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Media Statement (2) by Parliamentary Opposition Leader and DAP MP for
Ipoh Timor Lim Kit Siang in Parliament on Saturday, 30th July 2005:

Call for public debate whether Volkswagen should be allowed to acquire up
to 30% stake in Proton
======================================

The government investment arm Khazanah Nasional Bhd yesterday denied that
it has any plans to divest all or part of its existing stake in Proton
Holdings Bhd. in response to a media report stating that Volkswagen AG
was in discussions to purchase a substantial stake of up to 30 percent in
Proton.

Khazanah, a controlling and active strategic investor with a 42.7 percent
shareholding in Proton, said it was constantly looking at ways to
increase shareholder value and enhance investment returns. It remained
committed to supporting the board of directors and management of Proton
in its current efforts to improve operations and the strategic position
of the company, including the ongoing discussions with respect to a
proposed alliance with Volkswagen AG.

The market has been abuzz with talk that Khazanah is in talks to sell up
to 30% of Proton to Volkswagen AG in a deal worth up to RM1.65 billion or
RM10 a share, which involved VW taking management control of Proton.

In Parliament early this month, I had referred to the interview given by
former Proton CEO Datuk Mohd Nadzmi Mohd SallehNadzmi that government
over-protection in the past two decades had caused Proton to miss many
opportunities to enter into strategic alliances with international
automotive corporations, resulting in many countries like Thailand which
had started their automotive industry much later to achieve greater
success than Malaysia.

Nadzmi had disclosed that the leading American automobile maker General
Motors had shown interest in acquiring a stake in Proton, but government
overprotection had caused Proton to lose the opportunity to establish a
strategic alliance with the world’s largest vehicle manufacturer.

General Motors later went into Thailand, and although Thailand started its
automobile industry much later than Malaysia, our neighbour has achieved
faster growth in the automobile industry as to be regarded as the
“Detroit of the East” or the vehicle assembly and export hub of Southeast
Asia.

The recent headline news in the global automotive industry about the £50
million ($US87 million) sale of Britain's MG Rover to China's Nanjing
Automobile Group Corp (which may be challenged in the courts by China’s
biggest carmaker and rival bidder, Shanghai Automotive Industry Corp)
illustrates the new international trends in the automotive industry.

Volvo, for instance, though generally regarded as a Swedish car is owned
by Ford while the traditionally British Rolls Royce is now BMW-owned.
Volkswagen has bought up Skoda, although it is still generally regarded
internationally as a Czech car.

There should be an informed public discussion and debate on the future of
the first national car, in particular whether Volkswagen should be
allowed to acquire up to 30% stake in Proton, as this is an issue which
concerns the 26 million Malaysians and not just the Khazanah Board and
the government.


- Lim Kit Siang -



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