By Aung Hla Tun and Jason Szep
NAYPYITAW (Reuters) - Myanmar President Thein Sein plans to reshuffle his cabinet and appoint a new vice-president to reduce the influence of anti-reform ministers and accelerate changes in the former pariah state, several lawmakers said.
The imminent reshuffle could sideline some hardliners by reducing their responsibilities in the 37-member cabinet or give them new roles, said the lawmakers.
"He needs to make the cabinet more vibrant and effective and he has to remove some conservatives who are reluctant to accept his reforms," said one lawmaker, who declined to be identified.
The first to go was first Vice-President Tin Aung Myint Oo, a former four-star general considered a leader of hardline remnants of the military junta that ruled for half a century and was close to its paramount leader, former dictator Than Shwe.
The joint upper and lower houses on Wednesday endorsed Tin Aung Myint Oo's resignation and house speaker Khin Aung Myint said the military delegates in both chambers would have until July 10 to choose his successor.
He was one of two vice-presidents chosen by lawmakers and submitted his resignation on May 3. Thein Sein did not accept it and instead gave him leave for two months, say lawmakers and several government officials. That has stoked speculation about his role, including rumors of his deteriorating health.
The pace of change in Myanmar, already dramatic, looks set to accelerate after Thein Sein, a former general, announced on June 19 a second wave of reforms that aim to triple the size of the economy in five years and modernize a backward state where a third of the population live below the poverty line.
Sources with knowledge of the reshuffle discussions expect two ministers to be axed when seven ministries are merged into three portfolios: agriculture, transport and electric power.
Two prominent ministers are likely to be reassigned to become more central to the reforms, with Rail Transportation Minister Aung Min - Thein Sein's top peace negotiator - becoming a president's office minister and Industry Minister Soe Thein, head of the country's Investment Commission, given the National Planning and Economic Development portfolio.
He would replace Tin Naing Thein, who would become Finance Minister in place of former general Hla Tun.
Tin Aung Myint Oo's resignation as vice-president coincided with the opposition National League for Democracy party (NLD) — vilified for years by the former military government — filling several rows of seats in parliament, marking their transition from activists to lawmakers - minus their most famous dissident.
SUU KYI CRITICISED
Nobel laureate Aung San Suu Kyi came in for criticism for not showing up for the start of parliament and delaying until Monday when she will sit in the chamber. She cited exhaustion following her 17-day European tour that ended on Saturday.
"We have to recognize she is exhausted but we feel she should have prepared to come here," said Khine Maung Yi of a rival opposition party, the National Democratic Force (NDF).
NLD lawmaker Susu Lwin said she was disappointed by the lack of debate in parliament. "The way it is conducted is very tense. It would be better if it was less formal and we didn't have to submit questions in advance," she said in an interview.
The successor to Tin Aung Myint Oo will be chosen by armed forces delegates and is therefore almost certain to be another military man. The top contender is election commission chairman Tin Aye, a retired lieutenant-general well respected in the army and known as a moderate, who graduated from the elite Defense Services Academy in the same class as Thein Sein.
Thein Sein faces pressure from allies to strengthen his cabinet's ability to carry out reforms, particularly with resistance from conservatives likely to stiffen in coming months as the government attempts to open up an economy that has long benefited an elite with strong ties to the military.
Foreign investors have descended on Myanmar, but most appear to be window shopping, awaiting legislation including a foreign investment law that would protect their assets and clarify rules for foreign companies operating in the country.
Tin Naing Thein, national planning and economic development minister, said in an interview on Wednesday he expected the investment law to be approved by parliament and endorsed by the president by the end of this month.
Some Myanmar business leaders are concerned the proposed investment law could hand too much influence to multinationals when domestic firms are still coping with the transition from state controls and cannot compete with international brands following this year's suspension of U.S. and European sanctions.
The government must also counter public pressure for faster change. Protests have erupted in recent months over chronic power outages, textile wages and farm land reform. Long-simmering tension in northwestern Rakhine state between mostly stateless Rohingya Muslims and majority Buddhists has flared into violence that killed at least 80 people.
Being seen as moving too slowly on reforms could be devastating for Thein Sein's ruling Union Solidarity and Development Party (USDP) in the next general election in 2015. Suu Kyi's NLD won by-elections in a landslide in April, sending an ominous signal to the military-backed USDP.
"BIG ROOM FOR IMPROVEMENT"
Although the government insists there will be no backsliding on reforms, some freedoms are being at least partially rolled back. State censorship returned during the weeks of unrest in Rakhine state, and a much-vaunted media law has faced delays. Journalists covering this parliamentary session also faced tighter restrictions compared with the opening in February.
At that time, reporters could arrive early at the marble-floored complex with its soaring ceilings and freely interview members of parliament as they arrived. On Wednesday, journalists were kept waiting more than an hour in a bus outside the complex until the members had taken their seats.
But lower house speaker Shwe Mann highlighted the media's importance in his opening remarks to parliament. "It is essential for the lawmakers to listen to media's criticisms and the opinions," he said.
Shwe Mann, once a powerful figure in the former military junta, also urged parliamentarians to set aside their differences — from religion to ethnicity — to work for democracy and reconciliation, a comment that carries resonance given fighting with autonomy-seeking rebels in Kachin state and in the wake of a nationalist backlash against Rohingya Muslims.
The NDF's Khine Maung Yi praised the reforms but suggested far more needed to be done. "Compared to the past it is more acceptable but there is big room for improvement," he said.
(Editing by Martin Petty and Robert Birsel)