New Zealand will establish a dairy farm in Myanmar as part of its pitch to be at the front of the queue for economic potential in the increasingly democratic nation.

Prime Minister John Key became the first New Zealand leader to visit the country, which spent nearly 50 years under military rule until elections in 2010, when he arrived on Wednesday.

As democracy and democratic ties improve in Myanmar (formerly known as Burma), New Zealand is angling for closer economic relations, and on Thursday Mr Key will formally announce a $6 million deal to develop a dairy farm in Myanmar, to help boost its drive to becoming self-sufficient.

The country largely imports its agricultural products, particularly dairy, from New Zealand, and the herd on the new dairy farm is likely to be New Zealand cattle.

The aid announcement comes a day after Fonterra appointed a new country manager to Myanmar, where its products make up the lion's share of New Zealand's annual $18 million exports to the country.

Mr Key will meet with President Thein Sein, a former military commander, on Thursday, and will raise the issue of human rights and ethnic clashes, and how New Zealand can help Myanmar's development.

Mr Key will also meet with opposition leader Aung San Suu Kyi, the Nobel Prize-winning activist who spent 15 years under house arrest, and discuss the country's steps toward democracy.

"She's an integral part of the regime, effectively, as leader of the opposition. She is legitimising the move to democracy, so it'll be very interesting to see what she says," he said.

Earlier on Thursday, Mr Key visited Taukkyan War Cemetery to pay respects to nine New Zealand WWII soldiers buried there.

His visit to Myanmar follows two days in Cambodia for the East Asia Summit.

Mr Key returns to New Zealand on Saturday.

NZ Newswire

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