4

Multinational Enterprise Behaviour in Post-Coup Myanmar

Nicholas Coppel

Adjunct Associate Professor (practice), Monash University, and former Australian ambassador to Myanmar

Abstract

Since the coup, multinational enterprises have come under pressure to review their operations in Myanmar and exit any relationship they have with military-controlled entities. Targeted sanctions imposed by the United States, United Kingdom, Canada and European countries made it a legal requirement in their jurisdictions. However, very few foreign firms were in joint venture or had other commercial relations with military-owned or controlled entities, and the overestimation of the extent and significance of such relationships has distracted policymakers and activists from considering policies focused on the role the business community could play to strengthen human rights in Myanmar. The companies that left Myanmar mostly did so for security, commercial or reputational reasons. Leaving was not always easy or helpful to Myanmar’s citizens and, in some instances, even benefited the military. This chapter explores these pressures and responses and argues that policies need to recognise that change will only come from within Myanmar; thus, the focus should be less on external actors and more on what the international community can do to support responsible business practices in the country that will strengthen human rights and the wellbeing of the people.

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Following the 1 February 2021 coup d’état, the United Kingdom, United States, Canada, the European Union and other European countries imposed targeted sanctions on the two military-owned and controlled conglomerates, Myanma Economic Holdings Ltd (MEHL) and Myanmar Economic Corporation (MEC), as well as state-owned enterprises and the business interests of named military personnel and their family members. Most of the rest of the world did not follow with their own sanctions, although a number of countries restricted exports of arms and military equipment. The economy-wide sanctions applied by some countries from the 1990s to the 2010s are regarded as having concentrated wealth and power in the hands of regime-linked forces (Jones 2015) and this time were not applied by any country. Notably, none of the sanctioning countries was a significant trading partner of Myanmar (China, Thailand and Japan account for 58 per cent of Myanmar’s exports and 50 per cent of imports; World Bank 2021), and none of Myanmar’s bordering countries imposed sanctions. But, more significantly, as discussed below, very few foreign firms were actually in joint venture or in other commercial relationships with the Myanmar military or its entities. In this context, sanctions have not had much bite or functioned well as a coercive lever. Foremost, they have been statements of concern and displeasure at the coup and a signal of solidarity with those opposed to it.

The ways in which multinational enterprises responded to the coup were, thus, influenced not so much by the legal requirements of sanctions as by Organisation for Economic Co-Operation and Development (OECD) and United Nations (UN) guidelines, and principles setting voluntary standards of corporate behaviour. Various non-governmental organisations have developed advice specific to the Myanmar context to help guide businesses. Activist organisations, in particular, have targeted companies that lease land from military entities or pay fees to state-owned enterprises, arguing that these companies are complicit in the atrocities and human rights abuses committed by the military. Taken together, targeted sanctions and activist pressure run the risk of stigmatising all business with Myanmar, including legitimate, non-sanctioned activity. Corporate boards and fund managers concerned about their organisation’s reputation can be influenced by perceptions. If this sentiment is pervasive, targeted sanctions combined with activist pressure could become similar in effect to damaging economy-wide sanctions.

This chapter explores the extent and significance of corporate relationships with the military, and their responses to the coup, and concludes that withdrawing from the country is not always helpful, and that policies need to recognise that change will only come from within Myanmar. Thus, the focus should be on supporting responsible business practices in-country that can strengthen human rights and the wellbeing of the people.

Multinational enterprises and human rights

The OECD’s Guidelines for Multinational Enterprises (2011) set out non-binding principles and standards for responsible business conduct. These voluntary, not legally enforceable, guidelines advise that the first obligation of enterprises is to obey domestic laws, and that where domestic law conflicts with the guidelines, enterprises should seek to honour the guidelines in ways that do not place them in direct violation of domestic law. They also suggest that enterprises abstain from improper involvement in local political activities. Most publicly listed companies subscribe to these principles but, as we shall see, they are not comforting principles when the authority issuing the laws and regulations has come to power through the barrel of a gun.

