Independent Chinese carmaker Geely Automobile expects Malaysia to further relax sales restrictions on vehicles it will build in the Southeast Asian nation, according to a top company executive.

In an interview with China Daily, Yang Jian, Geely's executive vice-president, said he hoped Malaysia would allow the carmaker to sell a bigger ratio of its locally-made vehicles in the country.

Under the current rules, the firm will be able to sell just 20 per cent of locally-produced vehicles in the country.

Geely will start producing cars in Malaysia from September with an annual capacity of 30,000 units, Yang said.

Geely, which is based in East China's Zhejiang Province and listed in Hong Kong, last May agreed with a Malaysian partner to assemble own-brand cars in the country.

However, Malaysia last November said it would require the carmaker to sell all of its locally-built vehicles abroad.

In March this year, Geely was informed it would be permitted to sell 20 per cent of its made-in-Malaysia cars in Southeast Asia's No 2 car market.

"The restrictions are unfair and discriminatory as they are only imposed on Geely. We hope Malaysia will raise the quota," Yang said.

Regulators from China and Malaysia will discuss the matter soon, he said.

At present, nearly 20 foreign automakers are assembling vehicles in Malaysia. In 2005, car sales in the nation jumped by 38 per cent year-on-year to 522,000 units. The country's top two home-grown brands, Proton and Perodua, control three-fifths of the market.

Benjamin Asher, a Bangkok-based analyst with consultancy Automotive Resources Asia Ltd, told China Daily that Malaysia wanted to protect its national car programme.

"Having only recently opened its doors to international brands, the market share for Proton and Perodua has plummeted.

"Although the quality of Protons and Peroduas are lower than international, mostly Japanese, brands, Chinese vehicles are still lower than that (the quality of Protons and Peroduas)," Asher said.

"But the Malaysian Government may still be concerned that Chinese makers will snatch up too much of the lower end of the market, thus reducing the domestics' share further."
However, many Chinese carmakers still want to assemble cars in Malaysia in a bid to branch out into the Southeast Asian market.

Earlier this week, Chery Automobile, another independent Chinese car producer, agreed with Proton to jointly study plans to make and sell each other's cars in China and Malaysia, and elsewhere in Southeast Asia.

Hafei Automobile and Chang'an Motor are also planning to build cars in Malaysia.
Hafei is a partner of Mitsubishi Motors. Chang'an runs car ventures with Ford Motor and Suzuki Motors in China.

Geely's Yang said the carmaker is also negotiating to assemble cars in Viet Nam and Russia.

The carmaker aims to sell 1.3 million cars overseas annually by 2015, accounting for two-thirds of its overall sales.

Last year, it exported 7,000 cars, up from 5,000 in 2004.

Meanwhile, the company's overall sales surged by half to 150,000 units.

Geely Automobile ended at 0.79 Hong Kong dollars (10.18 US cents) yesterday, down 1.25 per cent.