Number of billionaires increasing despite crisis

Mahfuja Mukul: Bangladesh is facing multi-faceted macroeconomic crisis including unbridled inflation, dollar crisis, declining reserves, decline in remittances. Government and common people are losing their breath while carrying out the necessary expenditure. Even in such a situation, the wealth of a class of people is getting more and more inflated. According to the information of UBS Bank of Switzerland, the number of people with assets close to or above Tk 100 crore in local currency is about 1,700 in Bangladesh, whose total wealth is over $40 billion, the amount of which is more than Tk 4 lakh crore in local currency. Which is 10 percent of the country’s gross domestic product (GDP).
The country’s average inflation has been above 9 percent for more than a year. Last August, overall inflation stood at 9.92 percent. Traders are unable to open import letters of credit (LC) as per demand due to dollar crisis. The amount of import has decreased significantly. As a result, the growth of manufacturing industries is feared to decrease. The foreign exchange reserve situation of the country is becoming increasingly fragile due to continuous erosion.
According to international standards (BPM6), the country’s reserves are now $2,170 billion. Exports, the main sector of foreign exchange earnings of the country, did not grow at the expected rate in the last financial year. Another sector of foreign exchange earnings, remittance situation is also not promising. There has been a nominal growth in remittances in the country in the last financial year. On the other hand, the amount of remittances decreased in the first two months of the current financial year. The situation of the country’s banking sector is also fragile.
Along with the lack of good governance, defaulted loans have become a headache for the sector. At the end of last year, the state of rescheduled loans in the country’s bank sector stood at Tk 212,780 crores, which is 14.40 percent of the total disbursed loans. However, the country’s billionaires are not affected by these economic crises.
Zurich-based Credit Suisse Bank collects information on wealthy people from different countries for business reasons. For nearly a decade and a half, the research wing of the institute has been creating a database of financial statistics of the world’s wealthy, which is published under the title Global Wealth Report. However, Credit Suisse was acquired this year by another Swiss bank, UBS.
As a result, UBS Bank has published the database of the world’s richest people. According to the latest 2023 edition of the database, at the end of 2022, 22 individuals have wealth of more than $500 million or Tk 5.5 thousand crore (Tk 110 per dollar) in the country. Whereas at the end of 2021, the number of wealthy people in this category was 21.44 people have assets of Tk 100 million to Tk 500 million or Tk 1000 million to Tk 5500 million. In 2021, this number was 43 people.
At the end of 2022, the number of people in Bangladesh who had assets between $5 to $10 million or Tk 5.55 billion to Tk 1.1 billion stood at 40, which was 39 in 2021. At the end of 2022, there were 423 individuals with wealth between $1 to $ 5 crores or Tk 110 to Tk 550 crore. Whereas in 2021, the number of wealthy people in this category was 400 people.
In total, the number of people who have wealth of more than Tk 110 crores to Tk 5.5 thousand crores in the country has reached 529 people at the end of 2022. In 2021, this number was 503 people. It is seen that the number of people who have assets of more than Tk 100 million in Bangladesh has increased by 26 people in the space of one year. Out of this, the number of individuals with wealth from Tk 110 crore to Tk 550 crore has increased to 23.
According to the UBS report, the number of Bangladeshis with assets between $50 million and $10 million has reached 1,156 at the end of 2022. At the end of 2021, which was 1,125 people. Considering the current exchange rate, if you have assets of $90 lakh 91 thousand dollars, it will stand at Tk 100 crores in Bangladeshi currency. As a result, some of the 1,156 people with assets between $50 million and $10 million will be included in the list of hundred millionaires.
In this, the actual number of hundred millionaires in Bangladesh will be more than 529 people. Due to the depreciation of the local currency, the wealth in taka terms of these wealthy individuals was slightly lower in 2021 than in 2022.
