Editor’s Note: This is the first of a three-part series. The next article will explore the details of over a dozen criminal zones in Myanmar involved in industrial-scale human trafficking and operating complex online scams that now reach every corner of the globe.

International media and law enforcement are waking up to a new post-COVID trend in transnational crime: the proliferation of criminally run zones in Myanmar and across Southeast Asia, and an explosion of human trafficking for labor in these ungoverned enclaves.

A soldier at a military checkpoint along the Sai River, which borders Myanmar, in Mae Sai, Thailand, May 9, 2012. (Giulio Di Sturco/International Herald Tribune)
A soldier at a military checkpoint along the Sai River, which borders Myanmar, in Mae Sai, Thailand, May 9, 2012. (Giulio Di Sturco/International Herald Tribune)

Shocking news reports since July have uncovered the emergence of vastly increased criminal activity in remote areas of Myanmar, where the country’s military regime reaps profits from international scams. Lawless enclaves have also emerged in Cambodia and Laos. Crime networks in Cambodia alone have lured an estimated 50,000 to 100,000 people into slave-like conditions beyond the reach of law enforcement. In Myanmar, the number could be two to three times higher, most of them enticed through social media ads promising lucrative office jobs in Thailand.

Fueling the Growth of Organized Crime

Two related regional trends are behind the rise of this new form of violent crime.

First, in years before the pandemic, corrupt governing elites in the affected countries ignored and sometimes even promoted development of unregulated areas. Billed as “special economic zones” by the developers, they were meant to house online gambling operations established by Chinese triad groups. Billions of dollars in capital poured into the zones on the assumption they would attract millions of Chinese gamblers, tourists and workers to capture shares of the $145 billion a year market in China for illegal online gaming.

Then came COVID. Suddenly, the business plan for huge gambling centers collapsed. Lockdowns and strict border controls meant Chinese workers and gamblers could no longer travel freely to Myanmar and elsewhere. The criminal gangs’ need for new sources of revenue and labor intensified exponentially.

Second, in 2021 China initiated an unprecedented campaign to force many of its nationals in Southeast Asia to return home or face strict penalties. In response, the gangs began large-scale trafficking of alternative labor into the zones and developing new tools for international investment or crypto-currency-fraud schemes that rely on large numbers of scammers building personal contacts with potential victims on social media.

At the same time, the global pandemic knee-capped the efforts of media, law enforcement and civil society to monitor, expose and curb these activities. The remote locations of the enclaves carved out by Chinese mafia groups offered a safe space for expanded operations, their impunity reinforced by corrupt relationships with police, local officials, overseas Chinese associations and Chinese government and party organizations. 

Researchers and law enforcement are just beginning to recognize the scale of the problem and the criminal networks’ growing influence in weak, corrupt states such as Laos and Cambodia.

Post-coup Myanmar, where the army is at war with its people over its attempt to restore a military dictatorship, is in a league of its own. 

Southeast Asia’s Special Criminal Zones

The criminally run enclaves began systematic subversion of state sovereignty in Southeast Asia in the late 2000s. While occasional enforcement did occur — such as Cambodia’s move against criminal gambling operations in 2019 — it only led Chinese gangs to expand across jurisdictions as happened in Cambodia.

Even though Phnom Penh’s crackdown made little headway, the triads decided to hedge their bets with another base in Myanmar.

The result was the notorious Shwe Kokko Yatai New City Project, one of the region’s largest and most sophisticated operations, which its developers billed from 2017 to 2020 by as part of China’s Belt and Road Initiative (BRI).

Myanmar’s National League for Democracy (NLD) government successfully disrupted construction of the Shwe Kokko project by challenging the Chinese government on the developers claims that it represented part of the BRI. China publicly distanced itself from the crime city in late 2020 after a Chinese news report exposed the criminal history of one of the key investors — She Zhijiang — a fugitive from Chinese law enforcement long involved in illegal online gambling in the Philippines and Cambodia. In the wake of that disclosure and the NLD government’s actions, Thailand shut off the power and telecommunications services to Shwe Kokko, bringing the illicit activity there to a standstill before 2021.

