Perusahaan Otomobil Malaysia Sdn Bhd (Proton) was established in 1983 and its first car was launched a good 30 years ago, in 1985. Proton was the brainchild of none other than Dr Mahathir Mohamad. Proton was used as a platform for Mahathir’s dream to develop Malaysia into an industrial powerhouse. Despite a no-go from his personal advisers, critics and common sense, Mahathir went ahead to establish Proton.
Since its induction, Proton has always been a failing organisation and year-in-year-out speculators predict the timing of its closure. Proton has been plummeting again and the question of whether the government should continue to bail out Proton has reemerged. Should the government save Proton again?
Initially, Proton dominated the local industry with 60 percent of car sales. As late as 2001, Proton still dominated the local industry with sales more than 50 percent, compared to other international models. However, in 2014, its sales dropped to 17 percent and has further reduced to about 15 percent during the first quarter of 2015. Currently, Perodua leads the local industry while Proton is second, barely above third placed Honda.
Has the quality of Proton dropped that the sales have reduced drastically?
Personally, I don’t necessarily think so. Proton survived all the while under Mahathir’s regime because the tax for imported cars was raised significantly, making them virtually unaffordable for the middle income group. Hence, people had no choice but to buy a Proton. However, since Mahathir resigned, the subsequent leaders reduced the stranglehold on imported cars and people were able to afford them.
Prior to the 2013 general election, the Barison Nasional (BN) manifesto included progressive reduction on tax of important cars. It is estimated imported car prices should be reduced by as much as 30 percent by 2018.
Proton is widely known as ‘milo tin quality’ among the people and word on the ground is that “if you want to be safe on the road, do not purchase a Proton”. Although Mahathir would tell you that Proton is probably better than a Volvo or Mercedes, we all know the truth. Mahathir has a problem with grandiosity and the entire nation knows that.
Proton has been sluggish all the while. With the sales of Proton being at an all-time low, it is speculated that the government needs to pump in about RM1.5-2 billion to save it from shutting down. Although Mahathir will continue to say Proton needs no bail-out, it does not curtain the truth of Proton’s true suffering.
In March 2000, under the premiership of Mahathir, Petronas hit the headlines (as it has numerous times) when it sealed a deal about RM1 billion to purchase 27 percent of Proton shares, making it the controlling shareholder. The stake was held by DRB-Hicom Group Bhd, which was deeply in debt. This came about after Proton reported a loss of RM19 million over a period of nine months in 1999.
Let the truth be told
Very often we hear people questioning our petrol price since we are a petrol-producing nation. All kinds of excuses have been cited, some of which make absolutely no sense. Let the truth be told. The fact is that we are paying a hefty price for petrol despite being one of the front-runners in petrol production because Mahathir allegedly exhausted billion of Petronas funds and money is still being siphoned out from Petronas.
In the early 1980s, Petronas received a lot criticism for injecting huge amounts of money to bail out debt-ridden and politically-affiliated Bank Bumiputra. In 1998, the entire nation wept as Mahathir spearheaded Petronas to allegedly bail out Konsortium Perkapalan Berhad (KPB), a public-listed company belonging to his son, Mirzan Mahathir. It was estimated KPB floundered with debts of around RM1.7 billion.
Under the Mahathir regime, Petronas was used to finance the Petronas Twin Towers and development of the country’s administrative capital,Putrajaya. Through Putrajaya Holdings Sdn Bhd (where Petronas is one of the shareholders) it was also involved in landmark projects like Putra Square, Putra Mosque, Putra Bridge, Putrajaya Lake and Wetlands. Petronas was also used to secure the title sponsorship for the rights of the Malaysian Formula 1 Grand Prix.
While all this seems colourful to market Malaysia around the world, economists and traders dubbed many of them wasteful.
Petronas was more than a bank to fund Mahathir’s mega-projects and is still continuing to do so, that is why the public do not really benefit from the advantage of Malaysia being an oil producing nation.
While you may argue and say all these developments were necessary to put Malaysia on the map, let me remind you that Singapore is far ahead than us in all aspects with nothing to depend on locally. Success is through good governance and not wasteful blind expenditure.Mahathir reminds me of Fiorentino Perez of Real Madrid where he just splurged insane amounts of money for success.
Should the government save Proton again?
Personally, my answer is NO! We are done and over with Mahathir spoiling the nation. KPB-bailout, MAS-bailout and Proton-bailout. We have had enough with Mahathir’s bailout culture. If after 30 years a company cannot stand on its own feet and progress, it is time to shut it down. Such companies are only liabilities to the country. Forget the ‘national car’ emotional slogan. Currently, Perodua is a better mascot of a national car than Proton.
It is high time the nation uses its brains to think, and not the heart.
