Myanmar Economic Holdings in brewery contract dispute

Myanmar Economic Holdings in brewery contract dispute

Singaporean food and beverage conglomerate Fraser & Neave (F&N) has claimed that its Burmese partner is trying to oust it from a joint-venture agreement in Myanmar Brewery, according to various news sources.

F&N owns 55 percent of Myanmar Brewery, which corners a huge part of Burma’s domestic beer market with manufacturing plants for Tiger Beer, Myanmar Beer, ABC Stout and Anchor Beer. The remaining 45 percent is held by state-owned Union of Myanmar Economic Holdings Ltd (UMEHL), a conglomerate run by Burma’s Ministry of Defence.

The Singaporean firm said that UMEHL filed a claim on Thursday informing F&N that it plans to begin arbitration proceedings to claim F&N’s majority stake in the brewery, citing the Burmese company’s reading of the joint venture agreement, according to a report in Singapore’s Business Times.

The report said that F&N disputes the basis of the claim, adding that it has engaged lawyers and “intends to vigorously resist the claim”.

When contacted by DVB on Friday, UMEHL declined to comment on the matter.

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Although the brewery represents only a small part of F&N’s business, losing its stake “would mean being shut out of one of Asia’s fastest growing beer markets,” said Reuters on Thursday, noting that in a May earnings briefing, F&N said its Burma beer business had recorded double-digit growth from a year earlier.

While F&N is controlled by Thai billionaire Charoen Sirivadhanabhakdi, UMEHL is one of two main conglomerates owned and run by the Burmese military via the Ministry of Defence. UMEHL is no stranger to controversy, being one of the majority partners in the Latpadaung copper mine in Sagaing which it operates on a joint venture basis with China’s Wanbao Company.

According to the Wall Street Journal on Thursday, “The [Myanmar Brewery] spat highlights the risk of doing business with Myanmar’s state-owned enterprises and could damp confidence of investors seeking opportunities in a country still emerging from decades of secrecy and isolation under military rule”.

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