Research objectives

1. Cross-border Smuggling in Mindanao: Its Links to Local Informal Economies and ViolenceStarjoan D. Villanueva

2. Describe the actors, system, structure, processes and issues related to illicit trading, with special attention to historical accounts and women’s participation; Analyse its historical roots and links to local informal economies and political forces that shape and perpetuate violence. Research objectives Understand the scope and depth of cross-border smuggling within the context of existing “war economies” in Mindanao:

3. Framework of analysis Economic dimension - valuation of illegal exchanges of goods, and its contribution to local informal economies; Political dimension – links between smuggling and the existence of “shadow economies” that are controlled by powerful clans and interest groups through violent means; Socio-cultural dimension - historical context and gender dimensions of cross-border smuggling, with reference to women’s participation, their vulnerabilities and coping mechanisms in dealing with conflict dynamics. Need to look at three dimensions:

4. Key Concepts (1) Smuggling as part of the illegal or ‘second economy’ described by MacGaffey covers all unofficial trading activities that are carried out quite openly, thus, intersect with official and recorded economic transactions; Factors like availability of natural resources, geographical location, access to goods and services, and transportation conditions can drive second economies to expand far beyond official economic figures. ‘Smuggling-formal economy’ connections:

5. Key Concepts (2) Paul Collier postulates that economic agenda or greed (rather than grievance) as a main driver of conflict, can motivate certain groups to exploit economic opportunities and cause them to initiate and sustain conflict; This helps explain the predatory taxes and rent-seeking activities of state officials and armed groups that benefit from illicit trade, and how favorable conditions for violence are created. ‘Smuggling-violence’ connections:

6. Key Concepts (3) Smuggling and piracy in Southeast Asia is an ancient phenomenon that dates back to the height of the Sulu sultanate in the fifteenth century; Competition over resources between traders and state actors as part of the ‘coping economy,’ and how this can lead to conflict and violence; MacGaffey’s study showed how women both struggled and exploited the opportunities offered by an expanding second economy, and gained economic independence amidst the risks. ‘Socio-cultural and gender-conflict’ connections:

7. Methodology Key informant interviews with multi-actors Oral histories/life stories of traders and Kuratong Baleleng (KB) members Social accounting matrix Desk review and analysis of related studies Case analysis (extreme case study) Researcher’s direct observations Triangulation through different tools and sources of reliable data and information:

8. Initial findings (Tawi-tawi) Cross-border smuggling on basic commodities is ‘well-recognized and highly accepted;’ Factors that drive cross-border trading with Malaysia: availability of ‘lootable’ goods and services, geographical distance, scarcity of goods and basic commodities (from the mainland), inadequate infrastructure facilities.

9. Initial findings (Tawi-tawi) ‘Allowed’ imported goods and commodities include rice, flour, sugar and other food items; ‘Hot’ items not allowed include liquor and cigarettes; Two-way transactions; goods for ‘export’ include fighting cocks (from Negros), beauty products (i.e. Belo), liquor (i.e. Tanduay) and local cigarettes.

10. Initial findings (Tawi-tawi) P60/sack of rice x 7,000 sacks per ‘kumpit’= P420K Average of 10 ‘kumpits’ ‘apprehended’ per month equivalent to unrecorded monthly income of P4.2M or P50.4M annually Rough computation of cutoms police’ unrecorded income from ‘kotong:’

11. Other findings (Tawi-tawi) Smuggling activities have no direct links to ‘shadow economies’ and conflict; Parallel human trafficking activities and narcotics trading exist, but they don’t bother traders’ activities; Women’s participation in cross-border smuggling has declined over the past few years due to absence of safe transportation, and risks from piracy and natural disasters.

12. Initial findings (Sulu) There are about 20 medium-sized ‘kumpit’ boats plying the Jolo-North Borneo trade route; These boats are chartered by small and medium-scale businesses through a broker who has direct contact with the owner of the boat; A chartered trip to Borneo from Jolo would cost about P150,000-200,000; The total value of goods shipped by the chartered boat from Borneo to Jolo is about P100-150M.

13. Initial findings (Sulu) Impression that almost everyone (i.e. business, military and police, armed groups, politicians, influential clans) is involved in illegal activities like human trafficking, gun running, narcotics trading and smuggling; There is a direct link between smuggling and local conflict, particularly clan feuds or ‘rido.’

14. Initial findings (KB) The second economy in Ozamis City is almost as big as the formal economy; proceeds from illegal drugs, particularly ‘shabu,’ can almost match the revenues generated by the formal economy; Allegedly, Ozamis is the center of narcotics trading in Western and Northern parts of Mindanao, the drop-off point of shabu coming in from Manila; Around 3-5 kilos of ‘shabu’ are delivered every month in Ozamis;

15. Initial findings (KB) The wholesale price of shabu per kilo is about P3.8 M, and the retail price in Ozamis is four times the wholesale price in Manila, or about P15.2M; There is no available data on the annual income of Ozamis but as a third class city, it is estimated roughly between P200 to P250M;

16. Initial findings (KB) There is a sharp rise in criminality after the fall of KB and its original founding members; There are individuals (mostly young ones) who are riding on the popularity of KB; The police and other security actors are not effective in curbing criminal acts due to their involvement by way of ‘kotong’ in exchange for protection.