BANGKOK — Military-linked conglomerate Myanma Economic Holdings has filed a legal request to end its joint venture with Kirin Holdings, likely dashing the Japanese brewer’s hopes to remain in business with a different partner.
Myanmar Brewery is 51% owned by Kirin and 49% by Myanma Economic Holdings (MEHL). A MEHL representative recently published an announcement in a state-run newspaper of the company’s filing in a Yangon court.
The announcement is the latest turn of events for Kirin’s local beer venture since the military took control of Myanmar in February.
A Kirin spokesperson said the company was aware of the announcement, but had not obtained any kind of official documents from the court.
“We are unable to confirm any details at this time,” the spokesperson said.
Shortly after the military takeover, Kirin said it would end the joint venture and sought negotiations with MEHL. The Japanese brewer had envisioned the Myanmar conglomerate selling its stake to another local company or other buyer so that Kirin could maintain the business in Myanmar.
MEHL is involved in a range of businesses, including financial services and gemstone trading, which serve as a source of funding for the military, according to United Nations reports.
Under the Myanmar Companies Law, the court may wind down a company if it “is of opinion that it is just and equitable.”
“We are well aware the we must dissolve the joint venture as soon as possible,” Toru Yoshimura, manager of Kirin’s corporate strategy department, told investors at an earnings briefing on Nov. 9.
“We are preparing to take action by the end of this year, including legal action, and we are considering all possible measures to dissolve” the venture, he said.
Kirin said in November 2020 that all dividends from Myanmar Brewery to Kirin and to MEHL had been suspended, following criticisms that the payments were helping fund military activities.
The latest development only highlights the legal risks foreign companies face while operating joint ventures in Myanmar.
“It is highly likely that the court will make decision in favor of MEHL,” a legal expert told Nikkei.
Kirin had forecast Myanmar Brewery’s revenue to increase 21% in 2021 to 38.6 billion yen ($337 million). But January-September sales dropped 41% on the year to 14.3 billion yen, as a boycott against military-linked products and other setbacks led to a more than 30% decrease in sales volume.