PROTON GETS RM1.5B FEDERAL GRANT ONE WEEK AFTER DR M QUITS

(MMO) – Putrajaya has approved Proton’s application for a RM1.5 billion soft loan to help pay its vendors, giving the national carmaker a much-needed financial boost amid plummeting sales.

The decision was reached by the federal Cabinet today, about a week after Tun Dr Mahathir Mohamad quit his post as Proton chairman following his growing disillusionment with the federal administration led by Prime Minister Datuk Seri Najib Razak.

In a statement to announce the matter, International Trade and Industries Minister Datuk Seri Mustapa Mohamed said Cabinet agreed to the loan on condition that Proton formulates a comprehensive turnaround plan to improve its competitive edge at the international level.

He said that Performance and Management Delivery Unit (Pemandu) CEO Datuk Seri Idris Jala will head a special taskforce overseeing this turnaround, which will also include three government appointments and three appointments from the private sector.

“Apart from ensuring the terms of this loan is fulfilled, the task force is also required to look at past Proton business models, identify weaknesses, and identify ways to overcome them,” Mustapa said.

Proton has been seeking a RM1.5 billion injection by the federal government to cover accumulated losses of over RM2.5 billion up to last year.

A recent report in Singapore’s Straits Times suggested, however, that Dr Mahathir’s campaign to unseat Najib may have hindered the carmaker’s bid for the grant.

The report quoted a Proton executive as suggesting that the bad blood between Dr Mahathir and Najib had put the firm’s employees and vendors in the difficult position of having to choose between the two.

Last week, Dr Mahathir moved to quit his post in Proton as well as in other government-linked firms. The decision announced on his blog came shortly after his tenure as Petronas adviser was terminated by Putrajaya.

Mustapa said, however, that today’s decision on the grant was made after taking into consideration the welfare of around 60,000 employees who work either with Proton or its vendor companies.

“Proton has to convince the government regarding its new business plan so that it is able to compete,” he said.

Proton has also been asked to find a foreign partner for its Research and Development (R&D) division.

Idris Jala was previously credited with turning around troubled national airline Malaysia Airlines (MAS) from near bankruptcy to record breaking profits.