Australia boosted its aid and eased restrictions on defence cooperation with Myanmar on Monday as Thein Sein became the country’s first head of state to visit Canberra since 1974.

“As a close neighbour, Australia will benefit from a more open and prosperous Myanmar that is fully integrated into the the region,” said Prime Minister Julia Gillard of the country formerly known as Burma. “Australia’s commitment to expand its constructive engagement with Myanmar recognises the unprecedented process of change underway there towards political freedom and the new opportunity this brings to help promote the prosperity of Myanmar and its people.

“It also recognises President Thein Sein’s leadership in driving these critical reforms.” While Canberra said its arms embargo would remain, it announced an easing of restrictions on defence cooperation including humanitarian and disaster relief activities, as well as peacekeeping. It will also appoint a defence attaché to Myanmar as well as a trade commissioner.

Gollard said AUS $20 million (US $20.7 million) would be provided over two years for “strengthening democratic institutions, promoting human rights, improving economic governance and advancing the rule of law”. Thein said he was proud to be the first head of state to visit since 1974. “My visit to Australia is one that I have looked forward to for a very long time,” he said.

Australia last year lifted all its remaining targeted travel and financial sanctions against the country.