The Pandemic and Southeast Asia’s Illicit Drug Economies

By Diana Kim

April 5, 2021

A year has passed since the COVID-19 pandemic began.[i] Narratives of change and transformation prevail in our ways of explaining the pandemic’s significance and impact. However, one activity that appears to defy this perspective is the illicit drug economy of Southeast Asia.

Observers of the region have noted a striking stability that is exemplified in three interrelated trends. First, drug production and supply continues.[ii] In May 2020, one analyst noted that “there has been no change in the street price of methamphetamine in Bangkok or Manila… the biggest market for the substance in Southeast Asia,” suggesting “no impact on its availability in the market.”[iii] In early 2021, the UN Office for Drugs and Crime (UNODC) reported an 11% reduction in the Shan States’ poppy cultivation area, continuing what has been an ongoing trend since 2015, alongside the steady expansion and diversification of the synthetic drug market.[iv]

Second, major drug cartels remain in business. Perhaps best known is the Sam Gor syndicate, whose recently arrested leader Tse Chi Lop has been called “Asia’s El Chapo” or the head of “the biggest drug-trafficking operation in Asia’s history.”[v] Experts agree that COVID-19 did little to disrupt the operations of Sam Gor and other transnational criminal organizations that have not only successfully kept open laboratories for crystal meth in the Golden Triangle region but also maintained robust supply chains.[vi]

Third, while in some countries like Niger, Italy, and parts of Central Asia, government efforts to contain the pandemic’s spread through international border closures and restrictions on domestic travel appear to have led to observed reductions in drug trafficking and fewer seizures, this has not been true for Southeast Asia.[vii] In Laos, for instance, a booming trans-shipment point for drug trafficking, smugglers have hardly been deterred by closures to traditional transit routes through Thailand.[viii]

How can we understand this continuity? Where does this regional pocket of stability relating to drugs and crime fit within a world that is experiencing otherwise dramatic changes in politics, economy, and society? The colonial history of drugs in Southeast Asia helps provide answers. We tend to think more about proximate factors in direct response to COVID-19. And it partially makes sense to explain the apparent resilience of Southeast Asia’s illicit drug economies in light of the adaptability of the drug cartels’ business models and the imperfect nature of border controls and limited state capacity. However, it is also worth stepping back to puzzle over why these organizations and trafficking are such a sticky feature of this region in the first place, and why Southeast Asian states wield the type of capacity they do when dealing with illegal drugs.

Southeast Asia bears a distinctive legacy of colonial institutions relating to opium. Until the late 19th century, the British, Dutch, French, and Spanish who colonized the region profited handsomely from opium sold to local inhabitants. I have written elsewhere on how Europeans treated opium smoking in Southeast Asia as a peculiar social vice that could be regulated through taxation.[ix] For instance, the British in Singapore and the French in parts of today’s Vietnam operated opium tax farms that yielded over 50% of the colony’s locally collected tax revenue.[x] Opium factories manufactured the drug, which was sold openly in retail shops. The Saigon opium factory had a vast hall, “filled with the infamous odour of ‘boiled chocolate,’” and opium shops in 1880s Rangoon resembled “gin shops in London with conspicuous signboards and often attractive in appearance particularly at night.”[xi] At the time, most opium sold for popular consumption across Southeast Asia was from British India, which – between 1789 and 1935 – exported an estimated total of 5.6 million chests of opium (approximately 970,000 tons), making it the world’s largest supplier.[xii]

Workers in the Saigon opium factory. Credit: Archive Nationale d’Outre Mer

European rulers established at least four layers to an intricate transnational network for opium’s trade, transport, and taxation: (1) a cross-regional trade linking the poppy fields of Bengal and production sites in India to major ports in Southeast Asia; (2) inter-colony exchanges for trans-shipments of opium; (3) within-colony transportation that moved imported opium stored in warehouses to factories and packaging plants and then distributed the final product to consumers such as opium dens attached to state-run opium retail stores in Penang or nearby the tin mines of Selangor, the rice mills of Rangoon, and the tobacco estates of Sumatra. And finally, there were small amounts of poppy cultivation that occurred in the Shan States of Burma, northern Laos and Thailand that the European defined as legal if it remained limited to use by local inhabitants such as the Shan, Hmong, and other “hill tribes” that we refer to as ethnic minorities today.  

