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KUALA LUMPUR, March 19 — National carmaker Proton has been at the receiving end of unfair criticism from the media, according to former prime minister Tun Dr Mahathir Mohamad.
Writing in his blog, Dr Mahathir said Proton gets very little protection from the government and is not the reason for the high taxes on cars.
Proton came to life during his leadership and has been losing market to Malaysia’s other car maker, Perodua.
“The raw hatred for Proton by some members of the media is quite unprecedented,” Dr Mahathir wrote.
“The protection for Proton is minimal. Most of the exemption from tax that Proton gets can also be obtained by foreign cars if they are prepared to have 90 per cent local contents ,” he added.
Local content is key because it has created nearly 250,000 high income jobs . Proton creates the type of jobs that can propel Malaysia towards developed nation status, he argued.
He said the government has only ever paid RM400 million to set up Proton while the carmaker borrowed RM800 million, which it has since repaid.
“Compare this with what a Japanese company and the GM in the US spent recently merely to develop and produce electric and hybrid cars – 5 billion US dollars each,” Dr Mahathir said.
While the government promised Proton RM200 million a year for research, little of this money has been tapped, he said.
Closing down Proton will lead to an outflow of RM20 billion or more, he added.
The outflow of Malaysian money due to import of cars every year is more than RM20 billion while exports of automotive components and cars earn the country RM4 billion, resulting in a net outflow of RM16 billion.
“Close down Proton and the outflow would be RM20 billion or more,” Mahathir said.
Earlier this month on March 5, The Star daily reported that Proton is trying to source as much as RM3 billion from Putrajaya and other sources in order for it to develop new models for the market.
According to the report, Proton had approached the government last year to help fund its model development but came away empty handed after failing to convince its officials. It then turned to national oil firm Petronas but was similarly unsuccessful.
In the report, the firm is said to require some RM3.8 billion in investments by 2017 and at least RM1.8 billion by next year.
The same day, Datuk Seri Mustapha Mohamed confirmed that Proton approached Putrajaya for funds but said the practice was not unusual among local firms.
The minister of international trade and industry declined, however, to divulge the purpose of the funds being sought by the struggling automaker, other than to say Putrajaya provides various forms of allocations to help local companies grow, including tax breaks, research and development grants, and training incentives.
Proton later denied the report, saying instead that it had previously applied for a research and development (R&D) grant from the Malaysian Investment Development Authority (MIDA), before the company was taken over by DRB-Hicom.
“Proton wishes to state that an article in one of the local English newspapers on Proton seeking development funds of RM3 billion from the ministry and Petronas is not true.
“The statement that Proton has committed RM3.8 billion until 2017 is also not true,” Proton's corporate communications chief Nur Balkish Hood was quoted as saying in a statement by Business Times.
During its heydays in the 1990s, Proton accounted for nearly four of every five new vehicles sold, but has since witnessed its fortunes dwindle before being overtaken by second national carmaker Perusahaan Otomobil Kedua Sdn Bhd (Perodua) as the best-selling brand in Malaysia.
Proton was established in 1983 by former prime minister Tun Dr Mahathir Mohamad in his bid to jumpstart Malaysia’s shift towards manufacturing.
In 2012, it was sold to Tan Sri Syed Mokhtar al-Bukhary’s DRB-Hicom.