Businesses across Southeast Asia should take a more active role in combating illicit trade, which continues to thrive despite enforcement efforts, according to legal experts and industry leaders who spoke at a recent forum in Taguig City.
The forum on illicit trade organized by The Financial Times highlighted how companies are often caught in the middle as both victims of smuggling and counterfeiting, and at times, unwitting facilitators. Panelists said the private sector’s engagement is critical in preventing, detecting, and disrupting these illegal activities.
Daniele Marchesi, country manager of the United Nations Office on Drugs and Crime (UNODC) Programme Office in the Philippines, warned that illicit trade is often tied to global crime networks. “This issue of crime and illicit activities cannot be solved only by states. We need a very comprehensive approach that involves also the private sector, academia and other actors,” Marchesi said.
From the perspective of the downstream oil industry, Shell Pilipinas Corp legal counsel and deputy corporate compliance officer Vincent Juan pointed to the continued challenge of petroleum smuggling.
“Petroleum products are transferred from one vessel to another in the high seas and then brought to the Philippine shores, or smaller vessels are docking in smaller Philippine shores,” Juan said, warning that consumers who use these smuggled goods may unknowingly be buying a petroleum product that is “dangerous and unsafe for your car and the environment.” He noted that Shell was the first to comply with the government’s fuel marking program, which uses molecular tags to distinguish legitimate imports.
Illicit tobacco trade also remains a pressing concern. Jericho Nograles, president of the Philippine Tobacco Institute (PTI), said one in five cigarettes sold locally is fake, and that the COVID-19 pandemic further fueled the trade.
“This year, we are still seeing a rise of illicit tobacco trade based on our monitoring, not because of the lack of enforcement, but a lack of successful prosecution,” Nograles said.
He proposed a composite task force led by the Bureau of Internal Revenue, the Bureau of Customs, the Department of Finance and the Department of Justice to combat illicit tobacco trade, which he said costs the government an estimated P160 billion annually in excise taxes. “It should not only be enforcement-focused, but prosecution-focused,” he said.
Nograles said governments often fail to address illicit trade because “it’s embarrassing,” stressing that the private sector needs to pressure authorities to acknowledge the problem. He also underscored the need to harmonize trade policies in Asia, pointing out that a product considered legal in one country may be treated as illicit in another.
The liquor sector faces similar challenges, said Chen Yun Jin, a partner at LAW Partnership specializing in intellectual property. He explained that in Malaysia, liquor regulation is spread across multiple agencies, including the Ministry of Domestic Trade, customs authorities, the police, the Ministry of Health and local councils, noting, “There are so many authorities that are involved just in this industry.”
Jin also cited the need to harmonize trade, intellectual property and labeling laws across ASEAN, saying, “For example, [in] parallel import, where they are actually legally manufactured in the country of origin, but then when it comes into, for example, Malaysia, it did not follow the requirements of the labelling law. So that would be mismatched in terms of the IP law.”
He said collaboration should involve a broad range of private-sector players, from producers and corporations to insurers and shipping companies, while business associations and chambers of commerce should also raise awareness of the issue.
