If we put our own house, Bangladesh, in order, ensure justice, give people the freedom of expression, continue with the practice of democracy by holding credible elections, put an end to acrimonious politics, establish transparent and accountable system and, above all, adopt a good pro-investment policy, then we do not need to worry about capital flight from the country. Capital will remain in our country, and more capital will make an inflow from abroad.
In other words, people, especially the rich, should feel that they have a good environment for investment and security of their lives and that of their family members. Their capital will build up in the country through savings and reinvestment. Bangladesh will not then need to raise alarms to catch the so-called thieves 'stealing' its capital.
Mere trying to catch the thieves or castigating them will not bring any result. The media has recently reported that a huge amount of stolen money from Bangladesh has piled up in the Swiss banks. Bangladesh should, however, be aware of the fact that stolen money is going to the overseas banks, including Swiss banks, not only from Bangladesh but also from many conflict-stricken countries like Nigeria, Syria, Iraq and many other impoverished countries.
Capital flight has a relation to peace. Wars and civil strife drive money outside the borders of countries suffering from these phenomena. Uncertainty about the future induces capital flight.
There is no a civil strife per se in Bangladesh, but the country has been suffering from a kind of political discontent which, many apprehend, may give rise to social or civil chaos any time. The country could not hold acceptable and inclusive elections in the recent past, and a kind of deep discontent prevails among its citizenry. So the people, who have become rich overnight, are thinking over what to do with their riches. Many among them do not apparently feel safe to keep all their money here.
Though some amount of capital has in recent years made an inward movement from abroad seeing much higher returns from investment in the country, Bangladesh has not received any foreign investment in the competitive sectors of the economy.
Bangladesh cares much for foreign capital, but cares less when domestic capital makes an outward journey. With restrictions put on its outward movement, the country's capital account is not free. When capital transfer beyond Bangladesh borders remains restricted, how can the Bangladesh citizens take so much money outside the country? Here Bangladesh policymakers seem to be short of right thinking. Money does not have geographical boundary, it flows across boundaries almost freely. In the past, many countries of the world have tried to keep money at home by putting hundred and one restrictions, but they failed. Money found way to land abroad bypassing restrictions slapped on such movement.
'Hundi' - a private and unacceptable way of money transfer from one country to another - is still freely used throughout the world. Under-invoicing and over-invoicing by the business people are the other tools of taking money illegally outside the country. The important thing is having the money; taking money from one country to another is not difficult.
Globalisation has made the so-called illegal transfer of money even easier. More money now flows every day across the borders of the countries of the world than any time in the past.
Money has a tendency to end up in safe 'vaults' which are being offered by the advanced countries of the West. The western countries are tough on money laundering, but not tough enough on the illegal transfer of money when they see that the transferred money lands in their territories.
Who use the Swiss banks' money? Definitely the western creditors. Swiss banks' money does not remain 'Swiss money' forever. Swiss banks' money becomes British, German or French money through lending and re-lending.
At home, Bangladesh needs to put an end to the plundering of people's wealth. So long as the easy and ill-gotten money will keep on piling in a few hands, a portion of that money will be finding way to foreign lands illegally.
The only way of putting an end to or at least reducing the extent of capital flight is ensuring peace and security for all and removing uncertainties. Bangladesh also needs to review its foreign exchange restrictions, making the capital account more flexible.
The writer is Professor of Economics, University of Dhaka.
abuahmedecon@yahoo.com
All about our \\\'stolen\\\' money
Abu Ahmed | Published: July 22, 2014 00:00:00 | Updated: November 30, 2026 06:01:00
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