LAHORE: The Lahore Chamber of Commerce & Industry (LCCI) on Tuesday showed serious concerns on the closure of the entire tractor parts manufacturing industry of the country, and urged the government to take concrete steps to revive this important local sector of industry.
A delegation from the engineering sector led by former chairman PAAPAM Engr Mumshad Ali brought up this matter in a meeting with LCCI President Kashif Anwar, Senior Vice President Zafar Mahmood Ch, and Vice President Adnan Khalid Butt.
The delegates highlighted the near total crash of demand for tractors, and severe cash crunch due to stoppage of GST refund by FBR to tractor assemblers.
They informed the president that this industry employs over 100,000 people mainly in the Lahore region, and the recent floods, high inflation, and political uncertainty has badly hit tractor sales leading to complete closure of tractor production by AGTL and 4 day a week production of Millat tractors.
Both plants carry surplus inventory of CBUs and parts, worth billions of Rupees and are not purchasing parts from local part making SMEs, leading to their closure and redundancies of over 100,000 skilled workers technicians and engineers, they said adding that due to drop in fresh bookings and stuck up GST refunds, the assemblers are short on cash and struggling to make payments to part makers.
If the tractors sales drop below 3000 units a month, they warned, it is no longer commercially viable for part makers to produce parts, and are, therefore, forced to close their operations.
They said Tractor production in the first 6 months of the current financial year is expected to remain around 10,000 units averaging around 1600 units per month, which is far short of the industry break-even point.
They said if the industry doesn’t achieve 3000 units average production per month in the next 6 months, the industry will not be able to revive itself, adding that it is essential for the government to take concrete steps now, rather than to wait for the next budget.
The 3 steps, they recommended, were to start low mark-up tractor financing through commercial banks and ZTBL, facilitate tractor exports as current GST regime is making Pakistani tractor uncompetitive in African market and, release stuck up GST refunds of assemblers to increase industry liquidity.
Copyright Business Recorder, 2022
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