Weak judiciary, corruption bind economy — US think tank

Due to pervasive corruption and weak enforcement of business rules and property rights, on top of a weak judiciary, the country continues to suffer as among the least economically free country in the world, according to US conservative think tank The Heritage Foundation.

The country’s ranking fell further in the foundation’s yearly index of economic freedom to 104th position out of 179 countries ranked this year with a score of 56.8 points.

Heritage Foundation said the country’s overall score was 20th among 41 Asian countries included in the list and was below the world average.

The country ranked 92nd of 157 countries in the US think tank’s ranking last year. The previous year, the country was in a tie at 69th to 75th place of 141 countries in the 2006 listing.

“The Philippines is weak in business freedom, investment freedom, property rights and freedom from corruption. Contracts can be hard to enforce,” according to the US institution’s yearly assessment on the country.

“Corruption is perceived as pervasive. The Philippines ranks 131st out of 179 countries in Transparency International’s Corruption Perceptions Index for 2007. A culture of corruption is long-standing. Enforcement of anti-corruption laws is inconsistent, and the public perception of judicial, executive, and legislative corruption remains high,” according to the foundation.

The country’s score in the Heritage index had deteriorated since 1998, when it got its highest score at 62.8 points.

In 1999, the Philippines scored 61.9; 62.5 in 2000, and 60.9 in 2001. It recovered slightly to 61.3 in 2003 before sliding to 59.1 in 2004, 54.7 in 2005, 56.3 in 2006, and 56 both in 2007 and 2008.

Heritage Foundation noted the country’s score this year was 0.8 point higher than last year and credited the slight improvement to monetary freedom and investment freedom.

The Philippines has pursued a series of structural reform measures to develop a more vibrant private sector, generate more job opportunities, and enhance business competitiveness, according to the yearly survey.

“The Philippines still relies heavily on remittances from abroad while fiscal freedom is only slightly above average because income and corporate tax rates are burdensome,” it said.

The government imposes both formal and non-formal barriers to foreign investment and the judicial system is weak and vulnerable to extensive political influence, it added.

Hong Kong was named the world’s freest economy for the 15th year in a row, with North Korea and Zimbabwe at the bottom of the rankings.

The annual index, which measures a jurisdiction’s commitment to free market capitalism, placed the southern Chinese city atop a list of 179 economies.

Hong Kong’s Asian rival Singapore was again ranked second, followed by Australia, Ireland and New Zealand, according to the pro-free market group.

The United States dropped one place to sixth, because of increases in both tax revenue and government spending as a percentage of gross domestic product (GDP), one of the report’s authors, Terry Miller, said in an article in the Wall Street Journal.

Miller, director of the foundation’s Centre for International Trade and Economics, said capitalism has taken a beating in recent months, as financial institutions begged for government intervention to help them through a global crisis.

But capitalism remained the best system to battle the downturn, he said.

“Despite recent setbacks, (left-wing critics) would be hard pressed to deny that capitalism steps out more nimbly than its rivals, and keeps up with the music far more surely,” he wrote.

Hong Kong is often criticized for allowing its economy to be dominated by a select group of family-controlled monopolies and cartels which control prices and block market access to competitors.

The Heritage Foundation said North Korea was the world’s most restricted economy, followed by Zimbabwe, Cuba, Myanmar and Eritrea.

Zimbabwe lost the most points on the 0-100 scale in the past year, followed by Venezuela, as a result of price controls, currency devaluations and nationalisations, Miller said.

Among the 10 individual areas assessed, Hong Kong ranks first in trade freedom, investment freedom and financial freedom.

Hong Kong also ranks in the top 10 in another three areas, namely business freedom, monetary freedom and property rights.

The Heritage Foundation noted that Hong Kong’s institutional strengths had allowed it to achieve high levels of prosperity reinforced by vibrant entrepreneurial activity.

The study measured the degree of economic freedom of 179 economies worldwide by assessing 10 factors: business freedom, trade freedom, fiscal freedom, government size, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption and labor freedom. — Daily Tribune