The push-over Proton

Proton Holdings Bhd. (Proton) has been declining since Dato’ Azlan Hashim took over and managed by Syed Zainal Abidin Syed Tahir. Once cash rich Proton under previous stewardship Tengku Tan Sri Mahaleel Arief, which managed to develop their own huge plant in the Proton City facility in Tanjong Malim through internal funds is now turning pauper.

The sales are significantly down and the profitability corresponded. The turn over was more than double five years ago.

The Star,, has the story on the recent Proton annual report:

Proton posts RM591mil loss

PETALING JAYA: Proton Holdings Bhd failed to meet its key performance indicators (KPIs) for the fiscal year ended March 31 (FY07) as revenue dropped 37% to RM4.9bil from RM7.8bil in FY06.

It posted a whopping net loss of RM591.4mil against a profit of RM46.7mil previously. Loss per share stood at 107.7 sen compared with earnings per share of 8.4 sen in FY06.

Among Proton’s KPIs were to generate revenue growth of 12.4% via higher domestic and export sales, and increase earnings before income tax margin to 2.5% from 0.5% previously.


However, during the full year, Proton only managed to sell 110,358 cars, which was a 40% drop from 183,824 units sold in FY06.

The weak performance was attributed to a challenging operating environment, which saw intense competition compounded by lower used-car values and stringent loan application screening that put credit squeeze on prospective clients.

During the fourth quarter (Q4), Proton posted a net loss of RM913,000 from a profit of RM126.9mil in the previous corresponding period.

Revenue slid 29% to RM1.3bil against RM1.8bil previously. Loss per share stood at 0.2 sen against earnings per share of 23.1 sen a year earlier.

Managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir said in a statement yesterday that the losses were due to lower sales volume and a combination of other factors, including one-off expenses and provisions.

Among the exceptional items were the right-sizing costs incurred by a subsidiary and higher amortisation of dies and jigs due to unmet volume.

Additionally, there were provisions of claims for the previous year’s project development cost and higher component and raw material costs due to late confirmation of component prices.

While the current financial year remains challenging, Proton intends to focus on operational efficiency, cost competitiveness, introduction of new models and more aggressive marketing campaigns to mitigate the impact of the weak car industry.

“These focus areas will enhance prospects of sales and cashflow, which will help improve the company’s position and restore its financial performance,” Syed Zainal said.

The efforts have already borne some fruit, such as the reversal in sales volume decline in Q4 which showed a 29% increase to 27,458 units from 21,248 in Q3.

Sales operations improved further through enhancement in sales representatives’ practices, pre-delivery inspection and sales service, as well as improved standard operating procedures.

The national carmaker was on track in the current fiscal year to introduce two new models which were potentially high-volume cars that would improve the product portfolio significantly, the statement said.

On the sales network and vendor rationalisation exercise, the combined Proton Edar and EON branch and dealer network would be reduced to 300 outlets by year-end based on performance and location, it said.

In FY07, the carmaker exported more cars, which totalled 20,595 units, compared with 12,526 in FY06.

The statement said demand had been good from the Middle East, Britain and Australia while new markets like Indonesia and South Africa were “showing promise.”

The positive sentiment has prompted Proton to expand assembly operations in Iran and exports are expected to increase further during FY08.

On the strategic alliance, Syed Zainal said the company was in close consultation with the Government and other stakeholders, and that a strategic partner “will consolidate and strengthen our business,” given the added value the partner would bring into Proton’s operations.


My brilliant and well read young friend, A M Ubaidah S,, in his second attempt to blog exactly a year ago, did an indepth analysis of Proton. Some salient points worth considering when Proton is being discussed. I have taken the liberty to upload it here:

Thursday, June 29, 2006

Let’s be Clear of some Real Grouses WE THE PEOPLE understand PROTON’s CURRENT CHAIRMAN has to answer for (outside of the still continuing stuck-window saga)

