The leaders of Malaysia and Australia today declined to set a date for the completion of a free-trade deal due to have been agreed by mid-2006, saying the negotiations should not be hurried.

"We have not decided when it should be completed but we are aware that our respective offices are working hard on that," said Prime Minister Abdullah Ahmad Badawi after talks with his counterpart John Howard.

Howard, who is on a two-day visit, said it was important to boost economic ties but that there should not be any pressure for a timeline on the free-trade agreement (FTA) talks which began in April 2005.

"I think it's very important that these negotiations not get hung up about a particular time. You have to do it methodically, rather than hastily put together. An FTA hastily put together could be counterproductive," he said.

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

One of the sensitive areas in the FTA negotiations is Australia's bid for access to Malaysia's government procurement market, which favours the country's majority ethnic Malays.

Better ties now

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 change its policies.

Howard is in Malaysia to reciprocate Abdullah's visit to Australia last year. Ties between the two nations have warmed significantly since former premier Mahathir Mohamad stood down three years ago.

"I think it's fair to say that our bilateral relationship now is as strong as it's ever been," Howard said at a joint press conference.

Mahathir, a political firebrand who often crossed swords with Canberra over economic and political issues, had opposed accepting Australia and New Zealand as partners in the region.