Southeast Asia’s rampant scam industry still morphing, adapting despite Beijing flexing its muscle

BANGKOK: The joint crackdown by Thailand and China on transnational scamming operations in Myanmar’s borderlands is unlikely to stem the “booming” criminality expanding across the region, analysts say.

The criminal groups, reportedly mostly Chinese-run, operate throughout Myanmar, as well as in Cambodia and Laos.

They are believed to generate tens of billions of dollars each year, using an army of often-enslaved individuals from around the world.

Individuals typically promised well-paying IT jobs are being coerced into pulling off an array of online trickery, from real estate schemes to WhatsApp and Facebook deceit and dating deceptions that evolve into fake investment plots.

They are being held in elaborate compounds operating both in lawless swathes of cleared former jungle and in the heart of regional cities.

Experts told CNA that under pressure from China, Thailand ramped up its efforts in recent weeks, switching off electricity and telecom access to scamming compounds in Myawaddy, across the border in Myanmar.

The power cuts in early February coincided with Thai Prime Minister Paetongtarn Shinawatra’s visit to China from Feb 5 to 8, where she was reported to have discussed the scam issue with Chinese President Xi Jinping.

Thailand also deployed military personnel at border crossings used by criminal groups and issued arrest warrants for key leaders of the militias that control various parts of war-torn Myanmar that also accommodate the compounds.

Following those moves, thousands of compound workers were released from captive scam operations in the Myawaddy area, close to the Thai city of Mae Sot. 

The first planes repatriating freed Chinese citizens departed later that month. Several thousand people of other nationalities await repatriation in camps on the Myanmar side of the border.

While Beijing has been ratcheting up heat on crime compounds in recent weeks in southeastern Myanmar, experts say it is likely focused on rescuing its nationals caught up in the industry and targeting criminal actors scamming people within China.

“There's no reason, from what we've seen yet, to say that this is going to yield anything like reform or a substantial reduction in operations,” said Jacob Sims, the founding partner of Operation Shamrock, a movement dedicated to disrupting the global “pig butchering” epidemic. 

Pig butchering refers to love-and-investment scams in which the scammers groom their victims over a period of time.

“China's response here – and I don't mean to criticise it because it's the only really effective response on any level – seems to be pretty reactive to domestic pressures,” he said. 

Thailand too, experts said, is more likely focused on immediate political considerations and economic struggles compounded by the scam compound border crisis, rather than attempting a sweeping clean-up of what the United Nations Office and Drugs and Crime (UNODC) describes as “one of the largest coordinated trafficking in persons operations in history”.

KIDNAPPINGS AND SOCIAL MEDIA UNREST

The crackdown by both countries followed the high-profile kidnapping of Chinese actor Wang Xing, who was lured to a Myanmar scam compound when visiting Thailand in January. 

Pleas for his release went viral on Chinese social media, which in turn prompted negotiations between Thai and Myanmar officials and his subsequent release.

Since then, both countries have had mutually beneficial reasons to be seen to be playing their part in a crackdown, said Nathan Paul Southern, operations director at the EyeWitness Project, which conducts investigations of the scam industry throughout the region.

“Thailand doesn't want to be seen as unsafe or posing a high risk of kidnapping, and China wants to project to its citizens that it can also protect them,” he said.

Thailand, whose largest source of tourists is China, has been left hostage by these public image concerns and this has forced the government to act, said Jason Tower, the Burma country director at the United States Institute of Peace (USIP).

Thailand welcomed 6.7 million Chinese visitors last year and the Thai tourism ministry aims to increase the figure to 9 million this year.

In the wake of Wang Xing’s kidnapping, the Tourism Authority of Thailand reported that some 10,000 Chinese tourists cancelled their visits over the Lunar New Year period.

“Thailand's GDP relies a lot on tourism, and the Chinese tourists constitute a very big proportion of the overall tourism industry,” said Joanne Lin, senior Fellow and co-coordinator of the ASEAN Studies Centre at Singapore’s ISEAS-Yusof Ishak Institute.

“Definitely, Thailand's economic interests are at stake. And it is under a lot of pressure from China,” she said.

At the same time, Beijing remains focused on being seen by its own people as a disruptive force, pulling the strings and ensuring that something of a blitz on crime was happening, according to Southern.

“Nothing is getting shut down unless it's coming from Chinese orders and that has been the case from day one with this,” he said, a view that experts CNA spoke to agreed with.

“Usually the reason is if it's Chinese language scams targeting Chinese victims or forced labour. So, if it's becoming an embarrassment or a security issue for China, then they will insist on shutting down those scam sites,” Southern said.

Notably in February, China’s assistant minister of public security Liu Zhongyi became the first official of a third country allowed to cross the Thai border to Myawaddy since the 2021 coup in Myanmar, to observe the crackdown on the scam compounds.

Sims called the moves a “good shot across the bow” for the criminal syndicates on the other side of the border.

But since the show of force last month, their operations have continued almost uninterrupted, he said, citing activities observed at the compounds from Thailand.

“It's not stopped. It's moved to other compounds that are rapidly developing further down the river and it's growing everywhere in the region. And I think the world really needs to not take its eyes off this,” Southern said.

