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World Bank says $3.15bn Illicitly Transferred from Bangladesh Annually

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The World Bank reported that approximately $3.15 billion is illicitly transferred out of Bangladesh each year through offshore accounts.

Citing the State of the Tax Justice Report 2020, the World Bank stated that the offshore financial wealth of Bangladeshis is estimated at 0.7% of the nation’s GDP.

“Including losses from corporate abuse and offshore tax evasion, tax revenue losses are estimated at over $700 million,” the World Bank stated in its latest Bangladesh Development Update report published on 2 April. This amount equals 2.2% of the country’s total revenue income in fiscal year (FY) 2019-20.

In the Development Update report, the World Bank noted that illicit capital flows into offshore accounts from Bangladesh have been increasing.

Referring to the latest Global Financial Integrity Report 2021, the bank mentioned: “Between 2009 and 2018, as much as $3.6 billion on average per year has been laundered from Bangladesh through trade mis-invoicing.”

The World Bank highlighted that Bangladesh’s illicit capital outflow through offshore accounts is high compared to some of the country’s peer nations in its Development Update report.

Currently, Bangladesh ranks 54th among 133 countries in the Financial Secrecy Index, which assesses the extent to which a country’s tax and financial systems facilitate individuals in concealing their finances from the rule of law, according to the World Bank.

The bank further stated that Bangladesh ranked 44th globally and 3rd in South Asia in terms of illicit outflows through trade mis-invoicing.

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PM Sheikh Hasina Seeks U.S. Business Support for ‘Smart Bangladesh’ Vision

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Prime Minister Sheikh Hasina today called on U.S. businessmen to support Bangladesh’s goal of becoming a developed and smart nation by 2041. Addressing a delegation from the US-Bangladesh Business Council at her official residence in Ganabhaban, she emphasized the importance of their partnership in this transformative journey.

“We aim to become a ‘Smart Nation’ by 2041. Your support in enhancing our global competitiveness and expanding our export base is crucial,” she said.

The Prime Minister highlighted Bangladesh’s imminent graduation from a “least developed” to a “developing” country in 2026, attributing this progress to sustained efforts over the last 15 years. “Our efforts have led to Bangladesh being recognized globally as a ‘Role Model of Socio-Economic Development’,” she stated, citing good governance, the rule of law, rural investment, women’s empowerment, and ICT advancements as key factors.

Sheikh Hasina noted the longstanding economic and developmental partnership with the U.S., which is Bangladesh’s largest export destination and source of foreign direct investment. She expressed optimism about further strengthening this relationship.

“To protect our economy from current pressures, investment—both domestic and foreign—is vital. The implementation of Bida’s One Stop Service (OSS) will facilitate this,” she said, addressing the OSS implementation progress review meeting at the Bangladesh Investment Development Authority’s (Bida) headquarters.

She urged the U.S. business community to invest in Bangladesh’s high-potential sectors, including renewable energy, shipbuilding, pharmaceuticals, and ICT. “We are establishing 100 Special Economic Zones (SEZs) and 28 hi-tech parks, making Bangladesh a prime destination for IT investments,” she added.

Highlighting Bangladesh’s competitive advantages, she mentioned the availability of a young, skilled workforce at competitive wages and the country’s liberal investment policy. She reassured investors of the government’s commitment to improving the investment environment.

In response to the Prime Minister’s address, Bida Executive Member Mohsina Yasmin presented a report on OSS progress, while NBR Chairman Abu Hena Md Rahmatul Muneem assured the business community of considering logical amendments to the Customs Act.

Sheikh Hasina underscored Bangladesh’s significant socio-economic achievements, including reduced poverty rates, increased life expectancy, and higher literacy rates, particularly among women. She noted that Bangladesh is currently one of the world’s fastest-growing economies, projected to be the 25th largest by 2030.

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FBCCI Calls for Customs Act Amendments and Full Automation to Ease Trade

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The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) has called on the National Board of Revenue (NBR) to amend the Customs Act and implement full automation to streamline the customs management system. At a workshop held at the FBCCI’s Motijheel office on Sunday, President Mahbubul Alam highlighted the potential benefits of these reforms.

