The government has granted permission to four local companies to invest US $13.5 million in five foreign countries including Philippines, Hong Kong, Ireland, UK and Kenya. So far 17 Bangladeshi firms have been allowed to invest abroad increasingly expanding the area of local investment abroad. A committee headed by Bangladesh Bank governor gave the permission. Meanwhile, the government has announced a comprehensive guidelines for investment abroad and as we see more big business firms especially companies engaged in exports will get permission for overseas investment.
The basic point is that 25 percent of export retention funds or 20 percent of five-year annual average export earnings of a firm will be eligible for overseas investment. We must say Bangladesh overseas business exposure is growing fast and naturally based on their financial strength but the question is how the outflow of money will be regulated and inflow of income to be strictly monitored so that overseas investment does not become a tool of amassing illegal wealth abroad.
Bangladeshi firms are already investing abroad and we believe that legally allowing investment will help illegal investment outside the NBR accountability regime to disappear. Exposure of Panama Paper showed many Bangladeshi business firms or individuals are maintaining investment abroad which is totally black money. Media report said Bangladesh lost around Taka one trillion on an average annually over the past 10 years which was siphoned through illegal channels in absent of legal way of transferring money properly reported with the financial authorities. If all these investments were reported and permission was given to transfer abroad, it could open big source of government revenue and reduce the nation’s dependence on internal revenue.
But the fact is that most such outflow is unearned fund obtained illegally through corruption and stealing of bank and budgetary allocation by government leaders, bureaucrats and government contractors. They don’t want to report their money to formal authorities for obvious reason. We would suggest that legalization of such fund must be made easier while criminal and regulatory regime must be strictly enforced to eliminate creation of black money. Formal overseas investment of businesses is just quite small amount compared to illegal capital flight. We would suggest new institutional mechanism to deal with overseas investment.
