Proton's recent request for 20 more years of tariff protection is so ridiculous. I wonder if Proton's management has truly learned anything after 20 years in the business.

The auto industry is a tough mature industry where the key factors for survival are a) size and efficiency and b) incremental technological progress. As a small general carmaker, Proton cannot possible compete with the giants in the long run without expanding its market beyond Malaysia and achieving marginal but constant improvements in product and technology.

So what is wrong with giving Proton protection, maybe forever? The main reason is Malaysia is a trading country. If it wants to continue expanding that trade, it must commit to free trade with others. The auto industry is the highest on the agenda of any free trade agreement.

Secondly, protection of manufacturing companies are costly and inefficient. The high cost of protecting Proton has lead to higher cost in the supply chain of production and services of other products. It is in fact like a high tax rate that makes not only keep the auto-industry inefficient forever, but also other industries as well. And for what? For workers that are better deployed elsewhere? For misplaced national pride in a bad product? For the political and financial interests of a few?

Proton must compete or die. It is not only a fact, but a symbol of our country progress towards competitiveness. To delay the removal of protection of Proton is to only delay our own progress. It also sends wrong signals to investors, workers, and consumers.

Few countries today have an auto industry that does not have the global auto giants playing a role. Even the protected China market is dominated by foreign auto joint-venture companies. Korea tried to protect their auto industry, but all of them is not at least partly owned by one of the global auto giants. All small European carmakers have either perished or been swallowed by the giants (except of niche players like Porsche and Ferrari).

The truth is the auto industry is a very tough business with very narrow margins. There is no point making a Malaysian car if our product loses out to Thailand. Malaysia has a chance to be an auto-industry hub if it chooses to give up its emotional view of Proton. Otherwise we can, for the moment at least, indulge in national thumping and false hope, while giving up jobs and growth to our neighbours.