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Dhaka Tribune

Exchange controls do more harm than good

Update : 05 May 2015, 06:37 PM

We welcome the debate opened up by the International Business Forum of Bangladesh on the case for lifting exchange controls.

Current controls are based on an outdated mindset, which seeks to limit the flow of foreign currency abroad by bureaucratic fiat. Businesses and individuals have to endure unfairly restrictive hurdles to transfer funds abroad. 

The difficulties imposed on Bangladeshi companies wishing to seek to invest and compete internationally, places our economy at a major disadvantage to competing nations.

Far from doing good, current laws create incentives for corruption in bypassing the law and facilitate the growth of illegal untaxed money channels. It is the rigidity of exchange control procedures which emboldens corrupt officials  and actively encourages informal and illegal channels, undermining the aim and spirit of anti-money laundering laws.

While the success of export industries and expatiates, remitting money has helped build up record foreign currency reserves, capital controls are actively stopping these flows from being put to the most productive use. Consumers also suffer as the policy prevents them from taking advantage of lower global market prices on many products.

The best way to get out of this trap is to lift currency controls so there is no incentive for people to hide their capital and income. The government should not see it as its job to restrict people sending legitimately earned money abroad for legitimate reasons.

Our economy can only benefit. Removing controls would at a stroke both curb illegality and increase opportunities to attract and make new investments.

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