Cyberscamming is Southeast Asia’s Incurable Disease

Perhaps my memory is failing, but was there a time when Southeast Asia was so threatened by organized crime yet so helpless to respond? The region is not unaccustomed to the evils of crime. The U.N. estimates that the drug trade is worth around $80 billion a year (although that includes East Asia, too). The illegal timber industry (again, in Southeast and East Asia) may be worth $11 billion annually. One can add to this list the illegal export of sand, gold, and fish, counterfeiting, and human and wildlife trafficking.

However, despite still being relatively juvenile, perhaps two to three years old, the cyber-scamming industry looks far more consequential than any of the other criminal activities mentioned above and may soon rival drug trafficking in value. The United States Institute of Peace reckons “pig butchering” scams could be generating the equivalent of 40 percent of each of the formal economies of Cambodia, Myanmar, and Laos. In Cambodia alone, the industry is believed to be worth around $12.5 billion annually. The USAID’s latest Counter-Trafficking in Persons report estimates there could be 150,000 people coerced into the industry’s labor force in Cambodia alone. There might be half this number in Laos. There are no good estimates of how much money from the industry is being laundered through the Southeast Asian economies, tainting every formal sector it touches.

Moreover, the industry is steering major political events. Future historians would be correct to argue that the course of the Myanmar civil war was rewritten last year when Beijing tried to play the junta and the ethnic militia off against each other to shut down the cyberscamming compounds on the Myanmar-China border, which sparked Offensive 1027 by anti-junta militias that has routed junta forces across much of the country. This feat has resulted in Beijing now throwing its weight behind the military regime.

The reason I am pondering whether scamming is more threatening than other illegal industries, even if it’s probably less lucrative than the methamphetamine trade for now, is because of how distinct a criminal activity it is. The first thing to be said is that all the other abovementioned illegal industries are shadows of formal, legal sectors. It isn’t illegal to sell wood or gold; the illegality comes when these are taken from protected areas or sold without the correct permission. One might argue that the narcotics trade is the illegal sibling of the pharmaceutical trade. Methamphetamine, the main drug of choice in Southeast Asia, can be legally sold as Desoxyn. Human trafficking often resembles the dark side of state-sponsored emigration schemes.

Because of their proximity to the legal market, almost every criminal activity can theoretically become legal overnight. That happened, for instance, when the Thai government decriminalized cannabis in 2022. A government could make a previously protected forest unprotected, thus making illegal logging legal. Maybe you don’t think decriminalization is a moral response, but you’d struggle to argue that it doesn’t strip criminal networks of funds that pay for other illegal activity or that it doesn’t produce economic gains (tax) instead of economic losses (the cost of law enforcement, etc) for the nation. Moreover, you couldn’t dispute that if a law enforcement response fails, a government has the right to consider this legislative fallback.

Accept this premise, and it becomes clear just how different the cyber scamming industry is. For starters, it isn’t merely a shadowy, unregulated cousin of a legal industry. There is no such thing as legal scamming, certainly not of the “pig-butchering” variety common in Southeast Asia. Because of this, a government cannot simply make cyberscamming legal. Therefore, there is no legislative fallback, meaning the only response is law enforcement.

Since law enforcement is the only way to tackle the problem, let’s consider the three options for doing so. One is an overwhelming, probably unlawful campaign against the scammers. Think of the recent El Salvadorian approach to drugs. Basically, build dozens of prisons and detain or murder anyone you think might be associated with scamming. But it’s difficult to imagine this happening since no country in the region affected by the scam industry has a police force capable of doing so and because there’s zero political will for this. Why would governments want to end an activity that puts millions of dollars in their own pockets? What self-respecting politician or tycoon in Cambodia, Laos, or Myanmar would miss the opportunity of getting involved in a $12 billion industry?

I would claim that the only effective way of tackling the industry would be for Southeast Asian governments to permit Chinese police to operate freely and extensively inside their borders. (Such a possibility obviously has some support in Beijing since it was the heroic climax to the Chinese blockbuster film “No More Bets,” which passed approval by the censors.) Yet, it’s a pointless debate. The opprobrium it would cause amongst the local populations (who are already on edge about anything that looks like Chinese colonization) and the vehement opposition from the United States means it isn’t going to happen.

That leaves two options. Either you harass and intimidate the scammers so that the weaker outfits unaffiliated with politicians or local oligarchs leave your country. This happened in August when the Lao police gave advance warning to scammers inside the notorious Golden Triangle Special Economic Zone, a near-autonomous region run by the Chinese mafioso Zhao Wei. After he met with Lao authorities early that month, the police raided his economic zone, but many of the scammers had been forewarned of the bust, most relocating to Cambodia and Myanmar. Likewise, scammers in the Philippines relocated to Cambodia after some busts this year. Granted, this isn’t an ideal regional response, but when have Southeast Asian countries ever put solidarity above self-interest?

Alternatively, you allow the cyber-scamming industry to be consolidated by one or two main outfits. Consolidation means law enforcement can go after the weaker, unaffiliated outfits, leaving politicians and their go-betweens to parley with the kingpins. The rationale is that a compliant industry boss, knowing their business will be left unmolested, will limit the antisocial behavior that ensnares the wider public and the other “excesses” of the industry, such as human trafficking and slave-like working conditions. According to my sources, this appears to be the favored response in Cambodia, where most of the scamming industry is being consolidated by Chen Zhi, a naturalized Cambodian citizen who owns the vast Prince Group conglomerate.

The problem with this response is that it’s essentially no response at all; it’s neither a law enforcement approach nor a legislative one. It leaves government wallahs begging the criminals to reform their excesses on the condition that tithes are paid to the political aristocracy. Moreover, it only makes sense for narco-states in Latin America, where politicians know that someday they could simply legalize the narcotics trade. Without this option, governments would have no fallback if the compact with criminals fell apart. Worse, it means the dominant cartel grows ever more wealthy and influential, and the entire state becomes maggoty by its riches. Cambodia, for instance, is well on its way to becoming the world’s first “scam state.”