Asia's Last Growth Market Suddenly Risks-Japanese Companies Tossed-March 29, 18:08

"Myanmar" is a country that is expected to be an emerging market in Southeast Asia and has been expanded by all companies.

However, the economy, which has continued to grow, fell into a large negative growth after the coup d'etat last year.

Now that the military is in control and the business is unfair, companies investing in Myanmar are facing management risks.


(Misato Yasui, Reporter, Economic Department, Keita Kage, Reporter, Directorate General of Asia)

Withdrawal of bitterness

"I'm pointing my gun at the citizens. I can't work with people involved in the military,"


said Kirin Holdings President Yoshinori Isozaki.



On February 14, it was announced at a press conference that it would dissolve the joint venture with a local company related to the Myanmar military and withdraw from the Myanmar market.

It was a tough decision to let go of one of the biggest beer companies in Myanmar, which has a market share of about 80%.

"Frontier" where Japanese companies have entered the market one after another

Before the coup d'etat, Myanmar was also called "the last frontier in Asia".



Since 2011, foreign investment has increased due to the progress of economic reforms and infrastructure development along with the progress of democratization.



As the population is expected to increase, more than 400 companies have entered the market from Japan.

The Thilawa Special Economic Zone, located near the largest city of Yangon, is a large industrial zone developed with the participation of a major Japanese trading company, and many Japanese companies such as automobile manufacturers Toyota and Suzuki have factories.



In the middle of the 2010s, retailers and financial companies announced their expansion one after another, and it was a situation that could be called a Myanmar boom.



It was widely believed that Myanmar should be a promising emerging market for continuous economic growth for Japanese and other foreign companies.

Clock hands go back

In the midst of the boom, Kirin also started operating a beer company in 2015 as a joint venture with the conglomerate "Myanma Economic Holdings," which manages pensions for military personnel.

Kirin President Isozaki


"The top beer makers around the world even said,'You got a good company,' and'Would you like to give it to us?' ), And entered the market after doing everything to the point where it seemed okay. "

However, the business that was going well suddenly went dark.


The trigger was a coup d'etat by the Myanmar Army on February 1, 2021.



The military detained Aung San Suu Kyi, who was leading a democratic government as a state counselor, and cracked down on civilian protests against the coup.



If the profits made in the beer business flow to the military through a joint venture, it may be pointed out that they are supporting the military as a result.



For this reason, Kirin decided to cancel the alliance in four days, saying that it would not be possible to maintain a relationship with the military.



Initially, however, we wanted to continue the business itself, assuming that the market could continue to grow.

However, the essential negotiations with the joint venture partner will be difficult.



During the protracted negotiations, foreign investors and human rights groups have scrutinized alliances with military parties.



"We reaffirmed the strong intention of the other party to never let go of the company." (President Isozaki)



For a company facing the risk of a decline in corporate value, the only option that could overcome the situation was "withdrawal from the Myanmar market." It is.

Keisuke Nishimura, vice president of overseas business, who has been involved in the Myanmar business since the establishment of the joint venture, recalls, "I never thought that the hands of the clock would return in the opposite direction."

Sudden braking, but the expectation that continued

After the coup, Myanmar's economy changed completely.



Against the backdrop of political instability, the currency "chat" was sold to major currencies, and the prices of imported products such as gasoline soared.

Citizens' lives are becoming more difficult.

In addition, foreign investment, which was the engine of growth, is chilling.



The World Bank expects Myanmar's economic growth rate to drop to -18% for the year to the end of September last year and to stay at + 1% for the year to the end of September.



Myanmar's economy is in danger of secular stagnation.



Nevertheless, there is a tendency among Japanese companies to continue to place some expectations for Myanmar's future.

When JETRO = Japan External Trade Organization asked Japanese companies entering the market from August to September last year about "business development in Myanmar for the next 1-2 years", they


answered "relocation / withdrawal to a third country". Was 6% and


“reduction” was 27%, while


“maintaining the status quo” was 52% and


“expansion” was 13%.


(Number of responses: 178)



There are still few cases of decision to "withdraw" like Kirin, and among the major companies, Toyota has "postponed" the start of operation of the new factory, as well as construction companies Fujita, Tokyo Tatemono, etc. The construction of the complex under construction in Yangon is being "suspended".

Some, like Suzuki, an automobile manufacturer, have said that they are expecting sales to resume locally, and there are moves to "restart" a small amount of car production at factories that had been temporarily suspended. ..

Is it finally a withdrawal rush?

Still, some experts analyze that the number of companies considering withdrawal may increase in the future as the military continues to take control for more than a year.

Professor Takashi Nemoto of Sophia University


"I think there were expectations that some companies would return to the same business environment as before if the economic policies they had been using were to continue after the coup d'etat. People's resistance has been prolonged and adverse effects have spread to society as a whole, and we have not been able to continue our business as we have in the past. We have no choice but to consider shrinking or withdrawing from our business. "

In fact, looking at foreign companies, French energy giant Total announced in January that it would withdraw from its local natural gas business, which had been pointed out as a source of funding for the Myanmar military. ..

Norwegian telecommunications giant Telenor has also announced plans to sell its local mobile communications business to a Lebanese investment fund and withdraw.

The trial is about to come

However, even if we decide to withdraw, it is not straightforward in Myanmar today.



Telenor's business sale was only approved by local authorities in March, eight months after its announcement.



Moreover, the approval added the condition that "in the mobile communication business, after the acquisition by an investment company in Lebanon, a local company that is said to be close to the military will be put into management."



There is growing concern that information may be used to monitor civilians as companies in line with military intentions enter the management of telecommunications companies.



Kirin, on the other hand, wants to sell and withdraw all shares in Myanmar's business by June, but it remains unclear whether the sale will proceed as planned to a company that is not breathing in the military in Myanmar today.

The Myanmar army, which continues to take control despite the criticism of the international community, and the companies that are at the mercy of it ... In that the business environment of emerging markets has changed completely due to unexpected circumstances, Ukraine has been invaded by military invasion of Europe and the United States. It can be said that companies expanding into Russia, which are subject to economic sanctions from Japan, have the same problems.



The current international community where democracy is greatly shaken.



In addition to the disruption of the global distribution network caused by the Corona disaster, the rapid changes in the political situation in each country seem to be a risk that cannot be ignored for the overseas strategy of companies.

Reporter of the Ministry of Economic Affairs


Misatoshi Yasui Joined


in 2014 After working at the Sendai and Nagasaki stations, he was in charge of the distribution industry, etc.

Directorate-general of Asia


Keita Kage Joined


in 2005 In charge of financial and financial coverage at the Ministry of Economic Affairs, Directorate-general of Asia from summer

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