The founding of Proton National Bhd in1983 was a big costly mistake to proceed with. Billions of ringgit from taxation payers have been lost in a process.
The haemorrhage seems to have a single after another perpetually until Khazanah's recent sale of a 43 per cent interest in Proton to DRB-Hicom a couple of months ago. Malaysians have been wondering - is this a end to this unfortunate tale of a government's foray in to a production of a supposed 'national car' or will a weight upon taxation payers as well as automobile owners be a single after another in alternative brand new ways?
A revisit of this white elephant plan could beget a larger open sermon especially amongst taxation payers who should be some-more endangered as to where all a taxation income they are essential have left to.
One uncomplicated arrogance that appears to have been done by Dr. Mahathir, a initiator of a inhabitant automobile project, is that an attention that is flourishing yearly should be profitable. It is not. In fact, attention data shows that a total increase of all a automobile companies over a last couple of decades volume to usually a modest return, as well as that usually for a fittest in a industry.
The British Experience
Consider a box of British Leyland a vehicle-manufacturing association formed in a United Kingdom in 1968. It was partly nationalised in 1975 with a supervision creating a brand new land company. The association incorporated much of a British owned motor vehicle industry, as well as held 40% of a UK automobi! le marke t.
Despite containing essential marques such as Jaguar, Rover as well as Land Rover, as well as a best-selling Mini, British Leyland had a uneasy history. In 1986 it was renamed as a Rover Group, after to turn MG Rover Group, that went in to administration in 2005. This finished mass automobile production by British-owned manufacturers.
Today, many British automobile marques have turn owned by foreign companies. For e.g. MG as well as a Austin, Morris as well as Wolseley marques have all turn partial of China's SAIC Motor Corporation Limited.
We should have avoided this costly mistake
Why did Dr. Mahathir not sense anything from a catastrophic British automobile attention knowledge is something that completely escapes many Malaysians? Surely any great leader would have got his officers to do due diligence. If they had done so, they would have found that a attention even with year upon year rises in sales is not upon trial to beget great returns to shareholders, even in a rarely grown manage to buy with a long convention of successful automobile make such as Britain?
This is because a single of a forces that extent profitability is a intensity of adversary between automobile companies from around a world. This leads to oversupply as well as pressure upon prices. This is exacerbated by a tall degree of leisure for brand new competitors to enter a industry.
Unless there is an enormous inner market such as China's or a United States as well as you can take value of a economies of scale, tiny producers such as Malaysia are perpetually cursed to a minor fixation or failure in a market place.
Played Out by Mitsubishi
As distant as Proton is concerned, Mahathir's mistake in ignoring a mercantile fundamentals of a attention was compounded by a miss of imagination or comparative value to furnish cars. The expected technology send from Mitsubishi! did not take place. This should have been anticipated. Why should Mitsubishi send their knowhow to Malaysia when it can carry out a gait of send to show off a profits?
In fact, a top management of Proton should ask Mitsubishi to open their books to see how much profit they have done from Proton given it began operation. Mitsubishi knew that Proton could not do though them as well as they were quite happy to go upon creation income from Proton while a association here a single after another to drain to death.
Equally critical was a bad peculiarity of management. Just prior to a privatization exercise according to Mahathir, Proton had accumulated RM4 billion during Tengku Mahaleel Ariff's tenure as arch executive officer, though a cash pot had forsaken to RM600 million during his successor Mohammed Azlan Hashim's stewardship.
To inspire people to buy Proton, a Government increased a import avocation for alternative cars as well as automobile parts. As a result, a consumers have suffered. For over thirty years you have had to pay higher prices for all cars together with Proton. Even this has not been sufficient to save Proton that has been sold five times already.
Another subject to ask is because couple of automobile manufacturers, until recently, appear to get in to bankruptcy? Then prices can climb relations to cost as well as shareholders can get a satisfactory return.
There are dual main reasons. In a little countries there is always a perennial optimism of managers as well as shareholders. In Malaysia, a reason is different. Here, a Government has been changing rules as well as regulations to hinder alternative cars from entering a market while upon condition that special favours together with an ever ready supply of monetary assistance to keep Proton afloat.
The end outcome is that a little Malaysians have finished up with some-more costly cars of alternative brands while many Malaysians have had little choice though to buy ! Proton a bad substitute !
This is a cost you have to pay for brainless patriotism.
Honouring Dr Mahathir
Ours is a contemptible tale that is a classic box study upon how not to set up a automobile industry. As with a inhabitant airline, I propose that a special course upon a knowledge with Proton be offering in a Institute of Tun Dr. Mahathir Mohamad's Thoughts.
What improved approach to honour Dr. Mahathir than a post graduate course upon his pet plan a National Car - as well as inviting him to be a guest lecturer! I am sure he will have lots to share as well as many people to blame as to because a plan has failed.
Proton's Bleeding Continues
Earlier this year aristocrat Tan Sri Syed Mokhtar Al-Bukhary was authorised to take full carry out of Proton. Since a sale, Proton's problems have a single after another by a detriment creation subsidiary, Lotus. In March, a firm was forced to put in place a team of consultants to conduct an audit upon a Lotus organisation of companies.
The need for this examination was pertinent in light of a monetary obligation of Lotus in a form of a 270mil (RM1.3bil) syndicated loan taken during a end of 2010, for that Proton had given a corporate guarantee.
In March, Proton, in a third entertain results, remarkable that a auxiliary was in a technical crack of certain post drawdown covenants upon a long-term loan. For now, a loan amounting to RM1.01bil had been re-classified as a short-term loan as during December 31, until a taking of capitulation for a extension of time
Although a brand new owner of Proton positively has deep pockets (he is a 7thrichest man in Malaysia) as well as owns a commercial operation sovereignty that covers ports, a postal service, power, defence as well as monetary services, besides automobiles, you can expect him to recoup his losses by raising a prices further upon Proton! to illu strate burdening a automobile buyers as well as by charging higher prices for a alternative products as well as services that he is involved with.
Either way, a Malaysian consumer continues being suckered by a inhabitant automobile debacle.
Koon Yew Yin reads Malaysia Chronicle
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