Ice and Instability: Illicit Financial Flows Along Thailand’s Borders

By Nickii Wantakan Arcado

Every year, illegal goods trading and narcotics smuggling generate billions of dollars of illicit financial flows within Southeast Asia. Methamphetamine seizures alone hit an all-time high in 2021, reaching 1 billion pills and nearly eight times the weight of seizures a decade ago. The Asia-Pacific drug trade is estimated to be worth as much as $61.4 billion annually, with more than 90 percent of tablets seized in Asia originating from four countries: Thailand, Myanmar, Cambodia, and Laos.
Thailand has consistently ranked first in drug-related arrests and methamphetamine seizures in East and Southeast Asia. The country made one of its biggest seizures of heroin last year, confiscating 694 pounds of heroin worth up to 944 million baht ($29 million) bound for Australia. The country’s reliance on traditional law enforcement operations and seizures, however, has led to little progress in shrinking the narcotics trade amid a pandemic-related supply glut and instability along the Thai-Myanmar border. Organized crime groups and illicit financial networks have thrived in the abnormal situation.
Organized crime networks have proven highly resilient to tightened border patrols, adopting new tactics to capitalize on the repercussions of the pandemic. Pandemic-related government lockdowns and travel restrictions contributed to long-term unemployment and reduced purchasing power, increasing the trade and consumption of illegal drugs. Thailand’s strained vaccine supply chain and slow and inefficient vaccine rollout created an opening for illicit suppliers to enter the pharmaceutical market to meet increasing demand. Criminal syndicates preyed on Thailand’s poor and sick by pushing counterfeit Covid-19 products through social networks on Facebook, Twitter, and LINE.
In contrast to the rise of meth seizures, interceptions of chemical precursors (ingredients) of methamphetamine, such as pseudoephedrine and ephedrine, have fallen. Drug traffickers have grown more creative in exploiting loopholes in Thai customs laws, either buying meth powder from large networks and pressing tablets themselves or by acquiring “pre-precursors.” Pre-precursors are legal in normal commercial use and allow crime syndicates to bypass stringent chemical controls, allowing them to diversify their manufacturing base and circumvent high surveillance regions, including the borders of eastern Myanmar, northern Thailand, and western Laos, also known as the “Golden Triangle.”
Drug syndicates have also capitalized on weak law enforcement cooperation along the border, a symptom of corruption and lack of capacity. Despite orders from the central government, there has been weak enforcement of official checks and controls along the northern border of Thailand. Money laundering activities are pervasive, a consequence of the country’s highly centralized governance and fiscal system and a non-existent tax system. The combination of isolated terrain with a multitude of problems, including both a pandemic and a migration crisis, has led to a lack of incentive to shun corrupt money-making activities. Despite efforts to heighten border security, the lack of will to enforce such measures at the local level reduces their effectiveness.
The drug trade also finances both sides of the fighting in Myanmar. Profits from illicit narcotics have become so lucrative that they outpace the formal economy in Shan and Kachin States, and the autonomous Wa Self-Administered Division. Billion-dollar “super labs” producing crystal meth, also called “ice,” have thrived since the 2021 coup, operated largely by insurgent groups. Agreements with Myanmar’s military have also allowed pro-government militias to stay insulated from law enforcement, granting them more leeway to pursue criminal activities. Neither side is incentivized to demobilize, given that territorial control and the absence of state investment and institutions are essential to maintaining narcotics revenues. 
Efforts to tighten security along the Thai-Myanmar border have resulted in criminal groups diverting their trafficking routes to the less-guarded border between Thailand and Laos. A growing share of illicit goods now travels through Laos before moving along the Mekong River into Isan, the northeastern region of Thailand. Of the top 10 provinces for seizures in 2021, Isan alone accounted for 49 percent of ice and 39 percent of meth tablet seizures—four times the amount seized in 2019 and 2020 combined. With Isan being the country's poorest region, smuggling rings have recruited couriers and middlemen from marginalized northeastern communities with ease. Meanwhile, unprecedented levels of production of meth pills have led to wholesale and street prices plummeting to as low as 10-20 baht (28-56 cents) per tablet, posing great social consequences for a region that has limited health and harm reduction services. The Mekong Delta and the Isan region have also been exploited to illegally traffic wildlife products and weapons.
Cross-border cooperation is key to setting priorities and rebalancing law enforcement strategies and approaches. The United Nations Office on Drugs and Crime (UNODC) Mekong Memorandum of Understanding on Drug Control has provided Thailand, Laos, Vietnam, Myanmar, Cambodia, and China an operational platform to address drug smuggling and other related challenges, including human trafficking and transnational terrorism. Intelligence-sharing and cooperation under the Mekong Memorandum has allowed the Thai Border Patrol to implement more effective customs operations, border policing, and immigration inspections.
As criminal networks grow more sophisticated, the technology required to monitor their movements will need to adapt accordingly. Analytical-centered approaches that reinforce law enforcement coordination through maritime domain awareness or bilateral law enforcement training provide a geospatial edge in combating illicit financial flows and continue to be a large component of the U.S.-Thailand strategic alliance and partnership. Reflecting the United States’ growing role in assisting Thailand’s fight against drug smuggling, the U.S. State Department’s International Narcotics and Law Enforcement Affairs Office donated around $370,000 worth of equipment to police in the northeastern border region. UNODC’s Global Maritime Crime Programme has also helped bolster the Royal Thai Navy and Royal Thai Marine Police’s efforts to crack down on maritime meth routes in the Andaman Sea and the Gulf of Thailand by providing them with monitoring and identification systems to track the activities of illegal vessels.
In early June of this year, the Thai government introduced a decriminalization law to combat the illegal cannabis market—and make a profit out of it. While the bill has been pulled for additional parliamentary revisions, at the center of decriminalization is the hope that economic benefits will boost national income. Allowing farmers to monetize the plant as either a medical commodity or cash crop, especially in Isan, could prove a useful strategy in reducing reliance on illicit cultivation or chemical precursor trading. Additionally, a subfield that has rarely garnered attention when discussing illicit finance in Southeast Asia is the need for tax autonomy. Tax revenues allow local governments to sustain their operations and address local-level needs, contribute to poverty reduction, and disincentivize illicit economic exchanges. The tax pillar within the Indo-Pacific Economic Framework, of which Thailand is a participating member, may also have a promising effect on enacting and enforcing effective taxes as well as cracking down on money laundering or corruption schemes.
Thailand’s war against illicit trade cannot be fought using strict enforcement tactics alone but must be supplemented by policy interventions at home and regionally. Concerted efforts between Thailand and the wider ASEAN community—with support from the United States and other key partners—are needed to combat illicit markets before they become irreversibly entrenched in local economies and grow too big to fail.

Nickii Wantakan Arcado is a research intern with the Southeast Asia Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C.