Proton seeks foreign tie-ups

Proton seeks foreign tie-ups

Agence France-Presse, Kuala Lumpur

Malaysian carmaker Proton said on Wednesday it was in talks
with several foreign parties about possible alliances after
shareholders approved a major restructuring plan to gear up for
competition under a regional free trade pact.

Chief executive Mahaleel Ariff said Proton's shareholders gave
their full support to the revamp that would pave the way for the
company to enter new tie-ups after a parent company is set up
ahead of Malaysia's entry to the Association of Southeast Asian
Nations (ASEAN) Free Trade Area (AFTA).

The new company is expected to take over Proton's listing
status by the first week of April and will streamline businesses
into five core sectors: manufacturing, marketing, engineering
services, property and financial services.

Following the restructuring, Proton is talking with a "couple
of foreign parties but unfortunately because of confidentiality,
we can't name them," Mahaleel was quoted as saying by Bernama
news agency.

He said Proton would unveil a new model powered by its own
Campro engine early next month. The car is produced with 90
percent local content and this allows Proton to price it
competitively, he said.

Mahaleel denied reports Proton car prices would be raised by
between two and five percent because of higher duties under a new
motor tariff structure from Jan. 1.

As a national carmaker, he said it was Proton's duty to
produce affordable cars.

He said prices of some models have fallen recently such as the
Perdana by about 6,000 ringgits (US$1,579) to 97,000 ringgits,
the Wira by about 5,000 ringgits to 49,000 ringgits and the
Iswara by about 3,000 ringgits to 34,000 ringgits.

He said all current prices would remain unless the market
condition changes.

"If market changes for the worst, we may react and if the
market changes for the better, we may raise the prices," he said,
adding Proton was in talks with the government to ensure the new
tax structure would not burden the public.

In a statement later, Proton said it was "currently studying
the new tariff structure in depth before announcing any new
pricing for our models.

"At this stage, no price increase has been set by Proton," it
added.

Proton, set up in 1985 as part of Malaysia's move into heavy
industry, is pinning hopes on three new models to be released
this year to revive sales after its market share tumbled to 49
percent last year from 60 percent in 2002.

Proton car sales fell by a sharp 27.5 percent to 155,420 units
last year.

The carmaker, which has been protected by high import tariffs
and other advantages that will disappear under AFTA, has sought
another 20 years of tariff protection but the government has kept
silent on its request.

Under AFTA, 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.