SEOUL, Aug 16: South Korea may discuss a free-trade pact with North Korea during an upcoming summit in hopes of encouraging the hardline communist state to open its markets, officials said on Thursday.

“I'm aware that a possible free-trade deal between South and North Korea is under consideration as one of the agenda items for the summit,” Trade Minister Kim Jong-Hoon told reporters.

President Roh Moo-Hyun has said economic cooperation will be a key theme of his meeting with North Korean leader Kim Jong-Il in Pyongyang on Aug 28-30.

The summit will be only the second in the two countries' history.

“For an FTA, rather than its name or form, what's more important is North Korea's willingness towards market opening and international trade,” Kim said.

His remarks indicated both sides will probably discuss a comprehensive economic partnership agreement rather than a full-fledged market-opening deal, Yonhap news agency said.

Roh said on Wednesday he will discuss forming an “inter-Korean economic community” with his counterpart.

“In this way, the South will have more investment opportunities, while the North will have a chance to make an economic turnaround,” Roh said.

South Korea's central bank said separately that North Korea's economy shrank an estimated 1.1 per cent last year, due partly to floods and the international standoff over its nuclear programme.

North-South relations have improved as the North starts taking steps towards dismantling the programme under an international deal.

Per-capita gross national income stood at $1,108 last year, almost 17 times less than in South Korea.

A poll published on Thursday showed South Koreans strongly support the upcoming summit even though most do not believe it will achieve any concrete results.

Some 74 per cent welcome the meeting while 22.6 per cent oppose it, the survey by the Korea Times and its sister paper Hankook Ilbo showed.

However, around 60 per cent of 1,000 adults surveyed nationwide believe there will be no tangible outcome from the summit because it was hastily arranged.

About 30 per cent said the meeting would encourage North Korea to scrap its nuclear weapons and promote inter-Korean co-operation.

While Roh says economic cooperation will be the focus, 34 per cent said denuclearisation should top the agenda, followed by inter-Korean cooperation (21 per cent), methods for reunification (14.4 per cent) and the establishment of a peace system (13.4 per cent).

The conservative opposition Grand National Party accuses Roh of seeking the summit to boost the chances of his preferred candidate in December's presidential election.

Some 57.5 per cent agreed, compared to 33.5 per cent who saw no political motive. But while around 49 per cent think the summit will sway the election, some 44 per cent think it will have no effect.

The phone poll was conducted on Monday and Tuesday with a margin of error of 3.1 percentage points, the Korea Times said.

Meanwhile, South Korea has become the biggest foreign direct investor in Vietnam thanks to its involvement in building new towns and leisure facilities, a state trade agency said on Thursday.—AFP