Dumping of foreign cars hurting Proton: Mahathir

Dumping of foreign cars hurting Proton: Mahathir

M. Jegathesan, Agence France-Presse, Kuala Lumpur

Malaysia's national carmaker Proton is being hurt by foreign cars which are being sold cheaply in the local market, former premier Mahathir Mohamad said on Wednesday.

Mahathir, who is an adviser to Proton, also called for imports from China to be restricted to offset the national carmaker's difficulties in entering the vast Chinese market.

"I am not complaining about China. That is their policy but if they are protecting, we have to be protective also," he told reporters.

Mahathir called for a review of the thousands of approved import permits (APs) granted to Malaysians, particularly influential people, which allows them to bring in foreign cars at low prices.

The vehicles' prices were underquoted and they arrived in Malaysia at below cost, hurting Proton's ability to compete, he said.

"Sometimes (it costs) even less than the cost of the raw material. This is why I have asked for the identity of individuals with APs to be made public," he said.

"Then we will know whether Proton is protected or foreign cars are protected."

The government said last week it would not publicize the names of those granted import permits, which Mahathir said were running at about 67,000 annually.

Initially the scheme applied only to luxury vehicles but it has widened to the extent that low-cost models from Asian automakers are finding their way here in greater numbers.

"Some cars are imported into Malaysia at 11,000 ringgit a unit (US$2,900). There is not way Proton can compete," he said. The cheapest Proton car is about 40,000 ringgit.

Mahathir, hailed as the chief architect of Malaysia's automotive industry, defended Proton's performance, saying domestic sales have not dipped.

"Percentage wise it may have gone down but volume wise it has not gone down," he said, adding that Proton was increasing production.

Proton has long been protected by high excise taxes and import duties on foreign cars but faces a tough new environment under a regional trade pact which is stripping away the protective measures.

The national carmarker used to sell six out of every 10 new cars in Malaysia but growing foreign competition is eating into its market share, which fell to 44 percent in 2004 from 48 percent in 2003.

To compensate, Proton is aiming to sell at least 100,000 vehicles abroad annually by 2008. Exports have doubled from 8,000 units in 2003 to 17,000 in 2004 and it has set a goal to double overseas sales in 2005.

However, analysts say Proton is still not able to compete against major foreign carmakers and that its vehicles lack many of the features that are now considered standard elsewhere.