Kyodo News has reported that Geely is putting its Malaysia investment plan on hold as it is unhappy with a new government policy requiring foreign vehicle manufacturers to export 80% of what they produce.

The news agency cited the New Straits Times quoting Geely's executive director Lawrence Ang saying that, under the old automotive policy, it would only have had to export 30%.

The new policy also offers foreign investors grants and lower import duties. However another problem is that the government has decided not to issue any new manufacturing licenses until the current overcapacity issue is addressed.

Geely has been considering investing in a 100m ringgit ($US27m) plant with local partner Information Gateway.

Contract assembly of Geely CK1 sedans is expected to start by July, without the investment in the new plant.

Geely is targeting production of 10,000 units a year, but under the new policy only 2,000 of these can be sold locally.