* EU praises moves towards democracy
* Businesses eager to enter untapped market
* EU urges release of political prisoners
By Adrian Croft and Justyna Pawlak
BRUSSELS, April 17 (Reuters) - The European Union is expected to lift all sanctions on Myanmar next week, except for an arms embargo, in recognition of the “remarkable process of reform” in the country, a document seen by Reuters showed on Wednesday.
The EU agreed a year ago to suspend most of its sanctions against Myanmar for a year, but it is now expected to go further by agreeing “to lift all sanctions with the exception of the embargo on arms”, the document said.
The step, which was agreed by EU ambassadors on Wednesday, paving the way for ministerial approval on Monday, will allow European companies to invest in Myanmar, which has significant natural resources and borders economic giants China and India.
“The EU is willing to open a new chapter in its relations with Myanmar, building a lasting partnership,” said the document which contains the draft conclusions for Monday’s EU foreign ministers’ meeting.
The EU had frozen the assets of nearly 1,000 companies and institutions in Myanmar and banned almost 500 people from entering the EU. It also prohibited military-related technical help and banned investment in the mining, timber and precious metals sectors.
The United States and other Western countries have been easing sanctions on Myanmar to reward a wave of political and economic reforms put in place since Myanmar’s military stepped aside and a quasi-civilian government was installed in 2011.
Under President Thein Sein’s reforms, opposition leader and Nobel peace prize laureate Aung San Suu Kyi, who spent 17 years under house arrest, has been allowed back into politics and has made a number of visits abroad.
A succession of foreign leaders, including U.S. President Barack Obama, have travelled to Myanmar, formerly known as Burma, and the country is attracting a surge of interest from overseas businesses keen to enter one of the last untapped markets in Asia.
In February, Danish brewer Carlsberg said it was returning to Myanmar following the easing of international sanctions which forced it out of the country in the mid-1990s.
While praising moves towards democracy and government efforts against corruption, the EU document called on Myanmar to release unconditionally remaining political prisoners.
It also called on the government to deal with inter-communal violence and take urgent action to deal with humanitarian risks facing displaced people in Rakhine State, which was swept by sectarian violence last year that killed at least 110 people and left 120,000 homeless.
Sectarian violence erupted again last month and 43 people were killed in Buddhist-majority Myanmar. Thousands, mostly Muslims, were driven from their homes and businesses as bloodshed spread across the central region of the country.