Govt lists what Proton must do to get aid

By THE STAR | 2 April 2016

PETALING JAYA: The Government is of the view that the current business model adopted by Proton is not sustainable and if it were to offer its assistance, it will come with several conditions.

International Trade and Industry Minister Datuk Seri Mustapa Mohamed said among the pre­requisites were for Proton to immediately identify a strategic foreign partner, the company to be professionally managed, no interference in its business and putting in place tough but necessary measures for the long-term sustainability of Proton.

He also urged Proton to “graduate” from Government protection as the measures were only short- and medium-term in nature and would eventually be abolished, as in Japan and South Korea.

The national car company’s share in the domestic automotive market, which once peaked at 74% in 1993, is now hovering at 15%.

Mustapa said since Proton was set up in 1983, the Government has provided grants, various forms of assistance as well as forgone taxes to the tune of about RM13.9bil in total.

The ministry also injected RM100mil to alleviate the burdens of Proton vendors last year.

“The Government has been seriously deliberating Proton’s request for assistance for grants and soft loans.

“It is a major request and the Government needs to be thorough with its evaluation as a lot of public money is involved.

“We need to be particularly prudent in allocation of resources at this time when our national revenues have been seriously impacted by falling oil and commodity prices,” he said.

Mustapa added that he was informed that there were instances when Proton appeared to be unprofessional in its decision-making process.

“In order for the Government to consider providing financial assistance to Proton, it’s important that a competent leadership team be appointed in the company.

“We note the decision made by Tun (Dr) Mahathir (Mohamad) to relinquish his position as the Proton chairman.

“While we recognise the contributions made by Dr Mahathir throughout his chairmanship of Proton, we must not turn a blind eye to challenges faced by Proton and its inability to establish a solid financial footing,” he said.

He added that since he became the International Trade and Industry Minister in 2009, he had been briefed regularly by the senior management of Proton on the issues and challenges faced by the company.

“The National Automotive Policy in 2009 clearly stated the need for Proton to team up with strategic foreign partners. In this extremely competitive line of business, there is a need to set aside high capital resources for research and development. Scale is also crucial but Proton currently has neither of them.

“It’s also suffering a problem of under-utilisation of its two production plants at 35% each,” said Mustapa.

Malaysia currently has two national car projects, namely Proton and Perodua. The latter, which is 49% owned by Malaysian shareholders including Permodalan Nasional Bhd (PNB), is a joint-venture with Daihatsu and Toyota, and is a profitable company.