National carmaker Proton will have to become more competitive, Prime Minister Abdullah Ahmad Badawi warned today after agreeing a free trade pact with Japan which opens up the industry.

The deal will see protectionist tarrifs on Japanese vehicles ended completely within 10 years and so expose Proton to further competition, already a sore point with former premier Dr Mahathir Mohamad, the driving force behind the establishment of the carmaker and now its adviser.

Mahathir complained yesterday that Proton was losing market share because so many foreign cars were being allowed into the country.

"The Chinese car is coming, Chevrolet cars made in Korea are here, lots of Korean cars are coming. The idea that we should protect the national car is no longer there," Mahathir said.

Abdullah said in response that Proton must make serious efforts to expand abroad and be innovative at home in order to face the competition.

"The expansion of imported cars (in Malaysia) is an ongoing thing and I believe that it will continue to be that way," the official Bernama news agency quoted him as telling Malaysian journalists at the end of his visit to Tokyo.

"If Proton were to produce more cars for the expanding automotive market in Malaysia that is also good for Proton. At the same time, Proton has to make serious efforts to get a cut of the overseas market."

'we have to be the best'

Abdullah said he was optimistic that Proton could weather the foreign competition, especially with its new ultra-modern plant facilities at Tanjung Malim.

"With the setting up of the new plant, Proton would be able to produce better cars in the future and at competitive prices," he said.

"I believe Proton can improve, be technologically advanced. The automarket is highly competitive and only the best can perform and only the best can secure markets.

"We have to be the best. Unless we are willing to do that, we cannot expect much," he said.

Proton used to sell six out of every 10 new cars in the country but its market share fell to 44 percent last year from 48 percent in 2003.

Exports now account for less than five percent of Proton's earnings but the carmaker is aggressively moving to expand its markets.