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

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.