Proton chief tells all in controversial Agusta sale

Proton chief tells all in controversial Agusta sale


SHAH ALAM: Proton Holdings Bhd yesterday revealed the details surrounding the controversial sale of MV Agusta for one euro, saying the Italian motorcycle maker was headed for bankruptcy even after the company bought it and that further support for Agusta would only drag Proton down.
Members of the current board said the previous board which approved the purchase was not fully aware of the terms of the shareholders’ agreement and that Agusta failed to deliver the synergies expected.
“This was a decision that was thoroughly considered. There was urgency in the matter but it was not hasty. It took five months to come to that point and we hired external consultants and lawyers and, looked at the possibility of restructuring Agusta but found out it was not a solution,'' said Proton chairman Datuk Mohammed Azlan Hashim.
In a briefing for the media, Azlan, together with board member Badrul Feisal Abdul Rahman and managing director Syed Zainal Abidin Syed Mohamed Tahir, recounted the process that led to the disposal of Agusta.

First wind

Azlan said the board first got wind of the ongoing troubles at Agusta in early August last year when the Proton representative in Agusta said the Italian company was in dire straits and required additional funding.
The group exco at that time, which was formed to take over the daily running of Proton after former CEO Tengku Mahaleel Tengku Ariff left, decided that a detailed review was needed and Credit Suisse First Boston, along with an Italian law firm, were hired to advise Proton on how to move forward.
“This was also the first time we discovered that in addition to the 70mil euro investment in Agusta (which was to buy a 57.8% stake in Agusta), the Proton group had subsequently injected further sums of money into Agusta,'' said Azlan.
The advances were made through two wholly-owned Proton subsidiaries, Proton Cars UK and Perusahaan Otomobil Nasional Sdn Bhd (PONSB).
Azlan said Proton Cars UK advanced nine million euros to Agusta and PONSB had given a credit line of up to 30 million euros. The PONSB advances, of which 15 million had been drawn down, were structured along the lines of a parts purchase assistance programme.
He said the boards of those subsidiaries that approved the funding basically comprised management and from a governance perspective, the board was empowered to do what it wanted.

CSFB review

CSFB had then done its review of Agusta and what it found was “scary” as it found that the existing business model of Agusta was neither operationally nor financially sustainable.
Agusta was unlikely to deliver significant economies of scale even when integrated with Proton.

“Anything can be made to work but it depends on how much money and time you are prepared to spend. If we want to make it work into an operating cashflow positive position, then we have to be prepared for a substantial backing for an extended period at considerable financial risk. In other words, there is no guarantee,'' he said.
Azlan said the board did not know how long it would take for Agusta to turn around neither how much, in total, it would cost.
Faced with the prospect that Agusta would have to pay 154 million euros (the outstanding debt owed plus a claw back on some of the haircut given by previous creditors) should it fail to meet its scheduled debt payment of 16mil euros at the end of December 2005, Proton had a tough decision to make.
Proton was told by its newly appointed adviser CSFB that for Agusta to continue surviving, it needed 40 million euros in the near term and up to 66 million euros until Agusta is able to support itself.
“This is clearly beyond Proton's means,'' said Azlan. He said those estimates were based on certain assumptions and if any of those were not met, the amount would have been higher.
Problem to turn Agusta around


Another problem the Proton board had to deal with was how to turn around Agusta operationally as the company had lost 120 million euros in the last six years.
“This is a niche product. Average sales were 14,425 units a year over the past six years. The breakeven sales number as computed by CSFB was 43,894,'' said Azlan.
“Even if we had the money to invest and could produce 44,000 bikes, could you sell 44,000 bikes? This is not the more you produce, the more you can sell.
This is not a product that sells like hot cakes. This is a highly specialised product and expensive product. This is the Ferrari of motorbikes. Many people desire a Ferrari but how many people can afford to buy one?'' asked Azlan.

Difficult to restructure

Azlan said when Agusta was found to be in a precarious financial position, the initial approach by the Proton board was to see whether Agusta could be restructured.
He said that route was “extremely difficult” because of restrictions such as veto rights and anti-dilution clauses by minority shareholders, and that the previous management was still entrenched in the company.
With creditors overdue and independent directors at Agusta hinting that perhaps Agusta should be wound up as a bankrupt company, Azlan said the only option then left for Proton to extricate itself from Agusta without spending more cash was to sell its stake in Agusta. But it had to sell that stake to a credible party with financial means.
He said six options were deliberated and only one meant no further capital injection by Proton. That option, which involved pledging Proton's stake to Banca Intessa, was shot down by that bank as they felt the Agusta shares were worthless. Bank Intessa was the financier to Agusta.
The Proton board then asked CSFB to find a buyer before the end of December 2005 so that Proton would not have to pay the 16mil euros debt payment and pour in further funds into Agusta.

New buyer found

By Nov 24, GEVI approached Agusta's management with a proposal to acquire Proton's stake. Azlan said Proton had also obtained a proposal from another company, wishing only to manage Agusta and to take the upside from any recovery but not share the downside risk.
GEVI said it will buy Agusta for one euro and inject 30mil euros in total, with 15mil euros of that as working capital. Proton sold its stake in Agusta to GEVI on March 2, 2006.
With hindsight, Azlan said the vehicle Proton used to acquire the 57.8% stake in Agusta - Proton Capital - was not optimum.
“It was not ring-fenced. Proton Capital was just the conduit that put the money into Agusta. That's why our investment of 70mil euros was exposed. All Proton Capital had was the shares of Agusta instead of acquiring (the assets and liabilities) from Agusta,'' he said.
“Structure is just as important as intention. Nothing has been done post acquisition to realise the intention into reality,'' he added.

Expensive lesson

Looking back, Azlan said the Agusta episode was an expensive lesson for Proton.
“We do not want a recurrence of this. To an extent, the financial loss is damage to Proton,'' he said.
The second lesson from this was the loss opportunity as the amount of money pumped into Agusta - 100 million euros in total - would have been better used at Lotus, which was very much involved in auto manufacturing and engineering.
“They have the capabilities, name and brand. This type of money would be better used in building up that company and the money could have also gone into product development,'' he said.