While this latest crackdown may have sent a message to criminal actors, the fact they have not been properly shut down is proof that public optics and politics remain the priorities in both Bangkok and Beijing, according to Mark Cogan, an associate professor of peace and conflict studies at Kansai Gaidai University in Osaka.

“There needs to be a face of accountability,” he said. “But whether or not that's going to lead to the erasure of criminal elements, well, good luck with that.”

PUSH FOR SECURITY CONCESSIONS

Thailand has seen criminal elements grow along its porous border for years.

Despite the mushrooming of elaborate complexes and kidnappings of victims across its border, the government has “made very, very little effort” to take measures to disrupt the activities”, according to Southern, citing lack of controls over border areas and infrastructure and resources used by criminal actors.

Now, regional dynamics means the calculus for taking at least some action has changed, Cogan said. 

Myanmar is a different place compared to five years ago – transnational crime has reportedly dramatically expanded, militias hold more territory, especially in border areas, and the military junta has a loosened grip on the country. 

That has impacted Thailand’s top-level cooperation with its neighbour – ties were closer with Myanmar’s junta during the military-fronted administration of Prayut Chan-o-cha, compared to the current leadership of Paetongtarn Shinawatra.

Now, the current prime minister is under more public scrutiny to be seen as tough on a scam crisis where Thai nationals are being targeted, at a time where the country’s economy is also slumping, Cogan said.

That economic precariousness will also invite more requests from Beijing to cooperate on security matters to help solve the problem and repatriate the thousands of Chinese still being held close to the Thai border, he believed.

Tower said it was unsurprising that Beijing is using the opportunity of a border crisis and rampant criminal activities to call for more joint operations and intelligence sharing, “which has been a stated objective of the Chinese side for a couple of years now”.

President Xi has been promoting China’s Global Security Initiative (GSI) since 2022. The framework policy proposes reforms of global security, which in effect can help protect its overseas interests.

Several countries in Southeast Asia have formally endorsed the initiative, including Cambodia, Laos and Myanmar. Thailand has been more cautious, only expressing a willingness to explore cooperation under the GSI.

“Chinese pressure here and the Chinese demands for security influence are quite significant,” Tower said.

Signs of Beijing’s increasing security influence in Thailand have already emerged. Away from the border, after years of resistance, the Thai government last month relented and allowed for the deportation of 40 ethnic Uyghurs to China.

“The repatriation of illegal migrants is normal under the immigration law,” said Thailand’s national police chief Kittharath Punpetch. He said the government was assured by Beijing that those repatriated would be cared for. Paetongtarn did not comment on the reasons for the decision.

Russ Jalichandra, Thailand's vice-minister for foreign affairs, said despite other nations offering to take in the group, "Thailand could face retaliation from China that would impact the livelihoods of many Thais”.

The United States responded by announcing visa sanctions on Mar 14 against officials from Thailand, a US ally, for their role in the deportation. Washington says the members of the Muslim group will face persecution.

“In order to reset the public safety concerns, Thailand is having to make some pretty considerable concessions to the China side,” Tower said in reference to the release of the Uyghurs.

Beijing has also been pushing for closer connections on law enforcement. Leaders of both countries signed a bilateral agreement in February to enhance their law enforcement cooperation, including along shared borders with Myanmar.

“The two sides must continue to strengthen cooperation in security, law enforcement and judicial cooperation” in order to “protect people’s lives and property”, Xi said during talks with Paetongtarn in Beijing.

In 2023, the Thai government also discussed a proposal to allow Chinese police officers to patrol tourist areas alongside Thai officers, a scheme that was shelved after public backlash.

Comparatively, in Cambodia, the China-Cambodia Law Enforcement Cooperation Coordination Office was set up in 2022, giving Chinese authorities a foothold in the kingdom.

China also has a strong security presence around the Golden Triangle area, a border zone known for various organised criminal activity between Thailand, Myanmar and Laos.

Tower said Thailand was being pressed to make more concessions and could not afford to put itself in a “weaker position with respect to China”.

“I think there's a risk for Thailand, if it doesn't take that leadership role, that there could be further events that would trigger an even greater response and greater pressure from the China side and that's maybe one thing that's also incentivising a greater Thai crackdown on these issues,” he said.

Thailand has to be pragmatic about ties with its biggest trading partner, especially given the vacuum of American leadership and influence in the region following the re-election of Donald Trump, said Lin.

“With Trump 2.0, we will see that China's influence will definitely grow in Southeast Asia. There’s no doubt about it. Thailand is pivoting to China even more,” she said.

EYES OFF CAMBODIA?

More complex security issues swirl in Myanmar, making it more difficult for its neighbours to make a dent in the crime groups thriving amid instability. 

China still has a sizeable problem on its southern border with Myanmar; regions that are largely controlled by militias remain havens for scamming.

The vast majority of Chinese nationals identified as missing people in Myanmar were taken across the international divide from Yunnan and Guangxi, not from Thailand, according to analysis from USIP.

And while Beijing has cooperated with the State Administrative Council, the junta’s governing arm, to crack down on these crimes, the muddled nature of control there is making the situation complicated, Lin said. 