The UN’s Guiding Principles on Business and Human Rights (UN 2011) state that in conflict-affected areas, the host state of multinational enterprises has a role to play in assisting corporations to ensure that they are not involved with human rights abuses. Business enterprises should seek to prevent or mitigate adverse human rights impacts directly linked to their operations, products or services, even if they have not contributed to those impacts. Where a business has not directly contributed to an adverse human rights impact, and it does not have the leverage to prevent or mitigate the adverse impact, ‘the enterprise should consider ending the relationship, taking into account credible assessments of potential adverse human rights impacts of doing so’ (UN 2011). Here there is a recognition that, in some cases, enterprises will need to weigh the impact of leaving against the impact of staying.

In Myanmar, the Myanmar Centre for Responsible Business (MCRB) initially responded to the coup with a cautiously worded statement saying that it was watching the developments with growing and deep concern, but was abstaining from politics (MCRB 2021). Reinforcing this, the statement avoided the word ‘coup’ or condemnation of what had happened. While noting that everyone benefited from respect for human rights, democracy, fundamental freedoms and the rule of law, it said its primary concern was the safety of employees and the continued provision of essential services. The emphasis was on the contribution multinational enterprises could make to human rights and essential services (MCRB 2021). This focus featured also in a statement by several chambers of commerce, which said their members had provided Myanmar people with access to greater opportunities and prosperity (CCI France 2021).

As military atrocities against civilians increased, more was expected of foreign firms than watching with concern. The UK-based Institute for Human Rights and Business, an international think tank that founded the local MCRB, advised businesses to ‘ensure they do everything in their power to abide by international standards and avoid complicity in human rights violations being committed by security forces’ (Tripathi & Morrison 2021). In response to claims that payments legitimised the regime, funded the military and could be complicit in acts of atrocity, they cautioned businesses ‘to avoid and end commercial relationships—direct or indirect—with the military and its economic interests’. But, on the fraught question of whether to pay taxes, they pointed out that tax revenues contributed to preventing a failed state. They suggested that companies should publish what they paid and advocate for taxes to be spent on welfare not warfare.

In further collective advice to businesses, the Institute for Human Rights and Business suggested that foreign enterprises leave Myanmar if they were ‘contributing to, or directly linked to, harm and cannot exercise any leverage—collectively or individually—to prevent or mitigate that harm’. Conversely, there was an argument for some enterprises to stay, especially those that:

have the leverage to ensure at least their own operations, and usually those of their business partners, respect human rights on issues such as worker safety, fair wages, and respecting the rights to freedom of association and expression, and not to be discriminated against, including as a union member. (Tripathi, Morrison & Bowman 2021)

The argument was that, by staying, they would offer a different, more hopeful, vision of the future and be well placed to contribute to the country’s eventual revival. That is, the essential step was for enterprises to review their operations and consider whether they were in any way connected to harm. This approach was contested by activist groups who argued that any payment to the Myanmar military regime would support and legitimise the military and make the payer complicit in atrocity crimes and human rights abuses. The respective merits of these competing approaches are considered later in this chapter in light of the impact of companies that did withdraw from the country.

Calls to end commercial relationships with military-owned or controlled entities

Drawing attention to multinational enterprises with commercial relationships with Myanmar’s military predates the coup. For example, following the attacks on Myanmar’s Rohingya community in Rakhine State in 2017, an Independent International Fact-Finding Mission was mandated by the UN Human Rights Council to investigate. It reported on the military’s economic interests, concluding that:

Foreign companies with joint ventures and other commercial relationships with the Tatmadaw … are in some cases legally implicated in the conduct of the Tatmadaw, and in all cases complicit through their tacit acceptance and approval of the Tatmadaw’s actions. (UNHRC 2019, 62)

The Fact-Finding Mission advocated economic isolation of, and disengagement from, the military conglomerates and associated companies. In view of the scale and diversity of the military’s business interests, it is surprising that only 14 foreign company joint ventures with military-owned or controlled businesses were identified, and only 44 foreign companies were identified as having other contractual or other commercial ties, such as leasing land (UNHRC 2019).

