More than 60% large entrepreneurs strongly agreed that money laundering was taking place through formal banking system in Bangladesh extensively, according to a Centre for Policy Dialogue (CPD) survey.
Nearly 61% entrepreneurs feared that the investment environment could deteriorate further in coming days, said the survey made between January and April this year.
They (entrepreneurs) also mentioned that corruption, inadequate infrastructure, inefficient government bureaucracy, government instability and limited access to financing are the major impediments towards private investment.
CPD research fellow Towfiqul Islam Khan presented the survey report at a media briefing on State of the Bangladesh Economy in FY2014-15 (Third Reading) as part of CPD’s Independent Review of Bangladesh’s Development (IRBD) programme in the city yesterday.
Given the high interest on lending charged by the domestic banking sector, over 53% supported allowing foreign loans for private investment to a great extent.
The survey also revealed that 67.8% respondents possessed a rather pessimistic view as regards the ongoing initiatives to improve infrastructure in Bangladesh and 76.7% expressed doubt over the prospects of timely implementation of infrastructure projects.
“Much of the capital flight might occur through under-invoicing of capital machinery and those items with zero duty,” said CPD Executive Director Professor Mustafizur Rahman.
After analysing import shipment data of 30 items for July-March, the CPD like previous year indicated that the possibility of illicit financial flow through import of capital machinery was taking place.
It found that growth payments jumped abnormally 23% against capital machinery import during the first nine months of the current fiscal year.
This rise in imports of capital machinery failed to reflect in private investment, which is still perceived to be stagnating, it said.
The survey was also identified that 30 import items valued more than Tk100 crore witnessed 100% growth during the period.
More precisely, four of the items in categories of aeroplanes and other aircraft, compression-ignition internal combustion piston engines, and machines for treating metal including electric wire and transformers, showed very high growth in their value, it said.