Malaysia PM, Volkswagen yet to meet on Proton

Malaysian Prime Minister Abdullah Ahmad Badawi has not yet met Volkswagen AG Chairman Ferdinand Pi?ch for talks on a possible tie-up with state-controlled carmaker Proton Holdings, the premier said today.

Loss-making Proton, which faces a shrinking market share in the increasingly competitive domestic market, is looking to tie up with a global automaker to boost its sales and turn around the company.

Its main asset is a modern, low-cost production line north of the capital.

"I have not seen him yet," Abdullah told reporters in reply to a question on whether he had met the chairman of the German carmaker. "He has not made his appearance here. I don't think I can wait too long ... I can't be waiting forever, don't you think so?"

Pressed for the date of a meeting, Abdullah said, "I will not tell you when."

Industry sources said talks between Volkswagen and the Malaysian government had been bogged down over several issues, including Volkswagen's reluctance to assume Proton's debts.

Once before, in 2005, Volkswagen explored an alliance with Proton but the talks failed.

Proton Chief Executive Syed Zainal Abidin Syed Mohamad Tahir said over the weekend that a decision on Proton's foreign partner should be made quickly but not hastily.

"The main issue is that the government's and the country's objectives should be met," news agency Bernama quoted him as saying.

Early this month Abdullah said Malaysia was still talking with U.S. automaker General Motors about a possible tie-up with Proton, but he gave no details of the talks.

French car maker PSA Peugeot Citroen had also explored a tie-up with Proton before calling off the talks last month, saying it was not economically viable to co-produce cars with the Malaysian company.