KUALA LUMPUR – The impending collaboration between national car company, Proton, and a foreign strategic partner (FSP) will not only maximise the manufacturing capacity at both its Shah Alam and Tanjung Malim plants but also allow the company to compete effectively, regionally and globally.
The partnership will also enable Proton to compete with car manufacturers like Honda, Toyota and others.
Dr Irwan Shah Zainal Abidin, Director of the Asian Research Institute of Banking and Finance, said Proton had no other choice but to undertake a management paradigm shift as the country’s limited population of 30 million did not offer the manufacturer economies of scale to compete internationally.
Joining hands with a foreign strategic partner would not only result in increased production and sales but also help the car manufacturer carve a bigger market share.
“The time is ripe now for Proton to seek a partner so that they can together build up capacity and not depend on the government in future,” he said in an interview today.
Proton’s current market share is only a meagre 14 per cent compared with between 63 and 64 per cent in the 90s.
Irwan, who is a senior lecturer at the School of Economics, Universiti Utara Malaysia, said such a tie-up would give an edge to the foreign strategic partner to use Proton as a hub to tap the ASEAN market.
This will only benefit Proton, via technology transfer, and provide add value to local vendors in terms of engineering management expertise.
“We can learn their management skills and work culture. Indirectly, this will help Proton shift into higher gear.
In the long-run, Irwan said the Proton-FSP collaboration would help rescue Proton’s vendor network given the fact that orders for car components had dwindled drastically as sales were significantly off-target.
“So, if we have no joint-venture with any FSP, there is a possibility that these vendors will cease operations as the sales target cannot be met.
“The prospective FSP will inject capital into Proton, raise vendors’ activities and generate employment,” he said, adding that if the capacities at both the Shah Alam and Tanjung Malim plants are merged, production would rise to 400,000 units annually.
This will immediately enable Proton to have a wide reach as envisaged in the Regional Comprehensive Economic Partnership which potentially includes more than 3 billion people or 45 per cent of the world’s population.