Proton chief says RI car program may be too late<\/p>\n
By Mitchell Mackey<\/p>\n
INDONESIA's national car policy may be 10 years too late,
\naccording to Rashid Rahim, the chief executive officer of
\nMalaysia's flagship carmaker, Proton.<\/p>\n
Speaking in Kuala Lumpur earlier this month, Rashid said
\nProton -- which has now been in the market for 10 years -- is
\nfighting aggressively for its survival in the fiercely-
\ncompetitive international car market.<\/p>\n
"We know how difficult it is to build a car company and the
\nfuture for us is going to be very challenging," Rashid said.<\/p>\n
"Indonesia's car companies will face similar challenges and
\nthey are not as far advanced as we are because they are only now
\nstarting," he said.<\/p>\n
Proton was established with a large degree of state protection
\nas part of a government policy to encourage the development of
\nthe Malaysian automotive industry.<\/p>\n
Similarly, PT Timor Putra Nasional, as the designated
\nIndonesian "national car" carmaker, has been granted tax
\nconcessions in order to help make the company viable and
\nencourage further investment in full-vehicle and component-
\nmanufacturing industries.<\/p>\n
Although Indonesia has had a number of vehicle assembly
\noperations producing cars and commercial vehicles for some time,
\nthe government felt that there had been little in the way of
\ntechnology transfer.<\/p>\n
According to the Minister of Industry and Trade, Tunky
\nAriwibowo, the tax concessions given to PT Timor, which is headed
\nby President Soeharto's youngest son Hutomo Mandala Putra, are
\nrequired to help Indonesia develop its automotive industry
\nfurther.<\/p>\n
In an interview with the Straits Times, Tunky said: "We have
\nto cooperate with someone who is really willing to give the
\ntechnology and provide everything in order for us to develop our
\nown technology and industry.<\/p>\n
"The Japanese have been here since the early 1970s.<\/p>\n
"Everybody knows the developments we have had so far -- not
\nenough attention has been given to developing support
\nindustries."<\/p>\n
While PT Timor may help develop the necessary infrastructure
\nin the short term, the progressive reduction in tariff
\nprotection, as Proton is now finding, may effect the long-term
\nsurvival of Indonesia's car industry.<\/p>\n
Proton acknowledges that the design and development of its own
\ncars is an essential but challenging goal.<\/p>\n
"We have to have our own design and engineering capabilities
\nand to do this, we need volume sales in export markets and that
\nis very difficult as we are competing against very big
\ninternational players," Rashid said.<\/p>\n
"We are developing a niche strategy, looking for opportunities
\nin markets around the world where we may not have to compete
\ndirectly against the international car companies."<\/p>\n
A major investment program is currently underway which will
\ndouble Proton's production capacity to more than 700,000 cars.<\/p>\n
A new state-of-the-art factory, called Proton City, is being
\nbuilt near Kuala Lumpur.<\/p>\n
Rashid said that as the Malaysian market could account for
\nonly half of the company's production, the export campaign must
\nbe successful.<\/p>\n
However, Proton's product lineup makes it difficult to be
\ntruly internationally competitive.<\/p>\n
Strategic alliances with Mitsubishi and Citroen have resulted
\nin the conversion of vehicle platforms from those companies into
\nProton products, such as the Mitsubishi Lancer, which is
\nmanufactured in Malaysia as the Proton Wira.<\/p>\n
However, Proton is at least two years behind the new model
\ncycles of Mitsubishi and Citroen.<\/p>\n
The new-generation Lancer is now on sale in most developed
\nmarkets but it will be at least another year before the Proton
\nversion is available.<\/p>\n
The company also continues to rely heavily on imported
\ncomponents, primarily transmissions and engines, which come
\nmainly from Japan.<\/p>\n
Likewise, PT Timor, with its relationship with Kia Motors Corp
\nof South Korea, could face the same problems.<\/p>\n
The design and development of competitive passenger cars
\nrequires massive investments that even well-established, medium-
\nsize carmakers such as Volvo and Subaru find difficult to afford.<\/p>\n
So far, Proton is yet to establish a significant presence in
\nIndonesia.<\/p>\n
About 750 Proton Saga sedans are being operated as taxis in
\nJakarta as part of a trade agreement which involves Malaysia
\nbuying aircraft from the Bandung-based PT Industri Pesawat
\nTerbang Nusantara (IPTN).<\/p>\n
Proton is investigating the economics of establishing a
\nvehicle assembly operation in Jakarta. However, a decision is not
\nexpected for some time.<\/p>",
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