Wednesday, March 19, 2014


As posted by Dr. Mahathir Mohamad at Che Det on March 18, 2014

1. The raw hatred for Proton by some members of the media is quite unprecedented. Nothing is right about Proton. It should really be bankrupted and closed down. That will reduce the price of cars so everyone in Malaysia can own a foreign made car.

2. Firstly car prices are high because taxes are high. But the detractors will say the taxes are high to protect Proton.

3. The protection for Proton is minimal. Most of the exemption from tax that Proton gets can also be obtained by foreign cars if they are prepared to have 90% local contents and are made locally which Proton has achieved.

4. But who cares whether the local contents are high or low. I think we should care because the local contents and local car production have created almost 250,000 high-income jobs directly and indirectly. Imported fully-built-up cars create jobs in their own countries. Do we want 250,000 people to lose their jobs so foreign workers will benefit!

5. Then there is the acquisition of technology and engineering knowhow. We were just assembling foreign cars at inflated cost due to very low deletion allowances in 1983 when Proton was launched. Today we have the capacity to design, build prototypes, test and produce our own cars. Acquiring this capacity carries some cost. But because of Proton’s needs we have produced highly qualified engineers and technicians. And we are not penalised by low deletion allowance for high cost parts.

6. Do we need this capacity? We have ambitions to become a developed country. Can a country of consumers of foreign products ever become a developed country? We see some very rich countries with no industrial capacity at all. They buy everything from foreign countries. Can we say they are developed? We need industrial capacities and sophistication if we aim to become a truly developed country. We need scientists, engineers, inventors, innovators, highly skilled workers etc. etc. We will not have them if we cannot create jobs for them. Proton create those jobs.

7. How much has the Government paid to have Proton? Four hundred million Ringgit. Proton borrowed 800 million Ringgit which it had repaid. Compare this with what a Japanese company and the GM in the U.S. spent recently merely to develop and produce electric and hybrid cars – 5 billion US dollars each. They have still not got it right. To start an automotive company in Europe and America at the time we started would require billions of dollars. The Government spent only 120 million US Dollars.

8. The Malaysian Government promised to give 200 million Ringgit a year for Proton’s research in hybrids and electric cars. Hardly a fraction of this fund has been given to Proton. There is no record of 3 billion Ringgit being given to Proton by the Government. On the other hand Proton financed the construction of the Tanjung Malim Plant at 1.8 billion Ringgit using internal funds. Incidentally the Government has collected billions of Ringgit from Proton through various taxes, directly and indirectly. Of course the Government would collect the same or more from imports. But to import, the outflow of funds would be more than the taxes collected.

9. But let us close down Proton and buy foreign cars. The outflow of Malaysian money due to import of cars every year totals 20+ billion Ringgit. Automotive components and cars exported from Malaysia earn us four billion Ringgit. Net outflow is 16+ billion Ringgit. Close down Proton and the outflow would be 20 billion Ringgit or more.

10. Government is subsidising fuel amounting to almost 24 billion Ringgit a year. The tax on cars is high because the Government needs to recoup some of the subsidy money. With or without Proton the taxes are needed by Government. Outflow of funds will increase our trade deficits.

11. The sales of Proton cars has not been good lately. The new management and owners have to do a lot of cleaning up. Proton has now decided not to produce inferior cars for the Malaysian market and then upgrade them for the foreign markets. That was the original policy.

12. Proton now produces cars for domestic and the world market conforming to Euro 5 and other world standards. Go test the Prevé or Suprima S. They are superior to the old Proton cars. Proton intends to keep up with the sophistication of the imports. In fact in many respects they are superior to imports of the same class. Imports were given exemptions from conforming to Malaysian standards. Proton never seek to be exempted.

13. But superiority comes with a cost. Malaysians complain about the performance of Proton cars before but now that we produce better cars Malaysians must be prepared to pay a little bit more. Remember even the best brands have to recall hundreds of thousands because defect cause accidents and deaths.

14. If we look around we see many of the European and American brands have disappeared. But Proton is still around. That in itself is a minor miracle in the automotive world.

15. Proton is determined to not only survive but to do well as an industry and a business. The detractors can say what they like. That will not deter Proton. We in Proton look upon our work as a mission. We think we are contributing to the development of Malaysia as a really developed country. It will take a little time. But we are determined to make a success of this the only car from a developing country.