For the past six months, we have been hearing that the Chinese automaker Geely (owner of Volvo) is poised to takeover majority control of Proton. However today, Bloomberg reports that Geely’s billionaire owner Li Shufu complains that Proton keep changing its plans, “they keep changing, today it’s this, tomorrow it’s that.” Li is famous for being a jovial man with a very simple and modest lifestyle. The frustration is palpable and he hints of dropping a bid for Proton.
For the last two years, most foreign investors have been exiting Malaysia, spooked by 1MDB. Local investors are also in exodus mode, upset by the weak Ringgit, corruption and poor governance, draconian politics and religious tensions.The only investors keen on Malaysia have been China, who sees an opportunity to expand its One Belt One Road policy and make geo-political gains in the Straits of Malacca and the South China Seas.
Unlike the rail infrastructure projects which are essentially loans from China, the Geely-Proton deal is the highest profile “real” investment by a China based company. If the deal collapses, we can expect Li Shufu, sharing not very nice words to other potential China investors eyeing Malaysia. Will this be the start of China’s investment retreat from Malaysia?