INSIGHT
The requirement to import two hundred bulldozers (track-type/crawler tractors) by the Balochistan government has, brought to limelight the myopic vision and lack of political will on the part of successive governments that failed to install the planned manufacturing facilities in the last few decades. Budget allocation of Rs3 billion was made by the provincial government in year 2014-15 for import of these bulldozers, but only 71 units have been procured so far.
Pakistan has a total land area of 79.61 million hectares (MH or Mha) and total physical area 57.99MH, including 4.55MH forest areas. At present, an area of 22.10MH is under agricultural use, whereas 23.01MH is not available for cultivation being under farm homesteads, farm roads etc. More than 8.25MH remains cultivable waste or uncultivated farm area, mostly in Balochistan. To improve the agriculture growth rate, there is a need to turn quickly the waste land into cultivable area. But nothing concrete has been done in this direction. In fact, currently, there is negative growth in the agriculture sector; due to a variety of factors though.
As a matter of policy, bulldozers are maintained in public sector by provincial governments and rented out to farmers through a subsidy programme. Unfortunately, there has been no significant replacement or replenishment for the last two decades or more, of old and obsolete bulldozers in the provinces. For many years, the federal government has plans to procure bulldozers to enhance farm mechanisation capacity of the provinces, but somehow the procurement process remains incomplete. Every year, federal government allocates funds to provincial governments for purchase of bulldozers and other machinery required for this purpose, but either the funds are not released timely, or inefficiency, mismanagement and corruption at the execution agency impedes the progress for achieving results.
To bring more area under cultivation, earthmoving machinery, such as a bulldozer, is necessary. It is employed for improvement and levelling of land, reclamation and conservation of soil and construction of embankments. To develop the available 8.25MH waste farm area, some 2,400 bulldozers of 90-120HP capacity each are required over a period of 25 years. This needs a financial outlay of about Rs40 billion, including foreign exchange component of over $350 million, at the present rate.
Agriculture has remained a priority sector, which accounts for 19.82 percent of GDP and 43.7 percent of employment, with emphasis on large-scale mechanised cultivation. Yet, almost nothing has been done to promote optimal indigenisation of the required machinery for the agriculture sector.
Tractor industry is well established; still significant numbers of tractors are being imported every year. There are more than 500 manufacturers of farm machinery and implements, but do not have latest technology and modern production methods. The proposed project of local manufacturing of bulldozers has a long history of failures.
It was in early 1970s that the Pakistan Industrial Development Corporation (PIDC) had launched a project for progressive manufacturing of bulldozers in collaboration with Fiat-Allis. Licensing agreement covering technology transfer was signed between the PIDC and the Italy-based multinational company. Comprehensive plan for phase-wise manufacturing of parts, components and assembly was finalized, availing design and production facilities at the Heavy Mechanical Complex (HMC) and other engineering units. As per procedure, an approval for PC-1 was taken from the government. But there was no headway.
The project was revived in the 1980s. The foreign partners renewed their interest and, subsequently, arranged equity in the joint venture through their local agents. A revised set of formalities were completed by the sponsors with the government, updating the plans.
At the advanced stage of take-off, however, the Japanese manufacturers Komatsu entered the scene, apparently showing interest in the project, but in fact putting a spanner in the whole process. During these years Komatsu had captured the local market, supplying bulldozers under the Japanese grants and credits. They were not serious in local manufacturing venture, as proved later. Thus the project could not see the light of the day, and Pakistan continued to import bulldozers. It may be added that Fiat-Allis bulldozers had dominated the Pakistan market until late 1970s when the Komatsu product was introduced, whereas Caterpillar bulldozer was launched here in 1984. However, import data shows import of only one brand of bulldozers during the last five years, creating monopoly of one supplier.
In 1995, efforts were made to import bulldozers from Iran on staggered delivery basis, under barter arrangement, in exchange of plant machinery for two sugar mills. But this did not materialise either. China has established a sound base for capital goods industry and produces a large number of bulldozers under license from Komatsu, Caterpillar and other international Original Equipment Manufacturers (OEMs). These are of comparable quality, but about 30 percent lower in price. Therefore, the State Engineering Corporation proposed in 1999 to Shantui Machinery Construction Co, the manufacturers of Komatsu bulldozers in public sector, to assemble and produce bulldozers at the Heavy Mechanical Complex, on principles of co-production and co-financing, against the government requirements. The Chinese delegation visited the stakeholders and, after due diligence, agreed to implement the idea and prepared a soft-term financial package also. But, somehow, the government backed out once again. It was after few years that the Chinese manufacturer, along with Komatsu and a trading house in Hong Kong, jointly offered bulldozers in CBU (completely built-up) condition, totally on import basis. Interestingly, Komatsu later established, in 2005, a joint ownership company in China with Shantui, for marketing of bulldozers in selected countries under the Chinese suppliers' credit.
In short-term, Punjab government would import 100 bulldozers, while it currently has 536 bulldozers, out of which 198 bulldozers are out of order, being outdated and well above their working life span. Likewise, Sindh has an acute shortage of bulldozers, as only 80 bulldozers are functional, while 280 units are out of order at present. The provincial governments maintain a large number of mechanical workshops for maintenance and repair of bulldozers. But these facilities are about 30 years old and require major BMRE to be functional, which is not being undertaken. Sadly, the Sindh government has not purchased any bulldozer since the past decade or so. It was only in March this year that Sindh government had issued tender for purchase of six bulldozers of 140-150HP capacity. Similarly, the federal government had promised in 2009 to provide 100 bulldozers to Khyber Pakhtunkhwa province, but the promise was not fulfilled. Only 17 new bulldozers were added to its fleet of agricultural machinery in December 2014. Now it is planned by the provincial government to procure another lot of 25 units during the current financial year. Balochistan government will require additional 900 bulldozers in future. There is significant demand of bulldozers by the government of Azad Jammu and Kashmir.
With a future outlook, it is vital to undertake progressive manufacturing of bulldozers locally, without further delay, which would ensure availability of bulldozers at an affordable price. Thus there is a need for the government to take fresh initiatives for manufacturing of earth-moving machinery, seeking license from the Original Equipment Manufacturers (OEM), either in the public sector or seeking private investment through the Board of Investment. Indeed, it will provide momentum to the cherished goal of self-reliance, contributing largely towards import substitution and creating employment opportunities.
The writer is ex-chairman of the State Engineering Corporation