The outbreak of the covid epidemic pushed the economy of the country to the brink of disaster. Many were unemployed. Deteriorating poverty situation. The year 2021 was seen as the year of economic recovery after the corona outbreak. However, this process was disrupted by the emergence of new types of Covid, new infection waves and restrictions. The situation became more fragile in the latter half of the year due to the instability of the global energy market.
Then the Russia-Ukraine crisis started. Global supply systems become fragile. Due to these reasons, Bangladesh is going through an adverse situation in the multifaceted crisis of the macro economy. However, despite these adversities, the wealth growth of various beneficiary groups in the country did not stop, but increased.
The former governor of Bangladesh Bank Salehuddin Ahmedsees the concentration of wealth as an obstacle in the way of balanced development in Bangladesh. He told the media, “Those who have wealth have more connections with high-ranking people. This connection is influencing them at all levels from politics to bureaucracy, banks. As a result, they get the benefit of bank loans. In the banking sector, it will be seen that most of the loans are concentrated among large customers.
Even if seen regionally, it can be seen that most of the areas except Chittagong and Dhaka are deprived. Again, when the income increases, the rich buy land and property. Need two bigha, buy and keep 10 bigha. Later sold eight bighas. By speculative investing. They have opportunities and possibilities. There are some cases of monopoly-oligopoly in Bangladesh. For example, in power, banks, pharmaceuticals, a few groups are doing everything. On the other hand, small and medium enterprises are being deprived day by day.
Credit Suisse’s comment on this database of wealthy people is that they create the database regularly to know the information of high-net-worth individuals. Net worth is calculated by subtracting liabilities from the total value of financial and non-financial assets (real assets such as land, houses, etc.) owned by the individual.
Economists and experts see corruption as a major reason for the increase in the wealth of the country’s rich despite the economic crisis. They say that the development of human resources can be done in a completely legal and transparent process. Here wealth inequality is also a feature of capitalism. However, what is happening in countries like ours and in other countries of the world is corruption.
One of its negative effects is increased economic inequality. Our policy framework is very conducive to corruption. Bangladesh is one of the countries in the world where the number of rich people is increasing at the highest rate.
Executive Director of Transparency International Bangladesh (TIB) Iftekharuzzaman said, ‘There is nothing to be surprised about the information of the wealthy. This is a normal picture. Even if it was in the lower row, it may have moved to the ranks of the rich. The most important thing is that Bangladesh is one of the countries where the number of rich people is increasing at the highest rate. Who are called super rich. Discrimination has also increased.
44 percent of our national income is owned by the richest 10 percent. 16 percent are owned by the richest 1 percent. It shows how obvious the discrimination is.
According to Credit Suisse’s report, the database was created based on data collected from various sources on the distribution of wealth in 217 countries and economically independent regions (special administrative regions such as Hong Kong). The database was created in three phases.
In the first step, the average wealth distribution of the respective countries and regions has been calculated. In this case, a major source was the food survey data of the countries. For countries where household survey data were not available, wealth distribution was calculated based on economic statistics. In many countries, due to the lack of sufficient data, several statistical methods including regression analysis have to be applied based on various data including the ratio of average wealth and GDP of the respective sub-regions.
Former secretary, former chairman of the National Board of Revenue (NBR) Mohammad Abdul Majeed told the media that the wealth of the rich is definitely increasing in the country. Accountability, good governance and political economy have ramifications in this regard. If this wealth remained in the economy, be it through evasion or corruption, then the economy would have at least 75 percent more utility. Because people were employed. Money stayed in the country and flowed in the country. In this case, the first injustice that is happening is that wealth is being taken away from everyone through fraud or corruption.
Money is being taken abroad without looking at those from whom it is being taken or throwing it away. Wealth is being created there, jobs are being created, progress is being made. They could have happened here. As a reflection of these things, inequality is increasing. It will be seen that these corrupt people will not allow the reforms that are needed in the country. If the state institutions of the country could work properly, then the country would not be in this situation today.
