Venezuela's President Hugo Chavez has signed an agreement to set up a joint textiles company between the government and the private sector.

The government, which made the deal after negotiating with the owners of a redundant textile plant, will provide the capital for the new company - called Industria Venezolana Endogena de Textiles SA, or Invetex.

VEB3.2bn will be invested, while the factory's owners will supply the necessary infrastructure and machinery.