Malaysia rises in economic freedom index but corruption a worry

(MM) – Malaysia ranked as the world’s 37th freest economy in 2014, up 19 places from last year, but levels of corruption in the country are worrying, according to an index that tracks economic freedom around the globe.

The Index of Economic Freedom for 2014 released today by Washington-based think tank The Heritage Foundation together with financial daily Wall Street Journal said that Malaysia was among the ten countries that saw the biggest improvements in rankings.

“Recent reforms have put greater emphasis on improving regulatory efficiency, enhancing regional competitiveness, and modernising the financial sector,” it said.

“It has undertaken wide-ranging reforms to address various structural weaknesses and improve competitiveness,” said the report said of Malaysia, adding that economic freedom in the country has steadily increased over the past five years.

But the report also noted Malaysia’s economic freedom declined over the past 20 years, citing drops in five of 10 economic freedoms, including property rights, freedom from corruption, and investment freedom.

“Most notably, freedom from corruption has declined by over 25 points, undermining the rule of law.”

Malaysia scored 69.9 in the index for 2014, compared to 66.1 in 2013 when it was placed 56th, and 66.4 in 2012 when it ranked 53rd.

In 1995, however, Malaysia ranked 10th in the world with a score of 71.9 before dropping to 21st with a score of 69.9 in 1996.

It was placed in the “moderately free” group which included Belgium, Uruguay, Jordan, and Brunei among others.

Within the Asia Pacific, Malaysia ranked 9th, with Hong Kong topping the list at 90.1 while Singapore was second at 89.4 points each.

For 2014, Malaysia has dropped points for its fiscal freedom, as government spending increased to 29 per cent of gross domestic product (GDP), and public debt rose to 56 per cent of the domestic economy.

The report also noted that Malaysia lost points in trade freedom, as non-tariff barriers impede car imports, and the government still screens manufacturing projects.

This year marks the 20th anniversary of the index, which covers 10 freedoms from property rights to entrepreneurship in 186 countries.