Proton investment in Malaysia close to RM7.6bil


BY ALVIN TAY IN SHAH ALAM

PERUSAHAAN Otomobil Nasional Bhd (Proton), having invested a total of RM7.6bil in the country, is among the largest domestic investors in Malaysia.  

According to its chief executive officer Tan Sri Tengku Mahaleel Tengku Ariff, these funds are all internally generated and RM3.3bil have been invested in plant and facilities since 1983. 

The remaining RM4.3bil was invested in research and development over the last five years, he said in an exclusive interview with StarBiz

Tan Sri Tengku Mahaleel Tengku Ariff

“We have invested RM1.8bil in Proton's motor city in Tanjung Malim, with another RM5bil plus in investments planned over the next five years,'' he added. 

Mahaleel said Proton had also contributed to government revenue, in both direct and indirect taxes from 1995 to 2002, a total of RM13.14bil (excise duty accounted for 54%, import duty 8%, corporate tax 5%, and sales tax 33%). 

Proton is also in a class apart, in that Malaysia is one of 11 countries with full-scale automotive capability worldwide, having gained a global reputation with Lotus which supplies technology, research and development to 10 car manufacturers.  

Only 11 countries out of the 146 World Trade Organisation members can design and manufacture a vehicle from the ground up with the latest technology, meeting world standards. In 2002, Malaysia became the 11th country.  

Mahaleel said Proton was also one of Malaysia's largest employers with a high intellectual workforce; it directly employs 9,500 (8,000 locals and 1,000 foreigners) such employees worldwide. 

Malaysia has been asking in its Second Industrial Master Plan (IMP-2) for companies to have its own research & development (R&D), design and products, as well as to acquire technology. 

The Federation of Malaysian Manufacturers, in its briefing to the media, said IMP-2 would continue with its strong emphasis on an export-led industrialisation strategy, as Malaysia's relatively small domestic market would not generate the mass volume necessary to sustain its competitiveness.  

The success of the Malaysian manufacturing sector to move up the value-added ladder under such a strategy would require manufacturers to adequately deal with critical issues arising from these trends.  

Mahaleel said: “We can have a premier national car company, provided it received government research grants, investment incentives for overseas investment in plants, engineering and R&D initiatives, with government employees accorded incentives for buying these products.” 

“These incentives should be open to any other national car company as long as they reach these capacity and investment levels which the government can determine as policy,” he added.  

Citing worldwide examples, he said: “In Australia, government employees who take a government loan to buy a car may choose from only four car companies to buy from. For example, last year the Australian government gave A$4.5bil in aid, as a transitional measure, as Australia's tariff protection drops to 5% in 2010.The government will support the car industry which employs 55,000 people until 2015. 

“In Australia, Mitsubishi was provided with A$200mil and it is in further negotiation with the Federal and South Australian state government for a A$900mil upgrade of its plant in Adelaide.” 

In Europe, he added, the British government in 1999 provided more than £150mil in subsidies to BMW to continue production at Rover's plant in Lonbridge.  

In 2002, West Midlands in Britain secured more than £60mil worth of government subsidy to help Rover continue its recovery while in Leipzig, Germany, the city provided a subsidy of 418.6million euros to BMW to locate its new plant there.  

Proton, one of the four national carmakers in the country, currently sells to 15 active overseas markets. This year, it is exploring the export potential in countries like Iran, Syria, China and Indonesia.  

For the year ended March 31, 2003, Proton's group revenue dropped by 10% to RM9.27bil from RM10.21bil in 2002. Group profit before tax also fell by 10% to RM1.36bil as opposed to RM1.51bil recorded the previous year.  

At the company level, revenue was reduced by 10% to RM7.67bil from RM8.58bil the previous year. Proton closed at RM9.00 on the Malaysia Securities Exchange on Friday. 

 Stock Watch On PROTON Stock Watch On PROTON-CA 

Related Stories:Mahaleel charged up for challenges in auto sector 

Earlier Proton stories Exciting times in store for Proton, says Mahaleel Proton to have factories overseas Proton still able to compete post-Afta Three new Proton models soon 

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