Published on February 17th, 2020 | by Hammer0
Proton has a RM1.5 Billion loan with Miti still unsettled
Many Malaysians are happy that Proton is now a money making car business with an export market that is looking better than Perodua’s export intentions. The Geely Bo Yue SUV which was rebadged and slightly re-tooled to become the Proton X70 SUV has been its turnaround story and the catalyst for renewed interest in all Proton vehicles on sale today. However, there is a little issue of a loan that is still hanging in the air and we would like some clarification.
Back in 2018, Proton was owing a lot of money to their vendors with the continued lack-luster sales and dried up dealerships. Then great news arrived in June 2017 where DRB-HICOM BHD (Protons owner) and Zhejiang Geely Holdings Group signed a agreement, which saw Zhejiang Geely Holdings Group acquiring 49.99% of car manufacturer Proton and 51% of sports car brand Lotus in a deal worth RM1billion.
The Selling Price
At the time Zhejiang Geely paid a cool RM460.30 million for Proton of which RM170 million was in cash and the remaining RM290 million was paid with the rebadging of Geely sports utility vehicle (SUV) platform, the Boyue.
Zhejiang Geely also paid 100 million pound sterling (RM540 million) to Proton for the 51% stake in Lotus Cars.
Geely’s partnership with DRB-HICOM BHD has been great news since for both the country as well as the many vendors and dealers as Proton is today back as a household name and its range of revised vehicles together with the X70 SUV is on the ‘want to own’ list of many Malaysians and its growing. Fact of the matter is this, Geely solved a big Malaysian headache and this is the best news since.
What About The Loan
However, we are now wondering what has happened to the RM1.5 billion soft loan that was awarded to Proton in April 2016 by the government (this is in fact Malaysian tax payer money and we should be informed of its repayments, if any).
From the total soft loan of RM1.5 billion, the Government disbursed RM1.25 billion to Proton that was largely used to settle the outstanding payments to its vendors. The balance of RM250 million was disbursed a week later. Separately, as announced by the Minister of Finance II, the Government reimbursed Proton a research grant worth RM1.1 billion when the final agreement with Geely was signed in July 2017.
This soft loan was given for a good reason as Proton had about 12,000 employees and its vendors had another 50,000 plus employees which means about 62,000 jobs were saved.
On the 17th of June 2017, the then Minister of International Trade and Industry, Dato’ Sri Mustapa Mohamed released a statement explaining the reasons why tax payer money was loaned to Proton in response to a statement made by Tun Mahathir at the time.
Now, February 2020, the local assembled Proton X70 SUV has been launched with selling prices that will make many Malaysians visit the numerous new and existing Proton dealerships nationwide, including the latest to be opened in Puchong.
The earlier fully imported from China Proton X70 SUV managed to find 29,000 buyers in the past 13-14 months and the success of this was partial due to the 29,000 Approved Import Permits that was awarded to Proton to import in the X70 SUV at a very favorable import tax rate.
This alone would have allowed Proton and Geely to achieve handsome profits for the 29,000 units of the Proton X70 SUV. At an average of RM10,000 (todays average asking price) for an Approved Permit, this alone is a cool RM290,000,000 before any profit is added on to each and every imported Proton X70 SUV.
Malaysian Taxpayer Needs Answers
The good news is still that Proton has recovered ad on its way to be the No.1 car manufacturer in Malaysia with a growing overseas export market. Many jobs have been saved. New businesses are opening up with the rise in Proton demand. Exports are looking positive for new Protons. However, what has happened to the RM1.5 Billion soft loan and the RM1.1 Billion Malaysian government research grant?
Will we get the answers?