Continuing this approach, the self-styled Special Advisory Council for Myanmar, a trio of former UN rapporteurs or advisers on Myanmar, advocated a ‘cut the cash’ strategy involving ending commercial relationships with not only military-owned companies, but also the six state-owned economic enterprises (SAC-M 2021). This approach was supported by other advocacy groups who argued that Myanmar state-owned enterprises—especially the Myanmar Oil and Gas Enterprise—financially benefited the military. Burma Campaign UK maintained a list of multinational enterprises doing business with the Myanmar military and this so-called Dirty List included 101 companies (Burma Campaign UK 2021).

Returning to the UNHRC Fact-Finding Mission report, the 14 joint ventures identified represent just 11 foreign companies, as three foreign companies each had two joint ventures (see Table 4.1). Nine of the joint ventures have partners domiciled in either Korea or Japan, and all bar one are domiciled in Asia.

Table 4.1: Foreign joint venture partnerships with MEHL and MEC

Myanmar company	MEHL or MEC	Foreign company	Domicile	Sector
Coal Mine and Power Plant	MEC	Saraburi Coal Co. Ltd	Hong Kong	Mining
Gold Cement Co.	MEHL	26.4% GC Holdings	Seychelles	Manufacturing
Hanthawaddy Golf & Country Club	MEHL	37% Inno Co. Ltd	Korea	Recreation
JPMD Ltd	MEC	49% Japan Myanmar Development Institution	Japan	Construction
Mandalay Brewery Ltd	MEHL	51% Kirin Holdings	Japan	Manufacturing
Moe Gyo Sulphuric Acid	MEHL	Unknown % NORINCO	China	Manufacturing
Myanmar Brewery Ltd	MEHL	51% Kirin Holdings	Japan	Manufacturing
Myanmar Inno International Ltd	MEHL	44% Inno Co. Ltd	Korea	Real estate
Myanmar Inno Line Co. Ltd	MEHL	18% Inno Co. Ltd	Korea	Real estate
Myanmar POSCO C&C Co. Ltd	MEHL	70% POSCO Coated & Color Steel Co. Ltd	Korea	Manufacturing
Myanmar POSCO Steel Co. Ltd	MEHL	70% POSCO Steel Co. Ltd	Korea	Manufacturing
Myanmar Wise-Pacific Apparel Yangon Co. Ltd	MEHL	55% Pan-Pacific Co. Ltd	Korea	Manufacturing
Telecom Int’l Myanmar Co. Ltd	MEC	49% Viettel	Viet Nam	Communications
Virginia Tobacco Co. Ltd	MEHL	60% Distinction Investment Holdings Pte	Singapore	Tobacco

Source: UNHRC (2019, 96–7).

Of the 11 foreign joint venture partners two, Kirin Holdings Co. Ltd (a Japanese beverage maker) and POSCO Steel, have announced their intention to end their joint ventures. Kirin and MEHL jointly own Myanmar Brewery and Mandalay Brewery. Kirin had pre-existing concerns about their association with MEHL and, in 2020, decided to suspend dividend payments from the two breweries (Goto 2021). After the coup, Kirin initially wanted to retain their Myanmar investment, but without the stigma attached to being in partnership with MEHL and sought to terminate the joint venture. However, in February 2022, it concluded that this would not be possible and decided to sell its stake in the breweries and withdraw completely from Myanmar. Unable to find an outside buyer, Kirin sold its stake to its military joint venture partner (Taguchi & Henmi 2022). Similarly, immediately after the coup, POSCO Coated & Color Steel Co. Ltd announced in February 2021 that it had suspended all dividend payments to joint venture partner MEHL and, two months later, said it would rearrange the joint venture but continue to make steel roofing to improve the housing market, create employment and industrialise and revitalise the economy (POSCO 2021).

Three years after publication of the Fact-Finding Mission’s report and 21 months after the coup, only one foreign joint venture had divested and one other hoped to rearrange its joint venture. The limited impact of the Fact-Finding Mission report stems from the misapprehension that the military’s large and diversified business interests were integrated into the global economy. However, decades of isolationism, economic mismanagement and the stigma attached to going into a joint venture with a military conglomerate meant there actually were few linkages created over the preceding decades and, hence, limited leverage. Further, those few companies with linkages were from countries not imposing sanctions. This casts doubt on the utility of a response to the coup that targets foreign firms but has no discernible effect on the military’s funding or attitude.

