What India, Singapore, UAE, Malaysia and Bangladesh Do That Pakistan Refuses To

Five peer countries that operate liberalised foreign currency frameworks while remaining FATF-compliant and IMF-compatible

By Asad Baig · Lahore · May 2026 · Approx. 19-min read

Why this comparison settles the argument

When Pakistan's foreign currency reform is proposed, the most common objection is not that the reform itself is wrong. The most common objection is that international institutions, FATF in particular, the IMF in particular, would not allow it. The argument is delivered with great seriousness by people in suits on television.

I want to settle this argument once and for all, with evidence.

Singapore is FATF-compliant. The United Arab Emirates is FATF-compliant. India is FATF-compliant. Malaysia is FATF-compliant. Bangladesh is FATF-compliant. India runs ongoing IMF programmes alongside one of the most comprehensive resident foreign currency frameworks in the world. Bangladesh, with a comparable economy to Pakistan and similar political constraints, offers its IT exporters retention rates and cash withdrawal rights that Pakistani equivalents cannot dream of.

If FATF compliance and IMF programmes were genuinely incompatible with productive-class FCY access, none of these five countries would have what they have. They have it. The constraint on Pakistani reform is domestic, not international.

This article documents what each of these five countries actually offers, in detail, with sources. Read it, and the next time someone tells you reform is impossible because of international rules, you will know exactly which countries to point them to.

For the personal stance argument, see my position on Pakistan's foreign currency account problem. For the cost analysis, see how Pakistan's FCY system costs the productive class $25 to 36 billion a year. For the proposed reform Pakistan should adopt, see the Productive Capital Account: a reform proposal for Pakistan's FCY system.

The five-country comparison at a glance

Five peer countries operate liberalised FCY frameworks under the same FATF and IMF regimes that Pakistan operates under. The headline differences:

Five out of six countries say "yes" or "yes with documentation" to every productive-class banking right. Pakistan says no to all three. None of the differences is explained by FATF or IMF rules. Every difference is explained by domestic political economy.

India: a comprehensive resident FCY framework under an IMF lineage

India operates one of the most comprehensive resident foreign currency frameworks in the developing world, and it does so under the regulatory regime of the Reserve Bank of India which has historically maintained much closer relationships with the IMF than Pakistan has.

The core Indian instruments

Indian residents have access to multiple instruments depending on their status and need.

The Liberalised Remittance Scheme is the most striking. Under LRS, any Indian resident can remit up to $250,000 per financial year for any permitted current or capital account transaction, including investing abroad, buying foreign property, gifting to relatives abroad, and education abroad. There is no project-by-project approval process. The remittance happens through a designated Authorised Dealer bank, with a simple declaration. Pakistani citizens have nothing equivalent.

The Exchange Earner's Foreign Currency (EEFC) account allows Indian exporters to credit up to 100 percent of their foreign exchange earnings to a foreign currency account, denominated in any of the major currencies, with no compulsory conversion to rupee. By contrast, Pakistani IT exporters must convert at least 50 percent of earnings to PKR upon receipt under the current ESFCA framework, with the retained 50 percent unavailable for cash withdrawal.

India's relationship with FATF and IMF

India is FATF-compliant. India has had multiple IMF programmes historically, most notably the 1991 balance-of-payments crisis programme. India maintains its FCY framework alongside both regimes without conflict.

The compliance architecture used by India includes mandatory KYC and source-of-funds verification, beneficial ownership disclosure, cross-checking with income tax records, suspicious transaction reporting, and integrated monitoring through the Financial Intelligence Unit (FIU-IND). These are the same controls Pakistan should adopt, applied honestly to all account holders, rather than selectively to small users while elite wealth flight continues through alternative channels.

What Pakistan could learn from India

India is FATF-compliant. India runs IMF programmes when needed. India's framework is more liberal than Pakistan's at every productive-class touch point. The constraint on Pakistan is not international institutions. The constraint is domestic political economy.

For the deeper analysis of India's specific framework, see India's liberalised foreign currency framework explained.

Singapore: the multi-currency banking model

Singapore is the regional financial centre that Pakistan's elite uses for its own offshore banking, while denying ordinary Pakistanis equivalent access at home.

