EghtesadOnline: The domestic production of refrigerators and washing machines grew while that of TVs fell in the first four months of the current fiscal year (March 21-July 22), latest data published by the Ministry of Industries, Mining and Trade show.
A total of 692,000 refrigerators and freezers were produced during the period, registering a 20.4% growth compared with 574,900 devices produced in the corresponding period of last year, IRNA reported.
The production of washing machines stood at 430,700 during the same period, 36.2% higher than the 316,100 devices made in the same period of last year.
A total of 347,800 TVs were produced by Iranian producers from March 21 to July 22, 4.3% less than 363,500 in last year’s corresponding period.
The secretary of the Association of Audiovisual Device Producers blames the decline on one foreign and three domestic factors.
“The crisis of global shortage of microchips, especially microprocessors, which are the core of the central television system, has had a negative impact on the domestic production of this product,” Mohammad Reza Shahidi was also quoted as saying by IRNA.
According to the official, the coronavirus lockdowns, power outages and decline in people's purchasing power are the main factors behind the TV production decline.
“The ban on imports of home appliances in the year ending March 2019 energized local production. At present, domestic production meets 60% of demand for home appliances. The remaining 40% are met through international brands and exemptions considered for imports by those who live in border towns. We need to provide opportunities for residents of border towns to make a living via cross-border trade,” Ali Moayedi Khorramabadi, the head of Iran’s Headquarters to Combat Smuggling of Goods and Foreign Exchange, was recently quoted as saying by IRNA.
According to the official, the value of home appliances imported by residents of border towns is nearly $1.5 billion.
Domestic production of home appliances has been on the rise in recent months. Some manufacturers have even posted a 100% increase in output. For the first time, two well-known local companies launched the production line of dishwashers in the country, IRNA reported recently.
“Home appliance industry’s turnover, including chinaware and crystal glassware, hovers around $6.5-7 billion, of which $2 billion are attributed to smuggling,” says Abbas Hashemi, the secretary of the Association of the Industries of Household Appliances of Iran.
“The growth in home appliance production during the current Iranian year has been unprecedented in the past decade,” he was quoted as saying by IRIB News.
Noting that the main challenge facing the industry is the insufficient supply of raw materials, the official said, “For instance, manufacturers of refrigerators and freezers need a common thermoplastic polymer called ABS [Acrylonitrile Butadiene Styrene]. The Industries Ministry should provide raw materials in cooperation with the petrochemical industry. Home appliance producer refused to sign an export contract because they were not confident that there would be a sufficient supply of petrochemical raw materials. The supply of steel sheets, copper and aluminum parts as well as the allocation of foreign currency for the purchase of essential imported parts are also challenging for the industry.”
The official estimated the value of annual contraband smuggled into and out of Iran at $12.5 billion per year.
“At present, close to 150 types of television sets varying from 32-75 inches are manufactured in 14 factories across the country. Our overall production capacity is three million sets per year, yet actual production stands at 1.5 million,” Shahidi was quoted as saying by IRNA.
The official noted that domestic demand stands at 2.2-2.4 million TV sets per year.
“Due to an import ban on home appliances, the remaining demand is supplied through contraband. Our estimates are that more than 2,000 television sets are smuggled into the country every day. That makes more than 700,000 sets per year.”
Without paying tax, import duties, insurance fees or other such expenses, smugglers can sell their goods at competitive prices in the local market and this robs domestic products of their ability to thrive.
“We expect TV production to reach 1.6-1.7 million sets by the [fiscal] yearend [March 2022], to register a 30% growth compared with the corresponding period of last year. This will only come about, if production firms receive the foreign currency they require to import the necessary raw material and smuggling is battled effectively,”