  • The sale of MV Agusta seemed to conclude in a matter of days, or at most weeks, and without extensive stakeholder engagement, where even the Italian partners and management of MV Agusta expressed surprise at the conclusion of the sale! Strange when the purchase process took months of very public deliberation and stakeholder engagement.Sure, the propaganda around the sale of MV Agusta hints at the purchase being an isolated Dr M – Tunku M decision. However, the truth is that international newswires, including the BBC, reported an engagement and due dilligance process ~1 year prior to the finalisation of the purchase of MV Agusta. With the 3-month initial due-diligence stretching to months longer, all publicly reported, the purchase deal was done with the agreement of the Proton board and Khazanah, backed by a lengthy due diligence, audits from Big 4 firms as well as support from MV Agusta’s creditors such as Citibank.In contrast, where was the due-diligence around the sale of MV Agusta? Hence, the manner of the sale, to an unknown entity and for a measly fraction of the purchase price (even with the debt transfer) with no discernable due diligance, is a major source of angst!
  • Many who study Proton’s quarterly performace figures expressed suspicions that despite the sale of the debt of MV Agusta, Proton still chose to perform a debt provision at the quarter of the MV Agusta sale, attributing this to losses due to the MV Agusta sale. The debt provision seemed exhorbitant, making people wonder whether Proton was actually trying to hide real operational losses it had incurred following dismissal of Tunku Mahaleel and the departure of a core of his team, including the highly reputable CFO.
  • When a CEO is dismissed / allowed to lapse in his contract / encouraged to leave, one expects the replacement to do better. Else, why dismiss the earlier CEO?However, Proton’s performance has not improved since the departure of Tunku Mahaleel, but has taken a turn for the worse, with the biggest low when Azlan unveiled the “luxury” Waja…. ??!!!??!?!!!.Some of the decline has been arrested since the arrival of Syed Zainal, but ironically, all the successes of Syed Zainal can also be attributed to the plans laid out during Tunku Mahaleel’s time.E.g. the Campro Engine replacement for the Waja, the SRM or Satria Neo’s (late) delivery, even the vendor quality assurance program were all plans Tunku Mahaleel laid out. In fact, resistance to the vendor quality assurance program by ‘influential’ vendors is supposed to have been one reason for Tunku Mahaleel being ousted from the CEO position.So, why did the Proton board need to remove Tunku Mahaleel, if Chairman Azlan’s more direct leadership since could do no better, and in some ways, have done far worse!
  • Finally, Proton’s current problems are symptomatic of a directionless leadership. There is much given to slogans and press releases of success, but if one takes away the plans of Tunku Mahaleel that they have implemented, they are struggling for direction. Otherwise, why would Proton be regressing by negotiating with Mitsubishi on building cars together (probably a Mitsubishi knock-off), when Proton has already demonstrated the capacity to build from scratch?The current Proton leadership has a penchant for proclaiming the NAP defines the strategy they are following, but as the NAP is non-specific, non-detailed and bereft of real-life big rules and big picture ideals of where Malaysia wants to position its automotive industry in the regional, let alone global market, Proton is basically directionless. The NAP is so poor as a guide to Proton that if anyone is willing to pay me for a few weekends, I, a non-expert, could probably come up with something better!

Maybe I’ll do it anyway…. but for now, can someone convey the above to Azlan Hashim so he (and others) will at least just stop yammering on about how they have ‘answered’ Dr M’s questions on Proton? Some real answers would be nice too…


Proton sales were badly affected after the National Automotive Police was released March 2006. Proton also went through a process of consolidation after Tengku Mahaleel left and as a result, companies like MV Agusta was sold for one Euro under a clandestine deal.

Proton needs to consolidate its resources and be injected with new components to move on. Failure will see further decline. Proton has been actively looking for a strategic partner for technology and market development. Proton has been reported talking to several parties, some giants in the global automobile industry PSA Citroen and General Motors. So far nothing conclusive has transpired from these talks. Recently, the move active party is Volkswagen AG, the German automobile giant. The talk has been going on for quite sometime.

No indication where the talk had actually gone and is actually going. However, there exist contradictions on the matter about Proton’s future. The Prime Minister Dato’ Seri Abdullah Ahmad Badawi urged for Proton to talk to other parties.

The Star,, has this story:

Talk to other firms, Proton told

KUALA LUMPUR: Datuk Seri Abdullah Ahmad Badawi has asked Proton Holdings Bhd to start talks with other carmakers on a partnership because Volkswagen AG is not interested.

“I have made the decision that since Volkswagen is not interested in the proposal that Proton wants in terms of the equity participation but they want cooperation in some other form, Proton can begin to talk to others,” the Prime Minister told reporters after chairing the Umno supreme council meeting last night.

