Core
Business World, 13 March 2012

 

The government expressed elation over the Philippines improvement in the world ranking of Economic Freedom of the Heritage Foundation (HF). It moved up eight notches higher — from 115th in 2011 to 107th in 2012. But that’s not much of an improvement. The Philippines is behind Cambodia which is ranked 102nd out of 179 nations in 2012, and way, way behind Singapore (ranked second), Malaysia (53rd) and Thailand (60th). The Philippines is only slightly ahead of Indonesia which is ranked 115th in 2012.

According to the Heritage Foundation, “economic freedom is a crucial component of liberty. It empowers people to work, produce, consume, own, trade, and invest according to their personal choices.”

Here’s the HF overall scoring system. An economic freedom score (EFC) of 80-100 is rated FREE. Only one country among territories in the ASEAN region — Singapore with a score of +87.5 — falls within the FREE category.

A country with a score of 70 to 79.9 is considered MOSTLY FREE, while a country with a score of 60 to 69.9 is considered MOSTLY MODERATE.

Two countries from the ASEAN-5 group — Malaysia with a score of 66.4 and Thailand with a score of 64.9 — are considered MOSTLY MODERATE.

A country with a score of 50.0 to 59.9 is considered MOSTLY UNFREE. Cambodia with a score of 57.6, the Philippines a score of 57.1, Indonesia with a score of 56.4, Vietnam with a score of 51.3 and Laos with a score of 50.0 fall in the MOSTLY UNFREE category.

IMPROVING BUT STILL MOSTLY UNFREE

Last year, the Philippines has an Economic Freedom score of 56.2, or an improvement of 0.9. But is it really something worth crowing about? Even with the 0.9 improvement, the Philippines continue to fall within the MOSTLY UNFREE group.

A quarter of a century after the historic EDSA 1, when the Philippines became the model of all freedom-loving peoples all over the world, the Philippines remains MOSTLY UNFREE. It lags behind emerging Cambodia!

The HF report has unkind words on the Philippine judiciary. The report noted that despite the challenging economic environment, “the Philippine economy has been on a steady path of economic reform.” An inefficient judiciary, however, continues to be a deterrent, according to HF, as it “remains susceptible to political interference” and “does not provide effective protection for property rights or strong and transparent enforcement of the law.”

RULE OF LAW AND FREEDOM FROM CORRUPTION DOWN

Malacañang is correct in pointing this out. Rule of law, honoring contracts — both are important characteristics of a free country. But what it failed to mention is that freedom from corruption has not moved either — it was 25.0 in 2009, down to 23.0 in 2010, then back up again to 24.0 in 2011 where it has remained unchanged in 2012.

These most recent numbers are much worse than the Philippines’ freedom from corruption scores 11 and 12 years ago. The freedom from corruption score was 24.0 in 2012. Yet, it was 33.0 in 2000 and 36.0 in 2001.

Clearly, the government’s claim that it is making progress in its anti-corruption efforts are not supported by the numbers. HF said: “Despite some progress, government’s anti-corruption efforts have been too inconsistent to eradicate bribery and graft effectively.” This suggests that the government has to do much, much more in order to be back where the Philippines was in 2001. And to think that the score in 2001 was mediocre.

On the protection of property rights, the score was a low 30.0 in 2012, suggesting no progress. That low score has remained unchanged since 2009. But the score a decade ago was much better. It was 50 in 2001 and was even higher at 70.0 in 2000. The concern with property rights has significantly deteriorated over time. Heritage Foundation has this to say: ‘The cumbersome court system and loose regard for contracts continue to be causes for concern.”

For a broad view on Philippine economic freedom see the table below. It gives a comparison of the 2012 scores with the 2011 scores to show short-term progress or deterioration. The comparison with the 2000 scores is meant to remind us where the Philippines was before the “lost” decade associated with Mrs. Gloria Macapagal-Arroyo.

PHILIPPINES: DOWN AND LONG WAY UP

 

The challenge for the Aquino III administration is how to recover quickly on lost grounds — on property rights, freedom from corruption, investment freedom, and financial freedom. But one thing is clear: recovery is likely to be attained by acting decisively, not by talking incessantly.