Malaysia's Proton, VW still in partnership talks

Malaysia's Proton, VW still in partnership talks - govt investment agency

	Published : Sun, 17 Jun 2007 12:17 By : Agencies Print this Story

KUALA LUMPUR (XFN-ASIA) - Volkswagen AG and Malaysian national automaker Proton are still in talks to enter a partnership after a second round of negotiations in Thailand, the government investment agency Khazanah Nasional said.

'Negotiations between Proton and Volkswagen are ongoing,' said Ahmad Shahizam, spokesperson with the government's investment arm, Khazanah Nasional. He declined to elaborate.

The first round of talks was held in New York early last week and the second round was held this week in the Thai capital, Bangkok.

Khazanah Nasional is the controlling shareholder in Proton, with a 42.74 pct stake in the company. State pension fund EPF and national oil firm Petronas own 12.07 pct and 8.84 pct respectively.

The remaining 36.35 pct is held by a mix of local and foreign companies.

Another official familiar with the talks said negotiations were centred on 'working out a solution to allow Proton to have a strong foreign partner.'

'The government is open to all positions. The idea is to make Proton a commercially viable company,' the source told Agence France-Presse on condition of anonymity.

'I suppose there will be several more rounds of discussions between the two parties. There is a momentum set in place to form a partnership,' the official added.

The Malaysian team comprises officials from the prime minister's department, ministry of finance and Khazanah.

Asked if Volkswagen would be allowed to hold a majority stake in Proton, the official said: 'That could happen. Nothing should be ruled out. Volkswagen could have a majority stake in Proton.'

Malaysia's government is under intense pressure to announce details of a partnership for Proton in a bid to provide it with expertise to stem a sharp decline in market share and cut financial losses.

The loss-making company last year lost its status as Malaysia's biggest-selling automaker to homegrown rival Perodua.

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Malaysia's Proton, VW still in partnership talks - govt investment agency