Besides the German carmaker, US-based General Motors Corp had in the past expressed interest along with French PSA Peugeot SA to work with Proton.

When both the car manufacturers pulled out, Volkswagen became the forerunner.

However, the March 31 deadline to announce the strategic foreign partner of Proton passed without any development.

The Government’s investment arm, Khazanah Nasional Bhd, is offering its 38% equity in Proton for sale to save the carmaker from further losses.

Local automotive companies who have been eyeing a stake in Proton include Naza Group, Mofaz Group and DRB-Hicom Bhd.

Abdullah also called on Proton to do whatever necessary to turn around the national car industry.

It was announced yesterday that Proton’s net loss was RM591.4mil for the year ending March 31.

On whether there was a need to revamp the top management of Proton, Abdullah replied: “They have to do whatever is necessary.”

Singapore based Channel News Asia reported that the Prime Minister said VW not interested in continuing the talk and Proton should move on. This is what the news’,, take on the matter:

Proton, Volkswagen talks fail: PM
01 June 2007 1534 hrs


KUALA LUMPURMalaysia‘s Prime Minister Abdullah Ahmad Badawi said talks with Volkswagen to forge a strategic alliance for national carmaker Proton have failed, as the besieged firm posted massive losses.

The government has been in talks with Volkswagen for a partnership seen as vital to Proton’s fortunes but Abdullah said the German carmaker had dropped out as an equity partner out after disagreeing with proposals for the tie-up.

“I have decided, since Volkswagen is not interested in the proposal that Proton wants in terms of equity, Proton needs to talk to other people,” Abdullah was quoted as saying late Thursday by the state Bernama news agency.

Nearly six months of negotiations with French car giant PSA Peugeot-Citroen for an alliance collapsed in March while talks with Mitsubishi of Japan have also been unsuccessful.

Abdullah had said earlier that Malaysia would talk to US motor firm General Motors if talks with Volkswagen were to fall through.

The news came as Proton posted larger than expected net losses of 591.36 million ringgit (174 million dollars) for the year to March 2007.

The carmaker blamed weak auto sales amid stiff competition and higher production costs for a reversal from the year earlier profit of 46.69 million ringgit.

“They have to turn around. They cannot be going on making losses,” Abdullah said of the results.

“They have to do whatever they think is necessary,” he added, when asked if Proton needed to revamp its top management.

The government is under intense pressure to forge a partnership between Proton and a foreign auto manufacturer to provide the ailing company with expertise to arrest a sharp decline in market share.

It has so far missed two self-imposed deadlines to find a partner for Proton and the government Friday set a new timeframe.

“We will decide on the partner for Proton within the next three months,” Second Finance Minister Nor Mohamed Yakcop was quoted saying by Bernama.

Malaysia owns 59 percent of Proton and analysts have partly attributed difficulties in forging partnerships over the government’s reluctance to cede control of such a key national company to foreign hands.

A previous round of talks with Volkswagen broke down in January 2006 after Proton rejected what it said were “inappropriate” plans by the German carmaker to exert control over Malaysian firm.

Three Malaysian automotive companies have expressed interest in acquiring all or part of the government’s stake.

Analysts, however, said a local partner would not provide Proton with technology to develop new models or help expand its markets overseas.

“The end game is that Proton has to get a foreign partner. A local partner will not solve its woes,” Kurnia Insurans chief investment officer Pankaj Kumar

“The Malaysian market is too small. Proton has the production capacity and if it’s not utilised, it’s a waste,” Pankaj told AFP.

Despite the prospect of a deal with General Motors, analysts also said Proton’s bargaining power had decreased with the US company the sole foreign firm left in the picture.

“Even if GM is still at the negotiating table, we are no longer excited about an alliance as GM is struggling to regain its global market share and in Malaysia,” investment bank CIMB said in an advisory to clients. – AFP/ir

On the hand, this was Khazanah Holding Bhd. CEO Dato’ Azman Mokhtar’s statement on the matter is rather different. Azman said Proton is still very much game along VW’s avenue, which is still showing interests (uploaded from The Star also) :


Khazanah sets year-end target for Proton revamp

Khazanah Malaysia Bhd chief executive officer Datuk Azman Mokhtar outlines what the national investment arm intends to do to address the problems at some of the companies in which it has interests. He has pledged to complete by end of the year the restructuring of Proton Holdings Bhd. He also talks on Malaysia Airports Holdings Bhd (MAHB), the UEM Group as well as Time Engineering Bhd and its unit Time dotCom Bhd.


