‘Geely tie-up will free Pro­ton from per­pet­ual govt sub­si­dies’

New Straits Times - - Business -

The strate­gic part­ner­ship that Pro­ton Hold­ings Bhd sealed with China’s Zhe­jiang Geely Hold­ings Co will free the national car­maker from per­pet­ual govern­ment sub­si­dies, said a mem­ber of par­lia­ment yes­ter­day.

Se­ti­awangsa MP Datuk Ah­mad Fauzi Za­hari said the sub­si­dies, which come at a great ex­pense to tax­pay­ers, had run into bil­lions of ring­git over the past 30 years and could not go on for­ever.

The tie-up with an in­ter­na­tional auto giant like Geely, he said, would bring with it ex­cit­ing prospects for Pro­ton.

“Pro­ton will now be able to in­crease its pro­duc­tion five-fold to 500,000 ve­hi­cles in three years with its en­try into the Asean mar­ket and, more sig­nif­i­cantly, the huge China mar­ket.

“Asean has a pop­u­la­tion of 600 mil­lion, and China boasts an­nual car sales of 28 mil­lion. Even if Pro­ton, via Geely, se­cures just one per cent of the China mar­ket, it means 280,000 ex­tra cars for Pro­ton to pro­duce,” he said.

Fauzi said Pro­ton’s cur­rent an­nual pro­duc­tion of 74,000 ve­hi­cles was only 20 per cent of the ca­pac­ity of its Tan­jung Malim plant, but with the Geely part­ner­ship, “the sky’s the limit for Pro­ton. Just imagine the thou­sands of new jobs to be cre­ated for Malaysians”.

Pro­ton signed an agree­ment with Geely last Wed­nes­day, af­ter which the Chi­nese car­maker took up a 49.9 per cent stake.

Fauzi, who closely fol­lowed devel­op­ments in the au­to­mo­tive in­dus­try, de­scribed Geely’s track record since tak­ing over Swedish car­maker Volvo in 2010 as “very im­pres­sive”.

Via Geely, the Swedish car­maker had ramped up pro­duc­tion by 200,000 more cars than it pre­vi­ously did on its own.

“In 2015, Volvo man­aged to roll out more than 500,000 cars, the high­est fig­ure in its al­most 90 years of ex­is­tence. I am con­fi­dent that Geely can do the same with Pro­ton,” he said.

Fauzi said he was per­son­ally ex­cited about Pro­ton’s fu­ture be­cause it would mean sav­ing some 60,000 di­rect and in­di­rect jobs, as well as some 200,000 jobs from ven­dors, dis­trib­u­tors and sup­pli­ers.

Sav­ing jobs had al­ways been up­per­most in the govern­ment’s mind and the sale of the Pro­ton stake should be seen strictly as a busi­ness de­ci­sion and noth­ing else, he said.

“I sup­port the view of Sec­ond Fi­nance Min­is­ter Datuk Seri Jo­hari Ghani, who hopes that mov­ing for­ward, there will be no fur­ther sub­si­dies for Pro­ton and that it will be able to stand on its own feet with­out ask­ing for govern­ment help.

“The govern­ment can­not af­ford to con­tinue putting good money into bad busi­ness. We have to cut bad busi­nesses off.”

Fauzi said the au­to­mo­tive in­dus­try now was vastly dif­fer­ent than what it was 30 years ago when Pro­ton first came into be­ing.

Since then, there had been an evo­lu­tion in the in­dus­try, with con­sol­i­da­tion among play­ers be­com­ing the name of the game.

He cited the ex­am­ples of Bri­tain’s iconic Land Rover be­ing taken over by In­dia’s Tata Group, Bri­tish Vaux­hall by France’s PSA, Re­nault by Nis­san and Volvo and Lon­don Taxi by Geely.

The Bri­tish pub­lic had never re­garded such busi­ness deals as a “sell-out”, and Malaysians should be ma­ture enough to be­have sim­i­larly, he said.

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