Nut forgetting the shell, nursing the monkeys from the wild

It has to come to our attention that Malaysian companies involved in oil and gas industry, which have benefitted immensely from Petronas, is believed to not do their bit in corporate social responsibility  for the Malaysian masses, particularly  for the unskilled youths and school leavers.

These contractors and service and solution providers have been awarded projects and amassed a lot of wealth from Petronas due to the Federal Government policies  towards their status as ‘Malaysian companies’  and not on their competency  and capability alone. That provided space and opportunities for capacity building, which later became beneficial in these companies’ growth and multidimensional expansion.

Now that they are there, they are conveniently turning a blind eye towards the strategic initiatives to develop the Malaysian youth masses. The excuse is “Market forces”. The fact is that, not only do little to train Malaysian youths  and provide them  will  upskilling opportunities, they are pitting their fellow Malaysians to compete against the imported labourers.

The Federal Government is providing training and up-skilling opportunities for Malaysian youths classified under ‘Not in Education or Training’ (NIET), to earn basic skills and necessary competencies for the industry. Never-mind the fact these contractors and service providers to Petronas not willing to do it.

Now, the expect these Malaysian youths to be paid equally with foreign labourers, particularly from Bangladesh, Indonesia and Myanmar. “We have to go with market forces and get who ever offers the lowest”.

It is convenient for executives of these home grown oil and gas contractor and service providers and support companies reflect on their roots and journey to this point of their corporate history.  If they think why they shouldn’t pay Malaysian youths more than the labourers because of “Market forces”, then how about when Petronas awarded them their first job back then. Where they they the best, against foreign contractors?

Probably what they should be also reminded is that more than 90% of  the RM7.00 per hour wages that they are willing pay foreign labourers would flow out  as opposed to if Malaysians youths were to be given the opportunity instead. Even if these Malaysian youths are paid 10-15% more, their wages would be recycled back into the domestic economy.

This is the same domestic economy which provided the  resilience and drive to the eco-system were these oil and gas contractors and service providers benefitted from, right from the start.

 

Published in: on April 10, 2014 at 09:30  Comments (9)  

Omar Ong leaving?

Ethos Consulting co-founder Datuk Omar Ong, being photographed with the official White House bus for the American President

In the minds of so many people, the thought of Datuk Omar Ong no longer in the good books of Prime Minister Dato’ Sri Mohd. Najib Tun Razak is a little bit far fetched since the former has been perceived to a close adviser and strategy confidante of the latter.

However, rumour is circulating within certain ‘inner circle’ about Ethos Consulting co-founder Omar Ong is leaving the BoD Petronas. This is the evidence of some degree of fall out between Prime Minister Najib and Omar.

Omar was appointed to the BoD of Petronas in May 2009, much to the displeasure of then the national oil company Adviser Fourth Prime Minister Tun Dr. Mahathir Mohamad. In fact the appointment of Omar into BoD Petronas was one of the three burning points Tun Dr. Mahathir raised in his first meeting after Dato’ Sri Najib swore in as the Sixth Prime Minister on 3 April 2009.

Omar is believed to have brought in the ‘transformation’ in Petronas which saw Non Malays assuming strategic and very powerful operations positions replacing the functions and roles played by Malay professionals in one of the most profitable New Seven Sisters.

If this rumour turn out to be accurate then it would bring about new perspective of how Petronas is viewed and fresh expectations. The resignation of  Tun Dr. Mahathir as Petronas Adviser was only three months ago and already created a ripple.

Published in: on March 4, 2014 at 20:30  Comments (16)  

Backhand slap on shameless super-dramatic salesman

Malaysia Airports strikes back at AirAsia Supremo Tony Fernandes for his outrageous twitter messages taking potshots against GLCs Malaysia Airlines and Malaysia Airports, with manipulated market-talk, gross misinformation and distortion of stories.

The Star:

Published: Friday February 21, 2014 MYT 4:47:00 PM
Updated: Friday February 21, 2014 MYT 5:31:24 PM

MAHB: AirAsia received most incentives over 10 yrs (Update)

BY JOSEPH CHIN

Responding to comments by AirAsia boss Tan Sri Tony Fernandes that Malaysia Airports Holdings Berhad (MAHB) had to start churning profits to avoid burdening taxpayers, MAHB says it has remained profitable over the last 15 years, and points out that AirAsia itself has been a beneficiary of its strong financial performance.Responding to comments by AirAsia boss Tan Sri Tony Fernandes that Malaysia Airports Holdings Berhad (MAHB) had to start churning profits to avoid burdening taxpayers, MAHB says it has remained profitable over the last 15 years, and points out that AirAsia itself has been a beneficiary of its strong financial performance.

KUALA LUMPUR: Malaysia Airports Holdings Bhd (MAHB), responding to comments by Tan Sri Tony Fernandes that MAS and MAHB were burdening taxpayers, said AirAsia Bhd had received the most incentives over the last 10 years, pointing out that MAHB had even introduced an incentive programme to support the low-cost carrier’s growth.

In a statement issued on Friday to clarify comments made by the AirAsia boss, it said since 2002, AirAsia has been a beneficiary of MAHB’s strong financial performance.

“It (AirAsia) has received the most incentives over the last 10 years from MAHB despite it not being the airline that contributed the highest number of passengers or revenue.

“MAHB had specifically introduced an incentive programme to support the growth of AirAsia at its infancy stage. This had facilitated AirAsia’s growth to become the successful airline that it is today,” it said.

Below is the statement issued by MAHB:

MAHB clarifies on Tony Fernandes‘s statement

SEPANG: We refer to the following statements made by Tan Sri Tony Fernandes, CEO of Air Asia Group, reported in Malaysian Insider and Malaysia Kini on 19 February 2014, as well as in other media:-

1. “…… Fernandes said that MAS and Malaysia Airports Holdings Berhad (MAHB)have to start churning profits to avoid burdening taxpayers.”

