Dr M: Selling Lotus a viable option

Tun Dr Mahathir Mohamad, Malaysia’s former prime minister, comments on Proton Holdings Bhd after billionaire Syed Mokhtar Al-Bukhary’s DRB-HICOM Holdings Bhd agreed to buy a controlling stake from the government. Mahathir, who helped found Proton and remains an adviser, also comments on whether DRB should sell Proton’s UK sports-car arm Group Lotus International Ltd. The former premier made these comments in an interview in Kuala Lumpur yesterday.


On selling Lotus

“It is a viable option and I think the new owners of Proton might consider that. But, Lotus is not just a sports-car company. It is an engineering and technology company. It’s selling engineering skills to China and helping people going into the industry.”


Whether Proton’s new controlling shareholder DRB-HICOM can make a difference

“The man behind DRB-HICOM is a successful entrepreneur. He owns ports and businesses and took over DRB-HICOM from previous owner and has turned it around.

“DRB-HICOM was a great failure before. It lost a lot of money before he took it over and has turned it around. It’s a profitable company and many foreign automotive companies go to this company and want them to be partners. They assemble Mercedes-Benz cars, Volkswagens and Suzukis. They are financially strong. I am confident.

“Of course, they have a lot of borrowings. Nobody is rich with their own money. They are rich with money that they borrow.”

On whether Proton still needs a global strategic partner

“If you go to Italy, small companies can design and build car, so you don’t need big companies to be with you. You can go direct to the very companies which the big companies use.

“We see big companies are more keen on swallowing us up. We feel we want to be independent. Therefore, we go to the small companies and we can now build and design cars of modern design by working through these small companies.”

On what’s needed to turnaround Proton’s fortunes

“I think a good management. There is nothing wrong with Proton, but bad management has caused it to come down.

“There were times Proton was doing so well. It made so much money it managed to build huge facilities, including a big manufacturing centre costing RM1 billion. These were internally generated funds and not by borrowing from the banks or asking the government for money. It’s not usual for any car companies to be able to generate funds internally for expansion. So it’s not a failure.

“Today, it seems to be in a bad way. Of course, there were things done which should not have been done. For example, they allowed for the import of foreign cars, but these people under-declare and do all kinds of funny things. As a result, these foreign cars push out Proton from the market. So, we understand the problem. We have a chance to recover.”

Proton’s challenges

“One time, we had a reserve of RM4 billion, which would able to finance the growth of the future. Unfortunately, due to things done by the wrong management we have lost the cash.

“In the automotive business you need a lot of money. Each model, just for the platform requires half a billion ringgit. We need that money. I hope the new investors will provide the money.”

On whether Malaysia really needs a national car

“By itself, a national car is not a need. We could buy cheaper cars by importing them. An automotive industry generates a lot of engineering skills and it can give us a lot of the other businesses.

“Now we can manufacture components and produce a lot of other things. People who look at Proton may think of it as a failure, but we think it has helped Malaysia take many steps in the field of engineering.”