Struggling national carmaker Proton need not rush into signing up a foreign partner, former prime minister and Proton adviser Dr Mahathir Mohamad said in remarks published today.

His comments come just days after International Trade and Industry Minister Rafidah Aziz urged Proton to speed up its search for a foreign partner so it could expand and compete in the regional and global markets.

Mahathir, who created Proton in 1983 as part of Malaysia's drive into heavy industry, was recently appointed adviser to the company after retiring last October.

He said Proton must be allowed, in its own time, to choose a foreign partner that will be compatible with and contribute positively to the company.

"It is an important step but you must study it carefully and not just because people say so," Mahathir told the New Straits Times in an interview.

"Everyone says Proton needs a strategic partner but this doesn't ensure that you will succeed."

Learn from others

Mahathir said Proton must learn from foreign carmakers doing well in Malaysia how to be competitive and cut costs.

"Proton must look at how other countries can produce cheap cars and how some of them are able to import cars to Malaysia at prices that are below the cost of the raw materials to make them," he said.

"We must learn how to produce very cheap cars."

Mahathir said that Proton was evaluating several offers from "big automotive companies". It was an attractive catch for potential partners because it could offer access to the Malaysian car market, which is the second biggest in Southeast Asia, he said.

"Proton has also been offered opportunities to produce cars in several countries and obviously many countries are looking at Proton," he said without naming the countries.

State investment arm Khazanah Nasional, the single largest shareholder, is said to be considering plans to allow a foreign carmaker to hold up to 20 percent equity in Proton to boost its competitiveness and improve sales eroded by foreign rivals.

Proton's Japanese partner Mitsubishi Motors recently bailed out but trading house Mitsubishi Corp. still holds another 7.9 percent in Proton and is believed to be in talks to sell it to Khazanah.

Proton used to sell six out of 10 new cars in the country but for the first time in years, its market share shrank to 49 percent in 2003 as sales tumbled 27.5 percent to 155,420 units. - AFP