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