Proton-Geely: What’s the Deal?
I’ve been busy today answering questions from readers and a reporter on the Proton–Geely deal. To simplify things, I won’t repeat myself, but I will give you directly what I’ve told the Malaysiakini reporter:
Q: Is it a good deal in the first place? Should DRB sell more than 49.9%? Also, who owns the golden share now? In future, who will have the say with regards to strategy?
A: Proton has been commercially unsustainable for a long time, therefore this deal cannot be judged on whether it is good or bad but as a necessity. The details of the deal must be fully disclosed and the Government must come absolutely clean on the new shareholding structure of Proton. Does the Government still have a golden share? Are there any other third parties holding shares and acting in concert with Geely? I find it very hard to believe that Geely is willing to buy Proton without majority control.
Q: After selling 49.9% shares to Geely, is Proton still a national car? Does it qualify to receive RM1.1 billion R&D from the government?
A: I don’t think Proton can be considered a national car anymore after the deal completes in July. Again, I stress the Government must come clean on the details of the deal. If I have to make an educated guess, the RM1.1 billion payout to Proton is probably to help Proton settle all outstanding liabilities in order to deliver to Geely a clean company in July.
Q: Certain politicians suggest reducing the import duty since protection for Proton is no longer necessary, what do you think? Should excise duty, one of the main reasons pushing up car prices, also be reduced? You suggested eliminating the excise duty, what should be the time frame?
A: If Proton is no longer a national car, then the excise duty must in principle, gradually be reduced and then eliminated within 3 to 5 years. I am against a sudden elimination in excise duty as it will cause market confusion and destroy all locally produced cars including Perodua, and will also decimate the used car market. The Government must act responsibly and tell Parliament what it intends to do as soon as possible. Keeping the details of the deal opaque and being silent on its excise duty policy are irresponsible acts, and these serve only to cause unnecessary anxiety and confusion in the market.
Q: What’s next for our national automotive policy, then? Should we turn into a manufacturing hub like Thailand, or should we continue to create our own cars?
A: We have a strong automotive parts industry and we have to thank Proton for that. However we must move on. I am positive on Geely’s abilities and its management of Volvo is impressive. I hope Geely can do the same with the Proton brand and make it a regional brand. Malaysian cars can be competitive if we eliminate the culture of unlimited protectionism which breeds wastage, inefficiencies and corruption. Protectionism can be good but it must have a specific limited time frame, and the management must be based on merits and abilities. Proton squandered all the protectionist policies and the time has come to end it.
Q: What should be the strategy for Proton now? Should Proton enter the China market under the name of Geely? Or should Proton come out with a new name/brand after the acquisition?
A: I don’t think Proton should enter the China market, that is Geely’s home turf. For Malaysia, it should keep Proton and see how it performs in Malaysia for a few years. Proton must always be market sensitive.