Illegal funds outflow: M'sia is 5th on list
Published on: Thursday, December 25, 2014
PETALING JAYA: Malaysia lost over US$48.93 billion (RM170.7 billion) in illicit outflows in 2012, making it a cumulative US$394.87 billion during the 10-year period from 2003 through 2012, according to the international anti-corruption group Global Financial Integrity's (GFI) latest report.In the latest update, GFI reported that a record US$991.2 billion in illicit capital flowed out of developing and emerging economies in 2012 alone, facilitating crime, corruption and tax evasion.GFI's 2014 annual global update on illicit financial flows pegged cumulative illicit outflows from developing economies at US$6.6 trillion between 2003 and 2012, the latest year for which data is available.
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The think-tank said due to Malaysia's downward trend in outflows since 2010, the country is now ranked fifth, switching places with India which climbed a notch to fourth.GFI measures illicit ?nancial out?ows using two sources, out?ows due to deliberate trade misinvoicing (Gross Excluding Reversals or GER) and out?ows due to leakages in the balance of payments, also known as illicit hot money narrow out?ows.The GER methodology, which draws upon the International Monetary Fund's (IMF) Direction of Trade Statistics (DOTS) database in conjunction with its International Financial Statistics (IFS) database, estimates trade misinvoicing by looking for imbalances in reported export and import values between a country of interest and the world.The vast majority of illicit ?nancial ?ows – 77.8% in the 10-year period covered in this report – are due to trade misinvoicing.
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Last year, Bank Negara Malaysia disputed the GFI figures, saying that the estimates of illicit outflow was overstated as the estimates in the report of trade mispricing had not been taken into consideration.The central bank said then that the GFI estimates were essentially unrecorded financial flows, which were not necessarily synonymous with illicit financial outflows.
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Asia continues to be the region of the developing world with the greatest volume of illicit ?nancial ?ows, comprising 40.3% of the world total over the ten years of the study.Titled "Illicit Financial Flows from Developing Countries: 2003-2012," the report finds that illicit outflows are growing at an inflation-adjusted 9.4% per year or roughly double global gross domestic product (GDP) growth over the same period."As this report demonstrates, illicit financial flows are the most damaging economic problem plaguing the world's developing and emerging economies," said GFI president Raymond Baker in a statement.The outflows, he said, was already greater than the combined sum of all foreign direct investment and official development assistance flowing into those countries and are "sapping roughly a trillion dollars per year from the world's poor and middle-income economies.""Most troubling, however, is the fact that these outflows are growing at an alarming rate of 9.4% per year – twice as fast as global GDP," Baker added.Stay up-to-date by following Daily Express’s Telegram channel.
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