Japanese Beverage Giant Ends Cooperation With Myanmar's Military Regime Next Month

Illustration of a Kirin truck fleet. (Wikimedia Commons/Comyu)

JAKARTA - Japanese beverage giant Kirin plans to dissolve its joint venture next month with Myanmar's military, Myanmar Brewery, whose profits plunged nearly 50 percent on an annual basis in the third quarter, according to its financial results for the period.

The collapse in brewery sales followed a boycott by anti-regime protesters of military-related products, which was part of a campaign to sever the coup leaders' financial trajectory. Products like Myanmar Beer Myanmar Brewery can no longer be found on store shelves due to the boycott.

Kirin said in the presentation of the third-quarter report on Tuesday last week, "we are aware that we must dissolve the joint venture as soon as possible. We are preparing to take action by the end of this year, including legal action, and we are considering all possible actions to dissolve the JV," quoted from The Irrawaddy November 15.

Japanese big beverage company Kirin owns a 51 percent stake in beer maker Myanmar Brewery, with military-owned conglomerate Myanma Economic Holdings Public Co. Ltd. (MEHL) holds the rest.

In its Q3 2021 financial report, Kirin said Myanmar's beer market had shrunk, with sales volumes hit by the spread of COVID-19, 'political upheaval', and supply chain disruptions.

Compared to the same period last year, Myanmar Brewery's sales volume fell by more than 30 percent. Normalized operating profit fell 49.4 percent year-on-year 'due to lower sales volume and increased raw material costs, among other things.'

Kirin ruled out a quarter-on-quarter increase at Myanmar Brewery this fiscal year, saying that given the risks facing the company's operations, "it is better to have a flat outlook."

Improvements in most of its overseas markets could not offset the decline in domestic and Myanmar operations, the Japanese company said.

After the February 1 coup, Kirin announced they were ending a joint venture partnership with MEHL, citing deep concern over the military's actions, which it said were against company standards and human rights policies.

But 10 months later, Kirin said discussions about dissolving the partnership with MEHL were still ongoing.

Human rights group Justice for Myanmar (JFM) said the financial results in the report provided clear evidence that the mass boycott of military-related products by Myanmar consumers was successful, by directly impacting the flow of money into the pockets of the coup leaders.

JFM demands that Kirin immediately cease operations of Myanmar Brewery and its JV with MEHL, providing transparency on how it intends to end business operations.

Kirin has previously faced international criticism for its partnership with the Myanmar military regime amid allegations of genocide against the Rohingya in western Myanmar. Last year, Kirin hired Deloitte Tohmatsu Financial Advisory to conduct an independent review of MEHL's financial structure and governance. However, his investigation into MEHL's military connections ended inconclusively because access to information was denied.

However, Kirin stopped paying dividends to the military-owned company last November.

"Dividends from Myanmar Brewery continue to be suspended," he said on Tuesday.

To note, Kirin's Myanmar business posted an operating profit of US$115 million (161.84 billion kyats) in 2019, according to the company.

Myanmar Coup. The VOI editorial team continues to monitor the political situation in one of the ASEAN member countries. Casualties from civilians continue to fall. Readers can follow the news covering the Myanmar military coup by clicking this link.