Thursday, 26 July 2012

Cheaper cars will force Proton to compete

DAP economist Tony Pua says that by revamping the National Automative Policy, Proton will be forced to buck up

KUALA LUMPUR: Making cars cheaper through tax cuts would likely hurt national car maker Proton but this will force the ailing company to compete, said DAP national publicity chief and economist Tony Pua.

Driving Proton’s business down will likely be among the major opposition to Pakatan Rakyat’s proposal to reduce car prices by cutting duties as consumers will opt for cheaper imported cars as they are seen to be superior to its local counterpart.

The national car maker had seen its fortunes rapidly dwindling despite the protectionist policies which have had helped Proton keep its car prices comparatively low. But it is barely surviving in the increasingly competitive automotive industry.

Malaysians pay high prices for cars mainly because of the protection afforded to national Proton since 1984 and import, excise and sales taxes have translated into some of the highest car prices in the region.
Pua said revamping the National Automotive Policy (NAP) as announced by PKR strategic director Rafizi Ramli on Tuesday means Proton would have to buck up and offer consumers more.

“It will force local car makers to be more competitive,” the Petaling Jaya Utara MP told FMT.

“Why should they [Proton] be happy? They have been kept happy for the past three decades with very little to show and a huge burden to the man on the street,” he added when asked if Pakatan’s proposal would likely hurt Proton’s business.

Racial issue

A revamp of the NAP could also trigger a political backlash. Proton was Malaysia’s first Bumiputera car maker with a predominantly Malay workforce. Hurting its business will likely see right-wingers interpret it as a threat to Malay businesses.

Umno sympathisers and Malay hardliners Perkasa had already denounced the proposal as a threat to Proton, admitting that consumers are likely to go for imported cars instead.

“No one will want to buy Proton cars because the price of imported luxury cars will be about the same… and Proton employees will be upset at getting retrenched,” a news portal quoted him as saying.

But Pua said it was time that the automotive policy is drafted based on voter interests and not well-linked elites within the national car maker company.

“We do what is right for the country and for its people. We will do the country no favours by continuing to breastfeed a 28-year-old child. If the ‘child’ still wants to throw tantrums, then he needs to learn to fend for himself,” he said in reference to Proton.

Rafizi said on Tuesday that the proposal will be included in Pakatan’s election manifesto and be used as a major campaign issue for the federal opposition as it fights for federal power.

Malay car dealers associations have responded with scepticism, saying that Pakatan would either backpedal on its pledge or introduce a new taxing system as cutting duties and tax would slash government’s revenue considerably.

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