Proton should plan for merger
with bigger carmakers to face the challenges and opportunities of Afta
Press Statement
by Ronnie Liu Tian Khiew
(Petaling Jaya, Tuesday):
It's unwise for national carmaker
Proton to invest another RM5 billion in research and development over the
next five years in its so-called drive to become an Asean giant. Such
investment is totally misplaced as the quest for turning Malaysia into a
"mini Detroit of the East" as claimed by its CEO Tengku Mahaleel Ariff is
not viable.
The Proton project is a product of
personal ego of the outgoing Prime Minister. It has cost Malaysian taxpayers
a lot of money due to its poor planning, relatively high cost of production,
weak export capabilities and low acceptance abroad. Proton is now facing
even tougher road ahead in the face of Afta.
For instance, Proton has to subsidise
no less than RM 10,000 for every unit of car that was sold in England
market. Londoners for years have been paying a lower price for each Proton
car they purchased as compared to Malaysian consumers back home. Besides,
they have been getting all sort of incentives (such as buy-back guarantee)
for buying a Proton.
The decision to buy British carmaker
Lotus was also widely regarded as a bad investment by any standard.
Proton now has a workforce of 10,000,
including 2,000 employed abroad. The national car project has spawned an
industry involving tens of thousands of vendors and suppliers, with annual
purchases of parts and components totalling some five billion ringgit.
Malaysians cannot allow the Proton project to collapse in the face of stiff
competition, nor we should allow the project to continue depleting our
national coffer.
Proton has been protected since 1985
by high tariffs and other advantages but this will disappear when the market
is liberalised in January 2005 under the Asean Free Trade Area (Afta).
Tariffs on imported cars in Southeast Asia fell below five percent in
January under Afta but Malaysia has obtained a reprieve for its auto
industry until 2005.
Mahathir has said it would impose
excise duties on imported cars to offset losses in revenues from import
tariffs. Critics said the move was aimed at evading Afta and to protect
Proton which is already feeling the heat. Sales dropped 10 percent last year
to 239,783 and further in the first half this year.
Proton is unlikely to keep the costs
down and improve exports and acceptance of its cars overseas. And the local
market is really too small for Proton to survive. What is the use of double
the production of Proton to half a million units by 2005 when even
Malaysians would not see Proton as their car of preference? Proton should
really face the reality by looking for buyers or to merge with giant
carmakers for survival.
(7/10/2003)
* Ronnie Liu Tian
Khiew, DAP national publicity secretary
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