Myanmar authorities recently seized 35.5 tons of drugs and chemicals in Shan State—a haul worth hundreds of millions of dollars—but the bust will have little impact on Southeast Asia’s expanding crime syndicates. The crackdown shows the drug trade is only becoming more deeply entrenched in the region’s economy.
In what may be Southeast Asia’s largest drug bust, authorities in Myanmar have announced the seizure of 35.5 tons of methamphetamine and other drugs and 163,000 liters of precursor chemicals in northeastern Myanmar’s Shan State. The seizures, worth hundreds of millions of dollars, took place in the area around Kutkai township between February 20 and April 9.
Drug labs in Shan State have become a primary source of narcotics for the entire Asia-Pacific region in recent years. An international investigation recently identified the dominant force behind this trade as a single crime syndicate known as Sam Gor. There are no reports as to whether the recent seizures are connected to this organization, but from what authorities have disclosed, Southeast Asia’s drug syndicates are producing and trafficking drugs on such a scale that a few dozen tons are an acceptable loss.
The operations in Shan seized 193 million “yaba” methamphetamine tablets—nearly 18 tons of meth—as well as over 500 kilograms of crystal meth, 630 kilograms of ephedrine, 588 kilograms of opium and 292 kilograms of heroin. The quantity of methamphetamine found is nearly double the total amount seized by the Myanmar government in 2018 or 2019.
Authorities also seized over 3,500 liters of liquid methylfentanyl, which is used to make fentanyl, a deadly synthetic opioid that is reportedly fifty times stronger than heroin and lethal in doses as small as two milligrams. Fentanyl was partially to blame for three drug overdoses in Bangkok late last year. The incident has led some to believe that fentanyl is now in the heroin supply of the Thai capital.
“We can today confirm that drug production and trafficking in and through Shan is not what some have been thinking; it is more than meth tablets and crystal and has evolved to synthetic opioids on a scale nobody anticipated,” said Jeremy Douglas, the UN Office on Drugs and Crime (UNODC) Regional Representative for Southeast Asia and the Pacific.
UNODC estimates that the Asia-Pacific methamphetamine trade could be worth US$61.4 billion per year—not far behind Myanmar’s GDP of $71.2 billion. For drug producers involved in a business of that scale, the loss of a few hundred million dollars may do little to slow them down. While the recent seizures are laudable, they suggest that drug syndicates and traffickers are only becoming stronger and more deeply entrenched in the region’s economy.
Crackdowns do little to slow Southeast Asia’s drug business
Myanmar’s attempts to crack down on drug production in Shan State have largely been futile. Raids yield few arrests and often appear as though someone tipped off the traffickers before authorities arrive.
In March, the Myanmar military seized US$64 million in narcotics, chemicals and equipment in Kutkai’s Kaungkha Village. The drugs were found in empty buildings and no one was arrested. “It is difficult to say who those drugs belong to,” military spokesperson Brigadier General Zaw Min Tun told the media after the bust.
Authorities have arrested more than 130 people in connection with the recent record-setting drug busts, but this is a small price for traffickers to pay to keep the profitable trade moving.
“Even though the operation in Kutkai township [resulted in] the military seizing over a million [dollars] worth of drugs, business is still booming and prices are still falling,” U Tin Maung Thein, of Shan State anti-drug trafficking group Mana, told Radio Free Asia.
Profits soar for the multinational syndicate behind Southeast Asia’s drug trade
According to a Reuters account published last October, the Sam Gor syndicate now mass produces synthetic drugs in labs in northeastern Shan State using precursor chemicals smuggled over the border from China. The UNODC estimates that this single syndicate may bring in as much as US$17.7 billion per year and likely controls 40-70% of the region’s wholesale methamphetamine trade.
As Richard Horsey, an analyst at the International Crisis Group, wrote in a report last year, “The trade in ice, along with amphetamine tablets and heroin, has become so large and profitable that it dwarfs the formal economy of Shan State, lies at the heart of its political economy, fuels criminality and corruption and hinders efforts to end the state’s long-running ethnic conflicts.”
