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Friday, March 30, 2007

29-03-2007: Meaningful talks on Proton should proceed, say analysts

The government should not rush into an agreement with a foreign strategic partner for Proton Holdings Bhd although the national carmaker urgently needs one to turn around its flagging fortunes, industry observers and analysts said.

They said in any event, such a partner would not be able to work miracles and turn Proton around overnight and meaningful negotiations should be allowed to take place over a reasonable period of time.

In a research note dated March 19, TA Securities Research said there was no major short term risk if talks were to drag on for another few months.

News that the government might miss its self-imposed end-March deadline to announce a strategic partner for Proton came as no surprise to analysts given the complexity of the politically-sensitive matter.

Deputy Prime Minister Datuk Seri Najib Razak said on Wednesday that the government may miss the March deadline to come to an agreement with a foreign player.

Sources said the talks with the foreign parties could have been bogged down by some contentious issues such as matters of control and the fate of the vendor development programme.

“It could be that the government is not willing to relinquish too much control to these foreign partners because what is at stake is Proton’s national identity, and not just a business,” said the source.

An analyst said the entry of a strategic partner could spell the end of less competent and competitive vendors, which would not be what the government wanted to see.

TA Research expressed scepticism over the March deadline due to the fact that one of the bidders, General Motors, had just submitted its plans to the government in January.

“Two months’ time frame could be too soon for both parties to reach a multi-million ringgit agreement. Furthermore, to come up with a readily available plan to turnaround Proton may take longer than that,” it said.

It said Peugeot PSA, which had withdrawn its bid for Proton, took seven months for its evaluation and research before concluding that cooperation with Proton was not feasible.

TA Research said the entry of a foreign partner would primarily result in a change in consumers’ perception over the quality of Proton’s cars and that this would be priceless.

“We believe the consumers’ confidence will improve, which will translate into higher sales volume,” it said.

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What is the main factor for you to buy a Proton Car?
Low price and no other choice due to budget
Good resale value
Low maintenance cost
Ride & Handling is good
Reliable parts, chasis and engine
Good Styling exterior & Interior
Patriotism (I support Made in Malaysia Products)
Follow others (Follow Majorities should be the best choice)