National car-maker Proton does not see a pressing need to form alliances with foreign automakers as it prepares for the opening of the domestic car market by 2005, a report said today.

There was little incentive for a tie-up as Proton would have to pay high engine costs and amortisation charges to its foreign partners, Perusahaan Otomobil Nasional Bhd. (Proton) chief executive Mahaleel Ariff was quoted as saying by The Star .

"Where is the value from foreign alliances going to come from? They cannot give any value in terms of economies of scale. The alliance can o­nly be for us to assemble for them and make money from it," he said.

Superior technology

Proton was already relying o­n its British unit, Lotus Group, for all technology aspects, with the joint development of its own Campro engine o­n track, he said.

Mahaleel said Proton was all revved up for market liberalisation under the Association of Southeast Asian Nations (Asean) Free Trade Area (AFTA).

It has won a licence to sell commercial vehicles in China and is bidding for a licence to sell passenger cars there, with a decision expected by June.

Plans were in place to set up an assembly plant in Guanhzhou to produce 30,000-50,000 cars initially and up to 100,000 cars later o­n for the world's most populated market, he said.

Proton also has a plant in Iran and expects to produce 10,000 cars by the year-end, with plans to set up another factory in North Africa and maybe South America, he said.

"We would have small cars to high-end cars (by 2005)," he said.

"Newer products would be benchmarked against the (South) Korean cars. The technology we apply would be much more superior than that of the Koreans. I am very upbeat for we know what is coming and what our costs are."

New engine

Prime Minister Dr Mahathir Mohamad two years ago said the government may sell a stake in Proton to a foreign partner with a strong technology base to help Proton stay competitive but the plan was subsequently shelved.

Proton now has some 60 percent of the Malaysian market due to high tariffs o­n imported cars.

This protection will largely disappear under Afta where tariffs fall to zero to five percent at the start of 2003 but Malaysia has obtained a reprieve for its auto industry until 2005.

Proton has said the Campro engine was expected to help cut production costs by 20 percent and save the company some o­ne billion ringgit (US$263 million) over the next five years.

It was also developing a common chassis with its British unit to further lower production costs. -- AFP