Pro-democracy leader Aung San Suu Kyi looked set to clinch a seat in parliament in Myanmar's third election in half a century on Sunday, a crucial test of reforms that could convince the West to end sanctions and its pariah image.

The United States and European Union have hinted that some sanctions - imposed over the past two decades in response to human rights abuses - may be lifted if the election is free and fair, unleashing a wave of investment in the impoverished but resource-rich country bordering rising powers India and China.

The charismatic and wildly popular Suu Kyi, a Nobel Peace Prize laureate held for 15 years under house arrest until 2010, complained last week of irregularities, though none significant enough to derail her party's bid for 44 of the 45 available by-election seats.

Thirty minutes from the scheduled end of balloting at 4. p.m. (0930 GMT), an official from Suu Kyi's National League for Democracy (NLD) said votes had been counted in 82 or the 129 polling stations in her Kawhmu constituency and claimed Suu Kyi was the clear frontrunner.

Daw Aung San Suu Kyi has won 65 percent of the vote so far, the official told Reuters, referring to Suu Kyi by her honorific title.

From dawn, voters quietly filed into makeshift polling stations at schools, religious centres and community buildings, some gushing with excitement after casting ballots for the frail Suu Kyi, or Aunty Suu as she is affectionately known.

My whole family voted for her and I am sure all relatives and friends of us will vote for her too, said Naw Ohn Kyi, 59, a farmer from Warthinkha.

In Suu Kyi's rustic constituency of bamboo-thatched homes in Kawhmu, south of the biggest city Yangon, she looked poised for a landslide win. So far as my friends and I have checked, almost everyone we asked voted for Aunty Suu, said Ko Myint Aung, 27-year shop owner from Kawhmu.

Ko Myint Aung was one of 15 constituents contacted by Reuters, who all said they had voted for Suu Kyi.

To be regarded as credible, the vote needs the blessing of Suu Kyi, who was freed from house arrest in November 2010, six days after a widely criticised general election that paved the way for the end of 49 years of direct army rule and the opening of a parliament stacked with retired and serving military.

President Thein Sein, a general in the former military junta, has surprised the world with the most dramatic political reforms since the military took power in a 1962 coup in the former British colony then known as Burma.

In the span of a year, the government has freed hundreds of political prisoners, held peace talks with ethnic rebels, relaxed strict media censorship, allowed trade unions, and showed signs of pulling back from the powerful economic and political orbit of its giant neighbour China.

It was rewarded last November when Hillary Clinton made the first visit to the country by a U.S. secretary of state since 1955. Business executives, mostly from Asia but many from Europe, have swarmed to Yangon in recent weeks to hunt for investment opportunities in the country of 60 million people, one of the last frontier markets in Asia.


Voting stations opened at 6 a.m. (2330 GMT), some under the watch of small numbers of observers from the European Union and the Association of South East Asian Nations (ASEAN), who were given only a few days to prepare inside Myanmar. Some said they considered themselves election watchers rather than observers.

The last election, in November 2010, was widely seen as rigged to favour the military-backed Union Solidarity and Development Party (USDP), the biggest in parliament. The NLD boycotted the vote.

The day isn't over yet, but perhaps this is the first really authentic election held in this country for some time, said Robert Cooper, a long-time friend of Suu Kyi and counsellor to EU foreign policy chief Catherine Ashton.

The pace of change has been breathtaking, he told Reuters while touring polling stations north of Yangon.

But as Myanmar changes, so too, is Suu Kyi. At 66, many see her now as more politically astute, more realistic and compromising. She has described President Thein Sein as honest and sincere and accepted his appeal for the NLD to take part.

Her top priorities, she says, are introducing the rule of law, ending long-simmering ethnic insurgencies and amending the 2008 constitution ensuring the military retains a political stake and its strong influence over the country.

While her party may end up with only a small number of seats, many expect her to exert outsized influence.

Some Burmese wonder if conservatives would dare oppose her ideas in parliament given her popularity, especially ahead of a general election in 2015. Many MPs want to be seen aligned with her, sharing some of her popular support.

But the election has not gone smoothly. Suu Kyi has suffered from ill health and accused rivals of vandalising NLD posters, padding electoral registers and many cases of intimidation.

Some of these infractions, however, have been quite minor and are typical of elections across Southeast Asia, where vote-buying and even assassinations are commonplace.

The NLD on Friday said a betel nut had been fired by catapult at one of its candidates and a stack of hay had been set on fire close to where another was due to give a speech.

It made fresh claims of irregularities on Sunday and said some ballots papers had been covered in wax to make it tricky to write on. It accused the USDP of waiting outside some polling stations and telling voters to back their party.

Sceptics in the democracy movement say Suu Kyi is working too closely with a government stacked with the same former generals who persecuted dissidents, fearing she is being exploited to convince the West to end sanctions and make the legislature appear effective. Others have almost impossibly high hopes for her to accelerate reforms once she enters parliament.

It was not clear when the election results would be announced. The full result has been promised within one week.

Some U.S. restrictions such as visa bans and asset freezes could be lifted quickly if the election goes smoothly, diplomats say, while the EU may end its ban on investment in timber and the mining of gemstones and metals.

(Writing by Martin Petty; Editing by Jason Szep and Jonathan Thatcher)