Multinational enterprises in other relationships with military entities

Unlike most other companies in some sort of relationship with the military, Facebook received funds from them—it did not make payments to them. Shortly after the coup, Facebook banned the Myanmar military and military-controlled state and media entities from Facebook and Instagram as well as ads from military-linked entities. In December 2021, Meta Platforms Inc. (formerly known as Facebook) expanded its ban and removed pages, groups and accounts representing military-controlled entities such as Myanmar Beer and telecommunications operator Mytel. Meta used the International Fact-Finding Mission report on the economic interests of the military to identify companies to be removed (Frankel 2021).

All bar three of the 44 foreign companies with contractual or commercial ties to the military-owned business conglomerates were domiciled in Asia and one other was domiciled in both Singapore and Lebanon. That is, the foreign enterprises with a direct association with the sanctioned entities were not domiciled in the jurisdictions imposing sanctions. Consequently, the imposition of sanctions did not have much success.

Nevertheless, one company, Adani, felt the impact of sanctions and sustained advocacy and decided to exit. Adani Ports and Special Economic Zone Ltd, an India-based subsidiary of the Adani Group, was subjected to considerable international attention because it leased land from MEC (a sanctioned entity) to develop a port project in Yangon. It did not matter that in 2019 it was the National League for Democracy government that had granted Adani permission to develop, operate and maintain a port on the land. In an example of shareholder activism, Norwegian pension fund KLP said it would divest from Adani Ports and Special Economic Zone Ltd on the grounds that the company’s military link breached the fund’s responsible investment policy (Fouche 2021). Initially, Adani denied their linkage was inappropriate, but in October 2021 said it would nevertheless work on a plan to exit the company’s investment by June 2022 (Sethuraman N.R. & Sudarshan Varadan 2021). This was cautiously welcomed by activist groups who, in an afterthought about the consequences, said:

Adani Ports must now find a way to exit responsibly by mitigating the impact on their Myanmar workers and recovering what they can of their $90 million payment to MEC so they do not leave a windfall for the terrorist Myanmar military. (ACIJ 2021)

Campaigns to attract public support need also to have regard to the complexity of situations and the range of implications. Ironically, Adani’s heralded departure may further enrich the military, while national income and employment will likely be less than what they would be if they stayed.

Australia’s sovereign wealth fund, the Future Fund, was criticised for having equity stakes collectively valued at AUD157.9 million across 14 publicly traded companies that maintain business links to the Myanmar military. Somewhat tenuously, an activist group argued that the Future Fund was ‘profiting from the Myanmar military’s brutal oppression and campaign of terror’ (Justice for Myanmar 2021b). Even more tenuously, it argued that the Australian Government had not directed the fund to divest and was, therefore, ‘directly connected to the Myanmar military’s grave violations of human rights’ (Justice for Myanmar 2021b). The equity stakes were in companies including Adani Ports, Kirin and POSCO. New Zealand’s Super Fund was also criticised for investing in Adani (BHRRC 2021). The goal of these campaigns was to create a perception that all commercial connections with Myanmar carry reputational risk and to get the attention of the Australian and New Zealand governments, which had not joined European and North American governments in imposing sanctions. Selling down their relatively small shareholdings in companies listed on international bourses could not seriously be expected to be of any consequence to the situation in Myanmar.

Multinational enterprises in relationships with state-owned enterprises

Myanmar’s six state-owned enterprises play a large role in the economy, and the National Unity Government (NUG) called for sanctions to be imposed on them, especially the Myanmar Oil and Gas Enterprise (MOGE) (NUG 2021). The NUG also called on all offshore gas operators to suspend payments to the government until democracy was restored. The US, UK, Canada and European countries have heeded the call and sanctioned some of the state-owned enterprises, but only the EU has sanctioned MOGE.

Publish What You Pay Australia, a civil society coalition, claimed that:

any international oil and gas company making or facilitating the payment of funds to MOGE is likely to be assisting the Myanmar military in committing extensive human rights abuses and financing and legitimising its claim to be the government of Myanmar. (Moore 2021b, 7)

They also said that asset managers and pension funds were ‘exposed to the risk of funding the military through the military’s misappropriation of MOGE’s cash, supporting its efforts to crush Myanmar’s transition to democracy and its human rights abuses’ (Moore 2021b, 7). They did not call for production to be halted (two-fifths of Myanmar’s power comes from gas) but called on oil and gas companies to place gas sale proceeds into escrow accounts until there is an elected, civilian government. Withholding taxes, however, would place them in violation of domestic law and would not be consistent with OECD guidelines or the approach favoured by the Institute for Human Rights and Business.