Better use for money

Syed Zainal said that money lost on Agusta would have enabled Proton to hire engineering companies to develop two platforms for Proton.
“Going forward, we should focus on the real problems, which is coming up with new model variants and strategic alliances. Obviously today, going into this venture would have been a very big drain on our resources both financially and time. Too much time has been spent on Agusta. Lotus should be the real focus point on where to put our energy and resources into as the have styling, design and cars,'' he said.
“Our focus should be on getting back the market share in Malaysia, how to capture the Asean market and deal with the National Automotive Policy.''
Azlan said attempts to communicate Proton's views to Tun Mahathir Mohamad has been made but it has not been able to do so.


Update: Theedge 30th Mar 2006
Proton statement on the disposal of interest in MV Agusta Motors SpA

1.0 Background
1.1 Proton Holdings Berhad (Proton) had announced on March 2, 2006, that it has completed the sale of loss-making Italian motorcycle maker MV Agusta Motors SpA (MVAM) to GEVI SpA, ending months of negotiation between both parties. The rationale for the sale of MVAM was to enable Proton to focus on its core business and to minimize its exposure in the loss-making investment in MVAM.
1.2 Despite the release, there continues to be uninformed speculation surrounding the disposal. In view of these uninformed speculations, Proton would now like to offer a more detailed explanation on the disposal.
1.3 The disclosures provided herein are meant only to clarify certain issues and speculation pertaining to the disposal of interest in MVAM. It is not meant to cast aspersions on any party that may have been directly or indirectly involved in the acquisition of the interest in MVAM.
2.0 Disposal on interest in MVAM
2.1 Why Proton took the decision to dispose its interest in MVAM
2.1.1 Proton had, through its wholly-owned subsidiary, Proton Capital Sdn Bhd (Proton CAP) acquired a 57.75% interest in MVAM in 2004. The acquisition was based on the assumption, amongst others, that it would enable access to certain technologies as well as help diversify the Group's revenue stream. Unfortunately, the acquisition of MVAM was not able to deliver on these expectations and is unlikely to be able to do so without significant investment of financial and managerial resources by Proton CAP. Instead, as discovered in August 2005 by the Group Executive Committee, MVAM's financial situation had deteriorated significantly and had threatened to pose significant financial risk to Proton Group. It was this threat together with other considerations that had prompted Proton CAP to re-evaluate its investment in MVAM.
2.1.2 Initially, a restructuring of the investment in MVAM had been considered. However, as a result of the structures put in place to govern the inter-relationship between Proton CAP and the minority shareholders (i.e. Shareholders Agreement, By-Laws etc.), any proposed restructuring would not have yielded a satisfactory solution. In fact it would have merely increased Proton CAP's financial exposure to MVAM without any reciprocal gain in control.
2.1.3 Proton CAP had also subsequently considered continuing to support MVAM, both in the immediate-term as well as until such time that MVAM is able to sustain itself, at which time the investment would be reviewed. Again, as a result of the structures put in place, the funding needs of MVAM would have had to be borne solely by Proton CAP. To begin with, at the time the matter was being considered, the scheduled frozen debts remaining to be repaid amounted to approximately €107 million (RM477.28 million). Estimates prepared in September 2005 also suggested that if Proton were to continue supporting MVAM, it should be prepared to inject an additional €40 million into MVAM as working capital until end-September 2006 and up to €66 million until such time that MVAM is able to sustain itself. All of this assumes that the appropriate bank facilities would be made available to MVAM.
2.1.4 After due consideration, the options were found to be prohibitive in terms of further financial cost, with no certainty whatsoever that MVAM could be turned-around on a timely basis. In addition, the rationale given for the acquisition also now appeared to be unattainable, thereby any further investment into MVAM could not be justified. In any event, the financial requirements for continued involvement in MVAM had increased substantially.
2.1.5 Meanwhile, Proton, through Proton CAP, had also engaged a global investment bank to review and advise it on its investment in MVAM. A review of the acquisition by the investment bank concluded the following:
a) MVAM's existing business model is neither operationally nor financially sustainable.
b) Developing MVAM into an operating cashflow positive business will require: (i) substantial backing from Proton; (ii) over an extended period; and (iii) will involve considerable financial risk.
c) Integration of MVAM's operations with those of PROTON is unlikely to deliver significant economies of scale or synergies to the combined business.
d) There is a very real possibility that MVAM will fall into bankruptcy, with significant commercial, financial and reputational risk to Proton.
2.1.6 Independent legal advice on the operation of Italian law was also sought by Proton CAP. In brief, Proton CAP was advised that there is a real risk that in the event MVAM goes into bankruptcy and legal proceedings are initiated to recover the debts due to the creditors, the corporate veil between Proton CAP and Proton could be pierced if it is shown that PROTON had exercised its "direction and control" to the detriment of MVAM.
2.1.7 After due consideration of the advice given and the adverse financial situation at that point of time, given the limited options availale (as discussed in paragraph 2.1.2 - 2.1.3), it was clear that the most optimal route for Proton CAP to take was to exit MVAM completely via a disposal of its interest in MVAM to another party that has the financial means (or at least is able to secure funding for MVAM) to continue supporting MVAM. In addition to this, the new party that takes over must also have a credible plan that could convince MVAM's banks, and more importantly the local legal authorities of their ability to assume the responsibilities of Proton CAP in respect of MVAM, a company that has cumulative losses over the last six years in excess of €118 million.
