Three aspects of the economy that adversely affect the nation are being reviewed widely in the mainstream media. The Finance Minister openly admitted recently that corruption eats up 2-3 per cent of the gross domestic product (GDP) while a Washington-based research organisation revealed that 1.1 per cent of the country's GDP is lost by way of capital flight to foreign countries.
The above-mentioned two factors are quite gloomy, to say the least. But, another source, the International Labour Organisation (ILO) in a study has painted a somewhat bright picture about the country's remittance earnings that the hardworking blue colour workers are sending home mostly to maintain their families. The educated job seekers, who enjoy the status of being called non-resident Bangladeshis (NRBs), don't, however, feature as money-remitting expatriates. They prefer to keep their savings in foreign banks for the rainy days.
The flow of foreign exchange remittance has increased nearly sixfold during the last decade and Bangladesh has become the world's sixth top recipient country and the second in South Asia. The contribution of remittance to the country's GDP is found very positive - with one per cent rise in the remittance inflow reflects 0.12 percentage point rise in per capita GDP. A laudable contribution, indeed.
Both corruption and capital flight are known issues that have been afflicting the economy for a long time. While the finance minister only recently admitted that corruption eats up 2-3 per cent of the national economy, the World Bank had repeatedly mentioned this in its annual reports since late 1980s and the politicians and the finance ministers in particular, of the time had kept quiet about it. Finance Minister AMA Muhith deserves congratulations for bringing the issue into the open for all to discuss and create public awareness against such a social scourge.
The Washington-based research agency Global Financial Integrity (GFI) has provided interesting details of capital flight from Bangladesh. For example, between 2008 and 2012, 38.5 per cent of combined ODA (Official Development Assistance) and foreign investment has been accounted for capital flight. This works out in terms of per capita loss at $6.84. GFI also points out that in 10 years, between 2003 and 2012, on an average, $1.31 billion was funnelled out of the country in a year. This adds up to a whopping $13.1 billion. This sum, if available, could finance nearly 59 per cent of the country's education expenses or over 30 per cent of the nation's expenses on health.
UNLESS LOOPHOLES ARE PLUGGED, SFYP MAY FLOP: Well over 60 per cent of the capital flight occurs in trade through under- or over-invoicing, which is widely practised in most developing countries. This and a number of other measures adopted by the corrupt businessmen and their partner officials for conducting the heinous crime clearly indicates that the country is suffering from a severe countervailing economic force that is powerful enough to hoodwink the powers that be and get away without a scratch. It goes without saying that when the country's illicit outflows of fund are high, its development score tends to be low. And one also must not forget that there exists a strong connection between the level of outflow of funds and the poverty gap.
Economists are concerned with the prevailing situation. Despite some efforts at preventing such illicit outflows of funds, various anti-money laundering measures are failing. This gives rise to feeling that things are not working well and adequate measures have not been taken to plug the loopholes through which the perpetrators - both businesses and their collaborators in the powerful government agencies - are merrily subverting the rules to their advantage.
This means that the government's financial action task force's anti-money laundering measures are either not without loopholes and/or not being properly implemented. Any laxity in monitoring and implementation of the measures will fail to make any dent in money laundering. This also reminds all concerned what Finance Minister Muhith has already stated: widespread corruption at all levels is eating away 2-3 per cent of the GDP and one per cent is lost due to political violence.
Muhith has announced that the government's current seventh five-year plan that ends in 2020 has a target of creating 18.7 million new jobs against 12.5 million new entrants in the job market during this five-year period. Targets also include 8.0 per cent GDP growth, containing inflation at 5.5 per cent, raising domestic investment to 34.4 per cent from 26.6 per cent of GDP, raising public investment to 7.8 per cent and national savings to 32.1 per cent of GDP.
While the targets appear somewhat ambitious, these are still achievable provided the loopholes in money-laundering measures are effectively plugged through strict monitoring and implementation of rules and political stability is ensured.
sayed.kamaluddin@gmail.com
Corruption, capital flight and remittance: Three sides of Bangladesh economy
Sayed Kamaluddin | Published: July 21, 2015 00:00:00 | Updated: November 30, 2024 06:01:00
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