ISLAMABAD, Feb 16: Pakistan and Malaysia on Wednesday agreed to start talks on a preferential trade arrangement (PTA) that would later be converted into a free trade agreement (FTA) and reached an understanding to jointly act as a catalyst for a PTA at the level of the Organisation of Islamic Conference.

Prime Minister Shaukat Aziz and his Malaysian counterpart Abdullah Ahmad Badawi also agreed to integrate their trade diplomacy through foreign offices, set up a joint investment company, facilitate recruitment of Pakistani workers in Malaysia, enhance political and diplomatic relations and expand bilateral cooperation in the fields of investment and trade, science and technology, education and culture.

This was announced by Prime Minister Aziz at a luncheon meeting organized by the Pakistan-Malaysia Business Forum after his talks with Mr Badawi. Mr Badawi said the two countries had combined trade opportunities of after the end of quota regime and they should take full advantage.

He stressed the need for cooperation in Islamic banking, Islamic insurance and other Islamic financial instruments. He said both sides had held substantive discussions on political, diplomatic and economic issues.

Mr Aziz asked Malaysian businessmen to take full advantage of Pakistan's growing economy, liberal economic policies, investment-friendly climate and its geopolitical location.

He said with a strategic geo-political location - situated at the cross-roads of South Asia, Central Asia and the Middle East - Pakistan had emerged as a hub of economic opportunities in the region.

He said Pakistan offered a lot of investment opportunities in various fields, particularly in real estate, housing, construction, information technology and telecommunication.

Mr Aziz said a number of Malaysian companies were successfully operating and earning profits in Pakistan, but the number of such companies and their investments should increase through joint ventures with Pakistani companies to utilize the full potential available to them.

He said Pakistan after completing deep-rooted reforms in economy and in security and political fields was expected to achieve a growth rate of seven per cent during the current fiscal year.

With its deregulation policy and successful privatization programme Pakistan offered attractive opportunities to foreign investors, he added. Mr Badawi also asked the business communities of the two countries to make use of the opportunities of trade and investment and cooperate with each other to promote economic ties between the two brotherly Muslim countries.

He said the two sides had similar perceptions on important international issues and shared historical and religious traditions and they should enhance cooperation in sectors like cotton, textiles and palm oil.

He expressed dissatisfaction over the volume of bilateral trade Which, he said, was low and should be enhanced. He said the signing of MoUs and agreement meant nothing if these were not implemented. He asked Pakistani entrepreneurs to use Malaysia as a gateway to Asean markets.

He said there was a strong need to convert the OIC into an economic entity which should play a key role in promoting of trade and investment among Islamic countries. He said both countries could also set up profitable propositions through joint ventures to market Halal products and services to 1.8 billion Muslims around the world.

The two premiers also witnessed the exchange of six MoUs signed between private sector firms of the two countries and the launching of long distance and local loop telecom service.