- Mar 1, 2007
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I was reading through wiki's definition on proton, the last segment particularly caught my eye
Charges of protectionism
When the first Proton appeared on Malaysian roads, local wits promptly dubbed it (Proton Saga) the 'Potong Harga', meaning the 'cut-price' Proton. And for good reason. The Proton was at least 20% cheaper than non-national makes in the same 1.3 to 1.5 litre class. With both the price and a dash of national pride working for it, the Proton got a rapid hold on the market. By 1988 the Proton had overtaken all other makes and grabbed 73% of the passenger car market.
In 1983, when the 'national car' had been planned, Malaysia was selling just over 90,000 cars a year and the market was growing annually by 20%. The Proton plant was designed to turn out 80,000 units a year and could gear up to 120,000 units. But in Proton's first full year of production (1986), car sales took a severe dip to 47,000 and next year, due to the worsening economic situation, just 35,000. Only in 1988 did the market begin a recovery to 54,000 units, by now most of them Protons. Since then, the market has grown steadily to a 2005 peak of 417,000 cars[16]
Government policy has kept the Proton cheaper than other makes by the simple strategy of taxing the competition, while giving Proton exemptions from these same taxes. Duties on packages of parts for assembly into complete cars in Malaysia is said to average about 150%. Proton is exempted from most of these[17]
On 1 January 2008, the postponed-several-times full implementation of an ASEAN Free Trade Agreement [18] which Malaysia originally signed on to in January 1992 was to finally have come into effect. The agreement would effectively bar practices that discriminate against goods (including vehicles) that are considered “Made in ASEAN” by the use of Tariff and/or Non-Tariff Barriers. This would practically eliminate most of the price advantage, achieved by way of the 50% rebate Proton (and other “Malaysian-made” cars) enjoy on the hefty (75 to 125%) engine-capacity-related Excise Duty applied to new vehicles sold in Malaysia.
This rebate is largely responsible for the non-Malaysia ASEAN-made cars costing between 30 and 60 % more than an equivalent locally-made vehicle. With a “level playing field”, within the confines of CEPT[18] (which at the moment allows a maximum 5% import duty) using existing FOB prices, an ASEAN (Thai-made) Toyota would sell for within 10% of a comparable Proton, and would probably result in the devastation of Proton the company. It would appear that this is an unacceptable consequence to the Malaysian government, so for the time being, local car manufacturers will be allowed to continue receiving the excise duty rebate, with the Government picking up the tab for probable penalties it will have to pay to ASEAN members for the gross disregard of the Trade Agreement requirements.
As 2008 progresses, it is starting to be apparent that more and more global manufacturers are betting that the level playing field stipulated by CEPT will continue to be ignored by the Malaysian government for as long as possible. This has temporarily derailed these manufacturers' previous plans to use Thailand (principally) as their regional manufacturing hub, forcing them to reintroduce Malaysian-assembly of some models from CKD. This allows them to benefit from better tariff structures applied to such vehicles, in an effort to remain competitive (in the non-National car segment), and to narrow the price difference between their models and equivalent (Excise Duty rebated) locally-made cars.
It should be noted that the main “solution” mooted by the Malaysian Government over several years to maintain the pricing advantage of locally-made cars, by providing grants and subsidies (to counteract a removal of the Excise Duty rebate) would also be deemed to be non-compliant with the Trade Agreement, contravening Non-tariff barriers to trade requirements.
The lack of direct competition at Proton models' price points (in Malaysia) has allowed Proton, for many years, to continue selling very outdated designs, generally with scant regards to providing basic safety equipment such as airbags and anti-lock braking in domestic models. Additionally, J.D. Power survey results have consistently shown that Protons have poorer rankings in initial quality than the available competition[19]
"the level playing field stipulated by CEPT will continue to be ignored by the Malaysian government for as long as possible" = BLATANT !!!!!!
Shameless, absolutely shameless government policies.
