Status of Khazanah’s stake in Proton to be known this week

KUALA LUMPUR: As the decision on the new owner of Khazanah Nasional Bhd’s (Khazanah) 42.7-per cent stake in Proton Holdings Bhd (Proton) is expected to be known early this week, there is deep concern by industry players that the move will have an impact on the development of the national auto industry.

Among the major areas concern would include the company’s vendor programme, which involves many vendors.

They opined that the new shareholder should continue to outsource the manufacturing of parts and components for Proton vehicles, which Proton has been doing since its inception, spawning a brisk auto parts industry in the country.

“If the new shareholder has manufacturing units involved in manufacturing parts and components, they should divest these units or should not be involved in this area for Proton vehicles. They are a lot of vendors involve in the manufacturing of components and parts for Proton vehicles,” an industry source said.

Another source said Proton, being an Asian brand, needed someone who had deep knowledge of its business and not merely possess the financial capability.

“It’s the national car project. Proton needs a personal touch. You have to understand well the nature of the business of Proton. It’s an Asian brand,” the source said.

He also said that the new shareholder must have an expansion plan for the export market of Proton. Proton exported about 20,000 vehicles to 25 countries last year including the Middle East, Australia and Asean countries.

Industry sources said the new shareholder should have the capacity not only in turning around Proton’s financial performance, but taking the national carmaker to greater heights.

Proton’s net profit fell to RM20.1 million for its six months ended September 30 last year, from RM150.6 million in the previous corresponding period. Net profit for last year’s second quarter was RM15.5 million compared with RM65.9 million in the second quarter of its previous financial year.

Sources also feel that there was a lack of transparency in the decision-making process on the new shareholder of Khazanah’s stake.

“If Khazanah wants to change partners for Proton, there will be a new leadership for the national carmaker. It should be transparent on the parties that it is negotiating with,” he said.

Among the parties that submitted proposals for the 42.7-per cent stake included DRB-Hicom Bhd (DRB-Hicom) and Proton’s chairman Datuk Seri Mohd Nadzmi Salleh.

DRB-Hicom, however, has yet to reveal its plans for Proton. It was also believed that Mohd Nadzmi’s bid was not the cheapest among all bidders.

Mohd Nadzmi’s plans would include transforming Proton into a global player, starting with the upcoming model codenamed ‘P3-21A’, which would transform Proton’s DNA.

Mohd Nadzmi would also re-look the export markets for Proton, naming China, Iran, India and the Asean countries as potential markets for the national carmaker.

He had said that there would be more tie-ups with Mitsubishi Motors Corp, which was keen to share its electric vehicle mechanism with Proton.

Mohd Nadzmi also planned to privatise Proton in order to restructure its whole organisation.

According to sources, Mohd Nadzmi would be getting support from local financial institutoons as his proposal was deemed ‘bankable’.

Many local bankers seemed to favour Mohd Nadzmi’s proposal as he showed that he would be able to pay the borrowings when his plans would come into fruition over the next two years.

Mohd Nadzmi was appointed chairman of Proton on Jan 1, 2009.

He is also the chairman of boards of various subsidiaries within the Proton Group of Companies. He was the managing director of Perusahaan Otomobil Nasional Bhd from 1993 until 1996.

Prior to that, he was also the manager in the marketing services department of Edaran Otomobil Nasional Bhd in 1984, from which he later assumed the positions of executive director and chief executive officer of the company. — Bernama

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