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August 15, 2008

Automotive: GM turns bullish in Asean
General Motors is ready to restart negotiations for a tieup with Malaysian national car maker Proton, according to reports on Thursday from Malaysia state news agency Bernama.

Just one day earlier, on Wednesady, Richard Wagoner, chairman and CEO of the US automotive powerhouse was in Thailand, Malaysia’s northern neighbour, announcing GM’s invest of $445 million in a new diesel engine plant in Rayong, often called the Detroit of Thailand, and an upgrade of its assembly operations.

The new engine plant is expected to start production in 2010, the number one US car maker, said in a statement at the plant launch in the eastern Thai province of Rayong.

On Thursday, General Motors signed a deal Thursday with Thailand's top energy firm PTT to collaborate on research into alternative fuels such as ethanol for cars, the companies said in a statement.

"The strategy will focus on alternative energy that is socially responsible, economic, environment-friendly and with practical technology," GM chief executive Richard Wagoner said in a statement.

"GM and PTT will cooperate to study possible markets as well as the infrastructure needed to realise benefits from increased use of alternative energy," he added.

Their research will include finding ways to expand ethanol production from crops not used for food, the statement said.

The firms will also study hydrogen fuel, low-cost hybrid engines, and other fuel-saving technology in Thailand and the rest of Southeast Asia, it added.

Thailand is GM’s biggest auto assembly base in Asia, with top selling models including the Chevrolet Captiva and Chevrolet Optra.

In Malaysia, GM president for South-East Asian operations, Stephen K. Carlisle, was quoted as saying on Thursday that the American company was always open to capitalise on opportunities to further strengthen its presence in the region.

Carlisle, however, said no approach has been made to engage GM for fresh talks although it has been reported that the Malaysian Government was willing to look for a strategic alliance for Proton despite last year's failed talks with GM and German carmaker Volkswagen.

Carlisle said last year's talks could not proceed further as the Malaysian Government and Proton were looking at their own strategic plan and were confident it was capable of operating on its own without a foreign partner.

Asked if GM had asked for majority stakes in Proton during the talks or the reason for its failure to acquire the Malaysian national carmaker, Carlisle declined to comment.

Khazanah Holdings Bhd, as Proton's major shareholder and the government's investment arm, had said the talks ended as the government took note of Proton's positive developments, including improving sales at both domestic and overseas markets.

"The government is of the view that Proton's management should be allowed to continue with its plans to further strengthen the company," Khazanah said in November last year, adding that the issue of strategic partners could be considered at a later date.

Proton first announced its intention to begin talks with Volkswagen in October 2004 for a strategic partnership while talks were to have started with GM in early 2007.

Carlisle said despite the slump in car sales throughout the world that affected GM's financial standing, it was in a good position to buy stakes in Proton if offered.

"We always see opportunities in the Malaysian and regional markets. So we want to step up our presence here," he said.

A year ago, DRB-HICOM Bhd and General Motors Asia Pacific Holdings LLC  formed HICOM-Chevrolet Sdn Bhd (GMAPH), to strengthen the Chevrolet brand in Malaysia.

DRB-HICOM holds 49 percent in the new company and GMAPH the remainder. The total investment in the joint venture was about RM15 million ($4.5 million).

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