by Koon Yew Yin
27th May 2014

When I read the news that former prime minister Tun Dr Mahathir Mohamad had been appointed as Chairman of Proton Holdings Bhd., I could not help thinking that most Malaysians will be laughing and crying at the same time with this disclosure.

According to the report, Datuk Seri Najib Razak said that “I believe Tun’s appointment will certainly strengthen Proton, given’s his determination and high commitment to see the national car company succeed. Although there are many challenges ahead but in the pursuit to improve Proton’s competitiveness, I believe the company would accrue many benefits from his profound experience and knowledge.”

Why Malaysians Are Laughing

Malaysians are laughing because Dr. Mahathir has been de facto chairman of Proton ever since it was first set up. And even after his resignation as Prime Minister in 2003, he has continued to pull the strings on government policy on Proton. Therefore, there is no need to make him chairman unless it is to pay him the large salary that is normally paid to the Chairman of a very large car manufacturing company.

Earlier reports had mentioned that Dr. M who was serving as the adviser of Proton after he left the prime ministership position was not being paid a salary or allowances for his services. Perhaps the decision to formalize his position at the top of the company is simply Najib’s way of compensating Dr. Mahathir with big bucks for keeping his mouth shut on Najib’s poor leadership of the country.

Why Malaysians Are Crying Over Their Cars
 
At the same time, Malaysians must be crying with this news. They are crying because it is Dr. Mahathir who has been the chief catalyst and cheerleader of the national car project since 1983. It is an undeniable fact that this white elephant project has not only cost taxpayers billions of ringgit but has also burdened Malaysians with some of the worst cars found on Malaysian roads.

I don’t think it is necessary for me to go into the two fundamental mistakes Dr. Mahathir made in pushing for the national car project.

The first mistake is a basic Economics 101 rule, and this is that unless there is an enormous internal market such as in China or the United States, and we can take advantage of the economy of scale, small producers such as Malaysia are forever doomed to a minor placing, or bankruptcy, in the car marketplace.

Even medium sized European countries with larger national car markets cannot compete.  Of all countries in the world, only South Korea alone has been able to overcome this small national market limitation; and this has been due to the exceptional quality of its management capability, high technology and worker skills and discipline.

Played out by Mitsubishi

As far as Proton is concerned, Mahathir’s mistake in ignoring the economic fundamentals of the industry was compounded by our lack of expertise to produce cars, the low quality of Proton managers, our unskilled labour and our reliance on Mitsubishi for the anticipated technology transfer.

That technology transfer from Mitsubishi did not take place. This should have been expected. Why should Mitsubishi transfer their know-how to Malaysia when it can control the pace of transfer to maximize its profits? Mitsubishi knew that Proton could not do without them and they were quite happy to continue making money from Proton while the company here continued to bleed to death.

Government increased import duty to protect

To induce Malaysians to buy Proton, the government increased the import duty for other cars and car parts. As a result, the consumers have suffered. For over 30 years Malaysians have been crying over having to pay higher prices for all cars including Proton. Even this has not been sufficient to save Proton which has been sold five times already. The end result is that a minority of affluent Malaysians have ended up with more expensive cars of other brands whilst most Malaysians have had little choice but to buy Proton – a poor substitute.

Sack Dr. Mahathir

With Dr. Mahathir’s appointment as Chairman of Proton, Malaysians can expect to cry more when their car prices not only remain high but go even higher if Dr. Mahathir has his way to protect the national car with even greater levels of handicaps against foreign cars.

Instead of appointing him as Chairman, Prime Minister Najib Razak should have sacked him as the Proton adviser! Unfortunately this has not happened. The burden of the highest car prices in the region is the price we have to pay for brainless nationalism and equally brainless leadership on our national car project.

Why not let Proton crash like MH 370?