MOGE is in four offshore gas joint ventures with multinational enterprises: the Yadana, Shwe, Zawtika and Yetagun projects. Each joint venture comprises a gas production component and a gas transportation component. The main joint venture companies are the French energy group Total; Korea’s POSCO International; PTTEP, a subsidiary of the Thai state-owned oil and gas company PTE; and Petronas, Malaysia’s state-owned oil and gas company.

Total is the operator of the Yadana Project, which supplies 50 per cent of total gas supply to Myanmar and 11 per cent of Thailand’s natural gas. In May 2021, the joint venture suspended cash distributions to shareholders from the project’s gas pipeline joint venture, but continued to pay taxes. However, in January 2022, Total and another joint venture partner, Chevron, decided to exit Myanmar, leaving PTTEP, a subsidiary of the Thai state-owned oil and gas company PTE, as the project’s operator. Total and Chevron’s withdrawal increased the equity share (and future dividend payments) of the remaining partners including MOGE (PTTEP 2022). Given that their withdrawal has only increased the equity of MOGE, it was incorrect for Justice for Myanmar to herald Total’s decision to exit Myanmar as ‘a major step in cutting off funds to the illegal military junta’ (Justice for Myanmar 2022a). Total’s exit was a windfall gain for MOGE and is illustrative of the unintended consequences that can come from pressuring foreign firms to exit.

POSCO, the operator of the Shwe Project supplying gas to China, maintained operations, defending its relationship with MOGE on the basis that it predated the coup and that withdrawal might see it replaced by China or other players, which would only benefit the junta and inflict damage to Korea (Korea Times 2021). POSCO International is continuing its exploration activities. In July 2021, it extended its contract with Swiss-based driller Transocean (Energy Voice 2021). The Zawtika Project is operated and mostly owned by PTTEP and most of the project’s gas is piped to Thailand. PTT is also in a joint venture with MEC to construct a fuel terminal that has attracted criticism (HRW 2021).

In April 2021, Petronas, operator of the Yetagun Project, declared force majeure due to depletion of gas production and said it would temporarily cease production until remedial measures were undertaken to enable its resumption (Petronas 2021). A year later, Petronas and their foreign joint venture partners all withdrew from the project and the military appointed a Thailand-based private oil and gas company as operator, thereby ensuring the continued flow of funds to the military (Justice for Myanmar 2022c).

Certainly, MOGE’s revenue is the greatest of all the state-owned enterprises and, consequently, has been the major target in efforts to cut funding to the military. Several foreign joint venture partners have divested, leaving other foreign partners to assume the role of operator. Their divestments have served only to increase MOGE’s share in the joint ventures. Despite the attention on international operators, no gas production has halted (other than from the depleted Yetagun Project), and the military’s revenue has only increased.

To stay or to leave?

Many multinational enterprises operating in Myanmar are not in a relationship with the military or their owned or controlled entities. Nevertheless, several have, of their own accord, chosen to divest while others have been pressured to do so.

Shortly after the coup, Woodside, an Australian natural gas producer with large offshore petroleum exploration holdings in Myanmar, reduced its presence in Myanmar and demobilised its offshore exploration drilling team. The company subsequently went one step further and withdrew from Myanmar, relinquishing its exploration permits. The company said its conduct was ‘guided by the UN Guiding Principles on Business and Human Rights and other relevant international standards’ (Woodside 2022). While the company did not have any producing assets or generate any revenue, it had, as required, a production sharing agreement with MOGE that would have become operational if the gas fields were to be developed. The relinquished exploration permits are now open to being offered by MOGE to less principled gas producers from China and Russia. The future possibility of a gas-for-weapons deal cannot be ruled out.

