Forward    Feedback    


Failure To Announce The National Automotive Policy (NAP) Is As Bad As Policy Failure When It Results In Big Foreign Automotive Companies To Invest In Neighbouring Countries.  Resulting In Huge Investment Losses To Malaysia



Media Statement
by Lim Guan Eng

(Petaling Jaya, Thursday):  Failure to announce the NAP is as bad as policy failure when it results in big foreign automotive companies investing in neighbouring countries resulting in huge investment losses to Malaysia. The admission by International Trade and Industry Minister Datuk Seri Rafidah Aziz yesterday that inputs from Proton Chairman Datuk Azlan Hashim showed the delay in putting the "mechanism" of the NAP in place had caused many of the big foreign automotive companies to invest in neighbouring countries.

Rafidah even said she personally knew that Malaysia lost two big multinationals over the last decade because we could not decide to on the NAP. Such losses can be quantified in billions of ringgit and has cost our country not only direct losses of investment but also the opportunity cost involved in failing to be the center of motor industry in South-East Asia.


Instead Thailand has taken advantage to become the regional centre for auto manufacturing and assembly not because of its attractive policies but by default due to Malaysiaís no policy and policy failure. As a sign of poor delivery sytem in government, Malaysia has been struggling to formulate the NAP which has still not been outlined despite the framework being announced in October last year.


For Rafidah to be so indifferent to the losses suffered by Malaysia from losing two big auto multinationals is not only irresponsible but also questions her competency and seriousness about ensuring Malaysiaís status as a favoured destination. Worse is her continued state of denial of the state of our automobile sector when she said that Malaysia's competitiveness as an investment destination for foreign automotive players will remain despite Volkswagen's decision to pull out of talks with Proton to assemble and sell the German brand cars here.


How can there be other automobile makers still interested investing in Malaysia after such a snub from VW that did not even bother to inform Proton of its decision to drop a strategic manufacturing partnership plan with Proton but allow Proton to know about it only in the press? The only foreign car markers without a strong presence in South-east Asia that might be interested in linking up with Proton are Hyundai, Peugeot and Fiat. These 3 companies have not shown any interest especially after Proton lost a record RM 510 million from a single investment in Italian motorcycle manufacturer MV Agusta.


If the NAP will only be fully implemented by 2020, no wonder the Malaysian car industry is in deep trouble with such ridiculous self-inflicted wounds!

Even Mitsubishi Motors Corporation, which was a technology partner with Proton for 19 years before exiting from the company in 2004, has said that it has no plans to jointly set up a plant with Proton as a joint venture. The question is not only Protonís failure which must be fully addressed by the management but the unacceptable delay by the government in unveiling of the National Automotive Policy (NAP) to provide direction and certainty.


It is shocking that even Rafidah does not know when the main draft of the NAP will be announced and have to guess that it would be done partly under the Ninth Malaysia Plan (2006-2010) and partly under the 3rd Industrial Master Plan (2006-2020). If the NAP will only be fully implemented by 2020, no wonder the Malaysian car industry is in deep trouble with such ridiculous self-inflicted wounds!


Another self-inflicted wound is the refusal by Proton management to answer the real reasons behind VWís rejection of a strategic partnership with Proton and the RM 510 million losses in selling Agusta less than a year after investing in it. Protonís silence will only attract adverse criticism that it is not accountable and affect its credibility by giving the impression that there is some scandal that it is trying to hide.


The public has a right to know who took the lead and why Proton was convinced to sell Agusta for one euro or RM4.50 after spending RM 510 million in less than a year. Was there any independent review or a second expert advice sought before the decision was made to buy Agusta last year and incur a total expenditure of RM510 million or in its recent sale for one euro?


Such failure by the government to announce the NAP and Proton managementís refusal to give full public disclosure has caused a complete loss of confidence amongst investors. This can be seen by the more than 20% drop in the price from RM 6.35 since last Friday to RM 5 resulting in RM 741.4 million in market capitalization being wiped out. (Proton has a paid-up share capital of 549.21 million shares.)


The government must quickly state how it can restore public and investor confidence in Proton when it can only recoup RM 4.50 from RM 510 million investment. Any delay will make not only the announcement of the future NAP irrelevant but also not prevent the continuous slide in Protonís share price even after full disclosure by Proton.                                     


* Lim Guan Eng,  DAP Secretary General

Your e-mail:

Your name: 

Your friend's e-mail: 

Your friend's name: