Statement by Lim Guan Eng in Penang on Thursday, 7th August 2008:
The failure by Proton to find a foreign partner is a warning signal that
it is no longer a competitive and economically viable entity with
declining market share and questionable management decisions that causes
Proton to lose money when other finds profits
by Prime Minister Datuk Seri Abdullah Ahmad Badawi recently that Proton
Holdings Bhd needs to consider a foreign partnership to further improve
on its quality and service to the buyers is an admission of failure of
Proton despite producing Proton's three-millionth car. Despite a long
desperate search, the failure by Proton to find a foreign partner is a
warning signal that it is no longer a competitive and economically
viable entity with declining market share and questionable management
decisions that causes Proton to lose money when other finds profits.
Abdullah may urge the 25-year-old national car maker to produce more
fuel efficient and environmentally-friendly cars. But the reality is
that sales fell 40% from 183,824 units to 110,358 units last year, a
drop in market share to 32 per cent from more than 60 per cent in 2000.
How can Proton expect to survive with such poor sales when its overseas
market is a loss-making operation? Such a steep loss in market share is
Of greater concern is the refusal for a Royal Commission of Inquiry into
the RM 800 million ringgit MV Agusta scandal to fully disclose
mismanagement and financial misjudgments by Proton Holdings Bhd, action
against those responsible and new measures to be implemented against
such weaknesses. This follows the shocking announcement by Harley
Davidson Inc that it will purchase Italian motorcycle manufacturer MV
Agusta, once owned by Proton Holdings Bhd, for US$109 million (RM352
million), making the total sale proceeds of RM 800 million.
Proton Holdings had bought MV Agusta in 2006 for RM368 million which it
had then sold for only one euro (RM5) to an unknown company in Italy -
Gevi SpA. In justifying the sale for one euro Proton had said here were
no operational, engineering, and technological synergies between Agusta,
the motorcycle maker, and Proton as a carmaker.
Proton bought a 57.75 percent stake in MV Agusta in December 2004 for 70
million euro (RM367.6 million), which was treated as goodwill and
written off. However Proton lost more than RM 500 million in the sale
for one euro because it had to assume the additional provisions relating
to MV Agusta in the accounts of the Proton group for the financial year
ended March 31, 2006, amounting to RM136.2 million.
After MV Agusta was sold off for one euro(RM5), Gevi SpA sold Husqvarna,
a division of MV Agusta which manufactures scrambler sporty off-road
motorcycles, to a German company BMW for 90 million euro (RM450
million). Now MV Agusta has been bought by Harley-Davidson Motor Cycles
of the United States for RM350 million.
Public interest therefore requires a full accounting from Proton on how
it went so terribly until BMW can pay RM450 million for one third of MV
Augusta and Harley Davidson pay RM 352 million for the remaining stake
which Proton sold only one euro at a loss of more than RM 500
million.Tun Dr Mahathir is correct to state that Proton appears to have
lost approximately RM800 million by selling Agusta for only RM5 stating
that the buyer of MV Agusta “invested one euro and made 160 million
Malaysians have a right to know what type of management can makes such a
decision that allows other foreign companies to benefit at our expense.
Instead of losing RM 500 million, Proton could have earned RM 300
million if it had sold to BMW and Harley-Davidson. Proton has refused to
anwer despite Khazanah Malaysia, the Malaysian government's investment
arm, holding about 42.74 %t of Proton.
Public interest requires full accountability and transparency.
Unfortunately Proton’s refusal to give full disclosure leaves requires
an establishment of a Royal Commission of Inquiry into this RM 800
million MV Agusta scandal in the interests of good corporate governance
and social responsibility. Malaysians wants answers to this RM 800
Lim Guan Eng, Penang Chief
Minister & DAP