Claims were made that if Myanmar Metals, an Australian explorer and mine developer, did not divest from its Bawdwin joint venture it ‘would essentially be in support of the illegal, unconstitutional seizure of power and legitimize the Myanmar military’s authority’ (Moore 2021a). The company decided to dispose its entire interest to one of its local joint venture partners, but stated other reasons for doing so:

the lack of stability, clarity, and confidence in Myanmar at this time makes it impossible for us to bring international finance to bear on the project, impossible for us to gain access to it, and impossible for us to meet our obligations in the meantime. (Myanmar Metals 2021)

Civil society groups remained unhappy and lodged a complaint with the Australian national contact point for the OECD guidelines, arguing that the sale could lead to millions of dollars ‘lining the pockets of Myanmar’s murderous generals once the mine becomes operational’ (Barrett 2021).

Telenor Myanmar, a Norwegian-owned mobile telephony provider, is another example of a company that activists criticised for withdrawing from Myanmar. Telenor was criticised not for paying its licence fees but for divesting its Myanmar operations through a sales agreement with the Lebanon-based M1 Group (Justice for Myanmar 2022b). As a condition precedent for regulatory approval, M1 entered into a local partnership to ensure it had a local majority owner (Telenor 2022b). Telenor’s decision to write-off its investment was informed by the deteriorating situation and by security, regulatory and compliance issues. Ensuring continuation of operations that provide affordable mobile services to support Myanmar’s development and growth was also a consideration (Rostrup 2021). Activist groups were concerned that the business’s new owners might be less vigilant in resisting censorship and protecting customer data and claimed Telenor’s sale would further embolden the military, ‘putting the lives of activists, journalists and anyone opposed to the military junta at greater risk’ (Justice for Myanmar 2021a). Telenor explained the dilemma they faced:

There are no solutions without negative consequences … a key reason for selling Telenor Myanmar is that we do not want to activate intercept equipment, which all operators are required to do … It is precisely this conflict—between the requirement to comply with local law on the one hand and the concern about human rights and the risk of violations of Norwegian and European sanctions on the other—that leaves Telenor with no choice but to sell … selling the business is the least detrimental solution for customers, employees and the broader society. (Telenor 2022a)

These examples from Total, Woodside, Myanmar Metals and Telenor all highlight the risk of unintended consequences from pressuring companies to leave. The Total and Myanmar Metals exits could lead to more revenue for the military and Telenor’s exit is not good news for its 18 million subscribers.

Other companies to exit for operational reasons include:

• The German wholesaler Metro, suppliers of food to restaurants and hotels, ceased operations due to ‘the volatile investment and business environment’ (Metro 2021).
• In October 2021, British American Tobacco said it would cease all operations after evaluating their long-term operational and commercial viability (Petty 2021).
• EDF, a French power group, suspended development of the Shweli 3 hydropower project citing human rights concerns (Reuters 2021).
• Amata Asia (Myanmar), a Thai industrial estate developer, indefinitely suspended the Yangon Amata Smart & Eco City Project (Chan Mya Htwe & Aung Loon 2021).
• Hongkong and Shanghai Hotels Ltd suspended for one year construction of its planned Peninsula Yangon Hotel ‘due to the unfortunate situation in Myanmar’ (Kawai 2021).
• Sembcorp Industries, a Singapore-based engineering company operating a gas-fired power plant, is ‘actively monitoring the situation’ and has not made a decision on whether to proceed with its proposed industrial park development (Sembcorp 2021). Its president said: ‘we are invested in this country. We are operating this very important infrastructure asset; our immediate priority is to continue to serve the community’ (Connors 2021).
• The Swiss-owned Kempinski Hotel in Nay Pyi Taw ceased operating in October 2021, eight months after the coup, suggesting business conditions including the impact of COVID-19 contributed to the decision (Myanmar Now 2021).

