Japan has agreed to forgive Myanmar 303.5 billion yen ($3.72 billion) in debt and overdue charges, and resume development loans to the Southeast Asian country, the two nations said on Saturday, in a move to help foster the nascent democracy's economic development.

They have decided to cooperate in drawing up a blueprint for the Thilawa Special Economic Zone in Myanmar, potentially giving Japanese firms a leg-up over rivals in winning infrastructure projects for the area.

The announcements were made jointly by Japanese Prime Minister Yoshihiko Noda and President Thein Sein, Myanmar's first head of state to visit Japan in nearly three decades. just a year ago, prompting the West to ease sanctions on a nation rich in untapped resources and seen as one of Asia's last frontier markets.

(Reporting by Kiyoshi Takenaka; Editing by Sanjeev Miglani)