Malaysia aims to resolve Proton partner issue fast

Malaysia hopes to pick a foreign partner national carmaker Proton Holdings as soon as possible, Second Finance Minister Nor Mohamed Yakcop said today.

"It has to be made fast and we are really putting it on fast track to resolve it as quickly as possible," he told reporters in Malaysia's administrative capital of Putrajaya.

State investment arm Khazanah Nasional Bhd, which owns 43 percent of Proton, is in talks with Germany's Volkswagen and U.S. auto giant General Motors to sell some of its stake in the loss-making company.

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

Nor Mohamed declined to give a deadline to resolve the Proton issue but stressed that a government buyout of Proton was not on the cards.

The Edge Financial Daily on Thursday quoted a report by investment bank JP Morgan as saying that Proton might be headed for privatization and "broken up" with key assets injected into a special purpose vehicle to pave the way for a foreign partner.

"It depends on what is the ultimate objective of the partnership? What is best for Proton? What is best for the National Automotive Policy? What is the preference that the foreign partner requires, so we have to be quite open minded and flexible in how we do it," Nor Mohamed said.

"Various options are possible but one thing we are not doing is we are not taking it private," he added.

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.

Proton shares were down 0.8 percent at 5.90 ringgit by 0710 GMT, compared with a 1 percent gain in the benchmark share index.