Date: April 2003

Philippines, World's 62nd Freest Economy

The Philippines was ranked as the 62nd freest economy among 161 countries in the 2003 Index of Economic Freedom, an annual survey conducted by the US-based Heritage Foundation in cooperation with the Wall Street Journal.

Most figures cited for the Philippines' ranking, however, were based on year 2000 data. The country received an overall score of 2.85 this year, an improvement from last year's 2.95. Hong Kong got the best score of 1.45 while North Korea got the lowest score of 5.0 among Asian countries.

The overall scores for economic freedom were based on a number of variables including trade policy, public fiscal burden, government intervention, monetary policy, foreign investment codes, taxes, tariffs, banking regulations, wages/prices, property rights, enforcement of regulation and black market.

Economic Freedom Ranking
Asian Countries (2003)
Rank	Country	Score
1	Hong Kong	1.45
2	Singapore	1.50
3	New Zealand	1.70
9	Australia	1.85
27	Taiwan	2.30
35	Cambodia	2.50
35	Japan	2.50
40	Thailand	2.55
52	South Korea	2.70
62	Philippines	2.85
72	Malaysia	3.00
72	Mongolia	3.00
80	Sri Lanka	3.05
99	Indonesia	3.30
99	Pakistan	3.30
Source: The Heritage Foundation

The Philippines received good scores in trade policy (2.0); government intervention (2.0); monetary policy (2.0); and fiscal burden (2.5). On the other hand, it obtained poor scores in foreign investment (3.0); banking and finance (3.0); wages/prices (3.0); property rights protection (3.0); regulatory functions (4.0); and black market (4.0).

In its country-specific report, the Heritage Foundation said the Philippines has made substantial, albeit slow, progress in liberalizing its economy. It noted that from 1987 to 2001, the government privatized some 480 state-owned enterprises and that in 2002 it passed a law privatizing the energy sector.

"However, nationalist forces continue to defend constitutional restrictions on foreign ownership of corporations that also restrict greater liberalization, and expatriate businessmen continue to complain that administrative bureaucracy has actually worsened," the report about the Philippines stated in part.

In terms of allowing foreign capital into the domestic economy, the Heritage Foundation said the Philippines continues to maintain barriers to many foreign investments, with 100 percent or majority Filipino ownership required in over 30 specific industries, including mass media, retail trade, most professional services, use of marine resources, weapons, advertising, public utilities, commercial fishing, most manufacturing, and development of natural resources.

The Philippines was also criticized for poor enforcement of regulations and the prevalence of corruption in the bureaucracy.

The Heritage Foundation described the Index of Economic freedom as a practical reference guide to the world's economies.

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