TOKYO - Prime Minister Dr Mahathir Mohamad said today his country hoped to seal its first bilateral free trade agreement (FTA) with Japan, a Japanese official said.

Mahathir made the remark at a meeting with Economy, Trade and Industry Minister Takeo Hiranuma.

The veteran prime minister, who has pledged to resign next October, said he would like to propose an FTA early next year, according to the Japanese official.

Mahathir noted careful consideration was needed of sensitive areas such as farm products, but said he hoped the two nations would reach an accord swiftly, the official said.

Hiranuma was quoted as saying Japan "will make efforts" to reach a pact.