Answers to Tony Pua’s questions on Proton-Geely deal
(LSS) – Q1: Why is PM still giving Proton a research grant of 1.1B? This free money basically Geely paid less than 200m for its 49.9% stake in Proton.
Q2: Proton will still owe Govt 1.5B in loan. If default, the Govt takes over Proton w 65% stake. Hey … super deal for Drb and Geely, default also can get off debt free. Rakyat stupid ah?
Answers to Q1 & Q2: IF they default. That is part of business isn’t it? Both Geely and DRB-Hicom have paid or will pay hundreds of millions or billions into Proton. If the company continues to run losses and default, they will LOSE all these investments.
The govt has been supporting Proton because it is to save jobs and to sweeten the deal for Geely to take over.
Remember that Proton has been running multiple billions in losses in recent years and still have up to RM3.2 billion in govt soft loans that need to be repaid.
So when Geely takes up the stake in Proton, they will also share half of the losses in the coming year and share the loan burden.
Govt support for the automobile manufacturing industry is not unique.
Remember the US Govt supporting both GM and Chrysler to the tune of US$17.4 billion in 2008 when both were in financial trouble?
Figures released by Holden also shows it received AUS$2.17 billion in Australian state and federal government assistance over the past 12 years, compared to AUS$1.1 billion for Ford and AUS$1.2 billion for Toyota, http://bit.ly/2qBk11e
The alternative is for Proton to close and wipe-out 60,000 jobs in Proton and the extended supply-chain.
There is nothing wrong with the govt giving grants or soft-loans to assist the company and its workers.
Helping the people is what the govt is supposed to be.
Perhaps DAP would want to explain to 60,000 people and their families why they want them to lose their jobs?
Q3: Why all Proton lands shifted to DRB?
Answer to Q3: This is a most stupid question. DRB-Hicom owns 100% of Proton. Before the Geely deal, DRB Hicom has the right to shift the lands to itself for future development.
If the land was not shifted then Geely would own 49.9% of that land too.
Q4: So, after this deal, Proton lost Lotus, lost its land bank, owes Govt 1.5B, 49.9% owned by Geely??? And rakyat still gave 1.1B free money to the Chinese??? BTW if Geely cash out now, wow they masih untung lah. What a deal … for the Chinese lah.
Answer to Q4: Geely cannot just cash out like this. DRB-Hicom is the majority owner. Also, remember that the company has liabilities and loans to the govt?
You cannot simply strip out all the cash of a company and leaving just liabilities. That will be criminal fraud.
Such simplistic thinking indeed from DAP! Where did you learn how to do business?
