Australia said it wants access to Malaysia's government procurement market, which favours the country's majority ethnic Malays, enshrined in a free-trade deal currently under negotiation.

Australia's Trade Minister Mark Vaile said free trade agreement (FTA) talks had so far been "constructive and positive", but that his country wanted them to extend to procurement.

"It's always an objective," Vaile told reporters after meeting Southeast Asian economic ministers to discuss a wider trade pact with the region.

"It's important for both sides, and I pointed out to some colleagues here the opportunities that exist in accessing the Australian government procurement market as well," he said.

"It's not just a one-way street, it's a two-way issue."

Sensitive area

Malaysia's Muslim Malays lag economically behind its ethnic Chinese community, and under a system of positive discrimination, have sole access to specific government contracts.

Restrictions on Malaysian government procurement have also been flagged as a sensitive area in ongoing trade negotiations with the United States, although Malaysia has flatly said it will not unravel its policies.

Vaile said Australia understands Malaysia's concerns, but was optimistic about finding a solution for the deal, as well as the agreement being negotiated with the Association of Southeast Asian Nations (Asean) and New Zealand.

"We understand ... the domestic restrictions as far as some programs are concerned," he said.

"We'd like to think that there is probably a creative way we can address that in a bilateral and an agreement with the Asean countries but that's work in progress."

Vaile said Australia was also looking for ways to boost investment in Malaysia in the talks.

"One of the challenges is how we improve the opportunity for further investment flows into Malaysia out of Australia, and of course that goes without saying in the Australia, New Zealand and Asean negotiation as well," he said.

Australia and Malaysia agreed to launch free-trade talks in April last year with the aim of finishing negotiations by the middle of this year.

Annual bilateral trade between the countries amounts to some US$7.5 billion and Malaysia is Australia's ninth largest trade partner.