KUALA LUMPUR – Malaysia has soared up the ranks of the Economic Freedom of the World 2024 Annual Report, securing 29th place out of 165 countries compared to its previous 43rd placement.
The report by Canada’s Fraser Institute recorded Malaysia’s overall score as rising from 7.44 to 7.56 on the 0 to 10 scale, with the improvement driven by gains in three areas, namely size of government, freedom to trade internationally and regulation.
Malaysia’s score for legal systems and property rights, which was adjusted for gender disparity, maintained at 5.70 while its score for access to sound money fell from 9.45 to 9.32.
Centre for Market Education (CME) chief executive officer Carmelo Ferlito said that while it is good to see important progress in Malaysia’s overall ranking, continuous efforts are needed to improve on the size of government.
In a statement, he said that there is a particular need to focus on minimising government interference with the economic system.
According to the report, size of government measures the degree to which a country’s fiscal policies limit the scope of individual economic choice. As such, countries with lower levels of government spending, marginal tax rates, government investment and state ownership of assets earn higher ratings.
The statement also highlighted that economic freedom – the degree to which individuals are allowed to make their own economic choices such as what to buy, where and how to work as well as how to start and run a business – is fundamental to prosperity.
The index, it said, measures economic freedom through openness to trade, tax and regulatory burdens, government spending, the protection of persons and their property as well as citizens’ access to sound money.
The report, which noted that the most comprehensive data available are from 2022, recorded Hong Kong as ranking above Singapore to gain the top spot as the most economically-freedom jurisdiction in the world.
However, the report pointed out that Hong Kong’s rating continues to fall from 9.05 in 2018 to 8.58 in 2022. Switzerland, in third place, scored 8.43, with New Zealand (8.39) and the United States (8.09) making up the top five nations.
The 10 lowest-ranked countries are Yemen (156th), Libya (157th), Iran (158th), Argentina (159th), Myanmar (160th), Algeria (161st), Syria (162nd), Sudan (163rd), Zimbabwe (164th) and Venezuela (165th).
The report also said that per-person gross domestic product (GDP) in countries in the top quartile of economic freedom was US$52,877 in 2022 compared to US$6,968 for bottom quartile countries.
Poverty rates were also lowered, with 1% in the top quartile of the population experiencing extreme poverty, or living on less than US$2.15 per day, compared to 30 per cent in the lowest quartile.
Life expectancy, meanwhile, is 80.5 years in the top quartile of countries compared to 64.9 years in the bottom quartile.
Matthew Mitchell, senior fellow at the Fraser Institute and a contributor to the report, said that where people are free to pursue their own opportunities and make their own economic choices, they lead more prosperous, happier and healthier lives.
“After decades of slow but steady increases, global economic freedom peaked in 2019, but has declined in each of the three years since then, which hasn’t happened since we began measuring economic freedom more than 25 years ago” he added.
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. – October 23, 2024