Monday, August 21, 2017

Canning firm defies govt order to leave factory


In the latest development of an ongoing saga over a botched government enterprise privatisation effort, canned goods manufacturing firm Myanmar Makro Industry Company is defying a government order to leave its factory in Yangon’s Thaketa township.

The front gate of the Myanmar Makro factory in Thaketa township, Yangon. Photo: Ko TaikThe front gate of the Myanmar Makro factory in Thaketa township, Yangon. Photo: Ko Taik

Myanmar Makro is locked in a dispute with the Ministry of Livestock and Fisheries’ commercial department – Livestock, Feedstuff and Milk Products Enterprise – over its right to occupy the factory, insisting it has a lawful lease with three more years to run. The Livestock Enterprise’s attempted to privatise the plant, auctioning the disputed lease to a third party in 2012, Mega Marine company.

Makro’s CEO has warned that international investors might be scared off if the government sets precedent for evicting companies with valid leases.

The complex three-sided dispute goes back to 1997, when the then-Livestock, Fisheries and Rural Development Ministry leased the factory premises to Myanmar Makro for a 20-year period.

Myanmar Makro, which has been in business 70 years, produces Reday canned goods and Bravo chilli sauce. They say the factory represents a K1 billion investment, and has more than 200 workers.

But in January 2011, the current Livestock, Foodstuff and Milk Products Enterprise auctioned the factory off by order of the Ministry of Livestock, Fisheries and Rural Development as part of a reform agenda to privatise government-controlled commercial assets.

Myanmar Mega Marine bought the factory, completing payment in three installments of K3290 million, in February 2012. The ministry then told

Myanmar Makro they had to leave.

Makro ignored the order and on March 17, 2013, the department served an eviction notice ordering Myanmar Makro to quit the premises within 15 days. Myanmar Makro called a press conference to announce its intention to defy the order.

U Moe Myint Kyaw, managing director of Myanmar Makro, said on March 31, “We cannot accept the eviction order from the ministry based on the Government Premises [Eviction] Act because that law is aimed only at squatters. We are not squatters. We have an agreement and a contract to stay in the factory for 20 years. That contract expires in 2017. Since it has not expired, we do not need to leave.”

U Aung Pyae Sone, former general manager of the Livestock, Foodstuffs and Milk Products Enterprise, told a press conference called by the ministry in February last year that the 2011 sale was an act of force majeure. He said that when the auction took place, under the authority of the ministry, Myanmar Makro was offered the chance to buy the premises. They refused to do so, and another buyer bought the factory instead.

The Thaketa canning factory was now owned by Mega Marine, and Myanmar Makro must leave the premises, U Aung Pyae Sone said, adding that Myanmar Makro had failed to respond to a departmental letter advising them to leave.

U Aye Htun, a lawyer for Myanmar Makro, said at the March 31 press conference that force majeure was taken to mean fire, flooding, riot or similar occurrence. Nothing of the sort had taken place, which is why the company could not accept the auction outcome, regarding it as a breach of contract.

He added that the Government Premises (Eviction) Act, 1955, was not the right way to sue Myanmar Makro. “We don’t need to move away from the factory. We have a legal contract and we can stay another four years. We invested a great deal in the factory, but chose not to buy it, which would have meant more investment. We understood we had the right to conduct business in that factory for 20 years. But they broke the contract by auctioning the factory before the contract ended. We intend to continue to do business until 2017, and have no intention of moving,” he said.

Department of Livestock, Foodstuffs and Milk Products Enterprise managing director U Myo Thet Swe first wrote to ask Myanmar Makro to move out of the factory in June, 2012. Further requests came in July and October last year, citing the law.

Myanmar Makro Company sued the department of Livestock, Foodstuffs and Milk Products Enterprise in March last year, citing its right to stay on the premises for 20 years.

U Moe Myint Kyaw said he would continue to fight the order to quit and would even seek help from overseas, adding that if the government can treat local companies in this way, foreign investors should be wary of investing here.

“When we sent our petition to the Office of the President, they replied that they were being sued by the

Myanmar Mega Marine Company. But that company and the department are not suing us. If they did, we would welcome our day in court because we are in the right. But now they are threatening the use of force. We will continue to tell the truth about the situation,” he said.

No spokesperson of Mega Marine could be located for comment at the time of going to press. In a statement in February last year, Mega Marine said it was the responsibility of the ministry to take the necessary action.