Hyundai Motor is in talks with the government of Uzbekistan to buy a stake in a former Daewoo Motor factory in the central Asian state, both sides told Reuters on Friday.

In October 2005, an Uzbek industry official said the country had bought the 50% stake held by Daewoo in their joint venture but had yet to decide if it would seek a new foreign partner, the report added.

"There have been negotiations with Uzbekistan on the plant, but nothing has been decided, and it is unclear if the talks would succeed," a Hyundai official told the news agency on Friday.

A source in the Uzbek government reportedly confirmed the two sides were in talks, adding, however, that negotiations were "slow".

"Both sides are interested. A (South Korean) delegation has been here, they've seen the plant. But I can't say negotiations are particularly active. We have not signed any documents or memoranda on this," the source told Reuters.

A South Korean newspaper, JoongAng Ilbo, reported on Friday that Hyundai said it was in talks with Uzbekistan and that it aimed to complete negotiations within this year, with a plan to expand the factory's capacity to 300,000 vehicles per year, Reuters added.

If labour issues are resolved, the factory could produce small cars such as the Verna and the Click, an unidentified Hyundai official reportedly told the paper.

The factory, opened in 1996,  aims to assemble 110,500 Daewoo-brand cars this year, up from 70,070 in 2004. Exports, bound mostly for Russia, are set to rise to 56,926 cars this year from 35,659 in 2004, the report said.