Cross-border Smuggling in Sulu’s
Deadly Waters: How Economic
Agenda Co-exist with Violence
Starjoan D. Villanueva
Research Question
“Why cross-border smuggling co-exists, but does
not necessarily trigger violence, in a region that
has a long history of conflict?”
• How do key actors benefit from smuggling? How much
income is derived from these unofficial transactions?
• How does smuggling contribute to conflict? Do small
traders of consumer goods and commodities operate
independently as part of a ‘coping economy,’ or are
they linked to a large network of traders that may
have direct or indirect connection(s) to a regional
‘shadow economy’ and violence?
• What are the political forces and dynamics that drive
and sustain illegal trade and the existence of local ‘war
economies?’
• Are small traders the victims or are they exploiters as
well of this ‘underground economy?’
Review of Literature (1)
• Janet MacGaffey, in studying the extent of
smuggling in Zaire, described the existence of
unmeasured and unrecorded “second
economies” that intersect with the country’s
recorded and official economy;
• She noted how economic factors had driven
these second economies to expand far beyond
official economic figures;
• She further underscored the role of colonial
powers and state controls in reviving ancient
trade routes for smuggling, thereby resulting to
strong personal ties among actors upon which
second economies largely depend on.
Review of Literature (2)
• In analyzing the links between informal
economies and conflict, Paul Collier postulates
that economic agenda or greed (rather than
grievance) as a main driver of conflict, can
motivate certain groups to exploit economic
opportunities and cause them to initiate and
sustain conflict;
• Eric Tagliacozzo further argues that violence
and illicit commerce always cross in specific
historical or geographic contexts. However,
violence, he asserts, is often the last
alternative that smugglers would resort to in
protecting their economic interests at the risk
of challenging the political status quo.
Review of Literature (3)
• Another relevant study on the political
economy of conflict further highlights the role
of globalization and economic restructuring in
facilitating permissive conditions for conflict
trade and the regionalization of ‘war
economies;’
• Neoliberal policies’ inherent function weakens
state capacity to generate, distribute, and
regulate wealth equitably. These policies
further exacerbate regulatory differentiation
between states in a regional economic setting,
thereby adding incentives for cross-border
illicit trade to flourish.
Thesis or Argument (1)
• Smuggling, like any other economic
enterprise, is mainly driven by profit and
opportunities for other benefits that a
particular geographic setting can offer;
• Small traders’ decisions to engage in crossmaritime illicit transactions are further
influenced by socio-cultural and political
considerations which include familiarity with
trade routes, trust and confidence with
existing social networks and personal ties, and
serious assessment of legal implications and
human security threats associated with
external and internal political dynamics that
can trigger violence.
Thesis or Argument (2)
• Cross-border trading and smuggling has existed
long before the concept of a nation-state started
and the birth of the Philippine republic;
• This puts to question the illegality label attached to
all unofficial and unrecorded cross-border
transactions on consumer goods and commodities,
plus the fact that the state has neglected its duty
to provide access to economic opportunities,
infrastructure support, and protection that would
allow local economies to formally develop and
flourish;
• This further underscores the negative impact of
neoliberal policies on the local economies of the
Sulu archipelago, resulting to the marginalization
of small traders who are now forced to resort to
smuggling in order to cope with the situation.
Evidence (1)
• Cross-border trade, smuggling and piracy
particularly in Southeast Asia are an ancient
phenomenon. Steam navigation and colonial
expansion in the latter half of the 1800s
caused illicit trading activities to decline;
• After the Philippines gained independence in
1946, smuggling and piracy became a viable
occupation for Sulu outlaws, with the
proliferation of modern firearms and
motorized boats due to available inexpensive
military surplus engines brought in by the
war.
Evidence (2)
• Initial valuation of cross-border smuggling off the
shores of Tawi-tawi reveals that this practice is both
widely recognized and highly accepted; the practice
is so rampant that a very thin line (if at all) exists
between formal and informal economies;
• Both traders and state actors benefit from
smuggling; the traders enjoy exemptions from
paying import taxes that can reach as high as 50
per cent of the price for rice, and 60 per cent of the
price for sugar;
• Customs personnel profit from illicit trading through
imposition of predatory taxes or kotong to allow
illegal shipment of consumer goods from Malaysia
through motorized wooden boats or kumpits (PhP60
per sack of smuggled rice or flour). A very
conservative estimate of 1,500 sacks per kumpit
would fetch an unrecorded income of P90,000 per
transaction.
