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Japanese firms in Myanmar recall expats, encounter difficulties doing business

  • April 22, 2021
  • , Nikkei , p. 15
  • JMH Translation

An increasing number of Japanese corporations in Myanmar are bringing their Japanese employees home. Taisei Corporation has decided to temporarily recall all three of its Japanese employees stationed in Myanmar by the end of this month, while Japanese staff at KDDI and Suzuki have already returned home. Myanmar’s military has intensified its crackdown on civilians since the coup, and the turmoil in the country has made it difficult for the businesses to continue operations. Taisei Corporation, whose construction projects in Myanmar have been stalled, says the company is concerned about the employees’ safety.

 

Nippon Express has decided to bring some of its Japanese staff in Myanmar back home. All Japanese employees at Mitsubishi Electric there have returned to Japan and the local employees are teleworking from home. KDDI has kept its essential personnel in Myanmar, but the rest of its Japanese workers are leaving the country. Japanese staff at NEC in Myanmar returned to Japan in early April.

 

Many foreign firms started operating in Myanmar after the democratic government took power in 2011. Japanese corporations have been especially active there, making inroads into manufacturing, services, construction, and other sectors. As of March 2021, the Japanese Chamber of Commerce in Myanmar had more than 400 members. Many of these companies have chosen to form joint ventures or collaborate with local companies to comply with foreign investment regulations and accommodate the country’s unique business practices.

 

The choice of such partners has turned out to be a key factor in determining the business risks incurred by Japanese companies. The companies that have been most heavily affected by the turmoil are those partnered with local firms affiliated with the Myanmar military. Kirin Holdings and South Korea’s POSCO Group have announced they are going to dissolve a joint venture with a leading military-affiliated business, Myanmar Economic Holdings (MEHL), after their joint venture came under strong criticism from international human rights organizations and institutional investors as a source of funding for the military.

 

Companies that formed partnerships with Myanmar’s public corporations or state-affiliated companies are also finding themselves in a difficult position. Such companies include JFE Engineering, which is manufacturing bridges in a joint venture with the Myanmar Ministry of Construction, and KDDI and Sumitomo Corporation, which are engaged in mobile phone and other businesses with Myanmar Posts and Communications (MPT), a state-run enterprise.

 

Many of Myanmar’s private companies that have collaborated or set up joint ventures with Japanese corporations are family-run conglomerates doing business with the Myanmar military. In the future, these ventures may become targets of economic sanctions imposed by Western countries as well. (Abridged)

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