Keeping second option open

Shamsul Huq Zahid | Published: July 10, 2016 00:00:00 | Updated: February 01, 2018 00:00:00

It is not that surprising that deposits made by Bangladesh nationals with Swiss banks recorded a 10 per cent growth in 2015 while the same from nationals of other countries, barring those from Pakistan, declined during the period. The increase was in keeping with the trend witnessed during the preceding three years.
All the funds deposited with Swiss banks may not be tainted ones. But most are and the major part of the same are taken out of the country using both legal and illegal routes.
The rise in deposits by Bangladesh nationals with Swiss banks during last four years starting from 2012 was in line with the perceived deterioration in corruption situation during the same period.
However, the growth of deposits of Bangladesh nationals with Swiss banks, estimated at US$50 million in 2015 is a small fraction of the money that is being taken out of the country annually in recent times. One international agency, the Global Financial Integrity, estimates the annual illicit outflow of funds from Bangladesh in between $8.0 and $9.0 billion during the recent periods.
Many governments across the world, particularly the developing ones, have initiated measures to curb illicit outflow of funds and some of them have initiated negotiations with the Swiss authorities to get information about such deposits and get back the stashed funds in full or, at least, a part of it.
These measures might have created some impact on the flow of funds to Swiss banks. The decline in deposits held with Swiss banks by nationals of different countries other than Bangladesh and Pakistan in 2015 substantiates such a claim.
Though a number of authorities, including the central bank, the National Board of Revenue (NBR) and the Anti-corruption Commission (ACC), do very often claim to have enforced sufficient anti-money laundering measures, no visible impact of the same on the outflow of funds from Bangladesh is visible.
Â Undeniably, it is hard to stop outflow of capital if its owners are determined to transfer it. In this age of information technology the job has become even easier.
Illegal funds tend to fly out more than clean money for obvious reason. Owners of small amounts do not usually bother to transfer it. But holders of big amounts always remain concerned about the safety. They usually transfer a part or whole of the same outside the country.
The question is, why should they be worried about the safety of the ill-gotten money when no government agency is trying seriously to locate the same and take it way? The truth is they are not willing to take any risk.Â Besides, these people do consider such funds, invested in real estate or kept with foreign banks, as security for themselves and also for their 'future generations'. Â
However, it is not that only tainted money is going out of the country for fear of being 'caught one day'. Legally earned money is also being taken out of the country using illegal means because of the restrictions on transfer of funds abroad. Such funds are also invested in real estate or deposited with foreign banks.
Economists and relevant others often show bureaucratic hurdles, gas and energy crisis, high cost of doing business and political uncertainty as reasons for substantial rise in the flight of capital in recent years. The factors cited are very much there and those have been hindering investment in the country for years together.
But there are other reasons. It is only the affluent people, who have accumulated wealth through fair or foul means, are transferring funds abroad. Even the most conducive investment climate in place would not be able to fully stop illicit outflow of funds. Possibly, the volume of fund flow would have reduced a bit, nothing more.
One plausible reason behind the continuous increase in the flight of capital is the rise in the volume of graft money which is shared by both politicians and bureaucrats. The development spending has been going up continuously. The inclusion of mega projects and the repeated escalation in their costs amid delays after delays, it is suspected, have been contributing to the rise in the volume of graft money in the country.Â Moreover, the high-cost suppliers' credit taken for bankrolling large development projects is thought to be yet another source of graft money in the country.
The dishonest section of businesses has been transferring funds and keeping a part of the export proceeds outside the country through normal trade transactions. And this is no secret. The relevant authorities do know this, yet they are not that serious about stopping it.
Funds have been flying out even in greater volume from relatively affluent countries. Bangladesh is no exception. But the worrying part of the issue is the substantial increase in the flight of capital in recent years.
Bangladesh's economy is growing at a decent pace. The per capita income has been going up continuously. In such a positive situation, why should the affluent section of people transfer funds abroad in large volumes?
It could be that overall political, economic and social conditions do not make some affluent people that optimistic about the future of the country. Thus, they are keeping their second option open so that they and the members of their families can fly out to safe shelters abroad whenever such a need arises.
Â Â Â zahidmar10@gmail.com