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Kirin CEO: top priority is to continue brewing in Myanmar

  • December 15, 2021
  • , Nikkei Asia , 9:25 p.m.
  • English Press

NANA SHIBATA, Nikkei staff writer

 

TOKYO — Japanese beverage company Kirin Holdings wants to “continue its beer business in Myanmar,” the company’s top executive said as it confronts serious human rights issues in the Southeast Asian country.

 

“The best scenario is that we keep operating,” Yoshinori Isozaki, Kirin’s president and chief executive, told Nikkei Asia on Wednesday. “If Kirin exits, I think people in Myanmar will be disappointed.”

 

Kirin argues that staying in Myanmar will promote human rights, and that a possible departure scenario is opening the door to replacement companies that do not respect them.

 

But Isozaki acknowledged that the legal dispute it is now embroiled in “is not a problem that we can solve on our own.”

 

The Japanese company has sought to end its partnership with Myanma Economic Holdings (MEHL), a company owned by the military, which seized power on Feb. 1.

 

After unsuccessful negotiations with MEHL, Kirin took its case to the Singapore International Arbitration Center in early December.

 

Kirin wants to dissolve the joint venture with MEHL and continue its business in a new joint venture. Isozaki revealed that he has a prospective new partner drawn from a long list of potential candidates. “It is a completely local independent company,” he said, with no military links.

 

However, both sides are keen to retain their interest in the profitable brewing business. Kirin holds a 51% stake in Myanmar Brewery, and MEHL the rest.

 

Kirin acquired its stake in 2015 as part of a strategy to expand into foreign markets because of shrinking domestic demand.

 

Isozaki said that easily giving up its Myanmar interest “will not be permitted.” The troubled Southeast Asian country had become one of Kirin’s most profitable foreign markets, accounting for 9% of the group’s brewing profits before the military takeover.

 

Isozaki said that Kirin “has contributed” as a responsible corporate and respects human rights. The company has imported its management style, which nurtures brand recognition and values employees.

 

In mid-November, the military conglomerate petitioned a Yangon court for dissolution of its troubled joint venture.

 

Isozaki said that in general, “it is doubtful that fair and impartial trials can really be done in developing countries.”

 

Kirin filed for international arbitration in December, but expects the process to be lengthy — probably more than 18 months. However, it would like to settle by June if possible to reduce investor pressure.

 

“A resolution will take time,” said Isozaki. “It is supposed to take 1.5 years at least, or about two years.”

 

The case is in many respects a bilateral legal issue. In 2013, the governments of Japan and Myanmar signed an agreement intended to safeguard investor interests. Depending on the situation, Kirin may ask the Japanese government to intervene and uphold the international trade agreement.

 

Isozaki said Kirin’s future in Myanmar now rests with the courts and the governments, but the company wants to stay.

 

“Continuing business in Myanmar remains a top priority,” he said.

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