ASEAN Beat | Economy | Southeast Asia

Japan’s Kirin to Finalize Withdrawal From Myanmar

After a year of failed negotiations with its military-linked joint venture partner, the Japanese beverage maker has become the latest foreign firm to exit the country.

Japan’s Kirin to Finalize Withdrawal From Myanmar
Credit: Flickr/ume-y

The Japanese beverage firm Kirin has become the latest foreign firm to bail out of crisis-hit Myanmar, announcing that it plans to withdraw from its joint venture with a conglomerate with close ties to the country’s armed forces.

Since 2015, Kirin has operated two brewery businesses in joint venture with Myanma Economic Holdings Limited (MEHL), a conglomerate that has tentacles firmly lodged in numerous sectors of the Myanmar economy. While Kirin formally announced its decision to cut its ties with MEHL a few days after last February’s military coup, it has been mired in a dispute with MEHL on how to resolve the Japanese firm’s concerns.

After a year of negotiations failed to reach a satisfactory outcome, the firm said yesterday that its board made the decision to “urgently terminate” the partnership with MEHL. “Given this, Kirin Holdings also decided to terminate its current joint venture partnership with [MEHL], which provides the service of welfare fund management for the military,” it said.

“We will resolve this issue by the end of June, no matter what it takes,” Kirin Chief Executive Isozaki Yoshinori told reporters, according to Reuters, which added that the withdrawal is likely to cost the company 46.6 billion yen ($404.37 million) in the year to December.

Kirin’s withdrawal underscores the extent to which Myanmar’s business environment has collapsed since the coup, terminating the period of relative optimism that coincided with the country’s limited political opening in the 2010s. According to the Wall Street Journal, “nearly two dozen major foreign companies” have withdrawn from Myanmar since the military takeover tipped the country into political chaos.

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Indeed, in Kirin’s case, the firm’s concerns predated the coup. In November 2020, more than two months before the military takeover, Kirin suspended dividend payments to MEHL, after the rights group Amnesty International published a report claiming that the conglomerate was directly funding units accused of genocide and crimes against humanity against, including against the country’s Rohingya Muslim minority.

Then, a week after last February’s coup, Kirin stated that it was ending its joint venture with MEHL, stating that it was “deeply concerned by the recent actions of the military in Myanmar” and that it would be “taking steps as a matter of urgency to put this termination into effect.”

But while activists have called on foreign companies to cease engaging with the military, their departure is often a mixed blessing. Today, a coalition of 649 civil society groups sent an open letter to the CEO of Norway’s Telenor, expressing its opposition to the telecommunications firm’s plan to sell its local operation to Investcom, a local company with close ties to the military junta. Aside from Kiri, Telenor was the first major Western country to announce it was pulling out of Myanmar, after it came under pressure to hand over the personal details of its customers to junta authorities.

Meanwhile, Thailand’s state-controlled PTT is bidding to take over the Yadana gas project, after its joint venture partners, France’s TotalEnergies and the U.S. oil giant Chevron, announced that they were withdrawing from the project due to concerns about the political situation.

In a similar way, a Kirin spokesperson told Reuters that the company will now seek buyers for its two business units, Myanmar Brewery Ltd and Mandalay Brewery Ltd. Almost by definition, any firm willing to even consider entering a joint venture with the Myanmar military in the midst of the current political crisis would have few scruples about human rights.

The one positive for activists is that Kirin might struggle to attract buyers, with the two firms having become the subject of a public boycott since the coup. Kirin’s results show that Myanmar Brewery sales declined 39 percent in 2021.

But whatever happens in Kirin’s case, the recent spate of exits suggest that the goal of political activists, which is to starve the military of funds and legitimacy, is only partly congruent with those of large foreign corporations, for whom considerations of values are closely tangled up with questions of optics. While foreign companies have in many cases been willing to take financial hits by pulling out of  Myanmar, bottom line considerations ensure that their responsibility to the people of Myanmar only extends so far.