Visiting Singaporean Prime Minister Goh Chok Tong made the offer to Prime Minister Khaleda Zia during official talks at the Prime Minister's Office on the second day of his three-day tour. Khaleda welcomed the Singaporean initiative and accepted the offer.

The city state also assured Bangladesh of an increase in manpower import, greater promotion of investment and its support to Bangladesh's bid to join ASEAN Regional Forum (ARF) during the talks.

The two countries signed an agreement to protect and promote investment and a memorandum of understanding (MoU) on regular consultation between the two foreign ministries on bilateral concern. Foreign Secretary Shamsher Mobin Chowdhury and Singapore's Permanent Secretary of Foreign Affairs Bilahari Kausikan signed the MoU.

Chowdhury later briefed the press on the official talks at Sonargaon Hotel. He quoted the Singaporean PM as telling his Bangladeshi counterpart, "There is a perception in the west that identifies Islam with terrorism and Singapore would like to work with Islamic countries to remove the misperception."

"Bangladesh welcomed this noble initiative from a non-Muslim nation as it is an initiative for peace and accepted the offer," said Chowdhury, adding that it would promote the modern and tolerant ideals of Islam.

The foreign secretary said the eight-nation NSC would be made up of four Arab countries and as many countries from Asia, but he would not disclose the names of the other countries.

Chowdhury said the first NSC meeting will be held in Singapore in the end of the year, although the committee is still in the conceptual stage as Singapore is talking with other countries for bringing it into being.

Bangladesh has also agreed to a Singapore proposal to share intelligence and information as the first steps to combat terrorism in the region and beyond together.

"Bangladesh and Singapore are signatories to several UN resolutions that provide scope for close co-operation," said Chowdhury, adding UN involvement does not rule out bilateral collaboration between Dhaka and Singapore.

When asked if the proposal for the NSC has the US vetting, Chowdhury skirted the issue, saying it is a matter of Singapore.

Singapore is one of the closest US allies in Southeast Asia and has recently signed several agreements on fighting against terrorism in the region.

Speaking to the BBC Bengali Service after the briefing, Chowdhury said the NSC is not an alternative to the already existing mouthpiece for Muslim nations, the Organisation of Islamic Conference, and keeps true to the main aims of the OIC.

He added the involvement of non-Muslim nations like Singapore only strengthens the effort to project the tolerant side of Islam in the West.

Trade and investment between the two countries are also set for a boost after Dhaka and Singapore signed an "Investment Guarantee" earlier to protect and promote investment in both countries.

Industries Minister Motiur Rahman Nizami and Singapore's Minister for Prime Minister's Office and Second Minister for Foreign Affairs Lee Yock Suan signed the agreement after the prime ministerial summit.

Premier Goh also proposed a free trade agreement (FTA) between the two countries, while Dhaka proposed long-term plans for increasing trade to narrow the trade gap between the countries. Both sides agreed to discuss the matters.

Goh said businesspeople from both countries could raise trade and investment if they wish as Bangladesh has established itself as a reliable partner in business, Chowdhury told reporters.

Earlier, Goh told private news agency UNB he has been briefed on sector-wise business operations in Bangladesh and said, "I can help promote investment in Bangladesh, at least from Singapore." Foreign Minister M Morshed Khan also quoted Goh as telling the UNB, "Bangladesh is the right country to come and invest in."

The Board of Investment (BoI) figure shows that Singapore currently has $1 billion worth of investment on the ground and in commitments.

Relaxation of visa processing for Bangladeshis was also raised during the talks, with Singapore promising Bangladeshi businesspersons and medical patients will be issued visas within three to four days of filing their application, Chowdhury said. The Singapore visa procedures are uniform for all countries and is not prejudiced against any country, he quoted Singapore officials as saying.

Before formal talks, the two prime ministers had a brief meeting where they discussed strengthening of relations in different sectors and expansion of trade and commerce.

Finance Minister M Saifur Rahman, the foreign minister, Commerce Minister Altaf Hossain Choudhury, State Minister for Home Affairs Lutfozzaman Babar and State Minister for Overseas Employment and Expatriates Welfare Kamrul Islam Chowdhury were present at the formal meeting from the Bangladesh side.

The Singaporean side included the minister for the Prime Minister's Office and second minister for foreign affairs, Minister for Home Affairs Wong Kan Seng and Minister for Manpower Ng Eng Hen.