This article first appeared in The Edge Malaysia Weekly on December 25, 2017 - December 31, 2017

FINALLY, Proton Holdings Bhd has found a foreign strategic investor in Zhejiang Geely Holding Co Ltd. China-based Geely, which has a track record of turning around Swedish carmaker Volvo Car Corp, is expected to breathe new life into the ailing national carmaker and bring back the glory days when it commanded the lion’s share of the domestic passenger car market.

Finding a strategic partner was the condition attached to the RM2.5 billion soft loan the government provided last year to keep Proton afloat.

In September, DRB-Hicom Bhd announced the sale of a 49.9% stake in Proton to Geely. It was said that the bid was a two-horse race between Geely and French carmaker Groupe PSA.

DRB-Hicom, whose earnings had been dragged down by Proton’s huge loss, also hived off its entire stake in Lotus to its controlling shareholder, Tan Sri Syed Mokhtar Albukhary, and Geely (50% each).

The deal valued the 49.9% stake in Proton at RM460.3 million. Proton will get the rights to the Chinese carmaker’s Boyue SUV platform.

However, the prized 250-acre land in Shah Alam (on which Proton’s main assembly plant is sitting) was carved out from Proton and continues to be wholly owned by DRB-Hicom, along with land in Glenmarie and several small parcels overseas.

Nevertheless, the Proton stake sale did not go down well with some quarters, including former prime minister Tun Dr Mahathir Mohamad. Dr Mahathir believes the liberalisation of the local car market has hurt Proton.

By the same token, the billions of ringgit from the nation’s coffers used to keep Proton afloat have made others wonder whether the money could have been better spent on projects that benefit the people.

Geely has succeeded in reviving Volvo. But sceptics say Proton could be very different from Volvo — for instance, the procurement policy. For that, the world will be watching the Chinese carmaker closely to see if it can pull another rabbit out of the hat.

Dr Li Chunrong
CEO
Perusahaan Otomobil Nasional Sdn Bhd

With over 30 years of experience, Li is a veteran in the automotive industry in Asia. However, he could face a challenging time looking for ways to turn around Proton.

Procurement policy, the vendors who supply automotive parts, and product quality are among the issues he will have to resolve, in addition to cultural shocks.

National carrier Malaysia Airlines Bhd has seen two foreign CEOs leave in less than two years. Will Li be able to stay in the driving seat long enough to complete his task? Only time will tell.

Tan Sri Syed Mokhtar Albukhary
Substantial Shareholder, DRB-Hicom

A man who needs no introduction in the local corporate scene, Syed Mokhtar is one of Malaysia’s richest men. He controls many strategic assets such as ports, power generation plants, sugar refinery, rice distribution and the national carmaker, Proton Holdings Bhd.

He has managed to find a foreign partner for Proton, which, in turn, helped save his flagship company, DRB-Hicom Bhd, from plunging deeper into the red.

The sale of the Proton stake to Zhejiang Geely Holding Co Ltd has been criticised by former prime minister Tun Dr Mahathir Mohamad, whom the tycoon is close to.  However, in an interview with The Edge in May, Dr Mahathir said he had not met Syed Mokhtar for months. He added that previously, they met almost every week.
 

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