ASEAN KEY DESTINATIONS
Brunei ranks 4th in ASEAN economic freedom
BRUNEI is ranked fourth among its Southeast Asian peers in 2013 when it comes to economic freedom, according to a recent report published by a Canadian think tank.
In the Economic Freedom of the World (EFW) 2015 report by the Fraser Institute, the sultanate placed 62nd out of 157 economies and scored a 7.18 rating out of 10 in the index. Hong Kong and Singapore topped the global index, with a rating of 8.97 and 8.52, respectively.
In ASEAN alone, Brunei is ranked behind Malaysia, Cambodia and Singapore.
The report said economic freedom is present when “individuals are permitted to choose for themselves and engage in voluntary transactions as long as they do not harm the person or property of others”.
The score is calculated based on five indicators: size of government, which includes public spending and taxation; legal structure and security of property rights; access to sound money; freedom to trade internationally; and regulation of credit, labour, and business.
Brunei scored a five under the size of government which is measured by the extent of the country’s reliance on “political process” to allocate its resources, goods and services.
In the area of legal system and property rights, Brunei managed a 6.6 rating. This rating was based on the assessment of the country’s judicial independence, integrity of the legal system, reliability of police and business costs of crime.
Brunei scored a 5.97 rating for the protection of property rights. This sub-indicator is considered a foundation for economic freedom and efficient operations of markets.
“Countries with major deficiencies in this area are unlikely to prosper regardless of their policies in the other four areas,” said the study.
Brunei scored an 8.18 rating in access to sound money thanks to its high money supply growth and low inflation.
When it comes to freedom to trade internationally, which is measured by four sub-indicators, the Sultanate was given a rating of 7.58 with scores reflecting low mean tariff rates. However, the study gave the country a 5.11 rating under the sub-indicator for controls of movement of capital and people.
Brunei was given a score of 8.56 for regulations which cover areas under the three sub-indicators of regulation for credit, labour and business markets. The country was also measured highly when it comes to the domestic credit market and labour regulations with 9.68 and 8.86 respectively.
Under the sub-indicator of business regulations, the study gave Brunei a 7.13 rating with lower ratings for bureaucracy costs and administrative requirements, both of which restrain entry and reduce competition.
Fraser Institute published the first EFW report in 1996.
The think tank used data compiled from surveys, expert panels and case studies to write the report. It constructed index ratings using data from external sources such as the International Monetary Fund, World Bank and World Economic Forum.
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