A report that Proton may be selling up to 51 percent of the company to foreign investors has been welcomed by industry observers.

Yeah Kim Leng, professor of economics at Sunway University Business School, said this is long overdue "largely because of the uneconomical scale that Proton is operating on".

Both Yeah and Malaysian Automotive Association president Aishah Ahmad said that Proton needed a strategic partner, and this would greatly benefit the company.

Yeah added that it would allow Proton to increase its production capacity to be a local and regional player.

This in turn will benefit the country, he said, with increased economic contributions and exports, while decreasing reliance on government assistance.

Yeah said despite being under foreign control, Proton would still maintain the national mark.

"The days of the national car are over, it's now increasingly more of a private sector business. Even British flagship companies have been taken over by foreign hands.

"(But) Malaysia will not lose out even if it's in the hands of a foreign partner. The foreign partner will bring in capital and inject technology," he added.

The financial analyst also said that a foreign partner would be in a position to fully utilise Proton's production capacity, which will benefit the vast network of parts and component suppliers in the supply chain.

However, a caveat in the deal would be that the foreign partner would have to raise Proton's quality standard as a global company.

Commenting further on this, Aishah said the percentage of who owns Proton is not an issue.

"What matters is how the company is managed, and what kind of subsistence the foreign partner is able to give in terms of new model development," she said.

Bloomberg on Wednesday reported that Proton was looking to let go of a controlling stake in the company.

Quoting sources, the business publication said Proton is looking at Volkswagen AG’s Skoda unit and Suzuki Motors Corp, as well as perusing proposals from companies including Renault SA and Peugeot parent PSA Group, in separate closed-door negotiations.

According to the report, Proton is struggling from accumulated debts due to sales slump and the company needs to bring in a foreign partner, a condition it agreed to in order to get a government bailout of RM1.5 billion.