The official establishment of the ASEAN Economic Community (AEC) is set to strengthen ASEAN as a globally competitive and powerful trade block. However, the coming together of the region and the bringing down of trade barriers has also facilitated an unprecedented expansion of transnational crime.
According to the United Nations, illegal trade across ASEAN and East Asia is now worth more than US$100 billion a year, equal to the combined GDPs of Myanmar, Laos and Cambodia.
Established criminal networks in Southeast Asia have long been flourishing due to high levels of corruption and weak governance that make it relatively easy to target multinational corporations, natural resources, supply chains, and goods to counterfeit, to name just a few.
Corruption, in particular, remains a key factor as it is both a facilitator of transitional crime and an obstacle for combatting it. In Transparency International’s 2015 Corruption Perceptions Index, which measures the perceived levels of public sector corruption worldwide, ASEAN countries scored considerably low, particularly mainland Southeast Asia with Vietnam receiving a ranking of 112 out of 168, Myanmar 147 and Cambodia 150.
Multinational firms operating in the ASEAN region experience frequent security challenges protecting their intellectual property, preventing supply chains from pilfering or unwittingly being used to transport contraband, securing resources during land and sea transport, and avoiding corrupt practices with staff, partners, and vendors. All of these are potentially costly issues that can also negatively affect a corporation’s reputation and leave them exposed to the US Foreign Corrupt Practices Act (FCPA) or the UK’s Bribery Act.
The goal of the AEC is to strengthen ASEAN as a single market trade block with the free flow of goods, capital and skilled labour in order to make the association an internationally dominant trade group. And while the AEC is projected to grow ASEAN’s economy and help soften the slowdown in China, countering criminal enterprises will be a key challenge not only for ASEAN governments, but for multi-national corporations operating in the region as well.
Access Asia’s risk management services can help corporations mitigate risks associated with transnational crime in the region, particularly pertaining to security, supply chain issues and IP infringement. For more information on our services, please contact us at [email protected].
