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THE
economic environment in the Philippines has not
essentially changed and remains restrictive for
businesses and laborers, according to the 2008 Index of
Economic Freedom released by a Washington-based think
tank Tuesday.
The
latest index showed that corruption was the main factor
hindering business and labor productivity in the
country.
Authors
of the index said that under a “free economy,”
individuals are free to work, produce, consume and
invest in any way they please, and that freedom is both
protected and unconstrained by the state.
“The
overall freedom to start, operate and close a business
is limited by the Philippines’ regulatory environment,”
the report said. “Starting a business takes an average
of 58 days, compared with the world average of 43 days.
Obtaining a business license takes less than the world
average of 234 days. Closing a business can be difficult
and lengthy.”
The
“Economic Freedom Score” of the Philippines was at 56.9
percent, placing the country at 92nd among 157 countries
ranked by the Heritage Foundation.
Other
Southeast Asian countries did better than the
Philippines in the index. Malaysia ranked 51st while
Thailand ranked 54th. But the Philippines ranked ahead
of Vietnam (135th place), Laos (137) and
Myanmar (153).
Hong
Kong and Singapore retained their No. 1 and No. 2
rankings, respectively, for the 14th successive year.
Both port cities benefit from low taxes and liberalized
trade.
Hong Kong, however, saw its score dip slightly due to higher
inflation and greater tax revenues.
European
countries accounted for half of the top 20 economies
considered free or mostly free, with
Ireland
at No. 3, Switzerland at No. 9 and the UK at No. 10. The
US ranked No. 5, and Canada ranked 6th.
Regionally, the
Philippines
ranked 15th behind Malaysia and Thailand, which ranked
8th and 9th, respectively.
The
index measured 10 “freedoms,” namely, business freedom,
trade freedom, fiscal freedom, government size, monetary
freedom, investment freedom, financial freedom, property
rights, freedom from corruption, and labor freedom.
Among
all the components, the Philippines scored the lowest in
freedom from corruption.
“Corruption is perceived as widespread,” the report said
of the Philippines. “Corruption is pervasive and
long-standing. Enforcement of anticorruption laws is
inconsistent, and the public perception of judicial,
executive and legislative corruption remains high.”
The
country also fared poorly in terms of property-rights
protection and openness to foreign investors.
“Two
negative lists restrict foreign investment and limit
foreign involvement in numerous sectors: for example,
20-percent foreign equity in radio and communications,
30 percent in advertising, and 40 percent in utilities,
deep-sea fishing, and education. Foreigners may not own
land,” the report cited.
“Residents and nonresidents may hold foreign-exchange
accounts, but nonresidents may do so only in certain
circumstances. Payments, capital transactions and
transfers are subject to numerous restrictions,
controls, quantitative limits and authorizations,” it
added.
In terms
of property rights, the report blasted the country’s
judicial system for enforcing “the law weakly.”
“Judges
are nominally independent, but several were appointed
strictly for political reasons and are corrupt,” it
said.
“Despite
some progress, enforcement of intellectual-property
rights remains problematic,” it added.
The
Philippines, however, scored the highest in terms of
government size, which is defined to include all
government expenditures, including consumption and
transfers. The report acknowledged that the government
“has tried to reform and privatize some public
enterprises” in recent years.
“The
Philippines scores relatively well in just two areas:
trade freedom and government size. Fiscal freedom is
average because income and corporate tax rates are
burdensome, although overall tax revenue is low as a
percentage of GDP. The average tariff rate is low, yet
nontariff barriers are significant,” the report said. |
