The ex-chief executive of Malaysia’s national car maker, Proton, was ousted after he rejected a new contract that offered him “inferior” conditions, former Prime Minister Mahathir Mohamad told the Associated Press (AP) on Tuesday.
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Mahathir reportedly hinted that Mahaleel Ariff’s recent criticism of the government’s automotive policy hurried his exit from Proton, but stressed he agreed with his protege that Proton is struggling with unfair competition from foreign cars.
Proton’s board of directors announced late on Monday they would not renew Mahaleel’s contract and would search for a new chief executive.
“It’s not because Mahaleel had failed in his job,” Mahathir told AP. “He was dismissed because he did not agree with the terms offered to him. … The terms, according to him, are inferior.”
The Associated Press noted that speculation has been rampant that Mahaleel would be removed after he ruffled feathers by saying in a recent interview with a local newspaper that Malaysia’s automotive policy of removing protections is hurting the government-controlled car maker.
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By GlobalDataProton’s market share in Malaysia has slipped from 57% in 1993 to around 30% in the first half of the year due to a regional free trade agreement that reduced tariffs on foreign cars. The duties had earlier kept the prices of foreign cars artificially high, making Proton the only affordable cars for most Malaysians, AP added.
Hyundai and Nissan have also chipped away at Proton’s business by introducing locally assembled models at competitive prices, the report noted.
Mahathir, Proton’s current adviser, reportedly did not reveal what the terms were but indicated he disapproved of the dismissal because Mahaleel had succeeded in making Proton profitable during his eight-year tenure as chief executive.
According to AP, Mahathir said he will remain Proton’s adviser “unless I am dismissed.” He did not elaborate.
Prime Minister Abdullah Ahmad Badawi reportedly rejected his comments, saying the government is doing “the right thing” by slowly reducing protective tariffs for Proton.
Mahathir told AP he was “not happy” because he believed foreign cars are imported too easily into Malaysia. He noted also that Proton is burdened with obligations such as having to obtain relatively expensive components from local Malay vendors.
“I want to protect Proton and I think it’s justified,” Mahathir said. “But if you feel Proton should compete in an even playing field, then remove these burdens. … Otherwise you must help Proton.”
In a statement issued later Tuesday, Mahathir reportedly reiterated his demand for greater transparency in Malaysia’s auto import policy, alleging that cronyism has marred the government’s issuance of permits to Malay-owned companies to import cars.
“My explanation is made for the sake of the country’s dignity and interests and for a successful national industry,” Mahathir said, according to the Associated Press.
AP noted that Mahaleel’s departure has been welcomed by some analysts who say it could pave the way for Volkswagen to take a stake in Proton, which has been in talks with the German car maker to establish a partnership.
Mahathir reportedly said he did not oppose any move by Volkswagen to buy a stake, but reiterated his hopes that Proton would not be acquired completely by any foreign car maker.
“I’m against a national car being owned by a non-national, but if the country wants the national car to be sold to other people … I have no say,” he added, according to the Associated Press.
