Rahkine is deeply scarred by communal violence between Buddhists and Rohingya Muslims that began in 2012, presenting one of the most acute challenges for Myanmar's first popularly elected government in decades.
In a surprise move today outgoing president Thein Sein announced the removal of the emergency order, which had been in place since unrest left scores dead and tens of thousands of Rohingya Muslims confined to miserable displacement camps.
While Rakhine has not seen a serious outbreak of violence in more than two years, the state remains fractured on religious lines. Most Muslims are trapped either in camps or in heavily regulated areas near the border with Bangladesh.
A rising tide of Buddhist nationalism in Myanmar has fuelled discrimination against the Muslim minority, seen by many as illegal immigrants from neighbouring Bangladesh.
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Tens of thousands have fled persecution and poverty for neighbouring countries like Thailand, Malaysia and Indonesia.
But the tide appears to have slowed this year after a Thai crackdown on people-smuggling in 2015 led boat captains to abandon many Rohingya on land and at sea, spurring a regional crisis.
"We think the situation is good. But any politician can see that Rakhine State is very sensitive and it would be easy for it to explode at any time," said Aye Maung, chairman of the Arakan National Party (ANP), which represents ethnic Rakhine Buddhists.
Around 18 ANP lawmakers, many wearing black stickers on their jackets, walked out of the Rakhine regional legislature yesterday.
It is not clear what is behind the lifting of the state of emergency by Thein Sein. The former general has steered Myanmar's dramatic reforms since 2011 but has also presided over growing Buddhist nationalism.