Proton eyes China, Russia to boost exports

Proton eyes China, Russia to boost exports

Agence France-Presse, Kuala Lumpur

Malaysia's national carmaker Proton on Tuesday said it plans to export 100,000 units by 2008 and open production plants in China and Russia to minimize the impact of a regional trade pact, an official said on Tuesday.

"It will hurt all the players who have invested in Malaysia -- Proton and Perodua (under AFTA)," Haris Fadzilah Hassan, Proton's strategic planning head told reporters.

Haris said under the Association of Southeast Asian Nations (ASEAN) Free Trade Area (AFTA) agreement, competition would be intense in Malaysia since it has the largest passenger car market share in the region and many foreign made cars are already entering the market at cheaper prices.

"So we need to export. We target to export 100,000 units by 2008. As a company we are prepared to meet competition. We are now working on the market side," he said.

Former premier Mahathir Mohamad, an adviser to Proton, early June said that the firm was being hurt by foreign models which were being sold at unfairly low prices in the local market.

Last year Proton exported 17,000 units and for the financial year ending March 2006, it plans to export 27,000 cars. Proton current production capacity stands at 380,000 units.

Proton 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 last year from 48 percent in 2003.

Malaysia cut import duties to 20 percent on ASEAN cars on January 1 under the AFTA agreement.

Then in January the government decided to delay implementation until later in the year pending a review of the tariff structure on concerns that foreign car companies might shelve fresh investments or even relocate current Malaysian operations.

However, it would delay reducing duties to the required level of below five percent until 2008.

Haris said Proton would push the sale of Proton's latest sporty model, the GEN-2, Waja and Savvy models for export.

Proton's key markets now are neighbouring Singapore, United Kingdom, and the Middle East, he said.

On plans for Russia, Haris said Proton hopes to begin exports as early as next year and when sales volumes increases it would consider a production facility.

"Maybe in January we will be able to sell our cars in Russia. We will look at the demand before considering a production facility," he said.

But Haris lamented that its plan for a production plant in China had not taken off.

"They (the Chinese authorities) keep asking us questions," he said.

Officials had previously said that Proton was partnering Goldstar Heavy Industrial Co and has plans to set up operations in Humen City in southern Guangdong province.

Haris also said that Proton hoped that under the new auto policy to be announced in September, the government would look into providing grants to Proton to acquire foreign companies with technical capacity.

"There could be some kind of grants that helps Malaysian companies to acquire companies that can help (us) in terms of technology, branding and market access overseas," he said.