Thursday, 7 April 2016

Weigh Proton issues based on comprehensive analysis


International Trade and Industry Minister Datuk Seri Mustapa Mohamed recent statement on Proton's performance received diverse reactions from the public. Within 48 hours, the statement generated close to 150 spin-off articles and more than 1,500 comments through the printed, electronics and social media.
Malaysia Automotive Institute's analysis on the comment's found that 38 per cent reacted to the minister's statement positively, while another 50 per cent would like to see the issues be discussed deeper and solution be identified.
In 2001, Proton controlled 53 per cent of the domestic market share, with around 240,000 units sold locally. Proton's domination declined year after year, posting a 14 per cent market share and 103,000 units sold last year.
Throughout the years, numerous polemics have been seen on the proton issues, on social media, online news portal and other sources. This issue needs to be confronted objectively based on a comprehensive analysis on the impact of Proton's sustainability.
The first issues of importance is the aspect of employment, should Proton's problems persist. More than 60,000 employees will be directly affected and 130,000 more indirectly affected. This issue is exacerbated by the current economic climate which makes re-employment a huge challenge.
At the same time, Proton has generated an industrial ecosystem that provides Malaysians with the opportunities to explore jobs and business of high technology. This is a leap from the agricultural and mining activities that Malaysia was involved in previously.
The second issues is the business ecosystem created by Proton. Since its operations began, Proton's supply chain comprises more than 500 businesses, distributors, dealers and workshops.
Last year alone, the automotive industry contributed around RM30 billion gross domestic product (GDP).
The third issues is the true added value of the automotive sector - research and development (R&D) covering design, engineering and testing. The automotive sector also places Malaysians in the main scientific roles covering materials, electic and electronics, mechanical engineering as well as chemistry.
The outcomes of these value-added activities will produce many positive spin-offs, especially in the transport industry. The advances in R&D can create news modes of mobility which are more dynamic, environmentally friendly, comfortable and are built with better safety features.
Realising the importance of the automotive industry, many governments around the world have assisted their domestic industries, especially during difficult times.
A prime example of assistance was the General Motors (GM) bailout by the government of the United States.
In 2009, GM went through a sales decline of 45 per cent from the previous year, with debts amounting to US$93billions (RM365.7billions).
The company requested assistance from Obama administration as its cash flow could only sustain six to nine months of operations. At the time, 1.2 million workers would have been directly or indirectly affected by GM's collapse.
The US government injected a total of US$50 billion into GM, on condition that the company declared bankruptcy and surrender a majority equity to the government.
The restructuring of GM began with the closure of several production facilities, reduction of dealership outlets and manpower rationalisation. The restructuring resulted in a debt reduction of US$17 billion in three months.
Malaysia National Automotive Policy 2014 (NAP2014) was developed to ensure that the entire automotive ecosystem is strengthened by 2020.
Proton needs to restructure its business model in line with the NAP2014 to contributed to a bigger imperative of the Malaysian economy and enable more Malaysians to be part of this high technology industry.

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