Full Link: http://en.wikipedia.org/wiki/Proton_(carmaker)
Charges of protectionism
When the first Proton appeared on Malaysian roads, local wits promptly dubbed it (Proton Saga) the 'Potong Harga', meaning the 'cut-price' Proton. And for good reason. The Proton was at least 20% cheaper than non-national makes in the same 1.3 to 1.5 litre class. With both the price and a dash of national pride working for it, the Proton got a rapid hold on the market. By 1988 the Proton had overtaken all other makes and grabbed 73% of the passenger car market.
In 1983, when the 'national car' had been planned, Malaysia was selling just over 90,000 cars a year and the market was growing annually by 20%. The Proton plant was designed to turn out 80,000 units a year and could gear up to 120,000 units. But in Proton's first full year of production (1986), car sales took a severe dip to 47,000 and next year, due to the worsening economic situation, just 35,000. Only in 1988 did the market begin a recovery to 54,000 units, by now most of them Protons. Since then, the market has grown steadily to a 2005 peak of 417,000 cars[16]
Government policy has kept the Proton cheaper than other makes by the simple strategy of taxing the competition, while giving Proton exemptions from these same taxes. Duties on packages of parts for assembly into complete cars in Malaysia is said to average about 150%. Proton is exempted from most of these[17]
On 1 January 2008, the postponed-several-times full implementation of an ASEAN Free Trade Agreement [18] which Malaysia originally signed on to in January 1992 was to finally have come into effect. The agreement would effectively bar practices that discriminate against goods (including vehicles) that are considered “Made in ASEAN” by the use of Tariff and/or Non-Tariff Barriers. This would practically eliminate most of the price advantage, achieved by way of the 50% rebate Proton (and other “Malaysian-made” cars) enjoy on the hefty (75 to 125%) engine-capacity-related Excise Duty applied to new vehicles sold in Malaysia.
This rebate is largely responsible for the non-Malaysia ASEAN-made cars costing between 30 and 60 % more than an equivalent locally-made vehicle. With a “level playing field”, within the confines of CEPT[18] (which at the moment allows a maximum 5% import duty) using existing FOB prices, an ASEAN (Thai-made) Toyota would sell for within 10% of a comparable Proton, and would probably result in the devastation of Proton the company. It would appear that this is an unacceptable consequence to the Malaysian government, so for the time being, local car manufacturers will be allowed to continue receiving the excise duty rebate, with the Government picking up the tab for probable penalties it will have to pay to ASEAN members for the gross disregard of the Trade Agreement requirements.
As 2008 progresses, it is starting to be apparent that more and more global manufacturers are betting that the level playing field stipulated by CEPT will continue to be ignored by the Malaysian government for as long as possible. This has temporarily derailed these manufacturers' previous plans to use Thailand (principally) as their regional manufacturing hub, forcing them to reintroduce Malaysian-assembly of some models from CKD. This allows them to benefit from better tariff structures applied to such vehicles, in an effort to remain competitive (in the non-National car segment), and to narrow the price difference between their models and equivalent (Excise Duty rebated) locally-made cars.
It should be noted that the main “solution” mooted by the Malaysian Government over several years to maintain the pricing advantage of locally-made cars, by providing grants and subsidies (to counteract a removal of the Excise Duty rebate) would also be deemed to be non-compliant with the Trade Agreement, contravening Non-tariff barriers to trade requirements.
The lack of direct competition at Proton models' price points (in Malaysia) has allowed Proton, for many years, to continue selling very outdated designs, generally with scant regards to providing basic safety equipment such as airbags and anti-lock braking in domestic models. Additionally, J.D. Power survey results have consistently shown that Protons have poorer rankings in initial quality than the available competition[19]
"the level playing field stipulated by CEPT will continue to be ignored by the Malaysian government for as long as possible" = BLATANT !!!!!!
Shameless, absolutely shameless government policies.
Full Link: http://en.wikipedia.org/wiki/Proton_(carmaker)