Tractor industry on verge of shutdown

[FOOLS_NIGHTMARE]

The tractor industry is moving towards total shutdown as a majority of units are now running a single shift due to persistent delay in release of sales tax refunds.

In a letter written to Prime Minister Imran Khan and Finance Minister Shaukat Tarin on Monday, Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) Chairman Abdul Rehman Aizaz reiterated the industry’s demand to release Rs6 billion worth of sales tax refunds.

He lamented that the amount had been stuck with the government for the past more than 20 months.

He pointed out that the closure of tractor industry would spell disaster for the agricultural mechanisation efforts, particularly when the country was facing a severe deficit of food commodities. He voiced fear that it could also lead to a steep rise in the import bill.

He noted that the delay in sales tax refunds to the tractor parts manufacturers had triggered a liquidity crisis and it might lead to the suspension of operations over the next few days, which would render millions of direct and indirect workers jobless.

He said that Pakistan spent over $8 billion on the import of edible items in the previous financial year while the food import bill widened by over 50% to $1.47 billion in the first two months of current fiscal year.

He voiced concern that the persistent rise in import bill would inflate the trade deficit further.

“Food imports will increase further in the coming months as the authorities have decided to import an additional 0.6 million tons of sugar and 4 million tons of wheat to build strategic reserves,” he wrote.

“The rise in import bill of food items indicates a shortfall in domestic production, which can be met only through the increase in per-acre yield by implementing farm mechanisation programmes.”

He was of the view that farm mechanisation was not possible if the tractor industry ceased to operate and expressed concern that closure of the industry would bring the agriculture-based economy to a standstill.

Tractor industry on verge of shutdown | The Express Tribune

Official laments stuck tax refunds have caused liquidity crisis for parts makers

tribune.com.pk

 

[AZADPAKISTAN2009]

Good companies never depend on sales tax return , they build their model on Sales and Profits

Tax return is small % reward back to tax filers

 

[airmarshal]

Its just like saying news media is on verge of shutdown as government is not releasing ads. This sluggish and lazy is due which Pakistani businesses are not competitive.

If your business is based on government money or refunds, you dont deserve to get anything from the business you have invested in.

 

[IbnAbdullah]

Salaam

Government should release tax refunds if it has promised them. The price hike in tractors has been massive in the last few months and years and sales have fallen accordingly. Used tractors, I hear, are more sought after now.

Government should also incentivize establishment of combine harvesters and other agricultural machinery. Old and inefficient models that are used waste a lot of produce and cost foreign exchange when importing.

 

[AZADPAKISTAN2009]

If some Tractor company , goes bankrupt that is fine it is not Government's responsibility

GST sales return is normally not used to run your business , such tax returns can be held back
Some new guy will open the Business and develop a proper plan to stay profitable and not cry about stuff

 

[Pak Nationalist]

Good companies never depend on sales tax return , they build their model on Sales and Profits

Tax return is small % reward back to tax filers

Stopping sales tax returns create liquidity issues for the companies. There are many running expenditures businesses have to make. We should be criticizing FBR for punishing existing taxpayers for doing their duty instead of blaming taxpayers. Retailers and speculators (realtors) pay minimal taxes or evade taxes (sales tax mostly in the case of retailers). Has anyone ever denounced them as you did in the case of local manufacturing? Our attitude towards manufacturing where we consider those who produce something of value in this country criminals is responsible for our pathetically low exports to GDP ratio and us being a consumption-based economy with a minimal manufacturing base. This bias hurts Pakistan. Please express such strong emotions in the case of large landowners who pay zero taxes, real estate speculators (middle class is a part of that racket), and the retail sector that pockets sales tax after taking that from its customers and not issuing pakki receipts.

 

[khail007]

Greedy companies with mafia-like mindsets. These companies want to gain only thru unhealthy tactics by increasing the price but not the quality of their products. Suzuki, Atlas Autos are prime examples of such a mindset. In the last 30 years, no innovation, only change in stickers and headlights shape that all they do but the prices always touching the limits.
Flour mills, sugar mills, ghee/oil mills, animal and poultry feed mills; all are in same queue. IMO these are the mafias as they all sitting in parliament to safeguard their business the mafia tactics. That's why since last 40 years no change and only the people of Pakistan suffers.
Still, there are many knee-jerks reactions in favour of 'privitazation'; actually there should be a popular voice, no business/vadera family to be in parliament.

 

[SD 10]

View attachment 779321

The tractor industry is moving towards total shutdown as a majority of units are now running a single shift due to persistent delay in release of sales tax refunds.

In a letter written to Prime Minister Imran Khan and Finance Minister Shaukat Tarin on Monday, Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) Chairman Abdul Rehman Aizaz reiterated the industry’s demand to release Rs6 billion worth of sales tax refunds.

He lamented that the amount had been stuck with the government for the past more than 20 months.

He pointed out that the closure of tractor industry would spell disaster for the agricultural mechanisation efforts, particularly when the country was facing a severe deficit of food commodities. He voiced fear that it could also lead to a steep rise in the import bill.

He noted that the delay in sales tax refunds to the tractor parts manufacturers had triggered a liquidity crisis and it might lead to the suspension of operations over the next few days, which would render millions of direct and indirect workers jobless.

He said that Pakistan spent over $8 billion on the import of edible items in the previous financial year while the food import bill widened by over 50% to $1.47 billion in the first two months of current fiscal year.

He voiced concern that the persistent rise in import bill would inflate the trade deficit further.

“Food imports will increase further in the coming months as the authorities have decided to import an additional 0.6 million tons of sugar and 4 million tons of wheat to build strategic reserves,” he wrote.

“The rise in import bill of food items indicates a shortfall in domestic production, which can be met only through the increase in per-acre yield by implementing farm mechanisation programmes.”

