LAHORE - At least 300 tractors parts manufacturing SMEs have been forced to shut their units amidst a total crash in tractors’ demand along with a severe liquidity crunch following the suspension of refunds by the Federal Board of Revenue to tractor assemblers, which was due for a long time. In a hurriedly called meeting held here, the Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) discussed the gravity of the situation being faced by the auto parts industry of the country. The house submitted an alarming report that the closed industrial units had laid off around 100,000 workers in and around Lahore during this unprecedented ongoing crunch, which was very unfortunate. PAAPAM Chairman Munir K. Bana, Senior Vice Chairman Usman Aslam Malik, former Chairmen, including Engr Mumshad Ali, Abdur Razzaq Gauhar, Abdul Rehman Aizaz, and Tariq Nazeer, former VC Irfan Ahmed Qureshi and MC members, including Shahid Daad, Syed Mansoor Abbas Shah, Saeed Iqbal, Javed Hafiz, and Secretary General, Ghulam Murtaza attended this meeting. The house was of the opinion that the present crunch, followed by the floods, would cause acute food shortages if the government did not take stock of the situation immediately. A large number of jobless people were rendered homeless in tractor and ancillary industries which were closed down in recent days. The closurer of AGTL, followed by Millat Tractor, has aggravated the situation, they added. PAAPAM Chairman Munir K. Bana informed the meeting that both plants carried surplus inventories of CBUs and parts worth billions of rupees and were not purchasing parts from local partsmaking SMEs, leading to their closure and redundancies of over 100,000 skilled workers, technicians, and engineers. The house further registered that due to a drop in fresh bookings and stuckup GST refunds, the assemblers needed more much-needed cash for making payments to part makers. It would cause a crippling effect on the agro-sector when low yields would necessitate importing wheat for which government has no foreign exchange, the house apprehended. If the tractor sales drop to 3000 units a month, it will no longer be commercially viable for part makers to produce parts, and they will therefore be forced to close their operations. PAAPAM Senior Vice Chairman Usman Aslam Malik, addressing the meeting, said that tractors production in the first six months of the current financial year was expected to remain at around 10,000 units averaging around 1600 units per month, which was far short of the industry breakeven point. PAAPAM calculated that if the industry doesn’t achieve 3,000 units of average production per month in the next six months, the industry will not be able to revive in the future. It is essential for the government to take concrete corrective steps now rather than wait for the next budget. As an outcome of the meeting, the house agreed to take up the matter with the government, as the industry alone cannot handle the worst downturn in the industry’s 50 years of history. Usman Aslam Malik appreciated the government scheme of low markup tractor financing through commercial banks. But more actions were needed to achieve the industry’s breakeven sales of 3,000 units per month for the next six months. He warned if collective actions were taken after a period of time, the tractor industry’s ship would be bound to sink lock, stock, and barrel. Munir K. Bana recommended the facilitation of tractor exporters as the current GST regime was making Pakistani tractors totally uncompetitive in the African market. He also asked the government to remove customs duty, additional customs duty, and regulatory duties on the import of tractor-specific auto parts and pass on its benefit to the farmers.
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