Admist all the talk about survival of Proton, one of the biggest myths that is prevalent - pounded in by Dr Mahathir Mohamad himself - is that the failure of Proton would result in a large loss of jobs and high paying ones at that.

The truth is that if Proton were to fail today, the economic loss, including job loss, would be minimal. But if it were allowed to fail in the future, then the pain would be much worse.

Any national loss caused by the failure of Proton would really involve the automobile market rather than the industry itself. If Proton were to fail, the demand for cars in this country would not change.

If the government does not change the tariff structure for cars, the tax that the government would collect from all the cars sold in this country would still be large enough for the government to spend its way out of any economic loss.

And a large sensible infrastructure project for example, a high-speed train from Singapore to Thailand or subsidising broadband rollout throughout the country, would more than make up for any number of quality jobs lost.

If the tariff was to be reduced significantly, then the demand for cars would increase, making Malaysia a very attractive place for foreign auto companies to build cars.

In fact, this would have been a better alternative for Malaysia had the government not protected Proton for so long thus allowing Thailand to catch up in terms of market size and infrastructure. As it stands now, Malaysia may or may not be able to build a competitive car industry.

The car industry is an epitome of manufacturing and hence one of the top determinants of its success is size and scale. While there is a demand for niche products, developing a unique niche is very, very difficult (It's not likely that Proton will ever be like Porsche, the only real successful niche car company in the world).

Anyway, the government can increase the size of the Malaysian market and make it more attractive for foreigners to build cars in Malaysia by simply removing the tariff it imposes. The loss of car tariff revenue would more than made up by the doubling of the car market and the building of more tolled roads. There would not be much job loss.

As it stands, the Malaysian government may lose any advantage it still has if Thailand continues to expand its car market and car industry.

The longer the Malaysian government waits to take action, the less advantageous the tools it has available. Once Thailand becomes established as a car industry hub, there is no way, at least for Malaysia, to dislocate it.

In fact, it is very conceivable that one day, Proton may be controlled by a foreign company and have its plants moved to Thailand - eventually losing whatever jobs it created anyway.

In other words, any economic or job loss by Proton, now or in the future, would really be the responsibility of the government. It has squandered not only money, but also opportunity.

What a lot of people do not see - or know but would not say - is that Proton is really a direct transfer of wealth from car buyers to the manufacturer. The argument about creating jobs and new industry no longer holds water and the longer that argument is proposed, the worst the problem it creates.

In that sense, the government lowering tariffs under Asean Free Trade Agreement is an extremely good thing. At least the government will get to collect more taxes which, hopefully, it will spend wisely or retain even just to improve its fiscal position and its credit rating - all of which would create more jobs and economic gain than Proton could offer at this juncture.