Khazanah is the major shareholder of Proton but we are not the only shareholder. You have to recognise that Proton represents the manifestation of the Government’s industrial policy for the past 20 to 25 years.

It is the instrument of economic and industrial policies.

As shareholders, first of all, we are very concerned with its performance, including the decline in operations, financials, as well as structurally. No, we were not surprised with the results.

What have we done about it? We have representatives on the board. The management is doing its best to turn some of these things around but there are structural issues. As the major shareholder, we take primary responsibility for the structural and shareholder issues.

In that regard, we have done our studies and we are very clear on what needs to be done.

We need a strategic alliance. All the reported interested parties, including Volkswagen AG and General Motors (GM), are still in the picture.

The Prime Minister (on Thursday) was referring to VW’s indication for a meeting in late March or April.

We briefed the PM today (yesterday) to explain that talks indeed were ongoing and meetings have been set. It does not contradict the PM. Discussions are very much on. VW is still interested.

This month, meetings will continue between the interested parties and us. My team is determined to solve this as soon as possible and certainly by the end of the year.

Several local parties have declared their interest and they remain in the picture. The door is open even to the locals as this is a public sale and a free market. It is not inconceivable to have both a foreign and local partner.

We are looking at narrowing down the choices of both international and local strategic alliances.

Khazanah is willing and able to do a strategic alliance. Basically, we will sell some equity. We will be happy to share and work on a collaborative model in terms of management to bring scale, technology and also considerable local capabilities that have been built over the past 20 years.

We are willing to look at the control of certain parts of the business, for example, the manufacturing side. It also means that we need to retain certain things, which the foreign partner will be happy to retain, for example, the distribution and the brand.

There are still a lot of positives. Malaysia is still the largest passenger car market in the region and the Afta (Asean free trade area) liberalisation is happening.

Proton also has many valuable assets, including the plant and the capabilities of its franchise, as well as land value.

If we need to sell, we will sell. We will sell for financial value but we will sell it in a responsible manner because we’re carrying the responsibility of ensuring that the national auto sector has its best chance of being put on a sustainable path.

What if there is no strategic partner? Then we will look at the financials, which will be an issue of price. On the other hand, there is a Government decision that needs to be made that looks at the strategic and national objectives.

The Government will be making a decision based on the potential buyer is and who can carry out the national auto policy interest. We will be making our recommendations to the Government.


There exists a major discrepancy in where Proton position is with regards to the talks with Volkswagen. Clearly illustrated the Prime Minister, who is also the Finance Minister and de facto Chairman of Khazanah Holdings Bhd. has not been getting the accurate and most recent information. It seemed he has been insulated of information.

So what was his constant demand “to work with me not for me” all about, if he had been kept away from the right information on the issues that supposed to be at the tip of his fingers? Is it him or people around him?

Either which, does not sound good for the country.

When asked, the meeting with Volkswagen Chairman had always been a term of reference for the decision. Is the fate of Proton having a meaningful win-win relationship with Volkswagen is based on the German auto giant Chairman’s meeting with the Malaysian Prime Minister aka Khazanah Holding Chairman? Is this the same man who on his official visit to Venezuela called it “New Zealand”, infront of Hugo Chavez and days later “Bolivia” and “Vietnam”? Is this the same man who in the recent IAP meeting when one of the expat CEOs talked about support services, his reaction was “sports centre”?

Thinking the fate of Proton rest on the decision of someone who canceled the Scenic Bridge project for all the mis-informed reasons, gave me a fright.




Published in: on June 2, 2007 at 14:19  Comments (7)  

More Islamic bashing following Lina Joy verdict

This was what veteran journalist and one time Chief Editor of Berita Harian, Dato’ Ahmad Reejal Arbee’s take on the highly sensational and controversial Lina Joy case.

