Tie-up can lift Proton competitiveness

KUALA LUMPUR: The impending collaboration between national car company Proton Holdings Bhd and a foreign strategic partner (FSP) will not only maximise the manufacturing capacity at both its Shah Alam and Tanjung Malim plants, but also allow the company to compete effectively regionally and globally.

The partnership will also enable Proton to compete with car manufacturers like Honda, Toyota and others.

Asian Research Institute of Banking and Finance director Dr Irwan Shah Zainal Abidin said Proton had no other choice but to undertake a management paradigm shift as the country’s limited population of 30 million did not offer economies of scale to compete internationally.

Joining hands with a FSP would not only result in increased ouput and sales but also help Proton carve a bigger market share.

“The time is ripe now for Proton to seek a partner, so that they can together build up capacity and not depend on the government in future,” he said yesterday.

Proton’s current market share is only a meagre 14 per cent, compared with 63 and 64 per cent in the 1990s.

Irwan said such a tie-up would give an edge to the FSP, using Proton as a hub to tap the Asean market.

“We can learn their management skills and work culture. Indirectly, this will help Proton shift into higher gear.

In the long run, he said, the collaboration would help rescue Proton’s vendor network, given the fact that orders for car components had dwindled drastically as sales were significantly off-target.

“If we have no joint venture with FSP, there is a possibility that these vendors will cease operations as sales targets cannot be met.

“The prospective FSP will inject capital into Proton, raise vendors’ activities and generate employment,” said Irwan, adding that if the capacities at both plants were merged, production would rise to 400,000 units annually.

This will immediately enable Proton to have a wide reach as envisaged in the Regional Comprehensive Economic Partnership, which potentially includes more than three billion people, or 45 per cent of the world’s population.