KUALA LUMPUR: The failure of the joint-venture project between Proton Holdings Bhd (Proton) and Goldstar Heavy Industrial Co Ltd (Goldstar) in Dongguan, China, has resulted in an estimated loss of US$5.78 million (RM20.4 million) for Proton, Prime Minister Datuk Seri Najib Tun Razak said.
Najib, who is also Finance Minister, said that the losses included the revolving capital in the said joint venture.
“The joint-venture contract clearly states that all disputes must be referred to arbitration. Therefore, in line with the Arbitration Agreement signed on July 6, 2007, Proton Automobiles (China) Ltd (PAC) had started arbitration proceeding against Goldstar in Singapore,” he said in a written reply to a question from Lim Lip Eng (Segambut-DAP).
Lim wanted to know why the joint-venture project of Proton with Goldstar in Dongguan failed, the losses recorded by Proton and the probability of Proton winning its case.
Najib said Proton’s chances of winning the arbitration proceeding were high as the action of Goldstar to file a legal suit in the People’s Court in Dongguan City clearly contravened the arbitration agreement.
It was also clearly in breach of the anti-suit injunction obtained by PAC in the High Court of Singapore, he said.
The joint-venture project is said to have failed following Goldstar’s failure to fulfil its contractual obligation to commence business operations in the given time and its failure to obtain approval from the government of China to enable the joint-venture company to produce passenger cars in the country. — Bernama