Myanmar Coup Opens the Floodgates

Then, on February 1, 2021, Myanmar’s military overthrew the country’s civilian government. The criminal enterprises and their Burmese safe zones got a new lease on life — including restoration of Thai electricity and internet two weeks later.   

Between February 2021 and March 2022, as the pandemic raged across the region, construction of new enclaves exploded along a 40-kilometer stretch of the Moei River. USIP has so far identified 15 distinct criminal zones in the area.

By late December 2021 the extent of malign activity in the enclaves began to seep out starting with social media reports of Malaysian nationals being trafficked into the zones and held hostage. 

The victims’ stories all have a similar ring: A Kenyan national responded to a Facebook ad for a high-paying job in Thailand and was tricked into illegally crossing the border to a scam zone in Myanmar; a Malaysian man began a romantic relationship through social media and, after a single meeting, wound up trafficked into Myanmar; a group of Indian tech workers responding to advertisements for lucrative information technology jobs in Cambodia were trafficked to a remote part of that country. Once in the zones, the victims are given three choices: staff online scams, pay ransom, or face physical and psychological torture.

Unlike Shwe Kokko, many of the newer zones are designed without physical casinos. Instead, the city-like enclaves appear more like penal colonies. Online social media posts feature one particularly sinister enclave known as the KK Zone, which is located on the Moei River across from a Thai military base at Mae Ku village. By one account, as many as 10,000 people are enslaved there, tortured or, according to some accounts, threatened with having their organs harvested if they fail to generate adequate revenue from operating scams.

Further reports of Indians, Indonesians, Taiwanese, Kenyans, Ukrainians and other nationals trafficked under similar conditions into Southeast Asia continued to appear throughout 2022. The zones had clearly begun to menace the region and were even reverberating globally.

Taking Down a Kingpin?

Regional pressure began to mount as the scale of the problem became apparent. In Cambodia, particularly, media reports prompted ASEAN countries to demand the government take steps to free tens of thousands of Thai, Malaysian and Indonesian victims.

Meanwhile, Thai authorities announced on August 17, 2022 that they had arrested the billionaire fugitive investor behind Shwe Kokko, She Zhijiang, on charges of fraud and running a “criminal gang.” Law enforcement across the region hailed his apprehension as a “major breakthrough,” but few questioned how he managed to hide from the law since 2014 or why he was able to travel to China on a fraudulent Cambodian passport and sign contracts with a key think tank affiliated with China’s pre-eminent government planning body.

Following She Zhijiang’s arrest, little has changed on the ground. Two of his partners in Shwe Kokko –- gangster Ma Dongli and Hainan political operator Zhong Baojia — remain at large. Zhong continues to hold several official positions with business associations in Hainan and Henan Provinces and was awarded for his “philanthropy work” just months before She’s arrest. Meanwhile, construction on Shwe Kokko continues unabated. A spokesperson from the company, which includes among its shareholders the Karen Border Guard Force (BGF), has publicly indicated that the arrest will “not impact the project.

The cross-border connections of this sinister activity became alarmingly apparent when Cambodia-based Chinese media outlets began running a series of advertisements for the Shwe Kokko Yatai New City starting from September 2022 and continuing to the time of writing.

Some of the ads include a QR code that links to an app developed just for the Yatai New City. It advertises a range of businesses present in the city and provides a link to Yatai IHG’s investment department and another to a money transfer app. The ads demonstrate that the Yatai IHG continues to operate despite the arrest of She Zhijiang and suggest there is a market in Cambodia for “businesses” to relocate to Myanmar.

Myanmar as a Magnet for Crime

As several countries across the region struggle to address this new form of criminal activity, Myanmar has emerged as the preferred location for criminal groups to base their trafficking and scam operations. For the Myanmar army, revenue from organized crime via corrupt border guard forces has become a key pillar of its survival strategy.

