The contract is seen as a precursor to a free trade agreement between Malaysia and the GCC nations of Saudi Arabia, Qatar, Kuwait, Oman, Bahrain and the UAE.

Under the agreement, the two trading partners would work together to boost investment and trade through removal or reduction of customs and non-customs barriers, encouragement of contact between business sectors and establishment of economic, trade and investment partnerships, exchange of trade missions and organization of trade and investment fairs.

UAE Minister of Economy Sultan Al-Mansouri signed the agreement for the GCC with Malaysian Minister for International Trade and Industry Mustapa Mohammed.

As the first action to put their commitment toward enforcing the agreement in place, he added, the two signatories agreed to set up a joint expert committee whose main mandate is to follow up the implementation of the agreement, lay down necessary mechanisms toward that purpose and remove any obstacles that could hinder swift, smooth achievement of objectives of the agreement.

The Malaysian prime minister lauded the agreement as “a qualitative turning point'' in the GCC-Malaysia ties. Razak told media that he expects the negotiation to start in March and the FTA may be concluded within a year or a year-and-a- half.

''The GCC-Malaysia agreement on promotion of investment and trade will play a strategic role in advancing bilateral economic and trade cooperation, facilitating easy flow of investment, sharing information and expertise and removing trade barriers that could stand on the way of increasing trade exchange,'' the minister added.

Later, Razak, who held talks with Mubadala Development Corporation Chief Executive Khaldoon Khalifa Al-Mubarak, said Mubadala had reiterated its commitment to the Kuala Lumpur International Financial District, a proposed $8-billion joint property development between Malaysia Development Berhad and Mubadala.

Mubadala said in a release that Mubadala Aerospace will explore opportunities with Malaysia's National Aerospace and Defence Industries covering training as well as aircraft manufacturing, design and assembly.

"Governmental cooperation agreements in important geographies such as Malaysia complement our tie-ups with world leading private sector companies," said Homaid Al-Shemmari, the executive director of Mubadala Aerospace.

The agreement was signed on Sunday at Emirates Palace Hotel during the Invest Malaysia Forum, in the presence of the prime minister of Malaysia.

The parties will explore mutually beneficial opportunities in the areas of joint metallic and composite aero-structures design, manufacturing and assembly, as well as the potential implementation of joint training programs for aerospace engineers and technicians.

Razak, who arrived in Abu Dhabi on early Sunday to inaugurate the "Invest Malaysia 2011" forum, is also expected to meet several industry heads from the region to push more Gulf investors to invest in Malaysia.