Bangladesh and Thailand have agreed on steps to push ahead with a proposed road linking Dhaka to South-East Asia.

The news emerged after talks between Thai Prime Minister Thaksin Shinawatra and his Bangladeshi counterpart, Khaleda Zia, in Dhaka.

A Bangladeshi Government spokesman said the two countries would jointly approach Burma to secure co-operation for the trans-national highway.

I believe that this will open up new and exciting business possibilities

Thai PM Thaksin Shinawatra

The spokesman said Bangladesh and Thailand would also set up a new joint council to raise trade levels, and the two prime ministers had agreed to establish an additional air link.

Earlier, Mr Thaksin said plans to build the road link would provide a vital boost to the regional economy.

He wants the region to become one of the world's largest business hubs - and improving transport links between the two countries could begin this process.

"I am particularly keen on introducing air services between our respective second cities of Chiang Mai and Chittagong," Mr Thaksin said at a function held in his honour.

"I believe that this will open up new and exciting business possibilities."

Duty-free

Economists say that improving links between South and South-East Asia is long overdue.

Poor communications impedes trade between the South Asian Association for Regional Cooperation and the Association of South-East Asian Nations.

The Thai prime minister said a joint business council would ignite this process.

For its part, Dhaka wants more duty-free access in Thailand for some of its exports.

Both countries agree that while bilateral trade has increased, it is still below its full potential.