Koon Yew Yin's Blog
A Hose of Problems for Proton, our National Car - Koon Yew Yin
Koon Yew Yin
Publish date: Wed, 17 Feb 2016, 01:58 PM
Koon Yew Yin
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An official blog in i3investor to publish sharing by Mr. Koon Yew Yin.
All materials published here are prepared by Mr. Koon Yew Yin
All materials published here are prepared by Mr. Koon Yew Yin
I am not surprised to see the STAR front page article ”A Hose of Problems for Proton”.
The founding of Proton National Bhd. in1983 was a big expensive mistake to begin with. Billions of ringgit from tax payers have been lost in the process.
The hemorrhage seems to have continued forever. Malaysians have been wondering - is this the end to this unhappy saga of the government’s foray into the production of a so-called ‘national car’ or will the burden on tax payers and car owners be continued in other new ways?
A revisit of this white elephant project could generate a larger public discourse especially amongst tax payers who should be more concerned as to where all the tax money they are paying have gone to.
One simplistic assumption which appears to have been made by Dr. Mahathir, the initiator of the national car project, is that an industry that is growing yearly should be profitable. It is not. In fact, industry data shows that the total profits of all the car companies in the world over the last few decades amount to only a modest return, and that only for the fittest in the industry.
The British Experience
Consider the case of British Leyland a vehicle-manufacturing company formed in the United Kingdom in 1968. It was partly nationalised in 1975 with the government creating a new holding company. The company incorporated much of the British owned motor vehicle industry, and held 40% of the UK car market.
Despite containing profitable marques such as Jaguar, Rover and Land Rover, as well as the best-selling Mini, British Leyland had a troubled history. In 1986 it was renamed as the Rover Group, later to become MG Rover Group, which went into administration in 2005. This ended mass car production by British-owned manufacturers.
Today, many British car marques have become owned by foreign companies. For example MG and the Austin, Morris and Wolseley marques have all become part of China’s SAIC Motor Corporation Limited.
We should have avoided this expensive mistake
Why did Dr. Mahathir not learn anything from the disastrous British car industry experience is something that completely escapes many Malaysians? Surely any good leader would have got his officers to do due diligence. If they had done so, they would have found that the industry even with year on year rises in sales is not guaranteed to generate good returns to shareholders, even in a highly developed economy with a long tradition of successful car manufacture such as Britain?
This is because one of the forces that limit profitability is the intensity of rivalry between car companies from around the world. This leads to oversupply and pressure on prices. This is exacerbated by a high degree of freedom for new competitors to enter the industry.
Unless there is an enormous internal market such as China’s or the United States and we can take advantage of the economies of scale, small producers such as Malaysia are forever doomed to a minor placing or bankruptcy in the market place.
Played Out by Mitsubishi
As far as Proton is concerned, Mahathir’s mistake in ignoring the economic fundamentals of the industry was compounded by our lack of expertise or comparative advantage to produce cars. The anticipated technology transfer from Mitsubishi did not take place. This should have been anticipated. Why should Mitsubishi transfer their knowhow to Malaysia when it can control the pace of transfer to maximize its profits? In fact, the top management of Proton should ask Mitsubishi to open their books to see how much profit they have made from Proton since it began operation. Mitsubishi knew that Proton could not do without them and they were quite happy to continue making money from Proton while the company here continued to bleed to death.
To encourage people to buy Proton, the Government increased the import duty for other cars and car parts. As a result, the consumers have suffered. For over 30 years we have had to pay higher prices for all cars including Proton. Even this has not been sufficient to save Proton.
Another question to ask is why few car manufacturers, until recently, seem to get into bankruptcy? Then prices can rise relative to cost and shareholders can get a fair return.
There are two main reasons. In some countries there is always the perennial optimism of managers and shareholders. In Malaysia, the reason is different. Here, our Government has been changing rules and regulations to obstruct other cars from entering our market whilst providing special favours including an ever ready supply of financial assistance to keep Proton afloat.
The end result is that some Malaysians have ended up with more expensive cars of other brands whilst most Malaysians have had little choice but to buy Proton – a poor substitute!
This is the price we have to pay for brainless patriotism.
Honouring Dr. Mahathir
Ours is a sorry saga which is a classic case study on how not to set up a car industry. As with the national airline, I propose that a special course on our experience with Proton be offered in the Institute of Tun Dr. Mahathir Mohamad’s Thoughts.
What better way to honour Dr. Mahathir than a post graduate course on his pet project – the National Car - and inviting him to be a guest lecturer! I am sure he will have lots to share and many people to blame as to why the project has failed.
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Discussions
5 people like this. Showing 50 of 66 comments
So cheap skate it's actually criminal that 1756
This is the real Desa.
2016-02-17 15:15
the tallest building will NOT be KLCC. this will be Menara 118 ( old stadium Merdeka site) later re-named as Ah Jib Gor ? any suggestion
2016-02-17 15:17
Mr Koon. You are out of touch. PM Najib will be the first to see the end of Proton.
2016-02-17 15:17
Mr Koon. Why did you imply that tax payers money will be used to bailout Proton? This is PM Najib government not your former crony Tun Mahathir. You wee responsible during IJM time paying kickback to help Tun Mahathir stay in power. And your Dap is now recruiting Tun Mahathir
2016-02-17 15:23
So who worse is a good question.....it depends.
