Mahathir’s national car policy a big mistake

Khazanah’s sale of its 43 per cent stake in Proton to DRB Hicom will close an unhappy chapter for the Malaysian government’s foray into the production of a so-called ‘national car’. Millions of ringgit have been lost.

It was a big mistake from the word go.

First, we did not have the expertise or competitive advantage to produce cars. The anticipated technology transfer did not take place quick enough.

The opportunity costs have been tremendous:
- the national car policy indirectly promoted the construction of lucrative tolled highways (and in the case of Penang, tolled bridges and tunnels) for concessionaires; ordinary motorists carry the burden.
- for a long time, public transport was neglected. We could have had a fantastic, modern rail, LRT and even tram system, but instead, the development of our train services drew to a screeching halt in the 1980s and today, the train service is reminiscent of the 1970s. In Penang, the ferry service was neglected and the terminal that collapsed on the mainland in the late 1980s was never rebuilt.
- the promotion of the national car, along with easy car loans, led to increasing congestion on the roads, as more and more people relied on private motor vehicles.
- the market was protected and higher import duties for other makes and little competition for Proton meant that Malaysians had to pay a much higher price for imported cars.
- car loans grew to become a significant component of rising household debt.
- the dependence on motor vehicles puts Malaysians at the mercy of higher oil prices.
- the promotion of private motor vehicles is environmentally unsustainable.
- huge investments are needed for road infrastructure, maintenance and widening – money which could have gone to improving our public transport infrastruction
- hundreds of millions of ringgit have been spent on government subsidies for Proton, investment into Lotus (including Formula One sponsorship), etc.

For all this, one man is principally responsible. The national car policy was after all his pet project. And what a tremendous price we have paid.

Anil Netto