SECTION [B]: PROTON - A MISTAKE?

Is having a national marque the right move?
Could we be better off without national marques? This is a tricky question to answer. In terms of economic contribution, our automotive industry is nowhere close to Thailand's and Taiwan's. On the consumers' side, there is a huge disparity between the price and quality of vehicles that we are getting, all at the cost of protecting the national marques. On the other hand, one can argue that due to the creation of national marques, Malaysia has developed local capabilities in the automotive manufacturing sector that are ahead of Thailand or Taiwan. The question then is, why have the national marques not translated the capabilities into economic contributions?

A common argument put forward by Proton to defend its lacklustre performance is that Proton is a young company of just 20 years old. Well, let us take a look at Hyundai's milestone. Hyundai started in 1968 with a licensing agreement with Ford. In 1974, at the age of 6, Hyundai designed and manufactured South Korea's first indigenous four-wheeler, the Pony. By 1979, exports of the Pony alone stood at 31,486 units. By 1988, Hyundai had already exported 576,134 units of four-wheeler internationally, which is double what Proton is currently producing. As for Proton, it took 15 years to come up with its own vehicle. As for exports, Proton has yet to gain any significant foothold in any overseas market.

Table 1

Some viewed that the national car project should not have started because with domestic four-wheeler sales of 108,314 units in 1983, the local market was not big or economically viable enough to support a local brand. But why should we limit ourselves to the local market to achieve economies of scale when there is a world out there? Table 1 above shows the production and exports of a few countries in 1994. For South Korea, even as early 1985, 50% of the 263,000 units of four-wheeler produced were already exported.

So, a more appropriate question would be, is the current predicament that befalls our automotive industry the result of having national marques or is it due to mismanagement of the national marque (take note of the singular form) and poor and contradicting policies being introduced and implemented by the government? Over the last 20 years, by focusing on the yearly love affair of tweaking and playing with the excise duties and import tariffs, rather than developing the national marques through gradual liberalisation as done by South Korea, the Malaysian government was digging the graveyards for our national marques. Taking Thailand and Taiwan as examples, it was only with industry liberalisation that the industry sales increased tremendously.

Figure 1 : Thailand's Vehicle Sales


Figure 2: Taiwan's Vehicle Sales