MANILA, Philippines—Illicit trade is threatening Southeast Asia’s economic growth and sustainability goals, prompting the EU-Asean Business Council (EU-ABC) to urge the Philippines to use its Asean chairship to demonstrate stronger regional safeguards against smuggling and illegal commerce.
In a report submitted to the Philippine government and the Association of Southeast Asian Nations Secretariat, the Council called on Manila to showcase the Preboarded Technical Verification (PTV) mechanism as a model for coordinated enforcement across the region.
The report, titled “Driving Asean Action Against Illicit Trade,” outlined a roadmap encouraging Asean members to adopt a “cooperation-first” approach in addressing illicit trade while integrating such measures into the bloc’s broader economic priorities.
According to the Council, the Philippines is well positioned to lead regional efforts to secure trade corridors increasingly vulnerable to organized illicit activity.
By promoting policy coordination and regional collaboration, the country could help strengthen supply chains across Southeast Asia while ensuring that legitimate trade flows remain resilient and interconnected.
The report cited recent Philippine reforms, including the Anti-Agricultural Economic Sabotage Law targeting large-scale smuggling, as well as verification systems such as the PTV mechanism designed to prevent non-compliant shipments from leaving exporting countries.
It added that the Philippines’ chairship provides an opportunity to showcase domestic measures that curb diversion at the export stage. These include regulations requiring tobacco exports to carry the fiscal and regulatory markings of their destination markets under Republic Act 10643, which aims to prevent products from being redirected into illicit markets.
The Council noted that enforcement remains critical to the success of these initiatives, and that the Philippines could use its leadership role to promote the exchange of practical enforcement strategies across Asean member states.
The report said the chairship could also be used to strengthen customs cooperation mechanisms, improve risk-based border controls, and encourage data-driven systems that facilitate legitimate trade while deterring illegal activities.
The Council tied its recommendations to Asean’s Priority Economic Deliverables, saying the proposals were meant to reinforce existing commitments rather than introduce new mandates.
As the Philippines assumes the Asean chairship under the theme “Navigating Our Future Together,” the group said integrating anti-illicit trade measures into the bloc’s economic agenda would help safeguard regional markets.
Chris Humphrey, executive director of EU-ABC, said the 2026 chairship aims to strengthen regional trade and investment links while improving supply chain resilience and accelerating digital transformation.
“Achieving these objectives requires not only deeper integration, but also stronger safeguards to ensure that trade remains secure, transparent, and rules-based,” Humphrey said.
The Council said illicit trade drains public revenues and erodes confidence in supply chains across multiple sectors, including medicines, fuels, consumer goods, agricultural products, alcohol, and tobacco.
Among the proposed solutions were stronger customs cooperation, adoption of artificial intelligence-driven risk management tools, and expanded use of digital traceability platforms such as the Asean Single Window.
The recommendations aim to protect legitimate business activity while removing illicit operators from supply chains, the report said, adding that integrating such measures into the 2026 regional agenda could bolster investor confidence and demonstrate Asean’s commitment to a secure and forward-looking economic environment.
“By building on existing Asean mechanisms, promoting risk-based and trade-facilitative approaches, and strengthening cooperation with the private sector and dialogue partners, Asean can reinforce its commitment to a resilient, sustainable, and future-ready regional economy,” Humphrey said.
The EU-ABC prepared the report following its business mission to Manila in 2025 and submitted it to key Philippine agencies, including the Department of Trade and Industry and the Department of Finance.
Illicit tobacco trade remains a major concern in the region, costing Asean economies billions of pesos in lost tax revenues each year while supporting smuggling networks and organized crime.
Sen. Win Gatchalian, chairman of the Senate Committee on Ways and Means, cited data from the Bureau of Internal Revenue showing that the Philippines lost an estimated P50 billion in 2024 due to illicit cigarette trade and the misdeclaration of vapor products.
