Malaysia's venture in the auto industry gained prominence in 1983 when former Prime Minister Tun Mahathir Mohamad directed the establishment of Proton Holdings Berhad simply known as Proton. The company produced Malaysia's national car. But the company has fallen into tough times as competition shrinks its market share in the Asian country.
Today, the company is on the verge of near-bankruptcy but the Malaysian government will not allow that judging by their eagerness to sell their share in the car company to a foreign company.
"The government will not let Proton die because it is our national car and we need to preserve the country's reputation," said Hilmi Yahaya, the finance ministry parliamentary secretary to the parliament according to the national Bernana news agency as reported by Forbes.
To save the national car manufacturer of Malaysia, the government of the company is currently having talks with German automaker Volkswagen. Two rounds of talks between the Malaysian government and representatives of Volkswagen are in the books and the Malaysian government is expecting that the German automaker will consider their offer.
In saving Proton, the Malaysian government is looking for a company which will buy the 42.74 percent stake that the government has on the Malaysian automaker. Volkswagen definitely has that capability as it is the biggest European automobile manufacturer. Apart from that, although General Motors is offering to buy the Malaysian's government share in Proton, the latter seemingly favors Volkswagen as the partner of Proton.
But will the partnership with Proton be beneficial to Volkswagen? Some analysts say that Volkswagen has to think about the potential boost that they will have in the Malaysian auto market. Although the said Asian market is declining for the past year, Volkswagen can have the upper hand in the market if it partners with an automaker with the backing of the local government.
On the other hand, Volkswagen is expected to spend some serious money in purchasing the share of the Malaysian government in Proton. Another thing is that, Volkswagen will have to find a way to fit Proton into their operations. Would they make Proton their arm in Southeast Asia or will they start rebadging Proton automobiles and start selling tem outside of Malaysia? The possibility is endless for both automakers.
Both parties though are not in a hurry to seal the deal. "It is just like a marriage," said International Trade and Industry Minister Datuk Seri Rafidah Aziz in an interview with Malaysia's national news agency, Bernana. "You just don't get married. Check first and discuss. Similarly, you cannot sell off just like that, it must be a right partner who knows the industry. Not just somebody that has money," she added.
Surely this is what Volkswagen is also doing. Although it is expected that a decision concerning this issue will be reached by the end of the year, the German automaker is surely already checking out the possibility of the venture. Only time will tell where the will point the way Volkswagen will be taking.
Although the talks between Volkswagen and the Malaysian government is going smoothly, Aziz pointed out that there are still things that needs to be ironed out in the negotiation. "I don't know the details on what they are negotiating. What I know is that there are some requests from the Proton side and some requests from the Volkswagen side that are not resolved," she tells Bernana.
