PM to meet VW heads to discuss possible Proton tie-up

Prime Minister Datuk Seri Abdullah Ahmad Badawi said that he will meet with Volkswagen's top officials in hopes of wrapping up talks on a foreign alliance for national car maker Proton.

"I am waiting,'' Abdullah told reporters.

"I am expecting (them) to come anytime.''

He did not elaborate.

The Malaysian government missed a self-imposed deadline Saturday to finalise a strategic partnership for loss-making Proton with a foreign company.

The government is in talks with Volkswagen AG and General Motors Corp., the two remaining foreign contenders after France's PSA Peugeot pulled out last month.

"At the level of the officials, (the talks are) nearing completion,'' Abdullah said.

"We want to conclude the talks as soon as possible.''

Malaysia's government owns around 43% of Proton through its investment arm, Khazanah Nasional Bhd, and has stressed the need for foreign expertise, preferably via a stake investment, to revitalise Proton.

Over the past seven years, Proton has seen its market share plunge from nearly 60% to 32% in Malaysia, Southeast Asia's biggest new passenger car market with about half a million units sold each year.

Proton, which has set its sights on becoming a significant exporter of cars, reported a net loss of RM281.5mil (US$80mil; euro 61mil) for the quarter ended Dec 31, 2006, from a net profit of RM86.5mil a year earlier.

For years, the company thrived in a protected environment, which included high taxes on foreign cars that made many Malaysians to buy Proton cars.

But the taxes have been slowly lowered in line with a regional trade agreement, and some Malaysians have sought out imported vehicles. - AP