KUALA LUMPUR (AFP) -- The United States and Malaysia on Monday kicked off a make-or-break fifth round of trade talks, imperiled by sensitive issues and a row over a Malaysian energy deal Iran.

The talks, which are a last-ditch attempt to strike a free-trade agreement (FTA) before a March deadline, are being held in the resort town of Kota Kinabalu on Borneo island.

No details of the discussions were made available, but U.S. officials said they would hold a press conference when they conclude at the end of the week.

Malaysia said Friday it was ready to suspend the talks after senior U.S. lawmaker Tom Lantos called for a halt over a 16 billion dollar deal between the state-owned National Iranian Oil Company and Malaysia's SKS Group.

"Malaysia reiterates that the FTA negotiations cannot be held hostage to any political demand, and cannot be conducted under such threats," the trade ministry said.

However, the U.S. government said later it was forging ahead with the talks despite the controversy.

"The Malaysians are tough negotiators. I think we're tough negotiators," U.S. Trade Representative Susan Schwab said in Washington. "But we will press ahead in the hopes of getting a free trade agreement that is in the interests of both countries."

The negotiations are bogged down in sensitive areas including the services sector, investment and government procurement.

The U.S. is seeking access to lucrative Malaysian state contracts, which favour the country's majority ethnic Malays and indigenous groups, or "bumiputras" as they are known.