Malaysia has today announced that it would award a RM8 billion double-tracking rail project to China, as leaders of both nations pledged to increase bilateral trade.

Government officials earlier this year estimated the tracks, which are to connect Johor Baru with Gemas in the neighbouring state of Negeri Sembilan, would cover 250 kilometres and cost more than RM8 billion.

Apart from the rail project, Malaysia also committed to grant Chinese companies contracts to construct one of the country's biggest dams and an aluminium smelting plant, Prime Minister Najib Razak said after a meeting with Chinese President Hu Jintao in the

administrative capital of Putrajaya.

Malaysia and China have also agreed to increase bilateral trade and investment linkages especially in the area of palm oil and Malaysian timber.

NONE "China has become one of Malaysia's largest trading partners and we hope that trade and investment will increase with China," he told a joint press conference with Chinese President Hu Jintao, who is on a one-day visit to Malaysia, at the Prime Minister's office.

Earlier, the two leaders met for a delegation meeting which lasted for about an hour at the same venue.

This was Hu's second visit to the country, having visited Malaysia as vice-president in May 2002. His visit also commemorates the 35th anniversary of diplomatic ties between the two nations.

Banking cooperation

Najib also added that the signing of an agreement between Bank Negara Malaysia and the Banking Regulatory Commission of China heralded a new era of cooperation between the two countries in the area of finance.

"This is very meaningful in view of the current global economic challenges and also deepens the integration of our economies," he added.

Najib said both countries also agreed that the completion of the second Penang bridge, linking the mainland and the island, should be on time without any delays.

He said Malaysia has also committed to grant Chinese companies the construction of the Mengkuang Dam, the biggest dam in Pulau Pinang, a pulp and paper project and the construction of an aluminium smelting plant.

"We also have agreed that the area of cooperation should encompass more areas such as energy, agriculture, fisheries, education and science and defence and security cooperation," said Najib.

Exciting phase

He also said that both governments were eager to ensure that whatever documents signed by the two nations today were implemented.

"We are confident of working closely together to bring our bilateral ties to greater heights," he said.

He said that today's meeting as "excellent" taking into account that bilateral ties between the two countries, established some 35 years ago, had blossomed over the years.

"Our bilateral ties are poised for an exciting phase. Both countries are committed in taking these relations to a higher plane.

"President Hu's visit is not only important symbolically taking place during the 35th anniversary of our diplomatic ties but also because we have managed to cover a wide range of subjects and topics during this visit," Najib added.

Later in the day, Najib hosted a luncheon for President Hu at Shangri-La Hotel in Kuala Lumpur.

Also present were Foreign Minister Anifah Aman, Transport Minister Ong Tee Keat and Minister in the Prime Minister's Department Koh Tsu Koon.

Hu and his wife, Liu Yongqing, arrived yesterday for a two-day visit.

They will later take a short drive south of the Malaysian capital to visit Malacca and are scheduled to depart for Singapore at 4.30pm.