Illicit inflows grow during Thein Sein's term
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Nearly half of total illicit inflows into Myanmar worth US$77.7 billion since 1960 occured during the last four years, according to a report by Global Financial Integrity (GFI).
The Washington DC-based research and advocacy organisation finds that trade misinvoicing - the fraudulent over- and under-invoicing of trade transactions - accounted for the majority of the country’s illicit financial outflows (59.6 per cent) and inflows (89.2 percent) over the 54-year period analyzed.
“It is greatly concerning that illicit inflows have grown significantly in recent years, averaging under $400 million per annum in the 1960s, they’re averaging over US$8 billion per year today. Unless corrective actions are taken, the economic toll of these illicit flows will only continue to grow.” said GFI Chief Economist Dev Kar who previously served as a senior economist at the International Monetary Fund.
Titled “Flight Capital and Illicit Financial Flows to and from Myanmar: 1960-2013,” the study finds that nearly US$20 billion flowed illegally out of Myanmar between 1960 and 2013.
“Myanmar has a very serious problem with illicit financial flows, and curtailing them should be a priority for the government that forms following the forthcoming elections,” noted GFI President Raymond Baker, a longtime authority on financial crime. “Illicit flows have drained billions of dollars from Myanmar’s official economy; this money could have otherwise been used to help the nation’s economy grow. Beyond the direct loss to the economy, these flows are driving the underground economy, fueling crime and corruption, and costing the government significant revenue.”
Both the inward and outward illicit movements of money deprive the government of crucial tax revenue. By applying relevant tax rates on illicit flow figures, the report estimates lost tax revenue due to illicit flows and compares it to Myanmar’s public spending on health and education. The loss averaged 122-172 per cent of health expenditures and 48-73 per cent of education spending from 1960-2013. Approximately 30 percent of this tax loss occurred in the last four years of the study.
"This means that some individuals have been taking advantage of increased economic openness for personal gain, at the expense of the rest of the country," said Joseph Spanjers who co-authored the report.
