Malaysia's national carmaker Proton aims to tie-up with a new foreign partner by the end of the year and plans to launch new models, including a multi-purpose vehicle, to boost its market share to over 50 percent, reports said today.

Proton chief executive Mahaleel Ariff was quoted by Bernama as saying that talks were being held with companies from "the east and the west" on a partnership that would cover a wide scope. He declined to give details.

"There have been discussions with some prospective parties and we hope to nail the agreement by the end of this year," he said.

The government is pushing Proton, which has received proposals from three foreign car companies including Britain's MG Rover, to forge a tie-up so as to remain competitive and to penetrate global markets.

Special adviser, former premier Dr Mahathir Mohamad, has said Proton was also in talks with South Korean and German carmakers but did not elaborate.

State investment arm Khazanah Nasional, which is now the single largest shareholder in Proton after buying out the stake held by Japanese giant Mitsubishi Motors, is said to be considering plans to allow a foreign carmaker to hold up to 20 percent of Proton.

Set up in 1983 as part of Malaysia's drive into heavy industry, Proton used to sell six out of every 10 new cars in the country but its market share fell to 49 percent in 2003 and dipped further to 44.5 percent in the first eight months of this year as sales tumbled.

Mahaleel blamed a hiccup in production for the poor sales, citing a shortage of raw material such as steel, iron and aluminium.

"Our growth rate is faster than the market because consumer spending is strong. It is a question of delivery, rather than demand," he was quoted as saying by the New Straits Times.

Despite increased competition from foreign carmakers ahead of market opening in 2005 under the Asean Free Trade Area (Afta), he said Proton was optimistic of increasing its share to 50 percent next year amid strong demand for its lower- and medium-priced models.

The company is keen to launch a multi-purpose vehicle (MPV), which is among the fastest growing segement in the industry, but "it will take time," he said. MPVs are popular in Malaysia and have lower taxes than sedans and other passenger cars.

Proton earlier this year launched the Gen-2, the first of a new generation of cars, and is expected to introduce a new two-door hatchback and a small four-door sedan at the end of 2004 and early 2005 respectively.

Under Afta, import tariffs for most vehicles in the region were cut to below five percent in the past year. Malaysia obtained a two-year reprieve for its auto industry until 2005 but has said it would defer reducing duties to the required level until 2008.