KL won't force Proton to take on foreign partner<\/p>\n
Agence France-Presse, Kuala Lumpur<\/p>\n
The government will not force Malaysia's Proton to accept
\nforeign shareholders despite considerable interest from abroad in
\nthe national carmaker, Trade Minister Rafidah Aziz said in
\nremarks published Wednesday.<\/p>\n
Rafidah was quoted by the Business Times as saying that the
\ngovernment was aware that many parties were keen on joint
\nventures with Proton, not just to make cars for Malaysia but for
\nthe fast-growing region and other global markets.<\/p>\n
\"We cannot direct Proton to do it (sell a stake) because this
\nis a business venture,\" she was quoted as saying by the Business
\nTimes, when asked about renewed prospects of a new strategic
\nshareholder to help Proton expand its operations and stay
\ncompetitive.<\/p>\n
Talks of a strategic investor followed Prime Minister Abdullah
\nAhmad Badawi's recent statement that the government was open to
\nthe possibility of selling a major stake in Proton to foreign
\nparties, the report said.<\/p>\n
\"It is up to the (Proton's) board and it has indicated to me
\nthat it is talking to a few parties,\" Abdullah was quoted as
\nsaying.<\/p>\n
\"It has to be on a commercial basis and as long as it doesn't
\nsacrifice our interest... it's something that Proton has to think
\nabout.\"<\/p>\n
State investment arm Khazanah Nasional, which is now the
\nsingle largest shareholder in Proton after buying out the stake
\nheld by Japanese giant Mitsubishi Motors, is said to be
\nconsidering plans to allow a foreign carmaker to hold up to 20
\npercent of Proton.<\/p>\n
The government is pushing Proton, which said it had received
\nproposals from three foreign car companies including Britain's MG
\nRover, to tie-up with foreign auto giants to remain competitive
\nand to penetrate global markets.<\/p>\n
Set up in 1983 as part of Malaysia's drive into heavy
\nindustry, Proton used to sell six out of every 10 new cars in the
\ncountry but its market share fell to 49 percent in 2003 and
\ndipped further to 45 percent in the first half of this year as
\nsales tumbled.<\/p>\n
The carmaker is facing increasingly tough competition ahead of
\nmarket liberalisation in 2005 under the Association of Southeast
\nAsian Nations (ASEAN) Free Trade Area (AFTA).<\/p>\n
Under AFTA, import tariffs for most products in the region
\nwere cut to below five percent in the past year. Malaysia
\nobtained a two-year reprieve for its auto industry until 2005 but
\nhas said it would defer reducing duties to the required level
\nuntil 2008.<\/p>\n
Analysts have warned it may be tough for Proton to woo a new
\npartner unless the government is willing to trade in its dream of
\na national car industry for a pragmatic foreign tie-up.<\/p>",
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