The Premonition of the Two Pees

Revenge is best served cold. Government announced that Petronas Adviser position would be filled by Fifth Prime Minister Tun Abdullah Ahmad Badawi on 1 April 2016, upon the unanimous Cabinet decision of the sacking of Fourth Prime Minister Tun Dr. Mahathir Mohamad from continuing as the Adviser of the national oil corporation.

The Star story:

Friday, 25 March 2016 | MYT 5:18 PM

Pak Lah appointed Petronas adviser

KUALA LUMPUR: The Cabinet has endorsed the appointment of former prime minister Tun Abdullah Ahmad Badawi as adviser of Petroliam Nasional Bhd (Petronas), effective April 1.
Prime Minister Datuk Seri Najib Tun Razak said Abdullah was to succeed Tun Dr Mahathir Mohamad, whose service as Petronas adviser was terminated by the Cabinet on March 11.

“The decision to terminate the appointment of Tun Dr Mahathir Mohamad was made by the Cabinet since he was no longer supporting the present government, especially with the launch of ‘Deklarasi Rakyat’ (people’s declaration) together with opposition leaders,” he said in a statement here, Friday.

On March 11 the Cabinet unanimously removed Mahathir as Petronas adviser as it believed the former prime minister was no longer supporting the present government, hence he should no longer be holding any position related to the government. – Bernama

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There is also key changes in Proton too. Dato’ Harith Abdullah, who was appointed to the current post one month short of two years, would go back to DRB-Hicom and managing the distribution of the Group’s automotive and defence.

Ahmad Fuaad To Take The Helm Of Proton From April 1

PETALING JAYA: Proton Holdings Bhd will have a new CEO as of April 1, following an internal organisation by its parent firm, DRB-Hicom Bhd.

In a statement yesterday, DRB-Hicom said Datuk Ahmad Fuaad Mohd Kenali, currently DRB-Hicom COO for finance and corporate affairs, will become the next CEO of the national car maker.

Ahmad Fuaad, who has been a non-executive director at Proton since 2013, will be redesignated as executive director.

He will replace incumbent Datuk Abdul Harith Abdullah who will be going back to his previous role as DRB-Hicom’s COO of automotive distribution and defence.

Datuk Md Radzaif Mohamed, who was COO of the automotive distribution and defence in Abdul Harith’s absence, will take on the role of deputy CEO at Proton.

DRB-Hicom group managing director Datuk Seri Syed Faisal Albar said the movement of internal talent is consistent with the group’s policy to constantly develop capabilities to allow DRB-HICOM Group companies to always maintain fresh perspective to steer the group in the current challenging and competitive business environment.

– The Sun Daily

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Harith, isn’t he first executive who is a collateral in the tussle of policy and eventually strategic management of Proton. First it was Dato’ Lokman Ibrahim. Then Tan Sri Khamil who had given up the Chairmanship of the BoD of Proton in favour of Tun Dr. Mahathir.

Prime Minister Dato’ Sri Mohd. Najib Tun Razak initially was bullish about his mentor’s ascension to the Chairmanship of the Board of Director (BoD) of Proton.

The corporation which evolved from the national car project started in 1983 has been plagued by legacy issues continue even after it was taken over by DRB-Hicom in 2012. The stigma of troublesome products with poor or below average components, continuously looms the corporation which started from the national car project.

Despite launching three new models which themselves are competitive in bundled package offered, Preve’, Surpima and Iris, did not manage to corner its intended captive market.

Tun Dr. Mahathir, who started as the adviser after the DRB-Hicom take over and eventually came in as the Chairman of the Board of Directors (BoD) in May 2014, had partly blame the media for Proton’s poor reception by the market.

The Malay Mail Online:

Dr M accuses media of rounding on Proton unfairly

Wednesday March 19, 2014
11:37 AM GMT+8
KUALA LUMPUR, March 19 — National carmaker Proton has been at the receiving end of unfair criticism from the media, according to former prime minister Tun Dr Mahathir Mohamad.

Writing in his blog, Dr Mahathir said Proton gets very little protection from the government and is not the reason for the high taxes on cars.

Proton came to life during his leadership and has been losing market to Malaysia’s other car maker, Perodua.

“The raw hatred for Proton by some members of the media is quite unprecedented,” Dr Mahathir wrote.

“The protection for Proton is minimal. Most of the exemption from tax that Proton gets can also be obtained by foreign cars if they are prepared to have 90 per cent local contents ,” he added.

Local content is key because it has created nearly 250,000 high income jobs . Proton creates the type of jobs that can propel Malaysia towards developed nation status, he argued.

He said the government has only ever paid RM400 million to set up Proton while the carmaker borrowed RM800 million, which it has since repaid.

“Compare this with what a Japanese company and the GM in the US spent recently merely to develop and produce electric and hybrid cars – 5 billion US dollars each,” Dr Mahathir said.

While the government promised Proton RM200 million a year for research, little of this money has been tapped, he said.

Closing down Proton will lead to an outflow of RM20 billion or more, he added.

The outflow of Malaysian money due to import of cars every year is more than RM20 billion while exports of automotive components and cars earn the country RM4 billion, resulting in a net outflow of RM16 billion.

“Close down Proton and the outflow would be RM20 billion or more,” Mahathir said.

Earlier this month on March 5, The Star daily reported that Proton is trying to source as much as RM3 billion from Putrajaya and other sources in order for it to develop new models for the market.

According to the report, Proton had approached the government last year to help fund its model development but came away empty handed after failing to convince its officials. It then turned to national oil firm Petronas but was similarly unsuccessful.

