Geely tie-up will free Proton from perpetual govt subsidy

Ahmad-Fauzi-geelyKUALA LUMPUR: The strategic partnership that Proton has just sealed with China’s Geely will free the national carmaker from perpetual government subsidies at great expense to the taxpayers, a Member of Parliament said today.

Ahmad Fauzi Zahari, the MP for Setiawangsa, said such subsidies, which had run into billions since Proton’s inception 30 years ago, could not go on forever and the tie-up with an international auto giant like Geely brought with it very exciting prospects for Proton’s future growth.

“To begin with, Proton will now be able to increase its production five-fold to 500,000 vehicles in just three years to the year 2020 with its entry into Asean and more significantly, the huge China market.

“Asean has a population of 600 million and China, annual car sales of 28 million. Even if Proton, via Geely, secures just 1% of the China market, it means 280,000 extra cars for Proton to produce,” he told Bernama.

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

Proton Holdings Bhd, which wholly-owns Proton, signed an agreement with Zhejiang Geely Holdings Co Ltd last Wednesday in which Geely took up a 49.9% stake with Proton retaining the majority 50.1%.

Fauzi, who has closely followed developments in the automotive industry, described Geely’s track record since taking over Sweden’s automaker Volvo in 2010 as “very impressive”, ramping up over 200,000 more cars than Volvo previously did on it own.

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

The MP said he was personally excited about Proton’s future because it would mean saving some 60,000 direct and indirect jobs plus some 200,000 other vendors, distributors and suppliers.

Saving jobs was uppermost in the government’s mind when injecting funds into Proton all these years and the sale of Proton’s stake should be seen strictly as a business decision and nothing else.

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

“The government now cannot afford to continue to put good money into bad business. We have to cut bad business off,” he said.

Fauzi pointed out that the automotive industry today was vastly different from 30 years ago when Proton came into being because since then, there had been an evolution in the industry with consolidation among players becoming the name of the game.

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

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