TOKYO – Japan’s Kirin Holdings has announced that it will close its two joint ventures in Myanmar, becoming the first Japanese company to denounce the military coup that occurred earlier this week.
The military’s actions were “against our standards and Human Rights Policy,” the brewery said in a statement on Friday. “We have no option but to terminate our current joint venture partnership with Myanma Economic Holdings Public Company Limited … We will take urgent action to put this termination into effect.”
The Japanese company holds a majority stake 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, through our business, we could contribute positively to the people and the economy of the country, as it was entering an important period of democratization,” said Kirin.
The brewery informed MEHL of its plan to close the joint ventures on Friday morning, a company representative told Nikkei Asia. “No information has yet been received on MEHL’s response,” said the representative.
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 came after Amata Corp.’s decision. from Thailand on Tuesday to halt 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,” said the Kirin representative, adding that the company intends to look for a private, non-military partner to replace MEHL.
However, it is not clear whether MEHL will accept the closure of the joint ventures and whether a new partner will be found. The representative acknowledged that in the worst case scenario, Kirin may be forced to withdraw from Myanmar.
Myanmar Brewery is the dominant beer maker in Myanmar and is widely known in the country for its flagship beer brand in Myanmar. 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 Cervejaria Myanmar to MEHL in 2017, when it acquired its 51% stake in Cervejaria Mandalay for $ 4.3 million.
According to a Kirin disclosure, Cervejaria Myanmar 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 represented 6.8% of the group’s total normalized operating profit.
Foreign companies that have invested in Myanmar have been pressured by human rights groups to do business in the country. Activists called on Kirin, in particular, 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-owned entity, represented “a high risk of contributing” to human rights violations. In June last year, Kirin hired an independent auditor to review MEHL’s finances and governance. However, the brewer said in January that the investigation was “inconclusive” in determining the beneficiaries of MEHL’s profits.
Human Rights Watch said that Kirin’s announcement is “a long-awaited but welcome move”.
“Other foreign companies with ties to the Myanmar military must urgently and transparently follow Kirin’s footsteps,” said Teppei Kasai, the organization’s Asia program official.