The Karen BGF headed by Bo Chit Thu provides security to all of these zones along the border, and now reaps massive profits from growing criminal empires.

While there are considerable obstacles to a serious crackdown on organized crime in Cambodia or Laos, in Myanmar any reduction under current circumstances is impossible. So long as the current regime — which early this year dismantled six key units of the country’s police force — holds power, organized crime will spread to new parts of the country and increasingly pose a global security threat. Even the Chinese police have publicly described Myawaddy as “terrifying” and warned Chinese nationals not to travel there. Unfortunately, every day, dozens of unsuspecting victims from across the globe are trafficked into Myanmar.

A Global Security Threat

This human trafficking crisis is just one example of how Burma’s illegitimate military regime damages the security interests not only of its neighbors, but of countries as far away as the United States, where ads for lucrative tech jobs in Southeast Asia have recently begun to appear in California.

Malign activity at this scale represents a global security threat. It must be brought to an end. A first step would be for the United States and like-minded regional partners such as Thailand and India to assess how these lawless zones exploit governance gaps among them, and to take steps to shut off the criminal opportunities such openings create. Failure to address these growing challenges to global security will only encourage the unchecked spread of organized crime and its mutation into even more sinister forms.

Related Publications

Myanmar’s Crisis Looms Over the ASEAN Summit

Myanmar’s Crisis Looms Over the ASEAN Summit

Thursday, September 7, 2023

By: Brian Harding;  Jason Tower

This week, Indonesia hosted the Association of Southeast Asian Nations (ASEAN) summit and its related meetings with dialogue partners, including the East Asia Summit, in Jakarta. The three-day affair was bogged down by the bloc’s continued inability to sort through internal divisions over member-state Myanmar’s 2021 military coup, which has allowed the ruling junta’s violence and support for criminal enterprises to fester into transnational problems. Meanwhile, the absence of several leaders from major ASEAN partners, such as China’s Xi Jinping and U.S. President Joe Biden, further dampened proceedings.

Type: Analysis and Commentary

Global Policy

Ask the Experts: How to Stop Transnational Crime Networks in Southeast Asia

Ask the Experts: How to Stop Transnational Crime Networks in Southeast Asia

Wednesday, August 30, 2023

By: Andrew Cheatham;  Jason Tower

In recent years, transnational criminal networks have built a web of influence throughout Southeast Asia to facilitate their illicit gambling, fraud and human trafficking operations. And while these networks emanate from several countries in the region — particularly Myanmar — their reach is global. In the United States alone, victims have already lost several billion dollars to scams. USIP’s Andrew Cheatham and Jason Tower discuss how these large-scale networks operate, how the 2021 military coup in Myanmar offered the networks a safe haven for their illicit activities, and how the United States can take the lead on addressing this issue.

Type: Blog

Justice, Security & Rule of Law

Is Myanmar’s Junta Turning a Corner?

Is Myanmar’s Junta Turning a Corner?

Thursday, August 10, 2023

By: Priscilla A. Clapp;  Ye Myo Hein

Are conciliatory winds stirring among the leaders of Myanmar’s coup regime, or is the junta engaging in deception and distraction as it struggles on the battlefield against a broad range of resistance forces? The answer is almost certainly the latter. It would not be the first time the ruling generals have sought to stimulate international interest in promoting dialogue solely to enhance their legitimacy abroad.

Type: Analysis and Commentary

Conflict Analysis & Prevention

Four Takeaways from the ASEAN Summit

Four Takeaways from the ASEAN Summit

Thursday, July 20, 2023

By: Brian Harding;  Alex Stephenson;  Jason Tower

Foreign ministers from the Association of Southeast Asian Nations (ASEAN) gathered last week in Jakarta, with a range of critical challenges to address. Chief among those issues was the crisis in member state Myanmar, which the bloc is divided on how to approach. China’s aggressive activities in the South China Sea were also a key topic at the summit, with Beijing and ASEAN pledging to reach an agreement on a long-stalled non-binding code of conduct.

Type: Analysis and Commentary

Global Policy

View All Publications