Bangladeshi billionaires: where are you?

Despite all its economic growth, no Bangladeshi has yet made Forbes’ list of billionaires. One can only wonder: if Bangladesh is doing really well, where are all the billionaires?

June 11, 2022, 9:30 a.m.

Last modification: June 11, 2022, 09:34

Illustration: TBS

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Illustration: TBS

There are 2,669 billionaires in the world, and none of them belong to Bangladesh, as indicated by the list of world’s billionaires 2022 recently released by Forbes. Even Eswatini (formerly called Swaziland) – a small African economy a hundred times smaller than Bangladesh – boasts of having a billionaire.

But Bangladesh should have had a billionaire at this point, right? First, Bangladesh remains one of the fastest growing economies in Asia, if not the world, despite the twin crises of the Covid-19 pandemic and the Russian invasion of Ukraine. Moreover, with economic growth, income inequality in Bangladesh is also increasing rapidly, implying the concentration of wealth in the hands of a few.

Specifically, the Gini coefficient – used to measure income inequality in a country – fell from 0.458 in 2010 to 0.482 in 2016 and is expected to rise further. Moreover, according to Bangladesh Bank, the number of millionaire accounts (in Tk) increased by 13,881 in 2021 alone, despite the economic slump during Covid-19.

All of this makes you wonder: if Bangladesh is really so prosperous, why aren’t there any billionaires here?

It is often claimed that there are indeed billionaires in Bangladesh, but they hide all their wealth in offshore accounts and real estate. Their apprehension would be justified given that 11 Bangladeshis were named in the Pandora Papers for doing just that. It is indeed true that large capital outflows, as well as tax evasion in Bangladesh, make it difficult to estimate the real wealth of many individuals and this lack of reporting may contribute to Bangladeshi billionaires not being included.

However, blaming all of this on money laundering and tax evasion would be shortsighted. First, $1 billion is a ton of money. Converted into the local currency, one would need to accumulate around Tk 8,600 crore to be considered a billionaire by Forbes. So, it may be true that no Bangladeshi has accumulated so much wealth.

It should also be mentioned that not having a billionaire is not necessarily a problem and could, in fact, go in the direction of a more competitive, friendlier and fairer organization of markets for consumers. Therefore, refraining from finding a simple and often simplistic explanation can leave room for more nuance.

First, I hypothesize that several factors can facilitate wealth accumulation such as size of economy, per capita income, investment climate, trade openness, extent of privatization, absence of antitrust policies, monopolistic or oligopolistic natural resources as well as public resources. service market, poor and corrupt institutions, adoption of technology and innovation, etc. The effects of each factor are country-specific and not at all universal.

Also, I ignore countries with only one billionaire because evidence from one billionaire might not be strong enough to point to a pattern. For example, Eswatini’s only billionaire, Nathan Kirsh, has his assets mainly in New York and London and is only registered under Eswatini because of his nationality.

Now let’s talk about the size of the economy. The United States is the largest economy in the world and therefore has the highest number of billionaires (735) in the world. The same goes for other major economies such as China (539), Germany (134), Japan (40), UK (49), India (166), France ( 43), Italy (52), Canada (64), Russia (83), Australia (46) etc.

All of these countries rank first in the Forbes list of countries with the most billionaires. While it’s tempting to conclude that the size of an economy’s GDP determines the number of billionaires, there’s more to the picture than meets the eye.

For starters, the Forbes list of countries with the most billionaires also includes two much smaller economies, namely Hong Kong and Taiwan. With a GDP roughly equal to that of Bangladesh, Hong Kong has 67 billionaires while Bangladesh has none. Similarly, Taiwan is nearly twice the size of Bangladesh’s economy. But it has 51 billionaires. One explanation for this discrepancy could be that Taiwan and Hong Kong billionaires are heavily invested in other countries like China, the United States, and the European Union.

Seikh Rafi Ahmed. Sketch: TBS

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Seikh Rafi Ahmed.  Sketch: TBS

Seikh Rafi Ahmed. Sketch: TBS

Another way to look at this would be to consider economies roughly the same size as Bangladesh. This is where things get more interesting. Of the 71 countries with at least one billionaire, 31 had smaller economies than Bangladesh. For example, seven billionaires hailed from Chile, an economy roughly 78% the size of Bangladesh. On the other hand, Cyprus had four (04) billionaires despite an economy one-fifteenth the size of Bangladesh.

