Malaysia's prime minister has said he remains confident that national car maker Proton could rebound from losses despite ending alliance talks with Volkswagen and General Motors but would not rule out any foreign tie-up in future.

According to the Associated Press (AP), he also said the issue of bailing out Proton has not come up as the company had begun to turn around.

"No question of a bailing out. Proton is doing well today ... they have a good programme, they have secured exports to India, China, Indonesia and the Middle East," he told the news agency on the sidelines of the Association of Southeast Asian Nations' summit in Singapore.

"Proton should be given a chance," he told AP. "I believe this will be a successful turnaround."

The news agency noted that Proton shares plunged 18.6% to their lowest level in seven years Wednesday after the government's investment arm Khazanah Nasional said late on Tuesday it had stopped talks VW and GM about strategic tie-ups.

Money-losing Proton had been in talks with the companies about partnerships to help reverse its fortunes but, according to the Associated Press, Khazanah said Malaysian officials have recently noted positive developments at Proton, including improvements in domestic sales and exports.

The news agency said the announcement caught industry observers by surprise and many analysts questioned the long-term viability of the beleaguered automaker.

Abdullah reportedly said that foreign alliances were still possible in the future: "Certainly I don't want to rule out (future tie-ups) but I think Proton will be in a better position to really be a good strategic partner in the future," he told AP.

Citing the national Bernama news agency quoting Malaysia's second finance minister Nor Mohamed Yakcop, AP said Proton, which saw a loss of 591m ringgit ($US169) in the 2007 financial year, is expected to narrow its losses in the current year.

Yakop reportedly added Proton has seen strong recent sales figures, especially of the Persona line, which has sold about 22,000 units under three months after its launch in August.

Government officials also said late on Tuesday the company is introducing new models to raise its domestic market share from its current 31%, according to the Associated Press.

Proton once thrived in a protected environment, with high duties on imported vehicles forcing many Malaysians to buy its but duties have since been slowly lowered in line with a regional trade agreement, and more Malaysians are buying imported vehicles, AP noted.