Singapore's residents can hold accounts in any major currency at any major bank without restriction. Residents can transfer freely between currencies at market rates. Residents can withdraw cash in foreign currency. There is no compulsory conversion to Singapore Dollars on receipt of foreign earnings.

Singapore's compliance regime is among the strictest in the world. Singapore is FATF-compliant. Singapore has signed Common Reporting Standard agreements with most major jurisdictions. Singapore enforces strict KYC, beneficial ownership, and source-of-funds requirements. The Monetary Authority of Singapore takes compliance enforcement seriously.

What Singapore demonstrates is that liberal banking access for productive citizens and rigorous anti-money-laundering enforcement are not opposites. They are complements. The compliance architecture is what makes the liberal access sustainable, because it ensures the framework is not abused by money launderers.

The most damning fact for Pakistani policymakers is this. Pakistan's elite already uses Singapore. The Atlas of Offshore World data shows Pakistani-owned residential real estate of $120 million in Singapore. This is documented Pakistani offshore wealth, held in Singapore's liberal banking environment, by the same elite that votes for Pakistan's restrictive framework. The elite enjoys Singapore's framework abroad. Ordinary Pakistanis are denied the same framework at home.

For deeper analysis on Singapore's model, see Singapore, UAE and Malaysia: three FCY models Pakistan has refused to adopt.

UAE: the productive economy model

The UAE operates a banking framework specifically designed to attract productive economic activity. The UAE is FATF-compliant. The UAE maintains correspondent banking relationships with every major global bank. The UAE's framework is the most successful productive-economy banking framework in the region.

The OCCRP "Dubai Unlocked" investigation in May 2024 documented 17,000 to 22,000 Pakistani citizens listed as Dubai property owners, with properties valued at $10 billion at the start of 2022 and a current value with property appreciation of $12.5 billion or more. The leaked database includes prominent politicians, retired servicemen, bankers, technocrats, and members of Pakistan's political, media, military, and business elite.

In September 2018, Pakistan's Supreme Court was informed by chartered accountancy firm A.F. Ferguson that Pakistani nationals held an estimated $150 billion in assets and properties in the UAE. This figure should be treated as an upper-bound estimate, not a verified fact, but it has stood without correction for seven plus years and is still cited in policy debates.

What this proves is uncomfortable. The same Pakistani elite that has spent thirty years citing "money laundering concerns" as a reason to deny ordinary Pakistanis foreign currency access has been moving its own wealth to UAE banks for the same thirty years. The UAE banks were happy to accept this wealth under their own FATF-compliant framework. Pakistani regulators were happy to facilitate the outflow under PERA Section 5 immunity.

The UAE has built an entire economy around providing the banking access that Pakistani productive citizens cannot get at home. The UAE captures economic activity that should have stayed in Pakistan. The UAE's gain is Pakistan's loss. And the constraint that produces this loss is not international institutions. It is the political economy of who designs Pakistan's banking rules.

Malaysia: progressive liberalisation

Malaysia's framework demonstrates that even a Muslim-majority country with a history of capital controls can liberalise productive-class FCY access without sacrificing financial stability or FATF compliance.

After the Asian Financial Crisis of 1997 to 1998, Malaysia briefly imposed capital controls under Mahathir Mohamad. These controls were lifted in stages between 1999 and 2005. The framework that emerged is among the most progressive in the region for productive economy banking.

Malaysian features:

• Foreign currency accounts available to all residents

• Multi-currency banking standard at major banks

• Liberalised remittance for individuals (MYR 1 million annual limit)

• Free cross-currency conversion for documented purposes

• Established offshore financial centre at Labuan

• Successful Islamic finance ecosystem alongside conventional banking

• FATF-compliant with strong AML enforcement

Malaysia ran an IMF programme during its 1997 to 1998 crisis but rejected the IMF's recommendations and pursued its own stabilisation path. Even rejecting IMF prescriptions, Malaysia rebuilt its FCY framework as a productive-economy enabler, not a restriction architecture.

The lesson for Pakistan is that liberalisation can be progressive. Malaysia did not move from full capital controls to full liberalisation in one step. It liberalised in phases, monitored outcomes, adjusted, and continued. The Productive Capital Account proposal for Pakistan can follow the same path. Phase 1 might be IT exporters and freelancers. Phase 2 might add goods and service exporters. Phase 3 might add resident professionals with documented foreign-source income. The end state is comparable to Malaysia's current framework. The path is progressive, not revolutionary.

