A friend of mine and I have always pondered, what was our Prime Minister doing when he handed out abolishment duty for inbound Japanese CBU and CKD packs by 2010 in exchange for duty free export of “fruits” (and others) to Japan in the recent Japan-Malaysia Economic Partnership Agreement (JMEPA), since we do not export any cars to Japan.

What we did not realise is duty free access to the Japanese market has increased the worth of Proton and it’s Tanjung Malim plant tremendously. A report by Forbes quoting AFX News says that the Malaysian government has short-listed Volkswagen AG to be Proton Holdings Bhd’s strategic alliance partner. Of course, being short-listed doesn’t mean Volkswagen will be the final partner chosen. Recent statements by the PM himself mentioned that the strategic partner will only be decided by Quarter 1 2007.

If Volkswagen is indeed The One, the deal will involve Volkswagen taking a 51% controlling stake in Proton’s manufacturing arm. Volkswagen wants to penetrate the Japanese market, and this is the reason for it’s keen interest in Proton – to use Tanjung Malim as an assembly base for Japan-bound cars. In return, Proton will receive sales aids and technology transfer.


Related Links: JMEPA Press Statement Page 1, Page 2