Through proxies and networks with ethnic rebel groups inside Myanmar, Beijing has shaped multiple offensives against scamming compound operations there. 

It is an ally of the SAC, but the junta’s role in illicit activities is another factor causing a “lack of trust”, said Lin.

“We know that the Chinese government really needs the cooperation from the military junta. But then, on the other hand, there are groups that are linked to the military junta that are supporting these scam operations,” she said.

With Beijing’s eye on negotiations and operations with various militias in disparate parts of Myanmar, experts agreed the scamming business is going largely unchecked elsewhere - namely in Cambodia, where more than 150,000 people are estimated by aid organisation USAID to be ensnared by the scamming industry, generating some US$12.5 billion annually, according to USIP.

That growing figure means scamming now generates more revenue than Cambodia’s otherwise largest export industry, garments. It is worth nearly four times that of the tourism sector in the country.

Southern told CNA that his monitoring of chat groups used by syndicates in recent weeks revealed criminal actors are actively seeking to shift more operations from Myanmar to Cambodia, where scrutiny is lower and crime groups work without fear of being shut down.

“The only place in the region where they tend to just be operating out in the open, in the middle of the capital city, is in Cambodia,” he said after multiple investigations of various compounds throughout the country, including in Phnom Penh.

“Without the Chinese pressure to crack down right now, it's just growing at an alarming rate here,” he said.

While the government has created task forces, assisted efforts to rescue hundreds of individuals on the Thai-Cambodian border last month and amended legislation to tighten rules on gambling, experts say criminal activity continues to flourish. 

“The criminal actors now have so much influence in Cambodia that basically they've become untouchable,” Tower claimed.

The Cambodian government denies it is a haven for syndicate activity, blaming foreign media and NGOs for painting a bad image of the country.

A US state department report last year found that Cambodian officials were “undermining anti-trafficking law enforcement and victim protection efforts and dispelling reported accusations through minimisation and denial in public messaging of the prevalence and severity of online scam operations, including reports of government complicity”.

But Chou Bun Eng, permanent vice-chair of Cambodia's National Committee for Counter Trafficking, has told local media on several occasions that at least 80 percent of reported human trafficking cases investigated by authorities were false.

Cambodia is rated, however, as one of the most corrupt countries in the world - according to Transparency International it fell to 158th out of 180 nations by perceived levels of public sector corruption last year.

Several Cambodian tycoons, including government senators, have been implicated for their role in facilitating online scam operations through properties they own or management of special economic zones where crimes were identified to be taking place.

For example, operations were uncovered on properties owned by Ly Yong Phat, an advisor to Hun Manet, the Cambodian prime minister.

Ly was sanctioned by the US government in September last year for his role in “serious human rights abuse related to the treatment of trafficked workers subjected to forced labor in online scam centres”.

The Global Organized Crime Index has found that Chinese nationals in the country have been linked with extortion, protection racketeering, human trafficking, drug trafficking and money laundering through casinos and construction projects. 

For now though, Sims says Cambodia is staying out of Beijing’s crosshairs because of the way criminal groups cleverly operate.

“Cambodia is more effectively pivoted away from Chinese scam victims. And they've been able to do that because it's more centralised. It's a smaller number of people at the top calling the shots,” he said.

He said that China also takes a more pragmatic approach to dealing bilaterally with the Cambodian government, which is “less vested in decriminalising Cambodian political and economic structures, which it has no way of doing”. 

“Certainly China is militarily and geopolitically strong enough to twist Cambodia's arm into doing that, but they know that by doing that, they would destabilise their bilateral relationship with them,” he said.

NEW VICTIMS IN THE ENGLISH-SPEAKING WORLD

China’s outsized influence in shutting down criminal activities is resulting in a “diversification” in the way scams are being carried out, experts say.

Every time China ramps up its efforts to control the industry, the target shifts away from Chinese victims to other people around the world, Sims said.

He is already observing that syndicates are altering their priorities - and the people they traffic to carry out scams - increasingly to target English speakers, as well as victims in India and Africa. 

“Obviously there's some market incentives for diversification. But the most significant chance of facing accountability seems to be if you're targeting Chinese people,” he said.

Very little outside pressure or sanctions have yet arrived from other world governments on those facilitating or sheltering these crime groups across the region.

If no action comes soon, it could heighten the risk of the scam industry morphing to further impact distant countries without the means to combat it, experts agreed.

“If in the next few months, a few key figures aren't sanctioned by Western countries, then it's beginning to seem like there really is no limit for what these criminal syndicates can do, and they can just keep growing,” Southern said, referring to notorious crime figures in Myanmar and Cambodia.

Much has been left to Thailand, which is attempting to resolve its border issues and the mass repatriations of trafficking victims.

It is considering a 50km wall at its border with Cambodia to curb illegal crossings.

On the Myanmar-Thai border in Mae Sot, Judah Hira Tana, the international director of Global Advance Projects is watching on as thousands of victims continue to languish in camps, while Chinese nationals have been bundled onto flights home after being released.

“We really need to see governments engage in this region and come down and show that they're here ready to respond and be responsible for their citizens,” he said.