TOKYO – Japan’s Kirin Holdings has announced it will end its two joint ventures in Myanmar, becoming the first Japanese company to denounce the military coup that took place earlier this week.
The military’s actions were ‘against our standards and human rights policy’, the brewer said in a statement on Friday. “We have no choice but to end our current partnership with Myanma Economic Holdings Public Company Limited … We will take urgent steps to implement this termination.”
The Japanese company owns the majority stake in Myanmar Brewery and Mandalay Brewery, which are co-owned with MEHL, an entity that serves as a welfare fund for the Myanmar army.
“We decided to invest in Myanmar in 2015 because we believe that through our business we can make a positive contribution to the people and the economy of the country as it enters an important period of democratization,” Kirin said .
The brewer notified MEHL of its plan to end the joint ventures by Friday morning, a company representative told Nikkei Asia. “No information has yet been received about MEHL’s response,” the representative said.
Kirin invested $ 560 million in Myanmar Brewery in 2015 to secure a foothold in the growing Southeast Asian market. (Photo courtesy of Kirin)
Kirin’s announcement comes after the Thai Amata Corp.’s decision on Tuesday to suspend the development of a planned industrial park near Yangon due to fears of economic sanctions against Myanmar by the US and the EU.
“We are not thinking of withdrawing from Myanmar at this time,” the Kirin representative said, adding that the company plans to seek a private, non-military partner to replace MEHL.
However, it is unclear whether MEHL will accept the termination of the joint ventures and whether a new partner will be found. The representative acknowledged that in the worst case, Kirin could be forced to withdraw from Myanmar.
Myanmar Brewery is the dominant beer producer in Myanmar and is well known in the country for its flagship brand Myanmar Beer. Kirin acquired its 55% stake in the brewery for $ 560 million in 2015 to secure a foothold in the growing Southeast Asian market.
Kirin transferred a 4% stake in Myanmar Brewery to MEHL in 2017 when it acquired its 51% stake in Mandalay Brewery for $ 4.3 million.
According to Kirin’s disclosure, Myanmar Brewery had 32.6 billion yen ($ 316 million) in sales and 12.9 billion yen in what Kirin calls normalized operating profit for the year ended December 2019. This represents 6.8% of total normalized operating profit of the group.
Foreign companies investing in Myanmar have come under pressure from human rights groups to do business in the country. Activists in particular called for Kirin to end its joint ventures that benefit the military, even before Monday’s coup.
A UN mission investigating atrocities against the Rohingya people in Myanmar reported in 2019 that doing business with MEHL and Myanmar Economic Corp., another military entity, “carries a high risk of contributing” to human rights violations. In June last year, Kirin commissioned an independent auditor to review the finances and management of MEHL. However, the brewer said in January that the investigation was “unconvincing” to determine the beneficiaries of MEHL’s profits.
Human Rights Watch said Kirin’s announcement was a long-awaited but welcome step. ‘
“Other foreign companies with ties to the military in Myanmar must urgently and transparently follow in Kirin’s footsteps,” said Teppei Kasai, the organization’s program officer in Asia.