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With Dr M at Proton, Putrajaya can’t say ‘no’ to pleas for money, says report

The Malaysian Insider logo The Malaysian Insider 23/5/2014 The Malaysian Insider

Turning down Proton Holdings' requests for financial lifeline will be more difficult for Putrajaya following the appointment of former prime minister Tun Dr Mahathir Mohamad as its chairman, a report said today.

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The Edge Review said that for more than a year now, the current administration, led by Prime Minister Datuk Seri Najib Razak, had rejected several pleas for financial aid from the ailing national carmaker, which is struggling with weak sales, large debts and competition from foreign marques.

But with Dr Mahathir's (pic) "surprise appointment" as its chairman, "saying no to Proton is set to become a lot more difficult", it reported.

Dr Mahathir established Proton in 1983 while he was prime minister and had taken on an advisory role since his retirement in 2003.

The report said Putrajaya had rejected Proton's request for grants of up to RM2 billion early last year with the excuse that the government needed to cut its ballooning budget deficit.

Proton again applied for about RM1.7 billion to fund research and development, government officials and auto executives told the weekly.

Although Putrajaya could not afford to approve the grant, turning down Proton's request, especially with Dr Mahathir at the top, could turn out to be "politically messy" for Najib, said the officials.

(Najib is struggling with low approval ratings and holding on to his power after Barisan Nasional's dismal showing in last year's general election.)

Dr Mahathir, who is 88, remains an influential figure in the country's political and corporate landscape and has been critical of the Najib administration and his leadership recently.

The report quoted political analysts, who said that dismissing Proton's request could put Najib in the line of fire from Malaysia's longest-serving prime minister.

The Edge Review said Proton was the sole surviving initiative of the "ambitious industrialisation drive" embarked by Dr Mahathir in the early 1980s. Other ventures in steel and cement flopped although billions of dollars were pumped into them.

Proton is also struggling to stay afloat as it has been protected by high import duties imposed on foreign cars and aided with grants and other funding from the government.

Its market share has fallen to 22% from 60% in the mid-1990s.

It started off as a state-owned company but in 2012, the public-listed Proton Holdings was taken private by industrialist Tan Sri Syed Mokhtar Albukhary, who is close to Dr Mahathir.

Government officials and industry executives said Proton's private ownership was another reason it should not be given financial reprieve.

“It is a cut-throat business and Proton doesn’t have the technology or economies of scale to compete,” a chief executive of a foreign auto company based in Kuala Lumpur was quoted as saying.

“Fresh grants are unlikely to turn things around.” – May 23, 2014.

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