Isnin, 12 Jun 2017
PROTON went into trouble but EON shareholders had cashed out long ago
The story of Proton had gripped Malaysia recently but the real beneficiary of Proton was a company called EON, which was appointed the exclusive distributor for Proton cars right at the start.
Yes, Proton was created to make the cars while EON was also created to sell it - which is a strange arrangement since Proton could have easily set-up its own dealer network (which it later did, 20 years later called Proton Edar).
But has anyone ever asked why a Singaporean had owned up to 20% of our then National Car distributor EON right from the start and was Deputy Chairman?
Yes, Singaporean Rin Kei Mei (who passed away a couple of years ago) was a long-time Mahathir friend (said to have met him while Mahathir was studying in Singapore) and was rumoured to be the person who had asked Mahathir to set-up Proton. http://seruankeadilan.tripod.com/16-30_jul_03/berita_utama1.htm
In fact, Mahathir is so close to Rin that when Mahathir went to China in 1997 to try and set-up a jointly owned engine factory, RIn went along and was made Vice Chairman of that JV too:
However, Rin was not able to hold shares directly in Proton but held a big stake in EON instead - so he can profit from Proton.
According to professor KS Jomo, from the start, Proton had sold the cars at a very favourable price to EON,
On top of that, EON added in all sorts of "optional mandatory" accessories costing thousands per car that were clearly vastly overpriced and increased their already-fat profit margins.
If you don't accept the accessories package then you will have to wait a long time for delivery - so you were forced to accept the package.
And worse is that the book says that an additional 0.9% was added to the bank interest rate for your car loan and this amount was given back to EON by the bank.
So, not only did EON make money off from Proton from cheap prices, they forced their customers to buy overpriced accessories, they also forced their customers to pay them a cut of their monthly loan installments for years.
In fact, stories abound that many customers also had to bribe the then very arrogant EON salespersons if they want to buy a car - making many EON salespersons millionaires.
They could do all the above because there was little competition then since Mahathir govt's then had imposed 100% tax on comparable locally assembled cars and 300% on fully imported cars.
EON's growth was explosive (as you can see in the charts). Profits and total assets owned expanded like crazy. In fact, total assets grew a staggering 5,100% within a few years of setting up.
Heck! EON was even more profitable than the already super-profitable Mahathir's friends YTL with their hugely lop-sided IPP power agreements!
EON got so rich that they eventually ended up buying and owning their own bank, EON Bank - probably the first car distributor in the world who ended up buying their own bank.
EON Bank was eventually sold to Hong Leong for RM5.4 billion later on - with Rin being a major shareholder and pocketing billions.
EON is pretty much history while Proton is in trouble now - but all of the EON shareholders already made their billions many years ago.
Now, do you still want to cry together with Mahathir when 49% of Proton was finally sold?
KS Jomo about EON: http://bit.ly/2sq7xi0