What’s new? Shan State has long been a centre of conflict and illicit drug production – initially heroin, then methamphetamine tablets. Good infrastructure, proximity to precursor supplies from China and safe haven provided by pro-government militias and in rebel-held enclaves have also made it a major global source of high purity crystal meth.

Why does it matter? Drug production and profits are now so vast that they dwarf the formal sector of Shan State and are at the centre of its political economy. This greatly complicates efforts to resolve the area’s ethnic conflicts and undermines the prospects for better governance and inclusive economic growth in the state.

What should be done? The government should redouble its drug control and anti-corruption efforts, focusing on major players in the drug trade. Education and harm reduction should replace criminal penalties for low level offenders. The military should reform – and ultimately disband – militias and other pro-government paramilitary forces and pursue a comprehensive peace settlement for the state.