Malaysia will make a firm decision on a potential strategic tie-up between Proton and foreign car makers within three months, Second Minister of Finance Nor Mohamed Yakcop said today.

"I think three months is reasonable for us to come out with a firm decision," he told reporters.

Nor Mohamed said besides Volkswagen of Germany Proton was also talking to car makers such as Peugeot SA of France.

Asked if the government would allow a foreign party to take a majority stake in Proton, he said: "Our mind is fully open. We will do whatever it takes to make Proton viable.

"And if we need to give them significant equity, we will give them significant equity," he added.

Nor Mohamed said Malaysia "will do whatever it takes to make Proton viable."

"If, in the nature of things and the context of circumstances, it is necessary to bring in a foreign partner, we will bring in a foreign partner," the minister said.

"Our mind is open," he said, adding that the decision will be based on which party can serve Proton and the nation's interest best.

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Malaysia yesterday said it might allow German carmaker Volkswagen to gain a controlling stake in national carmaker Proton, a move that would help turn around the fortunes of the ailing company.

"It is an option we are considering at the moment. There is no approval yet," said Prime Minister Abdullah Ahmad Badawi.

"It all depends on detailed discussions. It is just an option," Abdullah told reporters.

The Sun newspaper reported Thursday the market was abuzz with speculation that embattled Proton was making renewed efforts to find a partner.

The report cited industry sources as saying that Volkswagen was mentioned as one of the "potential partners" to take a 51 percent controlling stake.

Proton recently signed a letter of intent with PSA Peugeot-Citroen to evaluate and study possible cooperation, with the first round of talks beginning in September.

Analysts say Proton needs to find a strong foreign partner to help revive its fortunes - it reported a RM58.6 million loss in its first quarter to June.

The company's market share has fallen steadily in recent years as the auto market has been liberalised to allow greater foreign competition.