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Last Updated: Friday, 6 May, 2005, 11:53 GMT 12:53 UK
Pakistan rejects India investors
Pakistani Prime Minister Shaukat Aziz
Shaukat Aziz says that he wants an honest dialogue with India
Pakistan's prime minister has said that Indian companies will continue to be barred from investing in Pakistan, until progress is made over Kashmir.

Shaukat Aziz was speaking in the Malaysian capital, Kuala Lumpur, where he urged other countries to increase investment in Pakistan.

But Mr Aziz said he was optimistic that relations with India were improving.

India and Pakistan both claim Kashmir. The issue is the biggest hurdle in peace talks between the two countries.

'Three to tango'

"The atmospherics between the two countries are getting better," Mr Aziz said.

"Trade has increased and we hope gradually other forms of economic cooperation - be it investment, be it freer trade, more travel - will happen."

Correspondents say that although Pakistan has no formal ban on Indian investment, it has not approved any proposals in the past.

"The issue is complex. It involves three stake holders - Pakistan, India, the Kashmiri people.

"To resolve this issue all three will have to show magnanimity, courage, flexibility and leadership. It takes three to tango," Mr Aziz said during a visit to Malaysia.

He said that Pakistan has an open economy and that there were no sectors that were not open to foreign investors.

The Pakistan of today and tomorrow is a Pakistan of opportunities
Shaukat Aziz

But he said that he wanted to see "progress on all issues" with India before they would be allowed to invest.

He said that if all the parties involved in the dispute could embark in an "honest open dialogue" he was confident that the Kashmir issue could be resolved.

Resisted calls

The prime minister also said that Pakistan may send nuclear-centrifuge equipment to the United Nations to help an investigation into Iran's nuclear programme.

Pakistan has so far resisted calls to hand over the parts.

The former head of the Pakistani nuclear programme, Abdul Qadeer Khan, admitted last year that he had passed nuclear technology to Iran, Libya and North Korea.

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