This post was originally published by Myanmar Times
Since initiating reform in 2011, Myanmar has made progress in rejoining regional and international communities – transitioning to a market economy, liberalising trade and investment and promoting industrial development. Yet decades of political instabilities and civil unrest have sown the seeds of an extensive illegal economy, ranging from illicit trade in drugs, logging and mining to counterfeiting and wildlife and human trafficking.
Some of the problem can be attributed to Myanmar’s location in the middle of the East-West trade routes and its long and porous borders with China, India, Bangladesh, Thailand and Laos. These borders are difficult to police comprehensively, which allows smugglers to move illegal products in large volumes. The situation has been exacerbated by poor governance structures, archaic laws and pervasive corruption, all of which have combined to give rise to a black-market economy where illicit trade flourishes.
The scope and depth of this varied illegal activity presents significant challenges for the country’s continued economic development and regional integration; it also poses significant risks to Myanmar’s environmental integrity (e.g. illegal logging) and the health and safety of its consumers (e.g. illicit trade in alcohol).
To help inform governments on the effectiveness of their efforts to fight illicit trade, the Transnational Alliance to Combat Illicit Trade (TRACIT) commissioned the Economist Intelligence Unit to produce the Global Illicit Trade Environment Index as a tool to measure the extent to which countries enable or inhibit illicit trade.
Recent findings from the Index underscore the challenge that Myanmar faces in combating illicit trade. Myanmar ranks 82nd out of 84 countries evaluated, with an overall score of 23.0 (out of 100). This means that — apart from Iraq and Libya — Myanmar shows the poorest structural capability to effectively address illicit trade. Regionally, Myanmar is well behind its neighbours in both ASEAN (Singapore, 24th, Malaysia, 47th and Thailand, 48th) and APEC (e.g. Australia, 5th, Hong Kong, 12th).
In producing the Index, we found the overall policy environment in Myanmar is held back by fragile institutions and governance, which together enable the supply of illicit goods to both enter the country and transit through it onto other destinations. Low level of penalties, and weak coordination, monitoring and enforcement mechanisms on corruption, meanwhile, hinder the implementation of many anti-illicit trade policies.
Clearly, more needs to be done in the coming years so that the environment for illicit trade becomes less hospitable for traffickers and traders. And, we hope that this week’s Anti-Illicit Trade Forum in Nay Pyi Taw, organised by the European Chamber of Commerce in Myanmar (EuroCham), will raise awareness of the issues surrounding illicit trade in this country. As a partner to the Forum, TRACIT will present findings from the Index, with the objective to help policymakers better understand the regulatory environment and economic circumstances which enable illicit trade. We also hope that the Forum can accelerate the process of identifying policy gaps and implementing tangible actions that government and industry can take now to improve Myanmar’s ability to defend against illicit trade.
There are a number of steps that Myanmar can take to improve its overall policy environment to discourage illicit trade. At the national level, for example, there needs to be improved inter-agency cooperation, particularly law enforcement agencies such as the ministries of finance, commerce, border affairs, the police force and General Administration Department under the home affairs ministry. Limited or ineffective coordination between government agencies is often exploited by illicit traders.
In addition, Nay Pyi Taw could initiate partnerships to leverage the strengths of the private sector, which can be a critical partner for governments in the fight against illicit trade. EuroCham and the companies that form its Anti-Illicit Trade Advocacy Group have taken a proactive stance on the issue and can serve as valuable partners for intensifying working relationships between business and government.
Finally, addressing corruption in customs and law enforcement must be tackled head on if strategies to combat illicit trade are to have any chance for success.
The transnational nature of illicit trade requires that countries look beyond their own borders. As such, Myanmar must reach out to its neighbours and call for greater government-to-government cooperation, especially in the areas of customs, law enforcement and information exchange on exports and high-risk products vulnerable to smuggling. Addressing vulnerabilities and security challenges created by illicit trade will also be critical as Myanmar moves towards deeper economic integration with its trading partners via various trade agreements, and as it participates more intensely in regional economic cooperation with the ASEAN Economic Community (AEC).
The challenges facing policymakers in addressing multiple vulnerabilities in the economy remain significant. For any sustained success, it will be crucial that all parties live up to their formal engagements and set up the envisaged institutional, regulatory and legislative measures without delay. Myanmar is by no means alone in facing this challenge. EuroCham and TRACIT look forward to collaborating with the government here and private sector stakeholders to advance the anti-illicit trade agenda and ensure clean and safe trade and sustainable economic development.
Executive Director, European Chamber of Commerce in Myanmar
About tracit talking points
TRACIT Talking Points is a channel we’ve opened to comment on current trends and critical issues. This blog showcases articles from our staff and leadership, along with feature stories from our partners in the private sector and thought-leaders from government and civil society. Our aim is to deepen the dialogue on emerging policy issues and enforcement measures that can be deployed against illicit trade.