2. “Fernandes, meanwhile, criticised MAS and MAHB’s continued spending and losses.”

3. “It’s supposed to be profit-making. This just hurts decent players in the business when they’re spending like there’s no tomorrow,” said Fernandes. “

This has resulted in several enquiries being directed to MAHB especially by the shareholders. While it is not MAHB’s policy to comment on statements made by our partners but in this case we had been advised that as a public listed company, we need to correct the information related to MAHB.

MAHB wishes to clarify that since it was incorporated 22 years ago, its financial performance has been showing consistent profits yearly.

Over the last 15 years since being public listed, MAHB has continually paid the concession fees and taxes to the government, issued dividends to shareholders, paid incentives to airlines, and remained profitable.

Since 2002, AirAsia has been a beneficiary of MAHB’s strong financial performance as it has received the most incentives over the last 10 years from MAHB, despite it not being the airline that contributed the highest number of passengers or revenue.

MAHB had specifically introduced an incentive programme to support the growth of AirAsia, at its infancy stage. This had facilitated AirAsia’s growth to become the successful airline that it is today.

******************

The statement by Malaysia Airports against Tony Fernandes is the most stiff, considering that he has been pasinting the picture the GLC as an ‘Evil corporate body, out to make profit from the misery of common passengers’. He even attempted to get AirAsia passengers to ‘revolt’ against Malaysia Airports, in the ‘Airport Spring’ attempt.

 Fernandes used the opportunity of these really low-blow cheap shots based on skewed stories when Malaysia Airlines announced the YE 2013 unaudited financial results three days ago. A RM1.17 billion loss was recorded for the year.

‘Airport Spring’: Fernandes’s morbid attempt for passengers ‘uprising’ against MAHB, December 2011

What the founder of the low class carrier purposely did not state is that the bulk  Malaysia Airlines’s loss is attributable to non cash big ticket items such as depreciation and forex. He also would never admit that Malaysia Airlines have better standing in the terms of net assets, cash position and borrowings over shareholders’ equity compared to his own low class carrier group.

Malaysian public must be reminded that Fernandes’s past twelve years in low class carrier business had been on series of drama, deception, failed deals and summonses by civil aviation and regulatory authorities which include Malaysia, Australia and the Philippines.

His gross over salesmanship and corporate drama which never materialised include the acquisition of Batavia Air, the failed AirAsia Japan JV with All Nippon Airways and the more recent controversies of AirAsia India. That is not withstanding the drama of “Moving operations to Jakarta”.

Bloomberg story two years ago:

AirAsia’s Fernandes to Move to Jakarta as Airline Expands

By Chong Pooi Koon and Andrea Rothman  May 25, 2012 6:45 PM GMT+0800

AirAsia (AIRA) Bhd. Chief Executive Officer Tony Fernandes, one of Malaysia’s most successful businessmen, said he’s moving to live in Jakarta to help accelerate the regional expansion of Asia’s biggest budget carrier.

Fernandes has steered AirAsia’s growth from a two-plane operation to 110 aircraft in just over a decade, overtaking Malaysian Airline Systems Bhd. (MAS) as the country’s largest carrier by market value. He’ll move to live in the Indonesian capital in about two weeks where the group is setting up a regional office, while keeping Malaysia as its headquarters.

“Part of AirAsia’s success might require him to move away from the epicenter in Malaysia so that he can see the woods instead of the tree,” said Gerald Ambrose, who oversees 5.4 billion ringgit ($1.7 billion) in assets as managing director of Aberdeen Asset Management Sdn. in Kuala Lumpur.

The carrier has grown from its Malaysian roots to establish budget spin-offs in countries includingIndonesia, Thailand and most recently the Philippines and Japan. Fernandes wants to form similar airline partnerships in South Korea, Vietnam and the Middle East.

“I get over-involved in the Malaysian operation,” Fernandes told reporters in Toulouse, southern France, where he was taking delivery of the airline’s 100th Airbus SAS A320 plane. “I should also be looking at Japan, Indonesia.”

About 20 AirAsia head office staff are moving to join him and help with regional strategy, Fernandes said.

More Planes

The group placed an order last year for 200 advanced A320neo planes to facilitate route expansion. It’s considering additional orders for Airbus single-aisle jets, he said.

AirAsia rose 4.1 percent to close at 3.60 ringgit in Kuala Lumpur today after news of its potential fleet expansion. The benchmark FTSE Bursa Malaysia KLCI Index gained 0.2 percent.

The parent of AirAsia’s Thai unit is slated to list shares in Bangkok this month. The airline’s Indonesian venture is also planning an initial public offering this year, it said last year.

Fernandes’s decision to move comes as AirAsia and Malaysian Air’s biggest shareholders this month unwound a share swap following protests by the national carrier’s biggest union.

He has had a “rough ride here in the past three months in the uncertainty with Malaysian Air,” Ambrose said. “He might think he wants to stand back and focus on the business.”

****************

Fernandes should be reprimanded for all these. It is morally and probably legally wrong that Malaysians be hoodwinked by this shameless man, over and over again. The dishonour is overbearing.

The Sun story:

Tony Fernandes named Malaysia’s Best CEO

Posted on 5 April 2012 – 09:50pm

PETALING JAYA (April 5, 2012): AirAsia Group CEO Tan Sri Tony Fernandes recently bagged the Best CEO for Malaysia award at the Second Asian Excellence Recognition Awards ceremony organised by Corporate Governance Asia in Hong Kong.

“The award recognises his achievement in being a revolutionary force in the aviation industry. He is often acknowledged for his influential actions for directly shaping the way the aviation industry has evolved,” said AirAsia in a statement yesterday.

