Malaysia said today it plans to sign shortly an aviation liberalisation accord with the European Union aimed at expanding flights between Kuala Lumpur and European destinations.

"We have initiated the agreement and we are making arrangements to sign the agreement soon," Transport Minister Chan Kong Choy was quoted as saying by the state Bernama news agency.

Under the pact dubbed the "horizontal air service agreement," European airlines will be allowed to fly between Malaysia and any other European member state.

The agreement removes nationality restrictions in bilateral air services agreements between EU member states and Malaysia, which mean any European airline, not only flag carriers, will be allowed to operate the flights.

Malaysia is expected to be the second Asian country to sign the agreement with the EU, after Singapore signed up in June.

Tourism is Malaysia's second-largest foreign exchange earner, but it is facing stiff competition from neighbours including Singapore and Thailand.

Malaysia hopes to attract some 20.1 million tourists in 2007, up from 15.7 million in 2004.