The high-profit, low-risk nature of the crime makes it a 'reliable and low-key source of funding' for groups such as the Jemaah Islamiyah and Abu Sayyaf, according to Jeffrey Williams, managing director of think tank Orion Support and a former counter-terrorism expert with the US Air Force.

No figures were available as to how much of the estimated 650 billion dollars (S$901 billion) in proceeds annually from worldwide piracy goes to terrorist groups.

The estimate quoted by Williams was based on FBI figures.

But evidence, including documents seized from Al-Qaeda camps, has shown that terror groups have 'moved in on intellectual property crime' after traditional sources of funding dried up after the Sept 11 attacks, Mr Williams told the Protect security forum in the Philippine capital.

Mr Williams said groups such as the Abu Sayyaf and the JI were known to be engaged in counterfeit operations, mostly focusing on medicines and cigarettes.

The Philippines and Indonesia, which are both on the US government's list of top intellectual property violators, are known to be used as a 'support base for Middle Eastern and Asian terrorist groups,' Mr Williams said.

The first World Trade Centre bombing in 1993 was planned in Manila and funded largely through the sale of counterfeit shirts, papers presented at the forum said.

The International Anticounterfeiting Coalition meanwhile has warned that terrorist groups could use counterfeit medicines with deadly toxins in biological warfare, Williams said.

'Chemical and biological threats to the US and their allies will become more widespread as such capabilities are easier to develop, hide and deploy than missiles armed with WMD (weapons of mass destruction),' he added.

Rohan Gunaratna, who heads the Singapore-based International Centre for Political Violence and Terrorism Research, warned militant groups in the region 'will follow in the footsteps of Al-Qaeda' and would likely try to carry out more high-impact, high-fatality attacks. -- AFP