Former prime minister Dr Mahathir Mohamad blamed his successor Abdullah Ahmad Badawi for the shrinking Proton car market.
“Unfortunately for political reasons, the successful management was removed and then changed twice and the company lost money.
“At the same time the government decided to allow almost unlimited import of foreign cars which affected Proton,” he said.
Abdullah sacked well-known Mahathir associate Tengku Mahaleel Tengku Ariff who was Proton chief executive officer in 2005. Mahathir had publicly condemned the decision.
“All these resulted in a shrinkage of the domestic market share of Proton until today it makes up only 27% of the much enlarged domestic market.
“With almost half the domestic market now taken up by imports, there is a huge outflow of Malaysian money,” he said in his a speech at the Kuala Lumpur International Automotive Conference on Nov 13 and carried in his blog chedet.cc.
Mahathir, who is also Proton advisor, said buying things from foreign countries would result in an outflow of funds and lead to trade deficits.
“To prevent this, we can either limit imports or increase exports. Proton may not be earning much money through exports. But it is doing the next best thing by preventing money from flowing out to buy foreign cars,” he said.
He added that Malaysia sold about 600,000 cars a year and half the number would be local-made cars.
“Assuming an average car price is RM40,000, RM12 billion can be saved if the country does not import all its cars.
He also explained why the government had to impose a high tax on imported cars.
Although admitting that this was not welcomed by Malaysian consumers, Mahathir said all countries wanted to promote their local automotive industry and had no choice but to make imported cars costly.
“Japan and Korea had done this and we all know how much the Japanese and Korean cars have improved,” he said.
Mahathir said the quality of locally-manufactured goods must improve to match imported ones.
“To have an industry, especially automotive, time is required to achieve world standards and to be competitive,” he said.
He stressed that Malaysia should preserve its automotive industry because it created thousands of jobs.
“If the country is to become industrialised, it must acquire engineering skills,” he added.