।। Mainul Islam ।।
Capital flight has become a big obstacle to the economic development of Bangladesh for the last one decade. Although the gross domestic product (GDP) is gradually increasing, the GDP growth rate is registering only one to one and half per cent due to increased flight of capital from the country. The ratio of private sector investment and GDP is revolving around 23 per cent. On the contrary the ratio of government investment and GDP has crossed 9 per cent in the last one decade. That is why the GDP rate is not decreasing.
These money launderers are the number one enemy. If they would not have siphoned off money, Bangladesh would have left not only India but also Sri Lanka far behind. The country could be at the top in terms of per capita income. That is why the government and all Bangladeshis at home and abroad should detest, boycott and resist them.
Many may not know, but back in the day Bengal had been a most resourceful region in the Indian sub-continent for several hundred years before the British India Company made Bengal a colony. World renowned explorer Ibn Battuta, who had come to this country during the reign of Sultan Fakhruddin Mubarak Shah, first gave this recognition. For the second time, this recognition appeared in historic narratives of famous historian Abul Fazl of Moghul Emperor Akbar’s ‘Navratna’ Durbar.
”Corruption during the period of Bangabandhu was exceptional as the menace did not become common phenomena although the corruption spread post-independence since 1973. Although Ziaur Rahman presented himself as an honest man, corruption and plunder of capital started increasing in his regime. Institutional corruption spread during the reign of autocrat Ershad. Since the inception of election politics in 1991, the same processes were further consolidated.”
In his book Akbarnama, he acknowledged that the most resourceful province is ‘Subha Bangla’ in the Indian sub-continent during the rule of Akbar. Later, the recognition was given by François Bernier who was court physician of Aurangzeb.
According to Bernier, while Egypt had the reputation as the most resourceful region in the world, Bengal was the real claimant of that honour during the 17th century. Within a few days, another French businessman Tavernier supported Bernier. Tavernier was aware of this region as he came several times for the trade of tannery. The matter gained further currency as Karl Marx quoted this too.
After invasion into Bengal in 1757, British India Company plundered the resources and shipped these to England in the vessels for 100 years. The amount of such plundered cargo was so much that there was a worst ship jam at London port for about three months simply to unload all this booty. US historian Brooks Adams mentioned this too,
As stories of looting in Bengal have been proved in the research of many more historians, this looting has been now named ‘The Bengal Loot’. Then East Bengal or East Pakistan became victim of looting, deprivation and capital flight once again for about 24 years as it became a colony internally since 1947. After achievement of independence, Bangladesh was branded as an ‘international basket case’ and ‘bottomless basket’ by Henry Kissinger in 1972.
After the looting during two colonies of 214 years, why was the once most resourceful region of the Indian-sub continent humiliated in such a way? If the matter is analysed then it would be clear why I am leveling the launderers as number one enemy of the country.
Inward remittance did not become a factor for economy during the tenure of Bangabandhu. Bangladesh was the most attractive source country of labour for city development activities of the oil exporting countries in the Middle East due to first global oil crisis in 1973. At the end of seventies, the labour migration gained pace.
The labour migration has increased in the last four decades. Alongside the Middle East, migration to other countries increased too since the nineties. In the last 30 years, US, Malaysia, Singapore, Italy, Australia and Canada have been destinations of Bangladeshis. At the end of 2021, it is estimated that number of expatriate Bangladeshis has crossed 13 million.
Corruption and capital flight is the main obstacle to the development of independent Bangladesh. Corruption during the period of Bangabandhu was exceptional as the menace did not turn into a common phenomena although the corruption spread since the post-independence of 1973. Although Ziaur Rahman presented himself as an honest man, corruption and capital plundering started increasing in his regime. Institutional corruption spread during the rule of autocrat Ershad. Since the inception of politics of voting in 1991, the same processes strengthened further.
In the mid eighties, inward remittance started increasing. But at the time smuggling in the country’s economy turned a serious problem due to the Ershad government’s liberalised import policy implemented six years ahead of India. Informal money transfer or ‘hundi’ became an easy payment system as smuggling started becoming popular.
Since then, money laundering alongside migration increased steadily. Money laundering is now one of the main crises of economy. In 2021, 13 million expatriates sent remittance of 22 billion dollars. According to estimation of Global Financial Integrity, about 9 billion dollars were laundered from Bangladesh in 2018.
The lion’s share of the inward remittance from formal or informal channel will ultimately be deposited in the banks. Although the number of banks increased to 61, the flow of deposit continues. According to a recent estimate of Bangladesh Bank, there is a deposit of Tk 11000 billion in banks. However, the loan default now stands at over Tk 4000 billion.
Additional deposits are being considered the main problem of the banking sector. Taking loans from different banks and laundering money to foreign countries by over invoicing under import business and under invoicing under export prevailed.
Corrupt civil and military bureaucrats, politicians, professionals and new bank owners are involved.
Sending remittance through the banking channel has become easier. But sending remittance through hundi system has become even easier and developed more due to the revolution of information technology. The government recently decided to facilitate Bangladeshi businessmen to invest abroad. The finance minister claims the money laundering will decrease if this is done. In fact this decision will simply conceal money laundering. The ratio of private sector investment-GDP has become stagnant at 23 per cent. The finance minister should give priority to increase this ratio. Encouraging investment in foreign countries will no dispel this stagnancy.
● Mainul Islam is a retired professor of economics department of Chittagong University and former president, Bangladesh Economic Association.
*This article, originally published in Prothom Alo print and online editions, has been rewritten in English by Rabiul Islam.
