Illegal employment of expatriates in Bangladesh causing significant revenue loss, study finds
05 February 2020
Increasing amount of illicitly transferred remittance and tax evasion by both legally and illegally employed foreigners have reached a worrying level, depriving the government of Bangladesh billions in revenue losses, as evidenced in a study by Transparency International Bangladesh (TIB).
According to the study, an estimated $3.15 billion (Tk. 26,400 crores) are illicitly transferred annually out of the country while the state is losing at least $1.35 billion (Tk. 12,000 crore) of revenue annually due to tax evasion on this account. The study also finds that an overwhelming majority of the estimated 250,000 foreign nationals from 44 countries working mostly in various private sector entities are employed without mandatory appropriate visa and work permit.
The study conducted from April 2018 till December 2019 identified a series of governance challenges including different types of non-compliance by employers, foreign employees and a section of relevant public officials who are charged with the task of ensuring compliance of the relevant legal provisions, rules and regulations. As per the study, at different stages of the employment process of expatriates, from the stage of appointment to extension of Visa, allegations of illegal transactions were found in most of the stages to expedite the process.
“Corruption and illegality have become institutionalized in the expatriate employment process mainly due to collusive and coercive corrupt practices by the employers, employees and relevant officials taking advantage of procedural complications, deficits of coordination and lack of application of laws and policies, capacity and commitment of relevant officials,” said Dr Iftekharuzzaman, Executive Director of TIB on 5 February in a press conference organized at its Dhaka office to unveil the study titled `Employment of Expatriates in Bangladesh: Governance Challenges and Way-out’.
At the press conference, Manzoor E Khoda, Programme Manager, Research and Policy division of TIB presented the study findings while Advisor- Executive Management Professor Dr Sumaiya Khair; Mohammad Rafiqul Hassan, Director, and Shahzada M Akram, Senior Programme Manager, both of Research and Policy division, of TIB were also present at the meet.
The study observes that expatriates, employed in Bangladesh, mostly Indians, are not engaged in specialized jobs, instead, they are involved in ordinary administrative works, for which there should not be any dearth of Bangladeshi candidates. Such unnecessary employment creates unfair competition for the local candidates, in addition to a huge draining of foreign currency for paying remunerations, adds the study.
The study finds, many foreign nationals show lesser amounts of money than the actual amount received as wages to avoid paying tax and send their earnings to home-countries through illegal channels. Employers often deliberately hire foreign experts without following the due legal process to evade taxes and employ them with lower salaries although the employment of expatriates without legal documents are grossly illegal and punishable under law.
According to the study, usually, foreign nationals enter Bangladesh on a three-month tourist visa and manage jobs soon afterward given the shortage of people with strong communication and management skills, which are in high demand in the garment sector that has gone on to become the world’s second-largest supplier of apparel. When their visa is nearing expiration, they return to their home country and come back with a fresh three-month tourist visa and continue with their jobs in Bangladesh. At the same time, the government organizations that are supposed to ensure the application of related laws and regulations, have either failed to prevent so or they lacked efficiency. Several loopholes in relevant existing laws and policies concerning the employment of expatriates were also observed in the report.
According to the study, the number of foreign nationals working in Bangladesh is on the rise. According to different entrepreneurs, RMG sector employs foreign workers citing a shortage of skilled manpower for top management posts, the poor performance of locals in managerial communication, the reluctance of local candidates, to work at the factory level or in production plant, etc. However, the study noted unnecessary bias of local owner towards foreign workers in some cases and few local employers prefer foreign staff believing they have a lower chance of getting involved in corruption.
Dr Iftekharuzzaman also said "Like any other country, Bangladesh definitely needs skilled human resources from abroad to fill up the gaps in skills and expertise that are not locally available. But there is no way that it can be permissible without full compliance of the legal, procedural and regulatory framework, the deficits of which, as depicted by TIB, is depriving the country of its due share of benefits of expatriate employment. The degree of non-compliance and impunity prevailing in the sector is unacceptable and indefensible, and demands immediate corrective and preventive actions by all stakeholders, especially the relevant authorities.”
Pointing towards the findings of the study, Dr Zaman further said, “Recruitment of foreign nationals instead of qualified locals should be stopped. To ensure sustainable growth of the relevant sectors, an integrated policy strategy should be introduced and effectively implemented.”
TIB has suggested 9-point recommendations for consideration of various stakeholders to oversee the employment of expatriates and movements of foreign nationals staying in Bangladesh, which included, among others, an integrated data management system, and a ‘one-stop service’ to provide services regarding documents related to visa to foreign workers. It also urged the government to update foreign workers’ salary and wage scale, to assess the sector-based requirement of foreign workers and to ensure due procedure in their recruitments. It further called upon the government to form a joint task force to avail necessary information regarding foreign workers.