Besides Fernandes’ personal award, budget-carrier AirAsia also bagged an award at the event for Best Investor Relations Company for Malaysia while its investor relations manager Benyamin Ismail was named the Best Investor Relations Officer for Malaysia.

“It’s truly an honour for us to be recognised, for two consecutive years, as Malaysia’s finest at the awards. 2012 is indeed a great year for us, with multiple awards in the bag and most significantly, the launch of AirAsia Philippines’ maiden flights recently to Davao and Kalibo,” said Fernandes in the statement.

“We are also looking forward to the launch of our AirAsia Japan operations, which will be our first step into the lucrative North Asia market, in line with our vision to expand throughout Asia.”

The Asian Excellence Recognition Awards recognises excellence in investor communications, business ethics, corporate social responsibility, environmental practices and financial performances.

Recognitions are awarded based on interviews conducted with investors.

The recognition award is part of Corporate Governance Asia’s mission to enhance corporate governance practices throughout Asia.

**************

A Malaysian CEO who is supposed to be a world class innovator and industry leader should not be of and by someone whose business strategy is to trot on other businesses based on manipulated information and context, skewed perspective and worse of all, perpetuating a lie.

The recklessness is also unbearable. Not too long ago, DCA did not renew AirAsia’s Airline Operating Certificate (AOC) believed to be failure to update and comply of flight operations manual.

Malaysia Airlines should stand up against Fernandes too. After all, it is only fair after the national carrier was slapped with a RM10 million by MyCC for Fernandes’s failed attempt to cannibalise the GLC into oblivion.

Published in: on February 21, 2014 at 23:59  Comments (14)  

‘Cheating’ passengers and Government should be more shocking

FAX: Sabahans and Sarawakians short changed

AirAsia Supremo took a really low-blow pot shots against Malaysia Airlines, for the unaudited result of the Q4 of 2013 and the aggregated summary of accounts for the national carrier for YE 2013.

Tony Fernandes expresses shock over MAS’s losses, says aviation industry needs a review

BY TRINNA LEONG
FEBRUARY 19, 2014

Putrajaya needs to review aviation policies as it can’t afford to spend taxpayers’ money on loss-making Malaysia Airlines (MAS) which bled RM1.2 billion last financial year, said Tan Sri Tony Fernandes (pic).

The founder of AirAsia added that he was “shocked” at the amount of losses suffered by MAS.

“The whole aviation industry needs a relook,” he told The Malaysian Insider by phone today.

Saying that the industry’s policies and airline management need to shape up, Fernandes said that MAS and Malaysia Airports Holdings Berhad (MAHB) have to start churning profits to avoid burdening taxpayers.

“My point is that if you’re running a private company, could you afford to cut 16% of your costs and still lose RM1 billion?” he asked.

“It’s only because there’s taxpayers’ money that one can afford to do that. And this isn’t solving the issue,” he added.

Yesterday, MAS had reported its fourth straight quarterly loss for 2013 and chalked up RM1.17 billion in losses for the year – three times as much as in 2012.

The state-owned carrier has been implementing cost-cutting measures to cut its expenses such as axing several routes and introducing lower ticket fares to increase its load.

However, the airline is also awaiting government approval to purchase 100 Airbus and Boeing passenger aircraft that would amount to several billion ringgit.

A Reuters report said that the airline’s decision to spend on newer aircraft is to boost profitability and retire its older, less fuel-efficient aircraft.

Fernandes, meanwhile, criticised MAS and MAHB’s continued spending and losses.

“It’s supposed to be profit-making. This just hurts decent players in the business when they’re spending like there’s no tomorrow,” said Fernandes.

According to MAS’s website, the carrier has 88 aircraft in its fleet, including Airbus A330s and A380s, and Boeing 777-200s and 737s.

The airline’s expenditure also went up by 10% last year to RM14.9 billion year-on-year due to high fuel prices.

MAS posted its highest ever loss in history when it recorded RM2.52 billion nett loss in 2011. The company , however, managed to narrow its losses to RM433 million in 2012. – February 19, 2014

*************

The fact is that, Fernandes is totally unfair in his biased simplistic remark about Malaysia Airlines’ 2013 performance. Had he professionally analysed the figures in the proper perspective, it would give a totally different impression.

When Ahmad Jauhari Yahya took over as CEO and he was relieved from answering to the ‘Executive Committee’ which include Fernandes and his partner Kamaruddin Meranun, the strategy was improving on revenue and lowering cost. Since that is not much room for cost to be lowered mainly due legacy issues, AJ’s leadership managed to improve on revenue.

AJ and some of the proud employees

AJ and some of the proud employees

After two years, the results have shown. Revenue increased by 9.4% where as EBITDA improved by 36%. Another interesting point is that RM817 million from the RM 1.17 billion losses actually derived from non cash expenditure, in the form of depreciation. Forex losses (due to weakening of Ringgit) of RM194 million, is the other big ticket item.

The actual performance is actually impressive. Malaysia Airlines flew 6.42 million passengers on domestic routes and 10.785 million on international routes. Passenger per km of domestic and international routes improved to 77% and 81% respectively. Actually revenue passengers kilometres is at 47,286 million.

Game changer: Malaysia Airlines first A380-800 getting the traditional welcome at  KLIA, as it arrives from Airbus Centre 29 June 2012

Game changer: Malaysia Airlines first A380-800 getting the traditional welcome at KLIA, as it arrives from Airbus Centre 29 June 2012

Cargo business also improved. Malaysia Airlines flew load tonnage kilometres of 1,991.4 million for 2013.

The coffer is healthy. For the 12 months ended 31 December 2013, the Group’s cash balance stood at RM3.87 billion. Total assets were at RM21.86 billion, whilst net gearing remained at 1.9 times at the end of December 2013

The historical value of assets warrants the provisions made for depreciation. The net value of assets stands at RM14.4 billion. Borrowings  stands at RM10.36 billion.

