This article first appeared in The Edge Financial Daily, on April 14, 2016.

KUALA LUMPUR: Minister of International Trade and Industry Datuk Seri Mustapa Mohamed rebutted the claim that the RM1.5 billion soft loan approved to Proton Holdings Bhd is a bailout.

The minister defended that the decision was based on the welfare of the 60,000 workers and the vendors community.

Mustapa said that the decision by the government took into account Proton’s history and brand.

“First, this is not a company owned by the government, but a private company [with a] history and the [fact that it] is a national car.

“Then we are also looking at the workers’ welfare, we have to remember that Proton vendors are not only supplying to Proton but also other (car) companies, if these vendors face a big problem, this will also affect their supply to other companies.

“These are among the rationale why we gave the soft loan to Proton,” Mustapa told reporters after launching the Maxus G10 MPV car at Menara Weststar yesterday.

He pointed out that 60,000 workers are directly affected, a huge number, and not many Malaysian companies have such a large number of workers.

Asked if the restructuring of Proton will involve job cuts, Mustapa said,”It depends on the management, but as I have stated in the statement on April 1, Proton must have a sustainable business model.”

Last Friday, the Cabinet approved the conditional soft loan to Proton. The conditions included seeking a strategic foreign partner, coming up with a turnaround plan, as well as strategic plan to expand its domestic and international markets.

Also, a six-men special task force to be led by Performance Management and Delivery Unit chief executive officer Datuk Seri Idris Jala is to monitor Proton’s transformation plan.

It is not known when the special task force will have its first meeting.

Mustapa acknowledged that Proton’s management has no issue with the conditions set by the government. However, he said the government will not be involved in the day-to-day operations of the car company but it will monitor its performance.

Moving forward, Mustapa said,”I hope Proton will do better, as that is important to the 60,000 people working in Proton and the vendor community directly supplying to Proton. We hope Proton will be in better shape in the medium term.”