The Malaysian government has set a new deadline to name a foreign partner for national car maker Proton Holdings within the next three months after Volkswagen backed out from becoming an equity partner.

According to local news agency, Bernama, second finance minister Tan Sri Nor Mohamed Yakcop said on Friday (1 June) the government would want to resolve problems in Proton before proceeding with its ‘plan B’ to find a foreign suitor for Proton.

“We will decide on the partner for Proton within the next three months,” he was reported as saying.

The report noted that the government had missed its self-imposed 31 March deadline to name the strategic partner for Proton.

On Thursday, Proton reported its fourth consecutive quarterly loss. The company has struggled as restrictions on imports of foreign-brand cars have been loosened in recent years as part of a new regional trade agreement.

According to Bernama, Nor Mohamed said that, since Volkswagen “has no more equity interest”, the government would look for others who were interested.

He reportedly declined to comment on whether the government had engaged in talks with prospective parties for Proton’s partner.

Khazanah Nasional, the Malaysian government investment arm, owns around 43% of Proton, which has just posted a full-year pre-tax loss of RM619.9m for its financial year ended 31 March, 2007, reflecting the challenging operating environment.

Bernama noted that prime minister Datuk Seri Abdullah Ahmad Badawi said on Thursday that Volkswagen AG was not keen on Proton’s proposal in terms of equity participation but would rather engage in some other form of cooperation with Proton.

He added that in view of this, Proton needed to initiate talks with other parties for a strategic tie-up, Bernama said.

Proton-VW talks off