KUALA LUMPUR, (Thomson Reuters Foundation) – Almost $20 billion in dirty money linked to corruption, crime and tax evasion has left Myanmar in the past five decades, slashing government revenue and driving a thriving underground economy, a money-laundering watchdog said yesterday.
Fraudulent invoicing of trade deals and physical smuggling of drugs, timber, gems and other goods pose big challenges to Myanmar, which will hold its first general elections next month since the end of military rule, U.S.-based Global Financial Integrity said in a report.
Illicit financial inflows have accelerated in the past few years as the economy has opened up, and over the past five decades were four times as big as outflows, it said. “Myanmar must be one of the most porous countries in the world,” GFI economist Joseph Spanjers, the report’s co-author, told the Thomson Reuters Foundation.
“It is a serious challenge for the country as tax losses due to illicit flows are robbing it of crucial public funds.”
Long isolation and trade restrictions during the nearly 50-year-long reign of a military government until 2011 and attempts to regulate currency exchange rates have combined to drive a substantial part of Myanmar’s economy underground, GFI said.
The Southeast Asian country, one of the poorest in the region, is not alone in grappling with the negative impacts of illicit financial flows.
GFI estimates almost $1 trillion in dirty money leaves poor nations each year, an outflow that has grabbed the attention of anti-poverty groups and world leaders because, by cutting tax revenue needed to fund areas such as health and education, it has a corrosive impact on development.
