Proton set to announce VW tie-up in 2 weeks-paper

KUALA LUMPUR Wed May 26, 2010 8:21pm EDT

KUALA LUMPUR May 27 (Reuters) - Malaysian automaker Proton PROT.KL is set to announce a possible tie-up with Germany's Volkswagen AG (VOWG.DE) (VOWG_p.DE) in the next two weeks, The Edge Financial Daily quoted Proton's chairman as saying.

"The outcome of the talks with VW will be made public in two weeks time. I don't want to jump the gun," Mohd Nazmi Mohd Salleh told the company's annual meeting.

The paper did not detail the collaboration but there has been speculation in Malaysian newspapers for years that Proton could use some of its spare capacity to assemble VW cars.

Talks between VW and Proton on the German company taking an equity stake foundered in 2007 and General Motors [GM.UL] and Peugeot (PEUP.PA) have also been mooted as partners.

Malaysia maintains tariff controls that make foreign cars much more expensive than Proton's local product.

In October, the government said it was seeking a foreign partner for Proton and it last year said that foreign carmakers would be allowed to have 100 percent ownership of ventures producing cars worth over 150,000 ringgit ($45,250).

($1=3.315 Malaysian Ringgit)

(Reporting by David Chance; editing by Liau Y-Sing)

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