China firms propose RM41bil for Malaysia’s third national car project

  • Business
  • Saturday, 18 Aug 2018

TWO companies from China have proposed to invest US$10bil (RM41bil) in Malaysia’s third national car project and build a regional automobile hub to cater for the region in southern Perak, according to official sources.

Separately, Zhejiang Geely Holding Group has shown interest to participate in the national car project by upgrading its facilities in Malaysia.

The third national car project was mooted by Tun Dr Mahathir Mohamad after he became Prime Minister for the second time on May 10.

The proposal by Chinese electric vehicle (EV) players – GSR Capital and Envision Energy – was submitted to the government ahead of the Prime Minister’s current visit to China.

The investment of US$10bil by the two companies, said to be strong in global high-tech industry development, will spread over five years and the location chosen is near Proton City in Perak.

“Geely has informed the government that it is keen to upgrade its operation in Malaysia and participate in the third national car project,” says an official who knows the Geely plan.

No details are immediately available but Dr Mahathir is scheduled to visit Geely’s headquarters in Hangzhou during his five-day official visit to China from yesterday.

Besides several Cabinet ministers, Perak Mentri Besar Ahmad Faizal Azumu is a member of the Prime Minister’s entourage.

Geely, a Chinese multinational automotive manufacturing company, sells passenger cars under the Geely Auto, Lotus, Proton, and Volvo brands; and commercial vehicles under the London EV Company and Yuan Cheng Auto brands.

Last year, Geely acquired a 49.9% stake in Proton Holdings from DRB-Hicom Bhd after the Malaysian government invited it to be the strategic partner for ailing Proton. The firm also bought a 51% stake in Lotus Cars.

Geely attracted international limelight after it turned around Swedish carmaker Volvo Cars. It bought Volvo from Ford in 2010 and poured in investments of US$10bil to develop new models and technologies. With plants in China and Sweden, Volvo recorded an operating profit of US$1.25bil in 2016.

In Malaysia, Geely plans to turnaround Proton “as soon as practicable” within the first three years of acquisition.

In its 10-year business plan seen by The Star, Proton aims to cut cost across the board by 30%, improve quality and increase annual production gradually to 400,000 cars by 2027, from under 100,000 units last year.

Geely – major player

Geely has stated that it aims to become a major player in South-East Asia after acquiring stakes in Proton and Lotus.

Apart from interest shown by Geely, the Malaysian government is studying the proposal from GSR and Envision.

The joint proposal of GSR Capital and Envision Energy, in partnership with little known Concept Fields Sdn Bhd of Malaysia, includes the participation of Nissan of Japan.

According to the proposal seen by The Star, the pair will set up a new energy automobile hub and the new national car plant in southern Perak, where a major auto city was planned by the previous government.

Envision, which holds a 75% stake in Nissan’s electric vehicle unit AESC, will bring in AESC to join hands with GSR Capital to set up regional EV manufacturing facility, which includes producing electric car battery.

“The project will be spearheaded by GSR Capital which will be facilitating FDI of about US$10 billion into Malaysia,” says the plan.

AESC will provide the Japanese technology to produce the electric car.

“The proposed hub project holds great potential to yield benefits to Malaysia’s automobile industry as well as the country’s general economy. The inflow of US$10 billion investments is projected to create 15,000 jobs,” says the document.

The proposal also includes the establishment of an education hub directed at training skilled employees locally and creating R&D facilities to ensure continuous and sustainable development of the automobile industry in Malaysia.

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