London, Nov. 6 (Reuters): The world’s second-biggest tobacco group, British American Tobacco (BAT), bowed to UK government pressure to pull out of Myanmar today after international criticism of the Asian nation’s human-rights record.
BAT, the parent company of ITC Ltd, said it had agreed to the sale of its 60 per cent share in its Myanmar business to a Singapore investment firm after the British foreign office asked the tobacco group in July to quit the country, which is run by a military government.
“The sale agreement follows the exceptional formal request by the British Government in July for us to reconsider our investment in the joint venture,” said BAT’s director of corporate and regulatory affairs, Michael Prideaux. Foreign companies investing in Myanmar have long been a target of Western human rights groups who say the firms are indirectly supporting a regime guilty of human-rights abuses. BAT entered Myanmar in 1999 when it took over the tobacco business of London-based Rothmans.
Following the government’s pressure in July, BAT had said it was reviewing its presence. The UK government welcomed the move, saying it reinforced Prime Minister Tony Blair’s message in June that trade and investment with Myanmar is not appropriate so long as the regime continues to suppress the basic rights of its people.
“I am delighted that BAT, the largest remaining UK investment in Burma, has responded to the British government’s request that they leave the country. I appreciate that this was a difficult process, but I am in no doubt that the decision was the right one,” said foreign office minister Mike ’Brien.
In a clamp-down on pro-democracy movements, Myanmar's military, which has ruled since a 1962 coup, has confined democracy leader and Nobel peace laureate Aung San Suu Kyi to her home since September after major surgery and nearly three months in detention at a secret location.
Suu Kyi was detained on May 30 after a bloody clash between her followers and government supporters, and Myanmar's ruling generals have ignored U.. requests to release her.
BAT is the last major UK company to pull out of Myanmar and follows the move earlier this year by Premier Oil to unravel its involvement in a Myanmar gas project transferring its stake to U.S. company Amerada Hess and Malaysia's Petronas.
Lobby group the Burma Campaign UK also welcomed the move, and said it will shift its focus to campaign for a ban on imports of Burmese gems and timber into Britain and the European Union which are an important source of income for the regime.
”This is a huge victory. They had to be dragged out kicking and screaming but at least they are out. If a company like BAT can be forced out of Burma, any company can be,” said John Jackson, director of the Burma Campaign UK.
In the BAT deal, the London-based group is selling its 60 percent stake in Rothmans of Pall Mall Myanmar Pte Ltd to Singapore's Distinction Investment Holdings Pte Ltd for an undisclosed sum. The remaining 40 percent will continue to be held by the Union of Myanmar Economic Holdings Ltd.
BAT will license the production of its London and State Express 555 cigarette brands for the Myanmar domestic market to the Singapore company. Completion of the deal is expected over the next 12 months, BAT added.
The Rothmans business in Myanmar was established in 1993 at a time of significant foreign investment in Myanmar. As the nation's leading tobacco group, it runs one factory in the capital Yangon and employs 500 people.