Finance Minister Lim Guan Eng said Malaysia does not have the public funds to spare to launch another national car project as envisioned by Prime Minister Dr Mahathir Mohamad.

Instead, he said he had explained to the premier that the project would have to be backed by the private sector.

"If there are private parties who want to do it in Malaysia using their own funds, I think that is something that would be worthwhile looking at but not from public funds," Lim said in an interview with Singapore's Channel News Asia (CNA).

Mahathir had mooted for a second attempt at a national car project during his recent trip to Japan for the Future of Asia conference.

He said this was because Proton, which was started by his administration in 1984, had been sold off with 49.9 percent stake going to China-based company Geely last year.

DRB-Hicom, which is owned by tycoon Syed Mokhtar Albukhary, holds the remaining 50.1 percent stake in Proton.

"Our ambition is to start another national car, maybe with some help from Asean countries and our other partners," Mahathir had said in Japan.

Lim was further quoted by CNA as saying he believed that Mahathir's idea for a new car company came from a private party and that no proposal had been drafted yet.

Mahathir also said a second carmaker would help boost Malaysia’s engineering capability.

The idea has drawn criticism from several quarters who questioned the move in light of austerity measures being taken by the new government to deal with an accumulation of RM 1 trillion worth of debt and liabilities it said it inherited from the previous Najib Abdul Razak-led government.

Among the cost-cutting measures steps include the scrapping of the Kuala Lumpur-Singapore High-Speed Rail (HSR) project and a review of the RM60 billion East Coast Rail Link (ECRL) project with China.