TUMPAT, April 9 ― The government hopes the RM1.5 billion soft loan extended to Proton Holdings Bhd will help the national car maker solve its cash flow problems and remain viable.

International Trade and Industry Minister Datuk Seri Mustapa Mohamed said the granting of the soft loan not only showed that the government was concerned about Proton's future but also dispelled the notion that the government would allow Proton to collapse.

“The reality is the government is aware that this is a vital and strategic industry. But it is now facing problems and challenges and the government has decided to help.

“We hope the soft loan will help Proton with its cash flow problems especially to make payments to vendors that supply components to the company,” he told reporters after opening the annual general meeting of the Parents Teachers Association of the Tumpat National Secondary School here today.

The Cabinet yesterday approved a soft loan of RM1.5 billion, a bulk of which, will be used to pay its vendors.

A number of conditions were also imposed on Proton to rehabilitate the company.

Among the fresh conditions imposed on Proton is the need to draw up a turnaround plan, a way to expand its market domestically and internationally, and a tie-up with a well-known strategic partner that will help in research and development to help the national carmaker become competitive in international markets.

Mustapa said if the government did not step in and extend the financial assistance, it will affect the livelihood of 12,000 Proton employees and 50,000 workers employed by its vendors.

It would also have an adverse impact on other industries related to Proton, he added. 

Mustapa also said the government would meet the top management of Proton next week to draw up a transformation plan for the company. 

In giving the fresh funding, the government also announced that a taskforce led by Datuk Seri Idris Jala will be set up to ensure that Proton’s transformation plan is successful. ― Bernama