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MALAYSIA: Sime Darby not eyeing Proton

By just-auto.com editorial team | 25 October 2005

Malaysian conglomerate Sime Darby has no immediate plans to buy a stake in national car maker Proton Holdings, chief executive Ahmad Zubir Murshid has said.

"There are no plans currently to take up a stake in Proton," Zubir told Reuters after an annual shareholders' meeting. Domestic media have speculated the conglomerate aimed to buy a stake in the state-controlled car maker.

"We have been involved in assembling and distributing, and going into manufacturing will be very dicey," he added.

Reuters noted that Proton has traditionally been heavily protected in its home market but competition is arriving as Malaysia signs up to regional and bilateral free-trade pacts. Its domestic market share has dwindled to around 40% from two-thirds.

The company needs to tie up with a major manufacturer to give it the production volume and management guidance needed to succeed in a fiercely competitive and over-supplied global market, industry experts have said.

Volkswagen, Europe's largest car maker, has expressed interest in taking an equity stake in the company, Proton said last month, according to Reuters. The two firms are hammering out a joint venture to make cars for Southeast Asia's free trade zone from Proton's new state-of-the-art production line, which has a designed capacity of one million cars annually.

Sime, which sells BMW and Hyundai cars, among others, plans to assemble the BMW 5 series in Malaysia by the first quarter of 2006, and the 3 series later, Zubir told the news agency.

Sime also plans to assemble the Hyundai Getz model locally. Zubir also told Reuters Sime was waiting to study details of Malaysia's new motor vehicles policy, which was unveiled earlier this month, to gauge how it would benefit the company.

Reuters said that, under the new policy, the government wants to eventually phase out its approved permit (AP) system of importing cars and extend the issue of permits to listed ethnic Malay-run firms such as Sime, which sells imported cars.

In the past, licences to import cars have been given exclusively to unlisted Malay firms and Malay businessmen, a practice critics say has enriched a tiny elite and opened the way for corruption. Sime can now apply directly for the APs instead of buying them from those given the permits.

"We will apply directly for APs. There will be some savings from this," Zubir told Reuters.