October 17, 2012
PROTON– A Raw Deal for Malaysian Taxpayers
by Nawawi Mohamad, Malaysia Chronicle
Perusahaan Otomobil Nasional or PROTON does not belong to, neither is it controlled by, anybody who is really interested in making cars and profit. The main interest of everyone connected with the running of PROTON appears to be to make money out of the national car project.
The employees, from the lowest level to the CEO and shareholders are only interested that by the end of the month they will get their salary, bonus and yearly dividends. The ordinary employees are also just hoping for increments and promotions, and when they are hospitalized, they will demand the best medical benefits and claim the highest hospital bills. Every year like their CEO, they too hope for windfall bonuses too.
The vendors supplying the over three thousand components are also interested in making money. They will bribe anybody in PROTON they have to in order to secure their deals. Their products are mostly of lesser than specified quality but they will do all sorts of tricks like holding PROTON at ransom by delaying delivery of the components until the critical stages of production.
In other words, PROTON executives desperate to meet production targets will close and eye since there is no time to wait for fresh deliveries. Proton has no choice but to accept poor quality products and incorporate these into the cars they produce. Guess who is the ultimate ‘beneficiary’ or victim – yes, it is the buyer.
False efforts
When DRB-Hicom bought a 42.7 per cent stake in PROTON from Khazanah
Nasional Bhd for RM1.29 billion in January this year many people were skeptical whether it would succeed in turning itself around.
They were indeed right to expect negative results because DRB-HICOM does not have the much-needed money to inject into the national car maker. No one in the market was surprised when a week after the deal went through, the first order of business for DRB-Hicom’s Managing Director Mohd Khamil Jamil was to go to Maybank asking for money, if not begging for it.
In any huge venture, it would be most prudent to study, scrutinize, monitor and understand the business inside out so that a viable plan could be raised and implemented before pouring so much money into the venture. Unfortunately, it appears DRB-HICOM did not do its homework well! After taking over PROTON, DRB-HICOM simply does not know what to do with it!
“Everybody is waiting to see what DRB-HICOM plans to do with PROTON. We are working on a plan now and hope to come up with it by next month,” admitted PROTON’s CEO Che Khalib Mohamad Noh after the MICPA-Bursa Malaysia Forum 2012 in Kula Lumpur.
“DRB-HICOM Bhd will come up with a new business plan for PROTON Holdings Bhd next month.”
But the fact that Khalib declined to elaborate clearly shows that DRB-HICOM does not have a plan! Yet it refused to employ people who really are interested in making cars and profits.
Both Khamil and Khalib are ordinary top management individuals who have no experience in car manufacturing. Khamil has said at the group’s annual general meeting recently that the conglomerate plans to introduce a foreign partner to PROTON. This clearly indicates that both of them are really blur and need foreign help badly.
They should know that foreign partners won’t be easy to come by given PROTON’s political connections. Who isn’t aware that it is a ‘connected’ conglomerate that makes money by manipulation, bail-outs and not real business? Who would want to risk their investment in PROTON then?
Learn from other troubled car makers
Lee Iacocca was the”moving force” behind Ford and he revived the troubled
Chrysler when he was its CEO. The same thing with Carlos Ghosn of Renault when Nissan appointed him as the CEO in 1999 and he succeeded in turning the losing car manufacturer’s USD6.1 billion losses into a net profit of USD2.7 billion within three years.
DRB-HICOM’s own dilly-dallying in trying to revive PROTON shows how entrenched public scorn and cynicism is for this project. To many Malaysians, the only thought in the minds of the PROTON top management is how to pull out and make as much money as possible from the PROTON shares they will eventually dispose of.
No doubt, PROTON can expect ‘deja-vu’ to recur. It will again be left like an unwanted orphan and UMNO will then use taxpayers’ money to bail it out on the pretext of national interest. But ‘national interest’ my foot! The deal certainly seems to be all for UMNO leaders and cronies.
N you hv not seen pkns yet.a total joke that agency is.
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Not worry. There is always a fallback position for Syed Mokhtar and DRB-Hicom. Proton will be sold back to Khazanah Nasional or some other party which is UMNO friendly at a huge profit. Buy cheap and then sell high. That is the trader’s game. Screw shareholders and taxpayers will be damned.
As long as Mahathir is around, the national car will get its share of government funds. Billions have been put into this project since it was mooted in the 1980s by then Prime Minister. Tengku Mahaleel tried his utmost to reimage and reposition Proton and up to a point he was successful. Proton had huge cash reserves under his care. Unfortunately. despite his marketing savvy, the former SHELL executive was engineered out of the company. That is what happens to capable people.–Din Merican
We must start with a policy based on The Rce To The Top. By now PROTON should be producing some of the best cars in the world. They spent billions to build a spanking state-of-the art car manufacturing plant in the world in Proron City and no one has heard anything about it. Last I heard is that VW was interested in making their cars in that plant.. We have to inculcate a culture in our system where the bosses will attend to mistakes and correct them before it is too late instead of dithering because it will affect the rice bowl of thir cronies.
But again this Race To The Top must start from our education system where the best tools are selected to educate our young people. Yes by all means learn Tamil, Chinese and Malay. Now politicians are asking our children to learn other languages. These are all languages that will enhance your understanding of culture. But when it come to the language of Knowledge and the internet nothing beats english. We do not have to apologise to anyone when we select the best tools for our children.
In the 50s and 60s we had world class schools from which our students could futher their studies in leading Universities in Australia, New Zealan, U.K and the Americas. Students who graduated from Universiti Malaya with a Second Class Upper could do their PhD in leading universitie in the english speaking world. We nust regain that status instead of only looking for projects that will bring immediate gain to those who moot them.