Bangladesh: the closest comparison Pakistan has

Of the five peer countries, Bangladesh is the most uncomfortable comparison for Pakistan, because Bangladesh shares almost every constraint Pakistani policymakers cite as reasons reform is impossible.

Bangladesh operates an Exporter's Retention Quota account (ERQ) that allows up to 100 percent retention of export earnings depending on sector and purpose. The ERQ funds can be used for international payments, foreign travel, and operational expenses. The framework gives Bangladeshi IT exporters and garment exporters substantially better banking access than Pakistani equivalents have under ESFCA.

Bangladesh's IT industry has grown faster than Pakistan's in part because Bangladeshi IT entrepreneurs are not punished for repatriating their earnings. The Bangladesh government actively courts IT exporters with banking flexibility, tax incentives, and regulatory support. Bangladesh's IT exports crossed $1.5 billion in 2024, a smaller absolute number than Pakistan's, but growing from a smaller base.

Bangladesh is FATF-compliant. Bangladesh runs an IMF programme. Bangladesh has comparable political instability to Pakistan. The structural constraints are similar. The outcomes are different because the framework choices have been different.

If Pakistan wants the most direct, peer-comparable evidence that productive-class FCY reform is feasible without destabilising the country, Bangladesh is that evidence. The argument that reform is impossible has to explain why Bangladesh's framework works.

For deeper analysis of this comparison, see Bangladesh and Pakistan: two neighbours, two FCY outcomes.

The "currency will crash" argument debunked

The most common technical objection to Pakistani FCY reform is that liberalising will crash the rupee. The argument deserves direct refutation, because it appears constantly and it is wrong about the specific reform Pakistan needs.

The currency-crash scenario applies to a hypothetical reform that allows Pakistanis to convert PKR to USD freely. That reform was the original PERA 1992 framework. It collapsed in 1998, exactly as critics predicted, because it created a one-way pump from PKR into USD bookkeeping liabilities that the State Bank could not honour.

The Productive Capital Account reform I am proposing does the opposite. It does not authorise PKR-to-USD conversion. It authorises USD-to-USD passage through the Pakistani banking system without forced conversion. The dollars in question are already foreign-source dollars. They arrive via Stripe, PayPal, Wise, Payoneer, or wire from documented foreign clients. They are dollar supply, not dollar demand.

Under this reform, the rupee strengthens, not weakens, because more foreign dollars enter Pakistan through formal channels. The 30 to 60 percent of Pakistani IT earnings currently held offshore through Wyoming or Estonian or UAE accounts would have a reason to repatriate. The current account would improve. Reserves would grow. The rupee would have more, not fewer, dollars backing it.

Anyone who continues to make the "currency will crash" argument against this specific reform is either uninformed about how dollar supply affects exchange rates, or dishonest about which interest they are protecting. There is no third option.

The "FATF won't allow it" argument debunked

The five-country evidence already settles this. Singapore, UAE, India, Malaysia, and Bangladesh are all FATF-compliant. They all offer their productive citizens substantially better banking access than Pakistan does. If FATF compliance ruled out productive-class FCY access, these countries would not have what they have.

The FATF objective is to prevent money laundering and terror financing. The FATF requires source-of-funds verification, KYC, beneficial ownership disclosure, suspicious transaction reporting, and effective enforcement. The Productive Capital Account proposal exceeds all of these requirements. Source verification is mandatory on every deposit. KYC is rigorous. Beneficial ownership is declared at account opening and updated on changes. Tax filer status is required for residents.

What FATF does not require is that productive citizens be denied access to their own foreign earnings. That denial is a Pakistani policy choice, not an FATF mandate. The PCA reform is more FATF-compliant, not less, because it applies the same controls honestly to all account holders rather than creating exemptions for elite channels via PERA Section 5.

For the deeper rebuttal, see the "currency will crash" argument: why it does not apply to verified earner reform.

