The plunder of banks has become a shortcut to becoming millionaires in Bangladesh.
Every year, businessmen and industrialists conspire to loot several billions of taka in the form of bank loans.
Nowadays, not paying back loans has become a culture. A lion’s share of the plundered money is laundered abroad.
The observation was made by noted economist Dr Moinul Islam while presenting a paper titled “Ever-increasing income inequality in Bangladesh: What is the solution?”.
He was addressing a seminar on income and wealth inequality in Bangladesh, organised by Bangladesh Economic Association (BEA) on Saturday.
Eminent economist and former governor of Bangladesh Bank (BB) Dr Mohammed Farashuddin was present there as chief guest while BEA President Dr Abul Barkat presided over the programme.
Adopting illegal means, the number of rich people has kept rising rapidly.
Be it civil and military bureaucrats or businesspeople, everyone is getting involved in corruption to become rich quickly.
In the one hand the number of rich people is increasing and on the other hand, income inequality is widening, due to economic growth without employment.
Bangladesh has now reached close to a dangerous level of income inequality.
It has now become a crisis for the country.
The noted economist said there was corruption during the tenure of Bangabandhu also, but it did not become systematic then.
After coming to power, Zia created an opportunity for all to get involved in corruption.
As the USA did not support Bangabandhu’s government, the World Bank, the Asian Development Bank (ADB) and other donor agencies did not assist Bangladesh.
After Zia had taken over power, the donor agencies gave big amounts of financial aid. A major portion of that was plundered.
Since then, corruption started in Bangladesh.
He said the unscrupulous way to become a millionaire quickly in Bangladesh is to engage in corruption.
No government or autonomous organisation in Bangladesh is above corruption.
Members of the law enforcing agencies, revenue officials, government, semi-government, autonomous organisations, the judiciary, courts, education department, the educational institutions, health department and government hospitals are involved in corruption.
A big portion of this money is being siphoned off abroad. Now some 62 percent of parliament members are businessmen.
The key-note paper stated that four to five crore people in villages have now reached the threshold of lower-middle income and middle-income group, thanks to remittance inflow from expatriate workers.
However, the main beneficiary of the rise in immigration has been the several thousand manpower businesses. Most of them are becoming millionaires quickly.
Prof Moinul Islam said governments have been keeping crony capitalism in operation for 44 years, in line with the open market economy.
These governments did not have any urge to reduce income inequality.
He said Bangladesh now stands second in export of readymade garments in the world. But it cannot be said that workers in this sector are economically empowered. But they are contributing successfully to the RMG industry. The number of millionaires are rising in the country, because of the hard labour of RMG workers.
The RMG industry owners are laundering the highest amount of money abroad.
The former professor of Chittagong University said, among the millionaires who have a second home in Malaysia and house in “Begum Para” in Canada, the families of RMG factory owners are on top, alongside corrupt engineers, civil surgeons, bureaucrats, military officers and politicians.
The paper also said that among the non-resident Bangladeshi families who have escaped abroad, the number of businessmen and industrialists are high. The number of rich people in trade and service sector has been increasing rapidly.
Real estate, construction, Media, private universities and medical colleges, private banks, insurance, private English medium schools, colleges and kindergartens, newspapers, NGOs, hotels, luxury transport service, hospitals, clinics and diagnostic centres are high profit-making businesses.
According to Bangladesh Bank statistics in 2012, the number of millionaires were 23,212.
In 2014, the number crossed 50,000. In July 2015, the number soared to 54,727. In 2016, the finance minister announced that the number of people having bank accounts with deposits of more than Tk1 crore each is over 114,000.
That economic benefit is going to a small section of society is a dangerous signal.
The gini coefficient is a way to measure inequality. In 1973, the gini coefficient was only 0.36 percent. Although the country was poor, inequality was comparatively tolerable.
As per Household Income and Expenditure Survey 2016 by Bangladesh Bureau of Statistics (BBS), inequality increased to 0.483. According to international norms, if the country’s gini coefficient reaches 0.5 percent, income inequality in Bangladesh will have reached a dangerous level.
He said at the primary level of the country’s education, there are 11 types of education systems.
Children are attending different types of educational institutions based on the income of their parents. It reflects the disparity in the industrial sector.
Four types of secondary and higher secondary educational institutions exist in the country.
The population of Dhaka city has reached 1.75 crore. Some 40 percent, or 70 lakh, are slum dwellers.
Dr Farashuddin said the number of loan defaulters has been increasing as politicians have been patronising them. He narrated a story of how in 1992, a bank decided not to give any loan to Fazlul Haque, a loan defaulter from Narayanganj. His loan application then went to the parliamentary standing committee.
The committee comprised of six lawmakers from Awami League and five from BNP. All of them opined in favour of giving fresh loans to Fazlul Haque.
On inequality, the former Bangladesh Bank governor said the per capita income does not reflect the real economic situation of a person.
He said inequality exists not only in wealth and education. If disparity in health cannot be removed, development is not possible. Wealth inequality has to be eliminated.
Dr Shafique uz Zaman, chairman of Dhaka University’s Economics Department, said there is a regional disparity, alongside national inequality. Emphasis has to be given on employment generation and industrialisation for removing inequality.
Dr KAS Murshid, director general of Bangladesh Institute of Development Studies (BIDS) said the issue of inequality used to be discussed earlier, but now it is not.
Income inequality has reached a crisis level, but ordinary people do not react to it.
Dr Abul Barkat said the government only listens to talk about development. No political personality is available to listen to issues of inequality.
On solving the problem of inequality, Dr Moinul Islam said it is difficult to solve the ever-increasing income inequality, but it is not impossible.
The goodwill of the top leadership of the state is the foremost requirement because re-distribution of income and wealth is not possible without a change in the political policy.
China, Vietnam, Cuba, Israel and Sri Lanka have been able to slow down or stop the rise of inequality by adopting various income redistribution programmes and implementing them successfully.
However, in the contemporary world, no developing country except Cuba has achieved much success in reducing the gini coefficient.
Dr Moinul Islam said there is nothing to boast of in the 8.13 percent growth.
The well-being of people can be understood by using social indicators – health, education and gender inequality – as devised by Amartya Sen.