You wanna know how smart Proton is, well even if they manage to entice Carlos away from Nissan,even as savvy as he is,there’s nothing much he could do.Imagine VW after finding out certain clauses in the JV agreement doesn’t tally business wise,just had to pull out.Daniel Bahar,the ex Ferrari guy wasn’t even allowed his way in Lotus, he was just too smart for the Malaysian owners,well in the late 70′s till early 90′s,we had the Skoda jokes,well look at them now,Proton and it’s jokes will always stay.It’s one legacy of Mahathir that will bury him.Oouch!!!
What happened to this guy, a history graduate whose only experience in managing anything is the steering wheel of his car and who apparently got the attention of the Old Goat by manipulating his way. This third rate poker player ‘Tengku from Kelantan’ thought he had the right to gamble with taxpayer money just like the Old Goat thought it was his right to treat the nation’s central bank as he saw fit – his own personal piggy bank. These two criminals ought to be put on trial and made to account.
How do you think this third rate badminton player got his job with SHELL??
Din.Proton had wasted taxpayer money since it inception in 1984 almost 30 billion rgt.Look east policy ,what do we get from Jap.Mitsubishi supply the old engine,the the old model and didnot transfer any technology.
Dont worry about Syed Mokhtar.His backround ,graduate from Sultan Abdul Hamid college,SC grade 3.He started his business by smuggling cattles from Thailand.His company Bukhary holding started his business as rice trader.Manage to get a luctrative govertment contract and make money by smuggling rice from Thailand.He is vary smart and shrewed.He make his millions with the help of Mahayuddin when he was deputy minister of trade.
He strike his jackpot when he manage to be closer to Tun Mahathir.His group of companies in debt almost 30 billions rgt.But he is personally vary rich.
The DRB got contract with Mindef to supply armored vehicles for 8 billion rgt.He bought the vehicles from Turkey for 1.5 billion rgt,fixed the gun and communication for 1 billion make a gross profitt of 5.5 billions.
I know what he plan to do with Proton.He will invited VW to be his partner and sell 49 percent shares of Proton for 3 billion rgt.
Bean,
Ku Mahaleel is a businessman-director of some private companies including Tien Wah Press of which he is still the Chairman. I owe him a nasi kandar lunch. I told him that DRB-Hicom might call him back to lead Proton. I was wrong since Syed Mokhtar put his own men at the helm. I hope to meet him soon.–Din Merican
Kia,Hundai and Proton car started almost at the same time.When I bought Hundai car in 1994,it was almost 100 percent copy from Japnese car,Toyota?
Now look at Kia and Hundai car, the technology and he quality are batter than jap. or Geman car.Both company making hundren of millions profit every year.
I fully agree,our proton is slightly batter than scoda.
Tthe decent thing to do with Proton is to strip the balance sheet of its assets and sell them for scrap. That would stop the bleeding which has gone on for far too long at such enormous costs to taxpayers.
The mere mention of the word “Proton” gives me the shudders. I owned a Wira once but it’s all gone now. It’s lying in someone’s backyard and home to his many ayam kampong. At least there’s some use for it. The bloody Al Kutty has taken the whole nation on a ride in his rickety Proton Perdana. What a heck!
Still an “infant industry” that needs heavy tariff protection against foreign
competition after almost 30 years ???
Because of the ego of ONE man, we the rakyat had suffered losses of billions of ringgit, and this man is still behaving like he is God, and cannot be wrong. He has forgotten that there is a realL and Almighty GOD which he has to account to when the time comes.
My guess for Proton is this, whatever turnaround plan which they may come up with will eventually be considered unachievable, and a decision will be made to disposed off Proton with a huge profit as Din predicted, or by stripping and selling all the valuable assets, especially the land at Shah Alam and Tanjong Malim, not to mention all the plants and equipments. You can be sure that the profit will be unbelievable.
Its just too bad that a big portion of our rakyat dont mind being screwed this way, that’s why BN can continue ruling this country for so long.
Why are Malaysians so tolerant knowing that the Old Goat is using Proton to milk the tax payers for the last 3 decades? For the sake of national pride, we allow ourselves to be robbed?
Why so blind and what sort of perverse logic is this?
Stop the looting and boot UMNO/BN out this GE 13..
Tok Cik should never have used a Proton to do all his humping in the back seat. The absorbers could not absorb all those shocks he was making with his hip. I could have loaned him my Aston Martin DB5.
This customer should be told of the Latin term ‘caveat emptor’ or buyer beware. He made a choice despite the bad publicity that went with Proton for decades – bad design, poor manufacturing, poor after sales service etc etc. Over here an irate customer spewing obscenities like that would have police on his tail in no time.
While the customer was unloading all he had to say not just about the car but about the people who work there, everybody was standing there listening and taking all the abuse. This can only happen in Malaysia.
Proton suffers from a fundamentally flawed business concept, you can’t succeed in the sub compact segment unless you are one of the few global giants. I wonder if those in charge, then and now, can grasp this. Highly unlikely then that a new strategy can be formulated without appreciating the flaws of the old one.
It seems to me that whoever it is that selects the people to be put in charge seem to think that financial reporting skills are all that’s needed to manage a business.
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Good comment, Mazlan. You and I know that there is more to managing business than just a flair for numbers. The financial part of the business is the easy part of managing a business. Decisions we make affect the outcome and are reflected in the numbers at the end of the financial period.
The culture of Proton needs a major overhaul. Managers there should be told that performance counts and shareholders are prepared to shut it down if it is bleeding endless requiring massive taxpayers money. What does Che Khalib know about the industry? Zilt and to booth, he is a non-performer at TNB.
I think Tun Dr. Mahathir should know that. My own view is that Proton should be wound up if it is unable to sustain itself after decades of public funding and financial engineering. Welcome to the competitive world.–Din Merican