By Kevin Brown in Singapore
Published: October 29 2009 03:51 | Last updated: October 29 2009 03:51
Malaysia on Wednesday revived plans to find a foreign partner for Proton, the struggling state-controlled carmaker, as part of a national automotive policy that would also allow foreign manufacturers to set up wholly owned plants in the country to make up-market cars.
Mustapa Mohamed, the trade and industry minister, said the government hoped to resolve the Proton problem “soon”, but gave no indication which of many rumoured foreign partners might be close to a deal.
Officials say that Proton, formed 25 years ago as part of an industrialisation plan, has approached several overseas carmakers in an attempt to find a partner capable of using its significant spare manufacturing capacity.
Volkswagen had serious talks with Proton two years ago, but the discussions collapsed after the Malaysian government baulked at the German carmaker’s demands for a significant equity stake.
Other carmakers understood to have been approached by Proton include Renault of France and General Motors of the US. Proton and Khazanah Nasional, the state investment agency that holds a 42 per cent stake, have refused to comment on the talks.
Syed Mokhtar al-Bukhary, a Malaysian billionaire, is also thought to have expressed an interest in acquiring a stake in Proton, which might allow the government to restructure the company, without prompting the nationalist backlash that selling a controlling stake to a foreign manufacturer could trigger.
Mr Syed Mokhtar is a close associate of Mahathir Mohamad, the former Malaysian prime minister, who remains an adviser to Proton and a vocal defender of its protected position within the Malaysian market.
Mr Mustapa said that any foreign deal with Proton would need to increase Malaysian exports and make the country a production hub, as well as ensuring the transfer of the latest automotive technology and establishing research and development facilities.
“We would like to develop a more viable [auto] sector,” Mr Mustapa said. “We want Malaysia to be a hub. We want to be competitive.”
Mr Mustapa said the government would relax a freeze on new entrants into vehicle production, allowing new manufacturers to establish plants for passenger vehicles with an engine capacity of 1800cc and above, selling for at least M$150,000 ($43,600).
Manufacturing licences will also be available for pick-up trucks and commercial vehicles, hybrid and electric vehicles, and motorcycles with engine capacity of 200cc and above. No equity restrictions will be imposed, allowing foreign companies to own up to 100 per cent of fresh manufacturing ventures in these sectors.
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