SPECIAL REPORT: Urgent action needed to secure maritime supply chain against drug trafficking

As transnational organized crime syndicates are expanding their operations here to take advantage of legitimate supply chains, more regional joint operations by national agencies are needed to combat this maritime cross-border crime.

Synthetic drug trafficking is the most profitable illicit business in Southeast Asia worth tens of billions of dollars.  As transnational organized crime syndicates are expanding their operations here to take advantage of legitimate supply chains, more regional joint operations by national agencies are needed to combat this maritime cross-border crime.  By Lee Kok Leong, executive editor, Maritime Fairtrade

According to a new report by the United Nations Office on Drugs and Crime (UNODC), profits generated by organized crime groups in Southeast Asia have reached unprecedented and dangerous levels.

Making and trafficking synthetic drugs have rapidly become the most profitable illicit business. For example, the methamphetamine (meth) market of Southeast Asia, East Asia, Australia, New Zealand and Bangladesh are inter-connected and is estimated to be worth between US$30.3 and US$61.4 billion annually.

The illegal production of synthetic drugs is not geographically constrained.  Hence, meth labs have been sprouting up in countries and border areas with weak governance.

For crime syndicates, Southeast Asia is important as both an origin and transit region. Criminals are importing chemical precursors, needed to make synthetic drugs, from neighboring countries like China and India. They are trafficking the drugs within the region and also further afield to major consumer markets like South Korea, Japan Australia, and New Zealand.

It is no coincidence that the two largest meth markets in the world, East and Southeast Asia and North America, also happen to account for a significant share of the production of chemicals and chemical products at the global level.

Ironically, Southeast Asia’s global supply chain connectivity, regional integration, free trade agreements, special economic zones, and status as a global pharmaceutical and chemicals manufacturing hub provide favorable conditions for drug trafficking to thrive.

As countries in Southeast Asia simplify trade and customs procedures in conjunction with developing their economies, there is a shift of emphasis from border management control to facilitation. However, transnational criminal syndicates are expanding their illicit trafficking alongside growing legitimate trade flows. They are embedding illegal drugs into the legal movements of people and goods across borders.

The unique characteristics of the region thus provide drug trafficking syndicates a comparative advantage.

China clamps down hard on illicit synthetic drugs

In recent years, China has stepped up enforcement against illicit synthetic drug labs. The authority reported that the number of labs dropped by nearly 60 per cent between 2015 and 2017. However, this has the unintended consequence of shifting operations into Myanmar primarily, now believed to be the world’s biggest producer of meth.

Illicit meth manufacture also takes place in the Golden Triangle, and other countries like Malaysia, Indonesia and the Philippines. There are substantial maritime flows of meth from ports in Yangon and the southern regions of Myanmar, via the Andaman Sea into Central and Southern Thailand, Malaysia, Indonesia, and other parts of the region.

UNODC Regional Representative, Jeremy Douglas, says: “Southeast Asia has an organized crime problem, and it is time to coalesce around solutions to address the conditions that have allowed illicit businesses to grow, and to secure and cooperate along borders.”

Along for the ride

Traditionally, criminals transport illicit drugs into different countries through overland routes and unofficial seaports. However, as the criminals expanded their geographical reach, more drugs are now being transported using the same infrastructure and routes as legitimate trade.

Southeast Asia’s regional connectivity initiatives that boost legitimate cross-border trade are also helping to provide opportunities for drug traffickers to illicitly import precursor chemicals and export methamphetamine and other synthetic drugs.

Specifically, UNODC says that maritime drug trafficking will likely expand as the region’s economic connections proliferate. This is not surprising given that 90 percent of global trade flows through the ocean.

Moreover, to add salt to the wound, compare to other transport modes like air, there is relatively less security at maritime borders and less screening of cargoes onboard ships.

Maritime transport is also less expensive and can hold a much larger quantity than air transport. As it is, there are already large‐scale shipments of synthetic drugs and chemical precursors through sea routes within the region and also for export to other parts of the world.

And this trend will continue to rise in the foreseeable future.

Prajin Juntong, senator and former deputy prime minister of Thailand, says: “The organized crime situation in the region is concerning.

“Syndicates are taking advantage of Southeast Asia, and particularly of countries that struggle to respond.

“We are ready to take a leadership role and work with UNODC and international partners to build resilience and address cross-border trafficking.”

Who are the organized crime syndicates?

UNODC says that an increasing number of transnational organized criminal syndicates originating outside the region are targeting Southeast Asia. The dominant syndicates and financiers are based in Macau, China, Hong Kong and Thailand, working with criminal networks and chemists from Taiwan. They have become major players in the production and trafficking of methamphetamine and other synthetic drugs.

Corruption and transnational organized crimes go hand in hand.  Corruption is the oil that greases the wheels of corruption. Corruption is a serious problem. The increase in drug trafficking in Southeast Asia could not take place without significant levels of corruption.

The drug traffickers penetrate both public and private sectors by using bribery, extortion, trading in influence and collusion to facilitate their criminal activities. Corruption can happen at all stages in the supply chain, but border checkpoints are most vulnerable to it.

It can take various forms, for example, passing information to criminals about patrol routes or customs inspections, giving safe passage to shipments, omitting inspections and clearing them for entry without documentation.

There are many negative consequences for the country if corruption is left unchecked.

  • Corruption gives the country a bad reputation which deters foreign investment
  • Erodes public trust in authority and legal system
  • Handicaps legitimate trade
  • Deprives the state of taxes which can be used for public goods

Moreover, in many countries, reporting corruption involves high levels of personal risk as there is a lack of legal protection against reprisal and abuse. Therefore, authorities can take the lead in establishing an effective whistleblowing program and encourage the industry to do likewise. They should also mandate legal protection for whistleblowers. Whistleblowing must be one of the key policies in the fight against transnational crime syndicates.

Urgent need for regional joint enforcement

Southeast Asian governments have invested heavily in infrastructure and ambitious cross-border trade pacts, however, UNODC says that they have not made parallel investments in public security.

While law enforcement and border management are robust in some countries, they are not functioning effectively in others where trafficking is known to happen.

There is not enough cross-border cooperation and a fully operational regional framework for tackling cross-border crime does not exist.

Identifying illicit shipments and monitoring illegitimate maritime movements is extremely difficult without deep, rapid regional cooperation.

Meanwhile, criminals continue to take advantage of inconsistencies in border management, loopholes in legal systems and limited regional cooperation.

Therefore, authorities urgently need to develop a comprehensive regional cooperation framework to counter the synthetic drug crisis, while at the same time making sure there is a balance between enforcement and trade facilitation.

Kok Leong Lee

Kok Leong Lee

Kok Leong, executive editor, has overall editorial responsibility for the direction and focus of Maritime Fairtrade. He has two decades of working experiences, including holding senior regional roles in business-to-business (B2B) print and online publications. He enjoys his work as a journalist, and regards it as a calling.

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