Malaysia seeking foreign partner for carmaker Proton
Malaysia seeking foreign partner for carmaker Proton
Agence France-Presse, Kuala Lumpur
The Malaysian government is seeking a foreign partner for national carmaker Proton to boost its competitiveness, improve exports and tap new commercial opportunities, reports said on Wednesday.
State investment arm Khazanah Nasional, the single largest shareholder in Proton, is looking into the possibility of allowing a foreign car manufacturer to hold up to 20 percent equity in Proton, The Star quoted industry sources as saying.
Such a move would increase Proton's technological capability, create a global distribution link for Proton to sell its cars abroad and prepare it for market liberalization under the Association of Southeast Asian Nations (ASEAN) Free Trade Area (AFTA), they said.
A foreign tie-up would also help Proton gain economies of scale and cut production costs, they said.
"It is to strengthen the company. The capabilities can be built up. The sale may well be done within a year. Khanazah is willing to sell 20 percent but it also depends what the foreign party's appetite is," the source said.
Proton was set up in 1983 as part of Malaysia's drive into heavy industry, but its troubled Japanese partner Mitsubishi Motors Corp. (MMC) sold its entire 7.9 percent stake last month as part of an internal revamp.
Trading house Mitsubishi Corp., the core of the Mitsubishi group, holds another 7.9 percent stake in Proton but has denied it was also preparing to cash out.
Khazanah bought up 4.3 percent of MMC's stake to raise its interest to about 35 percent. The source told the newspaper that Khazanah was believed to be in talks to buy Mitsubishi Corp.'s 7.9 percent share to raise its holding to about 43 percent.
Khazanah intends to sell about 10 percent of its stake and has arranged for national oil firm Petronas, another key shareholder in Proton, to dispose of another 10 percent, the source said.
"After the disposal, Khazanah intends to still remain Proton's biggest shareholder."
The New Straits Times said Khazanah was expected to make more changes at Proton following the completion of the carmaker's internal restructuring.
Proton has more than 3 billion ringgit (US$789 million) in cash and has plans to aggressively compete globally, including introducing up to 20 all-new models on the road over the next decade and boosting sales to 10 countries including China and India, the daily said.
The Star said there may be plans to sell Proton's struggling British unit, Lotus group, amid concern about financial losses exceeding 800 million ringgit.
Proton has been protected for years by high tariffs on foreign cars but it will lose its edge under AFTA, where import tariffs for most products in the region were cut to below five percent from last year.
Malaysia obtained a two-year reprieve for its auto industry until 2005 but it recently said it would further defer reducing duties to the required level until 2008.
Proton's domestic market share tumbled to 49 percent last year from 60 percent in 2002, with car sales falling 27.5 percent to 155,420 units. It is pinning hopes on its new GEN-2 fitted with its own Campro engine and two other new models to be launched this year to revive sales.