Malaysia Airlines workhorse: B737-800

These are hardly key performance indicators that Fernandes’s low caste carrier could ever dream of, let alone match. The value of total assets and cash position is much lower. Even the published statistics are not as per international practice to measure any carrier operations, which is in passenger kilometres (or miles).

Aggregated net asset of Fernandes’s low caste carriers stand at RM4.8 billion. Cash position is RM2.2 billion. Borrowings is calculated at RM8.3 billion. That is only 19.9% lesser than Malaysia Airlines’ borrowings, compared to the value of net asset where the national carrier is 300% more.

Low Caste Carrier hazzard: Air Asia mishap in Kuching, 2011

Low Caste Carrier hazzard: Air Asia mishap in Kuching, 2011

The fact is that Fernandes as CEO and controlling director of the AirAsia Group should be investigated for all of the deception, false-sales-hood and hyped up business deals, on top all the cock ups and regulations crossed by any of the subsidiaries and reprimanded for. That would be morally sinful.

What was the damnest was when Fernandes took over the Rural Air Service from Malaysia Airlines in 2006, which was part of ‘Level Four Boys’ designed program endorsed by PM ‘Flip-Flop’ Abdullah Ahmad Badawi under the Airline Rationalisation Plan, he did not deliver. In fact the RM250 million subsidy was short of ‘embezzled’ (abused and channeled for other purposes) except to serve the consumers of the interior of Sabah and Sarawak.

Wheelers and OKU protesting against AirAsia

Even Wheelers and OKU protesting against AirAsia, for discriminating them

Fernandes should have been made to pay for the RM10 million fine imposed by MyCC failed and reversed ‘Share Swap’ between Malaysia Airlines and AirAsia, since he was instrumental in the systemic attempt to ‘devour and kill’ Malaysia Airlines which was inked in August 2011.

Part of the legacy issues of Malaysia Airlines are due to decisions made by the Federal Government. When Tan Sri Nor Mohamed Yackop endorsed the Wide Asset Unbundling (WAU) where assets where stripped and hived off as the solution, it basically subjected the national carrier to be serving the lessors (which factored profit) instead of financiers (which was just serving borrowings plus interests).

Malaysia Airlines Southern Support Zone Complex, KLIA

A good example is Malaysia Airlines is believed to pay RM75 million in rental for facilities such as the Southern Support Zone Complex and Flight Management Building at the Main Terminal Building, KLIA. Malaysia Airports build its HQ for RM200 million. It means that perpetually, Malaysia Airlines would should actually get a similar HQ complex for every three years of rental they are subjected to pay.

It is obvious that Fernandes never once blamed MD of Khazanah Holdings Bhd. Tan Sri Azman Mokhtar and then his Binafikit partner Mohamed Rashdan “Danny “Yusoff for the problems of Malaysia Airlines today derived from the WAU solution slightly over ten years ago.

A bleak nine months in Malaysia Airlines' 65 years history

A bleak nine months in Malaysia Airlines’ 65 years history

The public must realise continuous perils Fernandes had caused, which include Federal Government investment arm Khazanah Nasional Bhd. Any drama by him is actually to deflect something amiss about what he did or about to do.

The recklessness is also unbearable. The greed to make money should not be compromised with safety. Not too long ago, DCA did not renew AirAsia’s Airline Operating Certificate (AOC) believed to be failure to update and comply of flight operations manual.

Fernandes realise that when Malaysia Airlines is back on its feet as the national carrier’s operations grow bigger, more revenue is earned and the fleet are expanded and regenerated, it would reflect worse against his over-sellling-coupled-with-below-standard deteriorating service. Hence, his ‘attack is the best defense’ strategy, like expected.

Published in: on February 19, 2014 at 23:30  Comments (25)  

Carving out JCorp

Johor Corporation Bhd

Strong rumours circulating ‘in the market’ about Johor Corporation recently concluded the decision to hive off its group of project management, property development, construction and integrated facility management arm, Damansara Realty Bhd.

Details are sketchy but it is strongly believed that the two Johor born individuals would benefit from the sale as acquirer and eventually would be the new shareholders.

One of the individuals has been said to be a prominent member of the ruling feudal family of one of Malaysian states where as the other is a believed to be a very well known Batu Pahat son.

JCorp is the most successful and profitable state economic development corporation. This time last year, the devouring of JCorp’s cash cow was discussed here.

Published in: on February 13, 2014 at 17:54  Comments (6)  

Made in Malaysia

Proton Preve launched in 2011, is the fifth of indigenous products designed, developed and manufactured by Proton since the first one Proton Waja was launched 11 years earlier.

Many goodies installed, for a car offered in this segment and at this price. It is actually fully loaded. It is even rated as 5 Star on the ANCAP built-safety quality band.

Don’t just take our word for it. Jean Alesi is a world class Formula 1 driver. This is one steed, worthy of his accolades.

Happy Chinese New Year everyone. To those who are on the road, please be extra careful.

Published in: on January 31, 2014 at 12:30  Leave a Comment  

Being fair to Proton (Pt II)

Proton badge, present day

Proton badge, present day

Proton is moving into a new era on the matrix of quantity-quality. Both, in the context and perspective of the corporation which started from the national car project and the brand of a Malaysian made car.

The opportunity arises from the take over and under the control of the present DRB-Hicom leadership and management, which managed to turn around, restructure, add value and expand in the activity thrusts, operational growth and market capitalisation since been under the Al Bukhary Group beginning in 2006.

The rationalisation and realisation of assets, resources, competency, strength and current market potential and opportunities, Proton would embark into even bigger growth. It is committed into production of 500,000 units by 2018.

Several strategies have been outlined. It starts with beefing the customer experience, improving and offering variables in packages and marketing campaign and continuous expansion of existing market from the rationalisation of qunatity and quality at branches and dealership level. Proton is very serious and committed in attacking to the Malaysian motoring consumer market.

