Canberra – Malaysia's prime minister said Thursday he remained undecided on supporting Australia's plan to make East Timor a regional hub for processing asylum seekers, adding that cost as well as the wishes of the East Timorese would be major factors in his final decision.

Prime Minister Najib Razak met with his Australian counterpart Julia Gillard at Parliament House and pledged his government's cooperation in preventing people smugglers from taking asylum seekers fleeing Iraq, Afghanistan and Sri Lanka by boat from Malaysia to Australia.

Gillard plans to thwart their ambition to reach Australia by building a regional detention center on neighboring East Timor. Australia is negotiating the plan with the East Timorese government as well as other regional governments.

Most boat arrivals are currently held at an overcrowded detention center on Christmas Island, an Australian territory closer to Indonesia than it is to the Australian mainland. Australia would prefer they were held on East Timor because it has signed the UN refugee charter and detainees held there would not be able to take their fight for asylum to the Australian courts.

Najib declined to give an opinion of the plan, which will be considered by a 38-nation forum against people smuggling chaired by Australia and Indonesia.

"We need a bit of time to study the Australian proposal, but we will be as positive as we can," Najib told reporters at a news conference with Gillard.

Najib later told reporters on the sidelines of meetings at Parliament House that the East Timorese remained "quite divided" over the prospect of hosting such a detention and processing center.

"We have to see how... that has been accepted by the East Timorese first," Najib said. Australia had offered no details of how much the plan might cost Malaysia, he said.

"Certainly payment is a major factor," Najib said. "We'll consider all things that we can do together, but of course how do we apportion responsibility financially and all that are big questions that we have to address," he added.

Australia receives just a tiny proportion of the world's asylum seekers, but a surge of people arriving via Indonesia and Malaysia in rickety boats in recent years has become a divisive political issue in Australia.

Najib said Malaysia had responded to the problem by increasing penalties and intercepting more smuggling boats in Malaysian waters.

During their meeting Thursday, the two prime ministers agreed to finalize a bilateral free trade agreement within a year.