Analysts and economists are saying the Chinese automobile giant Chinese Automobile Holdings company, Geely, will have to allow for a gestation period to turn around the Malaysian iconic car manufacturer Proton if it succeeds in its takeover bid.
Geely has made a bid for a 51% majority stake in the company and has emerged as the dominant buyer ahead of the French firm, PSA in recent weeks.
No one can tell though why Geely is the front runner, as Peugeot did not say whether it is abandoning the race or is rethinking its strategy since both car makers have been on the market to enlarge bases.
But one thing is for sure since Malaysia seems to be losing out to Indonesia, that PSA might finally be interested in investing in the neighbouring nation, rather get itself involved in a national squabble.
Proton has been given an ‘underperform’ by an analyst from Sanford C. Bernstein, said Asean Today, an online portal.
Crony Capitalism or Kaput
Most analysts say Geely will need two years to see a Proton turn around, this if things go well after it acquires the brand.
Volkswagen, the troubled German brand is known to have made advances in the past to acquire a majority stake in Proton, but the bid failed after the Germans discovered how crony capitalism works.
It apparently offended the Germans so badly that they pulled out of talks and moved away from the Proton car maker in a subtle manner.
Reportedly, the culture of having tea at 10 am in the morning, lunch at 12.30 which is then followed by prayer times for the majority Malay workforce and a check-out time that is no better than the bloated civil service workforce in Malaysia, forced the Germans to call it ‘Kaput’.
Those incidents took place at a time when Tun Mahathir Mohamad – the genius behind the brand – was on a long leave of absence, attempting to end the wars in Gaza and criminalising wars across the globe.
A return of Mahathir to the scene at Proton uncovered the abject fate of his brain-child – from a gambit that had transformed and even revolutionised the Malaysian automotive landscape – to a kleptocratic entity.
Recently, Malaysia has seen the pullout of several foreign direct investors from the country and from deals in the making – including the Saudi Arabian much publicised pull out from the Petronas deal (we will talk about that another day).
It is not surprising that hunger stricken Chinese companies have become Prime Minister Najib Razak’s favourite bailout buddies.
Needless to list down the long, very long list of assets sale to Chinese companies here, but the most striking ones are the sale of the troubled, scandal-stricken 1MDB assets to the Chinese conglomerates.
Mahathir has already taken swipes at Najib over his “stupid” Chinese business deals, wrote Asean Today.
The portal says the former mentor of Najib Razak has lamented that Malaysia is letting Chinese firms into the country when “we can’t go to China and export into China completely built-up cars.
“We cannot even manufacture cars there without a special licence”, criticised Mahathir.
Forget what Najib’s political rivals will say, but a man’s got to do what a man’s got to do to put the meat on the plate of his hungry and dying companies, right.
A spat on Mahathir’s legacy
However, the whole Geely deal does not sound like a bailout of Proton.
It sounds more like a shaming of Mahathir by his political opponent, who is today a political colossal in Malaysian politics.
Najib Razak could have pumped billions of Malaysia’s own money (who say the country does not have those billions saved from cuts in subsidies, from the collection of the goods and services tax and from the high excise duties on cars etc) in Proton to secure.
But selling to Geely will hurt Mahathir, both on a personal basis and in the upcoming political battle of the giants that we are set to witness soon in the next general elections.
To be fair, the entire country knew that with Mahathir gone some day in the future, Proton will be gone too.
Hence, why would Najib pump Malaysia’s money in the once local automotive champion?
Let the Chinese do the job, and attempt at reviving the ailing company by taking advantage of what an investment in an Asean brand will bring for the China-based carmaker.
To many, it is a lure in the dark for the Chinese, as well as a ‘spat’ on the legacy of Mahathir and not many people can achieve both with one sling-shot.
The Najib regime had said – through its various spokespersons – that it would not mind bringing down everything that Mahathir has done during his career as Prime Minister.
Which is reminiscent of the cultural clashes Pharoah’s are credited for when one of them has passed, and the new ruler would try to erase the defunct regime from memory.