2.2 The robustness of the process by which the decision to dispose was arrived at
2.2.1 Proton CAP took the decision to dispose off its interest in the troubled Italian motorcycle maker after careful consideration of the financial as well as operational implications to the Group, both in the immediate as well as long-term. The decision to dispose of the interest in MVAM was taken after five (5) months of intense assessment and discussions at the highest level, beginning in August 2005. During this time, the Board of Proton as well as that of Proton CAP had full access and opportunity to engage with the advisers on the matter.
2.3 The consideration for the disposal
2.3.1 The 57.75% stake in MVAM was disposed off to GEVI SpA (GEVI), a special-purpose vehicle (SPV), for a nominal sum of €1. In addition to this, GEVI as the new majority shareholder, will "step in" and assume responsibility for MVAM's current and future liabilities, as well as secure the necessary funding for the company, thereby reducing the possibility of MVAM falling into bankruptcy. For information, MVAM's current liabilities at that time amounted to approximately €107 million in frozen debts plus other financial and trade creditors.
2.3.2 PROTON CAP had naturally sought a higher value for its stake, prior to the disposal to GEVI, when it instructed its investment bankers to seek for potential buyers for the 57.75% stake in MVAM. However, given that MVAM had negative shareholders' funds, was cashflow deficit, track record of years of losses and no concrete business plan moving forward, a valuation other than a nominal sum would have been extremely difficult to obtain.
2.3.3 The valuation of €1 for Proton CAP's stake in MVAM was supported by the actions of MVAM's existing bankers when they rejected the application for a loan to finance MVAM's working capital, using the MVAM shares as collateral as they viewed the shares as worthless.
2.3.4 Furthermore, the offer made to purchase Proton CAP's shares in MVAM for €1 by the founder of MVAM (who is also one of the minority shareholders of MVAM), also reinforced the notion that attempts to obtain any valuation other than a nominal sum is unrealistic. Therefore, although the Board had mandated the investment banker to try to obtain the highest value possible, in the end, it was not possible.
3.0 Antecedent issues
3.1 Did Proton lose RM500 million from the disposal of MVAM
3.1.1 There has been a lot of uninformed speculation as to "losses" incurred as a result of the disposal of MVAM. The fact of the matter is that the losses were incurred at the time of the acquisition of MVAM, not at the time of its disposal. The Investment Agreement to acquire the interest in MVAM was signed on July 7, 2004 and the acquisition was completed on Dec 1, 2004. The purchase consideration amounted to RM367.6 million. This entire amount of the consideration was treated as goodwill as MVAM was in a net liability position. Consequently, this entire amount was written-off immediately in the current financial year of the acquisition (i.e. financial year ended March 31, 2005).
3.1.2 The additional provisions relating to MVAM in the accounts of Proton Group for financial year (FY) 2005/06 thus far amounts to RM136.2 million. This too does not have anything to do with the disposal but relates to the loans and advances extended via two subsidiaries within the PROTON Group. These loans were extended by Management after acquisition of MVAM.
3.2 Why information was not released earlier
3.2.1 In so far as the regulatory obligations of a public listed company are concerned, Proton has complied with all necessary requirements of Bursa Malaysia. However, addressing the matter publicly was not an option until now, as the agreement to dispose of the interest in MVAM was conditional and restricted the ability of Proton to fully address the uninformed speculation in the public domain.
3.2.2 In addition, it was also felt that responding to the allegations prematurely would have detracted from the main issue at hand, which was to resolve the MVAM issue and avert the potential liability. All this is part of acting in the best interest of the shareholders.
3.3 Steps put in to prevent similar occurrences in the future
3.3.1 Since July 2005, Proton has undertaken a review of the major processes, decision-making structures and limits of authorities. In addition, Proton's external auditors, PWC, were also appointed to undertake a review of investments undertaken by Proton in the past to ascertain potential weaknesses in the process leading to decisions as well as to identify means to address these weaknesses.
3.3.2 One of the first steps taken to prevent or at least minimise the risk of such a recurrence again is a review of the internal governance structure of the Group. Changes have been made to the Management Committee and Board structures of PROTON and its Group. In the past the structures had been exclusive and certain key functions were not well represented. Under the reconstituted and expanded Management Committee and Board structures, a greater diversity of representation has been included in the decision making process. Apart from re-organisation of domestic structures, Proton had also undertaken changes to its overseas investments with a view to improve the balance and control as well as strengthen their financial discipline.
3.3.3 More importantly though, the structures that are now in place provides better clarity to all those concerned, as to actual authority and essential information to be disclosed.
4.0 Moving forward
4.1 With the disclosures, it is hoped that the public will now have a clearer view as to the matter of MVAM.
4.2 With the explanation and clarifications, Proton hopes that the matter will now be put to rest and that PROTON would be allowed to move forward and focus on its core business of manufacturing and selling cars.
4.3 With the recently announced National Automotive Policy (NAP), Proton's focus will now be to intensify efforts to improve its overall capabilities, product quality and cost competitiveness. It will also hasten efforts to promote the brand in various export markets, whilst concurrently expanding its product range quickly and cost effectively, either through partnerships or other means.

