Thursday 28 Mar 2024
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KUALA LUMPUR (Sept 25): Malaysia has dropped to 79th position out of 162 countries and territories in the latest Economic Freedom index released today by the Institute for Democracy and Economic Affairs (IDEAS).

IDEAS chief executive officer, Ali Salman said the sharp decline from last year, when Malaysia was ranked 67th, 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,” Ali said in a statement.

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

The index was published in the Economic Freedom of the World: 2018 Annual Report, produced by Canada’s Fraser Institute in cooperation with the Economic Freedom Network, a group of independent research and educational institutes in nearly 100 countries and territories. 

It measures the degree to which the policies and institutions of countries support economic freedom.

Specifically, it measures and ranks countries in five areas: size of government, legal structure and security of property rights, access to sound money, freedom to trade internationally and regulation of credit, labour and business.

For Malaysia, the rating on size of government had increased to 6.86 from 6.80 in the last year’s report, while legal system and property rights remained unchanged at 5.76, IDEAS' statement said.

Access to sound money changed to 5.79 from 7.01, freedom to trade internationally: increased to 7.54 from 7.51; and regulation of credit, labour and business changed to 8.62 from 8.65. A higher value indicates a higher level of economic freedom.

Hong Kong and Singapore topped the index, continuing their streak as first and second respectively from last year.

New Zealand, Switzerland, Ireland, the United States, Georgia, Mauritius, the United Kingdom, Australia and Canada (tied for 10th) round out the top 10.

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

Citing research in top peer-reviewed academic journals, IDEAS said 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 U.K., 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 think-tank said.

While 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.

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