6 key differences between Proton in the 1980s and DreamEdge today

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Name something that is quintessentially Malaysian, and after all the food choices and been said, chances are someone will probably say Proton. The first national car has been around for decades, and regardless of your opinion on it, it remains part and parcel of Malaysian industry and culture.

But, there’s a new contender in town. Since coming into govt following GE14, Mahathir has seemed pretty adamant about a new national car for Malaysia. Yes, we know there’s Perodua, but Mahathir allegedly doesn’t consider them a national car. And now, it’s official: the new national car is set to be developed by a local company called DreamEdge Sdn Bhd.

Before y’all start banging on about why it’s good or bad to have a new national car tho, let’s first break down some key differences between the situation DreamEdge finds itself in, versus Proton’s early years as a baby car. And perhaps one key difference many might want to know is that…

 

1. There won’t be any bailouts from the govt for DreamEdge if it fails

We know what some of y’all were probably thinking when Mahathir announced that there’s gonna be a new national car – “Aiyo, more of my taxpayer money gonna be used to save these white elephants?”. Well as it turns out, there seems to be no plans for that to happen.

“We are just supporting the ecosystem and this is the way forward. If it fails, that is management failure, product failure…. If they ask for money, we will not support it,” – Darell Leiking, International Trade and Industry Minister, as quoted by The Edge

As for whether the govt will keep thru with that promise of course remains to be seen, considering the patchy history Proton had when it came to needing ‘soft loans’ and ‘bailouts’ from the govt back in the day.

One of the earliest of such bailouts for Proton happened just a few years after its launch, recalls economist Jowo Kwame Sundaram. In his book ‘Japan and Malaysian Development‘, he writes that Proton had been losing money for four years straight, with the then-fledgling company RM52million in the red in 1987. As such, they had to ask the govt for a ‘soft loan’ to help them out which Putrajaya agreed to. Things didn’t work out that much better in more recent years either, with Proton getting a RM1.25 billion bailout as recently as 2016.

 

2. DreamEdge might not have the same tax advantages that Proton had in the 80s

Now despite some financial trouble early on, Proton actually did okay in terms of their sales numbers, with Proton garnering a 65% market share of the local car market for 1989. One thing that did help them out tho was that Proton had help in the form of heavy tariffs on imported cars, allowing their prices to stay low while others seemingly continued on the up.

Just how high were the taxes on foreign cars back then? Well a 1990 article in the LA Times puts the tariffs between 100% to 300% for imported cars while foreign companies who assembled cars here had to fork out an extra 35%. Proton however were only subjected to an extra 10%.

Today, the market for DreamEdge to penetrate is a little bit tougher. Over the years, tariffs and taxes on foreign cars have slowly been whittled away, with Najib’s administration for example removing a 10% import tax on Japanese vehicles. Overall, taxes on foreign cars have dropped to around 60% to 105%. Meanwhile, there’s an additional 10% duty for cars assembled locally or 30% for those fully imported.

In fact, it might get tougher for DreamEdge too as it was reported earlier this year that the govt is looking at a possible reduction in excise duties for cars, allowing for even lower car prices across the board.

 

3. DreamEdge has been in business for some time already

Proton is perhaps notable for being the brainchild of a certain Dr M, who wanted a national car to drive forward Malaysia’s industry. As such, the govt would approve plans for the national car project in 1982, laying the foundations for the formation of Proton on May 7, 1983.

DreamEdge however, is not one of Dr M’s ideas. Instead, DreamEdge has actually been around for over a decade, having been formed in March 2007. The Cyberjaya outfit is in fact quite well established, with offices in Malaysia, Japan and Turkey too. Their main areas of expertise and interests includes robotics, engineering, manufacturing and augmented design. Our friends at Soscili even interviewed them a couple years ago, before they became this well known!

“We are serious about filling the gaps in the nation’s knowledge-based economy,”- Khairil Adri Adnan, DreamEdge CEO in 2015, as quoted by The Star

Not all has been rosy for DreamEdge tho. The Edge reported that they were financially in the red for 2016 and 2017, with no data available for 2018 either.

 

4. The new national car claims to be privately funded

So earlier on we mentioned that the govt won’t be bailing out the new national car project if it fails, and it’s probably cos this new national car is set to be a private-sector initiative. Or so we thought.

It turns out that DreamEdge was once majority-owned by the Malaysian Industry Government Group for High Technology (MIGHT), which in turn is a govt-controlled entity. MIGHT’s subsidiary VentureTECH meanwhile apparently owns 52.63% of DreamEdge, leading to criticism that this new national car project isn’t really a private-sector initiative.