Update: NST 30th Mar 2006
MV Agusta - The untold storyProton reveals details behind Agusta deal

SHAH ALAM: Slowly but surely, a more complete picture of Proton’s controversial purchase of troubled Italian bike maker MV Agusta is emerging. And it is not a comforting picture.For a start, the board of Proton Holdings Bhd was not aware of all the facts when it invested in Agusta. It did not know that some RM176 million in cash advances were needed to keep the company afloat, Proton chairman Datuk Azlan Hashim said.Proton also got the short end of the stick in the deal as it could not exercise control despite having more than 50 per cent of the company, he said.It turned out that the minority shareholders could veto key decisions, maintaining their stake even if fresh capital was pumped in by Proton. Also, Proton could not change the management at Agusta.It was in August 2005 that the new management found out the full extent of Agusta’s troubles."We were first alerted when our Agusta representative asked for money. Clearly, we were caught by surprise," Azlan said at a Press conference at company headquarters in Shah Alam yesterday.Former Proton chief executive officer Tengku Tan Sri Mahaleel Tengku Ariff could not be reached for comment. Calls to his mobile phone went unanswered.The present board admitted that Agusta was a costly lesson but it was eager to move on."It would have been a drain on our resources. Our domestic market is challenged. I think that really is the real issue," said Proton managing director Syed Zainal Abidin Mohd Tahir.Proton’s sale of Agusta drew criticism from Mahaleel and adviser and former prime minister Tun Mahathir Mohamad, who wanted Proton to explain the sale of the company for one euro and the rationale for the deal.Proton provided this, and more, at the briefing.Proton bought a controlling 57.75 per cent stake in Agusta for E70 million in 2004. The family-owned maker of premium bikes had debts of more than E231 million.Agusta was losing money and "it has not achieved a single operating target", Azlan said.The firm needed to sell some 44,000 bikes just to break even, but over the last six years, it has managed to sell an average of about 14,000 a year.A six-month due diligence by PricewaterhouseCoopers and Societe Generale had highlighted these concerns."The management team of Proton at that point in time mitigated these concerns," Azlan said.The past management made a E9 million cash advance to Agusta from Proton Cars UK Ltd while Perusahaan Otomobil Nasional Sdn Bhd arranged a E30 million facility for Agusta to buy parts."This was done without the knowledge of the board," Azlan said.Agusta’s finances continued to deteriorate, with the remaining E107 million debt to be repaid and another E106 million needing to be pumped in to ensure a turnaround."The company was really in dire straits," Azlan said, adding that even its chief executive officer wanted to push it into bankruptcy.Proton then hired Credit Suisse First Boston to review the situation and look for a buyer. It found two buyers, but GEVI SpA was the better option because it was taking over Agusta’s current and future liabilities.A price higher than E1 could not be obtained as even banks had rejected loan applications using Agusta shares as collateral. This is because they viewed Agusta shares as worthless.

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National Automotive Policy: APs abolished by end 2010, tax rates reduced

National Automotive Policy: APs abolished by end 2010, tax rates reduced

The following is the full text of the new National Automotive Policy.

