Why capital flies out of the country

Many wealthy Bangladeshis have purchased houses, shops and other assets in other parts of the world, especially in the countries of their liking like the US, Canada, the UK, Malaysia and Dubai. The rich have the money and so they have the choices - many of them choosing to earn money in Bangladesh, but spending it outside the country. Many of them have dual citizenships, that is, they are at the same time citizens of the country of origin, Bangladesh, and also of the countries where they have settled in. The most preferred country for settlement and citizenship is the US, followed by Canada, the UK and Australia.
The rich Bangladeshis, having money and citizenship abroad, are in some sense global citizens. These people shuttle between Bangladesh and other countries they and their family members live in. The main reason for their coming back to Bangladesh again and again is to run the businesses which they either left behind or is trying to set up new ones.
Who are these Bangladeshis who have got global citizenship? These are the people who earned hefty amount of money from RMG (ready-made garment) business, stock market brokering, corrupt practices while holding government offices and others who used their connection with the government. For some, Bangladesh is a very fertile country to be rich quickly but for others, who constitute 90 per cent of the population, maintaining a bare minimum livelihood remains a distant dream.
The income distribution in Bangladesh is so uneven that 90 per cent of the GDP (Gross Domestic Product) growth goes to top 10 per cent rich people of the country. Many sectors, such as power and energy, do not face any competition, nor are they regulated to a level that can protect the interests of the public. As a result, earning money was made easy for the so-called investors in these sectors.
Normally with the wealth accumulated from the monopoly businesses, if invested in the economy, the country's economic growth should get accelerated. But in Bangladesh, that is not the case. Here investment is taking place only in sectors where prices can be set at the investors' will. As a result, the vast areas of the economy, where there seems to be some sort of competition, are remaining without investment.
In the recent years, Bangladesh is having more savings than investment. The excess savings are reportedly getting their way into foreign lands. On the other hand, the country itself is remaining barren without investment. Even a net capital outflow is taking place in case of foreign direct investment. Many multinational companies are taking their entire profit outside Bangladesh. They are reluctant to reinvest their retained earnings here. This also means, the multinationals are not interested in scaling up their businesses in Bangladesh.
Why is the Bangladesh economy remaining without investment? The main reason is political. The investors find divisive politics is tearing apart the country. They fear Bangladesh's acrimonious politics may turn into street violence any time.
The investors believe Bangladesh's democratic system is not strong enough to defuse tension that is prevailing in society. They see, here everyone talks about democracy but in reality they do not go by democratic norms. Here the main purpose is to cling to power or how to retain it for ever. The opposing views are hardly tolerated. As a result, many people, especially the rich, are not feeling safe with their lives and want to move elsewhere in the world. These people feel, though Bangladesh is not formally at war against any one, in reality the country is at war against itself. In this situation, one thing is certainly to happen, that is, the capital flight.
The Bangladesh economy has the potentiality of growing by 7.0 per cent or more per annum but it is growing below 6.0 per cent. The main reason is not the absence of good infrastructure. Infrastructural bottlenecks were there always but that did not prevent Bangladesh from receiving enough investment in the past to grow beyond 6.0 per cent.
If the present trend in investment scenario continues, Bangladesh may fall into an impoverished situation in the coming days. If that happens, the main economic indicators will go from bad to worse. There will be more social conflicts. In that situation, Bangladesh will lose all hopes.
The hard fact is that Bangladesh will never know how much money was taken away out of the country by its rich citizens.
The writer is a Professor of Economics, University of Dhaka.
 abuahmedecon@yahoo.com