The state-controlled Proton missed its self imposed deadline of March 31 to name a partner. It was in talks with Volkswagen, General Motors and PSA Peugeot Citroen but all discussions fell through.
The news surprised analysts, with some questioning if Proton has a long-term future without a western partner.
Malaysia's second finance minister Nor Mohamed Yakcop said the government felt Proton should be given the chance to return to profitability on its own.
Proton recently announced a £82m annual loss.
Government officials pointed to the success of Proton's most recent models, and said the firm was committed to increasing exports and to lifting its domestic market share from the current level of 31%.