US GOV'T: BANNED DRUG TRADE IN RP A-BOOM

Illegal drug trade in the Philippines has evolved into a
billion-dollar industry over the past few years, according to a 2006
international narcotics control report of the US State Department.

The report cited that the Philippines continues to experience an
increase in foreign organized criminal activity from China, Hong Kong
and Taiwan.

China and Taiwan-based traffickers remain the most influential foreign
groups operating in the Philippines, it added.

The US State Department report said most of the transactions involving
illegal narcotics from other countries to the Philippines are done
using letters of credit.

"There is little cash and negligible amounts of US dollars used in the
transactions, except for the small amounts of narcotics that make it
all the way to the United States for street sale. Drugs circulated
within the Philippines are usually exchanged for local currency," it
added.

The report said it found that rebels in the country obtain funds by
trading arms and drugs and by going into money laundering.

"Reportedly, insurgency groups operating in the Philippines fund their
activities, in part, through the trafficking of narcotics and arms, as
well as engaging in money laundering through alleged ties to organized
crime," it said.

The report confirmed that proceeds from the corruption activities by
government officials have also been a source of laundered funds.

The communist New People's Army, which has been tagged as a foreign
terrorist organization by the US and which has clusters of rebels in
various areas in the Philippines, according to the report, gets
funding by providing safe haven and security for many of the marijuana
growers in the northern part of the country and collects
"revolutionary taxes" from sellers of illegal drugs.

The report said it found that terrorist organizations are also
involved in the illegal drugs business.

The State Department said the Abu Sayyaf extremist group, which
operates in southern Philippines and has also been labeled a foreign
terrorist organization by the US and the United Nations, runs a
protection racket for foreign illegal drugs trafficking syndicates.

The report added the Philippines remains a transshipment point for
further export of crystal methamphetamine hydrochloride, locally known
as shabu, to Japan, Australia, Canada, South Korea, and the US,
including Guam and Saipan.

It said Ecstasy, another amphetamine-type stimulant, was rapidly
becoming a popular recreational drug among the rich, young and adults
alike, who obtain them easily in bars and clubs. An Ecstacy pill is
believed to cost locally at least P2,000 each.

Aside from shabu and other prohibited drugs, the Philippines also
produces, consumes and exports marijuana, the report said.

Most of the marijuana produced in the Philippines is for local
consumption, with the remainder smuggled to Australia, it added.

The State Department report said corruption and inefficiency among
government officials hamper efforts to stem the illegal drugs trade.

"Corruption among the police, judiciary, and elected officials
continues to be a significant impediment to Philippine law enforcement
efforts," it said.

The US expressed concern that the Philippine government, in line with
its Dangerous Drugs Act (DDA), had made no significant arrests or
prosecution of illegal drugs producers and traders in 2005.

"There have been a few arrests of PNP (Philippine National Police) and
PDEA (Philippine Drug Enforcement Agency) officers for dealing drugs
and selling seized chemicals, both of which are also prohibited under
the DDA," it said.

The US State Department, however, said it found no evidence of any
senior official of the Philippine government being directly engaged in
or facilitate the illicit production or distribution of illegal
narcotics, or even participating in the laundering of proceeds from
illegal drug transactions.

In February, police raided a cluster of drug dens in an impoverished
community in Pasig City and arrested close to 300 persons, including
women and children, who were suspected to be using illegal drugs or
selling them.