MP: Iran's car part making sector may go bankrupt
Tehran, Iran, Feb.13
Iran's MP has announced that the car part makers in the country were forced to cut down their workforce as a result of debts to the automakers.
"This industry (car part makers) is facing numerous problems, such as lack of liquidity, and an enormous increase of raw material prices," MP Mohammadreza Mansouri told Trend.
"On the other hand, the car makers have made matters worse, by not paying the car part makers their debts," he said.
According to the MP, this is happening because the car manufacturers are trying to get more benefits from the government.
Lack of liquidity made Iran's biggest car manufacturers - IKCO and SAIPA - incapable of paying their debts.
"The car part makers are in a very bad position here, so the government should directly invest money into them, instead of giving money to the car makers," Mansouri believes.
If it goes on like this, the MP belives Iran's car part making sector will go bankrupt soon.
"So far, the government has given a lot of money to the automobile manufacturers and about one million cars have been pre-sold, which is the result of the government aid, but despite this, the car makers owe the component makers and day after day this situation gets worse,” he said.
"To date, domestic car makers owe more than $4.7 billion to the car part makers," said the MP.
"We should not allow the experience of unlicensed financial institutions and banks be repeated, which, among other issues, forces government to pay their debts from the public assets," Mansouri noted.
In the past 12 years, a multitude of credit unions and savings and loans institutions were set up in Iran without obtaining a license form the Central Bank of Iran. This means, no one checked the financial viability, internal regulations or banking experience of these outfits.
The result was that illegal and unqualified institutions began promising people high interest rates, attracting deposits and then being unable or unwilling to return people’s money, leading to both an economic and a social crisis which forced the government to take action and deal with illegal institutions.