Hong Kong pips Singapore to be ranked world’s freest economy for 23rd consecutive year

Hong Kong has once again beat key rival Singapore to be ranked the world’s freest economy by a Washington D.C.-based think-tank for the 23rd consecutive year.

The city scored 89.8 out of 100 points in the annual index of economic freedom compiled by the right-wing Heritage Foundation over 180 economies, up by 1.2 points from last year, beating Singapore by 1.2 points and edging the island nation to second place.

North Korea was rated the least free economy, with only 4.9 points, while China was ranked 111th with 57.4 points, up 5.4 points. Taiwan clinched 11th place with 76.5 points, up 1.8 points.

Financial Secretary Paul Chan Mo-po welcomed the news on Thursday

“On top of maintaining our favourable business environment, free trade, simple and low tax regime, rule of law and independent judiciary, the government will also strive to enhance our financial infrastructure and foster closer economic cooperation with major trading partners, so as to strengthen Hong Kong’s leading position as an international city,” he said in a statement.

This year, the city’s overall score improved after two years of decline, thus widening its lead over long-time rival Singapore.

Out of the 12 components measured in the Index of Economic Freedom report, Hong Kong achieved the maximum score of 100 points in fiscal health, and 90 points or more in seven other areas, including business freedom, tax burden and property rights.

As at the end of March last year, Hong Kong’s fiscal reserves stood at HK$842.9 billion as former financial chief John Tsang Chun-wah has often been criticised for being a “miser” by tightening the public purse strings.

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“Hong Kong has demonstrated a high degree of economic resilience and remains one of the world’s most competitive financial and business hubs,” the report noted.

“The high-quality legal framework, which provides effective protection of property rights and strong support for the rule of law, continues to be a cornerstone of strength for this dynamic city. There is little tolerance for corruption, and government integrity is buttressed by a high degree of transparency,” it added.

However, economist Andy Kwan Cheuk-chiu, director of the ACE Centre for Business and Economic Research said the foundation only adopted a narrow approach in assessing an economy’s fiscal health.

“The foundation only looked at the figures of an economy’s fiscal reserves. Of course Hong Kong will get full marks in this area,” he said. “But the foundation overlooked the fact that such hefty reserves were accumulated at the expense of the government’s long term commitment into our welfare, health-care and education systems that serves to narrow down the widening poverty gap.

“Hong Kong obviously doesn’t do well in distributing people’s wealth. If there is a category of income inequality Hong Kong will definitely be ranked first,” he argued.