Mahathir belongs to the Merdeka generation and is a patriotic figure.
Ah jib kor is managed by Rosmah and diamonds.
2016-02-17 15:29
so who worst? najib or mahathir? Mahathir created so many white elephants, end up rakyat paying for all his mistakes. Najib give br1m, UTC, tol free Pan Borneo highway, listed Felda, sign TPPA with USA and many more for benefit of rakyat. So who is better?
2016-02-17 15:31
Proton was a good aspiration, something to be proud off at that time but along the way the managerial of the company was always an issue. Proton have the aspiration but does not have the way of doing things. Worth mentioning is that they should have established tools like TPM, Six sigma and stuff like that. This is a discipline that should have established which would be the blood vessel of Proton than keep it alive not merely copying the technology. If they have established the "way of doing things" it will reflect to the brand itself.
2016-02-17 16:30
Hakchai...ah jib kor got the title worse Finance Minister in Asia.
That is good reason to hate him.
2016-02-17 16:50
Dunno why talking this Desa fella. PM got worst finance minister what got to do with this blog?
2016-02-17 17:36
The writings on the Wall already.....
Proton time is up.....
But they cannot burn down Klcc or Putrajaya.
2016-02-17 17:42
I know you Desa.....you are the same fella in your old nic that always praise Najib. You always say Najib is very dangerous and will attack from sideway. Is that you
2016-02-17 17:59
Yeah you the same guy who predicted market hitting 1800 or 1900.....same joker right. After all wrong prediction, you change nic.......ll
2016-02-17 18:30
so many people had died or injured seriously due to having poor safety features in proton and perodua and motocycles.
2016-02-17 20:10
Feudal people will always support the incumbent. Period. It is their habit.
2016-02-17 21:11
when proton was launch 30 years ago, mm lee oredi forsee it's impossible to succeed... being stubborn in managing economy will bring it nowhere...
2016-02-17 22:07
Imagine what would have it been like if all the resources channeled into Proton was utilised to make malaysia the No#1 automotive assembling hub in ASEAN. Increasing jobs, cheaper cars, robust economy, higher FDI, etc
Guess, it has never meant to happen
2016-02-18 08:23
Desa 2020, if you have no idea what this guy is talking about you better do something about yourself or are you still in denial or shall I explain it to you in Malay/Mandarin/Tamil? Maybe Mr Koon's message to you is just like giving a rose to a monkey.
2016-02-18 08:45
Proton is the greatest car for health and for luxury becoz, no need to wind down window and aircond is super cold. On the other hand it allows you to use Mitsubishi engine at cheaper price and OEM Honda accord for superb price and luxury. Hahahaha
2016-02-18 08:51
I was right guys. He is just a monkey playing with the keyboard. It is getting more of them by the day. I feel sorry for this guy.
2016-02-18 08:53
How to run? The company is run by Malaya and engineer mostly Malay. First a lot of corruption and second they are incompetent ppl on crutches
2016-02-18 08:54
Thailand has no national car and Rayon(near pattaya) is called the Detroit of South East Asia. The Thais don't have that inferiority complex which that Apanma has. The Thai don't have to prove to the world that "we Thais pun boleh". Our loss is Thailand's gain. Sad.
2016-02-18 09:01
I can summarise Mr.Koon's comment into these few words. Singapore is blessed to have a LKY and Malaysia is cursed to have this Mahathir. I use Singapore for very obvious reason. We were once the same in so many ways, culture, language and education. One became the Switzwerland of SEA and the other became a circus. The only happy people in Malaysia now are the clowns while the rest of us suffer.
2016-02-18 09:14
Exercise faith in God and his plans for our real future,then everyone will be happy with our lives and even under LKY still many people are not satiisfied with their living.
2016-02-18 09:37
Fam I am not saying Singapore is Nirvana.I am comparing a twin neighbours taking different paths. One is planning ahead and the other is talking about pork-free and "Cross" issue and arguing over whether donation(is it?) is tax free not and minsters whose bother is involved with government project are not ashame to tell you so.
2016-02-18 10:11
Kindly check who is controlling the national fund in S'pore?And who are the super rich a nd elite class.As long as there is power,there will be greed,only the degree of greed is the issue,even in a communist community it exists so how much more in imprefect and corrupted humans with own ideologies and interpretation of what is right and wrong.
Accept the imprefecction of human governments and put your hope in God's government which will surely come one day but you must be spiritually qualified to be alive to see it.
2016-02-18 10:53
@cheahsk Just because you don't understand simple English and economics, does not mean it gives you the stature to belittle others in a little comment box, hiding behind your cowardly buffer that is the internet. You are the prime example of: an actual monkey playing with his keyboard. I feel sorry for your acquaintances trying to comprehend anything you say, to be perfectly honest. Incoherence and cowardice at its finest.
2016-02-18 12:23
jon_cmb, then what is your take on this Proton thing? Spill them out and let us see who is the actual monkey playing with his keyboard?
2016-02-18 13:26
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dont worry uncle koon, our pm najib might just erase mahathir's pet project proton.
first proton, then klcc. klcc will be torn down, replaced by klcc2, where lowyat 2 will move in as key tenant :-)
2016-02-17 15:14