He was of the view that farm mechanisation was not possible if the tractor industry ceased to operate and expressed concern that closure of the industry would bring the agriculture-based economy to a standstill.

Tractor industry on verge of shutdown | The Express Tribune

Official laments stuck tax refunds have caused liquidity crisis for parts makers

tribune.com.pk

tractors used to be quite good, than fiat started local assembly and literally sand would come out when you change the engine oil resulting in loss of sales and now the more popular messy Ferguson is also loosing the quality. Sadly, I would rather pay more for a used one than buying new!

 

[AZADPAKISTAN2009]

Sales return is like 3% to 5% of your income barely makes any difference , your 95% money should come from your Profit Margin

Businesses should not be crying their business will tank due to delay in Sales Tax return

If someone says their business will crash because of 3-5% Sales tax return , then the problem is really how you are making sales , may be your business is not making any decent sales

 

[S.Y.A]

Stopping sales tax returns create liquidity issues for the companies. There are many running expenditures businesses have to make. We should be criticizing FBR for punishing existing taxpayers for doing their duty instead of blaming taxpayers. Retailers and speculators (realtors) pay minimal taxes or evade taxes (sales tax mostly in the case of retailers). Has anyone ever denounced them as you did in the case of local manufacturing? Our attitude towards manufacturing where we consider those who produce something of value in this country criminals is responsible for our pathetically low exports to GDP ratio and us being a consumption-based economy with a minimal manufacturing base. This bias hurts Pakistan. Please express such strong emotions in the case of large landowners who pay zero taxes, real estate speculators (middle class is a part of that racket), and the retail sector that pockets sales tax after taking that from its customers and not issuing pakki receipts.

People who are criticizing are mainly those who have decided to support PTI govt no matter what happens. Even when proof of their incompetence is looking them right in the eye. No better than pmln and ppp supporters.

Sales return is like 3% to 5% of your income barely makes any difference , your 95% money should come from your Profit Margin

Businesses should not be crying their business will tank due to delay in Sales Tax return

If someone says their business will crash because of 3-5% Sales tax return , then the problem is really how you are making sales , may be your business is not making any decent sales

have you ever owned a business of this scale? instead of bashing the govt for effectively stealing what doesnt belong to it, you are bashing those who are actually providing jobs to people and contributing to the economy. stop being so naïve.

Also, yes, the sales are down, due to rising production costs brought about by devaluation, and rising utility costs. they can easily hike the price, and sales will fall further, because purchasing power has gone down, due to inflation. the farmers do not make a lot of money (PTI's claim not mine) due to aarht system, since they are the customer base for tractors, they wont be buying them.

 

[S.Y.A]

Please do go through the following links and you will see for yourself, the net income for 2020 of millat and al ghazi tractors was 1.99 billion and 1.35 billion rupees respectively, the tractor industry seeks 6 billion rupees in refunds, that is a huge amount compared to income:

Millat Income Statement
Al Ghazi Income Statement

You will also see that their income has fallen drastically since 2018, I wonder who is to blame for that? govt or the manufacturers?

 

[blueazure]

Good companies never depend on sales tax return , they build their model on Sales and Profits

Tax return is small % reward back to tax filers

give this man a medal please

 

[Pak Nationalist]

Greedy companies with mafia-like mindsets. These companies want to gain only thru unhealthy tactics by increasing the price but not the quality of their products. Suzuki, Atlas Autos are prime examples of such a mindset. In the last 30 years, no innovation, only change in stickers and headlights shape that all they do but the prices always touching the limits.
Flour mills, sugar mills, ghee/oil mills, animal and poultry feed mills; all are in same queue. IMO these are the mafias as they all sitting in parliament to safeguard their business the mafia tactics. That's why since last 40 years no change and only the people of Pakistan suffers.
Still, there are many knee-jerks reactions in favour of 'privitazation'; actually there should be a popular voice, no business/vadera family to be in parliament.

People who are criticizing are mainly those who have decided to support PTI govt no matter what happens. Even when proof of their incompetence is looking them right in the eye. No better than pmln and ppp supporters.

have you ever owned a business of this scale? instead of bashing the govt for effectively stealing what doesnt belong to it, you are bashing those who are actually providing jobs to people and contributing to the economy. stop being so naïve.

Also, yes, the sales are down, due to rising production costs brought about by devaluation, and rising utility costs. they can easily hike the price, and sales will fall further, because purchasing power has gone down, due to inflation. the farmers do not make a lot of money (PTI's claim not mine) due to aarht system, since they are the customer base for tractors, they wont be buying them.

Well said, dogmatism is not unique to supporters of one political entity. Critical thinking is a rare commodity in our environs.
So depressing to see ill-informed, populist comments getting acclaim from fellow forum members. As a nation, we heap scorn on producers of goods and services and then complain when exports do not rise briskly, and the import bill keeps swelling. Very upsetting. When will we abandon our anti manufacturing bias? As a society and economy, we reward speculation while holding an adverse opinion of anyone who takes a "risk" to create wealth in this country.

 

[Desprado]

Good companies never depend on sales tax return , they build their model on Sales and Profits

Tax return is small % reward back to tax filers

This and subsidy. It is crime and drug, which leads to dependency.

India or Bangladesh does not give subsidy to there exporters.

They only relaxes the terms for them.

 

[S.Y.A]

India or Bangladesh does not give subsidy to there exporters.

india's and bangladesh's currencies are strong which lowers the cost of raw material imports. and electricity supply is unhindered as well as cheaper. is that the case in Pakistan? A big NO. Pakistani govts, from zardari till now, are hell bent on destroying industry rather than supporting it. In an environment like Pakistan, these subsidies are absolutely necessary. otherwise please suggest what these companies can do to increase their profitability that they havent already thought of?