This was uploaded from Berita MyKMU, :

Datuk Rejal Arbee:

More Islamic bashing following Lina Joy verdict

Contributed by rejal on Friday, June 01 @ 20:37:28 MYT

Looks like the season for Islam bashing is here again. You cannot but help come to this conclusion after going through the endless comments denouncing Islam arising from the Federal Court’s majority decision over the Lina Joy case. One website, Malaysia Today which gets about 2 million hits a day posted more than 10 threads discussing the verdict.  


The picture given in the more vicious comments posted in those threads is that the Muslims are intolerant. The verdict has compromised the constitutional provision of guaranteeing freedom of worship and that the fundamental rights of a person was denied. Some even describing it as a dark day for human rights and religious freedom in Malaysia.

Some of the postings even pontificate that Islam advocates the death sentence against Muslims who renounced the religion attributing it to the Quran. One posting even claimed that Saudi Arabia periodically beheaded Muslims who converted to other religions. If this is so then how do you explain another posting claiming a Saudi girl had converted to Christianity to marry an Austrian working in the Kingdom. These postings show that some of the comments made in the various threads are very irresponsible.

The fact is there is nothing in the Quran which prescribes death to any Muslim who converts to another religion. Mohammad Hashim Kamali a Syariah Scholar at the International Islamic University quoted verse 137 of Surah An Nisa (Chapter 4 of the Quran) to debunk arguments that the Quran indeed prescribes the death penalty for apostasy.

“Those who believe, then disbelieve, then believe again, then disbelieve and then increase in their disbelief – God will never forgive them nor guide them to the path”. Kamali explained: “The implication is unmistakable. The text would hardly entertain the prospect of repeated belief and disbelief if death were to be the prescribed punishment for the initial act.”

No one has been sentenced to death solely for renunciation of faith unless accompanied by hostility and treason or was linked to an act of political betrayal of the community.

Nonetheless arising from this verdict there is paranoia among the non-Muslims including the western press accusing Malaysia of succumbing to Muslim extremists’ pressures. Their conclusion: religious freedom has taken a beating in this country and that Islam is indeed intolerant.

But what are the facts.

The Federal Constitution do indeed guarantee freedom of worship to everyone in this country. However this landmark case gives a distinction in such freedom accorded to Muslims and non-Muslims. For the non-Muslims the freedom is unquestionable. That is he can profess whatever religion that he wants including changing his religion to another. So what is there for the non-Muslims to complain?

But for the Muslims freedom of worship is not given in the absolute. A Muslim who wants to convert needed to follow certain procedures set out by the various Syariah Enactments in operation in the various states. What the Federal Court sets out then was that a Muslim wanting to relinquish his religion needed to apply to the Syariah court for a declaration. He should not try to get recourse from the Civil Court.

Not many know that before this case became a cause celebre there had been Muslims who had converted to other religions and allowed by the Syariah Court without any fanfare. Lawyer Pawancheek Merican who heads Defenders of Islam, a coalition of 80 Muslim non-governmental organisations, set up following a spate of religious disputes that have strained race relations in Malaysia believed that some 15 to 20 Muslims have been allowed to leave Islam officially through the Syariah Court. Thus rightly Lina Joy still have some recourse.

One posting quoted the Malaysian Islamic Youth Movement (Abim) President, Yusri Mohamad, as providing good advice to those who are “aggrieved in any way” with any part of the existing (Islamic/Muslim) arrangement to “choose other less confrontational and controversial approach towards change and reform”.

He said: “We believe the court procedure is an unhealthy one because such issues should be avoided (at the courts) as all confrontational approaches should be shunned.”

“We also plead that those hoping for an opposite outcome to reconsider their position and to consider modifying their expectations to suit what is good and more sustainable considering our realities. It is our belief that it is wrong for us as Muslims and Muslim associations to tolerate any injustice in the name of Islam.”

But the problem is that for one reason or another people behind Lina Joy had seen fit to take a confrontationist stance in so far as her conversion is concerned by bringing it to the Civil Court.

A posting by a Voice in the Malaysia Today website summed up what some Muslims believe: If these are private issues, why is the American based Beckett’s funding her defense and expensive legal team? Why are certain deviant Muslim groups getting Konrad Adreneur Foundation’s funding and assistance? Why is Singapore sympathiser New Straits Times and Sun giving much voice to those super liberal Muslims and refuse the right of replies by progressive and more authoritative Muslim groups?

