Myanmar lost nearly US$20 bln in illicit money since 1960

September 11, 2015 10:06
Souvenir items are displayed for sale at a store in Yangon, Myanmar. Massive illicit financial outflows have drained the country's domestic resources, according to the GFI study. Photo: Bloomberg

Nearly US$20 billion flowed illegally out of Myanmar between 1960 and 2013, according to a report by Global Financial Integrity (GFI), a Washington, D.C.-based research and advocacy organization based in Washington, D.C.

The outflows drained domestic resources, drove the underground economy and facilitated crime and corruption, the Wall Street Journal said, quoting from the report.

Decades of economic isolation and trade restrictions, as well as attempts to regulate currency exchange rates, combined to drive a substantial part of the economy underground, the GFI report said.

The study finds that trade misinvoicing—the fraudulent over- and under-invoicing of trade transactions—accounted for the majority of the country’s illicit financial outflows (59.6 percent) and inflows (89.2 percent) over the 54-year period.

“Myanmar is the most porous economy we have studied in depth,” wrote the report’s co-authors, Dev Kar and Joseph Spanjers.

The study estimates that illicit financial flows from the country totaled US$18.7 billion from 1960 through 2013, with annual average illicit outflows averaging 6.5 percent of the country’s GDP.

Illicit inflows totaled US$77.7 billion over the periodm nearly half of which occurred from 2010 to 2013, the report said. On average, Myanmar’s illicit inflows are equivalent to 14.4 percent of its GDP.

The study comes as Myanmar slowly opens up its economy to foreign investment amid an easing of economic sanctions.

The fruits of that opening, the Wall Street Journal reported recently, aren’t coming to American investors.

“Addressing the problem of capital flight and illicit flows is crucial to the policy reforms Myanmar is pursuing as it opens to the world,” GFI managing director Tom Cardamone said in a statement.

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