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Esprit Drops Factory Linked With Myanmar Military, Will Others Follow?

Clothing retailer Esprit has severed ties with a garment factory located in an industrial park linked to Myanmar’s military following calls from a United Nations report to impose targeted sanctions on businesses that support “extensive and systematic” human-rights violations” against civilians.

Two of the Southeast Asian nation’s “most opaque enterprises”—Myanmar Economic Holdings Limited (MEHL) and Myanmar Economic Corporation (MEC)—are both “owned and influenced” by senior military leaders responsible for forcibly deporting more than 700,000 ethnic Rohingya to Bangladesh, according to the UN Independent International Fact-Finding Mission on Myanmar.

MEHL and MEC, the UN Mission noted, own at least 120 businesses in myriad sectors, including construction, manufacturing, insurance, tourism and banking. The MEHL, for instance, operates two industrial zones—Ngwe Pinlae Industrial Zone and Pyinmabin Industrial Zone—in Yangon. Perfect Gains Garment Manufacturing, which Esprit worked with, is located in the former.

“Esprit will be taking immediate action by stopping all future orders made to the Perfect Gains factory in Myanmar,” the company said in a statement, noting it was previously unaware of the connection. “Esprit will continue to closely monitor this concerning situation.”

But not all relationships are so clear cut. At least 15 foreign businesses have joint ventures with Myanmar’s armed forces, also known as the Tatmadaw, while another 44 have “some form” of commercial ties with Tatmadaw-backed firms. Among these is Myanmar Wise-Pacific Apparel Yangon Co., which the UN Mission identified as a partnership between MEHL and Pan-Pacific Co. in South Korea.

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Other companies sourcing from factories within MEHL-owned industrial zones include C&A, Bestseller, H&M, Marks & Spencer and Next, the Nikkei Asian Review reported. Bestseller and H&M told the publication that they will be investigating the report’s findings. Marks & Spencer said it is no longer sourcing from Wise-Pacific (though it declined to provide further details) and C&A and Next did not respond to requests for comment, the Nikkei Asian Review said.

All companies conducting business in or purchasing goods from Mynamar should conduct ”heightened due diligence” to ensure they are not funding the Tatmadaw’s humanitarian law violations, the UN Mission said.

”Removing the Tatmadaw from Myanmar’s economy entails two parallel approaches,” Mission Chair Marzuki Darusman said in a statement. ”In addition to isolating the Tatmadaw financially, we have to promote economic ties with non-Tatmadaw companies and businesses in Myanmar. This will foster the continued liberalization and growth of Myanmar’s economy, including its natural resource sector, but in a manner that contributes to accountability, equity and transparency for its population.”

The Fact-Finding Mission will present its final report to the UN Human Rights Council this month.