The European Union is set to lift all remaining sanctions against Burma next week, except its arms embargo, to recognise the country’s “remarkable process of reform”, according to a report in Reuters.

The EU, which is due to review its one-year suspension of economic and diplomatic sanctions against Burma on Monday, is likely to completely lift all remaining sanctions, the report says. However, a ban on the sale of arms to the quasi-civilian regime will remain in place.

The move was reportedly agreed at an ambassadors’ meeting on Wednesday and will be formalised by the EU’s foreign ministers on Monday, thus paving the way for wide-scale investment into the resource-rich Southeast Asian nation.

“The EU is willing to open a new chapter in its relations with Myanmar [Burma], building a lasting partnership,” according to the Reuters report.

President Thein Sein has been widely lauded for introducing a series of democratic reforms in the former pariah state, including easing media restrictions, freeing political prisoners and liberalising its economy, since taking office in March 2011.

A number of other western countries, including the United States, Australia, UK and Norway, have continued to step up its diplomatic and economic engagement with Burma, which is seen by many as the last untapped market in Southeast Asia.

Earlier this week, Burma’s top peace negotiator, Aung Min, travelled to London to meet with a senior delegation of British officials, including Foreign Secretary William Hague and former Prime Minister Tony Blair. They reportedly discussed ongoing peace-making efforts in Burma’s resource-rich border areas, which have been plagued by decades of civil war with ethnic minority groups fighting for greater autonomy and rights.

Burma is rich in natural resources, including timber, gemstones, hydropower, oil and gas, but the military and its cronies have largely siphoned off industry profits over the past five decades. Analysts say Burma’s democratic transition has been largely driven by a desire to loosen China’s grip on its mismanaged economy.

But human rights groups have warned against prematurely rewarding Burma for its democratic reforms, while concerns remain over the treatment of ethnic minorities across the country.

“We strongly disagree with the EU’s recognition of the “remarkable process of reform,” warned the Swedish Burma Committee in a Facebook post on Thursday. “There has been no reform in Kachinland under Burma’s new ‘civilian’ government,” the group said, referring to the ongoing civil conflict in northern Burma, which has displaced over 75,000 people.

Earlier this month, Burma Campaign UK (BCUK) issued a briefing insisting that the EU must stick to the benchmarks outlined last year, which called for the release of all remaining political prisoners, an end to all ethnic conflicts, recognition of citizenship rights for the stateless Rohingya minority and full humanitarian access to conflict zones.

“Given that none of these four benchmarks have been met, to move from suspending to lifting EU sanctions would be premature, and also undermine the credibility of the European Union,” said BCUK.

According to the Reuters report, the EU is likely to reiterate calls for the Burmese government to address ongoing human rights concerns, including recent ethno-religious clashes, which claimed over 40 lives in March.

It follows two bouts of violence between Muslim Rohingya and Buddhist Arakanese in western Burma last year, in which security forces were implicated in targeting the stateless minority.