NATIONAL AUTOMOTIVE POLICY
A. INTRODUCTION
Since the establishment of Proton in 1985, Malaysia has succeeded in developing integrated capabilities in the automotive industry, which include local design and styling capability, full scale manufacturing operations and extensive local participation in the supply of components. Today, Malaysia is ASEAN’s largest passenger vehicle market with more than 500,000 vehicles sold annually with 90% of that manufactured or assembled domestically.
Nevertheless, much of the country’s success in developing the domestic automotive industry has been facilitated by policies that have promoted local vehicle manufacturers and moving forward, global and domestic challenges put the sustainability of this industry at risk.
The global industry is seeing slow growth, value destruction and massive rationalisation, driving vehicle manufacturers to merge to achieve even higher levels of scale. Recognising this global environment, the National Automotive Policy (NAP) seeks to address the manifold issues and challenges and transform the domestic automotive sector to become a more viable, competitive and significant contributor to the economy.
Moving forward, Government policy and support will be focused towards automotive industry participants providing sustainable economic contribution. The key drivers for such contribution will be economic scale, industry linkage and competitive value added activities.
B. OBJECTIVES OF THE NATIONAL AUTOMOTIVE POLICY
The overall objective of the NAP is generating sustainable economic value creation. This will maximise the long term contribution of the automotive sector to the national economy and at the same time ultimately benefit the Malaysian consumer. The need to create economic value entails that the industry will continue to require supportive Government policies in order to become fully competitive internationally.
The NAP therefore aims to facilitate the required transformation and optimal integration of the national industry into regional and global industry networks. The urgency of the transformation is driven by an increasingly liberalised and competitive global environment. Consequently, the Government has set out the following objectives for the national automotive sector:
To promote a competitive and viable domestic automotive sector, in particular the national car manufacturers
To promote Malaysia as an automotive regional hub, focusing on niche areas
To promote a sustainable level of economic value added and enhance domestic capabilities
To promote a higher level of exports of vehicles as well as components and parts that are competitive in the global markets
To promote competitive and broad based Bumiputera participation in the domestic automotive sector
To safeguard the interests of consumers in terms of value for money, safety and quality of products and services
C. POLICY THRUSTS OF THE NATIONAL AUTOMOTIVE POLICY
1. Provide Government support and incentives based on sustainable economic contributionThe Government will continue to nurture and support the development of the domestic automotive sector via a comprehensive package of grants and incentives. Such Government support and incentives will be aimed at optimising sustainable economic contribution, namely the scale of operations, extent of industry linkages, and the development of local and Bumiputera capabilities.
A sustainable level of economic contribution must ultimately relate to the type and level of value added activities, which will be competitive for the domestic market and for export in a fully liberalised environment. Thus, it would not be consistent with this policy to seek to maintain a level of value added activities which will not be viable and sustainable in the long run.
The level of support will also be correlated to the level of economic contribution and value add. In this context, a large scale manufacturing concern with exports and high industry linkage will be favoured relative to a pure assembly operation with little value added activities. Similarly, greater emphasis will be given to sales, distribution and after sales activities compared to pure importation of vehicles.
Support for manufacturing will come principally in the form of access to the Industrial Adjustment Fund and research & development (R&D) grants. These grants and incentives will be given based on pre-agreed conditions and timely achievement of Key Performance Indicators (KPIs).
2. Increase scale via rationalisation to enhance competitivenessFor the industry at large, all participants across the value chain will be encouraged to focus on achieving a scale of operations that ensures their enduring competitive viability.
The Government will encourage rationalisation initiatives in the domestic automotive sector, in order to create a leaner and more sustainable industry structure. A leaner industry structure throughout the value chain will enable industry participants to achieve a sufficient level of scale to be competitive.
In this respect, the Government will promote, through grants and incentives, two national manufacturers in the high-volume car segment to ensure sufficient scale and industry linkage. To enable achievement of required scale and industry linkage, these national manufacturers must be able to rationalise their models and platforms portfolio.
The rationalisation at the vehicle manufacturers’ level will consequently enable rationalisation of the component sector that will lead to greater scale, skills and improved quality. The end result will be a smaller number of vendors, all of whom will be operating at a scale, cost and quality level that will allow them to remain competitive and be able to export.
3. Promote strategic linkages with international partnersScale and focus are necessary to achieve greater competitiveness but in themselves, they are not sufficient. In addition, global best practices and industry linkage are other important key success factors for the automotive industry. Therefore, the Government will continue to encourage industry participants to collaborate with external parties to establish strategic tie-ups. Apart from sharing scale and resources, such strategic tie-ups open up opportunities and provide access for domestic industry participants to enter the global automotive supply chain and vice versa. Moreover, such strategic tie-ups also compel domestic industry participants to adopt best practice management, processes and procedures to deliver on higher quality standards that are necessary in accessing international markets.
4. Become a regional hub focusing on niche areas and complementary activitiesThe Government aims to position Malaysia as a regional manufacturing and assembly hub by encouraging existing participants to deepen their commitment in Malaysia. The Government will encourage existing vehicle manufacturers to rationalise the models assembled in Malaysia, scale up focused production and deepen industry linkage, in order to export competitively. It is expected that they will not primarily compete with high-volume national manufacturers in terms of pricing or target market.
The expansion of these participants and the deepening of industry linkages will also lead to greater scale and improved quality of the industry’s component vendor sector, thereby improving overall viability of the industry.
D. SPECIFIC POLICY INSTRUMENTS
1. Excise Duty StructureThe excise duty structure has been streamlined resulting in an overall reduction in the effective tax rate on most motor vehicles and a reduction in the tax differential between the different categories of motor vehicles (e.g. cars, MPVs, 4WD and between the different engine capacities). It is intended that the streamlining of the tax structure will promote greater transparency in pricing.
2. Gazetted Values of Imported CarsTo further promote greater transparency, the Government will gazette the values of imported cars for the purposes of duty computation. With the cooperation of the industry and the general public, it is expected that the incidence of tax underdeclaration will be significantly addressed. At the same time, the Government will step up enforcement measures against tax underdeclaration.
3. ASEAN CEPT Import DutyTo promote greater integration with the ASEAN automotive industry, Malaysia will reduce the ASEAN CEPT import duty to 5% for qualifying vehicles. While this will expose the domestic industry to greater competition, it is consistent with the policy thrust for rationalisation of models and increasing scale through exports.
4. Industrial Adjustment FundGrants from the Industrial Adjustment Fund will be made available to all companies – be they local, foreign or joint ventures – that create significant economic contribution.
These grants will be awarded based on two main criteria: scale and industry linkage subject to a sustainable level of overall capacity. Grants will be given on a model-by-model basis, subject to minimum threshold levels on both the scale and industry linkage criteria.
Specific R&D grants will also be made available, based on the viability and economic contribution of the R&D project. Further consideration will be given to companies that promote sustainable and competitive Bumiputera participation.
5. Manufacturing LicencesNew manufacturing licences will only be issued after over-capacity in the domestic automotive sector is resolved. In the meantime, vehicle assemblers will not be allowed to use or make available their existing excess capacity to third parties to assemble new makes or models that compete directly with those produced by national car manufacturers.
Where an increase in production capacity is required, companies in the high-volume and middle-volume segments will be encouraged to use existing excess capacity. New assembly facilities will only be allowed on a strictly case-by-case basis.
6. Approved PermitsThe current system of Approved Permits (APs), primarily used as a monitoring and data collection measure, will be phased out by 31 December 2010.
In the interim, APs will be made available based on economic contribution. Priority will be given to vehicle assemblers that have committed to a significant increase in production volume (with significant exports) in a particular model and require APs to import models that complete their product range for the Malaysian market. APs will be made available for a limited number of vehicles not assembled in Malaysia in order to ensure a sufficient choice of products for Malaysian consumers.
The importation of second hand cars (other than individual personal imports) will be progressively phased out culminating in a total ban in 2010, in order to stimulate demand for locally manufactured and assembled vehicles.
The Government will encourage and support companies currently awarded open APs (PEKEMA members) to transition into other related business activities e.g. sales and distribution or component manufacturers/vendors.
7. Vehicle Type ApprovalVehicle Type Approval (VTA) processes and procedures will be implemented comprehensively, in order to prevent the import and sale of sub-standard vehicles. The VTA process will ensure strict compliance with roadworthiness, safety and emissions standards. The VTA process will be implemented by the Road Transport Department (RTD) and other relevant agencies.
E. CONCLUSION
As a result of the implementation of these policy measures, the Government expects to see an industry with two strong national vehicle manufacturers, complemented by a number of foreign vehicle manufacturers (potentially with local joint-venture partners) who will upscale their assembly operations and at the same time rationalise the models assembled, to drive sustainable industry linkage.
Consequently, the components sector will also become more viable – there will be fewer companies (as incumbents merge), but their volumes will be higher and more networked into the global automotive industry. Gradual liberalisation will lead to reduced scope for importers, but genuine distributors will benefit from the increased sales volumes.
The NAP aims to provide a clear and transparent direction for all industry participants to enable them to make the optimal plans and investment decisions for the future.
Going forward, any Government policies and measures introduced for the domestic automotive sector will be based on this NAP. The NAP will be a long term policy base for the domestic automotive sector subject to reviews and refinement dictated by the global automotive industry environment.
The Government believes that this NAP will be a key measure towards driving the transformation of the domestic automotive sector to one that is viable, competitive and resilient, for the benefit of industry participants, consumers and the Malaysian economy.

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Proton Savvy - Bad comments from AUTO Express UK!

Proton Savvy Style

Adding a city car to its limited line-up certainly sounds like a good move for Proton, but how smart is the all-new Savvy?
When the Malaysian firm first took the wraps off its latest offering, we were baffled by the model's misfit looks. For a vehicle the company hopes will attract young buyers, the styling seemed dated. Haphazard badging and a mix 'n' match approach to the shape caused most of the confusion. The heavily sculpted rear sits uncomfortably with the sporty, deep-set nose and prominent V-grille. While the looks are sure to divide opinion, we reckon they are simply too fussy.

