KUALA LUMPUR -- Malaysian carmaker PROTON said Monday its new factory in Iran would begin operations next month in a further move to strengthen its foray into West Asia, AFP reported.

Its completely knocked-down operations in Borujerd, south of Tehran, would begin production with an initial rollout of 90 units of PROTON cars, it said in a statement.

"This will be an essential part of our strategy to remain competitive under more liberalized market conditions and the foundation we are establishing in Iran will allow us the option to consider it as a supply source," said PROTON's International Business manager Anuar Rozhan.

The venture in Iran would also open doors for Malaysian vendors to link up with Iranian suppliers and producers in the long-term, he added.

PROTON has tied up with the Zagross Khodro Car Industries for distribution, technical licensing and parts supply for its operations in Iran.

The Malaysian carmaker said it expected to sell 3,000 cars in the first year, and forecast sales to build up to more than 25,000 cars annually in the medium-term.