Trade Minister Rafidah Aziz has welcomed the strong interest from US and European auto firms in ailing carmaker Proton, but said there was opposition to it falling into foreign hands.

General Motors confirmed this week that it is interested in acquiring a stake in loss-making Proton, which needs the expertise of a strategic partner to arrest a sharp decline in market share in a newly competitive market.

The loss-making Malaysian automaker is also in negotiations with Volkswagen of Germany and PSA Peugeot Citroen oF France.

Proton said late Wednesday that it had conducted a feasibility study with Peugeot and the two sides were evaluating the findings, related to Proton's production capacity, product collaboration, distribution, and supply of parts.

Rafidah said the government would need to balance the benefits of keeping Proton in local hands, against the input of technology and access to other markets that a foreign partner would bring.

"This is not a simple decision because we do have local capability. There are many factors to look into," she said late Wednesday according to the state Bernama news agency.

"We cannot say who will get it. Technology partnership does not necessarily mean selling equity to the technology partner," she said, noting that there was opposition in some quarters to foreign involvement.

The Malaysian government owns 59 percent of Proton, including a 43 percent stake held by its investment arm Khazanah Nasional.

Three Malaysian automotive companies - DRB-HICOM, the Naza group and the Mofaz group - have expressed interest in acquiring all or part of the government's stake.

Newspaper reports have said that the GM bid - the US auto giant's third approach towards Proton over the past decade - involves a plan to take a small stake at the holding level, as well as a stake in its manufacturing arm.