Malaysia became Japan's biggest free trade partner Thursday as the two countries put into force an agreement that aims to tear down tarriffs on almost all goods within a decade.

The agreement will abolish tariffs on nearly all automobile and industrial products and most agricultural goods within 10 years.

The accord also covers services and will ease regulations on cross-border investments.

Malaysia is the third country to enter a free trade agreement (FTA) with Asia's largest economy after Singapore and Mexico.

Japan is Malaysia's third-biggest export market, shipping machinery, lumber, natural gas and other energy products.

Enhancing economic ties

In turn, Japan's top exports to Malaysia include semiconductors, general machinery and steel.

The two countries held a ministerial meeting in Tokyo Thursday to discuss the implementation of the agreement, with the Malaysian side represented by International Trade and Industry Minister Rafidah Aziz.

"With the entry into force of the agreement ... activities of the private sectors will be further accelerated and contribute to enhancing economic ties of both countries," the ministers said in a joint statement.

The agreement was signed by Japanese Prime Minister Junichiro Koizumi and Malaysian Prime Minister Abdullah Ahmad Badawi in December after two years of negotiations.