Putting ‘Bangladesh's offshored-out wealth’ into context
The recent article published in online portal (Bengali version) of an English daily on 17 May, titled "বিশ্বের বিভিন্ন দেশে বাংলাদেশিদের প্রায় ৫ দশমিক ৯১ বিলিয়ন ডলারের অফশোর সম্পদ আছে (Bishwer bibhinno deshe Bangladeshi-der pray 5.91 billion dollar-er offshore sompotti aachhe)" which translates to "Bangladeshis have approximately $5.91 billion in offshore assets in various countries around the world," presents data on offshore wealth attributed to Bangladeshi nationals.
In light of the recent European Union (EU) Tax Observatory report, titled "Atlas of Offshore World," the article primarily focuses on Bangladesh's offshore wealth without adequately comparing it to similar data from other countries, creating a misleading impression.
This selective reporting overlooks the broader context and comparative analysis crucial for an accurate global understanding of offshore wealth dynamics, which includes comparative data from other countries. I would address and clarify several points to ensure correct and balanced information is conveyed to the public.
Emphasising the need to position this data within a broader international context is crucial to providing a balanced perspective on Bangladesh's offshore wealth scenario.
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Bangladesh's offshore wealth is around $5.93 billion, representing about 1.3% of its total GDP of $460.2 billion. Even though Bangladesh is a lower-middle-income country, its relatively low offshore wealth-to-GDP ratio indicates that a smaller proportion of its wealth is transferred offshore compared to numerous other nations.
India possesses a total offshore wealth of $28.58 billion and a GDP of $3.39 trillion, resulting in an offshore wealth-to-GDP ratio of 0.84%, positioning it in 150th place. Although India's offshore wealth ratio is lower than Bangladesh's, the total amount of offshore wealth is around five times higher than that of Bangladesh.
Australia has an offshore wealth-to-GDP ratio of 12%, with a total offshore wealth of $208.83 billion and a GDP of $1.7 trillion. This places Australia in the 59th position.
China and Germany also have high offshore wealth ratios of 12% and 9%, respectively, reflecting significant amounts of offshore wealth. China has a total offshore wealth of $2.1 trillion, making it one of the top countries in this regard.
Pakistan and Sri Lanka have 2% and 3% offshore wealth-to-GDP ratios, respectively, higher than Bangladesh. Pakistan's offshore wealth is $7.50 billion, while Sri Lanka's is $2.11 billion. These figures suggest that both countries have more wealth offshore relative to their GDP than Bangladesh.
The United States has a moderate offshore wealth-to-GDP ratio of 6%, with a massive total offshore wealth of $1.6 trillion. This ratio places the USA in the 102nd position. Japan and South Korea have 8% and 7% offshore wealth-to-GDP ratios, respectively, indicating significant but controlled offshore wealth activities.
Countries like France and the United Kingdom have notably high offshore wealth-to-GDP ratios of 20% and 40%, respectively. France's offshore wealth is $545.46 billion, while the UK's is $1.24 trillion. These high ratios indicate significant offshore wealth activities.
Switzerland, Malaysia, and Singapore are classified as tax havens and are not ranked due to their unique financial policies that attract substantial offshore wealth. These countries serve as central hubs for global offshore wealth.
In contrast, Bangladesh's offshore wealth of $5.93 billion, or 1.3% of its GDP, is relatively modest. The selective emphasis on Bangladesh without this comparative context does a disservice to readers, potentially skewing public perception and understanding.
Bangladesh performs relatively well in the offshore wealth-to-GDP ratio compared to many countries, particularly those in its income category. However, there is room for improvement to secure its economic resources further.
Still, considering the offshoring of wealth as a critical issue, the Bangladesh government has proactively enhanced financial transparency and combated illicit financial flows.
The Bangladesh Government has introduced the Tax Act 2023 and the Offshore Banking Act 2024 as strategic measures to curb the outflow of wealth and attract inward investment. These legislative frameworks aim to enhance financial transparency, provide incentives for domestic investment, and create a favourable environment to attract international investors for economic growth. Significant steps have been taken to align with international standards.
These actions include strengthening regulatory frameworks to monitor and prevent illegal financial outflows, actively engaging with international bodies to oversee and manage offshore wealth, and implementing policies to promote domestic reinvestment through attractive financial products and incentives for local investors. Furthermore, enhancing international cooperation to track and manage offshore wealth can ensure better compliance and reduce illicit financial flows.
The article also cites data from the European Union (EU) Tax Observatory and the Organized Crime and Corruption Reporting Project (OCCRP), which must recognise offshore wealth management's nuances and complexities. Offshore investments are a worldwide phenomenon, not exclusive to Bangladesh, and stem from diverse reasons, including the widespread use of legal tax optimisation strategies globally.
The Bangladeshi government remains committed to maintaining economic integrity and transparency. Media outlets must present data within a balanced and comparative context to ensure they do not mislead the public. By delivering accurate information and highlighting the proactive measures taken by the government, we can work together to create a more informed and economically stable Bangladesh.
We appreciate the media's role in informing the public and hope this clarification contributes to a more nuanced understanding of the issues. Media outlets must uphold journalistic ethics and provide objective reporting to promote a better understanding of complex issues. By fostering transparency and accountability, we can build trust between the government, media, and the public for a more prosperous future.
Sabbir Ahmed is a Practising Chartered Accountant and Economic Analyst. He can be reached at [email protected]
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.