Inside, the yellow instruments are sadly the only obvious influence from Proton's sports brand Lotus. The cabin feels low budget - not least because of the vast expanse of grey plastic and a flimsy glovebox, which unbelievably opens to reveal the metal subframe and wiring. The steering wheel is also spoiled by the firm's use of cheap materials.
At least there's a bespoke radio with simple controls and a display screen. Unfortunately, funds didn't stretch to electric mirrors - realising you need to shift the angle on the passenger side once you've pulled away is an irritation we thought we'd left in the Nineties.

Still, with prices starting at a mere £; 5,995 for the entry-level 1.2 Street, what did you expect? In fact, for the money, the Savvy offers a surprisingly comfortable ride. The seats are well bolstered and there is a high driving position, giving you a clear view out.
Additional marks are awarded for practicality. The split-fold back seats stow flat to create an impressive 909 litres of luggage space - although the internally placed boot release is annoying for shoppers looking to offload their bags in a hurry. Meanwhile, the extra £1,000 for the Style trim option also buys you reverse parking sensors, air-conditioning and alloy wheels.
Sharp steering and snappy brakes make light work of tight cornering, but the gearbox is one of the worst we've tested. Its vague and excessively stiff shift takes all the enjoyment out of the driving experience. What's more, finding neutral at a standstill is difficult.
The whiny 1.2-litre engine - shared with Renault's Clio - is no fun, either. It takes too long to build up speed, allowing virtually every other driver to overtake you, and then quickly runs out of steam. The noise is also overbearing, as the motor spins at 4,000rpm at 70mph. Proton hopes to shift 6,000 new Savvys this year, but most buyers will be better off looking elsewhere.Julie Sinclair

Engineer-Research and Development in Malaysia - Looking for a JOB?

Engineer-Research and Development

Job Description
VENTURES BERHAD (380429-W)We are an established Group involved in the manufacturing of automotive components based in Klang. In line with our expansion plan, we invite ambitious and dynamic candidates to apply for the following position :

ENGINEER - RESEARCH and DEVELOPMENT ( 5 VACANCIES)The incumbent will assist in the development of new products and VA/VE activities for existing products. Bachelor of Science in any related engineering fields (Mechanical, Production, Electronic, Electrical Manufacturing etc.) Minimum of 2 years experience handling project development. Conversant with QS 9000 / TS16949 Quality System requirements that are related to product development. Fresh graduate can be considered.

We offer attractive remuneration package and good career prospects to the right candidates. Interested applicants are invited to send in their resume stating the current and expected salary and telephone number to the following : Senior General Manager Delloyd Ventures Berhad Lot 33004/5, Jalan Kebun, Kampung Jawa 42450 Klang, Selangor Darul Ehsan. Fax No. : 03 51613362 Email : jobs@delloyd.com
Location Selangor - Other,Malaysia

You can try this! GOOD LUCK!
Login: The StarJobs

SPY ----> Bugatti Veyron 16.4

Autoliv: Malaysian Seat Belt Industry to be Restructured

Autoliv: Malaysian Seat Belt Industry to be Restructured

STOCKHOLM, Sweden, Aug. 31 /PRNewswire/ -- Autoliv Inc. (NYSE: ALV; SSE: ALIV), a worldwide leader in automotive safety systems, has reached an agreement to consolidate all automotive safety suppliers in Malaysia into one company. The new company will consist of Autoliv's two local joint ventures, Autobelt and Airbag Systems Malaysia, and the two Malaysian seat belt companies Dapat and Brimal. The restructuring should lead to economics of scale that will contribute to strengthening the Malaysian car industry. This will be particularly evident in the areas of technology development and other competitive sourcing parameters.
The new company, which will be known as Autoliv HT (Malaysia), is a joint venture of Hirotako Holdings of Malaysia with 51% of the shares and the Autoliv Group with the remaining interest. The new company will have 250 employees and sales of approximately US $25 million.
The agreement is subject to approval of the Malaysian Government.
After a sharp drop last year due to the ``Asian Crisis'', sales of passenger cars and light vehicles in Malaysia are recovering and are expected to reach this year 250,000 vehicles. The most important car manufacturers in Malaysia are Proton, Nissan, Toyota, Honda, Mitsubishi, Volvo, Mazda and Ford. The new company will have all of these vehicle manufacturers as its customers.
Autoliv Inc. develops and manufactures automotive safety systems for all major automotive manufacturers in the world. The company has more than 60 wholly-owned subsidiaries and joint ventures with 21,000 employees in 28 vehicle-producing countries. In addition, the company has eight technical centers around the world, including 19 test tracks, more than any other automotive safety supplier. Sales in 1998 amounted to close to US $3.5 billion and net income US $188 million. The company's shares are listed on the New York Stock Exchange (NYSE: ALV - news), its Swedish Depositary Receipts on the Stockholm Stock Exchange (SSE: ALIV) and its stock options on the Chicago Board Options Exchange (CBOE: ALV.)
Inquiries:
Lars Westerberg, President & CEO, Autoliv Inc., +46-8-58-72-06-20Mats Odman, Dir. Corp. Com., +46-8-58-72-06-23, or mob. +46-708-32-09-33Barry Murphy, Director Investor Relations, +1-248-475-0409Gunnar Dahlen, President Autoliv Asia Pacific, +60-3-466-7666
SOURCE: Autoliv

The best and worst used cars - IN USA (2006)

The response to our 2005 Annual Subscriber Survey was overwhelming. We received responses on more than 1 million vehicles. Because of that, our data paints a more expansive reliability picture than ever before.
This year 62 models made our CR Good Bets list of typically reliable models that have performed well in our road tests, compared with 54 last year.
Our 2005 list of CR Bad Bets, models that are considered especially risky buys and that have exhibited several years of below-average reliability, has 34 models.
CR Good Bets and CR Bad Bets are based on our larger lists of Reliable used cars and Used cars to avoid (available to subscribers). These comprehensive lists give you a rundown of all the models that were found, from our data, to be above or below average in reliability. Owners reported on any serious problems they had had with their cars, minivans, SUVs, and pickup trucks in the previous year.

