The Rise of the 'Scam State': How a Multibillion-Dollar Industry has Taken Root in Southeast Asia
In the days leading up to the explosions, the business park was slowly being emptied. When the bombs struck, they brought down empty office blocks, demolished bustling food halls, and toppled a four-story hospital, silent karaoke complexes, deserted gyms, and dorm rooms. This marked the end of KK Park, one of Southeast Asia's most notorious 'scam centers', according to press releases from Myanmar's junta. The facility had housed tens of thousands of people, forcing them to relentlessly defraud people worldwide. Now, it was being dismantled piece by piece.
However, the park's operators had already fled, tipped off about an impending crackdown. Over 1,000 laborers managed to cross the border, and approximately 2,000 were detained. But up to 20,000 laborers, likely trafficked and brutalized, had vanished. Away from the junta's cameras, scam centers like KK Park have continued to thrive.
The global scam industry, now worth billions, has become so pervasive that experts are calling it the 'scam state'. This term, akin to 'narco-state', refers to countries where an illicit industry has infiltrated legitimate institutions, reshaping the economy, corrupting governments, and creating state reliance on illegal networks.KK Park's raids were just the latest in a series of highly publicized crackdowns on scam centers across Southeast Asia. However, regional analysts suggest these actions are often performative or target mid-level players, amounting to 'political theater' by officials under international pressure to crack down but with little interest in eliminating a wildly profitable sector.
Jacob Sims, a visiting fellow at Harvard University's Asia Center and an expert on transnational and cybercrime in the Mekong, explains, 'It's a way of playing Whack-a-Mole, where you don’t want to hit a mole.'
In the past five years, scamming has evolved from 'small online fraud rings into an industrial-scale political economy.' Sims notes that in terms of gross GDP, it's the dominant economic engine for the entire Mekong sub-region, making it one of the dominant – if not the dominant – political engine.
Government spokespeople in Myanmar, Cambodia, and Laos did not respond to questions from the Guardian, but Myanmar's military has previously stated it is 'working to completely eradicate scam activities from their roots.' The Cambodian government has dismissed allegations of hosting one of 'the world's largest cybercrime networks supported by the powerful' as 'baseless' and 'irresponsible'.
The industry has rapidly evolved from misspelled emails and implausible Nigerian princes to a vast, sophisticated system, raking in tens of billions from victims worldwide. At its core are 'pig-butchering' scams, where relationships are cultivated online before the scammer convinces their victim to part with their money, often through 'investments' in cryptocurrency. Scammers use advanced technology, including generative AI for translation and conversation, deepfake technology for video calls, and mirrored websites to mimic real investment exchanges. One survey revealed victims were conned for an average of $155,000 each, with most losing more than half their net worth.
The massive potential profits have driven the industrialization of the scam industry. Estimates of its global size range from $70 billion to hundreds of billions, rivaling the global illicit drug trade. These centers are typically run by transnational criminal networks, often originating from China, but their epicenter has been Southeast Asia. By late 2024, cyber scamming operations in Mekong countries were generating an estimated $44 billion annually, equivalent to about 40% of the combined formal economy. This figure is considered conservative and is on the rise.
In Cambodia, one company allegedly running scam compounds across the country had $15 billion of cryptocurrency targeted in a Department of Justice seizure last month – funds equal to almost half of Cambodia's economy. With such vast profits, infrastructure has rapidly been built to facilitate the scamming operations. These hubs thrive in conflict zones and along lawless and poorly regulated border areas. In Laos, officials have reported around 400 operations in the Golden Triangle special economic zone. Cyber Scam Monitor, a collective monitoring scamming Telegram channels, police reports, media, and satellite data, has identified 253 suspected sites across Cambodia. Many are enormous and operating in public view.
The scale of these compounds indicates the extent to which the states hosting them have been compromised, claim experts. Tower states, 'These are massive pieces of infrastructure, set up very publicly. You can go to borders and observe them. You can even walk into some of them. The fact this is happening in a very public way shows just the extreme level of impunity – and the extent to which states are not only tolerating this but actually, these criminal actors are becoming state-embedded.'
In Thailand, the deputy finance minister resigned in October following allegations of links to scam operations in Cambodia, which he denies. Chen Zhi, recently hit by joint UK and US sanctions for allegedly masterminding the Prince Group scam network, was an adviser to Cambodia's prime minister. The Prince Group denies any unlawful activity. In Myanmar, scam centers have become a key financial flow for armed groups. In the Philippines, ex-mayor Alice Guo, who ran a massive scam center while in office, has been sentenced to life in prison.
Across Southeast Asia, scam masterminds are 'operating at a very high level: obtaining diplomatic credentials, becoming advisers... It is massive in terms of the level of state involvement and co-optation,' says Tower. He adds, 'It's quite unprecedented that you have an illicit market of this nature, causing global harm, with blatant impunity, and it's happening in this public way.'
