Media Statement (2)
by Lim Kit Siang  

(Parliament, Saturday): The government investment arm Khazanah Nasional Bhd yesterday denied that it has any plans to divest all or part of its existing stake in Proton Holdings Bhd.  in response to a media report stating that Volkswagen AG was in discussions to purchase a substantial stake of up to 30 percent in Proton.

Khazanah, a controlling and active strategic investor with a 42.7 percent shareholding in Proton, said it was constantly looking at ways to increase shareholder value and enhance investment returns.  It remained committed to supporting the board of directors and management of Proton in its current efforts to improve operations and the strategic position of the company, including the ongoing discussions with respect to a proposed alliance with Volkswagen AG.

The market has been abuzz with talk that Khazanah is in talks to sell up to 30% of Proton to Volkswagen AG in a deal worth up to RM1.65 billion or RM10 a share, which involved VW taking management control of Proton.

In Parliament early this month, I had referred to the interview given by former Proton CEO Datuk Mohd Nadzmi Mohd SallehNadzmi  that government over-protection   in the past two decades  had caused Proton to miss many opportunities to enter into strategic alliances with international automotive  corporations, resulting in many countries like Thailand which had started their automotive  industry much later to achieve greater success than Malaysia.

Nadzmi had disclosed that the leading American automobile maker General Motors had shown interest in acquiring a stake in Proton, but government overprotection had caused Proton to lose the opportunity to establish a strategic alliance with the world’s largest vehicle manufacturer.

General Motors later went into Thailand, and although Thailand started its automobile industry much later than Malaysia, our neighbour has achieved faster growth in the automobile industry  as to be regarded as  the “Detroit of the East” or the vehicle assembly and export hub of Southeast Asia.

The recent headline news in the global automotive industry about the £50 million  ($US87 million) sale of Britain's MG Rover to China's Nanjing Automobile Group Corp (which may be challenged in the courts by China’s biggest carmaker and rival bidder, Shanghai Automotive Industry Corp) illustrates  the new international trends in the automotive  industry.

Volvo, for instance,  though generally regarded as a Swedish car is owned by Ford while the traditionally British  Rolls Royce is now BMW-owned. Volkswagen has bought up Skoda, although it  is still generally regarded internationally as a Czech car.

There should be an informed public discussion and  debate on the future of the first national car, in particular  whether Volkswagen should be allowed to acquire up to 30% stake in Proton, as this is an issue which concerns the 26 million Malaysians and not just the Khazanah Board and the government

(30/07/2005)