KUALA LUMPUR, Malaysia (AP) — Malaysia's national carmaker, Proton, doesn't need a foreign partner for now, the government said Tuesday, dismissing any possibility of an alliance with Volkswagen AG or General Motors Corp. in the near future.
State investment arm Khazanah Nasional, which owns a controlling stake in Proton, said in a statement that the company has ''discontinued negotiations'' with both Germany's Volkswagen and U.S.-based GM regarding an alliance with Proton.
Money-losing Proton had been in talks with the companies about a tie-up to reverse its fortunes. However, Khazanah said Malaysian officials have recently noted positive developments in Proton, especially an improvement in domestic sales and exports.
''The government is therefore of the view that Proton's management should be allowed to continue with its plans to further strengthen the company,'' Khazanah said. ''The issue of strategic alliance, if necessary, can be considered at a later date.''
Separately, Second Finance Minister Nor Mohamed Yakcop said that Proton, which saw a loss of 591 million ringgit (US$169 million; euro124 million) in the 2007 financial year, is expected to narrow its losses in the current year, the national Bernama news agency reported.
''Circumstances have changed,'' Nor Mohamed was quoted as saying by Bernama.
Nor Mohamed said the government does not reject the possibility of Proton having strategic alliances with foreign partners at a more suitable time in the future, when the company can negotiate from a stronger position, Bernama reported.
He added Proton has seen strong recent sales figures, especially of its Persona model, which has sold about 22,000 units less than three months after its launch in August.
The government also is encouraged by Proton's overseas sales in Iran, China and Indonesia, as well as its expected expansion into Thailand, Bernama quoted Nor Mohamed as saying.
Proton had long thrived in a protected environment, with high duties imposed on imported vehicles, forcing many Malaysians to buy Proton cars. But duties have been slowly lowered in line with a regional trade agreement, and more Malaysians are buying imported vehicles.
Proton's market share has slid to about 23 percent, from around 60 percent five years ago.