The Prime Minister was responding to a question by the Nikkei Asian Review, which had enquired if he would consider buying back Proton shares that were sold to the Chinese.
Dr Mahathir clarified that Malaysia still has the majority share of 51%, and said he does not know about the agreement that was reached between the buyer and seller.
"We had hoped that we would be able to market the car in China. But the company believes that Malaysia (can) produce only a right-hand drive car and it should confine itself to the right-hand drive market, which means we have no access to the huge market in China," he said, adding that this factor would limit our growth.
According to Dr Mahathir, the Government is looking to create a different company and also looking to Japan for some cooperation at the initial stages.
He brought up the example of Proton, which started with only 18% local content and cooperation from Mitsubishi Motor, and led to the mastery of "the whole process of building the car, from design to clay-model and test car".
"Today, modern technology is based more on sensors and other things. We need to acquire that also. But initially, we want just to build a car first for the Malaysian market, and then for the world market," he clarified.
When asked to elaborate on his current time in power compared to the first that ended 15 years ago, Dr Mahathir said his administration has to correct many of the damages caused by the previous government.
For example, Malaysia still wants to have friendly relations with China, but certain projects that required large loans from Beijing will have to be reformed or reduced.
"We have to reduce it by renegotiating, or we may have to stop some of the projects with the understanding of the Chinese government," he added.
However, the veteran politician is aware that his Government is dealing with a very powerful country. As such, matters affecting both parties will require "friendly discussions".
"We should also concretise the idea of East Asia Economic Caucus, because we need to include China in discussions over what will benefit the whole region, not just any one country," said Dr Mahathir.
The EAEC was a regional free trade zone proposed by Dr Mahathir in 1997 and would encompass Asean members as well as China, Japan and South Korea.
When asked if the presence of Chinese company Alibaba would remain in Malaysia's Digital Free Trade Zone, Dr Mahathir said that it would.
However, he acknowledged that Malaysia must look at other places for new technology, despite admitting that working with Alibaba was a good idea.
Earlier, The Nikkei Asian Review had pointed out that e-commerce was promoted through collaborations with Chinese companies, in particular with Alibaba, during the time of former premier Datuk Seri Najib Tun Razak.
In response to the publication's query about the next engine of growth, Dr Mahathir's answer seemed to look west.
"We see in Silicon Valley, California, there are a lot of new ideas that have come up, making use of IT and sensors used in building driverless cars.
"We also see remote-control (systems) being developed to such an extent that you can actually fly a plane without a pilot. And we have many new ideas coming up with regard to medicine and other fields," he added.
The interview also raised the issue of China's militarisation in the South China Sea.
To this, the Prime Minister said that Malaysia does not want to have too many warships in the South China Sea and the Straits of Malacca.
This is because the country does not want any tensions and the possibilities of fighting in these areas.
However, he acknowledged that Malaysia could not deny China access to South East Asia waters, as the seas there are a passage between the east and the west.
"But it should remain as such, not controlled by any nation, neither America nor China," said Dr Mahathir.
What Malaysia would like to see, he added, is some cooperation in terms of policing, as that would not need the deployment of big battleships.
"We need small ships to control piracy, for example. We want to keep the straits and South China Sea free for all the ships of the world, not for any particular countries," he concluded.
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