This chapter has identified over 30 multinational enterprises (Table 4.2) as having made public statements about their Myanmar operations. Those exiting range from franchise operators selling pretzels (Auntie Anne’s) or bubble tea (KOI Bubble Tea Shop) to major multinational corporations developing industrial zones (Amata Corporation) or manufacturing cigarettes (British American Tobacco). While there may be more companies that have ceased or been sold since the coup that have not attracted media attention, many of the 1,914 existing foreign investment projects in Myanmar (DICA 2022) are keeping a low profile and continuing. Examples of such companies include Carlsberg, Sumitomo, Marubeni, Mitsubishi (in the Thilawa Special Economic Zone and the Landmark Project) and Accor. Media reports of an exodus of multinational companies abandoning Myanmar (Nikkei Asia 2021; Economist 2021) are, thus, clearly exaggerated. However, the more significant story is the almost complete end of new foreign investment. According to the Myanmar Investment Commission, the cumulative value of permitted projects increased by less than USD100 million between May 2021 and April 2022, with most of the new investment coming from China and Hong Kong (DICA 2022).

Table 4.2: Multinational enterprise announcements about Myanmar operations

Company	Domicile	Activity	Decision
Adani Ports & SEZ	India	Container terminal	Divest by June 2022
AEON	Japan	Shopping mall developer	Project shelved
Amata Corporation	Thailand	Industrial zone development	Indefinite suspension
Ant Financial	China	Mobile payment services	Not proceeding with purchase of stake in Wave Money
Auntie Anne’s	USA	Pretzel retailer	Exited
Bridgestone	Japan	Tyre manufacture	Operations suspended
British American Tobacco	UK	Cigarette sale and production	Ceased operations and will withdraw
Chevron	US	Yadana gas project	Equity transferred to subsidiary
EDF	France	Hydropower development	Development suspended
ENEOS Holdings	Japan	Yetagun gas project	Divested
Hongkong & Shanghai Hotels	Hong Kong	Peninsula Hotel	Construction suspended for a year
Kempinski Hotel	Switzerland	Kempinski Nay Pyi Taw	Operations ceased
Kirin Holdings	Japan	Beer production and sale	Divested
KOI Bubble Tea Shop	Taiwan	Bubble tea retail	Exited
Meta	US	Social media (Facebook)	Military-linked entities banned from platform
Metro	Germany	Grocery wholesaler	Operations ceased
MGTC	France, US	Gas pipeline	Cash distributions suspended but taxes paid
Mitsubishi	Japan	Yetagun gas project	Divested
Myanmar Metals	Australia	Mining	Divested
Petronas	Malaysia	Yetagun gas project	Divested
Portia Group	UK	Port management	Contract not extended beyond 2021
Ooredoo	Qatar	Mobile telephony	Divested
POSCO International	Korea	Offshore gas	Continuing
POSCO Coated & Color Steel	Korea	Steel roofing	Continuing but seeking new JV partner
PTTEP	Thailand	Yadana gas project	Assuming project operator status
Puma Energy	Switzerland	Aviation fuel	Divested
RMH Singapore	Singapore	Cigarette sale and manufacture	Withdrew from joint venture
Sembcorp	Singapore	Industrial park development	No decision
Sembcorp	Singapore	Gas-fired powerplant operator	Continuing
Telenor	Norway	Mobile telephony	Divested
Telenor	Norway	Mobile payment services	Sold 51% stake in Wave Money
Tokyo Tatemono Co Ltd	Japan	Commercial complex development	Suspended operations
Total SA	France	Yadana gas project	Divested
Toyota	Japan	Hi-lux assembly	Opening postponed
Woodside	Australia	Offshore gas exploration	Exited

Source: Company websites and media reporting.

Twenty-one months after the coup, the main observation is not an exodus of existing foreign investment, but the drying up of new investment, which is in stark contrast to the previous 10 years, which saw an opening of the economy and an influx of foreign investment. To be sure, some prominent firms have left but many others have remained. And almost all of those that have announced their departure or suspension of operations are not those identified as in joint ventures or other commercial relationships with military conglomerates or state-owned enterprises. They were businesses without any military association.