The very same imperial powers that profited from opium also tried to ban it. In my recent book, Empires of Vice: The Rise of Opium Prohibition across Southeast Asia, I explain this process, tracing how, between the 1890s and 1940s, the many colonial states dividing the region came to reverse their position on opium, transforming what had once been a defensible fiscal base into a dangerous drug. This reversal—from legalized opium economy to prohibition—was a remarkable episode in the modern history of empires. On the one hand, it entailed a striking act of colonial state transformation, by centralizing control over opium and attempting to restrict its existing commercial life. On the other hand, prohibition was also a profoundly imperfect and incomplete process. Colonial institutions for trading, transporting, and taxing opium proved highly resilient, and defied the European powers’ own efforts to dismantle them.

These institutions persisted during World War Two when the Japanese empire assumed territorial control throughout the region. The occupied Singapore opium factory in 1941 retained production capacity for “three million tubes for roughly 70,000 opium smokers in Malaya and Sumatra,”[xiii] while in rural areas of northern Vietnam the Vichy regime upheld purchasing contracts with Hmong poppy growers for their product and its transportation to urban Saigon.[xiv] After the war ended in 1945, state-run opium monopolies were restored temporarily to finance post-war reconstruction and colonial independence struggles. Emergency revivals of pre-war arrangements for opium-related trade, transport, and taxation prevailed everywhere across the region, from British “pacification” campaigns in Burma to financing the armed struggles of the Viet Minh and French counterinsurgency.[xv] Surplus stocks of opium in the Salemba factory at the end of World War Two helped the Republic of Indonesia fight against the Dutch, by helping secure funds for military expenditure, secure foreign currency, and finance the Republic’s diplomatic activities overseas.[xvi]

Into the second half of the 20th century, even after the Europeans left, the legacies of the vast transnational opium industry they established and failed to dismantle remained, woven into the sinews of newly independent states across Southeast Asia. For instance, the post-war Singapore government used money from an opium revenue replacement reserve fund established by the British in the 1920s for the development and improvement of public infrastructure during the 1950s.[xvii] The cash-strapped Democratic Republic of Vietnam, as demonstrated lucidly by Christian Lentz, built on French colonial and wartime arrangements to create barter systems with poppy-producing groups that served as the basis for taxation systems in the 1960s.[xviii] These are instances of a more general pattern across the region, by which past colonial opium institutions provided the hidden fiscal and financial bases for postcolonial state building, while extant sites and networks for opium sales, distribution, and production acquired a vexed strategic value for new rulers and their challengers alike. In Empires of Vice, I detail how these inheritances link to the criminalization of opium and draconian drug laws that emerged in most Southeast Asian countries during the 1970s. 

Fast forward to the 2020s, the legacies of European colonial rule can help us understand Southeast Asia’s resilient illegal drug economies amid COVID-19. In a most immediate sense, it dispels with reasons to be surprised that we see relatively little change. The production economies for drugs and trafficking networks—from the illicit poppy cultivation in the Golden Triangle region to the transit routes for precursor materials that link the Shan States with China, Thailand, and Laos—are ones that have withstood the collapse of empires, war, and new modes of territorial state building. Indeed, perhaps the more interesting question to ponder is why we do see changes occurring in certain places, despite the colonial past’s heavy shadow.

Taking a long-term historical perspective also enables us to see today’s drug cartels as not only business groups or criminal organizations seeking profit and adapting to market changes and border closures, but also entities that directly inherit or indirectly fill in spaces carved out by states—colonial, wartime, and postcolonial—that have ranged from being fully complicit to forcefully restrictive towards once legal commercial activity that only became criminalized in the last half century. Finally, looking back to the past gives traction to efforts for thinking about the future, regarding whether, how, and why Southeast Asia’s illegal economies compare with those of other regions experiencing more acute disruption to drug production and trafficking under COVID-19, and better understand the mixed impact of the pandemic upon drug economies across the world.

