Eye out for shady business
ECONOMISTS believe that the size of the underground economy affects gross domestic product (GDP) to some degree while criminologists recognise that there are clear links between it and organised crime.
The underground economy, also known as shadow economy or black economy, is often associated with criminal activities including smuggling of weapons, tobacco and drugs, prostitution, illegal gambling dens and online gaming activities, and human trafficking.
In 2015, Datuk Seri Hishammuddin Hussein, then the Home Minister, said that the “shadow economy” in Malaysia had grown to RM10bil and required the government to initiate tougher measures to control the illegal activities as they may threaten national security.
In 2016, Datuk Chua Tee Yong, then the deputy Finance Minister, said the underground economy amounted to 20% to 30% of Malaysia’s gross domestic product (GDP) based on World Bank calculations.
The police Commercial Crimes Investigation Department has also reported that “organised crime and financial crime together cost Malaysia between RM15bil and RM25bil per annum.”
With the influx of sex workers from neighbouring countries, prostitution in Malaysia has become notorious as a commercialised sex “industry” despite ongoing efforts to crack down on human trafficking and sex tourism by the authorities. Based on unofficial estimates, there are about 150,000 prostitutes in Malaysia, with approximately 10,000 to 20,000 of them in the Klang Valley alone.
Customs director-general Datuk Seri Subromaniam Tholasy reported that in 2018, the underground economy such as illegal smuggling was worth between RM5bil and RM7bil yearly. The department has recently seized contraband cigarettes valued at RM1bil in taxes.
Last October, a major operation launched by the police to eradicate illegal gambling dens and online gaming activities saw 12,449 raids and 22,300 people arrested nationwide. They also seized and froze accounts amounting to RM4.76mil, and 26,275 gambling machines, simulators and electronic tablets.
Illegal 4D and gaming operators and computer-related gaming machines alone cost the government a lot in revenue.
Corruption is the main cause of these illegal activities. In this context, the MACC has arrested dozens of enforcement personnel, including police officers, for allegedly accepting bribes from illegal gambling and massage centres that are associated with vice activities.
A more serious contention is the allegation that heavyweight politicians are financing, backing or involved in the underground economy.
The primary concern of law enforcement agencies is that proceeds from the underground economy, which are converted into legitimate money through money laundering activities, would be used to further enhance the illegal activities.
The government must take more serious measures to control the underground economy and activities of criminal syndicates. There must be coordination among the police and other law enforcement agencies to continuously disrupt the illegal activities of organised criminals, cut off their main source of funds and seize and freeze the assets of the financiers.
Judges who preside over these cases in court must mete out severe sentences on the criminals.
Finally, everyone in society must be educated that they can be either part of the problem or the solution. It is a tough battle but we must not stop fighting the underground economy or we will suffer the consequences.