RCSP releases new research report detailing the impact of Myanmar’s military coup on Japanese businesses.
On February 1, 2021, Myanmar’s military toppled the civilian government headed by Aung San Suu Kyi in a coup d’état anticipated by few. The coup reversed nearly a decade of political and economic reforms in Myanmar that had first been initiated with the establishment of a semi-civilian government in November 2010, setting the country back onto a dark path of political and economic isolation.
For Japan, one of the most significant beneficiaries of Myanmar’s political and economic liberalization, the February 2021 coup brought about a number of economic and foreign policy challenges. Throughout much of the Cold War, Japan enjoyed what many scholars refer to as a “special relationship” with Myanmar, as Tokyo often bucked the policy approach of other Western countries to provide war reparations, humanitarian aid, official development assistance, and other forms of economic assistance to Myanmar’s military leaders—even during periods of increased international isolation.
As a result of this so-called “special relationship” between the two countries, Japan significantly boosted its trade and investment with Myanmar after its political re-opening officially process kicked-off in 2011, becoming the country’s largest foreign aid donor and one of its largest foreign investors. The February 1, 2021 military coup, and its ensuing aftermath, threatened to derail these substantial investments and upend the trajectory of the Japan-Myanmar relationship.
From an investment perspective, the coup created a dilemma for Japanese aid agencies and private-sector firms. For Japanese companies in particular, the coup cast a growing and unwelcome spotlight on the growing business ties between some Japanese companies and state-owned enterprises controlled by Myanmar’s military leaders. Prior to the coup, in August 2019, the United Nations International Fact-Finding Mission on Myanmar, released a report entitled the Economic interests of the Myanmar military, detailing how some international companies were financially contributing to human rights abuses committed by the military even while the country was under civilian control.
Of particular significance was that the report unveiled direct links between Kirin, one of Japan’s largest beer companies, and Myanmar Economic Holdings Limited (MEHL), a conglomerate owned and operated directly by the Myanmar military. The domestic and international backlash to Kirin’s ties to the Myanmar military served as a cautionary tale to both Japanese and international companies conducting business in Myanmar, putting potential investors on high-alert and warning them of the future business and human rights risks of operating in the economy.
After the February 2021 military coup, many international companies faced an increasingly difficult decision. On the one hand, the reputational risks associated with operating in a country now controlled by a regime credibly accused of genocide was not good for business. On the other, many international companies, especially Japanese conglomerates, had heavily invested in the economy. Thus, leaving the economy out-right would result in significant repercussions not only for their bottom line, but also for the workers and subcontractors that they employed.
Against this backdrop, this report published by the Research Center for Sustainable Peace at the University of Tokyo (RCSP) aims to assess the impact of the February 1, 2021 military coup on both Japan’s foreign policy toward Myanmar and the Japanese private sector’s investment in the country, seeking to answer the question: “What does the military coup mean for the future of Japan’s economic and political relations with Myanmar?”
This is the first comprehensive research report published in English that details the fallout of the military coup on Japanese actors in Myanmar. It is also the first to delve into the specific implications of the military coup on the Japanese business community, examining to what extent current political conditions and compliance with international human rights standards such as the United Nations Guiding Principles on Human Rights (UNGPs) have impacted the decision-making of Japanese companies and their existing investments in the Myanmar economy.