27-07-2007: Govt sees Proton turnaround soon

KUALA LUMPUR: The government expects to turn around its loss-making national car maker, Proton Holdings Bhd, soon and hopes to see improvement within a year, Second Finance Minister Tan Sri Nor Mohamed Yakcop said on July 27.

State investment arm Khazanah Nasional Bhd, which owns 43% of Proton, is in talks with German carmaker Volkswagen and US auto giant General Motors to sell some of its stake in the company.

"For Proton we face a few challenges," Nor Mohamed told reporters in the Malaysian capital. "We are confident, God willing, of turning around Proton, but we want to do a good job of it."

Proton has been struggling with a steadily declining market share at home due to fierce competition, and has been unable to make up the shortfall through exports.

Volkswagen is seen as the frontrunner to partner Proton and has held several rounds of talks with the Malaysian government. A third round could be in the offing but talks with US carmaker General Motors are also under way, the government said last month.

Last week the Edge financial weekly said the two companies were nearing a partnership deal in which Proton would control its domestic distribution network while Volkswagen would handle international distribution.

Proton's shares were down 2.6% at RM5.65 at the midday trading break. - Reuters