Government will not interfere in Proton stake sale

TheEdge Fri, Sep 30, 2016 09:37am - 6 years View Original

This article first appeared in The Edge Financial Daily, on September 30, 2016.


KUALA LUMPUR: The government will not interfere in the sale of a stake in Proton Holdings Bhd to a foreign strategic partner, said Second Minister of International Trade and Industry Datuk Seri Ong Ka Chuan.

“They are free to make their own decision,” since Proton is now privately owned by DRB-Hicom Bhd, he told reporters at the sidelines of the SME Solutions Expo yesterday.

Ong said Proton had previously talked to a Chinese automobile manufacturer, however he did not disclose its identity.

“I think they are looking for the best offer. We are not going to interfere,” he added.

Ong also pointed out that Proton will have to work with foreign carmakers, as the Malaysian market is relatively small, compared with the US or China markets. “We only have a combined automobile market of 600,000. [The] Malaysian market cannot support the research and development expenses needed in the car making industry,” he said, adding that this compared with China and the US’ markets of 24.3 million and 17 million.

Aside from having to work with international players, Proton has to be competitive in terms of quality and look beyond the local market.

Proton chairman Datuk Seri Syed Faisal Albar said on Wednesday that Proton has shortlisted five foreign candidates as potential strategic partner and hopes to select its collaborator before the middle of next year.

He said the national carmaker expects to make a final decision “before mid-2017 or even earlier”.

Syed Faisal, who is also the managing director of DRB-Hicom, said although having a strategic partner means DRB-Hicom could “give up some equity stakes”, it will remain as a “substantial shareholder” of the carmaker.

Getting a strategic foreign partner was among the conditions set for Proton to receive a RM1.5 billion soft loan from the government earlier this year.

Earlier reports have said Volkswagen AG’s Skoda unit, Suzuki Motor Corp, Renault SA and PSA Group (whose subsidiaries include Peugeot and Citroen), and Chinese automaker Geely were likely candidates. Geely owns Swedish brand Volvo.

Shares in DRB-Hicom fell four sen or 2.63% to RM1.48 yesterday, giving it a market capitalisation of RM2.86 billion.

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