COVID-19 Could Spark a New Era of Piracy in Southeast Asia

Out of all the possible aftershocks from the COVID-19 pandemic, a surge in piracy may not be the most obvious. But Southeast Asia – and those countries so dependent on trade passing peacefully through the region – should anticipate it.

Research shows that people turn to piracy when economic opportunities elsewhere are scarce. It is a potentially lucrative profession; states and companies frequently pay ransoms set by pirates without much fuss since insurance more than covers the cost of doing so. In addition, shipping companies cut down on crews and safety measures to save on costs at times of economic hardship, making them more vulnerable to piracy (and armed robbery at sea).

Piracy was already trending upward in the first quarter of 2020, mostly in the traditional hotspots of the Malacca Strait, the Bay of Bengal, and the Sulu and Celebes Seas. The number of pirate attacks and armed robberies at sea in the first months of 2020 were three times the number at the same time last year. Now, with the impending economic disaster from COVID-19, ASEAN states and concerned stakeholders in the region must face the uncomfortable fact that increased crime in Southeast Asian seas is inevitable.

Global trade is in a nosedive caused by the pandemic’s chilling effects on the time-sensitive shipping industry and the “doubleshock” of no supply followed by no demand affecting China’s manufacturing sector. Both of these external realities will hit the trade-dependent, China-entangled economies of Southeast Asia hard, and they are likely to be replicated domestically as these countries cycle through their own public health emergencies. The effects may even worsen given some countries’ poor testing capacities. The World Bank forecast for ASEAN plus Timor-Leste is dismal. It projects negative 3.5 percent growth in Indonesia and negative 4.6 percent growth for Malaysia. The best-case projection for Thailand is a 3 percent contraction. Southeast Asia as a whole will tumble from near-constant growth over the last decade to zero economic growth. With China’s own economy headed for stagnation, the state and its investors are unlikely to offer a lifeline out of the crisis. Even if public health capacity proves sufficient (which does not seem to be the case so far), the economic effects will precipitate unavoidable political strife and thinner budgets. Solid, growing economies have been the norm for so long that a sudden crash invokes the politically tumultuous 1998 Asian Financial Crisis.

Now, other factors are compounding the likelihood of an outright surge in Southeast Asian piracy. Precipitous oil prices have created an unprecedented oversupply of crude, to the point that there is insufficient storage on land – leaving offshore storage in floating tankers as the only option for many companies. Consequently, China has dramatically ramped up its production of oil tankers, and it is projected that some 14 million barrels of oil will go into storage per day for this month. These tankers are filled to the brim with “black gold” and sitting in port with no destination. Other tankers are sailing to East and Southeast Asia to idle at ports with cheaper storage costs and laxer security. They present the juiciest possible targets for aspiring pirates.

Most piracy is unaffiliated with any sort of armed group, and amounts to little more than petty theft or kidnapping for an expected ransom. Minor piracy and armed robbery of a ship at port is not an existential threat to any country and will likely dissipate with economic recovery. However, rebel groups or terrorist outfits turning to piracy as a main revenue stream is a truly dangerous possibility, and warrants preventative action. Rebel groups in Myanmar or the southern Philippines could use ransomed crew members or whole ships to fund their militancy, accruing resources and inspiring others. The Abu Sayyaf Group infamously engaged in piracy and attacks on diving resorts to recoup losses in foreign funding during the mid-2000s, and were only beaten back after a sustained campaign by the Philippine armed forces around 2016.

Yet Abu Sayyaf and similarly aligned groups now exploit the seas between the Philippines, Malaysia, and Indonesia for armed robbery and the transportation of equipment and fighters on behalf of the transnational Islamic State. If other armed groups in the region adopt this tactic, the internal stability of certain Southeast Asian countries and their ability to come out of the COVID-19 crisis still intact will suffer. For a region at the center of the global economy, unfettered piracy and newly emboldened insurgencies could prolong the global recession even after the pandemic passes.

Preventative measures can help address the growing threat of piracy in Southeast Asia.

First, regional states’ respective coast guards need to sit down and plan for a near-term surge in piracy. The Trilateral Cooperation Agreement between Indonesia, Malaysia, and the Philippines proved useful in cutting down piracy and kidnappings in the Sulu and Celebes Seas that connect all three countries. An increased pace in joint patrols in those most vulnerable areas – the Malacca Strait, the Sulu and Celebes Seas, and the Gulf of Thailand – would help mitigate some of the security issues associated with economic decline. The next ASEAN Regional Forum Intersessional Meeting on Maritime Security should assess how implementation of its 2018-2020 work plan went in this respect. Outside countries like India could augment joint patrols in areas like the Bay of Bengal, where there is a distinct lack of capacity in maritime domain awareness and law enforcement.

Second, the United States and other external states with a stake in Southeast Asian stability should help cushion the economic fall of maritime Southeast Asian countries where possible and aid in their recovery. The foreign secretary of the Philippines pleaded for as much at a recent ASEAN-U.S. meeting, asking for a respite from China’s aggressive South China Sea pressure campaign amid the COVID-19 fallout. Prioritizing economic support to Brunei, Indonesia, Malaysia, and the Philippines (BIMP-EAGA states) would mitigate some of the worst knock-on effects, solve underlying issues driving piracy, and sew goodwill.

This could ultimately be a good test of the United States’ newly established International Development Finance Corporation. By aligning the IDFC with BIMP-EAGA, the United States could help inject money and employment opportunities into those areas most susceptible to piracy and permanently improve Southeast Asia’s frontier market infrastructure to boot. The Department of Transport’s Blue Dot Network could also help identify and hold accountable substandard ports and storage facilities with poor security measures – the likely targets of armed robbery.

Stakeholders in Southeast Asia should invest in whatever tools are necessary to keep the coming cascade of crises to a bare minimum. The COVID-19 pandemic will have wide-ranging effects far beyond the life cycle of the virus itself. Economic depression is just one of them, but a new era of piracy doesn’t necessarily have to be another.