Khazanah Nasional, the key shareholder in national carker Proton, today said it was "not interested" in buying Japan's Mitsubishi Motors and Mitsubishi Corp collective 15.8 percent stake in Proton.

"We have been approached by Mitsubishi and we are not interested," Khazanah managing director Anwar Aji told financial news wire AFX-Asia. He declined to give reasons.

Khazanah, the government's investment arm, currently owns a 30.46 percent stake in Proton.

Proton was established in 1983 by Malaysian companies as well as Mitsubishi Motors and some Mitsubishi group companies. Mitsubishi Motors and Mitsubishi Corp each hold a 7.9 percent stake in Proton.

Mitsubishi's pullout could deal a blow to Proton, which is grappling with poor sales due to intense foreign competition ahead of market liberalisation under the Association of Southeast Asian Nations (Asean) Free Trade Area (Afta).

But some auto analysts said Mitsubishi's withdrawal was a commercial decision to reorganise their operations in Asia due to financial troubles and did not reflect Proton's fundamentals.

Proton's market share tumbled to 49 percent last year from 60 percent in 2002, with its car sales falling 27.5 percent to 155,420 units last year.

Under Afta, import tariffs for most products in the region were cut to below five percent from last year. Malaysia obtained a two-year reprieve for its auto industry until 2005 but it recently said it would further defer reducing duties to the required level until 2008. - AFP