KUALA LUMPUR, Oct 9, 2007 (AFP) - Prime Minister Abdullah Ahmad Badawi said Tuesday that German auto giant Volkswagen is seeking management control over Malaysia's state-owned Proton as it negotiates an alliance.

"They have been discussing about it but we have not yet decided on that," Abdullah said when reporters asked if Volkswagen was eyeing management control of the loss-making firm.

Abdullah, who is also finance minister, said Malaysia was keen to wrap up the protracted negotiations as quickly as possible.

"We want to have this decision as soon as possible but they have to take time. I cannot force them to hurry up."

A finance ministry official told AFP Tuesday that Malaysia was expected to sign a deal with the German company in November.

"Malaysia is trying to settle it by November. This is what they intend to do," he said on condition of anonymity.

Reports over the weekend said that Volkswagen was close to forming a pact with Proton with at least an initial 20 percent stake.

"Volkswagen is also seeking management control and will require the government to underwrite any losses at Proton for at least three years," the Edge business weekly newspaper said.

Abdullah said he would meet with Volkswagen boss Martin Winterkorn when there was a breakthrough in the talks.

"I am waiting ... only when some decision has been made. They have many meetings but we have not finalised yet our agreements of any particular issues," he said.

Talks between Volkswagen and Proton began in October 2004, as Malaysia tried to salvage the homegrown carmaker which is floundering in a newly competitive environment thanks to a lack of new models and a reputation for poor quality.

Abdullah said recently that Volkswagen was studying Proton for a possible strategic pact that would help save the national carmaker.

For Proton, a deal is expected to boost efforts to reclaim the top spot in Malaysia's domestic car market and help it get a foothold in the lucrative European market.

Proton needs foreign technical expertise to halt a sharp decline in market share and halt a stream of losses, including a 46.75 million ringgit (13.40 million dollar) loss for the first quarter to June announced recently.
Volkswagen hopes to strengthen its presence in the Southeast Asian region through the partnership.