“These changes would simplify customs procedures, create a more business-friendly environment, and reduce the cost of doing business in Bangladesh,” Alam stated. The workshop was a joint initiative between FBCCI and NBR.

Alam underscored the importance of the Customs Act in facilitating trade and lowering business costs. “We believe the new law will significantly expedite trade activities,” he added.

The FBCCI president also addressed the complications caused by the Harmonized System (HS) code for product classification, emphasizing the need for complete automation in customs management to mitigate this issue. “A well-crafted law is only beneficial if implemented effectively,” he noted, urging the NBR to incorporate private sector feedback before finalizing the implementation process.

FBCCI Director AM Mahbub Chowdhury spoke about the harassment faced by traders at ports. He pointed out that despite paying fines for delayed duty clearance, traders still encounter obstacles during customs clearance.

Industry representatives presented their specific concerns during the workshop. Abul Hashem, president of the Sugar Traders Association, called for a tax reduction on sugar, citing it as a basic commodity rather than a luxury item. This, he argued, would help curb illegal sugar imports.

Mohammad Enayet Ullah, president of the Bangladesh Spice Traders Association, urged the NBR to adjust taxes based on international market fluctuations for spices, noting that high taxes contribute to rising spice prices in local markets.

In response, NBR Chairman Abu Hena Md Rahmatul Muneem assured the business community that logical proposals would be considered during the amendments and implementation phase of the Customs Act. He encouraged businesses to submit written complaints against customs officials rather than making random accusations.

Muneem acknowledged that while large fines are sometimes necessary to maintain trade order, they must be imposed logically and proportionally.

Md Masud Sadiq, NBR Member (Customs Policy and ICT), expressed confidence that the new Customs Act would be more trade-friendly than its predecessor and urged traders to fully cooperate in its successful implementation.

FBCCI Senior Vice President Md Amin Helali, Vice President Shomi Kaiser, directors, former directors, and NBR officials also attended the workshop.

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Global Factors, Not Mismanagement, Behind Economic Challenges: Salman F Rahman

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Salman F Rahman, the private industry and investment adviser to the Prime Minister, stated today that the challenges facing Bangladesh’s economy stem from global factors rather than domestic mismanagement.

Speaking at the One Stop Service (OSS) implementation progress review meeting at the Bangladesh Investment Development Authority’s (Bida) headquarters, Rahman highlighted the impact of international events on the country’s economic situation.

“The country’s economy is facing many challenges. These are not due to our mismanagement but are a result of the international situation,” Rahman said. He emphasized that Bangladesh efficiently managed the Covid-19 crisis, but the problems began after the outbreak of the Russia-Ukraine war.

Rahman pointed out that the Federal Reserve’s interest rate hikes led to a stronger dollar, putting pressure on Bangladesh’s reserves. “Prices of commodities, fertilizers, and fuel increased significantly, causing added stress on our economy,” he noted.

To mitigate these pressures, Rahman underscored the need for increased investment, both domestic and foreign. He stated that the successful implementation of Bida’s OSS could facilitate this investment. “We have received complaints that despite going online, people still need to visit physically and submit paper documents. These issues will be discussed today to expedite the remaining services,” he said.

During the meeting, Bida Executive Member Mohsina Yasmin presented a report on OSS implementation progress. However, journalists were asked to leave before the detailed discussion, which continued for about two and a half hours. After the meeting, Bida released a statement announcing that memorandums of understanding (MoUs) have been signed with 48 organizations, adding 101 services from 41 organizations to the OSS. Including Bida’s own 23 services, a total of 124 services are now provided through the OSS.

Mohammad Salahuddin, secretary to the Prime Minister’s Office, stressed the importance of investment in overcoming current economic challenges. “We need to remove all obstacles to increase domestic and foreign investment, and everyone must work together for this purpose,” he said.

Bida Executive Chairman Lokman Hossain Miah, who presided over the meeting, compared the investment service timelines of other countries, stating, “Vietnam provides investment-related services in 29 days and Indonesia in 48 days. We hope to add all investment services to the OSS in the next 2-3 months, enabling us to provide these services within a month.”

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