Giant brewer Kirin (KNBWY) said on Friday it is ending a six-year joint venture with a holding company in Myanmar that is linked to the country’s military. The army seized power this week in a coup, arresting the country’s civilian leader, Aung San Suu Kyi, and several other key government figures.
Kirin is “deeply concerned about the recent military actions in Myanmar,” the company said in a statement, adding that it “had no option but to end” the partnership.
Suu Kyi’s overwhelming electoral victory in 2015 followed decades of isolation and military authoritarianism. That same year, Kirin spent $ 560 million to buy a majority stake in Myanmar Brewery, the country’s largest brewery.
Its local and co-owner trading partner is Myanmar Economic Holdings Public Company Limited, a company that the UN Human Rights Council and others have pointed out to be owned and operated by Tatmadaw, the country’s powerful army.
“We decided to invest in Myanmar in 2015, believing that, through our business, we could contribute positively to the country’s people and economy, as it was entering an important period of democratization,” said Kirin on Friday.
Japanese companies have been investing heavily in Myanmar for more than a decade. Nissan (NSANF) opened a production facility there, while the Japanese investment bank Daiwa Securities (DSEEY) and the Tokyo Stock Exchange were used to help build the first Myanmar stock exchange. Daiwa told CNN Business that almost all of the company’s 10 employees returned to Japan because of the coronavirus pandemic. He added that his ventures in Myanmar are operating “as usual”.
Myanmar is not a big beer market for Kirin. Myanmar Brewery contributed only 1.8% of Kirin’s revenue during the first nine months of 2020, according to its most recent earnings report.
But it was a fast-growing one. Beer consumption in Myanmar increased 16% in 2019.
The pressure on Kirin to give up its commercial ties in Myanmar had been building even before this week’s coup. Military repression against the ethnic Rohingya population in the country, which carried “the marks of genocide” according to the United Nations, was widely condemned.
Suu Kyi’s handling of the crisis was also criticized. (Myanmar has denied the charges and has long claimed to have targeted terrorists.)
A few years ago, Amnesty International raised questions about whether donations made by the Myanmar Brewery were used to benefit the country’s military. And in 2019, an independent United Nations investigation mission released a report alleging that Myanmar’s military had been using its commercial ties to support its “brutal operation against ethnic groups”.
Since then, Kirin has been investigating its operations in the country and, last November, suspended the payment of dividends to the Myanmar holding company.
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