How will ASEAN affect member countries' economies? How can Malaysia take a leadership role?
MOHAMAD: There are many things that we can do together. In the first place, the marketplace is going to be bigger. There are going to be 600m people in the ASEAN grouping. That market needs to be made use of. Not by opening all of the markets at the same time, but by giving some protection for the smaller markets so that they too can grow. The market of ASEAN should be open to ASEAN countries and this is the after-agreement for the ASEAN free trade zone agreement and that means imports and exports should be taxed as low as possible or not taxed at all.
So this opens up the market, but there is a need to select the products that can be traded tax-free within the ASEAN region. These should be national products of the member countries. National products should be defined as products where a considerable amount of the work is carried out in the country. What is happening now is companies outside ASEAN are taking the opportunity to put in as little local content as possible and yet regard it as an ASEAN product, and therefore as one that can be exported to other ASEAN countries almost tax-free. That is not right. It should be a much bigger proportion of local content to qualify for tax free imports and exports within the ASEAN region.
What are your goals and ambitions for Proton?
MOHAMAD: We want to make Proton a company that produces world-class cars that we can export to every country in the world. For the time being, Proton has only focused on producing cars for the domestic market and has been hoping to export cars to other countries. But other countries have other needs, so the cars produced in Malaysia are not suitable for many other markets in the world.
So Proton needs to study the market more thoroughly and produce cars which can be sold in those markets. The growth should come from export, domestic growth is limited. We are already selling 700,000 cars a year, and that is a big number for a country with a population of only 30m. We need to grow Proton through exports of quality products.
What kind of long-term roadmap can we expect from Proton?
MOHAMAD: First of all, we must understand world standards and we must design and build cars that conform to word standards. Today, a lot of electronics are being used to control the engines, to provide information to the driver as to what is happening, or what is going wrong, etc. All of these things must be incorporated into the Proton car. Of course, we are doing that already, but when you do these things, the price of the car would have to increase somewhat. We cannot produce cheap cars of high quality. High quality cars require a higher price, so that is what we are pursuing at the moment.
There are going to be 600m people in the ASEAN grouping. That market needs to be made use of.
Why is there so much mystery around 1MDB?
MOHAMAD: It is supposed to be a sovereign wealth fund. Now, sovereign wealth is about excess of funds earned by the government, which they need to invest in something. So they use this excess fund in order to invest, buy property worldwide, etc. But 1MDB is borrowed money. Borrowed money is not sovereign wealth, it is actually the opposite. The government will have to pay for what they borrow and therefore, they are setting off on the wrong foot. The borrowing I am told carries a very high interest and the commission paid to the negotiators for this loan is in excess of 10%.
In other words, you do not really pay a high interest rate, but you get only 90% of the amount the loan raises. That 90% carries much bigger interest than if you get 100%. So these are things that are worrisome. Also, there has been some investment in the Caribbean where the hedge funds are operating and our government should not invest in hedge funds. This is a form of gambling, and we know that hedge funds can collapse and if they collapse, they drag everybody down with it. That is why a lot of questions are being asked about 1MDB.