‘Corruption hinders efforts vs illicit trade’

MANILA, Philippines — The country’s poor performance in addressing corruption is hindering its ability to combat illicit trade despite ongoing tax efforts.

Based on the new index of the Transnational Alliance to Combat Illicit Trade (TRACIT) recently presented to the Department of Finance, the Philippines ranked 69th out of 158 countries in terms of addressing illicit trade.

The Philippines scored 51.1 out of 100, just a few points above the global average of 49.9.

Notably, the Philippines performed below average in two of six categories that the index considered: criminal enablers of illicit trade and sectoral illicit trade indicators.

In the category of criminal enablers of illicit trade, the Philippines only scored 46.5, lower than the 53.6 average.

This evaluated how effectively countries design and enforce policies to counteract corruption, organized crime and money laundering – all key criminal activities that facilitate illicit trade.

In particular, corruption was the main concern as it undermines controls designed to prevent illicit goods from crossing borders and compromising law enforcement efforts to detect and disrupt illicit trade.

According to TRACIT, there is a need to beef up measures to criminalize corruption-related offenses, increase punitive actions for corrupt practices that facilitate illicit trade and adopt an all-of-government approach.

Further, the Philippines performed poorly in the sectoral illicit trade indicator, scoring 31.2, way below the global average of 44.6.

TRACIT said many countries lack the expertise and capabilities needed to detect illegal consignments of goods that are particularly easy to smuggle such as tobacco products.

Nonetheless, the Philippines registered above-average scores in taxation and economic environment, which looked at the strength of a country’s economic policies including tax frameworks, inflation control and management of informal economies that indirectly bolster its resilience against illicit trade.

It also performed better in the trade, customs and borders category, which evaluated a country’s ability to secure its borders and facilitate legitimate trade while intercepting illicit goods.

The country likewise scored well in terms of regulatory framework and enforcement and supply chain intermediaries.

The index identified vulnerabilities, strengths and trends within national systems. By leveraging data-driven analysis and practical recommendations, it aims to strengthen policies, enhance enforcement and promote international collaboration.

TRACIT said illicit trade remains a widespread and persistent challenge, affecting both advanced and developing economies.

“While some countries demonstrate relative strength in regulatory frameworks and enforcement, systemic vulnerabilities remain prevalent across the globe,” it said.

Of the 158 countries, Denmark ranked first with a score of 76 followed by economies belonging to the G20 and European Union attributed to their robust regulatory regimes and mature conditions for rule of law.

On the other hand, Yemen was the bottom performer, scoring 25.7. Most low-scoring economies are located in Africa as they struggle with weak regulatory frameworks, inadequate border and customs controls and poor supply chain oversight, all of which create fertile ground for illicit trade networks.