Proton must ‘graduate’ from govt protection, says Mustapa

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PETALING JAYA: Proton needs to “graduate” from Government protection, says International Trade and Industry Minister Datuk Mustapa Mohamed (pic).

In a statement on Friday, Mustapa said that the Government could not continuously protect heavy industries, including the automotive sector, noting that although other countries such as Japan and South Korea have protected their automotive industry, these measures were short- and medium-term in nature, and were eventually abolished.

“Proton, which is our national car project, needs to graduate from this protection,” he said.

Mustapa also noted that since he became Trade and Industry Minister in 2009, he had been briefed by Proton’s senior management of the issues and challenges faced by the company on a regular basis.

“The National Automotive Policy in 2009 clearly stated the need for Proton to team up with strategic foreign partners. In this extremely competitive line of business, there is a need to set aside high capital resources for research and development. Scale is also crucial. Proton currently has neither of them,” he said.

Mustapa said that problems faced by Proton were very challenging as company’s share of the domestic automotive market currently hovers at 15%.

He said that since its establishment, the Government has provided grants, various forms of assistance as well forgone taxes to Proton of about RM13.9bil in total.

Mustapa said that the Government believes that the current business model adopted by Proton is not sustainable, adding that it has been seriously deliberating Proton’s request for assistance for grants and soft loans.

“It is a major request and the Government needs to be thorough with its evaluation as a lot of public money is involved. We need to be particularly prudent in allocation of resources at this time when our national revenues have been seriously impacted by falling oil and commodity prices,” he said.

Mustapa also said that Perodua has turned out to be a more sustainable model.

“Perodua Manufacturing, which is 49% owned by Malaysian shareholders including PNB, has a joint-venture with Daihatsu and Toyota, and is a profitable company,” he said.

Mustapa also said that he would like to assure “Proton employees, vendors and the Proton ecosystem that their interests will be taken into consideration” before any decision is made.

He said that if the Government decides to assist Proton, several conditions will have to be met.

He noted these included Proton immediately identifying a strategic foreign partner, the need for Proton to be professionally managed, no interference in its business, and some tough but necessary measures that must be put in place for its long-term sustainability.

Mustapa added that he has been informed of instances when Proton appeared to be unprofessional in its decision-making process.

Meanwhile, Mustapa also took note of the decision by former prime minister Tun Dr Mahathir Mohamad to relinquish his position as Proton chairman.