Asia-Pacific countries can do more to combat illicit trade: EuroCham

SINGAPORE — Policymakers in Asia-Pacific can do more to combat illicit trade in the region, such as enhancing the oversight of free trade zones (FTZs), having tighter public-private collaborations and improving intellectual property rights protection, Singapore’s European Chamber of Commerce (EuroCham) said on Wednesday (Oct 12).

Its call came after it launched the Illicit Trade Environment Index yesterday, which measures how well countries do in keeping illicit trade at bay. The index, created by the Economist Intelligence Unit (EIU), was commissioned by EuroCham.

Singapore came in joint-seventh-best with Taiwan among the 17 economies involved in the inaugural study. The Republic was dragged down by the weak governance of FTZs and its authorities’ perceived lack of cooperation with the international community and private sector.

Insufficient oversight of FTZs is a major enabler of illicit trade, allowing illegal goods to be repackaged and relabelled to appear legitimate, a EuroCham report based on the index’s 
findings found.

Illicit trade is the production, movement, purchase, sale or possession of goods, such as counterfeit products and endangered wildlife. 

The report noted that in Singapore FTZs, “neither Singapore Customs nor any other government authority is a consistent presence”. 

“The surprise on the downside, or the underperformer on the index, is Singapore. It’s about striking a balance between trade facilitation, which is the efficient movement of goods and containers through ports, and monitoring for illicit shipments. Right now, Singapore is not achieving what we think the balance is,” said Mr Chris Clague, the EIU’s senior editor, industry and management research, and author of the report.

To improve its governance of FTZs, Singapore can take several steps, such as implementing a track-and-trace system, and requiring FTZs’ users to report product movement and reconciliation, said Mr Simon Jim, chairman of EuroCham’s Committee on Intellectual Property Rights (IPRs).

In response to media queries, a Singapore Customs’ spokesperson said it is more effective to adopt an intelligence-led approach to track suspicious shipments, given the immense volume of transhipment trade passing through the country.

“Singapore is committed to do our part in ensuring the security of the global supply chain. Singapore’s domestic laws apply within the free trade zones, and normal trade and customs requirements are in place for goods imported into or exported from Singapore,” the spokesperson said.

“We have and will continue to take regular and active enforcement actions to combat illicit trade in IPR infringing goods, by collaborating with rights holders, other local authorities and in joint operations with foreign customs administrations and international law enforcement organisations.”

Despite the weaknesses pointed out by the report, Singapore still ranks above most of its South-east Asian counterparts, many of whom are found to be ill-equipped to combat illicit trade.

Australia topped the index with the best environment for preventing illicit trade, followed by New Zealand. Hong Kong, once a hub for counterfeit goods, was third. Cambodia, Laos and Myanmar occupied the bottom of the rankings. 

Mr Clague said the flow of illicit trade into South-east Asia is set to grow as rising labour and other costs in China will see some manufacturers move their operations to other countries in the region.

Ms Lina Baechtiger, EuroCham’s executive director, said: “Illicit trade has a huge impact on all of our brand owners, it represents for them a big financial burden and reputation loss, and has an impact on society as a whole. It is, for example, a health hazard when we talk about counterfeit pharmaceuticals or food products ... It is also a huge loss in government tax revenue and, finally, it allows the funding of transnational crime networks and terrorism.”