Monday, February 23, 2004

MALAYSIA BUCKS THE CONSENSUS



Washington Consensus, that is. In a marked move of unprivatization, Malaysia's Perusahaan Otomobil Nasional, makers of the Proton, may buy back Mitsubishi's 15.8% stake in a joint venture with this state-owned company ahead of regional trade liberalization in 2005 w/in ASEAN.

Note the different spins given to the same story in the WSJ and in the FT .

The market fundamentalists over at the WSJ writes about Mitsubishi offering up its stake and in so doing creating more competition in the Malaysian market. The somewhat less fundamentalist marketeers at the FT write of Proton disposing of Mitsubishi's share. Given this move, Proton may be rather optimistic about its prospects in a liberalized market. So, who has the upper hand in the deal?

The WSJ writes: The proposed sale underlines Mitsubishi's diminished role in Proton, which increasingly has sought to cut its dependence on its Japanese partner by acquiring auto-engineering concerns such as the Lotus Group International of Britain. Proton, for example, has begun making its own engines, which it previously bought from its Japanese partners.

Malaysia, whose deployment of capital controls staved off most of the Asian flu afflicting most of its regional neighbors in the late 1990s, seems quite pleased with its with industrial policy as well. Proton may have succeeded in appropriating more advanced technologies from its partner, but it will remain to be seen how the state-owned firm will fare when the tarrifs come down.

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