KUALA LUMPUR, Feb 10 2017 : The government has no issue over DRB-Hicom Bhd relinquishing its 51 per cent stake in Proton Holdings Bhd to pursue a foreign strategic partnership (FSP).
Second Finance Minister Datuk Seri Johari Abdul Ghani said it was better for a Malaysian origin car to become a well-known international brand, rather than stay domestic and sell between 200,000 and 300,000 units, which is not sustainable.
“The key is to bring many investors to Malaysia and create employment,” he told reporters recently at the Malaysian Retail Chain Association Chinese New Year celebration.
Johari pointed out that Proton was no longer owned by the government and it had no intention of having a stake in the national carmaker.
As such, he said, there was no harm in Proton proceeding with its plan, while stressing the company was privately owned and intervening in its dealings would be wrong.
However, he added, the government could give its views on Proton.
Johari said Proton needed a foreign partner to incorporate new technologies and introduce better cars that the world would buy.
“If Proton is to stand alone, it cannot flourish overseas.
“We are making cars only for Malaysia and this is not sustainable with a population of only about 31 million. We also have Perodua and other car assembly brands.
“I think it is all about volume, as well as quality and technology, alongside a good design. These are all the ingredients needed for a better car which people would buy,” he added.
Johari also maintained that Proton is a good brand, but needed to be able to sell overseas, have volume and introduce more new models.
He said a dominant (automobile) brand needed to have a foreign partner, while admitting that one or two good local partners had indicated interest in partnering Proton, by holding a stake of less than 50 per cent.
He declined to elaborate further, but said those expressing an interest in Proton should do so by Feb 15, 2017.
It was reported last week that DRB-Hicom aims to complete the selection of the FSP for Proton by the first-half of this year, and was now awaiting the submission of bids from potential partners.
Following this, an earnest evaluation of the bids would commence.
Johari said while the government had no wish to be involved in private sector dealings, it remained concerned over Proton which had created thousands of jobs.
“There is a need to ensure this job security and that vendors are protected.
“Going forward, the government should allow the private sector to do business, but won’t itself be involved in it.
“However, we will undertake strategic business such as building the Mass Rapid Transit and Light Rail Transit systems.
You can’t get the private sector to do this as the investments are huge.
“Furthermore, no one in the private sector is willing to take the risk,” he added.
Johari said in certain situations, the government had to provide for the public without any profit, while subsidising some transportation costs.
Meanwhile, in April last year, the government extended a RM1.5 billion soft loan to Proton Holdings, to help solve cash flow problems, including assistance in paying its vendors for components supplied.
The government also imposed several conditions on Proton to revive its business, which, among others, included seeking a strategic foreign partner.
DRB-Hicom in a recent statement had said that it would maintain a significant equity in Proton.
It would also assess the intention of potential partners in utilising the current homegrown vendor network, as it also owned subsidiaries serving
Proton as vendors, and would avoid having it diluted substantially.
The group said the entry of an FSP would enable Proton to revitalise itself through access to new platforms, powertrains and technologies, which would further improve its range of products and quality.
“The group believes Proton can be a more successful carmaker once an FSP is on-board. The FSP search is not about shirking its national responsibility, but enhancing Proton as a bonafide carmaker and eventually putting it and Malaysia on the global map,” DRB-Hicom said.
Proton has been in the market since the mid-1980s, and has some brand equity in the domestic market, despite past and current challenges.
As a local company, DRB-Hicom is also proud to be the owner of the first national and ASEAN’s only car manufacturer. – Bernama