John Key will travel to Myanmar later this month in what will be the first visit by a New Zealand prime minister.
Cabinet has also decided to recognise the country by its official name, Myanmar. The military junta changed its name from Burma to Myanmar in 1989, a year after thousands died when a popular uprising was suppressed.
New Zealand has previously maintained a minimal bilateral relationship with the country because of international opposition to military control.
But under President Thein Sein there have recently been political reforms, including the release of opposition leader Aung San Suu Kyi from house arrest and by-elections in April. Key will meet both political figures on his visit.
As well as showing support for the changes, Key is also likely to raise human rights issues such as the ethnic violence in Rakhine province, which has displaced thousands of Rohingya Muslims.
Foreign Minister Murray McCully visited Myanmar in March this year.
New Zealand is looking to maximise trading opportunities as the country seeks to rebuild. Exports there stand about $18m year, mostly in dairy and poultry.
The Burmese foreign minister visited New Zealand for talks last month.
"There has been historic political and economic reform in Myanmar over the past year. I look forward to seeing these developments first hand, and exploring how New Zealand can work with Myanmar to support its political and economic reintegration with the rest of the world," he said.
Before flying to Myanmar, Key will join leaders from 10 ASEAN countries at the East Asia Summit in Phnom Penh, Cambodia. Re-elected US President Barack Obama is expected to attend.
Other leaders from Australia, China, India, Japan, Korea and Russia will also be there.
Key said it was an ''important grouping of countries for New Zealand''. Discussions will cover political, security and economic issues.
- © Fairfax NZ News
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