Economic freedom falling

Macau has fallen three places on the global Index of Economic Freedom, an annual ranking published by The Wall Street Journal and The Heritage Foundation has revealed.
Macau now occupies 37th place globally, and 9th place in the Asia-Pacific region, after a 0.2 point fall from last year to 70.1 points.
This year was the fifth consecutive year Macau has seen a decrease in its economic freedom ranking.
In order to determine economic freedom, the index grades 10 quantitative and qualitative factors on a scale from zero to 100.
Those factors include property rights; freedom from corruption; fiscal freedom; government spending; business, labor and monetary freedom; and market openness.
The data analysed by the index covers the second half of 2014 through to the first half of 2015.
The report states ‘the rule of law [in Macau] is relatively well respected, though more effective anti-corruption measures are needed’, while asking for ‘more committed structural reforms’ in order ‘to enhance prospects for broad-based long-term economic development.’
The report also mentions a lack of tourist attractions for non-gamblers and high travel expenses, as two recurrent structural problems in the city.
Corruption dragging it down
Although Macau’s economic freedom is well above the world average of 60.7, Freedom from Corruption was the lowest ranking in the factors analysed for the city, with 49.7 points, a value that has remained unchanged since 2013.
This result places the city in the ‘Mostly Unfree’ countries section of the index in terms of corruption.
The report also considers that Monetary Freedom in the territory has decreased 5.3 points from the 2015 index, down to 69.6 points this year, while Business and Labour Freedom remained stable at 60 and 50 points respectively.
The fall has caused the city’s Monetary Freedom ranking to dip below the global average of 75.7 points.
In general, Regulatory Efficiency in Macau was considered ‘less efficient than those of similar economies’, citing the absence of ‘serious reform efforts’ as the reason for the ‘lack of a dynamic, broad-based labor market.’ Government spending up
The only indicators to have risen for Macau in the 2016 Index for Economic Freedom have been Government Spending and Fiscal Freedom.
The Government Spending ranking increased 2.1 points in 2016 to reach 93.9 points, way above the world average of 63.5.
The report by The Wall Street Journal underlined how government spending in Macau is equivalent to 14.3 per cent of total domestic output, with gambling revenue still ‘generating considerable
surpluses’.
Fiscal Freedom increased 1.3 points from last year to 73.1, however it was still below the world average
of 77.8.
The report also considers Trade Freedom as one of the successes of the Macau economy, thanks to low-tariffs and openness to foreign investment.
Hong Kong still number one
The report shows a third consecutive year of improvement overall in the Asia-Pacific region, with the scores of 22 countries in the region having risen, while 19 declined, and one stayed the same. Four of the top five freest economies in the world are located in the region including Hong Kong, Singapore, New Zealand and Australia, with number four being Switzerland.
Even with a one point decrease from last year, Macau’s neighbour Hong Kong still occupied the first position in the economic freedom ranking with a score of 88.6 points.
The high position was credited to the city’s ‘open markets, strong property rights, and highly competitive fiscal policies’ the report stated.
In 2016, Hong Kong scored 97.4 points for Business Freedom, 90.7 for government spending and 90 for Property Rights.
‘The implementation of prudent economic policy within a stable and transparent legal environment has been the cornerstone of Hong Kong’s continuing achievement in maintaining the world’s freest economy.
Well-secured property rights ensure vibrant commercial interactions and entrepreneurial growth. With a high level of market openness and fiscal discipline, Hong Kong continues to be a leading global business and financial hub,’ the report stated.
Hong Kong was followed in the global rankings by Singapore, which despite a 1.6-point dip, still scored 87.8 points, the second highest score.
‘Economic growth has slowed in Singapore, but the city’s openness to global trade and investment continues to provide a solid basis for economic dynamism,’ the report said.