Mahathir’s Proton ‘tax’ was far worse than the GST

Oleh rmf


t’s so easy and fashionable to bash the GST, a modest tax universally supported by economists. Some perspective is necessary: The GST is nothing compared to the Proton ‘tax’ that Mahathir slapped on Malaysians when he was prime minister. Never doubt Pakatan’s capacity for collective amnesia. So, here’s a history refresher for their benefit

In 1983, Proton was born, and Malaysians would spend the following decades subsidizing this sickly, incompetent offspring of Mahathir. His government, compassionate as a cold sledgehammer, imposed import tariffs of up to 300 percent on foreign cars. Three. Hundred. Percent. Malaysians were herded toward two choices: Option A – buy a car for a price two, three, or four times more than the actual value. Option B – buy a Proton.

You can probably guess which Mahathir favored. Mind you, Proton cars were never that cheap to begin with. Because foreign vehicles were so much more expensive, Proton had an outrageous advantage – it could set whatever price it wanted. Ultimately, Malaysians were forced to pay a princely sum for a woefully substandard car – recall how Proton drivers struggled with power windows that would frequently jam.

It’s not like Malaysians had much choice. In his single-minded obsession with Proton, Mahathir neglected to develop public transportation. Services like the LRT, KTM Komuter, and the monorail were hampered by a very limited geographic reach, and plagued by frustratingly long waiting times. Owning a private vehicle remained an absolute necessity, and so Mahathir’s transportation policy essentially became a steep tax on all working Malaysians.

To his great credit, Najib has been trying to correct this, pouring massive investment into public transport. Existing facilities are being upgraded (see the timely extension of the LRT lines) and new ones, like the sprawling MRT system, are being built.

One wonders why this sort of ambitiousness was missing during the Mahathir years. He had 22 long years as prime minister. In that time, we could’ve established an efficient and accessible public transportation system equal to that of Japan’s. This is the great irony of Mahathir’s ‘Look East’ policy: We failed to emulate Japan in the most crucial regard.

In Japan, cars are made to be sold abroad, while locals enjoy the use of highly efficient trains. In Mahathir’s Malaysia, cars are made to be sold domestically because Proton gets squashed by overseas competition, and locals suffer from unspeakably bad public transport. So much for the laughable perception that Mahathir was some sort of genius. It’s unclear where he was looking when he urged us to ‘Look East’. Perhaps in the mirror?

Things would be entirely different if Proton turned out to be a success. But the company has been perpetually in the red, repeatedly needing taxpayer rescues. And for all the aid it received, Proton’s market share plunged from 74% in 1993 to around 15% today. Given that Proton was a centerpiece of Mahathir’s economic policy, it will always be a far bigger scandal than 1MDB. We must never let him forget this.

We have had to pay out of our pockets to keep Mahathir’s baby on life support, and for what? Money paid to satisfy Mahathir-era tariffs could’ve been used to make a down payment on a house, pay for a lifesaving medical procedure, or start a business. Think of the many thousands of ringgit we’ve lost as individuals to Mahathir’s automotive extortion.

The GST, at the very least, makes BR1M possible and funds the enhancement of public transport. We see concrete dividends from our money. In contrast, the Proton’s only beneficiaries are a few politically connected businessmen and the insatiable ego of one former dictator.

Even today, Proton looms large in Mahathir’s mind. With China’s Geely acquiring a 49.9% stake in Proton, he whines that the company is being carted off to foreigners. Should Pakatan come to power, I suspect Mahathir will force the new government to reverse this. A new era of Protonism would then commence – at our expense, of course. In the meantime, this country is moving on.

In 2004, The Economist wrote, “Proton represents all that was wrong with Dr Mahathir’s Malaysia: a firm born of nationalist ideals not commercial rationale, protected by old-style cronyism and never exposed to real competition. Like its creator, the best thing may be to let it go gently into retirement.”

I couldn’t agree more

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