TOKYO – Japan’s Kirin Holdings has announced it will end its two joint ventures in Myanmar and become the first Japanese company to denounce the military coup that took place earlier this week.
The military’s actions were “contrary to our standards and human rights policy,” the brewer said in a statement Friday. “We have no choice but to terminate our current joint venture partnership with Myanma Economic Holdings Public Company Limited … We will take urgent steps to make this termination effective.”
The Japanese company has majority stakes in Myanmar Brewery and Mandalay Brewery, which are co-owned by MEHL, an entity that serves as a welfare fund for the Myanmar military.
“We decided to invest in Myanmar in 2015, believing that our company could make a positive contribution to the people and economy of the country as it entered an important period of democratization,” said Kirin.
The brewer had 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 on the response from MEHL,” said the representative.
Kirin invested $ 560 million in Myanmar Brewery in 2015 to gain a foothold in the growing Southeast Asian market. (Photo courtesy of Kirin)
Kirin’s announcement came after the decision of Thailand’s Amata Corp. on Tuesday to suspend development of a planned industrial park near Yangon over fears of economic sanctions against Myanmar by the US and the EU.
“We are not thinking of withdrawing from Myanmar at this point,” Kirin’s 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 scenario, Kirin could be forced to withdraw from Myanmar.
Myanmar Brewery is the dominant beer maker in Myanmar and widely known in the country for its flagship Myanmar Beer brand. Kirin acquired a 55% stake in the brewer for $ 560 million in 2015 to gain 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 a disclosure by Kirin, 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. That was 6.8% of the total normalized operating profit of the group.
Foreign companies that have invested in Myanmar have been pressured by human rights organizations to do business in the country. Activists, in particular, have called on Kirin to end joint ventures benefiting 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-owned entity, “poses a high risk of contributing” to human rights violations . In June last year, Kirin commissioned an independent auditor to review MEHL’s finances and governance. However, the brewer said in January that the study was “inconclusive” in determining the beneficiaries of MEHL’s profits.
Human Rights Watch said Kirin’s announcement is “a long-awaited but welcome move.”
“Other foreign companies associated with the Myanmar military need to follow in Kirin’s footsteps in an urgent and transparent manner,” said Teppei Kasai, Asia program manager for the organization.