The quality of current and upcoming products would be determined from the supply chain and vendor programs. More emphasis would be given on materials, component and built quality. This would complement the customer experience strategy.

Technology benchmarking would part of the product definition.

The action plan outlined for moving forward is Proton is within internal resources  systematically working its way out of the comfort zone and depend lesser of protectionism but instead focus on the business acumen and commercial forces.

“We would like to shout less but do more”, remarked Deputy CEO and COO Dato’ Lukman Ibrahim. “We would be redeeming on our previous domestic market and fully realise its potential, offer value for money products and market oriented. We would also capitalise on the brand loyalist and loyalty”.

Speaking to BigDogDotCom recently, Lukman got his plans outlaid and being rolled out.

“Give us twelve months. You would see the results”.

The confidence is easily substantiated. Proton has developed the platform, seen in the Preve and Suprima S models. Recently, it acquired the NE01 engine from Petronas, which was developed from their experience and technology derived from Sauber. Product development would based on the commonality.

Export market is very much into its sight. Proton would embark into ‘fit-for-purpose’ strategy for different export markets. In some emerging markets, it is building strategic collaboration which include making selected Proton models made available as CKD.

It is not far fetch to see Proton seriously  is having the domestic market of China and India in its sight. Proton is fully realising from an earlier strategic collaboration and partnership.

On Lotus, the brand is moving on a very encouraging direction since the management changeover. Presently, Lotus is experiencing a backlog of 600 cars. Proton is targettng the annual demand for Lotus is 10,000 units by 2018. That is minus the market from China.

Part of the rationalisation of resources is to optimise Lotus’s design team, in Norwich, United Kingdom and Ann Arbor, Michigan. The experience and exposure, coupled with the Petronas NE01 engine design and development team (brought into Proton when the engine was acquired), would be synergised together with Proton’s design and development team which already proven their mettle in products such as Waja, Gen-2, Persona, Saga BLM, Preve and the most recent, Suprima S.

Proton is probably looking to introduce an SUV either being developed or under the Lotus brand by 2018. There is a huge potential for this segment in emerging and growing markets such as China, India and West Asia.

It is within sight that Proton would be fulfilling the export market outlined by NAP 2014 far ahead of the 2020 target. If by then the export number is 100,000 units and  average realised value per unit is RM50,000.00, Proton would add RM 5 billion per annum into Malaysian export value every year.

*Updated by Noon

Published in: on January 28, 2014 at 06:30  Comments (14)  

Being fair to Proton

Pride is a virtue, when it comes to coming to common sense for a Malaysian made product. A lot of Malaysians probably look at the the right angles to agree but the louder minority, nit-pick to justify themselves otherwise.

Regardless, August next year will mark Proton or its original name, Perusahan Otomobil National, of 30 years in automobile assembly and production mainly for the Malaysian market. It has been an enigma of erratic bumpy ride, all the way.

Proton sales, the past ten years

Proton sales, the past ten years. Notice the huge dip in 2006.

Proton started in late 1984 with re-badging of then the Mitsubishi Lancer. That opened opportunities for Malaysian automotive part manufacturers to begin operations   by supplying components to the first generation Proton Saga. As the local content increases, more opportunities are being opened. By 1987, Proton started to introduce variants to the Proton Saga with automatic transmission and later hatchback models.

By then, Proton had become an automotive household name. By early 1990s, Proton is the major mark on the streets where the market share stands in the neighbourhood of 65% of new cars sold. The growth provided progression.

In 1993, Proton introduced the model Wira which was a move away from the many variants of Saga. By end of the year, Proton market share is 74% of new cars sold and registered in Malaysia.

In 1996, the ownership and control of Proton was handed to automotive king DRB founder Tan Sri Yahya Ahmad. He was destined to transform the Malaysian automotive industry and had big plans. By October 1996, Yahya acquired British renown design, R&D and racing car production house Lotus Ltd., as part of Proton’s strategic plan to move forward.

However, it was short-lived when he was killed in a helicopter accident on 2 March 1997.

His effort did not go to waste. As a matter of fact, it was carried through by his successor. Proton started its own design team and the engineers started to develop their own design.

The outcome is  by 2000, Proton introduced its own indigenous product Waja 1.6L. It replaced the second Mitisubishi Lancer-derived product, Proton Wira. Proton was realising the vision envisaged of Fourth Prime Minister Tun Dr. Mahathir Mohamad to take Malaysia as an industrial nation with technical and technology competency and capability.

When it was exported abroad, it was well received. Even in the critical British market. Proton earned the title “Fastest growing imported car in so short of time”.

The collaboration and synergy with wholly owned-subsidiary Lotus of Norwich brought a lot of goodies for Proton models, which are categorised under the compact segment. Examples are the first and second generation Satria and Satria Neo.

Proton was incepted and incorporated 1983 under Heavy Industries Company (Hicom) because Tun Dr. Mahathir saw the strategic values from the ability for Malaysians to have automotive technology capability. It was a starting point for the learning curve, for an eventual capability of a fully industrialised nation and technological competency as a developed nation status.

The strategy was even bigger than that. Using automotive as a starting point, Malaysia could eventually move into the design and manufacturing for defense equipments such as armoured vehicles and battle tanks.

However, Tun Dr. Mahathir’s vision which started to show potential from growth,  was not followed through when PM ‘Flip-Flop’ Abdullah Ahmad Badawi took over. In fact, not only the strategy of developing a full blown automotive industry capability was totally neglected, in the excuse of open-ness to global trade and doing away with protectionism policies for specific industries.

An Ethos Consulting developed National Automotive Policy (NAP) was introduced where Malaysian automobile market was opened to more imports and the liberalisation began. The lame excuse was Malaysian motoring consumer deserve the bigger options of imported cars.

