THE cabinet’s message was loud and clear. The government cannot continue to prop up Proton unless the national carmaker embarks on radical changes and overhauls the way it operates.
The company has been a sick child despite some RM13.9 billion being pumped into it in the form of grants and other direct and indirect help since its inception in 1983.
Tun Dr Mahathir Mohamad’s baby from day one has been a colossal failure and proven to be a huge financial burden on the government. His other heavy industry project, Perwaja Steel, suffered the same fate.
He has been calling the shots on Proton ever since it was set up. And, even after his resignation as prime minister in 2003, he continued to pull the strings on government policy on Proton.
Dr Mahathir, via then international trade and industry minister, Tan Sri Rafidah Aziz, even halted at the eleventh-hour a tie-up with German auto giant, the VW group, in a deal that could have reversed Proton’s fortunes.
Dr Mahathir finally broke all formal ties with Proton after quitting his Proton chairmanship last Thursday.
Proton or its current owners cannot expect to come knocking on Putrajaya’s doors every time they need cash.
The company is saddled with growing debts, tumbling sales and tight cash flows to pay its suppliers. It has posted losses of more than RM2.5 billion in the last four years, according to one newspaper report.
And, it now wants the government to throw in a lifeline of RM3 billion — RM1.5 billion in R&D grant and RM1.5 billion in soft loans.
At the same time, car-owning Malaysians have long suffered from the high tariffs and non-tariffs on non-national cars in order to safeguard Proton.
For over three decades, we have been crying foul over having to fork out so much for foreign cars. But this has not benefited Proton which has changed hands five times so far in order to stay afloat.
In short, the government and the people have paid high prices for Proton.
International Trade and Industry Minister Datuk Seri Mustapa Mohamed on Friday laid out four strict conditions for future government assistance to Proton.
These include Proton putting into place tough but vital measures to ensure its long-term survival and that the company’s business must be free from any interference. Another demand is that Proton must quickly look for a strategic foreign partner.
Tok Pa’s statement on Friday was the most frank and blunt assessment of Proton yet. This is a departure from the norm. The government has until now been restrained in its public criticism of Proton in order to maintain decorum and show some respect for Dr Mahathir.
But it is now a free-for-all, given Dr Mahathir’s political stance in joining hands with the opposition to oust Prime Minister Datuk Seri Najib Razak.
Tok Pa also said something that economists have been saying all this while. Continued protection for Proton does not make economic sense. Malaysia cannot support a national car project given its small domestic market and that the car market must be liberalised to ensure greater competition.
A freer market means cheaper cars and consumers will benefit in the end.
Even some European countries with larger and more developed markets cannot compete with global carmakers. South Korea has bucked the trend, rolling out quality cars given its strong management capability and its advances in heavy industries and technology.
Proton has also suffered from old and outdated models and poor export markets. Its domestic market share has plunged to just 15 per cent today from a peak of 74 per cent.
Proton’s fate is now in the hands of its current owners. They must take steps to keep the company afloat but make the necessary but possibly painful changes.
It is an uphill battle to stay in the fast lane.
A veteran newsman, A JALIL HAMID believes that a good journalist should be curious and sceptical at the same time