Malaysia puts heat on Proton to speed up foreign alliances
Malaysia puts heat on Proton to speed up foreign alliances
Agence France-Presse Kuala Lumpur
The Malaysian government is pushing national carmaker Proton to accelerate efforts to form strategic foreign alliances to help it penetrate the global market, reports said on Tuesday.
Despite dominating the domestic market, Proton has not had similar success overseas partly because it was slow in producing new models, Deputy Trade Minister Ahmad Husni Hanadziah told parliament.
He said Proton must follow trends in the automotive industry for local car firms to merge with global giants.
"We have asked Proton to find joint-venture partners to penetrate the international market," Husni was quoted as saying by The Star.
Proton has received proposals from three foreign car companies but needed to study them thoroughly to ensure that the national interest was protected, he said, without elaborating.
The New Straits Times quoted Husni as saying that Proton can compete in the increasingly tough domestic and global markets if it can lower production costs and come up with new models every six months.
Set up in 1983 as part of Malaysia's drive into heavy industry, Proton used to sell six out of 10 new cars in the country but its market share fell to 49 percent last year as sales tumbled to 155,420 units.
Following the recent withdrawal of its Japanese partner Mitsubishi Motors, its single largest shareholder, state investment arm Khazanah Nasional is said to be considering plans to allow a foreign carmaker to hold up to 20 percent of Proton.
Chief executive Mahaleel Ariff recently said Britain's MG Rover group was one of the foreign firms keen on potential "technical exchanges" but Proton would not rush to sign on a strategic partner.
Former premier Mahathir Mohamad, who was recently appointed adviser to the carmaker after retiring last October, has said a foreign partner was crucial but warned Proton must not be surrendered to foreign control as it would jeopardize Malaysia's status as an auto manufacturer.
Analysts have said it could be a long hunt for a Proton partner unless the government is willing to trade in its dream of a national car industry for a pragmatic foreign tie-up ahead of market liberalization 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.