(AFP) National car company Proton aims to be a global brand by 2006 with the help of its British unit Lotus Engineering Ltd, its chief executive Mahaleel Ariff said today.

Mahaleel said Lotus was strong in technology and earns about RM800 million a year from consultancy fees alone.

Proton currently had a "bargain basement" brand but "in 2006... we'll have to go global" with Lotus technology, he told reporters on the sidelines of an Asia auto conference here.

Mahaleel said Proton planned to shut down Lotus plant in Coventry as it was a small and non-core operation. "We're not selling, we're closing it," he said, without elaborating.

Proton bought an 80-percent stake in Lotus in 1997 and earlier this year announced it would jointly produce a high-performance model with Lotus due to be launched in 2003.

Mahaleel said Proton was still conducting studies to revive plans to develop a three-billion-ringgit automotive township in Tanjung Malim in Perak.

However he said the project, originally conceived as the largest in the region, might be scaled down according to demand for its vehicles.

He said Proton would consider contract manufacturing for other auto companies "if it makes business sense" but added the company could survive on its own without such contracts.

Local monopoly

The Proton City project was shelved after the 1997 Asian financial crisis but Proton last month said it may reactivate the project to produce new car models ahead of the launch of the Asean Free Trade Area (AFTA).

More than 65 percent of cars sold locally today are Proton, partly because of high tariffs on imported cars but its tariff protection will largely disappear by 2005 under AFTA.

Tariffs on auto products in ASEAN will fall to between zero and five percent by 2003 but Malaysia has delayed cutting tariffs until 2005.

Mahaleel earlier told the conference AFTA would be good for Proton because it would exert pressure on them.

Stefano Aversa, vice president for global automotive practice at consultancy firm AT Kearney, said Malaysia could compete against neighbouring Thailand, which had a bigger industry and a larger presence of foreign carmakers.

However it had to stick to its plan to open up by 2005, he said.

"The direction is good, but the speed is not as fast as it should be... A target of five years is more than enough to manage a transition. It's important to stick to it," he added.

A senior official of Ford Motor Co told the conference Monday that there was talk Malaysia may delay lowering car duties by another three years to 2008.