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Singapore has fallen behind other Asian countries in developing and enforcing regulations that prevent illicit trades, a new report showed.

The Southeast Asian city-state was ranked seventh out of the 17 economies in the Asia Pacific on The Economist Intelligence Unit’s Illicit Trade Environment Index , scoring lower than Hong Kong and neighbor Malaysia.

Australia topped the index, which examined countries’ ability to curb illicit trade in four categories: intellectual property; transparency and trade; customs environment and supply; and demand. New Zealand and Hong Kong rounded out the top three.

Singapore’s lower-than-expected overall ranking is largely due to its poor scores in the transparency and trade category, which measures the visibility of trade flows and governmental supervision over free trade zones. Out of 100, Singapore scored 25.8, only slightly higher than Cambodia (25); that compares to Malaysia’s 93 in the same category.

The Singaporean government’s lack of vigilance in monitoring its seven free trade zones is the main reason for the low marks, according to the EIU. Neither Singapore Customs nor any other government authority has a consistent presence inside the FTZs. Citing a 2013 report from the International Chamber of Commerce’s Business Action to Stop Counterfeiting and Piracy initiatives, the EIU argued that insufficient government oversight is a major enabler of illicit trade in all economies with FTZs. Singapore was also viewed by experts as one of the least cooperative with stakeholders.

Unlike New Zealand, which also scored low (47.8) on transparency and trade, the EIU report said Singapore’s role as an indispensable regional logistics hub has made its negligence on trade monitoring more harmful.

The report also noted Hong Kong and China’s better-than-anticipated rankings on the list. Growing out of its image as a regional hub for illicit trade, Hong Kong emerged near the top of the list (third), thanks to two decades of improving policies and institutions. For example, with a strong enforcement regime, Hong Kong managed to reduce demand for counterfeit and other illicit goods and therefore controlled the supply side; the Chinese territory topped the list of the supply and demand category.

China ranked ninth overall on the list, slightly below Singapore. While the report attributed China’s improvement to the policy and enforcement efforts the government has made over the last decade, it also pointed out that as the global manufacturing center now moves into Southeast Asian emerging markets such as Myanmar, Laos and Cambodia, the concentration of illicit trade will also likely transfer from China to those markets. Indeed, all three ranked at the bottom of the index.

Singapore has fallen behind other Asian countries in developing and enforcing regulations that prevent illicit trades, a new report showed.

The Southeast Asian city-state was ranked seventh out of the 17 economies in the Asia Pacific on The Economist Intelligence Unit’s Illicit Trade Environment Index , scoring lower than Hong Kong and neighbor Malaysia.

Australia topped the index, which examined countries’ ability to curb illicit trade in four categories: intellectual property; transparency and trade; customs environment and supply; and demand. New Zealand and Hong Kong rounded out the top three.

Singapore’s lower-than-expected overall ranking is largely due to its poor scores in the transparency and trade category, which measures the visibility of trade flows and governmental supervision over free trade zones. Out of 100, Singapore scored 25.8, only slightly higher than Cambodia (25); that compares to Malaysia’s 93 in the same category.

The Singaporean government’s lack of vigilance in monitoring its seven free trade zones is the main reason for the low marks, according to the EIU. Neither Singapore Customs nor any other government authority has a consistent presence inside the FTZs. Citing a 2013 report from the International Chamber of Commerce’s Business Action to Stop Counterfeiting and Piracy initiatives, the EIU argued that insufficient government oversight is a major enabler of illicit trade in all economies with FTZs. Singapore was also viewed by experts as one of the least cooperative with stakeholders.

Unlike New Zealand, which also scored low (47.8) on transparency and trade, the EIU report said Singapore’s role as an indispensable regional logistics hub has made its negligence on trade monitoring more harmful.

The report also noted Hong Kong and China’s better-than-anticipated rankings on the list. Growing out of its image as a regional hub for illicit trade, Hong Kong emerged near the top of the list (third), thanks to two decades of improving policies and institutions. For example, with a strong enforcement regime, Hong Kong managed to reduce demand for counterfeit and other illicit goods and therefore controlled the supply side; the Chinese territory topped the list of the supply and demand category.

China ranked ninth overall on the list, slightly below Singapore. While the report attributed China’s improvement to the policy and enforcement efforts the government has made over the last decade, it also pointed out that as the global manufacturing center now moves into Southeast Asian emerging markets such as Myanmar, Laos and Cambodia, the concentration of illicit trade will also likely transfer from China to those markets. Indeed, all three ranked at the bottom of the index.