Conclusions and policy recommendations

Multinational enterprises have responded to the coup in ways that largely reflect their equities in the Myanmar economy. Small investors in franchise operations such as Auntie Anne’s pretzels and KOI Bubble Tea Shop had no military association but decided to exit the market for commercial reasons. The investments were relatively small and catered to consumers with disposable income. Some multinational enterprises still in the development phase of their investments, such as industrial zone development and hotel development, have suspended operations. In such decisions we see recognition that it was no longer possible, for a combination of commercial and strategic reasons, to continue; yet, the value of the original investment was significant. Suspension leaves open the possibility of returning to extract value from the sunk cost in the event that the political situation improves. Multinational enterprises with fully operational investments, such as mobile telephony services and beer and gas production, faced difficult decisions. Even when the enterprise wished to divest there was a need to do so responsibly. Human rights considerations included the impact on employees, the potential loss of a service benefiting the community and the possibility that a new owner might be more willing to comply with military edicts and be less sensitive to responsible business practices. Telenor Myanmar, for example, was faced with requirements to shut down the internet, block websites, provide data and switch on intercept equipment, and, consequently, decided to divest. However, it was criticised for leaving the business in the hands of others perceived as unlikely to have qualms about complying with military directives. Total’s exit will increase MOGE’s share of the revenue from the Yadana offshore gas field and increase the resources available to the military. The unintended consequences of these withdrawals need to be considered by all stakeholders concerned about the coup.

For many multinational enterprises, it will not be feasible to operate without having some relationship with a military-controlled regulatory body, such as payment of rent, lease fees, taxes or licence fees. Some argue that such payments fund the military, but this assumes a linear relationship, whereas, given the fungibility of revenue, there is none. We also know that when revenue is constrained, the military prioritises themselves and their operations, reducing funds for health and education. Nevertheless, corporate boards dislike adverse publicity and when accused of being complicit in atrocity crimes will seriously consider divesting. In this sense, stigmatisation of ongoing operations in Myanmar can have the same effect as economy-wide sanctions. Myanmar’s earlier period of sanctions did little to change the will or capacity of the military to maintain their power and repressive policies, while adding to the suffering of the population (ICG 2004, 15–18; Jones 2015). The current stigmatisation of continued business operations in Myanmar risks having the same outcomes.

Policy options are limited. UN-mandated targeted sanctions or an arms embargo, howsoever desired, will not be achieved while China and Russia continue to protect Myanmar from UN Security Council resolutions. Unilateral sanctions are possible but will not harm or sway the generals, as they have little regard for international opinion and their business interests are domestically focused. Nevertheless, sanctions can serve as a signal of displeasure at the coup and of solidarity with those opposed to the coup.

Activist pressure ostensibly focused on businesses with connections to military entities has not achieved much, in large part because the prevalence and significance of such ties have been greatly overestimated. The loudness of the calls to cut military ties, despite their insignificance, raises questions about whether the calls are a Trojan horse for those who would countenance collapsing the economy in an attempt to force change. To date, however, military violence and economic mismanagement have done more to cut funds available to the military than the actions of external players.

Foreign government and multinational enterprise policies need to have regard to their impact on the country, the workforce and the businesses themselves, both now and into the future. The policy objective should not be the economic collapse of Myanmar and immiseration of the people. From a broad and long-term human rights perspective, staying can be a responsible option. An isolated and impoverished Myanmar, when eventually restored to democracy, would face heightened challenges of governing with a debilitated commercial sector, small tax base and low-skilled workforce. The departures of Telenor and producers of gas for electricity generation will make life harder, not better, for the people of Myanmar, without adding to the financial pressure the regime faces.

Policymakers need to think more creatively about how foreign businesses in Myanmar can be leveraged to promote human rights. They may not be able to resolve conflict, but they can model good corporate behaviour by respecting human rights on issues such as worker safety, fair wages and freedom of association, as well as by developing employee and managerial skills. As we saw with mobile telephony, circumstances may deny the possibility of operating responsibly and the decision then becomes whether it is more responsible to stay and uphold other elements of corporate responsibility or to divest and leave the business in the hands of cronies or other less principled players. The arrest and sentencing of MCRB’s director, Vicky Bowman, shows that responsible business practices are perceived by the military as being in opposition to their regime, placing them at risk and in need of protection. The focus of policymakers needs to be on encouraging and supporting responsible business practices that can make a difference to the lives of Myanmar’s citizens. Foreign activist organisations also need to think beyond the standard action playbook focused on large Western corporations and devise Myanmar-focused strategies—that is, strategies that directly assist agents and conditions for change in Myanmar. It is the businesses, organisations and people who remain, not those that have left, that will ultimately bring about change in Myanmar.

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