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Location: Penang, Malaysia

January 18, 2005

The social burden and the second independence

We obtained our independence from the British on August 31, 1957. The Union Jack was lowered and the new Persekutuan Tanah Melayu flag was raised, thus symbolizing that we are on our own, breaking away from colonial rule. Then, we formed Malaysia in 1963 together with Sabah, Sarawak and Singapore. Oil rich Brunei said "No, thanks" at the very last minute. Two years later, Singapore decided to go on their own due to certain reasons. No going to elaborate this today, perhaps, someday. We celebrated our 47th independence day last year. We called it National Day. Some people might cry when they recall of their struggles and their sacrifices to build better life for the coming generations. As people used to say, we have come a long way to get here.

In the year 1933, Adolf Hitler met with Ferdinand Porsche to start up a project so that all the Germans could afford to buy economical cars for themselves. Hitler specified the requirement of the car where it could carry 5 passengers (including the driver), run up to the maximum speed of 62 miles per hour, fuel consumption at 33 miles per gallon, and cost only 1000 Reichmark (I don't really know the value of a thousand Reichmark, but I have a piece of 10-thousand Reichmark note). Well, that's how Volkswagen was born, the name which literally means "people's car" in the German language. Today, Volkswagen is the largest automobile maker in Europe. They have come a long way to get here.

In the year 1983, Proton was established as an initiative to produce Malaysian cars. The Japanese company, Mitsubishi Motors provided 70% of the capital in the form of Yen loans and took 30% of the equity. The first car name Proton Saga rolled off the assembly line in July 1985. Of course, it is derived from an old Mistubishi model and rebadged as Proton Saga. It is sold at the very competitive price at around RM18,000 at that time. The nearest competitor is Nissan Sunny 130Y. In order to boost local sales, import tax was raised tremendously as a way to protect this start-up. On the other hand, Proton also trying hard to boost its image by exporting it to overseas' markets. There comes the special export version with all the higher grade materials, better safety features, and are being sold at a price lower than the domestic version. What??? Yes, Proton has also come a long way to get here.

With the introduction of the regional tariff reduction program, i.e. the ASEAN Free Trade Area (AFTA), import tax has to be lowered in phases. It was supposed to be effective on Jan 1, 2003. In order to protect Proton for another 2 years, it was pushed out to Jan 1, 2005. Many Malaysians are hoping for cheaper cars. However, the government announced on the new year eve that car prices will go up instead. This is due to the increase in excise duty which is applicable to all cars. This is a very interesting development indeed. The reason given by the government is that they are not going to lose the revenues from import tax. Well, they have forgotten the reason for the tax at the first place. Import tax was slashed to 20% from as high as 190%, while excise duty was rasied to between 90% to 250%. On the other hand, Proton is still being protected with 50% excise duty rebate and this is critized by Thai automakers. By the way, raising the car prices will also lead to inflation but I don't think they care. A simple analogy here, the char-koay-teow ah-pek has to charge RM3.00 instead of RM 2.50 for a plate of noodles because he has to pay higher monthly hire-purchase installments for his new Proton Gen2.

I am sure by now you should be able to identify the social burden. Imagine that you see a mother holding his 22-year old son's hand and still teaching him how to look out for cars before crossing the road. What a shame! Then, what about the second independence? Well, look at it from two different angles. The second independence comes when either Proton can stand by its own feet or it closes down totally. I think we still have a long way to go before we get there.


Blogger Finn said...

This will increase the living standard but not your wages. All big brothers not to worry much as they do not have the burden. Gen2 is an old version of technology which most developed country would not want to use on their car. Gen3 is already on the market long ago.

7:54 PM  
Blogger Finn said...

Smart hawker will apply 10% service charge cum increase the price, else you will asked to prepare yourself.

11:20 AM  

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