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Remittance outflow from the country shrouded in mystery

Published : Friday, 7 February, 2020 at 12:00 AM  Count : 1004
Shahriar Feroze

Shahriar Feroze

Who are the dubious foreigners evading taxes here?
Once again it is the Berlin based Transparency International's Bangladesh branch that has come up with the latest eye-opening revelations , stating - Foreign nationals working in Bangladesh are siphoning off as much as  Tk 26,400 crore annually while evading a staggering Tk 12,000 crore in taxes. The questions involuntarily arise, who are these foreign nationals operating in Bangladesh? How come our financial regularity authorities and law enforcement agencies have noticeably failed to identify them?
However, TIB, as far as I understand do not operate without concrete information based on proven investigative methodologies. Tk 12, 000 crore may not be the exact but the plus or minus approximate figure in this regard. The million dollar question now, so who are these foreigners evading taxes worth thousands by the crore?

The warning had come earlier
Less than two years ago, media reports quoted our former finance minister to have stated - As much as $5 billion was siphoned off from Bangladesh every year by foreign nationals working mostly in the export-oriented garment sector.
 Given the former finance minister's information, our financial authorities should have seriously examined and addressed the tax evasion issue.
The former minister reportedly clarified that this '$5 billion is taken mostly by Indians, Sri Lankans and nationals within our neighbourhood'. Another question arises automatically - why is not there a register maintained, listing these so-called SAARC and non- SAARC expatriate workers operating in Bangladesh.

Referring to the former minster's words - his ministry definitely has an official or an unofficial list of foreigners working in Bangladesh coupled with the data how much money they are siphoning off by evading taxes. On that note, the finance ministry's data book can well be the primary source for making an official list of foreigners evading taxes here.

Looking at the bigger picture of remittance outflow from Bangladesh
According to a reliable media report, less than seven months old, Bangladesh Bank (BB) does not maintain any data on remittance outflow although it regularly updates data on remittance inflow. It, however, appears a mystery to this writer. The regular Google search on the issue suggests, the outgoing remittance is fully legal and is sent by 500,000 or so Indians who work in Bangladesh. Additionally, Bangladesh stands 5th among the 15 nations sending remittances to India after UAE, USA, Saudi Arabia and UK. In 2013, remittance from Bangladesh to India was about $ 3.716 billion. Can anyone tell, what's latest figure?
It is important since Indians are the majority of the foreign workers in Bangladesh remitting money home.

What can India do?
Responding to a statement about the outflow of remittance to India in 2018 , the then Indian High Commissioner to Bangladesh, Harsh Vardhan Shringla said - the piece of information Bangladesh being the fourth largest source of India's foreign remittance is completely wrong. However, it is easily understandable that whatever the amount of remittance enters in India from Bangladesh is surely registered by Indian financial authorities. As much as ours, it is also their professional obligation to reveal the exact figure of remittance inflow from Bangladesh. Not to inform us, but for the Indian people to know - how Bangladesh has been directly contributing to the Indian economy.       
Not penning out of any anti - Indian sentiment, in the face of a series of arguments and counter - Bangladesh, indisputably remains the key SAARC country in the region for a huge amount of remittance inflow in India. If our Indian friends take the effort to prepare a country specific inflow remittance report, Bangladesh should be placed at the topmost position.  

India's misleading information on inflow and outflow remittances from Bangladesh  
Nevertheless, the mystery deepens as a country specific chart, ranking incoming remittances to India places Nepal on the 7th position with a little over $ 3 billion. Even stranger, a similar chart placed just on the right side places Bangladesh as the 'topmost recipient country of Indian remittances with over $ 4 billion'. The data is easily available in the net. All you have to do is type, Wikipedia's Remittances to India via the search engine. And that's not all - Bangladesh Bank also maintains a regular country specific Wage Earners Remittance Inflows Chart and India's name is nowhere to been seen. In fact, India's position as a remittance sender to Bangladesh is not mentioned on any data, statistics or chart.

This is how Bangladesh has become the top Indian remittance recipient
So far, the data and charts I had gone through appeared mysterious and conflicting. Now it will be misleading for sure. Last updated in January of 2016, the Indian Business Standard ran a report on the web titled "Why Bangladesh leads in remittance outflow from India". The updated report is still available in the web for your reference. However, I am not going to get into details but felt it important to place a few points mentioned in the report.  

First, the report referred to a World Bank data of 2014 titled (Bilateral Remittance Matrix, 2014) stating that out of the $7.6 billion of outward remittances from India - 54 per cent or $4.16 billion was to Bangladesh alone in that year. Almost every year, 50-55 per cent of India's total outward remittances have landed in Bangladesh. (Where has the money gone?)

Second, the definition of outward remittance by the World Bank is wide, including those by workers, compensation of employees and migrants' transfers. Thus, remuneration of Bangladeshi employees by Indian companies in Bangladesh is also counted as remittance.
Third, this was difficult to digest - the foreign direct investment outflow by Indian companies in Bangladesh is also considered as outflow of remittance to Bangladesh.
Fourth, the news report quotes another World Bank report titled Remittance Market in India, 2012, by one Gabi G Afram, referring to a 2008 study by an A Kumar. The report stated that estimates of irregular migration from Bangladesh to India ranges from 5 million to 20 million. (Perhaps that's why the border killings have shot up)
The report says India is an important destination country for migrants from Bangladesh, Nepal and Pakistan and Sri Lanka. Even more fascinating, the report stated 'after Bangladesh, Pakistan accounts for the second highest remittance outflow from India, at 27 per cent of the total. (Prime Minister Imran Khan now has a point to become contented with his arch rival)

The report further mentioned of some 3 million undocumented and illegal Bangladeshi migrants working in India, and I assume they must be earning dollar by the billions.
This is how we have become the number one recipient of Indian remittances in short. $ Worth billions are coming but all of it remains undocumented.
Given the TIB's latest finding on outflow of remittance from Bangladesh, I wonder why our bankers, analysts, economists are failing to prepare similar reports on the outflow of remittances from Bangladesh while re-defining inflow and outflow of remittances according to their fanciful whims.

What should the government do?
This writer believes, it is time to take the TIB's latest report on tax evasion by foreigners with an alarming-sense-of-urgency. Simultaneously, tax evasion by foreigners operating in Bangladesh is not new, now that the latest TIB report has brought the issue under the lime light, it is time to deal with the issue before more taxes gets evaded in the days ahead. More to it, it's also time to list and regulate all foreign employees in Bangladesh while prepare a correct data bank on outflow remittances from Bangladesh.  
The question here - how seriously is the government taking the foreigners' tax evasion issue?

The writer is Assistant Editor,  
The Daily Observer












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