Chinese carmaker Chery Automobile signed a joint venture agreement with Malaysia's Alado Corporation to set up a new company on Friday.

"We are creating a powerful new company with revenues expected to exceed 2 billion ringgit ($636.94 million) by 2011," Chairman of Alado Corporation Haji Musa said in Putrajaya, the administrative center of Malaysia.

Malaysian Deputy Prime Minister Najib Tun Razak also congratulated Chery Automobile for selecting Malaysia as the regional headquarters and making Malaysia as its main manufacturing hub for producing right-hand drive vehicles to target the ASEAN markets.

"I believe not only Malaysia but the whole ASEAN region will be able to enjoy driving quality vehicles at very reasonable price," Najib said.

By locating in Malaysia, the foreign partner will, through its Malaysian counterpart, have access to the large and fast growing ASEAN market, which is expected to reach 2 million new cars and light commercial vehicles per year by 2010, according to Najib.

"The joint venture of Alado Corporation and Chery Automobile indeed marks another milestone in the bilateral cooperation between Malaysia and China," Najib added.

"China auto output reached 8.89 million in 2007 and became the third largest car producer of the world, after Japan and the United States," said Cheng Yonghua, Chinese Ambassador to Malaysia.

Chery Automobile has kept a leading position in China's car export for five years, according to Cheng.