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Malaysian gov't considers support for Proton

Publication Date : 19-07-2014


The Malaysian government is considering a request for financial support from Proton Holdings Bhd, the national carmaker that was taken private by DRB-Hicom Bhd two years ago.

Proton is struggling to recoup “billions of ringgit” of investment it made on research and development (R&D) works, as new car models developed in-house failed to find enough buyers.

The company had been losing market share to rival carmakers amid cool customer reception to models launched in 2012 and 2013.

Proton is targeting to unveil its global small car (GSR) model by the end of this year that had cost the company between 200 million ringgit and 300 million ringgit ($62.7 million and $94 million) to develop.

“Proton has approached us for support,” International Trade and Industry (Miti) Minister Datuk Seri Mustapa Mohamed said in a written reply to StarBizWeek.

“As this requires a budget allocation, Miti has been engaging with the Finance Ministry and the Economic Planning Unit. No decision has been made yet,’’ he said.

The government is scheduled to table its Budget 2015 in Parliament on Oct 10.

On Thursday, Proton chairman Tun Dr Mahathir Mohamad said the company should be reimbursed for the amount it had spend on R&D works.

He declined to elaborate how much money the company was seeking from the government, but said that Proton had invested billions of ringgit over the years on R&D programmes.

South Korea and Japan are among countries that provide generous incentives for their carmakers to invest in new technology.

Meanwhile, Mustapa said all investors – domestic or foreign – may apply to the government for incentives.

“Customised incentives are provided based on, amongst others, the level of investments and the quality of jobs created,’’ Mustapa said.

He added that in terms of “strategic investments,” the decision on the package was determined by the Economic Council (EC), which is chaired by Prime Minister Datuk Seri Najib Tun Razak.

Talks had resurfaced in the industry about Proton seeking at least 1.7  billion ringgit ($532 million) from the government to pay for its R&D cost.

However, Proton’s chief executive officer, Datuk Abdul Harith Abdullah, tells StarBizweek he was not aware of any recent meeting or presentation made to the EC requesting the amount.

“The incentives that we are seeking are available to everyone in the industry,’’ he says.

It was previously reported that at least three carmakers are seeking government incentives for the development of energy-efficient vehicles.

Harith says Proton is investing its resources in development of electric and hybrids vehicles, for which it should be entitled to incentives being offered.


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