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July 21, 2008

Malaysia’s Proton needs foreign partner to compete
Malaysia's national carmaker needs to hook up with a foreign company if it is to compete in the automotive industry, AFP reported, quoting local news reports.

Trade Minister Muhyiddin Yassin, according to local dailies, said such a partnership would help Proton expand into overseas markets, and thrive in the long term.

"I don't think we need to be too nationalistic in supporting Proton without taking into consideration what the business is all about," he said according to the Star daily.

"Proton needs to grow beyond the boundaries of Malaysia, where it needs to be competitive, form partnerships, have good technology and brand name," he said.

Proton was formed 25 years ago by former premier Mahathir Mohamad as part of an ambitious national industrialisation plan but its market share has slumped over the years, as it faced difficulties coping in a new deregulated market.

The government has urged it to forge a partnership with a foreign automaker to give it the expertise and economies of scale that it needs to survive, but talks with Volkswagen and General Motors have collapsed.

"If they want to move out, they have to be more competitive, they have to produce a good quality car and have a good technology," Muhyiddin said, according to state Bernama news agency.

Last month Proton announced a highly publicised "zero-defect" sales campaign, aimed at erasing a persistent reputation for poor quality that has left it struggling to compete against Japanese and European carmakers.

Proton managing director Syed Zainal Abidin also announced plans to fit all models with natural gas tanks from October to help motorists beat the rising cost of fuel -- following a 41 percent petrol price hike here last month.

In February Proton announced it recorded net profits for two quarters in a row, thanks to lower operating costs and increased sales.

The company booked a net loss of 32.92 million ringgit ($10 million) for the nine months to December 2007 -- a fraction of the 590.448 million ringgit loss a year earlier.

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