Gov’t Commended for Salvaging Factories

EghtesadOnline: Parliament Speaker Ali Larijani believes the government of President Hassan Rouhani has made tangible efforts to salvage closed factories.

News ID: ۷۴۱۲۹۹

03 May 2017

“The revival of abandoned factories is the country’s high priority, according to the laws ratified by the parliament and the headquarters of Resistance Economy,” he said on Monday in a gathering to mark Labor Day, IRNA reported.

“To this end, a considerable number of these manufacturing plants have resumed production.”

The bankruptcy of the likes of Arj Factory, Iran’s oldest home appliance manufacturer, grabbed headlines in local media over the past year and was used as a pretext by opponents of the Rouhani government to slam his administration’s performance, Financial Tribune reported.

Being a state-owned firm with most of its shares belonging to Bank Melli Iran, Arj Factory faced rising expenses following its nationalization after the Islamic Revolution of 1979, which lowered its income and profits.

Under the circumstances, Arj Factory and other troubled firms tried to save themselves by drawing on heavy loans and subsidized banking facilities, which accumulated their debt and made them bankrupt.

According to official documents, Arj Factory was put on the list of “troubled industrial units” in the fiscal March 2013-14. But the news of its closure broke last year (March 2016-17), provoking a barrage of criticism against the Rouhani government, regardless of the fact that the company went bankrupt during the tenure of the previous government led by Mahmoud Ahmadinejad.

Arj Factory was one of the 1,977 manufacturing and industrial units that were dragged near bankruptcy over the past few years, making 166,000 workers vulnerable.

According to ILNA, the report titled “Troubled Industrial Units on the Verge of Shutdown” was submitted by the previous administration to the government of President Rouhani in June 2013.

The report read that the number of woebegone factories might be more than the data gathered up until then, that is 1,977. The companies wrestling with shortage of working capital numbered 1,472 and those with overdue debts to banks, insurance companies and tax organization were as many as 1,231.

The total debts of these economic entities amounted to 123 trillion rials ($3.28 billion).

Workers’ compensation was not paid by 980 companies and 357 units were grappling with worn-out machinery and 272 entities were suffering from mismanagement.

Fars Province had the highest number of closed industrial units (319), followed by Khorasan Razavi (233) and Kerman (169).

Out of 1,977 troubled manufacturing companies, 1,501 belonged to non-governmental entities, 419 units belonged to cooperatives and the rest were state-run enterprises.

Industrial entities constituted 1,746 of the total number of bankrupt companies, which had 166,393 workers on their payroll.

In his speech on Labor Day, Larijani said he sees a promising future for the country.

“I feel we are leaving behind economic woes, an example of which is government efforts to save closed factories,” he added.

Figures released by the Ministry of Industries, Mining and Trade show domestic production of home appliances had a significant rise in the last Iranian year.

Over the 11 months to February 18, 2017, 818,900 refrigerators and freezers were manufactured, indicating a 21.7% rise compared with the similar period of the year before.

About 743,800 washing machines were manufactured, registering an increase of 61.5% and the production of evaporative coolers and televisions saw a 5.4% and 9.9% rise over last year’s corresponding period.