Myanmar: Kirin to review operations in Myanmar on criticism of its partnership with military-linked business

Kirin is to review its operations in Myanmar after the Japanese brewer’s partnership with a military-linked business drew fierce criticism from human rights groups, highlighting the growing reputational risks faced by multinationals doing business in the south-east Asian country, the Financial Times reported on December 23.

The company announced the review as it closes in on the purchase of Colorado-based New Belgium Brewing, the fourth-largest craft brewer in the US. Kirin said it planned to “make improvements” to its system rather than pull out of Myanmar entirely.

Employees of New Belgium, which Kirin is buying through its Australia-based Lion Little World Beverages unit, voted to approve the sale last week despite concerns raised by campaigners during the sales process.

Kirin is the dominant foreign beer company in Myanmar, where its partner in Myanmar Brewery and Mandalay Brewery is Myanmar Economic Holdings, a conglomerate with military shareholders.

Military leader General Min Aung Hlaing led a campaign against minority Rohingya Muslims in 2017 that sent more than 730,000 fleeing into Bangladesh amid reports of mass killings, rapes, and arson.

The US Treasury recently imposed sanctions on four Myanmar military leaders, while the International Court of Justice this month convened to hear a case examining whether the country has perpetrated genocide against the Rohingya.

Concerns about Kirin’s Myanmar business surfaced after Amnesty International last year reported that its Myanmar Brewery subsidiary had made three donations worth $30,000 to the military in 2017, at the height of the crackdown on the Rohingya.

Kirin then suspended charitable donations made by the unit and drafted a policy to ensure that its donations would be used only for humanitarian purposes.

When concerns about Myanmar Brewery resurfaced while Kirin was acquiring New Belgium, the Japanese company said it would conduct a “further examination” of its operations and relationships in Myanmar.

“We are aware of the difficulties in operating our business in a frontier market and we are continuing to make efforts to deepen our understanding and improve our system,” the company said.

It declined to provide further details of what kind of improvements it was considering, or when its review of its Myanmar operations would be completed.

Kirin’s international advisory board will also raise the issue during its next meeting, which Kim Jordan, New Belgium’s co-founder, has been invited to. The board may join a session that Kirin is considering holding in January to discuss its operations in Myanmar.

The controversy underscores the reputational dangers faced by multinational companies with operations Myanmar, as international efforts to seek justice for the Royingya gather force and campaigners put companies’ business partners and suppliers under intensifying scrutiny.

“Some companies in Myanmar did due diligence just to tick a box and send a report back to the board of directors; others took it seriously and went quite in depth,” said Jeremy Mullins of Vriens & Partners, a government affairs and political risk consultancy. “All companies are taking it a lot more seriously now.”

The Burma Campaign, a UK-based pressure group, publishes a “Dirty List” of companies with alleged links to the military in Myanmar.

The country accounts for only about 5 per cent of Kirin’s annual overseas beverage revenue but the brewer’s business there is profitable and robust and it enjoys more than 80 per cent market share. The reputational risks dogging Kirin have the potential to recur as it looks to acquire other craft breweries in the US.

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