Toyota arm pressured out of Burma

An affiliate of Japanese motoring giant Toyota has withdrawn its operations in Burma after pressure from US-based socially responsible investment firms.

A statement issued by Toyota Motor North America and seen by Reuters said that its trading arm, Toyota Tsusho Corp (TTC), had now sold its stake in a joint venture with the Burmese junta. The venture is majority-owned by Suzuki Motor Corp.

The group has been under pressure from firms, including the Boston-based Trillium Asset Management and Domini Social Investments in New York, to pull out of the military-ruled country.

“No other Toyota affiliate has any business, direct or indirect, with the Burmese government, to our knowledge,” wrote Toyota Motor Group Vice President James Wiseman in the statement. “TTC is now fully divested from its joint venture operations in Burma.”

Toyota, the world’s largest vehicle maker, owns 20 percent of TTC, which until the stake was sold in June, had built car and motorcycles with the junta. Reuters said that the venture produced around 12,000 vehicles in 2006.

A statement on the Trillium website said that the decision by Toyota “followed three years of dialogue with a coalition of investors”, including Trillium. Evidence of an equity partnership between TTC and the Burmese junta had been discovered in December 2009 by Domini, which prompted Toyota Motor to ask TTC “to reconsider its business activities out of concern for the current environment in Burma”.

The statement added that the junta “tightly restricts the domestic market for these vehicles to its wealthiest citizens and those with military connections”.

EarthRights International last year said that foreign companies investing in Burma, particularly in the extractive sectors, are inviting potentially high material and reputational risks.

Activists have long targeted Burma’s legion of foreign investors but have to date failed to convince Asian businesses from divesting. Thailand, Singapore and China are the ruling generals’ key economic allies and have steadfastly refused to support sanctions brought by the EU and US, amongst others.

“You’ve had many Western countries pull out of Burma but it’s significant to have an Asian company pull out, and for it to do so for what appears to be human rights reasons and not economic ones – it’s the first time I can remember this happening,” said Mark Farmaner, Director of Burma Campaign UK, which has campaigned for divestment.

He added however that the key reason for targeting companies was that “governments have failed to introduce any kind of targeted sanctions that stop this kind of investment, so even today you could have Shell or BP or any European company going in and investing in Burma”.

According to Trillium, Toyota “continues involvement in other operations in Burma including agricultural and apparel production, which could have significant human rights impacts”. Susan Baker, a research analyst at Trillium, said that any economic linkage to the junta “raises moral and reputational issues that present risks to the long term value of the Toyota brand”.

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