960407

20000 more tractors

to be imported,

under Awami Scheme

ANWAR RAJANI

KARACHI: The Federal Government has again decided to import 20,000 tractors from East Europe for distribution among the growers under the Awami Tractors Scheme, it is reliably learnt.

Funds for the import are being arranged and the shipments are likely to arrive during the next three months.

The Agricultural Development Bank of Pakistan (ADBP) last year, had imported about 20,000 tractors under this scheme, which were supplied to the growers at Rs 1.5 lakh per unit. Shipments had been booked on behalf of importers who enjoyed the bonanza of skimming out all the profit without having to invest a single penny. Importers were reported to be just middle men engaged by the ADBP.

The cost of imports made last year, was not calculated by the government. The expenses included the cost of the LC, the financial cost of Rs 3.5 billion invested by the ADBP for the import of 20,000 tractors at almost 5,000 dollars per unit, the financial cost involved in its pay back arrangement over 10 years period, transportation charges, insurance etc.

Thus the tractor was sold to the grower at Rs 1.5 lakh, but the actual cost borne by the ADBP per unit amounted to Rs 2.5 lakh. This computation does not include factors such as loss of revenue to the tune of Rs 1.75 billion to the government by allowing duty free and sales tax free import of 20,000 tractors. The import of built-up tractors otherwise attracts 30 percent duty and 15 percent sales tax which were not recovered on these imports.

According to market sources, some of the imported tractors went to big game money investors who are reportedly selling these tractors in black market for as much as Rs 3 lakh per unit.

With the local industry unable to meet the high demand because of shortages of local parts, farmers in need of tractors have no choice but to turn to black market and buy the Awami Tractor actually sold by ADBP at Rs 150,000 for as much as Rs 300,000. While the government is planning to import yet another consignment of 20,000 tractors the local tractor assemblers continue to face shortages of local components. They are also under pressure to increase the prices because local components being supplied to them by local vendors have registered phenomenal price increases in the past months, specially those of tyres, sheet metals and gears.

Local tractor manufacturers contend that since they cannot import components, local vendors taking advantage of the tariff walls now supply components at twice the prices at which these components can be purchased from the international market. During the last months production of both Millat Tractors and Al-Ghazi Tractor has suffered because of shortages of components such as Wheel Rims, Cam Shafts, Starters, big end bearing, Tyres etc.

It will be recalled that Secretary, Ministry of Industries Miyan Tayyab Hasan had given special permission to the Tractor Manufacturers to import starters which was turned down by Chief Survey & Rebate. Though Miyan Tayyab Hasan has now taken over as Secretary Ministry of Finance, and CBR falls under his jurisdiction, the Chief Survey & Rebate is yet to accept the writ of the Federal Secretary and no action has been taken on the approval thus defying his own Federal Secretary of Finance.

Local manufacturers complain that though the prime minister had given written directives to include local tractor manufacturers into the Awami Tractor Scheme by directing that the same concessions as allowed to importers of Awami Tractors be given to the local assemblers, these directives were never implemented. Similarly they complain that specific orders issued by the Minister of Agriculture to implement these directives of the prime minister were flouted by the vested interested with the result that local tractor manufacturers were never inducted into the scheme.

While 20,000 tractors will now be imported against 135,000 applicants, it is not known whether the ADBP with severe liquidity problems would once again be forced to invest in the scheme and sink or whether the importers, as is the normal business practice, would be asked this time to put in their own money to open the LC, just as the local tractor assemblers open the LC with their own funds.

Last year the ADBP had pumped in all the money and had assumed all the risk. ADBP would be kept busy for the next ten years recovering the installments from the Awami Tractor purchasers. With the rate of recovery being as low as it is, there are fears that billions of rupees invested by the government on Awami Tractor Scheme would be a difficult job of recovery for the ADBP.