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.