He said, “Now they are talking about laundering black money, especially money smuggled abroad, but no question is being asked about the source.” This one clause has complicated the situation the most. In other words, the money is being corruptly taken away, no question will be asked about that money, due to this kind of amnesty, the amount of black money including money laundering abroad is increasing. In other words, the matter of receiving indulgence is playing a special role in this regard.
The second step in creating Credit Suisse’s database is to review the asset ownership patterns of the respective countries or regions. In this case, complete information is available for 40 countries. In reviewing the data of these countries, researchers have found evidence of a direct relationship between wealth and income distribution. Statistics for 140 other countries have been created using this relationship. Although income data is available for these countries, detailed information on wealth ownership is not available. For the rest of the 37 countries, the experts had to resort to the average of the respective sub-regions.
The third step is to calculate the amount of wealth of the top tier or super rich of different countries. In this case too, traditional sources are considered unreliable by Credit Suisse researchers. For this, the Forbes Global Billionaires List was used along with other sources to review the distribution of wealth among the top rich in different countries.
In this case, the asset value is calculated based on the institutional exchange rate of the dollar. Credit Suisse’s statement in this regard is that there is a tendency to transfer wealth from one country to another among the world’s top rich. For this reason, it is better to consider the institutional exchange rate when reviewing the distribution of global wealth.
Economic analyst Mamun Rashid told the media, “There are three ways in which money comes to developing countries. One is the big project, second is the political relationship with the government. Another way has emerged in media reports. Where it is seen that those whose money has increased are related to the power sector and local contractors of large infrastructure. Besides, there is a large section whose money has increased. They are government officials.
Business representatives say that this figure of wealth growth is a reflection of the development of the private sector. Bangladesh is on the way from developing to developed country. New business is happening here, new sectors are developing. Some are doing well, some are not. The economy rests on the private sector. Wealth is increasing in this sector. Many new sectors are being opened with the help of the government, such as power and energy, telecommunication, IT, banking.
As a result of this the opportunities for big corporates have increased, they are doing well. But we must have an effort to bring equality. Especially the banking sector should come forward to develop the SME sector. Discrimination is definitely there. We have to try to reduce it. Another important thing is that doing business in the country creates employment. Now if the business is within Bangladesh, then it is ok. But if it drains out or goes away from Bangladesh then it is difficult for us. There needs to be a balance.
The Federation of Bangladesh Chamber of Commerce and Industries (FBCCI) President Mahbubul Alam told the media, “The image of wealth growth is a reflection of growth. We can take the increase in wealth as a positive. People’s incomes are increasing. From middle class to rich. That is, overall development is taking place. The most important thing is that the employment opportunities in the country are increasing through those who are using the resources of the country in the country. However, it is not right if the drain is out or left from Bangladesh. Those who are doing this are enemies of the country.
Despite the increase in the number of super rich in the country, 85 percent of income tax is coming from indirect sources. Bangladesh has the weakest tax base in South Asia. A large part of the super-richare smuggling wealth abroad without paying taxes in the country. Taking citizenship of another country or taking residence permit on Golden Visa. Apart from Bangladesh, huge amounts of money are deposited in various offshore destinations. Buying luxury homes in prime locations in Canada, Dubai, London. This illegal flow of money to foreign destinations has created a huge pressure on the foreign exchange of the country.
Farooq Moinuddin, the former managing director of Trust Bank, told the media, “We are seeing that a class of businessmen in the country are becoming rich overnight. And the wealth of people who do not have business is also swelling. It is not possible to become a big man overnight in any country by following ethics and laws. That means to become rich suddenly one has to engage in illegal activities. Bribery, irregularities and corruption have to be resorted to.
He thinks that although the per capita income of the people in the country is increasing, the income of the middle class and lower class is decreasing. Basically, the effect of the rich getting richer is per capita income. No country or nation can sustain its progress by leaving the largest section of the population in poverty. Effective governance is essential for the benefits of development to reach people of all walks of life.