National carmaker Proton is gearing up for greater foreign competition as motoring-crazy Malaysia prepares to slash tariffs on car imports by 2005 under a regional free trade area.

Protected since 1985 by high tariffs and other advantages, Proton is hoping a major restructuring unveiled last week will enable it to face off Japanese, American and European rivals that are already biting into its 60 percent share of the domestic market.

Last year, car sales by state-controlled Perusahaan Otomobil Nasional fell 10 percent year-on-year to 239,783 units and slid another 16 percent in the four months to April.