By Jahabar Sadiq
KUALA LUMPUR, Oct 9 — A Malaysian tech start-up that helped sell Proton cars is hoping for a favourable appeals court ruling tomorrow over its bid to be paid commission for the online sales leads generated in its three-year venture with the national carmaker that began in 2006.
Electric Angels MSC Sdn Bhd (EA), which counted a grant from the Multimedia Development Corporation (MDeC Malaysia) as part of its capital, is suing Proton Holding Bhd’s distributing unit Proton Edar Sdn Bhd, over a Live Marketing Agreement that would give the tech company RM750 for every car sold through its online venture.
The agreement between both companies allows for arbitration but EA is now pursuing the matter through the courts to get early access to records as Proton Edar has not handed over sales records to determine the actual commission due to the start-up, which was founded by Australian, Pete Meehan.
EA earlier bid for the records was refused by the High Court due to the arbitration clause but it had appealed further to the Court of Appeal, which will issue a ruling tomorrow in Putrajaya, a stone’s throw from Cyberjaya where MDeC’s International Advisory Panel (IAP) is meeting Prime Minister Datuk Seri Najib Razak to review the country’s ambitious information communication technology blueprint.
Incidentally, the Multimedia Super Corridor (MSC) where EA is based, was founded by Tun Dr Mahathir Mohamad who wanted Malaysia to join the digital revolution, more than a decade after the country’s longest-serving prime minister founded Proton to spur the country’s heavy industrialisation programme. Dr Mahathir is now an advisor to Proton.
Industry observers say the court ruling will be seen with interest by many start-ups being wooed by Malaysia under its Digital Malaysia plan as it involves a Malaysian industry giant and a software developer in a joint venture that went sour, leaving the software developer saddled with development costs that have yet to be paid.
Proton, which started selling cars in 1985, was once a government-linked company under Khazanah Nasional Berhad but it was sold earlier this year to DRB-Hicom Bhd, part of logistics tycoon Tan Sri Syed Mokhtar Al-Bukhary’s business empire.
However, the court action began before Syed Mokhtar bought the carmaker, which has seen sales drop in recent years due to a poor range of car models and increased competition from second national carmaker Perodua.
According to documents and web pages sighted by The Malaysian Insider, the Proton Live system was based on a four years of research and development called “CarConverse”, which analysed the behaviour of thousands of website visitors in real time to target them with one-to-one messages and invitations for live chat conversations about Proton cars, prices and promotions.
Under the venture, EA organised interested parties to take test-drives and many finished up buying a car. However, Proton controlled the actual transactions and the number of sales generated by the Proton Live website was never fully revealed to the tech company within the three-year venture that ended in 2009.
The Malaysian Insider learnt that buyers were enthusiastic about the Proton Live service, which was also featured in automobile blog paultan.org in August 2007. It is understood that it still keeps records of compliments and praise from happy Proton customers which were shared with the carmaker but never used in any publicity campaigns.
It is also learnt that Proton Edar held exclusivity over the LiveMarketing service for the most part of the three-year contract, which meant EA could not re-sell the service to other carmakers and distributors in Malaysia, which is among the largest passenger car markets in Southeast Asia with some 600,000 cars sold annually.
It is understood that Proton sold at least 270,000 cars during the contract period but it is not known how many was generated through the online service but paultan.org noted that within a month of the contract inked in June 2006, “Proton’s car registrations with the Road Transport Department went up 21 per cent to 10,018 cars in July compared to 8,328 cars in June — effectively increasing it’s total industry volume in July to 32 per cent, up 5 per cent from June.” [source: http://paultan.org/2006/08/17/proton-sales-up-21-in-july/]
Meehan remains in Malaysia and has founded another venture employing Malaysian programmers for other applications.
He declined comment when contacted by The Malaysian Insider except to say he hoped for a favourable outcome that would pay for the LiveMarketing software development costs.