Diana Kim is an Assistant Professor at Georgetown University in the Edmund A. Walsh School of Foreign Service. Her research and teaching focuses on the transnational politics and history of markets across Southeast and East Asia, with particular interest in the regulation of vice, illicit economies, theories of crime and disorder, state formation, and legacies of Empire and colonialism. Her book, Empires of Vice, develops a comparative study of the rise of opium prohibition in British Burma, Malaya, and French Indochina since the late 19th century.

[i] For the World Health Organization’s timeline of events relating to the initial outbreak, spread, and international responses to the COVID-19, see https://www.who.int/news/item/29-06-2020-covidtimeline

[ii] See UNODC 2020, “COVID-19 and the Drug Supply Chain: From Production and Trafficking to Use,” pp. 16-17. Accessed February 10, 2021 here: https://www.unodc.org/documents/data-and-analysis/covid/Covid-19-and-drug-supply-chain-Mai2020.pdf. Heroin is an exception. The UNODC has noted a drop in opium prices, suggesting greater disruptions to transportation and trafficking for opiates during the pandemic. See UNODC 2020, p. 4.

[iii] See Reuters. “Asia-Pacific Drug Trade Thrives Amid the COVID-19 Pandemic,” May 17, 2020 (by Tom Allard and Panu Wongcha-um), Accessed February 10, 2021 here: https://www.unodc.org/documents/data-and-analysis/covid/Covid-19-and-drug-supply-chain-Mai2020.pdf.

[iv] See UNODC. “UNODC Report: Opium Production Drops Again in Myanmar as the Synthetic Drug Market Expands,” February 11, 2021, Accessed March 26 here: https://www.unodc.org/southeastasiaandpacific/en/2021/02/myanmar-opium-survey-report-launch/story.html

[v] See CNN. “The Man Accused of Running Asia’s Biggest Drug Trafficking Syndicate Has Been Revealed. Here’s What Needs to Happen Next.” October 23, 2019 (by Jeremy Douglas). Accessed February 10, 2021 here: https://www.cnn.com/2019/10/23/opinions/tse-chi-lop-revealed-opinion-intl-hnk/index.html. On Tse Chi Lop’s arrest, see Straits Times, January 24, 2021, Accessed February 1, 2021 here: https://www.straitstimes.com/world/europe/dutch-police-arrest-alleged-asian-drug-syndicate-kingpin-tse-chi-lop

[vi] Ibid.

[vii] See UNODC 2020, pp. 1-4 on cross-country differences and the mixed impact of COVID-19 control measures upon drug trafficking, depending on the type of substance, its existing means for transportation, as well as business models used by criminal organizations.

[viii] Interview with NPR. “Drug Cartels Flourish in Southeast Asia Amid the Pandemic.” October 19, 2020. Accessed February 10, 2021 here: https://www.npr.org/2020/10/19/925501081/drug-cartels-flourish-in-southeast-asia-amid-the-pandemic

[ix] See Kim, D. (2020) “From Vice to Crime” Aeon Magazine. https://aeon.co/essays/how-european-empires-broke-the-habit-of-opium-consumption

[x] Kim, D. (2020), Empires of Vice: The Rise of Opium Prohibition across Southeast Asia. Princeton University Press, p. 3, citing Decours-Gatin 1987, p. 179 for French Cochinchina and Trocki 1993, p. 166 for British Singapore.  

[xi] Kim 2020, p. 5.

[xii] Kim 2020, p. 65

[xiii] Kim 2020, p. 189, citing Huff and Majima 2018.

[xiv] Kim 2020, p. 189.

[xv] Kim 2020, pp. 192-193.

[xvi] Cribb, R. (1988). “Opium and the Indonesian Revolution” Modern Asian Studies, 22(4), p. 701.

[xvii] See Kim, D. (2020). “The Sticky Problem of Opium Revenue” BiblioAsia, 16(3), p. 9. Available at: https://dianasuekim.files.wordpress.com/2021/02/biblioasia-oct-dec-2020-complete-pages-7-9.pdf

[xviii] Lentz, C. (2017). “Cultivating Subjects: Opium and Rule in Post-colonial Vietnam” Modern Asian Studies, 51(4), p. 1040.

Header image credit: UNODC/Zalmai

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