Will Proton allow VW to make its presence felt in Malaysia?

VW has arranged imminent talks with the state investment body controlling Proton to discuss either joint projects or taking a stake in the company.

The German carmaker is keen to form an alliance in Asia, where it faces increasing competition from regional car manufacturers.

Proton sees a tie-up with VW as a means of accessing new technology and expanding its presence outside Asia.

Long-term target

Proton has already held tie-up talks with both Peugeot and VW.

Earlier talks with VW collapsed in January 2006, after the extent of state control over Proton proved to be a stumbling block.

It was believed that the Malaysian government was reluctant to relinquish its "golden share" in Proton.