The "IMF won't allow it" argument debunked

India runs IMF programmes regularly and operates its comprehensive resident FCY framework alongside them. Bangladesh runs IMF programmes ($4.7 billion programme as of 2024) and operates its ERQ-style framework alongside them. Pakistan currently runs an IMF programme ($7 billion EFF, 2024 to 2027) and could operate the PCA reform alongside it.

The IMF's interest in Pakistan is fiscal sustainability, current account balance, and reserve adequacy. A PCA reform that brings $30 to 50 billion in offshore productive wealth back to Pakistan over five years is fiscally positive, current-account positive, and reserve-adequacy positive. The IMF should be in favour of this reform, not against it.

The "IMF won't allow it" argument relies on a strawman version of IMF preferences. Real IMF programmes accept liberalisation when it improves fiscal and reserve metrics. The PCA reform does both. The IMF would prefer Pakistan to have a stable, productive FCY framework that brings dollars onshore and reduces dependence on its programmes.

International institutions have at times been used as a convenient excuse for Pakistani policy choices that were actually driven by domestic political economy. FATF and the IMF are not the obstacles to Pakistani reform. They are sometimes the convenient excuse for not pursuing it.

The pattern: domestic obstacles disguised as international ones

The five-country comparison reveals a pattern that is uncomfortable for Pakistani policymakers. Every productive-class banking right that Pakistan denies its citizens is allowed in at least one and usually all five peer countries. Every restriction that Pakistan attributes to international rules is in fact a domestic policy choice that can be changed without violating any international rule.

The Pakistan column is the only one with three or more crosses. The pattern is not that international rules force everyone into restriction. The pattern is that Pakistan has chosen restriction while every comparable country has chosen liberalisation.

This is not a story of bad luck or external constraint. This is a story of domestic political economy producing different outcomes in different countries. When Pakistanis ask "why can't we have what India has", the honest answer is "we can, and the only reason we don't is that the Pakistani elite has structured the system to prevent it".

In closing

Five countries. Five different histories. Five different political systems. One identical conclusion. Productive-class foreign currency access is compatible with FATF compliance, with IMF programmes, with anti-money-laundering enforcement, with currency stability, with reserve adequacy, and with every other technical constraint that Pakistani policymakers cite.

The Productive Capital Account reform proposed for Pakistan is not radical. It is the adoption of frameworks that India, Malaysia, Bangladesh, the UAE, and Singapore already operate. The radical thing is Pakistan's continued refusal to do what its peers have done for decades.

When you next hear that "FATF will not allow it" or "the IMF will not allow it" or "the rupee will crash if we liberalise", you will know exactly which countries to point the speaker to. The evidence is on five different national balance sheets. The argument has been settled by the lived experience of five peer countries. What remains is the political will to apply the evidence to the Pakistani case.

The arithmetic, as I have argued elsewhere, is clear. The path forward is, as it has always been, a choice. The question is whether Pakistan's productive class will organise itself to demand that choice be made correctly.

Thank you for reading.

, Asad Baig, Lahore, May 2026

Frequently asked questions

Are Singapore, UAE, India, Malaysia, and Bangladesh all FATF-compliant? Yes. All five countries are FATF-compliant under the same standards Pakistan must meet. Each operates a substantially more liberal foreign currency framework for its productive citizens than Pakistan does, demonstrating that FATF compliance and productive-class FCY access are compatible.

What is India's Liberalised Remittance Scheme (LRS)? The LRS allows any Indian resident to remit up to $250,000 per financial year for any permitted current or capital account transaction, including foreign investment, property purchases, gifting to relatives, and education abroad. There is no project-by-project approval. Pakistani citizens have no equivalent framework.

What is the Indian EEFC account? The Exchange Earner's Foreign Currency (EEFC) account allows Indian exporters to credit up to 100 percent of their foreign exchange earnings to a foreign currency account in any major currency, with no compulsory conversion to rupees. Pakistani IT exporters are limited to 50 percent retention under ESFCA, with cash USD withdrawal prohibited.

What is the Bangladeshi ERQ account? The Exporter's Retention Quota (ERQ) account in Bangladesh allows up to 100 percent retention of export earnings depending on sector and purpose. The ERQ funds can be used for international payments, foreign travel, and operational expenses. This gives Bangladeshi IT and garment exporters significantly better banking access than Pakistani equivalents.

