A peace pact between the Philippine government and its largest Muslim separatist group is expected to be signed in Kuala Lumpur once the two sides iron out a final obstacle on land issues, Malaysia's foreign minister said today.

Syed Hamid Albar, who earlier held talks with Philippines Foreign Affairs Secretary Alberto Romulo, said Manila's negotiations with the Moro Islamic Liberation Front (MILF) were going well.

"On the peace talks, they are going smoothly. Only one matter needs to be resolved... it is regarding the ancestral land. Once that ancestral land issue is resolved, then those parties will be ready to sign the peace agreement," he told reporters.

"It will be signed in KL."

Ceasefire agreement

Asked when the signing will take place, he said: "The earlier the better to create a conducive environment for investment and to develop the economy in that area. We both believe this would benefit the people in that province and also in the Asean region."

The MILF, the country's largest Muslim guerilla group, has been waging a separatist rebellion in Mindanao since 1978.

Manila is holding preliminary peace talks with the MILF with the help of Malaysia, and a 52-member international observer team comprising soldiers from Malaysia, Brunei and Libya are monitoring a ceasefire signed in mid-2003.