FOR some it’s the new El Dorado. Foreign investors are lining up to do business in Myanmar, a once-pariah nation which only a couple of years ago was almost as isolated as North Korea today.

Myanmar’s rebranding as the cool new place to make money is getting global traction. Australia and Canada have eased or lifted all sanctions imposed on the country in the years it was under military rule, the US has made it easier to do business with Myanmar and early next week the European Union will lift all restrictions, except the arms embargo, on the country.

Not bad for a state whose military representatives were once barred from entering the  European Union (EU) and whose membership of the Association of Southeast Asian Nations (Asean) in 1997 led to a stalling of EU-Asean relations for almost a decade.

But times change, countries get rebranded and international relations keep evolving. Myanmar is by no means out of the woods. Human rights groups draw attention to ethnic strife and communal violence in the country, including the conflict between Buddhists and Muslims. Despite political reform, Myanmar still has political prisoners. Human rights and the rule of law are not always respected.

Still, the business leaders keep pouring in. While it was China that once ruled the roost in Myanmar, Beijing now faces tough competition from the US, Europe and Southeast Asian countries.

The focus on making money is not bad. There is plenty to be made in Myanmar, a country rich in natural resources. But given Myanmar’s history of authoritarian rule and human rights abuses, the international community must continue to push, prod and pressure Myanmar on reform. Achieving this requires a difficult balancing act which allows a stepping up of international engagement with Myanmar while retaining the option of tougher action if reform efforts stall.

Myanmar certainly deserves credit for beginning an impressive process of transformation under President Thein Sein. After decades of military rule, the government has legalised the main opposition party, released hundreds of political prisoners and implemented a variety of legislative and regulatory reforms. “My government will do everything in its power to see Myanmar become a democratic and prosperous and peaceful nation,” Thein Sein told EU officials earlier this year. Not everyone is convinced.

In an open letter to EU governments, the International Federation for Human Rights has urged a continuation of the current regime of suspended sanctions for an additional year as a “necessary safeguard” to ensure Myanmar stays on its path to reform.

According to the Asean Inter-Parliamentary Myanmar Caucus, the EU must strike a “careful balance between encouragement and continued pressure” and a permanent removal of sanctions will send the wrong message.

Engaging with countries in transition is never easy and in Myanmar’s case, the transition from decades of authoritarian military rule towards a more open and representative system is proving especially difficult. Political change is continuing. There is certainly much to welcome in Myanmar: the economy is forecast to grow strongly as policy reforms continue and foreign investment surges into the resource-rich country.

With foreign companies lining up to gain access to Myanmar’s market, the government has been implementing measures to ease restrictions on investments. The country is also opening up to the global financial system.

Political reforms are continuing apace. By-elections held a year ago saw opposition leader and Nobel peace prize laureate Aung San Suu Kyi elected to parliament and over the past years, the government has released hundreds of political prisoners, increased media freedoms and adopted important reforms in labour laws.

Journalists no longer have to submit their work for censoring before publication and private daily newspapers are now sold in Myanmar after years of press censorship. A commission to review the 2008 constitution has been set up, signalling that the ruling party could eventually allow Suu Kyi to contest the presidency in the 2015 general elections. The elections will in fact be a true test for progress towards democracy in the country.

EU-Myanmar relations are improving fast. European foreign ministers are frequent visitors to Myanmar, the EU has a representative office in the country and on several occasions has reiterated its commitment to supporting Myanmar’s peace process. Earlier this year, Myanmar and the EU pledged to build a lasting partnership, with the EU promising increased assistance and support for the country.

The European Commission has recommended that Myanmar be brought back into the EU’s Generalised System of Preferences (GSP) for least developed countries. Such a move could help raise Myanmar’s exports by 30 per cent according to the European Commission. The proposal follows a report by the International Labour Organisation which said the country has made “significant” progress in tackling forced labour, the reason Myanmar lost GSP status in 1997.

An end to sanctions, say those who favour such a move, will speed up Myanmar’s socio-economic development, attract investors into the country and allow European companies to compete on an equal footing with the US, China, Australia and others. Sanctions are also a blunt instrument, they say, which have had little impact on Myanmar’s generals and their friends while seriously hurting ordinary citizens.

In addition to helping bring much-needed capital back into the country, an end to EU sanctions will also encourage a transfer of skills and technology transfer and help the development of institutional capacity to help absorb the vast sums of money being poured into the country.

The lifting of EU sanctions will send an important signal of support. However, a careful step-by-step approach of increased smart engagement, which is conditional on continuing change and an end to violence, is required. Vigilance, monitoring and pressure will continue to be vital. The EU, along with other countries, will therefore have to maintain pressure for change, reform and openness.

The writer is Dawn’s correspondent in Brussels.