At the same time, Proton was treated as an investment and placed and restructured under Khazanah Nasional Bhd., where then trusted Chairman Dato’ Azlan Abdullah started a process of cannibalising and eventually the beginning of slow death.

Never the less, Proton manged to design and develop their own indigenous products such as the Preve and Suprima S models. Considering the amount of CAPEX which was invested for the development of these two products compared to the other in the same class, the outcome was brilliant.

On merit, these two models should able to win against any other brands in Malaysia since both came into the market as ‘fully loaded’. However, there are minority within the targeted market who are bold in their criticism to these models.

The Proton Perdana based on the 8th generation Honda Accord

The Proton Perdana based on the 8th generation Honda Accord

In 2012 Proton ownership was again reverted to DRB Hicom for a cash consideration of RM 1.2 billion. Proton under the new management was quickly synergised with marks under he DRB belt. Proton collaborated with Honda.

Under the pressing demand by the Malaysian Government to replace the Proton Perdana model which was introduced in 1995 based on Mitsubishi Eterna, Proton struck a deal with Honda to develop the new generation choice staff car for Ministers, Deputy Ministers, Chief Secretaries and Chief Executives of Government bodies and senior civil servants based on the 8th generation of Honda Accord.

The Petronas developed 2.0L turbo-charged engine

In mid-2015, Proton would introduce a Malaysian indigenous designed and produced which was developed and acquired from Petronas.

Currently, it is a 2.0L turbo-charged four in-line engine which produces 190HP and planned for the second generation Proton Perdana, which recently being introduced based on the 8th generation Honda Accord. A 1.6L and 1.8L are being planned, to power the Preve and Suprima S models.

Proton badge, in mid 80s

The saying of “Proof in the pudding is in the eating”. All those critics of Proton products should give the current models available in the market Saga FLV, Satria Neo, Preve and Suprima S and upcoming Perdana the fair chance based on merits due.

In the exercise to rationalise the Malaysian automotive industry which include the imports via the AP system, the Federal Government introduced the National Automotive Policy (NAP) 2014 on 20 January 2014.

NST story:

20 January 2014| last updated at 06:02PM

NAP 2014: Highlights

KUALA LUMPUR: Following are highlights of the National Automotive Policy (NAP) 2014 unveiled by the International Trade and Industry Minister Datuk Seri Mustapa Mohamed today:

Objectives:

* to promote competitive and sustainable domestic automotive industry including the national automotive companies.

* to transform Malaysia into a regional automotive hub in energy-efficient vehicles (EEV)

* to promote higher value-added activities

* to bolster exports of vehicles and components

* to encourage participation of Bumiputera companies in total value chain of the domestic automotive industry

* to safeguard consumers’ interest by offering safer and better quality products at competitive prices.

* Overall, the NAP 2014 provides a total financial package of about RM2 billion and measures and implementation plans to realise the NAP 2014

* The NAP 2014 targets at least 200,000 units of cars to be exported while exports of components will reach a minimum value of RM10 billion in 2020

* The government is open to possibilities to reduce excise duties gradually when the fiscal situation permits.

* On Approved Permits (APs), the government has decided an indepth study to be undertaken to asses the impact of the termination of Bumiputera participation in the auto industry.

* The NAP 2009 has specified for termination of the open AP by Dec 31, 2015 and the franchise AP by Dec 31, 2020

CAR PRICE REDUCTION

* A car price reduction framework has been developed to fulfil the promise of gradual reduction ranging 20 per cent to 30 per cent over the next five years.

* More new national car models and variants will be introduced at competitive prices this year.

* The NAP 2014 will see a bigger base of new models being introduced in the domestic market. These models will not only be greener but also safer.

* The government is constantly reviewing its fiscal position and is open to possibility to reduce excise duties when the fiscal situation permits.

* Models such as Saga SV, Persona SV, Viva, Alza and MyVi S Series, the new Honda Jazz and Nissan Almera were introduced at reduced prices of between three and 17 per cent. These models accounted for 30 per cent of market share in 2013.

ENERGY-EFFICIENT VEHICLE (EEV)

* Malaysia to become an energy-efficient vehicle (EEV) hub. This encompasses strategies and measures to strengthen the entire value chain of the automotive industry and will also lead to environment conservation, high-income job creation, transfer of technology and create new economic opportunities for local companies.

* The EEV includes fuel-efficient vehicles, hybrid, electric vehicles and alternatively-fuelled vehicles.

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Proton is confident that the NAP 2014 would be the ‘push factor’ for the corporation and brand to do better.

The Malay Mail story:

Proton says will ‘survive’ greater competition in new auto policy

BY IDA LIMJANUARY 20, 2014UPDATED: JANUARY 21, 2014 12:14 AM

Tan Sri Khamil Jamil, the chairman of Proton, also said today that Proton was not ‘for sale’. — Picture by Choo Choy MayTan Sri Khamil Jamil, the chairman of Proton, also said today that Proton was not ‘for sale’. — Picture by Choo Choy May

KUALA LUMPUR, Jan 20 — National carmaker Proton insisted today it will “survive” the greater competition from foreign vehicle producers now that the government has liberalised the auto industry to woo others into the market, under new guidelines in the revised National Automotive Policy (NAP) 2014.

Tan Sri Khamil Jamil, the chairman of Proton, said the company — which critics have seen as heavily relying on the government’s past protection from competition — will grow further.

“Proton will continue to survive and be stronger and better,” he told reporters today at the unveiling of the National Automotive Policy (NAP) 2014 here.

He later disagreed that Proton was “for sale”, saying that the company had undertaken “structural changes” and “structural improvement”, but did not provide further details.

