YANGON, Myanmar - Honeys Holdings, a Japanese clothing retailer that manufactures much of its product line in Myanmar, has decided that low labor costs outweigh the risks of doing business in a volatile country.

Earlier this month, the company announced plans to invest more than $11 million over the next two years in constructing a third factory in Yangon's Mingaladon Industrial Park, bucking the trend of foreign businesses leaving since last year's coup.

While the move is surprising given Myanmar's current instability, it is consistent with the company's reputation for relying on workers with few rights, according to those familiar with its business practices.

Myo Aye, the chair of the Solidarity Trade Union of Myanmar (STUM), accused the company of firing many labor leaders during a dispute over workers' demands for more time off during the Thingyan holidays in 2017.

"The workers demanded their rights and were fired right away against the rules," she said.

According to Myo Myo Aye, the company ignored workers' demands to reinstate those it had dismissed and imposed higher production targets on them.

The workers were warned that they would also be fired if they failed to meet the new quota-from 500 to 750 pieces per day.

Approximately 400 people lost their jobs over the next month.

This triggered a six-day strike outside the factory and a protest in front of City Hall on June 24. Finally, the government's Dispute Settlement Arbitration Council agreed to investigate the case but ultimately ruled in favor of the company, according to Myo Aye.

To make matters worse, the company also sued Myo Aye, accusing her of criminal defamation. Late last year, the case was finally dismissed.

An investigation of Honeys Holdings factories in 2019 "confirmed violations of freedom of association and revealed further serious occupational safety issues and other violations, including forced overtime, wage theft, and child labor," according to the Worker Rights Consortium, an independent labor rights monitoring organization.

"If the government continues to allow such a company to operate in Myanmar, things will only get worse," Myo Aye warned.