German auto giant Volkswagen is keen to take a 20 percent stake in loss-making carmaker Proton, an senior official said today amid reports that talks will soon secure a partnership.

"Volkswagen is eyeing a 20 percent stake (in Proton). That is what they want," the official familiar with the negotiations told AFP on condition of anonymity.

The official said Proton and Volkswagen had their fourth round of talks in Bangkok two weeks ago and will be meeting again soon.

Prime Minister Abdullah Ahmad Badawi confirmed talks were ongoing but said there was no formal request from Volkswagen for a stake in Proton.

"There is no formal request. There is no formal proposal that has been given to the government at this minute," he told reporters when asked to comment on reports that Volkswagen was keen for an initial 20 percent which will then be increased to 50 percent.

"All matters with regards to the Volkswagen proposed partnership or joint venture, whatever, with Proton is at the moment under discussion," he added.

Good feelings

Malaysia last week expressed optimism about securing a partnership with Volkswagen.

"I can confirm that we have a good feeling about this," second finance minister Nor Mohamed Yakcop told reporters.

Volkswagen said Friday that it will intensify talks with Malaysian authorities, a major shareholder in Proton, with a view towards a possible cooperation or shareholding in the passenger car maker.

Prime Minister Abdullah Ahmad Badawi recently said Volkswagen was studying Proton for a possible strategic pact that would help save Malaysia's national carmaker.

For Proton, a deal is expected to boost efforts to reclaim the top spot in Malaysia's domestic car market and help it get a foothold in the lucrative European market.

End-December deadline

Volkswagen hopes to strengthen its presence in the Southeast Asian region through the partnership.

Nor Mohamed said previous talks had progressed well.

"The talks are going well. It is good news," he said.

Proton and Volkswagen had met for a fourth time in Bangkok. They had earlier met in Thailand, the United States and Germany.

Malaysia hopes that the deal would be wrapped up by the end of the year.

Proton needs foreign technical expertise to halt a sharp decline in market share and stem a stream of red ink, including a RM46.75 million loss for the first quarter to June announced this week.