Sunday 16 May 2021 7:10 am

Weekend Read: Foreign investors flee Myanmar as regime strengthens grip

Businesses have continued to bow out of Myanmar after the bloody coup has killed more than 750 people and seen over 5,000 arrested for protesting the military’s forced reign.

Companies began to flee Myanmar in March, like Japanese beverage group Kirin which had a $1.7bn stake in Myanmar Economic Holdings Public Company Limited, a company run by the state’s army.

One high-end office block in Myanmar, which hosts a slurry of big business names, stands on military land, according to the United Nations (UN).

Since its ties with the military, who ousted the country’s democratically elected leader, have been revealed, the block known as Sule Square has seen an exodus of organisations.

Coca-Cola, the World Bank and management consultancy McKinsey & Company said they have moved out or are reviewing their leases at the Sule Square complex in Yangon, according to the BBC.

In a statement via email, Coca-Cola said it would not renew its lease when it ends next month due to “changing business requirements”.

“Our office-based employees at Coca-Cola Limited (Myanmar) will continue to work from home for the rest of 2021 as part of overall safety measures. We will be communicating our new office location at a later date,” it added.

The beverage company was one of many internationals, like Telenor, Chevron, Nestle and Adidas, to sign a pledge to “adapt” Myanmar operations in February, after watching the events “with growing and deep concern”.

Consultancy McKinsey said: “We no longer have space in a serviced office leased in Sule Square. We terminated our lease in early 2021.”

Meanwhile, a spokesperson for the World Bank group told the BBC that it was “assessing the situation in Myanmar, according to internal policies and procedures”.

News agency Reuters said it too was not currently using its Sule Square office and has been reviewing its tenancy.

The £88.5m Sule Square complex is based in the city of Yangon where widespread protests and civilian killings have occurred over the last three months.


Norway’s state-owned telecoms operator Telenor also uses the complex and said it had known the land was military-owned before it moved in, but had picked the location due to safety and a number of other reasons.

Telenor is yet to confirm whether or not it has plans to move out of the building but has had its operations in the region restricted, it said at the beginning of the month, after being shut out of the Myanmar market when the military ordered telecoms operators to shut their networks.

Following a few months in limbo, the group, which gains seven per cent of its earnings from the country, admitted it faced “several dilemmas in Myanmar.”

Its chief executive Sigve Brekke echoed, “We are facing many dilemmas,” as one of Myanmar’s biggest foreign investors since 2014.

In its first-quarter results for this year, which were released 4 May, the telecoms group wiped Myanmar’s $783m earnings from its overall corporate outlook for 2021.


Last week, retail giant H&M said it had halted new orders from the country due to transport and manufacturing disruptions.

The fashion retailer, which has around 45 direct suppliers in Myanmar, has not yet made a decision on its long-term future in the region.

“We fully recognise the complexities…in balancing different aspects to ensure that the people in Myanmar are not negatively affected,” H&M Myanmar country manager, Serkan Tanka, said.

British retailer Next also paused its production in the region at the beginning of April, with CEO Simon Wolfson telling Reuters: “We’re not placing any more orders at the moment, that is a big step.”

“Most of the stock that we were sourcing from Myanmar…we have alternatives in place already for that stock in other countries.”


Billionaire Gautam Adani, who owns Adani Ports and Special Economic Zone, has started to consider abandoning the group’s plan to set up a $127m container terminal in Yangon.

The group had announced intentions in May 2019 to set up the Yangon terminal through a lease agreement with Myanmar’s former democratic government.

“In a scenario wherein Myanmar is classified as a sanctioned country under OFAC, or if OFAC opines that the project violates the current sanctions, Adani Ports plans to abandon the project and write down the investment,” the port company said in an investor presentation at the beginning of the month, referring to the US Department of the Treasury’s Office of Foreign Assets Control.

OFAC administers and enforces economic and trade sanctions based on US foreign policy and national security.

Last month, the S&P Dow Jones indices said Adani Ports will be removed from its sustainability indexes because of the Indian private port operator’s links to Myanmar’s military.

Meanwhile, US Congress was urged at the end of April by the UN to impose sanctions on state-run Myanmar Oil and Gas Enterprise (MOGE), which has been controlled by the military since 1 February.

MOGE operates offshore gas fields in joint ventures with firms, including US-based Chevron, France’s Total and Australia-based Woodside.


On Monday, the Myanmar Centre for Responsible Business (MCRB) warned of a military adopted cybersecurity law, which may push even more companies out of the coup-stricken region.

The risky amendment from the 2004 Electronic Transactions Law “will greatly increase the risk for companies in Myanmar, to the extent that some responsible international investors, particularly in the ICT sector, may exit the market altogether, or delay or terminate plans to invest or supply services,” the MCRB said.

The law’s focus on ‘data localisation’ would mean companies have to store data in sites determined by the government, which would increase vulnerability to breaches and reduce the competitiveness of Burmese companies, according to the MCRB.

The business watchdog urged that the country’s chances of creating jobs will be “undermined” as the law is incompatible with international data protection regulation, like the EU’s General Data Protection Regulation (GDPR).

Beyond telecoms, retail and industry-focused firms, international financial institutions may be next to take their business elsewhere over the political unrest and violence.

“Finance sources such as private equity, international finance institutions, and banks, will also identify this cybersecurity law, if adopted, as a major ESG risk,” the MCRB continued, adding that “if they are unable to mitigate it, they will be unwilling to fund companies in Myanmar at a time when businesses badly need investment to recover from the Covid recession.”