Companies that are struggling to exit Myanmar joint ventures face the prospect of being abandoned by investors
International companies are struggling to get rid of military-related investments in Myanmar following the February coup and face reputational damage and potential sanctions violations. penalty if they do not do so. But many people find that exiting is being committed to be easier than done.
Japanese, Korean and Singaporean companies are among those facing the prospect of being dumped by international fund portfolios for not severing business links with business partners due to military control.
But nine months after Aung San Suu Kyi’s government was ousted, international businesses have found few interested buyers for their local stakes and the country is suffering a blow. deep economic recession and post-coup civil unrest.
Yadanar Maung, a spokesman for the advocacy group Justice for Myanmar, said: “Getting out of ties with Myanmar’s military has clearly been more challenging since the coup attempt, but businesses have to pull back a bit. responsibly, as this will save the lives of the people of Myanmar while ending complicity in the military’s atrocities.” .
Military forces have killed more than 1,270 people and arrested more than 10,000, according to the Association to Support Political Prisoners, a human rights group, and the military junta is using brutal methods to crush a political prisoner. ebullition in northwestern Myanmar.
USA, EU, UK and Canada have impose sanctions against certain companies or military individuals.
Immediately after the coup, global funds sought to eliminate their portfolios of companies with business ventures related to the military junta.
The companies have direct partnerships with military firms and have long come under pressure from campaigners, such as Japanese brewer Kirin, to say they will divest. Others, such as Norwegian telecom group Telenor, announced they would be leaving Myanmar as operating conditions under the administration had become unsustainable.
APG, a Dutch pension fund with $700 billion under management, has lobbied Kirin and Posco, a South Korean steelmaker, to end joint ventures with corporations controlled by Myanmar’s military. Despite promises from both companies, APG threatened to divest if they didn’t make significant progress next year.
“Twelve months is enough time. . . We have waited enough,” said Park Yoo-kyung, a consultant at APG.
Telenor’s efforts to exit Myanmar are symbolic of the challenges foreign businesses face.
In July, the Norwegian government-backed company announced that it would sell its local operations to Lebanon’s M1 Group for $105 million, having previously written off its entire investment. into this country. But the military-controlled telecommunications ministry bored with the deal, wants Telenor to find a new buyer controlled by Myanmar.
The company has faced criticism from campaigners after it was accused of failing to prevent or mitigate the adverse human rights consequences of its sale to M1, a group led by Lebanese prime minister Najib Mikati and his brother. his son controls.
Telenor countered that its decision to sell came after pressure from the military regime to install surveillance technology, which it said would violate EU and Norwegian sanctions against Myanmar.
Many international companies have suspended or closed operations locally but some have not, prompting campaigners and investors to question their commitment to leave the country.
Kirin and Posco, which has ties to Myanmar Economic Holdings Ltd, a military-backed group, have faced some of the strongest pressure from advocacy groups. They emphasize that companies should be prepared to walk away from their investments if they cannot responsibly divest.
“If a company cannot find a responsible buyer, they should liquidate their business and avoid making any payments to the military and their corporations,” said Yadanar Maung.
Kirin did not give a timeline for such a sale, even though it has pledged to do so, and its potential buyers will be limited by the risk of sanctions. A post-coup boycott of the company’s flagship Myanmar beer brand has reduced its appeal.
“We are taking urgent steps to effect the termination of our joint venture cooperation with MEHL,” the Japanese group said. “We hope to find a way that will allow Kirin to continue to make a positive contribution to Myanmar.”
Posco took a different approach. A spokesman said the company has try to buy shares of MEHL in its steelmaking joint venture – a move designed to distance itself from military interests – while considering whether such a deal would violate sanctions.
“We continue to urge MEHL management to make a decision, but we have yet to receive a response,” the company said.
But stock-owning funds like Posco and Kirin fear holding such shares will erode their own commitments to responsible investing.
Park said APG may soon be forced to divest as neither Kirin nor Posco have updated the fund on their progress. “I don’t think there are meaningful negotiations going on,” she said.
Singapore under scrutiny
Amid post-coup conflicts and human rights abuses, NGOs have also called for greater attention to Singapore’s dealings with the Myanmar military.
Foreign investment from the city-state exceeded $24 billion, making it Myanmar’s largest source of foreign finance. The US has asked Singapore to do more with its leverage over Myanmar.
Many of Singapore’s investments in Myanmar are channeled through multinational and foreign companies based in the city-state.
A Singapore company, Emerging Towns & Cities Singapore real estate group, is developing a residential and commercial project in Yangon, Myanmar’s commercial hub, on military leased land.
The company told the Financial Times that its operations are subject to local law but its Singapore-listed shares have been suspended since February pending review by regulators.
Additional reporting by Kana Inagaki and Leo Lewis in Tokyo