In fact, Bangladesh has a GDP roughly the same or higher than all of the following countries (number of billionaires in brackets): Colombia (03), Czech Republic (08), Egypt (06), Kazakhstan (04), Lebanon ( 06), Denmark (08), Vietnam (07), Ukraine (07), Monaco (03), Philippines (20), Hong Kong (67), Singapore (27) and Malaysia (12). Therefore, the size of the economy cannot explain why Bangladesh has no billionaires.

One explanation could involve the business climate in each of these countries, measured in terms of commercial freedom, monetary freedom, property rights, innovation and technology, bureaucracy, tax burden, etc. Some of the countries, as mentioned earlier, like Singapore, Denmark and Hong Kong rank among the top 10 most business-friendly countries in the world, while Malaysia, Chile, Cyprus and the Czech Republic rank much higher (among the first 40) on this list.

Even Kazakhstan, Colombia and the Philippines are ranked higher than Bangladesh, which currently occupies the 109th position on this list. Therefore, the investment climate in a country can play a major role in determining the accumulation of wealth.

That said, the business climate in Kazakhstan, Colombia, the Philippines or even India remains far from satisfactory, and their rankings often seem at odds with the number of billionaires in the respective countries. For example, the Philippines, Ukraine and Vietnam ranked 79th, 77th and 84th respectively for business climate, while India, an economy of 166 billionaires, ranked 73rd. Lebanon is ranked 92nd while Egypt is ranked 95th, a few places above Bangladesh.

To solve this last piece of the puzzle, we can look at the nature of the markets in these countries. Countries that allow corporate consolidations are also likely to have more billionaires than countries that do not. Returning to the case of Chile, Horst Paulmann’s Cencosud and the international chain Walmart have created an oligopoly in the Chilean market and have been repeatedly fined by the regulatory authorities. Despite this, they hold too much power in these markets, allowing the owner of Cenkosud to accumulate obscene wealth.

Likewise in India, people like Mukhesh Ambani and his Reliance have almost unchallenged control over the energy markets and also considerable influence over the ruling party leaders. Poor institutions and a lack of accountability have also led to the concentration of wealth in these countries.

This is where we need to discuss the privatization of natural monopolies like oil, airlines, railroads, power and other natural resources. For example, Three (03) of Chile’s seven billionaires, including Iris Fontbona – the richest person in Chile – are involved in the mining industry. In the case of Cyprus, two of their billionaires are involved in the tanker trade and another in the private airline industry.

In the case of Bangladesh, public utilities such as railways, airlines and natural resources are generally owned by state-owned enterprises and therefore by the government. Therefore, individuals have no opportunity to get obscenely rich by accumulating these precious resources.

Finally, one can also look at innovation and technology adoption in the manufacturing sector. As an indicator, we can consider exports of medium and high technology (% of exports of manufactured goods). Of Bangladesh’s manufactured exports, only 2% are medium and high technology exports. Compare that with Lebanon, Kazakhstan, Egypt, Ukraine or even Vietnam, where at least 30% of manufactured exports are high value-added technology exports.

Another reason a country has billionaires has nothing to do with its GDP or policies. Since Forbes only records a billionaire’s nationality – not the main source or region of their income – it’s possible that a person has never earned a penny in their own country but is recorded as a billionaire.

For example, Jean Salata, although a Chilean citizen, has lived and worked in Hong Kong since 1989, where he chairs Baring Private Equity Asia. Similarly, many Indian billionaires do not primarily operate in India either. That being said, it is worth considering why Bangladeshis are unable to hold CEO positions in foreign companies while Indians are making progress.

In conclusion, there could be several factors for Bangladesh not having a billionaire. On the one hand, it may be true that Bangladesh has billionaires, but their incomes are not reported. The unfavorable investment climate, rising tax and tariff burdens, and slow technology adoption may also play a crucial role here. On the other hand, it may be because Bangladesh has yet to privatize its state-owned natural monopolies.

About Oscar L. Smith

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