In the report, the firm is said to require some RM3.8 billion in investments by 2017 and at least RM1.8 billion by next year.

The same day, Datuk Seri Mustapha Mohamed confirmed that Proton approached Putrajaya for funds but said the practice was not unusual among local firms.

The minister of international trade and industry declined, however, to divulge the purpose of the funds being sought by the struggling automaker, other than to say Putrajaya provides various forms of allocations to help local companies grow, including tax breaks, research and development grants, and training incentives.

Proton later denied the report, saying instead that it had previously applied for a research and development (R&D) grant from the Malaysian Investment Development Authority (MIDA), before the company was taken over by DRB-Hicom.

“Proton wishes to state that an article in one of the local English newspapers on Proton seeking development funds of RM3 billion from the ministry and Petronas is not true.

“The statement that Proton has committed RM3.8 billion until 2017 is also not true,” Proton’s corporate communications chief Nur Balkish Hood was quoted as saying in a statement by Business Times.

During its heydays in the 1990s, Proton accounted for nearly four of every five new vehicles sold, but has since witnessed its fortunes dwindle before being overtaken by second national carmaker Perusahaan Otomobil Kedua Sdn Bhd (Perodua) as the best-selling brand in Malaysia.

Proton was established in 1983 by former prime minister Tun Dr Mahathir Mohamad in his bid to jumpstart Malaysia’s shift towards manufacturing.

In 2012, it was sold to Tan Sri Syed Mokhtar al-Bukhary’s DRB-Hicom.

– See more at: http://www.themalaymailonline.com/malaysia/article/dr-m-accuses-media-of-rounding-on-proton-unfairly#sthash.LRGpxFkC.dpuf

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In reality, Proton sales dwindled even after the DRB-Hicom take over and introduction of three new models. This is not withstanding of the new Perdana, which is a rebadge of the previous Honda Accord model.

Proton attempted with lots of strategic moves like the recently announcement of a new engine developed by Ricardo of United Kingdom. This is not withstanding the fact that right after DRB-Hicom took over Proton, they acquired the Petronas-Sauber developed NE01 engine.

The dwindling brand through the years

The sales from the Federal Government, State Governments and GLCs have helped Proton in the past three years. Between 2012-2015, Proton managed to see 10,500 cars of various models (mainly Preve and Saga) which include 3,000 Perdanas.

That is approximately RM800million of outright sales by Government and GLCs. The after sales aggregated bills in the past three years, would probably tipped the turnover for the Proton Group  in the neighbour of RM1 billion ever since DRB-Hicom took over.

Now that Tun Dr. Mahathir has taken Prime Minister and UMNO President Dato’ Sri Mohd. Najib Tun Razak to court even for personal reasons, it is impossible to decouple the man as a member who recently resigned from UMNO and Chairman of Proton BoD.

It cannot otherwise be distinguished as Tun Dr. Mahathir would have to declare in court that he is the Chairman of the BoD of one of companies under the DRB-Hicom Group as his vacation.

It has also been argued that how could a corporation which the Chairman of the BoD is committed to toppling of the Prime Minister of Malaysia, continue to be a major automobile fleet vendor of further contracts from the Federal and State Governments and GLCs.

Probably Government should ponder seriously into other models such as Toyota Altis, Toyota Camry, BMW 520i and the brand new BMW 730iL with the efficient 260hp 2 litre engine as options to eventually replace the current fleet of Proton Saga, Preve and Perdana.

After all, Toyota is under UMW  and BMW is under Auto Bavaria, which is part of the Sime Darby conglomerate. Both of these Malaysian MNCs are under the PNB Group.

Any profits derived from Government and GLC sales could eventually be channeled through the various existing PNB unit trust schemes, especially ASB. 10.8 million Bumiputera investors and depositors are the end receiver of this.

Another interesting point to consider is that Toyota and BMW already introduced their array of hybrid cars in Malaysia compared to Proton. It would be very inspiring if all the senior Government officers and GLC management use hybrid cars.

Objectively, Tun Dr. Mahathir did not bring about positive result in his involvement with the national car project corporation, now under DRB-Hicom in the past three years. Realistically, three initially much-hoped top management executives left, within a very short span of slightly over three years.

Now that he has done obsessively too much to demonise and topple the leadership 0f Prime Minister Najib just within a very short span of a year, he is getting back  the brunt of what he threw back into his face without even causing  a dent. Inadvertently, the Fifth UMNO President made himself a persona non grata.

He should seriously consider sparing Proton, for the sake of the Group, its brand, loyalty, dedication and livelihood of the people within the Group.

 

Published in: on March 25, 2016 at 22:00  Comments (2)  

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2 CommentsLeave a comment

  1. This RM1billiong business Govt & GLC hv
    been propping is quite interesting. So much is spent on fleet and staff cars. That must be cash into Proton’s coffee spread over three years.

    That is not withstanding If I may clearly recall that online newspaper Malaysian Digest reported in Mid Dec, Proton has been paying off their vendors with unsold cars.

    So Govt gives cash to the neighbourhood of RM1b over three years and yet Proton’s cashflow and treasury position is actually far worse than 1MDB’s.

    Something that should be highlighted because Proton is under Tun Dr. Mahathir’s watch. And the good doctor has been running 1MDB down for cash flow issues when a corporation he is managing is no better and dependant on Govt business.

  2. […] is the right thing to do for Fourth Prime Minister because as the Chairman of the BoD for a company which benefitted to an aggregated sales of RM1billion over three …, he shouldn’t be over-zealous about ousting PM […]


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