Malaysia and Chile today announced moves towards a free trade agreement in what could be the first such deal for Malaysia with a Latin American country.

Malaysia's trade minister Rafidah Aziz and Chile's foreign minister Ignacio Walker said both countries would begin studying the feasibility of a free trade deal after a meeting here.

"We are very pleased to have moved this step forward," Walker told reporters after the meeting.

"Today we have US$230 million of trade between our two countries, and we plan to sell the idea of Chile becoming a springboard, a gateway, a platform to Latin America because of the political and economic stability of our country," said the minister, who is on a one-day visit to Malaysia.

Both countries agreed to look into a free trade agreement (FTA) after a bilateral leaders' meeting at the Asia-Pacific Economic Cooperation summit in November, said Malaysia's trade ministry.

Officials are expected to start discussions in February, with the study to be completed by the end of 2006, said Walker.

Chile is Malaysia's fourth largest trading partner among Latin American countries, with bilateral trade shooting up in 2004 by 77.7 percent to US$232.4 million, said the ministry.

Chile's exports to Malaysia include metal ore and scrap and paper and pulp products and Walker said his country was interested in "value-added raw materials."

"We are moving towards a new stage of value-added of science and technology, of research and development," he said. "Malaysia has done very well in that area so we plan to learn from Malaysia a lot."

16 trade deals, 51 countries

The announcement marked the eighth free trade deal being explored or completed by Malaysia, which has been more proactive in recent years in seeking bilateral FTAs in tandem with neighbours Singapore and Thailand.

Malaysia currently has an economic agreement with Japan signed in December and is negotiating FTAs with Pakistan, Australia, New Zealand and South Korea.

It is also exploring deals with the United States and India.

Walker said Chile had already signed 16 trade deals with 51 countries including the European Union, and had recently inked an FTA with China and a partial agreement with India.

Despite the burgeoning numbers of trade deals, Walker set aside growing concerns from businesses that FTAs were undermining the multilateral trading system.

"In the end we cannot wait cross-handed, so to speak, in order to reach an agreement at the multilateral level," he said.