“I believe, like what the minister has said, Proton is still very relevant together with Perodua, two national automotive companies that will play a vibrant and focal role to enhance the local automotive industry,” said Khamil, who is also the managing director of DRB-Hicom Bhd, which is the sole owner of Proton.

Earlier, International Trade and Industry Minister Datuk Seri Mustapa Mohamed acknowledged that Proton has been facing stiffer competition than before as the car market becomes increasingly liberalised.

Mustapa said the government did the “right thing” when it set up Proton in 1983, but noted that the country’s inking of free trade agreements with the Southeast Asian region and countries like Japan and Australia was opening up the car market.

“At present, the market is becoming more and more open because of AFTA, ASEAN, cars are imported duty-free, so the market is more liberalised now,” he said.

Mustapa said that MITI previously controlled car prices to protect Proton, but said it was now dictated by market forces which will result in a competitive industry.

“There was a time when car companies have to come to MITI for approval to set prices, that was to protect Proton, but the policy has been dismantled in 2004,” he said.

Mustapa also said Proton has undergone changes in the past few years in a bid to be more efficient and competitive.

Today, Khamil touched on Proton’s plans to produce energy efficient vehicles (EEV), saying that it was already in partnership with carmaker Honda Malaysia Sdn Bhd.

Honda, in which Proton owns a stake, has committed to pouring in RM 1,000 million to build hybrid cars in Malacca.

Proton is also working on its own EEV model, Khamil said.

“We are on track, hopefully by end of 2015, we will see some results for Proton,” he said.

Even before the NAP’s unveiling today, three car companies had already agreed to invest in EEV production here — including Honda, Perodua’s RM1,300 million investment and Mazda’s RM300 million investment.

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Based on the NAP 2014, it is likely single largest portion of the 200,000 units of exported Malaysian made or assembled cars would come from Proton. On top of that, emphasis have been given to the development of ‘green cars’ (EEV), which Proton is deep into the development its own electrical and fuel cell models.

Proton success story for the export markets

Proton success story for the export markets

The affordability range models, where Saga FLV and Persona SV are categorised under, are two products offered by Proton with a lot of goodies. It is not just the value of the car, with the equipment and trim but also affordability ownership programs where consumers ‘Buy now, pay later’ schemes.

Proton is also the car manufacturer which opened the biggest opportunity for the participation of home grown automotive vendor development program for component and parts manufacturers. At the moment, there 360 companies serving the entire Proton supply chain.

The rationalisation of the new models plus re-strategising the brand and marketing and product placement programs is part of DRB’s commitment to make Proton a success story.

These are the mitigating justification part of the RM2 billion financial package offered and made available should be allocated for Proton. Under DRB-Hicom, Proton is set to maximise its production capability and optimumise all assets and resources the new roadmap laid out.

That would justify even if being analysed in the context as a corporation, the criticism should be made in the right perspective and consideration taking into consideration the variance in ownership and management, through time and spectrum of current events and mitigating circumstances and environment. It is very easy and probably fashionable in some quarters to make generalisation based on perception and taking re-phrased and re-packaged sweeping pot shots.

In reality, Proton came a long way through in the dynamism of a globally very competitive and challenging industry. It had been a volatile learning curve in the past thirty years and the national car project did follow through and now ready to move into the next phase, as part of a promising automotive group which has proven its steady growth and to add value.

Proton badge, present day

Proton badge, present day

Then again to be balanced and the same time correct, is an intellectual virtue which distinguishes one’s sense of observation and analysis, differentiating from any intent to express one’s thoughts tinged with omni-lethal concoction of the mixture between mischief and malice.

Published in: on January 25, 2014 at 23:59  Comments (8)  

PM Najib: Government will intervene if price mechanism fails

Prime Minister Dato’ Sri Mohd. Najib Tun Razak assured that the Federal Government would intervene if price mechanism fails, to ensure that goods and services especially pertaining to grocery and food items remain at the affordability of Malaysians.

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21 January 2014| last updated at 10:29AM

PM: Vital to reconstruct nation’s economy

By AZURA ABAS and KOI KYE LEE | news@nst.com.my
 2  8 Google +0  0 0 comments

PUTRAJAYA: Restructuring of the nation’s economy is vital as it would ensure a continuous and upward trend of growth.

Prime Minister Datuk Seri Najib Razak said if a reform of the economy was not made, the economic growth would remain stagnant.

For Malaysia to achieve its objective in becoming a developed nation by 2020 and a high income nation, Najib said the restructuring of economy was a must.

“If we do not do a restructure, the country’s economy will grow slower and we will not be able to achieve our objective which is to be a country with an advanced economy,” he added.

Najib, who is also the Finance Minister, attended the ministry’s first monthly assembly, earlier today.

He said that to achieve advanced economy, the country’s resources have to be managed efficiently and used productively.

Najib added the government would intervene if the current price mechanism has failed to function properly.

“The intervention will be done so that the people will not be burdened by the price hikes,” he said.

Prime Minister Datuk Seri Najib Razak delivers his speech at the Ministry of Finance’s first monthly assembly in Putrajaya. Pix by Mohd Fadli Hamzah

Read more: PM: Vital to reconstruct nation’s economy – Latest – New Straits Timeshttp://www.nst.com.my/latest/pm-vital-to-reconstruct-nation-s-economy-1.467258#ixzz2r0ZlqtDO

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The process of ‘intervention’ has already started. However, it is being addressed at source instead at end user.

Presently efforts are being made to address the specific issue that many Malaysians are complaining, the steep rise in grocery and food items of late. On Saturday, Minister of Agriculture and Agro-based Industry Dato’ Seri Ismail Sabri Yaacob announced that the price of raw paddy supplied by farmers to millers would be standardised to RM1,200 per metric ton.

Prior to this ruling, the price of raw paddy acquired by millers varied between states. As such, some millers started to buy at lower prices from farmers in the states and affected the supply from where the millers are based. The practice of cartel has been seen as ‘economically oppressing’ the famers.

