The Origins of Southeast Asia's ‘Scamdemic'

The Diplomat

08-08-2025

Over the past decade, Southeast Asia has become a major hub for cyber-enabled fraud, human trafficking, and financial crime. These scams target victims around the world through fraudulent investment schemes and trading platforms, generating vast illicit profits. 'Scam: Inside Southeast Asia's Cybercrime Compounds' is the first book to give a comprehensive account of this industry. Written by Ivan Franceschini, Ling Li, and Mark Bo, it is a deeply researched and compelling study, drawing on extensive fieldwork, careful access to difficult sites, and sensitive interviewing, as well as the authors' decades of experience working in Southeast Asia and China.
'Scam' makes at least three major contributions. First, it offers the most complete synthesis to date of how the scam industry emerged, moved, and embedded itself in Southeast Asia. Second, it develops the concept of compound capitalism to explain the industry's internal organization and the political and economic systems that sustain it. Third, it emphasizes the human dimension at the center of the story, showing how recruitment, coercion, and exploitation shape the lived experiences of those inside the scam compounds operating in parts of the region.
The first contribution comes through in the opening chapters, which trace the scams' trajectory from Taiwan's phone fraud operations in the 1990s, to mainland China, and then to Southeast Asia in the 2010s. This chronology shows how the industry adapted to enforcement pressure, relocating to jurisdictions with permissive regulation and selective oversight.
Early chapters also examine the complex and sometimes politically sensitive relationship between the scams and the Chinese state. The authors reject claims that the industry is centrally directed from Beijing. Instead, they describe a patchwork of responses shaped by law enforcement priorities, political caution in dealings with host governments, and moments of inaction linked to diplomatic considerations. They also note instances where Chinese-built infrastructure has ended up housing scam operations, framing this as a problem of weak oversight rather than deliberate policy.
The book draws throughout on examples from Cambodia, Laos, Myanmar, and the Philippines to show how the industry has embedded in different contexts. These are not discrete case studies but illustrative examples of the conditions in which scams take hold. In Cambodia, operations are closely linked to casinos, real estate developments, and business or industrial parks, often in plain view. In Laos, scams concentrate in industrial zones dominated by Chinese investment, where regulatory oversight is minimal and enforcement is rare. In Myanmar, they are spread across the country, but operate most visibly in border areas controlled by militias and armed groups, whose activities are often tolerated or supported by the central state, in regions with long histories of illicit trade. The Philippines offers a contrasting trajectory: the scams grew alongside the regulated gambling sector, exploiting complex licensing and local brokerage networks before facing more determined federal enforcement. These examples show that scams embed most successfully in jurisdictions where regulatory gaps intersect with political or economic incentives to tolerate them.
In highlighting these varied settings, the authors prompt political questions that will stimulate further research. Why has the industry embedded more deeply in some countries than others? How have local political dynamics shaped its resilience, even as its costs become more visible? Why has enforcement in the Philippines, for example, fragmented operations in a way not seen in Cambodia or Laos?
The book's second contribution is the development of the concept of 'compound capitalism' to capture how scam compounds operate. Compounds are enclosed sites where workers both live and work, under constant supervision and restricted movement. They function as tightly controlled zones of labor, space, and profit extraction, comparable to South African mining compounds and China's dormitory labor regime. Sustained by political protection, these 'zones of exception' link into broader networks of capital and data flows, embedding the industry within local economies and transnational profit structures. This helps explain how the scams have become so entrenched, while also pointing to questions about how such arrangements adapt across different political and economic contexts.
Franceschini, Li, and Bo map the range of actors who benefit from these arrangements. At the center are the operators, investors, and brokers who run the compounds and recruit workers, often linked to transnational organized crime networks. Political and economic elites are also part of the picture, whether ruling party members in Cambodia or Laos, or paramilitary and state officials in Myanmar. But the authors also show how important the trade has become for local economies. Property developments, service providers, and brokers all profit. Landlords, local businesses, and surrounding communities gain economically. This wider web of beneficiaries helps explain why the industry embeds so securely in certain places, despite its visibility.
The third contribution, the human dimension of the labor force involved in the scams, is woven throughout but comes into sharp focus in Chapters 2 and 5. Chapter 2 examines recruitment, showing how people are drawn in by job offers, sometimes from acquaintances, promising high wages abroad. Economic insecurity makes these offers persuasive, while brokers profit from placing recruits into compounds. Chapter 5 turns to exit, where leaving is dangerous and uncertain. Compounds are guarded, violence is routine, and ransom demands are common. Rescue often depends on NGOs, foreign embassies, or private negotiation, while repatriation is complicated by limited cooperation between states and the misclassification of trafficked workers as offenders.
In taking this approach, the authors' analysis complicates portrayals of those working in the compounds. While they may be involved in perpetrating crimes, many entered through deception or coercion and are held in conditions that align with trafficking. The authors resist framing them as an entirely distinct category of victim, instead situating their experiences within broader patterns of forced and coerced labor. They also draw attention to what happens after workers leave the compounds, a stage often overlooked in public discussions. Survivors are frequently assumed to be safe once they are released, but exit is only the start of another uncertain journey, shaped by legal misclassification, limited state support, and the lasting consequences of coercion and violence.
Enforcement by host governments, as the book shows, is reactive, uneven, and often cosmetic. In some cases, crackdowns are prompted by international attention or diplomatic pressure. Often, operations are relocated rather than dismantled, shifting to jurisdictions or areas where oversight is weaker. The Philippines stands out for enforcement that has disrupted parts of the industry, though even here the effect is partial. These patterns raise questions about the role of enforcement capacity, political will, and international cooperation in shaping the industry's resilience.
The book makes clear that scams are not static. Crackdowns in one jurisdiction and shifting political conditions in another are pushing operations into new locations. This is borne out by recent findings from the U.N. Office on Drugs and Crime, which has documented the spread of scam operations to the Pacific, Africa, and other regions. While 'Scam' keeps its focus on Southeast Asia, its analysis highlights the conditions under which the industry could take root elsewhere. It is a reminder of how easily scams can spread and integrate into local economies, underscoring the role of corrupt local conditions, the failures of international regulation, the gaps in financial oversight, and the laundering mechanisms that allow these operations to move across borders with relative ease.
'Scam' is a comprehensive and carefully researched account that will become an essential reference for those interested in the scamming industry in Southeast Asia and beyond. By setting out the industry's history, organization, and human impact with such clarity, it provides both a definitive study of one of Southeast Asia's most entrenched illicit economies and a foundation for thinking about how this trade is evolving as a global phenomenon.
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