"Pakistan and the kingdom of Saudi Arabia have underscored the need of enhancing military cooperation between the two brotherly countries," it said.

A senior Pakistani defence production ministry official briefed the Saudi delegation on ways "to undertake a joint venture" in the production of arms and ammunition, armoured fighting vehicles, missiles, and tanks.

Pakistan will hand over Al-Khalid tanks to Saudi army next year, additional secretary major general Ali Baz said at the briefing.

Pakistan's army last month inducted a new locally-made tank, after four years in development with Chinese assistance.

Pakistan and China agreed in 1990 to jointly develop the new tank, according to the Washington-based Federation of American Scientists (FAS).

The Al-Khalid MBT 2000 tank features a recently-developed thermal viewer system to improve nocturnal fighting capability and a Ukrainian-manufactured engine, FAS said on its website.

"Both sides agreed to hold joint military exercised between the armed forces of the two countries," the statement added.

Riyadh and Islamabad, both fighting Islamist extremists, have close ties and Pakistani President Pervez Musharraf is a frequent visitor to the kingdom.

Crown Prince Abdullah bin Abdul Aziz visited Islamabad last October.

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