Asia has the best and worst economic freedoms: Report

Asia has the best and worst economic freedoms: Report

HONG KONG (AFP): Asia counts four of the world's top 10 freest
economies, but the "schizophrenic" region also has six of the
most repressed, according to a report released here Wednesday.

Freewheeling Hong Kong came out top in the "2001 Index of
Economic Freedom," published by The Heritage Foundation -- a
leading US think tank -- and The Wall Street Journal.

But isolated Communist North Korea, which has only this year
slowly started to emerge from five decades of self-imposed
isolation, came out bottom of the list ranking 155th in the table
which judged countries on how heavily governments intervene in
their economies.

Singapore placed second in the list, New Zealand came in
fourth and Australia ninth.

Ireland was ranked third, New Zealand fourth and the United
States -- the world's biggest economy -- was ranked an equal
fifth with Luxembourg.

But Laos ranked 150th with Vietnam and Myanmar in 144 and 145
places, and the Central Asian republics of Uzbekistan and
Turkmenistan stood at 149, and 148 respectively.

The 1997 Asian financial crisis had had a profound effect on
the regional economy and the Asian tigers, who were once unified
by their success, have shown vastly divergent performances in
tackling the crisis, the report said.

"Asia as a whole no longer exists as a cohesive entity; it has
fractured into subgroups of economically free and unfree," the
report said.

"Asia shows the most schizophrenic differentiation of scores
of all the regions in the index. Three of the top four freest
economies in the world are in the Asia, but so are six of the
world's 15 repressed economies," it added.

While Thailand made efforts to liberalize its economy
following the 1997 slump, Malaysia, with its "authoritarian"
leader, Prime Minister Mahathir Mohamad, had taken "exactly the
wrong message" from the Asian economic collapse, said Hugo
Restall, editor with The Wall Street Journal.

Mahathir had scared off investors by placing tight government
controls on the economy, the report said.

"Through his brutal tactics, Mahathir has assured his personal
political survival, but most likely at the long-term expense of
the country," the report said.

Thailand, on the other hand, saw the biggest improvement of
anywhere in its performance in the index. Lower inflation and
government expenditure and reduced tariffs boosted Thailand from
46th to 27th place.

Thailand's improved performance and the worsening prospects in
Malaysia were a "graphic demonstration of how democracy can
improve economic freedom," said Restall.

South Korea and Taiwan were also cited by Edwin Feulner,
president of the Heritage Foundation, as examples where "economic
freedom has led to a very competitive political freedom."

The report highlighted the direct correlation between economic
freedoms and national prosperity, "so this really matters to the
average citizens of these countries," Fuelner said.

China's performance in the index declined this year as a
result of the poor job it has made of cleaning up its insolvent
banking system but the mainland's imminent entry into the World
Trade Organization should increase competition and transparency,
it said.

"Annual GDP growth remains robust, averaging more than eight
percent, but growth figures mask systemic weaknesses in China's
economy that are caused by the general lack of economic freedom,"
the report said.

The country's economic reforms launched in the late 1970s had
stalled partly because of "government reluctance to pay the
social and political price of enacting broader economic reforms,"
it added.

Japan, the world's second biggest economy which has been mired
in recession for much of the last decade, seems to be recovering,
the report said.

Although Sogo department store's recent collapse under a mound
of debt "could be only the tip of a red-ink iceberg," the "Big
Bang" reforms in financial regulations have lured more foreign
direct investment, it said.

Taiwan remains "mostly free" but it had slipped from 11th to
20th place as its practice of intervening in the market to propr
up currency and the stock market had harmed its overall score,
the report said.

Even though North Korea scored the lowest in all of the
index's 10 categories,its economy expanded in 1999 for the first
time in 10 years, with a 6.2 percent growth in GDP. This was a
result of expanded agricultural production and a massive 360
billion dollars in aid.