Economists attributed to steady economic growth, vibrant manufacturing sector and dominant apparel business as major boosters that played the vital role in making Bangldesh the third fastest growing country of rich people in the Wealth-X report .
Bangladesh to see double digit growth in number of high net-worth (HNW) individuals in next five years, said Wealth-X report, a New York-based research firm.
The report, titled ‘High Net Worth Handbook 2019’ published on Wednesday ranked Bangladesh the third fastest growing country in the world in terms of increasing number of rich people.
According to the report, Bangladesh’s compound annual growth rate (CAGR) will rise by 11.4% during the period of 2018-2023.
In addition to revealing a global view of the status and trends of the wealthy, the High Net Worth Handbook 2019 also examines the population based on their asset holdings, gender, industry focus, wealth source, education, and hobbies with a special breakdown of sports interest by wealth tier.
However, in its earlier report published in September 2018, the Wealth-X put Bangladesh on top of the list of the countries that saw the quickest growth in the number of ultra-high net worth (UHNW) population with a 17.3% growth during the 2012-17 period.
It defines HNW individuals as those with a net worth of $1 million to $30 million (Tk8.4 crore to Tk250 crore) and those worth more than $30 million are classified as ultra-high net worth (UHNW).
Talking to the Dhaka Tribune, economists said the steady growth of national income and strong export-oriented manufacturing base, particularly the apparel sector, and the government’s business-friendly tax policy played vital role in the CAGR outlook.
They said some might have earned money evading taxes and through unlawful means by taking money from banks, which expedited the money earnings process to become richer.
The report forecast Asia will experience the strongest growth in the number of HNW individuals and combined wealth, with the region’s HNW population projected to increase at a compound annual growth rate of 7.6% over the next five years.
“RMG sector is the heart of economy, which also created various windows for business. It has earned the name as the second largest exporter in the globe, which helped the country to increase number of rich people,” Selim Raihan, Executive Director of South Asian Network on Economic Modeling (SANEM) told the Dhaka Triune.
He said some might have earned resorting to unethical practices such as evading tax, bank loans through unfair means and did not repay.
In addition, the government is offering incentives and low rate tax to the business community, which is helping to earn more and to become richer, said the economist.
Raihan, however, said he number of rich people and their wealth has increased. But the question remains to know is it contributing to the economy, questioned Raihan..
Meanwhile, trade body leaders have credited the export sector for the rise in rich people in terms of wealth as the country has been experiencing steady GDP growth over 7%, driven mainly by export sector.
“Bangladesh saw a 7.86% GDP growth and it is driven by private sector and mostly export. This is because of the resilience of entrepreneurs, which was supported by the government’s economic support measures,” FBCCI President Shafiul Islam Mohiuddin told the Dhaka Tribune.
“Bangladesh has a very dynamic and leading manufacturing sector, the readymade garment sector, which has given access to global market. At the beginning the entrepreneurs were small in terms of wealth, which has become now bigger,” Zaidi Sattar, chairperson of Policy Research Institute (PRI) told the Dhaka Tribune.
“Overall economy saw rapid growth, being led by export-oriented sector, which is a factor for the rise in wealthy people.”
However, it has increased income discrimination meaning that richer have got rich and poorer become poor, which needs to be addressed properly, Sattar opined.
For the better income distribution, the tax system should be highly progressive, while the government expenditure has to be distributional. In addition, government has to focus on social protection, he added.
“ It is common and phenomenal that the number of rich people will increase in the first step of a developing country. It has been seen in case of most developing countries,” former caretaker government advisor AB Mirza Azizul Islam told the Dhaka Tribune.
But the government should keep income discrimination at reasonable level as it can create social unrest, said Islam.
The economist urged the government to ensure better use of wealth .
He also called for looking into the people who earn money through unethical way.
According to the report, apart from Bangladesh, four other countries posted double digit growth in terms of their rich population. They are Nigeria (16.3%), Egypt (12.5%), Vietnam (10.1%) and Poland (10.0%).
Five other countries on the top 10 list are China (9.8%), Kenya (9.8%), India (9.7%), the Philippines (9.4%) and Ukraine (9.2%).
In terms of richest concentration of rich people, the top 10 countries are US (8.68m UHNW population), China (1.88m), Japan (1.62m), Germany (1.02m), UK (893,905), France (877,380), Canada (505,010), South Korea (476,705), Australia (473,600) and Italy (418,090).
