Counterfeiting and Illicit trade in ASEAN

A new report called Tackling Illicit Trade in ASEAN Advocacy Paper, 2020 by the EU-ASEAN Business Council and the Transnational Alliance to combat Illicit Trade (tracit.org) sets out some stark data on how counterfeits fit into the illicit trade world. 

Illicit trade comprises all kinds  of cross border illegal trade from smuggling, to narcotics to wildlife and of course counterfeit goods are a major part of this. The problem comprises both into ASEAN region trade and intra ASEAN member states.  Some key features of the report relevant to anti-counterfeiting are set out below:

• Covid has had an impact in 2020 – 150,000 counterfeit 3M masks were seized in July 2020 in Vietnam. Philippines Customs reports $5M of counterfeit medical and PPE products this year.
• Ecommerce is a huge driver of the counterfeit trade. The  UNODC reported 2500 websites offering counterfeit sanitizer, masks and medical supplies. Major ecommerce sites like Shopee, Lazada, Topkopedia and Bukalapak are criticized by the US and EU for failing to tackle unauthorized sellers, counterfeit goods, rogue domain names and false advertisements. Hidden trader identities are a major barrier to stopping the problem. The boom in small-parcel postal services is the main delivery mechanism.
• Pharmaceuticals – the tarde in counterfeit pharma products is estimated to be $4.5 bn today. The problem is especially bad in Indonesia, with a growing online sales challenge. The Pharmaceutical Security Institute reported on 673 cases in Philippines, Thailand and Indonesia.
• Some sectors like tobacco and alcohol are hit by the triple whammy of smuggling, counterfeiting and refilling, leading to massive government tax losses (JTI estimates Malaysia lost RM1 billion in cigarette tax in 2020). The WHO asserts that ASEAN has the highest illicit (smuggled, refilled, counterfeit) liquor consumption in the world – a massive danger to consumers.
• Particular consumer sectors suffering from counterfeits in ASEAN include toys and auto parts, with these cases almost always being imports from China – according to examples like counterfeit BMW parts in Thailand.
• Agrochemical counterfeits are largely sourced from China and India according to seizures in Cambodia, Vietnam Malaysia, Philippines and Thailand. Many are very dangerous.
• China remains the main counterfeit goods source due to its proximity and shippers’ use of Free Trade zones to support the trade. Local counterfeit manufacture occurs in Malaysia, Thailand and Vietnam, including repackaging.
• The total counterfeits market in Southeast Asia is estimated to be worth $40Bn
• Weak enforcement mechanisms, poor sanctions and low Customs seizures in ASEAN countries make counterfeiting easy and attractive for criminals

The full report is available here