Talks between Malaysia and the European Union on a deal which could be a precursor to a free-trade agreement are likely to begin early next year.

"The Malaysian cabinet has to give its mandate first. It will take some time. I think talks could begin early next year," a government official told AFP on condition of anonymity.

EU External Relations Commissioner Benita Ferrero-Waldner said Monday during a visit to Malaysia that both sides had agreed to start talks on a partnership and cooperation agreement that will include measures to boost trade and investment.

"We have now given the green light - both from the Malaysian side and I from the side of the European Commission," she said.

The comprehensive agreement also covers issues such as the environment and intellectual property rights. Once it is sealed the two sides could then move to begin discussing a fully fledged free-trade pact.

Starting soon

Ferrero-Waldner said that officials from both sides would start negotiating the pact because "we want a very comprehensive agreement and we think that could be a new basis for future cooperation."

"It will take time but the most important thing is to start as soon as possible," she said, without giving a date.

Ferrero-Waldner also said the European Union wants to strengthen ties with Malaysia not only in trade and investment but also in education, research and technology, energy security and counter terrorism.

"Trade and investment is one of the important components. The best would be that we bring everything under one comprehensive agreement," she said.

Ferrero-Waldner said Malaysia is the EU's second most important trading partner in Southeast Asia and that the bloc was the biggest foreign investor in Malaysia in 2000-2004, accounting for 30 percent of total inflows.