M’sia drops in ranking for economic freedom

MALAYSIA tumbled from no 67 last year to 79th position in the Economic Freedom Index released yesterday.

The Economic Freedom of the World: 2018 Annual Report, which chart the positions of 162 countries and territories, was released by The Institute for Democracy and Economic Affairs (IDEAS) in conjunction with Canada’s Fraser Institute.

Hong Kong and Singapore again top the list at No 1 and 2 respectively. New Zealand, Switzerland, Ireland, the US, Georgia, Mauritius, the UK, Australia and Canada (tied for 10th) round out the top 10.

“The sharp decline of Malaysia to 79th position from 65th on the Economic Freedom Index is alarming. Though this is based on data in 2016-2017, the ranking reflects the fact that space for the private sector in Malaysia has been squeezed, businesses have been obstructed and size of the government has increased,” said IDEAS CEO Ali Salman said in a statement.

He calls for a comprehensive review of economic policies under the Pakatan Harapan administration spanning critical areas like government-linked companies’ reforms, size of the civil service and business regulations.

The 2018 report was prepared by James Gwartney, Florida State University; Robert A Lawson and Ryan Murphy of Southern Methodist University; and Joshua Hall, West Virginia University.

The rankings are based on data from 2016 and measures the economic freedom covering personal choice, ability to enter markets, security of privately owned property, rule of law, among others.

The 10 lowest-ranked countries are Sudan, Guinea-Bissau, Angola, Central African Republic, Republic of Congo, Syria, Algeria, Argentina, Libya and finally Venezuela. Some despotic countries such as North Korea and Cuba were not ranked due to lack of data.

Other notable countries include Germany (20), Japan (41), France (57), Russia (87) and China (108).

According to research in top peer-reviewed academic journals, people living in countries with high levels of economic freedom enjoy greater prosperity, more political and civil liberties, and longer lives.

For example, countries in the top quartile (25%) of economic freedom (such as the UK, Japan and Ireland) had an average per-capita income of US$40,376 in 2016 compared to US$5,649 for the bottom quartile countries (such as Venezuela, Iran and Zimbabwe).

The report also showed that life expectancy is 79.5 years in the top quartile of countries compared to 64.4 years in the bottom quartile.

“Where people are free to pursue their own opportunities and make their own choices, they lead more prosperous, happier and healthier lives,” said Fred McMahon, Dr Michael A Walker research chair in Economic Freedom with the Fraser Institute.

The Fraser Institute produces the annual Economic Freedom of the World report in cooperation with the Economic Freedom Network, a group of independent research and educational institutes in nearly 100 countries and territories.