Japanese beer giant Kirin has said it will ask a Yangon court to dismiss a petition by a military-owned conglomerate to dissolve a joint venture agreement between the two companies, branding the request a “violation” of its contract and of Myanmar law.
Myanma Economic Holdings Limited (MEHL) filed the request to dissolve the venture last week, just days after Kirin said it would take “legal action” to end the partnership.
“If the petition is approved, [MEHL] will be able to take control of the liquidation process,” Kirin said in a statement on Wednesday.
A hearing for the liquidation of Myanmar Brewery Limited, the main company under the joint venture, is scheduled for December 10 at the Western District Court in Yangon, MEHL’s lawyer San Tin said in a statement published by military-controlled media on Monday.
MEHL’s request was filed “unjustly” and ignored the joint venture agreement with Kirin, the Japanese company’s statement said.
“We will request dismissal of the petition because of doubts about the fairness and appropriateness of the liquidation process as well as violation of the joint venture agreement… and violation of Myanmar laws and regulations,” it added.
Earlier this month, a Kirin official said the company was preparing to take “legal action” and considering all possible measures to dissolve its partnership with MEHL by the end of this year. It first announced it was ending the partnership in the days after the February 1 military coup.
MEHL has been “uncooperative in the negotiations, effectively rejecting our proposals” while Kirin had made every effort to negotiate, the company said, adding that it will continue its efforts to end the joint venture “as soon as possible, transparently, fairly, and appropriately.”
Kirin has previously said it plans to continue doing business in Myanmar after ending the joint venture.
Hla Myo, MEHL’s general manager, told Myanmar Now the partnership would be liquidated “according to the laws” but declined to comment further.
Rights group Justice For Myanmar welcomed Kirin’s exit from the partnership and urged the company to prevent the military from taking control of the venture.
“Kirin must now take all measures available, including international arbitration, to prevent MEHL from taking control of Myanmar Brewery and to ensure that no payments are made to the Myanmar military, which is a terrorist organisation,” said Yadanar Maung, a spokesperson for the group.
Kirin should also ensure Myanmar’s underground National Unity Government consents to any decisions made about the future of Myanmar Brewery, she added.
“Myanmar Brewery assets, along with all assets of military conglomerates, belong to the people of Myanmar, represented by the National Unity Government,” she said.
MEHL has a 49% stake in Myanmar Brewery, which produces Myanmar Beer, while Kirin owns the remaining 51%. Together, the companies, which also jointly own Mandalay Brewery, once produced about 80% of the beer sold in Myanmar.
In the wake of the coup, people across the country have boycotted products produced by military-owned companies, including Myanmar Beer, as part of efforts to cut off the junta’s sources of funding.
Myanmar Brewery’s revenues plummeted by more than 40%–or ¥9.9 billion ($86.4 million)–during the third quarter of this financial year compared to the same period last year. Normalised operating profits, meanwhile, fell by just under 50%, the report said.
Kirin said that sales volumes of beer had fallen 20% in the Myanmar market due to the spread of Covid-19 and “political upheaval”, while sales volumes for Myanmar Brewery had fallen by 30%.
