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Saturday, November 30, 2013

Mahathir, if Proton can't compete, let it die


YOURSAY 'Who cares whether Proton or the rent-seekers die or live? How could a small group of cronies hold 25 million Malaysians to ransom?'

Dr M: Maintain AP system or Proton will die

your say, YoursayBlack Mamba: When Perwaja and Proton were first mooted decades ago, I remember the opposition led by Lim Kit Siang relentlessly opposed their implementation because Malaysia has a small domestic market to support both industries.

It was never heeded. After some years, Perwaja encountered great financial difficulties and had to be bailed out. Proton managed to survive because of the favourable policies enacted to protect this infant industry which have taken at a great toll on the rakyat's finances.

Lim was correct and Dr Mahathir Mohamad's foolish effort to leapfrog the nation into the industrial league foundered.

As they say, "The only way to convinced a fool is to let him have his own way." Unfortunately because of this one man's ill-conceived vision, the nation has to pay a very heavy price.

Cheong Sai Fah: The Malaysian public have suffered high car prices so that Proton may live. Proton has been given enough time to grow. Look at the Korean carmakers. They are prospering. If Proton can't survive after all these years, it deserves to go under.

Onyourtoes: Yes, some APs (approved permits) have existed for 80 years and they must have benefitted lots of Chinese businessmen, so the insinuation goes.

Well, if there were businessmen benefitting from the system, there must be politicians in power who were too corrupt or stupid to see it.

If after 80 years of AP system, we are still not self-reliant and self-sufficient on rice, flour and sugar, what made this stupid politician thinks that Malaysia will be competitive and self-reliant in the automobile industry.

It has been more than 30 years, the national automobile policy as it stands today is still in limbo. The Koreans who started the automobile industry around the same time as us has become the world's powerhouse. Malaysia, on the contrary, has become the world biggest automobile parasite.

It is time to put a stop to more than 30 years of exploitation by a bunch of good for nothing parasites at the expense of millions of Malaysian consumers. A whole generation of Malaysians have sacrificed and paid for their folly.

The great architect of Malaysia's ill-conceived automobile policy (more aptly the blood-sucking policy) must be told in no uncertain term to back off.

Get rid of all APs now and we will see the standard of living among Malaysians improve by leaps and bounds.

Odysseus: If Proton or any business cannot compete effectively in the open market, it's better to let it die a natural death and channel the money to better use.

A cat is only a good cat if it catches a rat. A car is only a good car if it brings you from one place to another with minimal cost.

Wg321: At one time, I heard Proton is producing an Islamic car for the Middle East countries and Turkey. What happened? You see, even fellow Muslims overseas are not interested in an Islamic car which is of poor quality.

They preferred Hyundai cars which are of superior quality than Proton. By the way, both Hyundai and Proton started producing cars at about the same time in the 1980s.

When PM Najib Razak launched the BEE (Bumiputera Economic Empowerment) agenda, he only wanted the bumiputeras to compete among themselves in order to prosper. He does not want the bumis to compete with non-bumis.

By the way, non-bumis include the Koreans, Japanese, and Chairman Mao's Chinese from China, etc.

Anonymous_4056: Maintain Proton and the rakyat will die. Let the uncompetitive Proton die. The Malays will have cars that are more reliable, safer and economical cars.

Why must we keep these unworthy cars and every rakyat is made to pay a high price for them. This does not make business sense, Mahathir.

Cala: Is Mahathir's logic on the AP system valid? Correct me if I am wrong, but let's compare two models - one made by Proton and the other, an imported car by a foreign manufacturer of equivalent engine size.

The cost of a Proton is ‘2x' (say), and its anticipated profit ‘y'. So Proton sells at ‘2x+y'. For the imported car, let's assume the cost of production is only ‘1x' because of efficiency. If ‘y' is the profit, and if the imported model can still sell, its selling price must be x+x+y = 2x+y, the same as Proton, where the second ‘x' must be the price of an AP system earned by an AP holder, and who is most likely a rent-seeker.

Mahathir's logic is, in order to create a level-playing field for Proton, the AP holder is allowed to earn ‘x' for each car imported. But what is the contribution of the AP holder? The answer: nothing. The system is in fact perpetuating an inefficient Proton. In the meantime, Malaysians are made to bear with Proton's ‘2x' in production cost.

The above-mentioned is a simple model for comparison. We know for a fact that an imported car sells much higher than ‘2x+y'. In many cases, it sells probably at ‘3x+y'. If that is the case, imagine the amount of money earned by a typical rent-seeker?

At the same time, Proton can continue with its inefficient production, and in the process, benefitting perhaps the parts suppliers who have no incentive to improve as the system shield them from competition. Thus, what we see is a vicious cycle where car buyers are taken for a ride by Proton.

What then is the conclusion as evidenced from the AP system? The Proton parts suppliers can earn their disproportionate profit despite low-value products delivered. But who are these parts suppliers?

And AP holders too can profit handsomely as they sell the APs to anyone who wishes to import a car. Again, who are these AP holders?

Tellingly, in place is a clear system of "extractive political institution" that facilitated an "extractive economic institution" that takes the form of AP system which benefits the ruling elites at the expense of the masses (car buyers).

Hence, there is little incentive to remove the AP system. Why should Mahathir do it?

Oh Ya?: Who cares whether Proton or the rent-seekers die or live? How could a small group of cronies hold 25 million Malaysians to ransom?

Toffeesturn: If Proton cannot compete after all these years it must die and there can be no two ways about this.

We can't afford to support unproductive enterprises - the price of a Proton is exorbitantly high and the only reason this is so is because they are not sufficiently productive, in fact they are unproductive.

Companies are unproductive because of varied reasons, inefficient management, corrupt practices, ineffective systems, poor R&D (research and development), incompetence and all these I think are woes that affect Proton.

Chinniah1954: Mahathir should have paid more attention to building a good public transport system rather than Proton. A better public transport system would have saved the majority of the Malaysians from being in debt to the finance companies and banks.

Indeed, you got your priorities all wrong in this matter.

EvenSteven: Just to let you know Tun, I traded in my two-year old Perdana for an 11-year old Suzuki Vitara and I got the better part of the exchange. - Malaysiakini

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