Foreign workers: Indispensable YES; non-compliance NO

On February 5, 2020, Transparency International Bangladesh (TIB) released a research report on "Employment of Expatriates in Bangladesh:  Governance Challenges and Way Out". Its main findings that received wide media coverage are: a) overwhelming majority of the estimated 250,000 expatriates working mostly in various private sector entities are employed without mandatory appropriate visa and work permit; b) an estimated $3.15 billion (Tk. 26,400 crore) are illicitly transferred annually out of the country; and c) the state is losing at least $1.35 billion (Taka 12,000 crore) of revenue annually due to tax evasion on this account.

The study identified a series of governance challenges including different types of non-compliance by employers, foreign employees and a section of relevant public officials who are charged with the task of ensuring compliance of the relevant legal provisions, rules and regulations.

Like any other similar sector illegal transactions including bribery prevail in various stages of interactions for relevant services. Collusive and coercive corrupt practices taking advantage of procedural complications, deficits of coordination, capacity and commitment of relevant officials have institutionalized illegality.

TIB has suggested some recommendations for consideration of various stakeholders. The Government response to the widely reported findings has been encouraging. The Home Minister, a key government stakeholder,  is reported to have said that his ministry would consider the report and take appropriate actions, which people will look forward to. This is important because the report comes against a background of growing public attention to the subject including occasional statements by relevant ministers in the parliament and beyond.

Not so encouraging are some comments of a respectable columnist published in The Business Standard (TBS) who found himself "highly perplexed" and alleged that foreign workers are portrayed (by TIB) "as if they are here to steal our money without giving us anything in return". He also attributes to TIB a statement that "more money goes out from the country than enters Bangladesh..."  None of these represents anything contained in the report or stated by anyone related to TIB.

It is not quite clear why the respectable economist finds it perplexing when concern is expressed that as much as at least Tk 12,000 crore of potential revenue is annually lost due to con-compliance of tax regulations consistent with the global practice of "pay as you earn". The economist appears uncomfortable as attention is drawn by the report to illicit transfer of about Tk 26,400 crore annually. He is also not convinced that Bangladesh is thus being deprived of the full benefits of employing foreigners which was stated by this author at the time of  launching the report and being repeated here with full responsibility.

The quoted figures are not only very conservative estimates, but also absolutely preventable in a country that is struggling desperately with low revenue collection. The irregularities can be controlled within the existing legal framework if the collusive practices of non-compliance identified in the report are prevented and brought to justice.

Given a benefit of doubt that it could be an instant commentary without looking at the report, it is also questionable why the amount of illicit outward transfer on this account was compared by the author with the total annual of inward remittance by Bangladeshi expatriate workers - two different subjects altogether. In fact it can be viewed as an attempt to defend the immorality when he cites that the estimated illicit outflow of $3.16 billion by foreign workers far exceeded by $4.5 billion sent in by our expatriate workers abroad in one quarter this year. Needless to add, the largest portion of our expatriate workers" inward remittances takes place in the legitimate process. 

TIB has not questioned, and will never dispute the importance of employing expatriates in Bangladesh in a globalized world, especially in the interest of export-oriented industry and foreign investment. But nothing justifies that such employment be allowed through the blatant non-compliances of the type identified in the study.

The column also wrongly attributes to TIB his assumption that "home country conditions pushed them (foreign workers) to come here in search of livelihood". Although their services here do generate income for livelihood, there is indeed demand for them. But simply because they are needed here they cannot be allowed or defended to violate rules and regulations in place, some of which need to be reformed and updated though.

Similarly, just because "our own skilled development system is dysfunctional, and our youth are not employable because of low quality and external inefficiency,"  as claimed questionably again by the author, no one can be granted impunity of wrongdoing. Here the learned economist indeed echoes a claim made by an industry insider in the BS pages of the same date that "most employers believe that foreign staff members have lower chance of getting involved in corruption". One wonders what corruption is, if everything illegal ab initio, work sans proper visa and permit, tax evasion and illicit financial transfers, are not.  

Similarly, to justify tax evasion is equally disturbing, especially by raising the question as he does, "how can they pay taxes when they work without authorization?" Why do they work, or why are they allowed to work without authorization in the first place? Aren"t they and their employers supposed to know what their tax obligations are? The author, however, partly indicates how the employers conceal the actual salaries and benefits by maintaining separate books of accounts.

Bangladesh definitely needs skilled human resources from abroad to fill up the gaps in skills and expertise that are not locally available. But there is no way that it can be permissible without full compliance of the legal, procedural and regulatory framework, the deficits of which, as depicted by TIB, is depriving the country of its due share of benefits of expatriate employment. The degree of non-compliance and impunity prevailing in the sector is unacceptable and indefensible, and demands immediate corrective and preventive actions by all stakeholders, especially the relevant authorities.

Iftekharuzzaman, Executive Director, TIB