Ailing automaker Proton is studying the possibility of setting up a plant in Egypt to bolster exports, a top official said today amid poor sales in the domestic market.

"From Egypt, we are (hoping) to use it as a base to enter the African continent and West Asia," Syed Zainal Abidin Syed Mohamed Tahir, Proton's managing director told reporters.

"We are now evaluating the plan," he said on the sidelines of a three-day anti-poverty forum with African and Southeast Asian leaders in Langkawi island.

Proton last year lost its status as Malaysia's biggest-selling automaker to homegrown rival Perodua. It recently reported larger-than-expected net losses of RM591.36 million for the year to March 2007.

Syed Zainal said although Egypt provided a big market it can also serve as a platform for Proton to increase its presence in neighbouring Saudi Arabia and Sudan.

The government here is currently in discussions with Germany's Volkswagen about a possible strategic alliance that would help save Malaysia's national carmaker.

Proton needs foreign technical expertise to stem a sharp decline in market share and to cut losses.

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

Khazanah's managing director Azman Mokhtar has set the end of this year as the "overall deadline" to clinch a deal.