Nusa Dua, Indonesia: Southeast Asian nations endorsed Myanmar on Thursday for the chairmanship of its regional grouping in 2014, gambling that the isolated country can stick to reforms begun this year that could lead it out of half a century of isolation.

But US President Barack Obama cautioned that Myanmar, also known as Burma, must still demonstrate improvements in human rights in his first remarks since the authoritarian regime freed hundreds of political prisoners in October and vowed more reforms in the weeks ahead.

“Some political prisoners have been released. The government has begun a dialogue. Still, violations of human rights persist," Obama said in a speech to the Australian parliament ahead of joining Asian leaders on the Indonesian resort island of Bali for an East Asia Summit.

“So we will continue to speak clearly about the steps that must be taken for the government of Burma to have a better relationship with the United States."

Myanmar’s chairmanship of the 10-member Association of South East Asian Nations (Asean), announced at a summit of its leaders in Bali, is a risky gambit for the regional grouping.

While it gives Myanmar coveted international recognition, it could backfire by provoking Western boycotts of Asean events in 2014 if Myanmar’s new government backslides on reforms and fails to convince the United States and Europe to end sanctions imposed in response to abuses by its former military rulers.

Such boycotts would be an embarrassment for Southeast Asia, a region of about 600 million people, at a time when it wants to be seen as a counterpoint to China’s growing influence in Asia.

“The change in Myanmar in the last six months, by Myanmar standards, is absolutely breathtaking," said Hal Hill, a professor of Southeast Asian economies at the Australian National University.

“But has Myanmar reformed enough to satisfy the Europeans and the Americans? At the moment, not yet. It is very promising but it is not yet embedded and credible," he said.

L-R) Philippines’ presidential spokesman Ricky Carandang, Singapore’s Prime Minister Lee Hsien Loong, Thailand’s Prime Minister Yingluck Shinawatra, Vietnam’s Prime Minister Nguyen Tan Dung, Indonesia’s President Susilo Bambang Yudhoyono, Cambodia’s Prime Minister Hun Sen, Brunei’s Sultan Hassanal Bolkiah, Laos’ Prime Minister Thongsing Thammavong, Malaysia’s Prime Minister Najib Razak and Myanmar’s President Thein Sein hold hands for a photo session during the opening of the Association of Southeast Asian Nations (Asean) Summit in Nusa Dua, Bali on Thursday.

But Southeast Asia has moved quickly to embrace change in the resource-rich former British colony, whose strategic location between rising powers India and China, and vast, untapped natural-gas resources, are drawing investor interest.

“Be assured that we are now growing into a democratic society," Ko Ko Hlaing, chief political adviser to the Myanmar president, told reporters.

Kyaw Hsan, Myanmar’s information and culture minister, told reporters more reforms were in store. “We are hoping for a more open country with a thriving democracy and one that is active in the local, regional and international arena."

A senior Myanmar home ministry official told Reuters on Wednesday the government was ready to release more political prisoners.

Countries across Southeast Asia welcomed the chairmanship as a critical milestone after years frustration over Myanmar’s isolation as the region approaches a European Union-style Asian community in 2015.

“We believe that with the positive improvements in Myanmar right now, this has shown that Myanmar would like to come back to the democratic way," Thai foreign minister Surapong Towijakchaiku told reporters on the sidelines of the Asean summit in Bali.

“Momentum for reforms"

Myanmar has embarked on a series of reforms since the army nominally handed over power in March to civilians after the first elections in two decades.

The junta was replaced by a military-dominated civilian government in a process mocked at the time as a sham to seal authoritarian rule behind a democratic facade.

Since then, recent overtures by Myanmar’s government have included calls for peace with ethnic minority groups, some tolerance of criticism, the suspension of an unpopular Chinese-funded dam project and the legalisation of labour unions.

President Thein Sein has also reached out to democracy leader Aung San Suu Kyi, who was freed last year from 15 years of house arrest.

Her National League for Democracy (NLD) is expected to decide on Friday whether to re-register as a political party to contest imminent by-elections.

An official in Suu Kyi’s party said Myanmar’s Asean chairmanship would spur more political change.

“Their decision is tantamount to encouraging the present Myanmar government to step up the momentum for reforms," Nyan Win, a senior NLD official, told Reuters. “Myanmar’s political activities will become more vibrant after assuming the chair."

Indeed, Indonesia’s foreign minister, Marty Natalegawa, said the chairmanship would likely open Myanmar further. “I am quite convinced this will have a huge multiplier effect."

He said there were no conditions attached to the decision.

“But I think we all know what we want to see."

“Real changes"

The United States has had strained relations with Myanmar since the former military junta, which took power in a 1962 coup, killed thousands in a crackdown in 1988.

US secretary of state Hillary Clinton said last Friday that Myanmar appeared to be making some “real changes" to its political system but needs to pursue more reform.

Myanmar’s government has responded by urging the United States to lift sanctions, describing its reforms as genuine.

The country, as big as France and Britain combined, is developing ports on the Indian Ocean and Andaman Sea that, if combined with proposed rail and pipeline projects, would allow cargo ships to bypass the Straits of Malacca.

That would open the way for faster delivery of oil from the Middle East and Africa to China and other countries in the region straddling the Mekong River.

India, Japan and Southeast Asia have sought to ramp up engagement, largely to counterbalance China’s influence and to gain a toehold in a country whose proven gas reserves have tripled in the past decade to around 800 billion cubic metres, equivalent to more than a quarter of Australia’s, BP Statistical Review figures show.