TOKYO -- Japan's Kirin Holdings announced it will terminate 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 option but to terminate our current joint venture partnership with Myanma Economic Holdings Public Company Limited... We will be taking steps as a matter of urgency to put this termination into effect."
The Japanese company holds the majority stakes in Myanmar Brewery and Mandalay Brewery, which are co-owned with MEHL, an entity that serves as a welfare fund for Myanmar's 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 entered an important period of democratization," Kirin said.
The brewer had informed MEHL of its plan to terminate the joint ventures by Friday morning, a company representative told Nikkei Asia. "No information has been received yet on MEHL's response," the representative said.
Kirin's announcement came after the decision by Thailand's Amata Corp. on Tuesday to suspend the development of a planned industrial park near Yangon due to fears of economic sanctions on Myanmar by the U.S. and the EU.
"We are not thinking of withdrawing from Myanmar at this time," the Kirin representative said, adding that the company intends to look for a private, non-military-affiliated venture 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 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 Myanmar Beer brand. Kirin acquired its 55% stake in the brewer 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 a Kirin 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. That amounted to 6.8% of the group's total normalized operating profit.
Foreign companies that invested in Myanmar have received pressure from human rights groups for doing business in the country. Activists have called for Kirin, in particular, to end its joint ventures that profit 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, posed "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 probe 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 with ties to the Myanmar military should follow in Kirin's footsteps in an urgent and transparent manner," Teppei Kasai, Asia program officer for the organization, said.