Assalamualaikum
Congratulation to Malaysian for this 'achievement'. We should be 'proud' of ourselves living in the country.
By Shannon Teoh (Malaysian Insider)
KUALA LUMPUR, Jan 20 — Illicit money outflows from Malaysia tripled to US$68.2 billion (RM208.1 billion) in 2008, from US$22.2 billion in 2000, according to a report by US-based financial watchdog Global Financial integrity (GFI) released this month. The country also had the fifth largest amount of illegal money outflows between 2000 and 2008, among developing countries. GFI defines illicit financial flows as generally involving the transfer of money earned through illegal activities such as corruption, transactions involving contraband goods, criminal activities, and efforts to shelter wealth from a country's tax authorities, said the programme’s website.
The report titled Illicit Financial Flows from Developing Countries: 2000-2009 said that illicit financial outflows from Malaysia totalled US$291 billion (RM888 billion) in that period. It said that the increase was “at a scale seen in few Asian countries.”
“The volume of illegal capital flight from Malaysia has come to dwarf legitimate capital inflows into the country in recent years,” said the report.
Top of the list of 125 developing countries was China at US$2.18 trillion in that period while Philippines, at 12th, was Malaysia's closest regional neighbour at US$109.3 billion. Zimbabwe was 73rd at US$4.1 billion and Myanmar at 85th with US$2.9 billion. The report said that it is clear that significant governance issues affecting both the public and private sectors have been playing a key role in the cross-border transfer of illicit capital from the country.
It noted that there have been media reports that large state-owned enterprises such as national oil company Petronas could probably be driving illicit flows. GFI said its research indicates that political instability, rising income inequality, and pervasive corruption are some of the structural and governance issues that could be driving illicit capital from many developing countries.
“In the case of Malaysia, the additional factor could well be the significant discrimination in labor markets which move people and unrecorded capital out of the country,” it stated.
GFI identified deliberate trade mispricing - which allows companies to avoid paying taxes — as the cause of 54.7 per cent of illicit outflows from developing countries. The report said that between US$1.26 to US$1.44 trillion flowed out from developing countries alone in 2008.
“Increasing transparency in the global financial system is critical to reducing the outflow of illicit money from developing countries,” the report said.
According to GFI, illicit financial flows pertains to the cross-border movement of money that is illegally earned, transferred, or utilised. The Washington-based GFI says that it promotes national and multilateral policies, safeguards, and agreements aimed at curtailing the cross-border flow of illegal money. It is a programme under the Center for International Policy, which was founded in 1975 to promote a US foreign policy based on international cooperation, demilitarization and respect for human rights, according to its website