Evidence (3)
• Economic factors that drive the flow of illegal
trade from Sabah, Malaysia: a) access to
cheaper consumer goods and commodities that
are not readily available from mainland
Zamboanga, thus, increased opportunities to
maximize profits; b) improved infrastructure
support; and c) enabling economic
environment on the part of the Malaysian
government that allows cross-border trading of
basic commodities like rice, flour, sugar and
other food items like noodles and chocolates;
• Long established social networks and personal
ties among traders and kumpit operators, and
strong familiarity with these traditional sea
lanes further encourage key actors to engage
in smuggling.
Evidence (4)
• At the other end of this informal trading
relationship, the development and expansion of
rubber and oil palm plantations in Malaysia has
created a diaspora and demand for labor to
work on these commercial farms;
• This opened doors for Tawi-tawi traders to
‘export’ locally produced commodities to Sabah.
These include RDL and Belo beauty products,
and ‘hot’ illegal items like fighting cocks (from
Negros), liquor (Tanduay and San Miguel beer)
and cigarettes. (NOTE: Mapping of trading
patterns, prices and volume of these goods is
underway)
Evidence (5)
• Despite rampant smuggling activities that
largely intersect with and dominate formal
local economies, cross-border trading has not
been observed to have direct links with
regional ‘shadow economies’ and violence;
• Highly illegal smuggling activities involving
drugs, guns and human trafficking co-exist,
thus, run parallel with illicit trading of
consumer goods;
• The traders are aware of the existence of
drug and human traffickers in the area, but
they avoid crossing the paths of these shady
characters.
Evidence (6)
• Presence of external threats associated with
piracy, human trafficking, maritime accidents
and drowning due to lack of access to safe
transportation system in getting to Sabah has
resulted to a significant decrease in the
number of women traders actively involved in
cross-border smuggling;
• Most women traders are now confined to
manage the family’s dry goods shops in
Bongao, while their male counterparts
continue to ride the kumpits and take the
risks of getting drowned or killed by pirates
that continue to prey on these traders.
Evidence (7)
• In contrast to Tawi-tawi, initial findings on
cross-border smuggling in Sulu reveals the
existence of a more sophisticated and complex
system that has direct links to a larger ‘shadow
economy’ and violence;
• Based on key informants’ accounts, almost
everyone (i.e. business, military and police,
armed groups, politicians and influential clans)
is involved in highly illegal activities like human
trafficking, gun running and narcotics trading
that intersect with smuggling of goods and
commodities;
Evidence (8)
• There are around 20 medium-sized kumpit boats
plying the sea lanes that connect Jolo to Sabah.
These boats are chartered by private individuals
through a broker who has direct contacts with the
owner of these boats. A chartered trip to Sabah
from Jolo would cost around P150,000-P200,000.
The total value of goods shipped by one chartered
boat in going back to Jolo from Sabah is estimated
at P100M to PHP150M;
• Given the high stakes involved in various forms of
intersecting illegal activities and actors in the area,
conflicting interests always play out in these crossborder illicit transactions, thereby triggering a
proliferation of violence, particularly clan feuds or
rido.
Concluding Remarks
•
•
•
•
The case study illustrates how economic agenda and profitseeking interests associated with cross-border smuggling, in a
region prone to conflict, may run parallel or co-exist with other
illegal transactions, but would not necessarily lead to or trigger
violence;
This unveils a highly predatory nature of informal economies,
with key actors feeding on the weaknesses of the state by
exploiting opportunities for economic survival (as in the case of
small traders in Tawi-tawi), or for personal gains (as illustrated
by customs personnel engaged in kotong);
These profit-seeking interests eventually intersect with other
far more lucrative illegal activities that would necessitate
access to and manipulation of political powers and resources to
secure the economic interests of a few powerful elites who
seek control of these emerging informal economies (as in the
case of cross-border smuggling in Sulu);
This situation eventually creates incentives for violence to take
form and unleash its powers, thus, poses a major challenge to
state-building efforts that can transform conflict and build
enduring peace.