|Published : 18 Mar 2017, 20:59:45 | Updated : 18 Mar 2017, 21:12:37|
Capital flight—Malaysian instance
The reported sending of 'Cash Transaction Report (TCR)' on 14 Bangladeshis by the Malaysian Financial Intelligence Unit (MFIU) at the request of the Anti-Corruption Commission (ACC) of Bangladesh has again brought to the fore the issue of capital flight. The Malaysian agency has made available information about 14 Bangladeshis who have invested in the Southeast Asian country under its second home programme, styled, Malaysia My Second Home (MM2H). The ACC had sought information about 50 people in connection with 32 cases of alleged money laundering. The MFIU has said they do not have any information about 36 others.
But the reasons behind the ACC's interest in particular 50 Bangladesh nationals are not clearly known. The statistics available with the MM2H website says as many as 3340 Bangladeshis availed the Second Home facility between 2003 and 2016 and each of them was required to make investment of a minimum amount as stipulated in the terms and conditions of the facility. Obviously, many had transferred bigger funds. They together needed to transfer a minimum of US$278 million. But the actual amount laundered by them would always remain shrouded in mystery. Since the Bangladesh Bank (BB) does not allow anyone to make this kind of investment abroad, all the individuals concerned have committed a major financial crime that is punishable under a stringent law.
It is not known whether the ACC or any other official agency has ever sought information from the Malaysian government about all the people who have invested funds under MM2H or whether the latter has refused to make available this kind of information with a view to protecting the investors concerned. The fact remains that the official agencies could make little headway in their task of retrieving large funds that have been transferred abroad illegally in recent years. The situation has deteriorated to such an extent that the finance minister himself the other day expressed in public his deep frustration over the illicit fund outflows. Any sensible person has reasons to be deeply concerned if the country loses 8.0 to 9.0 billion dollars a year through the transfer of illegal funds abroad.
However, all the funds taken out of the country illegally may not be black. A small part of it, though transferred illegally, might have been earned legally. Since private transfers of foreign exchange are prohibited without the central bank's permission, legally earned funds are, at times, taken out of the country using illegal channels. However, such fund transferors are committing no less an offence and do deserve no compassion. Trade transactions are thought to be widely used conduits for capital flight. A section of unscrupulous traders involved in both import and export operations is responsible for flight of a large volume of funds. But sadly enough, the relevant agencies lack the necessary initiatives to plug the holes in trade transactions.
Meanwhile, pressure is, of late, mounting on the government to allow the businesses in the private sector to invest abroad when their domestic investment has remained stagnant in recent years. True, some factors are discouraging the entrepreneurs to make any major investment in the country. However, efforts are on to help widen the scope for making domestic investment and soon such efforts are most likely to pay dividends. Moreover, allowing private investment abroad might create opportunities for some dishonest sections of businesses to take out funds legally in large volumes. Besides, the country's foreign exchange reserve, though looks healthy at the moment, has come under renewed pressure due to lacklustre export growth and decline in remittance inflow. Under such circumstances, the government needs to be extra cautious about the outflow of funds in both big and small amounts.