Myanmar’s chairmanship of the Association of Southeast Asian Nations (Asean) is expected to boost the country’s diplomatic and economic prospects. In April the country, which opened itself up to the world and outside investment only two years ago, successfully hosted finance ministers from the 10 member countries that make up Asean. The meeting—one of hundreds to be hosted this year by Myanmar—comes only a week after the country awarded contracts to 13 multinational firms to develop offshore oil blocks. “Myanmar’s renewed diplomatic efforts signal improving institutional strength and bode well for continued foreign investor interest,” Moody’s Investor’s Service wrote in an April report.

Myanmar’s diplomatic efforts will not come without challenges, however. At the meeting, Asean members reaffirmed their commitment to form an integrated regional economy, similar to the EU, by the end of 2015. To achieve that goal, however, Asean members must resolve significant policy issues under Myanmar’s chairmanship. Yet, Myanmar faces pressure from China, with which it shares a border and a long-standing trade and investment relationship. The Philippines, one of Asean’s five founding members, filed charges with the UN on March 31 disputing China’s territorial claim to the South China Sea. 

Myanmar also faces challenges from within its own borders. Corruption is one of them. Despite its reforms, Myanmar ranks 157 of 177 countries in Transparency International’s Corruption Perceptions Index and 182 of 189 countries in the World Bank’s Ease of Doing Business report. Addressing corruption will be difficult, especially if lucrative contracts, such as those recently given to the oil companies, result in big profits for the politically well-connected.

Domestic opposition parties and foreign political powers have also called for constitutional reforms to reduce the power of the military, expand individual rights and give more autonomy to minority groups. Those reforms require approval from more than 75% of the Parliament. The military reserves 25% of those parliamentary seats, meaning some military members must vote to give up power for constitutional reform to pass.

That constitutional reform has economic as well as political consequences, according to Moody’s. “Ultimately, the creation of a stable political environment will be crucial for the country to achieve its full economic growth potential,” Moody’s states. “To this end, sustained reform momentum will hinge on the evolution of the country’s democratizing system and ongoing ethnic tensions.”