Bangladeshi billionaires: Where art thou?

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

But Bangladesh should have had a billionaire by this point, right? Firstly, 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, the income inequality in Bangladesh is also rising rapidly, implying the concentration of wealth in the hands of the few.

More precisely, the Gini coefficient – used to measure income inequality in a country – rose to 0.482 in 2016 from 0.458 in 2010 and is likely to increase further. Furthermore, according to Bangladesh Bank, the number of millionaire accounts (in Tk) rose by 13,881 in 2021 alone, despite the economic slump during Covid-19. 

All of these make you wonder: if Bangladesh is really this prosperous, why are there no billionaires here? 

It is often argued that there indeed are billionaires in Bangladesh, but they are hiding all of 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 precisely that. It is indeed true that large sums of capital outflow, as well as tax evasion in Bangladesh, make it difficult to estimate the real wealth of many individuals and this lack of reporting may be a contributor to Bangladeshi billionaires not being included. 

However, blaming it all on money laundering and tax evasion would be short-sighted. Firstly, $1 billion is a ton of money. Converted into the local currency, one would need to accumulate approximately Tk8,600 crores to be considered a billionaire by Forbes. So, it may be true that no Bangladeshi have accumulated this much wealth. 

It is also worth mentioning that not having a billionaire is not necessarily a problem and might, in fact, point toward a more competitive, consumer-friendly and fair organisation of the markets. Hence, refraining oneself from plucking the low-hanging and often simplistic explanation may provide room for more nuance. 

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

Further, I am ignoring the countries with only one billionaire as the evidence of one billionaire might not be robust enough to point towards a pattern. For example, Eswatini's only billionaire Nathan Kirsh primarily owns his assets in New York and London and is only recorded under Eswatini because of his nationality.

Now, let's talk about the size of the economy. The US is the largest economy in the world and, thereby, has the highest number of billionaires (735) in the world. The same could be said for other large economies such as China (539), Germany (134), Japan (40), United Kingdom (49), India (166), France (43), Italy (52), Canada (64), Russia (83), Australia (46) etc. 

All of these countries occupy the upper-most position in the Forbes list for countries with the most billionaires. While it is tempting to conclude that the size of the GDP of an economy determines the number of billionaires, there's more to the picture than meets the eye. 

For starters, Forbes' list of countries with the highest number of billionaires also consists of two much smaller economies, namely, Hong Kong and Taiwan. With a GDP roughly equal to Bangladesh, Hong Kong boasts 67 billionaires while Bangladesh has none. Similarly, Taiwan's nearly twice the size of Bangladesh's economy. But it has 51 billionaires. One explanation for this discrepancy might be that the billionaires from Taiwan and Hong Kong are heavily invested in other countries like China, the US and the European Union. 

Seikh Rafi Ahmed. Sketch: TBS

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

In fact, Bangladesh has roughly similar or larger GDP than all of the following countries (number of billionaires in parenthesis): Columbia (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). Hence, the size of the economy cannot explain why Bangladesh has no billionaires. 

One explanation might involve the business climate in each of these countries, measured in terms of trade freedom, monetary freedom, property rights, innovation and technology, red tape, tax burden etc. Some of the nations, as mentioned earlier, such as 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 top 40) on this list. 

Even Kazakhstan, Columbia and the Philippines rank higher than Bangladesh, which currently sits at the 109th position on this list. Hence, the investment climate in a country can play a major role in determining wealth accumulation. 

That being said, the business climate in Kazakhstan, Columbia, the Philippines and 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 respectively ranked 79th, 77th and 84th in business climate, while India - an economy with 166 billionaires, ranked 73rd. Lebanon is ranked 92nd while Egypt is ranked at the 95th position, a few ranks above Bangladesh. 

To solve this final piece of the puzzle, we may look into the nature of markets in these countries. Countries that allow corporate consolidations are also likely to have more billionaires than countries that don't. Going back 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 fined several times by the regulatory authorities. Despite that, they hold too much power in these markets, allowing Cenkosud's owner to accumulate obscene amounts of wealth. 

Similarly in India, the likes of Mukhesh Ambani and his Reliance have nearly 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 privatisation of natural monopolies like oil, airlines, railways, energy and other natural resources. For example, Three (03) of Chile's seven billionaires, including  Iris Fontbona - the wealthiest person in Chile - are involved in the mining industry.  In the case of Cyprus, two of their billionaires are involved in the business of oil tankers and another in the private airline industry. 

In the case of Bangladesh, public services like railways, airlines, and natural resources are typically owned by state-owned enterprises and thereby, the government. Hence, there is no opportunity for private individuals to get obscenely wealthy by hoarding these precious resources.

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

Another reason for a country having billionaires has nothing to do with its GDP or its policies. Since Forbes only registers the nationality of a billionaire - and not the primary source or region of his earnings - it is possible for a person never to have earned a penny in their own country but be registered as a billionaire. 

For example, Jean Salata, despite being a Chilean citizen, has been living and working in Hong Kong since 1989, where he chairs Baring Private Equity Asia. Similarly, many of India's billionaires also do not primarily operate in India. That being said, it is worth looking into why Bangladeshi are unable to occupy CEO positions in foreign companies while Indians are getting ahead. 

In conclusion, there might be several factors for Bangladesh not having a billionaire. On the one hand, it might be true that Bangladesh does have billionaires, but their incomes are not reported. It might also be true that the poor investment climate, increased tax and tariff burden and slow adoption of technology play a crucial role here. On the other hand, it may be because Bangladesh is yet to privatise its state-owned natural monopolies.