Japan is to write off more than $US3.7 billion of debt owed by Myanmar (Burma) and to resume development aid.
The accord was announced after talks between President Thein Sein and Prime Minister Yoshihiko Noda in Tokyo. They also agreed to plan a special economic zone near Rangoon.
President Thein Sein is the first leader from Myanmar to visit Japan for almost three decades. He came to power in November 2010 after 50 years of direct military rule there.