(This I can vouch as several letters I sent to the NST and the Sun in response to certain views and accusations made against the Malays had on a number of occasions been spiked, never seeing the light of the day.)

Malaysia Today also carried a posting from Time saying the Lina Joy verdict, which will likely become a precedent for several other pending conversion cases involving Muslims, is seen by many in Malaysia as evidence of how religious politics are cleaving the nation, with a creeping Islamisation undermining the rights of both non-Muslims and more moderate adherents to Islam.

The writer says that Islam is so often partnered with extremism and autocratic governance, with Malaysia held up as a model of a moderate Muslim nation committed to safeguarding the rights of its diverse population. That verdict could now undercut that reputation, so the writer says

“To some non-Muslims, Wednesday’s judgment spelt a setback for religious freedom in Malaysia. ‘I think it’s a major blow,’ opposition politician Lim Kit Siang was quoted as saying by Reuters. ‘It casts a large shadow on civil liberties and the constitutional rights of Malaysians.’

Unfortunately such characters continued with their bigoted views even though the reality is quite different. There is no question that freedom of worship is well and truly functional among all Malaysians.

But the question is what is the objective of Lina Joy or those behind her to test the case right up to the Federal Court, the highest court of the country. And what is the agenda of the group funding the case? Why are these groups so intent in trying to embarrass the country and the practice of Islam here?

Arising from the verdict, Malaysia is now labeled as being intolerant and not practicing freedom of worship. And the rights activists has now accused the court of failing to address concerns over religious freedom in the country.

Thus foreign reports gleefully said the court’s verdict comes amid mounting racial and religious tensions in multiracial Malaysia, where minority religious groups fear their rights are being undermined, even though the country is traditionally seen as moderate. But the reports steer clear of how the rights of non-Muslims are being undermined when they can profess whatever faith they desire.

Looking at it from another perspective what is the position of Lina Joy herself? Everybody knows she has renounced Islam and is thus no longer a Muslim but her IC still states her to be so. What then is the implication? If during fasting month she eats in public, would she be so charged as a Muslim even if she has renounced the religion and is not required to fast?

The fact is not many of those who are born Muslims want to renounce Islam. Most of the problem comes from people who convert because they want to get married to a Muslim. When the marriage failed and ends in divorce the convert then wants to return to his former faith. And this result in problems.

A lawyer in a letter to cyber newspaper, Malaysiakini said he has on his hands, a few cases of Muslim converts who wish to return to their previous religion. What does this show? A lot of those who convert to marry a Muslim is not given enough education and guidance to strengthen his faith in the religion so that even when the marriage ends in a divorce, the convert should faithfully remain a Muslim because of his belief. Relinquishing of the faith is an indictment of the failure of the various bodies entrusted with this responsibility not shouldering their duties well.

This should also be a reminder that converting to Islam is a serious thing. It is not just something of a whim. Even if the conversion was done out of necessity because of marriage, the convert’s belief in the religion should be strengthened with stronger faith in time. So that even when a marriage ends in failure the convert will remain a true Muslim and not revert back to his former religion.

For the Malays there is another dimension to the problem. Constitutionally a Malay is also a Muslim. Once he ceased to be a Muslim he is not longer recognised as a Malay under the provisions of the Constitution.

Rejal Arbee
1 June 2007



Why so much opposition comes from the non Muslim Malaysians on this case? Their ignorance on the religion, provisions of law, value system that the Malay Muslim adhere to and/or sensitivities of the Malay Muslim majority at large? Is this the Kurang-Ajarness and arrogance that should be taught with methods like the deployment the heavy hand of law or other worse avenues?

This look like is just phase one of a long prickly ride.

More effort for everyone, especially the non Muslim Malaysians to re-trace everything (learn the culture, sensitivities and value system of the Malay Muslims – the majority of Malaysia) all over again and do the positive engagement. These ‘hostilities’ and feeling of distrust are no where good for the Perpaduan and unhealthy for the nation building process.

So if those who are not involved with this case withdraw their claws, blades in the scabbard and those at the other end of the line will lower their shield and slowly release the high strung bows.

No more stories about pro Article 11 movement people refusing ABIM’s invitation to sit down and discourse. Work towards getting a solution.


Published in: on June 2, 2007 at 04:23  Comments (12)