Kirin Plans Myanmar Beer Exit by End of June

Kirin Plans Myanmar Beer Exit by End of June

As Myanmar Brewery Limited’s (MBL) long drawn-out divorce passes the year mark, Japanese brewer Kirin last Monday finally announced that it is looking to exit Burma. However, the drinks giant says that the terms of any sale are yet to be finalized.

“Kirin is prepared to do whatever it can to complete the withdrawal fully by the end of June,” Russell Roll of Kirin Holdings told DVB. 

The collapse of Myanmar Beer is one of the great tales of the coup, and perfectly highlights the pitfalls of engaging in business with the Burmese military. 

Following the military’s violent usurpation of power, Kirin — which owns a 51% stake in the Myanmar Brewery Ltd. venture with sanctioned military-owned Myanma Economic Holdiings Ltd. Co. (MEHL) — promptly expressed its desire to dissolve the partnership. The Japanese brewer soon after revealed that it intended to continue to operate in Burma and was looking for a new partner. 

Despite this, Kirin continued to operate the venture well after the coup — either unable to find a new partner, or blocked from exiting by MEHL (a situation similar to that faced by Norwegian telecom, Telenor).

This was not the first time that Kirin had considered its position in the country; in 2019, the company had hired third-party auditor, Deloitte Tohmatsu, to investigate the partnership at the behest of the UN Fact-Finding Mission after MEHL was alleged to have made payments and donations to the military during its campaign of genocide against the Rohingya. In early 2020, the company’s own inquest returned inconclusive evidence after MEHL failed to cooperate. 

Kirin last week said in a press release that it had taken “every measure to find a way forward that would allow it to continue to Myanmar’s economy and society through the beer business.” 

MEHL, on the other hand, has done all it can to obstruct the Japanese brewer’s exit, going so far as to petition a Burmese court for the liquidation of MBL on Nov. 19. In doing so, critics suggest, the military is attempting to elbow out its partner, and to control the venture’s liquidation on its own terms. This petition was rejected on Jan. 26 this year, leaving Kirin with no option but to attempt to maintain the venture and find a buyer for its equity.

To counter its partner’s attempts to capture MBL’s assets, Kirin in turn filed for arbitration in Singapore with the intention of terminating the joint venture “fairly and appropriately”, according to Roll.

The question of who — other than a crony company backed by the military — would want to purchase the assets of the much maligned brewer remains unclear. Kirin was not forthcoming with a list of potential buyers.

At the end of 2021, the company said that MEHL had been uncooperative in negotiations and rejected their proposals. 

“Although the spread of COVID-19 made direct discussions difficult, we sought opportunities for dialogue by sending online messages, letters and other communications,” Roll said. On Feb. 3, he said there was conversation with MEHL. 

“Since we confirmed that the other side had a strong intention not to give up their MBL shares, we approached them to negotiate by suggesting the possibility of our withdrawal as a realistic option and started discussions.”

On Feb. 14, the board of directors decided to officially negotiate with MEHPCL, prioritizing the early termination of the joint venture. Roll says that the decision was made with “great regret”, but that considerations regarding “the wellbeing and safety of employees” will be paramount.

As of late last year, Kirin reported a 20% decline in sales volume, whilst Myanmar Brewery says it has seen a 30% reduction in sales and a 40% drop in revenue as a result of boycotts, the economic downturn, and political upheaval. 

Yadanar Maung, spokesperson for activists Justice for Myanmar (JFM), told DVB that it is vital that the company responsibly disengages from the country by adhering to both the UN Guiding Principles on Business and Human Rights and the OECD Guidelines. She further expressed that Kirin’s exit must not financially benefit the junta or MEHL, something that would make the Japanese company further complicit in the military’s crimes. 

“In earlier statements Kirin had suggested that MEHL is merely a pension fund for veterans, rather than an institutionalized conglomerate of the Myanmar military that directly pays the very generals and military units that commit atrocity crimes,” JFM said in a statement. “Kirin also must mitigate and remediate negative impacts to Myanmar Brewery workers. Kirin’s entry into Myanmar showed a serious failure of human rights due diligence that other companies should learn from.”

In light of the news, Human Rights Watch’s Teppei Kasai has suggested that other Japanese firms, “including Yokogawa Bridge Corp., Tokyo Tatemono, and Fujita” follow suit “in line with 2019 recommendations from the United Nations-backed Fact-Finding Mission on Myanmar to financially isolate the Myanmar military and curb its abuses.”