CR Good Bets
The best of both worlds

These are models that have performed well in Consumer Reports road tests over the years and have proved to have several or more years of better-than-average Used Car Verdict. They are listed alphabetically.
Acura Integra
Acura MDX
Acura RL
Acura RSX
Acura TL
BMW Z3, Z4
Buick Regal
Chevrolet Prizm
Ford Crown Victoria
Ford Escort Mustang (V8)
Honda Accord
Honda Civic
Honda Civic Hybrid
Honda CR-V
Honda Element
Honda Odyssey
Honda Pilot
Honda Prelude
Honda S2000
Infiniti FX35 (V6)
Infiniti G20
Infiniti G35
Infiniti I30, I35Infiniti QX4
Lexus ES300, ES330
Lexus GS300/GS400, GS430
Lexus IS300
Lexus GX470
Lexus LS400, LS430
Lexus RX300, RX330
Lincoln Town Car
Mazda Millenia
Mazda MX-5 Miata
Mazda Protegé
Mercury Grand Marquis
Mitsubishi Galant
Nissan Altima
Nissan Maxima
Nissan Murano
Nissan Pathfinder
Pontiac Vibe
Subaru Forester
Subaru Impreza
Subaru Impreza WRX, STi
Subaru Legacy
Subaru Outback
Toyota 4Runner
Toyota Avalon
Toyota Camry
Toyota Camry Solara
Toyota Celica
Toyota Corolla
Toyota Echo
Toyota Highlander
Toyota Land Cruiser
Toyota Matrix
Toyota Prius
Toyota RAV4
Toyota Sequoia
Toyota Sienna
Toyota Tundra

CR Bad Bets
These models from the Used Cars to Avoid list have shown multiple years of much-worse-than-average Used Car Verdicts. They have regularly shown more problems than most models each production year.

BMW 7 Series
BMW X5 (V8)
Chevrolet Astro
Chevrolet Blazer
Chevrolet Express 1500
Chevrolet S-10 (4WD)
Chevrolet TrailBlazer
Chevrolet Venture
Chrysler Town & Country (AWD)
Dodge Grand Caravan (AWD)
GMC Envoy
GMC Jimmy
GMC Safari
GMC Savana 1500
GMC Sonoma (4WD)
Jaguar S-Type
Jaguar X-Type
Kia Sedona
Land Rover Discovery
Lincoln LS
Lincoln Navigator
Mercedes-Benz CLK
Mercedes-Benz E-Class (V8)
Oldsmobile Alero
Oldsmobile Bravada
Oldsmobile Silhouette
Pontiac Aztek
Pontiac Trans Sport/Montana
Saturn Vue (AWD)
Volkswagen Cabrio
Volkswagen Jetta
Volkswagen New Beetle
Volkswagen Passat Wagon (V6)
Volvo XC90

About these listsThe lists are compiled from overall reliability data covering 1998-2005 models with better-than-average or much-worse-than-average reliability. CR Good Bets and CR Bad Bets include only the models for which we have sufficient data for at least three model years. Models that were brand new in 2004 or 2005 do not appear. Problems with the engine, engine cooling, transmission, and drive system were weighted more heavily than other problems.

Top Picks for 2006 The best models in 10 categories

Four new models made our Top Picks list this year. The redesigned Honda Civic is our choice among sedans priced below $20,000. The outstanding Infiniti M35 dethroned the Lexus LS430 in the luxury-sedan class ($40,000 or more). The Toyota Highlander Hybrid scored highest among SUVs priced above $30,000. Among pickup trucks, our choice is the new Honda Ridgeline. The addition of the Highlander Hybrid means that our Top Picks now include two hybrid models, but for very different reasons. The Toyota Prius is our Top Pick in the “green”-car category because of its excellent 44-mpg overall fuel economy, the best we’ve measured in any five-passenger vehicle. The high rating of the Highlander Hybrid is based on its excellent overall package, which includes all the inviting attributes of the conventional Highlander as well as better acceleration and moderately better fuel economy. For an in-depth look at the ownership costs of hybrids, see our April 2006 report on the high cost of hybrid vehicles, available to subscribers.Of the more than 200 vehicles that Consumer Reports has recently tested, our Top Picks are worth special consideration. All are recommended models and all-around high performers that: • Scored at or near the top among competing vehicles in our testing.
• We predict will have average or better reliability, based on our latest Annual Car Reliability Survey. • Performed adequately in overall crash protection if tested by the government or insurance industry.Each vehicle’s “report card” shows how it fared in testing, reliability, and crash protection, if available. “NA” means that we can’t provide an overall crash-protection rating because information wasn’t available. Multiple ratings refer to different versions. Prices are rounded to the nearest thousand dollars. These Top Picks are the result of the most comprehensive auto-test program of any U.S. publication or Web site. Here are some of the ways in which CR’s testing differs from that of other auto reviewers:• We anonymously buy all the cars we test from dealerships, rather than borrowing them from automakers, so we get the same quality as you would.• We use a dedicated, 327-acre auto-test center, staffed by a team of experienced auto engineers.• Every vehicle that CR tests is evaluated for months and driven for 6,000 miles or more.• More than 50 individual tests are performed on every vehicle, including some tests that were developed exclusively by CR’s auto engineers and adopted by the auto industry.



