(AFP) - Japanese Prime Minister Junichiro Koizumi and his Malaysian counterpart Dr Mahathir Mohamad pledged today to boost bilateral ties to stay competitive following September 11 attacks in the US, officials said.

The two premiers held "very productive discussions" on issues ranging from globalisation, terrorism and the situation in Afghanistan and Burma, said Foreign minister Syed Hamid Albar.

"Both leaders agree that the world has changed after September 11 and there is a need to adopt new approaches to be competitive," he told reporters after talks between the two premiers.

"Both leaders agree that in order to have effective relationship and play an effective role in the WTO (World Trade Organisation), they need to be cohesive and unified in their approaches."

While combating terrorism was important, both Mahathir and Koizumi agreed that the root causes of terrorism must be addressed to find a long-term solution, Syed Hamid said.

"Japan believes the question of Palestine needs to be resolved in order to bring peace and minimise injustices," he added.

Koizumi arrived here today on the second leg of his week-long Southeast Asian tour.

This was his first official visit to Malaysia, which came after the 60-year-old popular Japanese leader ended an overnight visit to the Philippines early Thursday.

Varsity proposal

Koizumi was accorded an official welcoming ceremony at the administrative capital of Putrajaya before talks with Mahathir.

The leaders have met three times previously. They last met in Brunei when leaders of the Association of Southeast Asian Nations (Asean) and their Asian partners - Japan, China and South Korea - gathered for an annual summit.

Syed Hamid said Mahathir had proposed that Japan, with its skilled workforce, helped Asean develop its human resources and Koizumi agreed to look into it.

Mahathir also offered Malaysia as a venue to house an Asean-Japan university, he said. There are now 1,000 Malaysian students in Japan and having a university locally would help trim costs, he added.

Koizumi was expected to use talks with the 76-year-old premier to propose forming a comprehensive economic alliance between Japan and Asean.

He first unveiled the initiative, which may include free trade accords between Japan and Asean, when he met Philippine President Gloria Arroyo on Wednesday.

Koizumi said he would seek Asean's "agreement on the plan when Japan and Asean hold their leaders' meeting" in the future.

Analysts said Koizumi planned to use this trip to boost Japan's profile in the region in a bid to counter China's intensified dialogue with Asean members.

Burmese issue

Japan was left out in the cold in November when China and Asean agreed to create the world's most populous free trade bloc within 10 years, covering two billion consumers.

Koizumi is to hold an audience with king Tuanku Syed Sirajuddin and be briefed by UN envoy Razali Ismail on Burma's national reconciliation process, before attending a dinner hosted by Mahathir.

A Malaysian official told AFP that Razali would seek Japan's assistance to help fund critical areas such as health, education and energy in Burma as it heads towards democracy.

Koizumi is to fly to Bangkok on Friday to meet Thai Prime Minister Thaksin Shinawatra.

He will then move on to Jakarta for talks with Indonesian President Megawati Sukarnoputri on Saturday and meet Singaporean Prime Minister Goh Chok Tong on Sunday before returning to Tokyo on Jan 15.