Malaysia extended another RM38 million worth of credit to Pyongyang to buy its palmoil today, the second day of a visit by North Korean nominal head of state Kim Yong-Nam.

Kim and Prime Minister Mahathir Mohamad witnessed the signing of a memorandum of understanding on export credit for the sale of Malaysian palmoil to North Korea.

This was the second palmoil credit pact between the two nations after a RM38 million package signed with Pyongyang in December 2000, acting foreign minister Azmi Khalid told reporters.

The two nations also signed an agreement on cooperation to promote cultural exchanges and tourism, he said.

Azmi said Kim, who is number two after Kim Jong-Il in the cash-strapped Stalinist state's hierarchy, pitched for Malaysian investment in the fields of energy, oil and information technology.

Kim also invited Mahathir to visit North Korea and the Malaysian leader accepted but no date had been fixed, Azmi said.

The two leaders agreed to intensify bilateral trade which currently stood at RM31 million annually, he added.

Azmi said Mahathir expressed Malaysia's support for the reunification of the two Koreas. Kim also voiced the North's willingness to reunite with the South but told the premier "certain issues have cropped up that delayed" the process.

Terrorism

Azmi said the North Korean leader supported Mahathir's call for the root causes of terrorism to be identified.

But he sidestepped a question about Malaysia's stand on US President George W Bush's remarks that North Korea constitutes an "axis of evil" with Iran and Iraq.

"We feel that it is a non-issue if we addressed the question of the reasons behind terrorism, the causes of terrorism," he said.

Azmi said North Korea proposed that Malaysia, which currently monitors developments there from its embassy in Beijing, open an embassy in Pyongyang.

Mahathir has "agreed in principle but this is subjected to funding and economic factors," he added.

Kim arrived yesterday with a 32-member delegation including Foreign Minister Paek Nam Sun and Foreign Trade Minister Ri Kwang-Gun, after a three-day visit to Thailand.

Earlier today, he was accorded an official welcome before holding an audience with King Tuanku Syed Sirajuddin Putra Jamalillail and talks with Mahathir.

Tomorrow, he is scheduled to visit the world's tallest buildings, the Petronas Twin Towers, before flying home. (AFP)