capacity which means 50% less employment and 50% less taxes.