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Bangladesh: Foreigners siphon off US$3.1 billion a year

Finds Transparency International Bangladesh study on expats working in Bangladesh.

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Updated: February 6, 2020

An estimated $3.1 billion, or about Tk 26,400 crore, is siphoned away every year by foreign nationals employed in the country, found a study by the Transparency International Bangladesh.

About 1.6 lakh foreign nationals became gainfully employed in Bangladesh after entering the country on a tourist visa, said the report “Employment of Foreigners in Bangladesh: Challenge of Good Governance and Way to Overcome”.

Typically, foreigners enter Bangladesh on a three-month tourist visa and manage jobs soon afterwards given the shortage of people with strong communication and management skills, which are in high demand in the garment sector that has gone on to become the world’s second largest supplier of apparel.

When their visa is nearing expiration, they go back to their home country and return with a fresh three-month tourist visa and continue with their jobs in Bangladesh.

Their salaries are paid fully in cash or to bank accounts abroad, depriving the government of tax too.

“Neither the employers nor the workers abided by the law during the recruitment process,” said Dr Iftekharuzzaman, executive director of TIB, at a press conference yesterday.

At the same time, the government organisations that are supposed to ensure application of related laws and regulations have either failed to do so or they lacked efficiency.

“As a result, we can see a picture of institutionalisation of a kind of irregularity in collusion here,” he said.

But employment of foreign nationals is a necessity in the face of skill-shortage in Bangladesh.

“Their recruitment has to be transparent, which will also ensure accountability and good governance,” Iftekharuzzaman said.

Some 90,000 foreigners are working in Bangladesh following due procedures, according to the report.

And about 41 percent of them come from India, followed by China, Japan, South Korea and Malaysia.

To evade taxes, salaries of legal foreign workers are shown less in the official documents than their actual income.

For instance, the actual salary of a chief executive officer in the garment sector ranges from $10,000 to $12,000 per month. But in official documents it is shown to be between $3,000 and $3,600.

Furthermore, about one-third the salary of foreign nationals legally working here is paid into the bank accounts; the rest is given in cash, the study found.

And due to tax evasion, the government is deprived of about $1.35 billion, or Tk 12,000 crore, in revenue from foreign nationals every year, found the Bangladesh chapter of the Berlin-based global graft watchdog Transparency International.

In fiscal 2018-19, 9,500 foreign nationals paid Tk 181 crores as tax under the jurisdiction of Tax Zone-11, the TIB report says.

Foreign workers sent $46.6 million as remittance through the legal channel in fiscal 2017-18, says the report referring to data from the Bangladesh Bank.

They are mostly employed in garment and textile mills, buying house, multinational companies, power plants, telecom companies, information technology, rawhide industry, healthcare, hotels and restaurants, cargo and freight forwards.

The study, which was conducted from April 2018 to December 2019, excluded foreign diplomats, pastors, researchers, students, officials of the United Nations and its wing offices and of international organisations.

The report mentions some challenges when it comes to ensuring good governance while dealing with foreign workers.

In its nine-point recommendations, TIB called upon the government to launch a “one-stop service” system to provide required services regarding foreign workers’ stay and work permit in Bangladesh.

It urged the government to update foreign workers’ salary and wage scale, to assess sector-based requirement of foreign workers and to ensure due procedure in their recruitments.

It further called upon the government to conduct drive under a joint taskforce at different offices and factories to avail necessary information regarding foreign workers.

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Daily Star
About the Author: The Daily Star is a leading English-language daily newspaper in Bangladesh.

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