Big business has always been uncomfortable when trying to find a way to deal with authoritarian regimes. Chief executives, just like politicians, grapple with the same basic dilemma — whether to engage or withdraw. It is a question now facing companies, many Japanese, active in Myanmar following last week’s military coup. While the wave of optimism that accompanied the initial overthrow of the junta in 2011 abated following violence against the Muslim Rohingya minority, democratic progress had still been encouraging. Cutting off foreign investment now would do little to preserve that progress. Instead, it would risk pushing the country further towards Beijing and allow authoritarianism to embed itself deeper.

Many businesses — worried about the reputational damage and the instability brought on by the coup — may soon leave but there is no ethical imperative unless they are in business with the military. Myanmar is already among Asia’s poorest countries, and exiting an ethical, normal business will only compound the damage done from the turmoil that accompanies the coup.

Companies that do leave will have to write off investments built up over the past few years that are, often, only now beginning to pay off. Foreign investment in the country peaked around 2015, according to official statistics, at $9.5bn — roughly 10 times the amount in 2009 before the democratic transition began. Most of this has come from elsewhere in Asia; Japan, in particular, is a big investor in the country, with companies including Toyota and Mitsubishi operating in Myanmar.

There are broader questions at stake too, about the economic relations between democratic and authoritarian regimes. Many countries are now wrestling with this problem. The British parliament is considering putting an amendment into its trade law on how to deal with countries accused of committing genocide, with an eye to China’s behaviour towards its Uighur minority. The EU, meanwhile, is touting the potential for improving China’s record on labour rights through its investment deal. Engagement brings with it the possibility of empowering alternative voices and centres of power, but it can also be seen as tacitly endorsing violence and repression.

In this case, a retreat will mean Myanmar’s military government simply looks elsewhere for investment. The region is critical to Beijing’s geostrategic goals — many in the country refer to Myanmar as China’s “west coast” — by providing access through ports and pipelines to the Indian Ocean. This reduces the world’s largest economy’s dependence on the critical trade route through the Strait of Malacca between Malaysia and Indonesia.

Sanctions should therefore be directed towards individuals, similar to those introduced against Russia by the Magnitsky Act in 2012, rather than the blanket sanctions that the US placed on Iran, cutting the country off from western markets and emboldening hardliners. One exception, however, should be companies directly tied to the military regime, especially the two main business groups Myanmar Economic Holdings Public Company and Myanmar Economic Corporation. In 2019, a UN fact-finding group called for member states to boycott these companies. Japanese brewer Kirin finally ended its joint venture with MEHL after this year’s coup.

Tens of thousands of people have taken to Myanmar’s streets to protest against the military coup and urge a return to democracy. They deserve support from western governments whose leaders should make clear the cost to the generals from any attempt to crush the opposition. Sanctions are called for but they must be the right ones that actually help Myanmar’s people.