Mr Mahathir is one of Burma's strongest allies

Malaysia is the sixth largest investor in Burma.

Mr Mahathir's visit to Burma has raised hopes that he could help broker dialogue between the military government and opposition leader Aung San Suu Kyi, who is under de facto house arrest.

Aung San Suu Kyi's National League for Democracy (NLD) party won the 1990 elections by a landslide, but the military refused to hand over power.

Trade

Mr Mahathir, long seen as a close ally of Burma's generals, met the military government's leader, General Than Shwe, on Wednesday.

The talks were said to cover increased economic co-operation and trade.

No meeting has been scheduled between Mr Mahathir and Aung San Suu Kyi, who has been confined to her home since September.

Mr Mahathir is spending a week in Burma

But diplomatic sources have said he is expected to urge the generals to make some concessions to break the political deadlock during private talks.

This has led to speculation that the restrictions on Aung San Suu Kyi may be eased shortly, as a gesture to the Association of South East Asian Nations (Asean).

Burma was admitted to Asean during Malaysia's presidency three years ago.

But some member countries, in particular Thailand, are increasingly frustrated by the political isolation Asean has suffered as a result of Burma's inclusion.

UN envoy

A Malaysian opposition leader, Dr Syed Azman Syed Ahmad, has meanwhile written an open letter urging Mr Mahathir to meet Aung San Suu Kyi.

Dr Syed Azman said it was important for South-East Asian countries to voice their protests against human rights violations in Burma.

The United Nation special envoy Razali Ismail is due to visit Burma on Friday to resume his efforts to break the political stalemate.

Dr Razali, who is also Malaysian, has been assurred of access to Aung San Suu Kyi during his trip.