Proton has no other choice but to undertake a management paradigm shift and look to work with others, as Malaysia’s limited population of 30 million doesn’t offer it the economies of scale to compete internationally. So says Dr Irwan Shah Zainal Abidin, director of the Asian Research Institute of Banking and Finance, as Bernama reports.

He said that the impending collaboration between the national carmaker and a foreign strategic partner (FSP) will maximise the manufacturing capacity at both Proton’s Shah Alam and Tanjung Malim plants. This will allow the company to compete effectively, regionally and globally.

“The time is ripe now for Proton to seek a partner, so that they can together build up capacity and not depend on the government in the future,” he said. He added that such a tie-up will give an edge to the FSP to use Proton as a hub to tap the ASEAN market.

Irwan said that a partnership will only benefit Proton, allowing it to obtain the transfer of technology from the FSP. The alliance will also have added value in terms of providing engineering management expertise to local vendors. “We can learn their management skills and work culture. Indirectly, this will help Proton shift into higher gear,” he stated.

In the long-run, the Proton-FSP collaboration will help rescue Proton’s ailing vendor network, which has been suffering given the automaker’s dwindling sales. The national carmaker’s current market share is only a meagre 14% compared to the 63 to 64% it enjoyed in the 1990s.

“So, if we have no joint-venture with any FSP, there is a possibility that these vendors will cease operations as the sales target cannot be met. The prospective FSP will inject capital into Proton, raise vendors’ activities and generate employment,” he explained.

The national carmaker is currently in the midst of securing a FSP, with China’s Zhejiang Geely and France’s Groupe PSA the potential candidates. Proton’s parent, DRB-Hicom, has said it will conclude and formally announce its partnership decision by the end of 1H2017, but will strive to complete the task as early as possible.

Last week, news reports indicated that Geely was planning to pull its bid due to DRB-Hicom’s indecision regarding the partnership. Meanwhile, PSA has confirmed that it has submitted an offer for the partnership, which would allow the French automaker access to Proton’s underutilised facilities as a production and export base, expanding the company’s presence in the South East Asian region.