Proton considers tie-up with firms

Proton considers tie-up with firms

Agence France-Presse, Kuala Lumpur

Malaysia's national carmaker Proton is in talks with three foreign firms, including Britain's MG Rover group, for possible tie-ups but will not rush to sign on a strategic partner, a report said Monday.

Proton chief executive Mahaleel Ariff was quoted by the New Straits Times as saying that MG Rover was one of the parties in potential "technical exchanges" and Proton was looking at supplying car platforms to the British carmaker.

In return, he said Rover could provide some of its own platforms to Proton.

Mahaleel said Proton would not be hasty in its search for a foreign partner as it must ensure that any strategic tie-up would benefit the domestic car industry in terms of technology, foreign investment, employment and exports.

Japanese giant Mitsubishi Motors remains a "technical partner" despite its recent withdrawal after two decades and Proton also has strategic alliances with the British Lotus Group, which it owns fully, and French automaker Renault, he said.

Mahaleel said he was not concerned that Proton had not managed to establish a global brand name for itself since its inception in 1983 as part of Malaysia's drive into heavy industry.

"The South Korean car industry started in the 1960s and it took them 40 years to get this far. You're asking us to be world champion at half time ... we've still got another 20 years to go to where they are today," he said on Proton's failure to copy the South Korean carmakers' success.

Mahaleel said Proton would invest five billion ringgit (US$1.32 billion) over the next five years to research and design "new breakthrough" cars to become a world class producer.

The company employs some 10,000 people worldwide, including some 1,400 research and design engineers, and needs another 300 engineers in the next 18 months to boost its technological capabilities, he added.

Proton has aggressive plans to put up to 20 new models on the road over the next decade to become a medium-car powerhouse and a major player in Asia, despite competition from Thailand which has emerged as a regional assembly hub for car manufacturers, the report said.

State investment arm Khazanah Nasional, the single largest shareholder, is said to be considering plans to allow a foreign carmaker to hold up to 20 percent equity in Proton after Mitsubishi Motors bailed out recently.

Trading house Mitsubishi Corp. still holds another 7.9 percent in Proton and is believed to be in talks to sell it to Khazanah.

Former premier Mahathir Mohamad, who was recently appointed adviser to Proton after retiring last October, has said a foreign partner was crucial but warned Proton must not be surrendered to foreign control as this 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 was willing to trade in its dream of a national car industry for a pragmatic foreign tie-up.

Proton used to sell six out of 10 new cars in the country but its market share plunged to 49 percent in 2003 from 60 percent in 2002 as sales tumbled to 155,420 units.