Five years after the 2021 coup that overthrew the democratic government of Myanmar, conflict still rages in the war-torn country. An illicit industry has developed to fill the gaps left by a disappearing civilian economy, taking advantage of the conflict’s growing costs and the lack of oversight to expand rapidly.

For decades, Myanmar has been plagued by powerful cartels running trafficking and mineral transfer schemes in the hinterlands around the borders with China and Thailand. After the 2021 coup, however, the nominal junta government relinquished full control of large swaths of the country, and has altogether stopped providing services to most areas. This is what led to the illicit economy’s rapid growth, leveraging law enforcement and economic breakdown to expand to the point where the Global Organized Crime Index now rates it as having the highest levels of organized criminality in the world. Local crime lords, military agents, and well-known foreign criminals from China and Thailand have created lucrative criminal economies in Myanmar that take advantage of the breakdown of law to exploit the resources and people of the country. 

The exploitation of Myanmar’s vast natural resources is one of the oldest and most established illicit industries. For decades, Myanmar’s huge deposits of jade, timber, gold, natural gas, and rare earth elements have all been exploited for profit by the Junta government and ethnic paramilitaries to fund the war effort. In the aftermath of the 2021 coup, the complete destruction of all environmental oversight made extractive industries easier to expand and more harmful to the environment, and in turn local communities. Early into the junta’s rule, they made up the bulk of the junta’s revenue, a cash flow that was directed into cementing control of the country rather than funding public services or sustainable development. Extraction itself is largely controlled by foreign actors, mostly Chinese, who take advantage of Myanmar’s low environmental restrictions and labor standards, to profit off of the conflict and in turn fund its continuity.

One of the most lucrative and harmful industries in Myanmar is heroin and amphetamine production. According to the International Affairs Review, the country is now the second largest producer of opium in the world after Afghanistan, and one of the largest in the world for methamphetamine and fentanyl. Myanmar’s drug cartels produce illicit substances in remote areas and then ship them globally to East & Southeast Asia, Australia & New Zealand, and North America. The revenue from illegal drug trade helps to fund both the junta government and ethnic militaries, incentivizing investment and growth of this network and prolonging the conflict.

Drug production has also increased in the wake of Myanmar’s civil war because of the breakdown of traditional subsistence economies and the onset of poverty for the country’s farmer population. Farmers willingly produce opium to afford food, basic healthcare, and education that isn’t available to most in rural areas. Without alternative opportunities for opium growers, communities that are reliant on the opium trade are increasingly resistant to change. In addition, the international actors who had provided incentives for farmers to switch to other products have left following the start of the war, leading to the overall growth of opium cultivation in the country. 

Human trafficking, the final large-scale illicit trade growing in Myanmar, is also one of the fastest growing and most profitable currently taking place. The large explosive growth of trafficking since 2021 is mostly due to the success of cyber scam operations set up in the rural periphery near the Thai and Chinese borders. Victims are trafficked into compounds and forced under threat of violence to run online scams targeting people around the world. The U.N. High Commissioner for Human Rights estimates that more than two hundred thousand people have been trafficked into Myanmar and Cambodia alone to staff these operations. The networks pulling in this labor stretch far beyond Southeast Asia, drawing victims from as far as Brazil, Kenya, and the Netherlands.

Several organized criminal groups, mostly originating in China, concentrate their operations in the country’s poorer and least governed states near the Chinese border where oversight is minimal and enforcement is easily bought off or intimidated. These groups are also responsible for the sourcing of labor not only for compounds in Myanmar, but also in the Middle East and Europe. 

The scams themselves take many forms, from fabricated investment schemes to elaborate romance cons that manipulate victims into sending money to a fake online partner. The scam industry has already cost Southeast Asia more than $75 billion in fraud losses over four years, and as operations increasingly target victims in the United States, they now cost Americans upward of $2 billion annually. Both the junta and rival ethnic armed groups have found ways to profit from this trade, levying gunpoint taxes on scam operations running in territory they control, and turning human trafficking and cyber fraud into yet another revenue stream sustaining the conflict.

Internationally, there have been growing attempts to curb the success of Myanmar’s criminal economy as it increasingly affects the global community. China has generally supported Myanmar’s junta government in return for its approval of the ‘Belt and Road Initiative’, but Myanmar’s inability (or unwillingness) to crack down on the scam industry even as it victimizes Chinese citizens has changed China’s thinking. Following crackdowns within China, Chinese law enforcement pressured local militias to hand over trafficked Chinese nationals and close scam centers. In late 2023, three ethnic resistance groups successfully coordinated an attack on the Junta military in the northeastern Shan state. The Council on Foreign Relations believes that China gave the group tacit approval for their attack in return for them publicly promising to eliminate scam centers along the China-Myanmar border. Since this attack, China claims to have repatriated more than forty thousand citizens. In March 2024, Thailand assisted in a joint operation to repatriate almost 1000 citizens to China as more Thai citizens have been trafficked or scammed.

The United States, Canada, and the United Kingdom issued coordinated sanctions late in 2023 on entities and individuals involved with cyber scams, which follow previous sanctions cutting off Myanmar’s oil and gas industry following the 2021 coup. The countries hope that these sanctions cut off the alternate revenue streams that fund military actions previously funded by the sale of oil and gas. The United States in particular has also seized assets belonging to criminals in Myanmar. In one case, the Department of Justice seized $9 million in crypto currency, helping to disrupt the financial system supporting the illicit economy. Despite attempts to sanction state-controlled illicit industries in Myanmar, corruption and smuggling continue to sustain them.

Illicit economies are now deeply intertwined with Myanmar and its economic system. Political structures and powerful actors are maintained by, and changed by, varying access to these networks. Criminal markets not only fund armed groups, they also shape power balances at local, regional, and national levels. This means that the contributors and powerful actors within these systems are necessary agents in any future peace project in Myanmar. Past peace agreements haven’t represented the interests of criminal actors or addressed the role of the illicit economy in any meaningful way, rather treating access to resources and revenue streams as bargaining points instead of trying to deal with their consequences or set up off-ramps. 

For any future peace agreement, negotiators must manage the risk of criminal agents undermining lasting peace, while at the same time creating methods to eliminate the importance of the criminal economy in Myanmar post-war.