H.K. rated world's freest economy for 11th straight year

Asian Economic News, Jan 10, 2005

HONG KONG, Jan. 4 Kyodo

Hong Kong continued the 11th straight year to rank first as the world's freest economy, followed by Singapore and Luxembourg, Washington-based think thank Heritage Foundation said Tuesday.

The United States, for the first time in the 11 years since the Heritage Foundation and the Wall Street Journal have been publishing the Index of Economic Freedom, slipped out of the top 10 to come in 12th place out of the 155 countries ranked.

Estonia rose to the fourth place, as the former Soviet republic strives for liberalization after regaining independence in 1991.

Japan ranked 39th with China moving up from 128th place last year to 112th place in the latest survey.

The least-free economies include those of North Korea, Myanmar, Libya, Zimbabwe, Turkmenistan and Laos.

''When China moves up that much, it is not only significant for its neighborhood or just Hong Kong and Taiwan but for the world,'' said Edwin Feulner, president of the Heritage Foundation, told a press conference.

Feulner said the U.S. ranking did not fall because it scored worse but instead because other countries improved their scores.

Marc Miles, director of the foundation's Center for International Trade and Economics, told the same press conference, ''The U.S. has remained stable for last four years but other countries have aggressively implemented other measures.''

Ireland, New Zealand, Britain, Denmark, Iceland, Australia and Chile outpaced the United States in this year's ranking.

While political developments do not affect a country's scores as the index mainly take account of the economic aspect such as trade policy, fiscal burden and government intervention, Feulner said as a general rule, democracy brings about economic prosperity.

Despite its ever-strong performance, Hong Kong was warned that a proposed sales tax, degeneration of press freedom and any undermining of the level playing field for business could result in its being stripped of its title as the freest economy in the world.

Financial Secretary Henry Tang is to unveil details about a proposed goods and services tax in his budget speech in March.

''We are watching closely to see...how it is implemented,'' said Danny Gittings, the Asian Wall Street Journal's deputy editorial page editor.

Gittings said an incident involving Albert Cheng, a radio talk show host and government critic who quit his job last summer, claiming his life would be in danger if he continued with his program, ''sounds a note of warning'' for freedom of speech in the city.

The level playing field for the business sector might be undermined if the government were to award a HK$40-billion (around US$5.1-billion) integrated art, culture and entertainment project, known as the West Kowloon Cultural Project, to a single real estate group, Gittings said.

Currently, Hong Kong has no competition law in place.