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.