“The company certainly needs a large injection of funds. And I am certain the funds will come from the biggest shareholder which is the government. VentureTECH is 100% owned by MIGHT. MIGHT is also 100% owned by the Malaysian government. If this is not public funds, then is it money belonging to Lim Kit Siang?” – Wee Ka Siong, MCA President, as quoted by Malaysiakini

In response to this, DreamEdge CEO Khairil Adri Adnan claims that VentureTECH’s share in the company has dropped to 10% since 2017. Darell Leiking meanwhile said that he never claimed DreamEDGE was a completely 100% privately-owned, but rather that the project will be 100% privately-funded, without any money from the govt going into the project, be it bailout or funding or R&D money.

“It’s privately funded. No government funding at all…. DreamEDGE would be the anchor who will lead it on a private-funding basis,” – Darell Leiking,  International Trade and Industry Minister, as quoted from Free Malaysia Today

This of course puts it in a very different position from Proton, who went thru a merry-go-round of govt-linked owners and funding such as Petronas and Khazanah, before going into the hands of its current parent company Geely.

 

5. Their foreign partner won’t be taking a stake in the company

When Proton launched in the 1980s, they had the help of a foreign strategic partner in the form of Japan’s Mitsubishi. That deal also saw the Japanese car maker take up an initial 30% stake in Proton. Their involvement in Proton expanded in 1988, when former Mitsubishi exec Kenji Iwabuchi became Proton’s managing director til 1993. His time saw Proton embrace Japanese-styled manufacturing techniques, and Proton would go on to post a profit in 1989.

Just like Proton, DreamEdge will also be partnering with a foreign strategic partner to help them out in their first foray to the automobile production business – Daihatsu.

The difference however, is that for DreamEdge, their foreign partner will not be taking stakes in the company. This is probably because Daihatsu already has stakes in Perodua, so it might get kinda awkward for them to also end up with stakes in what could be Perodua’s rival. What Daihatsu will do instead is to provide advanced tech support to DreamEdge to help them with designing and building the new national car.

And speaking of designing the car…

 

6. DreamEdge won’t reuse existing car designs (kinda)

While Proton’s initial car was a rebadged Mitsubishi (and some of their latest are rebadged too), the claim coming from DreamEdge is that they will be fully designed and developed by locals.  

“The new national car will be fully designed and developed by Malaysian engineers, with the technology support of Daihatsu,” – Darell Leiking,  International Trade and Industry Minister, as quoted by Free Malaysia Today

DreamEdge’s focus will be on the body, interior and interface systems of the new car. We said ‘kinda’ above tho cos as mentioned earlier Daihatsu will be providing tech support and we don’t know if this means just helping to develop the engine or providing the whole vehicle platform. They also haven’t decided if the new car will be a hybrid or use a conventional engine.

What we do know however is that it would be a B-segment sedan (altho widely mentioned as C-segment at first, this was later corrected), and that a prototype of the new national car would be revealed by March of 2020. The car is then set to be ready for sale a year after that. DreamEdge also apparently won’t be having a plant to build the car, but instead will contract out manufacturing.

 

Despite the differences between Proton and DreamEdge, one thing stayed the same…

…Mahathir.

While he certainly wasn’t responsible for founding DreamEdge nor was he apparently responsible for picking DreamEdge as the anchor company for the new national car project, our Prime Minister was pretty persistent that Malaysia should have it’s own national car again. This comes even after some backlash from the rakyat, which apparently annoyed Mahathir enough that he called out his critics earlier this year.

“Don’t buy Malaysian cars, buy foreign cars. Don’t go into third national car because it is bad… They know nothing about automotive engineering. That’s why we are introducing the third national car. To learn. Please learn to learn.

Malaysians think they know everything already. They don’t want this car because it’s a waste of money. They think they know everything about automotive engineering. They know nothing,” – Mahathir, in March 2019, as quoted by Malay Mail

Mahathir throwing shade at his critics aside, this is certainly reminiscent of the early days leading to Proton’s foundation. It’s claimed by some that despite a few of his personal advisors being against the idea of Proton, he went ahead and founded it anyway, with Proton being a symbol for Malaysia’s industrialisation and ultimate goal of being a first world nation.

Even in his 90s, he maintains his stance that we need a national car for ourselves. But as for whether or not this ends up being a masterstroke from Mahathir or a black mark on his return to Putrajaya remains to be seen.

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