New UNODC report documents expanding trade
The announcement of the seizures come on the heels of a new report from the UNODC on the expansion of the synthetic drug trade in Southeast Asia. According to the report, supplies of synthetic drugs in the region are increasing dramatically and the price of methamphetamine is at its lowest in a decade.
“In short, organized crime groups are in a position to provide better quality methamphetamine at much cheaper prices compared to a decade ago, increasing affordability and harm at the same time”, said Inshik Sim, a UNODC illicit drugs analyst.
“While the world has shifted its attention to the COVID-19 pandemic, all indications are that production and trafficking of synthetic drugs and chemicals continue at record levels in the region,” said Douglas.
In 2019, authorities in Southeast Asia seized a total of 115 tons of methamphetamine, but this figure doesn’t include data from Japan or Australia, the destination markets for much of the region’s narcotics trade.
UNODC also reports that the variety of narcotics in the region has increased, in part due to the popularity of new synthetic opioids. Before 2014, the agency identified only three opioids in the region; in 2019, it recorded 28 different opioids.
Southeast Asia’s drug trade has grown rapidly in part because producers have switched from opium to synthetic drugs. Synthetics, manufactured in labs, are easier to produce and the potential profit margins are astronomical. In northeastern Myanmar, a kilogram of wholesale crystal meth may sell for US$1,800, according to the UNODC. In Thailand, that same kilogram will sell for $70,500. In Australia, it’s worth $298,000 and in Japan, it could net traffickers $588,000—300 times the wholesale price.
Myanmar’s drug trade fuels armed conflict
An increasingly profitable drug trade also doesn’t bode well for Myanmar’s ongoing civil wars, as some ethnic armed groups rely on income from trafficking to purchase arms, hold territory and pay fighters.
“There isn’t a thriving licit economy that will make you the kinds of money that you need to sustain fighters. So you turn to illicit: resource extraction, logging, money laundering and, of course, illicit narcotics,” said Horsey in an interview with NPR last year.
Some of the militias involved in drug production in Shan State are backed by the Myanmar military. In Kutkai, where the recent mass seizures took place, the Kaungkha militia provides security and support for drug producers with the blessings of the sitting speaker of Myanmar’s Union Parliament, T Khun Myat.
But at the same time, the military has allegedly identified the Kaungkha militia as a key financial partner for ethnic armed group the Arakan Army (AA). The AA has been involved in ongoing fighting with the Myanmar military since January 2019. The fighting in Rakhine State has displaced hundreds of thousands of people and led to nearly constant reports of killings and detentions of civilians.
In April, a report published by Jane’s Terrorism and Insurgency Monitor said that the Myanmar military had identified a drug trade partnership between the AA and the Kaungkha militia. Through the partnership, the drug trade has become “the key generator of the tens of millions of dollars required to recruit, train, and equip an insurgent army.”
The report also alleged that the Myanmar military’s Northeastern Command has been aware of the militia’s involvement in the drug trade for years and has “almost certainly” profited from the trade.
The militia was once part of the Kachin Independence Army (KIA) in northern Myanmar and received backing from the military after it split off from the armed group. In March, however, the military detained some of the group’s leaders and seized 2,000 of its weapons. According to Myanmar military spokesperson Brigadier General Zaw Min, the military disarmed the group over its involvement in the drug trade.
This back-and-forth is typical of Myanmar’s response to the drug trade in Shan State and it does little to curb a multibillion-dollar business. Though the recent seizures and arrests may show the Myanmar military and police are ramping up enforcement efforts, these efforts won’t substantially affect groups like the Sam Gor syndicate.
“What has been unearthed through this operation is truly off-the-charts, and it is clear that a network of production facilities like those found would not be possible without the involvement and financial backing of serious transnational organized criminal groups”, said Douglas of the recent busts.