Is there pride in Proton?

Proton also needs to develop a solid business plan.

DATUK Seri Mustapa Mohamed, Minister of International Trade and Industry, gave a direct ultimatum to Proton. Show us that you will buck up, or Proton won’t receive funding.

This has lead to a widespread discussion in mass and social media on whether or not Proton should be given government support. 

Almost RM14bil of taxpayers’ money has been spent on Proton since it was established in 1985. Proton’s market share has slumped from 73% in the 1990s to a mere 15% in 2015.

The comments were quite predictable. Those who were fed up with Proton’s quality problems and slow service called for Proton to close shop. Conversely, those who supported Proton defended them by saying we should be proud of our national car.

Before we move forward, it is important to frame this issue accurately.

Poton remains, and still remains, a business –  its very existence is to generate profit. Profitable businesses are important within our democratic ecosystem. They create jobs and contribute to the nation’s development through tax collections.

In Proton’s case, the pertinent issue is to look at what we stand to lose. The automotive sector employs more than 550,000 people. 

If the sector fails, 4% out of Malaysia’s current workforce will be jobless. That is enough to double Malaysia’s current unemployment rate, which estimated at 3.1%.

From an economic perspective, Proton does not define the industry. The automotive industry is not Proton, and Proton is not the industry.

This may have been true 20 years ago, when Proton held most of the market share. Today, there are many manufacturers that have set up operations in Malaysia. Most of the these manufacturers have proven profitable business entities.

Hence comes the turning point. The classic defence is that there is a fundamental difference between Proton and other manufacturers. It is said that Proton is a full fledged car manufacturer. It was designed and built by Malaysians, for Malaysians.

Let’s look at this objectively. Patriotism and national pride are important notions, but the pride should not be misplaced or misrepresented, especially when that same pride does not make you move forward, but holds back your progress.

Firstly, is it true that Proton models are full fledged Malaysian products? Proton has been working with Japanese and Korean consultants on many of their models. 

Many major parts are fully imported, such as their transmission system and electronic control units. 

Many of Proton’s suppliers are Malaysian, but comprise mostly of plastic injection and metal stamping companies, which run on machines bought from Taiwan and raw materials purchased from Japan and Europe. 

Most manufacturers around the world have very effective programs to develop suppliers. Many of Proton’s suppliers have limited design capabilities, and rely on foreign talent to design their plastic moulds and stamping dies. 

Undoubtedly, there are strong Malaysian suppliers, but are strained by Proton’s unclear direction and unstable production volumes.

We are not here to condemn Proton. We were proud of Proton, and Malaysians rallied behind them when they started business in the 1983. 

Proton provided Malaysia with the dream that some day we will be making cars that the world will be talking about. 

However, it is difficult for Malaysians to be proud of something that has remained stagnant for so many years. When a parent sees his 5 year old child riding a bicycle, he will feel proud. 

But when the child is now 30 years old, there is nothing to be proud of when he can only ride a bicycle.

Proton should heed the minister’s call. They should work with a foreign partner. A foreign consultant mostly provides advice, but a foreign partner has the interest of keeping the business alive and improving it all the time. 

There is no shame in partnering other companies. There are many successful partnership models around the world, such as General Motors Group, the BMW Group, Hyundai Group, and Perodua as well.

Proton also needs to develop a solid business plan.  A plan that ensures their employees and suppliers are given the freedom to be creative and innovative, with the mentality that they need to stand on their own feet without help and penetrate the world markets.

We need to save Proton, and we need to once again be proud of them. But until they are willing to make tough decisions, there is no pride – only vanity.

Senior auto industry official