Does the IMF prevent Pakistan from liberalising its FCY framework? No. India runs IMF programmes regularly with a comprehensive resident FCY framework. Bangladesh runs an IMF programme with its ERQ framework. Pakistan currently runs an IMF programme that is compatible with productive-class FCY reform. The IMF prefers liberalisation that improves fiscal and reserve metrics, which the Productive Capital Account reform would.

Why do the same Pakistani elite who oppose domestic FCY reform use UAE and Singapore banking themselves? Because the elite's objection is to ordinary Pakistanis having access to comparable banking, not to the banking itself being available globally. The OCCRP "Dubai Unlocked" investigation documented 17,000 to 22,000 Pakistani citizens listed as Dubai property owners with $13 billion in documented assets. The same restrictive domestic framework that the elite supports is incompatible with what the elite enjoys abroad.

Is the "currency will crash" argument valid against the Productive Capital Account reform? No. The argument applies to a reform that allows free PKR-to-USD conversion, which would create a one-way pump from rupee into dollar liabilities, exactly the mechanism that destroyed PERA in 1998. The PCA reform does not authorise PKR-to-USD conversion. It accepts only foreign-source dollars already denominated in USD. The reform creates dollar supply, not dollar demand. The rupee would strengthen, not crash.

Could Pakistan adopt the Indian, Singaporean, UAE, Malaysian, or Bangladeshi framework directly? The Productive Capital Account proposal is essentially an adaptation of the Indian EEFC and Bangladeshi ERQ models, with additional safeguards drawn from Singaporean and UAE compliance practices. The proposal is not a radical departure. It is the application of existing peer-country models to the Pakistani context.

What specific FATF-compliant safeguards does the Productive Capital Account include? The PCA includes mandatory source verification on every deposit, tax filer status required for residents, beneficial ownership transparency at account opening with updates on changes, income-based caps on accumulation, and prohibition of PKR-to-USD conversion at the deposit point. These exceed current PERA-era controls and align with FATF best practices.

Why does the comparison pattern show only Pakistan with multiple restrictions? Because the political economy of Pakistani banking is unique among comparable countries in its degree of capture by the historical elite. The same legal architecture that allows offshore wealth flight under Section 111(4) and PERA Section 5 also requires forced conversion and restriction on productive citizens at home. Other countries have not maintained this combination of asymmetries.

Notes and sources

• Reserve Bank of India, Master Direction on Foreign Exchange Management

• Indian Liberalised Remittance Scheme regulations

• Exchange Earner's Foreign Currency (EEFC) account guidelines, RBI

• Monetary Authority of Singapore, Banking Regulations

• Bank Negara Malaysia, Foreign Exchange Administration Rules

• Bank for International Settlements country comparisons

• Bangladesh Bank, Foreign Exchange Regulations and ERQ guidelines

• FATF country mutual evaluation reports for India, Singapore, UAE, Malaysia, Bangladesh, Pakistan

• IMF Article IV consultation reports for Pakistan and comparator countries

• OCCRP "Dubai Unlocked" investigation, May 2024

• Atlas of Offshore World data on Pakistani-held assets in Singapore, London

• A.F. Ferguson submission to Pakistan Supreme Court on UAE-held assets (September 2018)

• World Bank Pakistan Country Update 2025

• World Bank Bangladesh Development Update 2024

A complete source list with citation numbers appears in the longer investigation, The Foreign Currency Account Question in Pakistan: A Forensic Investigation, 1947 to 2026.

Related reading from Asad Baig

• My Position on Pakistan's Foreign Currency Account Problem

• The Foreign Currency Account in Pakistan: A 76-Year History (1947-2026)

• How Pakistan's FCY System Costs the Productive Class $25-36 Billion a Year

• The Productive Capital Account: A Reform Proposal for Pakistan's FCY System

• India's Liberalised Foreign Currency Framework Explained

• Singapore, UAE and Malaysia: Three FCY Models Pakistan Has Refused to Adopt

• Bangladesh and Pakistan: Two Neighbours, Two FCY Outcomes

• The "Currency Will Crash" Argument: Why It Does Not Apply to Verified Earner Reform

• The IPP System Did Not Save Pakistan. It Destroyed It.