When met in Ministry of Agriculture yesterday, Ismail questioned what are the Opposition led State Governments doing about the rising price of goods and services.

He noted that many of the city councils and local authorities in these states have been hiking up licenses, permits, quit rents and even rental of premises owned by the local authorities. As such, the cost is passed to the consumers.

Therefore in most of the urban areas, price of prepared food have been rising and affecting the fixed income earners, especially in the lower bracket and those elastically affected due to urban poverty.

He asked Opposition Leaders to make the rising price of goods and services lesser of a political issue and come together with the Federal Government to ensure that the well being of the rakyat comes first.

Published in: on January 21, 2014 at 13:00  Comments (6)  

Rationalising Rice

In the effort to rationalise the price of raw paddy as part of the exercise to minimise the impact of wholesale cartels and middlemen of profiteering at the expense of end consumers, Minister of Agriculture and Agro-based Industry Dato’ Seri Ismail Sabri Yaacob issued an instruction to uniform the price.

A statement by MOA Director General of Rice Control:

Ketua Pengarah Pengawalan Padi dan Beras
Datuk Naimah Ramli

PENETAPAN HARGA BELIAN PADI YANG SERAGAM DI SEMENANJUNG MALAYSIA PADA KADAR RM1,200/MT

PUTRAJAYA: Kementerian Pertanian dan Industri Asas Tani hari ini menegaskan, harga padi di Semenanjung Malaysia diseragamkan pada RM1,200 setan metrik

Menurut Ketua Pengarah Pengawalan Padi dan Beras, Kementerian Pertanian dan Industri Asas Tani, Datuk Naimah Ramli, bagaimanapun bayaran sebenar bergantung kepada mutu atau kualiti padi yang dihasilkan.

“Keputusan ini selaras dengan pengumuman yang dibuat oleh Menteri Pertanian dan Industri Asas Tani, Datuk Seri Ismail Sabri di Kelantan kelmarin,’’ katanya dalam satu kenyataan yang dikeluarkan hari ini.

Naimah berkata demikian bagi menjelaskan beberapa persoalan dan kekeliruan berhubung isu ini yang dimanipulasikan oleh pigak-pihak tertentu mengenai harga yang akan mula diselaraskan mulai musim tuaian akan datang.

“Kita menjelaskan perkara ini kerana timbul persoalan mengapa Menteri perlu menetapkan harga belian pada harga RM1,200 per tan metrik.

“Menteri dan Kementerian memahami isu dan masalah yang membebani pesawah selama ini, kerana itu kita membuat keputusan supaya harga diseragamkan di seluruh Semenanjung berbanding sebelum ini di mana harga padi berbeza di antara satu negeri berbanding satu negeri yang lain.” Katanya.

Naimah menarik perhatian, langkah ini juga dilihat dapat mengekang aktiviti pemindahan padi tanpa kebenaran yang dilakukan oleh pihak tertentu dari negeri yang harga belian padi murah ke negeri yang menawarkan harga yang lebih tinggi.

“Bagaimanapun, harga bersih bayaran padi kepada pesawah bergantung kepada mutu padi. Semakin tinggi kandungan padi muda, batang padi, jerami, hampa, batu dan lain-lain akan mengurangkan lagi bayaran bersih padi tersebut,’’ jelasnya.

 

a)    Ketika ini harga belian padi berbeza di setiap negeri.

BIL. NEGERI HARGA BELIAN(RM / MT) KADAR PEMUTUAN  TAWARAN KADAR PEMUTUAN  SEBENAR
Perlis 1,050 17 – 18% 22 – 25%
Kedah 1,050 17 – 18% 22 – 25%
Pulau Pinang 1,050 17 – 18% 22 – 25%
Perak 1,100 17 – 18% 20 – 23%
Selangor 1,200 17 – 18% 20 – 23%
Kelantan 980 23 – 24% 26 – 28%
Terengganu 980 23 – 24% 26 – 28%
Pahang 1,050 18 – 19% 22 – 25%

b)   PEMUTUAN SEBENAR PADA MASA INI ADALAH DI ANTARA 20 – 23%. KOMPONEN YANG MENENTUKAN PEMUTUAN SEBENAR MELIPUTI:

BIL.

KOMPONEN

SEBENAR

AMALAN TAWARAN POTONGAN

I.

IMPURITIES (PADI MUDA, BATANG PADI, JERAMI, HAMPA, BATU, DLL)

10 – 15%

7 – 8%

II.

WAP BASAH

11 – 12%

11 – 12%

JUMLAH PEMUTUAN

21 – 27%

17 – 19%

Sementara itu, Naimah berkata pelaksanaan harga seragam ini akan bermula pada musim penuaian baru dan jadual tuaian mengikut negeri adalah seperti berikut:

a. PAHANG – FEB / MAC 2014
b. KELANTAN – MAC 2014
c. SELANGOR – APRIL 2014
d. PERAK – JUN 2014
e. KEDAH / PULAU PINANG / PERLIS – JULAI 2014
f. JOHOR / MELAKA / NEGERI SEMBILAN – TIDAK BERMUSIM DAN BOLEH DILAKSANAKAN SERTA MERTA.

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The standardisation of price of paddy at the source which is planters’ level would control how the cost of raw material before being processed by the millers.

It would minimise the profiteering, since all rice farmers are made aware of the controlled price that they should sell to millers.

At the moment, the ST15 rice (15% broken rice) is being sold at retailers’ end for RM18.00 per 10kg bag. That comes with MOA subsidy of RM0.30 per kg.

This has been seen as initial step to rationalise price of grocery and food products at consumer end, where part of the rise in price is caused by profiteering by the wholesale cartel and middlemen.

Published in: on January 17, 2014 at 22:00  Comments (2)  
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