Proton Pressing for Malaysian Government Assistance

Privately owned automaker Proton is reported seeking 3 billion ringgit ($915 million) from the Malaysian government for a turnaround plan based upon development of new vehicles, including an electric car.

International Trade and Industry Minister Mustapa Mohamed confirms the Proton request, telling The Star newspaper it is being studied.

The request “is still a work in progress,” Mustapa says without providing details.

The Star reported earlier Proton so far has been unsuccessful in seeking up to MYR3 billion from the government and government-owned Petroliam Nasional for the turnaround plan. It says the automaker has committed MYR3.8 billion ($1.16 billion) in investments through 2016 but needs more capital to be competitive and realize the plan.

Proton, once majority-owned by the government, now is a unit of industrial conglomerate DRB-Hicom.

Mustapa says companies in general are eligible for three types of incentives from the government: “pioneer status” tax incentives, R&D grants and incentives for training.

He says the request from Proton is not unusual, but there are limitations as to whether incentives are given.

“These incentives are available depending on the government’s financial situation,” he says.

“We want to know if it fits into the country’s strategic direction. We also look at the merits of the case, the availability of funds at that point in time, and we will do a thorough due diligence and cost-benefit analysis.”

The Star says Proton approached the International Trade and Industry Ministry last year for funding, but was turned down because it couldn’t fully justify why it needed the subsidy.

Meantime, Proton has named Abdul Harith Abdullah as acting CEO to replace Lukman Ibrahim, who resigned for a second time. The first time he was persuaded to return by shareholders.