Japan and Malaysia agreed to speed up their free trade talks in an effort to reach a basic agreement by the end of this month, Japanese officials said.

But after two days of talks here at the level of vice ministers, the two countries remained divided on the auto sector as Malaysia was reluctant to review its policy to protect its domestic industry, the officials said.

They were also trying to narrow differences in such areas as auto parts, steel and investment and services.

The two governments, which started talks on a free-trade agreement (FTA) in January last year, earlier vowed to reach a basic accord by the time Malaysian Prime Minister Abdullah Ahmad Badawi visits here on May 25-26.

Target date: December 2005

The two sides have so far worked out the framework of free-trade rules in agricultural and marine products.

When Malaysian International Trade and Industry Minister Rafidah Aziz met her Japanese counterpart Shoichi Nakagawa here last month, she expressed hope the two countries will formally sign an FTA in December.

Japan already has a free-trade agreement with Singapore, which was the first country in a new push to seek trade pacts. Japan's second free-trade deal went into force this month with Mexico, seen as a gateway for the US market.

Japan has also reached a draft agreement with the Philippines on a bilateral free-trade deal, which would allow Filipino nurses and careworkers to work in Japan. Negotiations are also under way with Thailand.