Selling Lotus a viable option: Mahathir

Tun Dr Mahathir Mohamad, Malaysia's former prime minister, comments on
Proton Holdings Bhd after billionaire Syed Mokhtar Al-Bukhary's
DRB-Hicom Holdings Bhd agreed to buy a controlling stake from the
government.

Mahathir, who helped found Proton and remains an
advisor, also comments on whether DRB should sell Proton's U.K. sports-
car arm Group Lotus International Ltd. The former premier made these
comments in an interview in Kuala Lumpur yesterday.

On selling Lotus:

"It
is a viable option and I think the new owners of Proton might consider
that. But, Lotus is not just a sports-car company. It is an engineering
and technology company. It's selling engineering skills to China and
helping people going into the industry."

Whether Proton's new controlling shareholder DRB-Hicom can make a difference:

"The
man behind DRB-Hicom is a successful entrepreneur. He owns ports and
businesses and took over DRB-Hicom from previous owner and has turned it
around.

"DRB-Hicom was a great failure before. It lost a lot of
money before he took it over and has turned it around. It's a profitable
company and many foreign automotive companies go to this company and
want them to be partners. They assemble Mercedes-Benz cars, Volkswagens
and Suzukis. They are financially strong. I am confident.

"Of course, they have a lot of borrowings. Nobody is rich with their own money. They are rich with money that they borrow."

On whether Proton still needs a global strategic partner:

"If
you go to Italy, small companies can design and build car, so you don't
need big companies to be with you. You can go direct to the very
companies which the big companies use.

"We see big companies are
more keen on swallowing us up. We feel we want to be independent.
Therefore, we go to the small companies and we can now build and design
cars of modern design by working through these small companies."

On what's needed to turnaround Proton's fortunes:

"I think a good management. There is nothing wrong with Proton, but bad management has caused it to come down.

"There
were times Proton was doing so well. It made so much money it managed
to build huge facilities, including a big manufacturing center costing 1
billion ringgit. These were internally generated funds and not by
borrowing from the banks or asking the government for money. It's not
usual for any car companies to be able to generate funds internally for
expansion. So it's not a failure.

"Today, it seems to be in a bad
way. Of course, there were things done which should not have been done.
For example, they allowed for the import of foreign cars, but these
people under- declare and do all kinds of funny things. As a result,
these foreign cars push out Proton from the market. So, we understand
the problem. We have a chance to recover."

Proton's challenges:

"One
time, we had a reserve of RM4 billion, which would able to finance the
growth of the future. Unfortunately, due to things done by the wrong
management we have lost the cash.

"In the automotive business you
need a lot of money. Each model, just for the platform requires half a
billion ringgit. We need that money. I hope the new investors will
provide the money."

On whether Malaysia really needs a national car:

"By
itself, a national car is not a need. We could buy cheaper cars by
importing them. An automotive industry generates a lot of engineering
skills and it can give us a lot of the other businesses.

"Now we
can manufacture components and produce a lot of other things. People who
look at Proton may think of it as a failure, but we think it has helped
Malaysia take many steps in the field of engineering." -- Bloomberg