CONSUMER REPORTS ANNUAL CARS SURVEY RANKS LEXUS FIRST IN PREDICTED RELIABILITY FOR 2006 MODELS

Mercury, Mazda, break into top-10 rank; Infiniti, Chevrolet plunge in standings

YONKERS, NY – Consumer Reports’ largest Annual Car Reliability Survey ranks Lexus in first place for predicted reliability of its 2006 models among 36 nameplates from domestic, European, and Asian automakers. Lexus was in second place last year behind Scion in CR’s survey. Honda moved into second place, from fifth, and Toyota remained unchanged in third place. Mitsubishi ranked fourth, up from seventh overall, and Subaru ranked in fifth place, down one in the standings from last year. Predicted reliability for both Mercury and Mazda models moved sharply higher. Mercury is now ranked in eighth place, up from 16th last year; it’s the only domestic manufacturer to break into the top-10 in the standings. Mazda was up eight places as well and finished in ninth, behind Mercury. Infiniti, which has traditionally been known for making vehicles with outstanding reliability, plunged 20 places in the standings, dropping to 28th from eighth. Its QX56 was the most unreliable vehicle among new cars. Scion dropped from first place last year to seventh this year. Volvo moved up 10 places to 12th overall, and Mini moved up eighteen places, to 11th overall.Among domestic manufacturers, Chevrolet dropped to 24th, down from 13th last year. Chrysler moved up to 15th place from 20th in 2005, and Jeep dropped five places to 19th. Ford dropped to 16th place from 15th, and Dodge moved up three places to 18th overall. Porsche placed dead last in the rankings, at 36th overall, down from 26th last year based solely on the problematic Cayenne SUV.Predicted reliability findings and a five-year reliability trend story are published in Consumer Reports’ Annual April Auto Issue, which goes on sale beginning Tuesday, March 7. The Auto Issue will be available wherever magazines are sold and may also be ordered online at http://www.consumerreports.org/. Free highlights from the April Auto Issue are available at www.ConsumerReports.org/autos2006.Survey Milestone: Data on More than One Million VehiclesFindings are based on Consumer Reports’ Annual Car Reliability Survey, which was conducted in 2005 and included subscribers to CR and its web site, http://www.consumerreports.org/. This year, the survey reached a milestone as CR gathered reliability information on just over one million survey was conducted in the spring of 2005 and covered 1998 to 2005 models. The total number of vehicles included is up from 810,000 in 2004 and 675,000 in 2003. (Consumer Reports has a total of roughly six million paid subscribers to its magazine and web site.) Early survey findings were released in one of Consumer Reports’ special automotive publications, New Car Preview 2006, last October. In the 2005 reliability survey, subscribers were asked to report any serious problems (because of cost, failure, safety, or downtime) they have experienced with their cars, vans, SUVs, or trucks during the previous 12 months. The survey covers 17 different trouble areas, ranging from the engine and transmission to body hardware and electrical systems for vehicles up to eight years old. The responses allow CR to present detailed reliability ratings for 1998 through 2005 models and to predict reliability for 2006 models. CR also uses the predicted reliability rating in determining which vehicles to recommend to its subscribers. Five-year Reliability Trend Analysis: Hitting a Plateau?The shifts in nameplate rankings for predicted reliability came during a period in which industry-wide progress in lowering new-car problem rates appears to have stalled. Consumer Reports’ analysis of its 2001 to 2005 Annual Car Reliability Surveys for the past five years shows that overall problem rates have reached a plateau for newer cars—especially for the Asian manufacturers (those from Japan and Korea). CR’s latest subscriber survey shows that Japanese and Korean manufacturers still have the fewest problems on average: 12 problems per 100 vehicles. This number, however, has held steady for the newest models since 2002, when they improved from 15 problems per 100 in the previous year. On average, Asian vehicles are still by far the most reliable, but their rate of improvement has slowed. U.S. makes had been edging closer to the Asians in reliability, but they, too, have stalled. In the most recent survey, domestic makes had an average problem rate of 18 problems per 100 vehicles, not that different from last year’s rate of 17 per 100. The rate has been about the same since 2003. European makes, which have recently been the most unreliable overall, remained steady at 21 problems per 100 vehicles. They have had either 20 or 21 problems per 100 vehicles in each of the past four years. Using the data from the past five surveys, Consumer Reports’ team of statisticians and analysts also compared how the vehicle lines from six major manufacturers—Chrysler, Ford, General Motors, Honda, Toyota, and Volkswagen—fared over time. CR combined manufacturers’ problem rates for one-year-old vehicles from each survey year and did the same for two-year-old vehicles, three-year-old vehicles, and so on. CR found that Toyota and Honda models have significantly fewer problems than cars from other manufacturers. Overall, eight-year-old Toyotas are about as reliable as three-year-old Fords and Chryslers and two-year-old Volkswagens. Toyotas have about half the problems of Volkswagens when new and only a quarter of the problems when five years old. On average, five-year-old Asian vehicles had 44 problems per 100 vehicles; American, 89 per 100; and European, 97 per 100. Among the U.S. automakers, Ford consistently showed lower problem rates than Chrysler and GM for older vehicles.Consumer Reports is one of the most trusted sources for information and advice on consumer products and services. CR has the most comprehensive auto-test program and reliability survey data of any U.S. magazine or web site. Our team of automotive experts brings decades of experience to the unbiased, independent Ratings, Recommendations and advice in the Annual April Auto Issue: Engineers test the cars we feature in our magazine; the Consumer Reports National Research Center's statisticians and researchers design and analyze the surveys that tell us about our subscribers' experiences with their cars; and our editors investigate and report on important automotive issues, making all the information easily understandable for consumers. Click here for 2006 auto images and the following charts:Consumer Reports' Annual April Auto Issue Top Picks 1997-2006 How the makes compare How the vehicle lines from the major manufacturers fared as they age Most and least problematic models 1998-2005 News media can reprint the auto images with the following credit line: Reprinted with permission of Consumer Reports and http://www.consumerreports.org/, April 2006.

SPY ----> Fiat Bertone Suagn

SPY ----> Saab Aero X

SPY ----> Chrysler 300C SRT8 Touring