Proton to Look East again?

Automologist LING and PROTON were born about the same time, and she thinks that she is seeing history repeat itself...

Firstly, let’s recap on the situation that Proton is in. The ailing Malaysian automaker received a RM1.5 billion soft loan from the government to pay off its debts, but one of the loan requirements is that the company must seek a technical partner to help it get back into the black. The deadline stipulated is the first quarter of 2017, and that is drawing near. Rumour is now rife that Chinese automaker, Geely, is leading the race to clinch that role, ahead of French automakers Renault and PSA Group.

The Edge reported that Geely and PSA are presently performing their due diligence at Proton’s HQ, and they are reportedly keen on acquiring a 51% stake in Proton’s Tanjung Malim plant, which has an annual capacity of 150,000 units per annum; however, the plant was designed to actually produce a maximum of one million units per year.

The potential partner, whoever it turns out to be, would immediately gain a large, operational car production facility, right in the centre of the Southeast Asian car market. Nothing concrete is expected to be announced until April 2017 and probably made official second quarter of 2017, as implied by Proton’s CEO, Ahmad Fuaad Kenali.

With Geely at the forefront, it has reminded me of Malaysia's Look East policy in the eighties. Under Prime Minister Mahathir, Malaysian businesses and people were encouraged to look to Asian countries, particularly Japan and Taiwan, to emulate their ethics, culture and values, and to facilitate joint ventures for technology transference. In fact, Proton was born from this policy, in a tie-up between Malaysia’s HICOM and Japan’s Mitsubishi.

As a kid in the eighties in Malaysia, I remember being taught in school to hold Asian values in high regard (and to shun those of the Occident’s; I’m sure things are different in our schools now...at least, I hope they are). Whether the Look East policy was successful, that depends on whom you speak to.

Our fourth Prime Minister decided to look the other way...

In the past year, it appears as if Malaysia is "Looking East" again, pivoting (from the USA) to China; in November last year, the two countries signed MOUs worth over RM143 billion in total (meanwhile, Najib has yet to play golf with President Trump, who is upholding a “Look Inwards” policy). In the next few years, we can expect to see more Chinese businesses and partnerships in Malaysia, with possibly Geely-Proton being one of the prominent ones.

And this could be the turning point for Proton. Geely also owns, besides its own marque, Volvo, which could provide valuable technology and insights into production processes and quality. Oh, and Geely also owns the London Taxi Company – oh, please please please bring the black taxicabs to Kuala Lumpur! But, does it still count as Looking East if these aforementioned companies are Swedish and British?

Whether we Look West or Look East to look for an ally/saviour, I subscribe to Deng Xiaoping’s famous maxim: 黑猫白猫抓住耗子就是好猫 - it doesn't matter if it’s a white cat or a black cat...as long as it catches mice, it is a good cat.