KUALA LUMPUR, July 21: Malaysia’s national carmaker Proton Holdings Bhd and Germany’s Volkswagen have moved a step closer to a partnership deal after recent talks, a Malaysian newspaper reported on Saturday.

State investment arm Khazanah Nasional Bhd, which owns 43 per cent of Proton, is in talks with Volkswagen and US auto giant General Motors to sell some of its stake in the loss-making company.

Volkswagen is viewed as the frontrunner to partner Proton and has held two rounds of talks with the Malaysian government.

A third round could be in the offing but talks with US carmaker General Motors are also under way, the government said last month.

Under the new agreement, Proton will control its domestic distribution network while Volkswagen will handle international distribution, the Edge financial weekly said, quoting unidentified sources.

“It is also understood that VW may have agreed to pay some cash for its 51 per cent equity in the new company that will own key assets of Proton,” the paper reported.

The balance of the equity will be satisfied with injection of technology and platforms.

Malaysia’s trade minister had said recently that the country wanted to sell its stake in Proton but won’t act hastily in the matter.—Reuters