Press Statement by Lim Guan Eng in Petaling Jaya on Wednesday, 28^th May 2008: 

Proton Holdings Bhd. should adopt the CAT principles of Competency, Accountability and Transparency if they are committed to be a viable player in the automotive industry  

DAP expresses grave concern that Proton Holdings has to incur a loss amounting to RM900,000, for the final quarter of its financial year ended 31 March (FY 2008). For Proton to claim a RM236.4 Million profit is misleading when these profits were the result of:

a. A R&D government grant of Rm194Million Research & Development (R&D) grant received from the “Industrial Adjustment Fund”.

b. A tax writeback of RM43.3Million

Without the R&D grant and a tax writeback, Proton would actually incur a loss of Rm900,000. This is shown by Proton’s operating expenses of Rm1.77Billion for the final quarter, which exceeded its revenue of Rm1.72Billion.

The Penang’s State Government’s own experiences with Proton’s cars have not been a happy one when even the State Secretary complained of leaking roofs and faulty engines after a year’s of usage. Even though the cars are still covered by warranty, the loss to the government caused by the time needed to repair them is an unnecessary inconvenience. Were it not for the Penang state government’s wish to support the national car project, other car models with greater fuel efficiency, comfort and reliability would be purchased. However, if Proton cars continue to show its inferior quality, the Penang State Government may be compelled to review its car purchase policy.

The government’s granting of the Rm194Million R&D grant raises the question of money well spent when the quality of the cares are so disappointing. This is proven by the failure of Proton to break into the export market relying solely on the domestic market and helped by high tariff protection, government subsidies and grants. If Proton were to depend solely on performance, it would have either be sold or even closed down.

DAP questions the Federal Government’s wisdom of granting Rm194Million R&D grant when the quality of Proton cars have neither improved nor matched its competitors. Relying on the government’s R&D grant would not help Proton meet its Key Performance Indicators (KPI) benchmarks. Proton should not claim any turnaround in its operating results but adopt the CAT principles of Competency, Accountability and Transparency to be a viable player in the automotive industry.

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* Lim Guan Eng, DAP Secretary-General & MP for Bagan & ADUN for Air Puteh