This is proof that we are forced to pay higher prices for motor vehicles because of Proton:
"MAA president Datuk Aishah Ahmad also disclosed that the government is still controlling the prices of imported cars and if the prices are found to be approaching or lower than domestic car prices, the government would ask the manufactures to increase prices before allowing them to enter the market.
The Competition Act should be meant for encouraging fair competition and pressing down prices to benefit consumers, but it seems now to have serving exactly the opposite purpose. It seems like the transformation plans are unable to get rid of the protection policy. That is why, the opening up pace of the national automotive policy is so slow, causing the commitment to attract foreign investment lacks convincing and foreign car manufacturers have chosen to set up plants in other countries."
Now seems an opportune time to discontinue protective excise and import duties meant to mollycoddle Proton. It is now in private hands and the new owners should try to compete on a level playing field with other car makers.
The initial impact of cheaper cars would hit recent owners of new vehicles bought at high prices. There should be a mechanism to soften the impact over a few years, otherwise, it would be unfair to them as well as the HP financiers. This is just a one-off bitter pill to swallow if we are for solving this ongoing problem. In effect protecting a continually failing company is using good money chasing bad. A case of misallocation of scarce resources.
Proton started as one of the pet projects of then PM, Dr. Mahathir. He went against advice that Malaysia did not have a sufficiently big home market to have its own car manufacturing company. To prop up the failing enterprise, besides protective excise and import duties, even government loans to civil servants to purchase cars were made conditional upon buying Proton. Official cars had to be Protons too. It had protection for the past 27 years and we continue to pay higher prices for them than foreigners buying them overseas!
Our national pride and an ex-PM's ego should not be the reason to continue having all car purchasers to pay heavily to maintain this particular car company, its employees and parts suppliers. If they cannot compete on level grounds, then they should do something about it. Britain's long history in manufacturing motor vehicles did not stop its famous marques like Rolls Royce, Jaguar and Rover from being taken over by foreigners. It was due to economic reasons and their employees had to adapt to be more efficient under foreign management.
Update on August 8: Malaysiakini...
Why are cars way cheaper in the US?