Higher growth with rising inequalities concern us
Published : Thursday, 27 September, 2018 at 12:00 AM Count : 283
During Pakistan regime, we fought against much talked about 22 families in our long democratic movements. They were millionaires and excoriated for amassing wealth by depriving the rest of the people of Pakistan. It had been seen as a wide disparity raging our economic and social fabrics to an alarming state. But what a surprise, in Bangladesh we have 50 thousand multimillionaires and that estimate was given by Bangladesh Bank in 2014. In 2012 it was 23 thousand 212 and now? Albeit it has outpaced the past.
Yes Finance Minister himself has conceded that there are more than 1 lakh 14 thousand account holders with more than 1 crore taka deposited in their respective accounts. It appears a fragment of population are appropriating lion share of the cake of economic growth and leaving a small portion of the left out for the majority. That goes against the spirit of our liberation.
Ensuring equality in the delivery of all opportunities was our commitment, so higher growth with rising inequality concerns us. But it has turned to a serious pass instead of declining at present. Bangladesh is seeing a speedy growth of inequality that is, a speedy rise of the rich surpassing other countries in Asia. It is said in a latest World Ultra Wealth Report 2018. "The daily observer" led it in 12th September 2018 under a semi banner caption "Fastest growth of ultra- rich in BD -- Sets World record posting 17.3 per cent growth of the super wealthy in six years.
Report read, Bangladesh is creating fastest-growing ultra- wealthy population over the past five years accumulating more wealth at a faster rate than China and USA. It was published by WEALTH -- X. The report says, the ultra high net worth population in Bangladesh posted a 17.3 per cent growth over the last 6 years. That means, during this period, Bangladesh saw the steep rise in rich people out numbering China and USA. Actually Bangladesh topped the list of the countries put in descending order.
In the rate of growing uneven resource accumulation in few hands, Bangladesh comes first. Then China, then Vietnam, Kenya, India, Hong Kong, Ireland, Israel, Pakistan and then United States. In the study of World Ultra Wealth Report, the World has 2 lakh 55 thousand 855 ultra billionaires. But question is different. None have questions about the riches of Bill Gates or Staves. Wealth accumulation so to say in the right way (though it is debatable) is getting acceptability. But fabulously accumulating wealth in few hands in the country like Bangladesh definitely cannot go beyond question mark. Definitely it implies the benefits of our growing growth have been unevenly enjoyed by few not by all, but "how" that is the hundred billion dollar question.
What is left out in the report is the lack of finding cause and ways of fabulously amassing wealth by few in Bangladesh is much talked about. Experts view that there is a causal relation between the mass expropriation or looting of wealth and non-performing bank loan (NPL) with money laundering. In the name of bank loan, by taking the advantage of scheduling and rescheduling and not giving back money to bank, money is expropriated and stockpiled. On the other hand, in foreign trade, particularly in imports mismatch in over and under invoicing is one of the main ways of siphoning off money abroad. It has increased tremendously at present and become much known to all. Particularly the recently growing inflated import bills make the concerned quarter suspicious about heavy money laundering due to days are approaching towards general election.
Our ill got billionaires are not willing to invest in their own country. If they do it, it would have a positive multiplier effect in the economy. At least it could have seen a wider scope of employment opportunities. Rather they feel free to send their unearned income abroad to invest in real estate. Bank looting and mismatching in invoicing in trade at this moment are two workable ways of amassing money which resemble the symbol of "Crony Capitalism", which has no constitutional support.
The number of bank loan defaulters in the country reached 230,658, and the amount of unrecovered loan from them totalled over TK 1.31 trillion until June 2018, according to Bangladesh Bank (BB). Finance Minister AMA Muhith disclosed the information in the Jatio Sangsad (JS) on 12 September in response to a query of a MP. The finance mister also informed JS that the loan defaulters were involved with 88 banks and financial institutions (FIs). A sizable portion of bank money taken as loan and then becoming defaulters goes for laundering. Lawmakers have identified the legal loopholes as one of the major reasons why bank loans defaulters go unscathed in most cases. The 23rd meeting of the parliamentary standing committee on the ministry of finance, held recently, listed the key reasons behind the spread of the default culture. According to media report, the law makers proposed enactment of a new law removing the weaknesses of the existing ones. Until credit worthiness is judged in its true sense, if loan sanction is empowered by patronage in any form, default culture will persist.
As it is told before, inflated import bills are suspected to be attributed for money laundering and fueling accumulation of wealth by few and thus creating inequality in socio-economic fabrics. Say last financial year saw record L/C (letter of credit) open for food imports. It was nearly 144 per cent which was not happened in any time of the past. Rate of opening and settlement of L/C also have been increased. Growth of L/C open for other goods imports reached nearly 44 per cent in last year. Rising of machinery parts imports has turned a serious look, though space of industrialization and capacity build-up are not running proportionately.
Through import bill payment, by over invoicing, experts view, money is rerouting abroad. This is proved by sudden trade deficit jump at 12.14 per cent in July on the back of higher import payments against slow exports. The gap stood at USD 1.17 billion in the first month of the current fiscal year, up from USD 1.04 billion in July last year, according to the latest data from the central bank.
The country's trade deficit hit USD 18.25 billion in fiscal 2017-18, the highest in its history. Imports stood at USD 4.7 billion in July, up 17.44 per cent year-on year. At the same time, exports rose 19.32 per cent to USD 3.52 billion. Some unscrupulous people might be laundering money in the name of imports through over-invoicing which has also increased import payments. BB should strengthen its monitoring and supervision to hold in the practice of over-invoicing. This is our additional thought over World Ultra Wealth Report 2018.
Writer is a freelance contributor