WHO will say "The buck stops here!" wrt Malaysia's colossal outflows?
I know this issue is not new, BUT THE GOVERNMENT OF THE DIE MAINTAINS ELEGANT SILENCE. I wonder what happens to the loudmouthed Perkosa chief, ex-PR idIotic MPs like Ibrahim Ali, Wee Choo Keong, Zulkifli Noordin -- all-in-awe friendly to the Barisan Nasional, remember? -- et al, ad nauseum? ~~ YL, Desi
Malaysia lost RM893b in illicit outflows, research shows
By Clara Chooi
July 22, 2012
The level of outflows was sufficient to mask the extent of income inequality in countries experiencing the capital flight, according to The Guardian. —File pic
KUALA LUMPUR, July 22 ― A colossal RM893 billion was siphoned out of Malaysia’s economy into tax havens abroad between 1970 and 2010, a London-based research has revealed, placing the country among the top 20 nation in the developing world labelled as “losers” of capital flight.
The sum is more than triple that of Malaysia’s national debt total, which amounted to RM257.2 billion in 2011, according to previous media reports.
In the study commissioned by Tax Justice Network (TJN), a London-based organisation of professionals including economists and tax consultants, Malaysia is now ranked 12th on the list, two rungs above Singapore’s RM533 billion outflow and three below Indonesia’s RM1 trillion.
According to researcher James Henry in UK’s The Guardian today, the “offshore economy” is large enough to leave a major impact on the estimates of inequality of wealth and income in any nation, as well as the estimates of national income and debt ratios.
“Most importantly ― [it would] have very significant negative impacts on the domestic tax bases of ‘source’ countries,” Henry was quoted as saying in the daily.
The former chief economist at consultancy McKinsey, in preparing the research report titled “The Price of Offshore Revisited” for TJN, had perused data from the Bank of International Settlements (BIS), the International Monetary Fund (IMF) and private sector analysts to conclude that over the past four decades, an alarming estimate of RM66 trillion or possibly RM100 trillion has flooded out of their home countries across the globe to seep into “the cracks of the financial system”.
According to The Guardian, this was even larger than the size of the entire American economy.
The paper noted that the sheer scale of hidden assets abroad by those seeking to evade taxes suggests that the official Gini coefficient of a country suffering from capital flight would not reflect a true picture.
“Standard measures of inequality, which tend to rely on surveys of household income or wealth in individual countries, radically underestimate the true gap between rich and poor,” The Guardian reported.
TJN member John Christensen told the daily that this meant that inequality was likely to be “much, much worse” than official statistics have shown.
“But politicians are still relying on trickle-down to transfer wealth to poorer people.
“This new data shows the exact opposite has happened: For three decades, extraordinary wealth has been cascading into the offshore accounts of a tiny number of super-rich,” he was quoted as saying.
In December last year, US-based watchdog Global Financial Integrity reported that Malaysia had lost RM150 billion through capital flight in 2009 alone, the fourth highest in the developing world.
The watchdog also found that Malaysia had lost a total of US$338 billion (RM1.08 trillion) over the first decade of the century while RM930 billion had left the country between 2000 and 2008, growing to RM218 billion per year from an initial RM71 billion in that period.
The federal opposition has long railed against the ruling Barisan Nasional (BN) over its alleged fiscal irresponsibility, claiming its relentless spending and massive illicit capital outflow would soon plunge the country into a debt crisis.