Businesses and industry leaders should actively speak out against the increasing problem of illicit trade in the Philippines and throughout Southeast Asia, according to legal experts and participants at a recent forum.

The forum on combating illicit trade, organized by the Financial Times in Taguig City, noted that businesses are often caught in the crossfire as both victims and, at times, inadvertent facilitators. Panelists said that tackling the issue requires the private sector to be an active partner in prevention, detection and disruption.

Daniele Marchesi, country manager of the United Nations Office on Drugs and Crime (UNODC) Programme Office in the Philippines, said illicit trade is often facilitated by international organized crime and can finance terrorist activities.

"This issue of crime and illicit activities cannot be solved only by states. We need a very comprehensive approach that involves also the private sector, academia and other actors,” Marchesi said.

Vincent Juan, legal counsel and deputy corporate compliance officer at Shell Pilipinas Corp, said smuggling remains a problem in the downstream oil industry. He said petroleum products are often transferred between vessels on the high seas before being brought into the country.

"Petroleum products are urinated from one vessel to another in the high seas and then brought to the Philippine shores, or smaller vessels are docking in smaller Philippine shores,” Juan said.

Juan said people who use these smuggled goods may unknowingly be using a petroleum product that is "dangerous and unsafe for your car and the environment." He said Shell was the first company to comply with the country's fuel marking program, which places molecular markers on legally imported fuels.

Jericho Nograles, president of the Philippine Tobacco Institute (PTI), said one in every five cigarettes sold in the Philippines is fake. He said the pandemic acted as a catalyst for the rise in illicit tobacco trade due to restricted access to legal goods.

"This year, we are still seeing a rise of illicit tobacco trade based on our monitoring, not because of the lack of enforcement, but a lack of successful prosecution," Nograles said.

Nograles proposed a composite task force composed of the Bureau of Internal Revenue, the Bureau of Customs, the Department of Finance and the Department of Justice to combat illicit tobacco trade, which contributes an estimated P160 billion annually in excise taxes.

"It should not only be enforcement-focused, but prosecution-focused," he said.

Nograles said governments often fail to address illicit trade because "it’s embarrassing," adding that the private sector needs to speak up and pressure governments to admit the problem. He also underscored the need to harmonize trade policies in Asia, noting that a product that is legal in one country may be considered illicit in another.

The problem also exists in the liquor industry, said Chen Yun Jin, a partner at LAW Partnership specializing in Intellectual Property. He said addressing the problem "requires a lot of efforts from the private sector and the government."

In Malaysia, liquors are regulated by multiple agencies, including the Ministry of Domestic Trade, customs authorities, the police, the Ministry of Health and local councils. "There are so many authorities that are involved just in this industry," Jin said.

Jin also cited the need to harmonize trade, intellectual property and labeling laws across the Association of Southeast Asian Nations (ASEAN) region. "For example, [in] parallel import, where they are actually legally manufactured in the country of origin, but then when it comes into, for example, Malaysia, it did not follow the requirements of the labelling law. So that would be mismatched in terms of the IP law,” he said.

He said collaboration should include a wide range of private-sector players, including national producers and corporations, insurers, and shipping companies. He added that business associations and chambers of commerce need to raise awareness of the issue.