ad info


Asiaweek TIMEASIA.com CNN.com
 > magazine
 home
 intelligence
 web features
 magazine archive
 technology
 newsmap
 customer service
 subscribe
 TIMEASIA.COM
 CNN.COM
  east asia
  southeast asia
  south asia
  central asia
  australasia
 BUSINESS
 SPORTS
 SHOWBIZ
 ASIA WEATHER
 ASIA TRAVEL

Other News
TIME.com
TIME Europe
FORTUNE.com
FORTUNE China
MONEY.com
Asiaweek Services
Contact Asiaweek
About Asiaweek
Media Kit
Get up to 3 months of Asiaweek free when you subscribe online!


JULY 14, 2000 VOL. 26 NO. 27 | SEARCH ASIAWEEK

National Follies
Proton and IPTN: lessons not yet learned
By PETER CORDINGLEY

The once-mighty British motor industry has just about disappeared up its own tailpipe. Many other Western manufacturers are either consolidating at home or picking off weakened Japanese and South Korean automakers. And around the world, lots the size of soccer fields are filling up with cars no one wants or can afford. So why does the Malaysian government think it can go it alone with its national car, the Proton? Possibly for the same reason some people in Jakarta continue to imagine there is hope for an Indonesian national plane. Despite the humbling lessons delivered by the Asian Crisis, neither the Malaysian nor Indonesian authorities seem to be getting the message — that the time has passed for Napoleonic follies that stand in defiance of economic law and the ever-tightening disciplines of globalization.

The Proton — a pet project of Prime Minister Mahathir Mohamad — has been stuck in low gear since the Asian Crisis began, despite hiding behind prohibitive tariffs on imported cars. For years the Proton was little more than a Mitsubishi with Malaysian characteristics, but it recently unveiled a new model, the Waja, that is largely designed and engineered at home. The hope is that the Waja will provide a fresh start. But there are a couple of problems: Its manufacturer, Hicom, suffered a net loss of $41.5 million last year. And Hicom's holding company, DRB, lost $55 million. To the rescue comes that savior of other troubled but well-connected Malaysian companies, the state-owned, cash-rich oil company Petronas. It plans to save Proton by buying it for $263.2 million. Says Kuala Lumpur investment consultant Lee Siang Chin: "For the nation, it is the right decision. The car project has to go to someone with enough money."

The new-look Waja, with its striking marque of gold tiger stripes and technological input from elite British subsidiary Lotus, may be more successful overseas than previous models — but only if vast sums of public money are spent on raising the Proton profile. But some wonder: Two decades after Hicom was set up, isn't it time to call it quits?

The numbers don't make much more sense at IPTN, the state-owned Indonesian aircraft manufacturer that was launched in 1976 with soaring ambitions (and the patronage of president Suharto) — and which now has debts to match. Created and run by B.J. Habibie, then research and technology minister and, in 1998-99, president, IPTN was supposed to transform Indonesia into Asia's leading plane-maker. Today, it owes $245 million to the Indonesian Bank Restructuring Agency, and perhaps another $130 million to other creditors. Plans for a regional jet and a sophisticated turbo-prop were dropped as a condition for International Monetary Fund assistance for Indonesia at the outset of the Crisis. But the company continues to turn out small turbo-props and some helicopters. IPTN president S. Paramajuda insists the corporation is adapting to market realities. "We are professional and entrepreneurial," he says. "We are a normal company." So "normal," in fact, that the only way that IPTN is likely to survive is if the government comes to its rescue and converts its giant debt to equity — all paid for out of public funds.

— With reporting by Arjuna Ranawana/Kuala Lumpur and Warren Caragata/Jakarta

Write to Asiaweek at mail@web.asiaweek.com

This edition's table of contents | Asiaweek.com Home

AsiaNow


Quick Scroll: More stories from Asiaweek, TIME and CNN

   LATEST HEADLINES:

WASHINGTON
U.S. secretary of state says China should be 'tolerant'

MANILA
Philippine government denies Estrada's claim to presidency

ALLAHABAD
Faith, madness, magic mix at sacred Hindu festival

COLOMBO
Land mine explosion kills 11 Sri Lankan soldiers

TOKYO
Japan claims StarLink found in U.S. corn sample

BANGKOK
Thai party announces first coalition partner



TIME:

COVER: President Joseph Estrada gives in to the chanting crowds on the streets of Manila and agrees to make room for his Vice President

THAILAND: Twin teenage warriors turn themselves in to Bangkok officials

CHINA: Despite official vilification, hip Chinese dig Lamaist culture

PHOTO ESSAY: Estrada Calls Snap Election

WEB-ONLY INTERVIEW: Jimmy Lai on feeling lucky -- and why he's committed to the island state



ASIAWEEK:

COVER: The DoCoMo generation - Japan's leading mobile phone company goes global

Bandwidth Boom: Racing to wire - how underseas cable systems may yet fall short

TAIWAN: Party intrigues add to Chen Shui-bian's woes

JAPAN: Japan's ruling party crushes a rebel at a cost

SINGAPORE: Singaporeans need to have more babies. But success breeds selfishness


Launch CNN's Desktop Ticker and get the latest news, delivered right on your desktop!

Today on CNN
 Search
  ASIAWEEK'S LATEST
Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?


  THIS EDITION

COVER: Business Outlook
Lessons Asian companies and countries are forgetting the lessons of the Crisis and putting recovery in danger
- Debt: Begging for forgiveness in Japan
- Banks: What Danamon did right, what the PNB did wrong
- Overdrive: How carmaking ambitions sank Ssangyong
- Megaprojects: IPTN and HICOM may end up as megafailures
- Reform: Cathay Pacific, Toyota, Ayala, Delgro and other giants
- Smart Money: Where to invest in the coming 12 months

EDITORIALS
Migrants: To fight human trafficking, regulate labor flows

Taxes: Nations must be careful about e-commerce levies

THE NATIONS
PHILIPPINES: Joseph Estrada's second-anniversary highs and lows
- Talking the Talk: He said what?
- People To Watch: Checking out the young guns

DIPLOMACY: India's president sees China as "a new world"

TAIWAN: So did Chen say "one China" or not?

MONGOLIA: Why the communists are back

MALAYSIA: Behind UMNO's "reformasi"
- Interview: Musa Hitam dares to criticize from within

Viewpoint: Entertainment and free media will decide our leaders


EYEWITNESS
Yangzi: Construction and controversy at China's Three Gorges

ARTS & SCIENCES
Theater: Singapore talents find cross-cultural success

Health: The rise in office injuries and what you can do about it

Books: Mournful meanderings through Laos

TECHNOLOGY
Crunchtime: Asian dotcoms shift into survival mode, slashing jobs and budgets as funding evaporates
- Bottomfishing: Cash-rich China.com buys revenues
- Net Ads: DoubleClick's Kevin O'Connor waits for the wave
- Cutting Edge: Mega Pixels, Micro Drive

NEWSMAP
This week's news round-up by country

STATISTICS
The Bottom Line: Asiaweek's ranking of world economies


Back to the top   © 2000 Asiaweek. All Rights Reserved.
Terms under which this service is provided to you.
Read our privacy guidelines.