In a major development, the Belarus state owned company has conveyed to the government that it will start assembling Belarus tractors in Pakistan from January next year.
An official source said the deal to start production of Belarus tractors in the country was finalised during the visit of prime minister to Belarus earlier this month. The company will initially assemble 500 tractors per year and with the increase in demand it plans to enhance production facility to more than 20,000 units per annum.
The Minsk Automobile Plant is a state-run automotive manufacturer association in Belarus, one of the largest in Eastern Europe. It manufactures heavy-duty trucks, buses, trolleybuses, road tractors and semi-trailers for semi-trailer trucks, and cranes.
The deal for Belarus investment was finalised in less than two years, as the Belarus government showed extraordinary interest for starting manufacturing operations in Pakistan, source said.
The source said that Minister for Food Security Sikandar Hayat Bosan played a pivotal role in local assembling of Belarus tractors as he complained to the prime minister that the locally manufactured tractors were of poor quality and needed an engine overhaul after 100 hours of operations.
Initially, the company plans to cater to the Pakistani market but Belarus is interested to use Pakistan as a hub for reentry in the Middle East and North African market. Belarus had strong trade ties with Iran, Libya and Syria but after the Arab spring it lost its Arabian markets and now it wants Pakistan’s help to regain access in the Arabian markets, the source said.
Currently, 24 tractor models are manufactured locally by two companies and prices start from Rs 650,000. Imported Belarus tractor costs Rs 1.4 million. The tractors sales crossed 50,500 units in the fiscal year 2012-13, but the production went down to half after imposition of GST. The local manufacturers cannot export their tractors to other markets and only Millat tractors are exported to Afghanistan and their numbers remain low to 500 units per annum.
The entrance of new player in the market will enhance competitiveness in the market. Pakistan had one of the lowest motorization levels – eight vehicles per 1000 persons in Asia compared to India’s 11, Sri Lanka’s 25, and Malaysia’s 641.