Washington-based economic think tank The Heritage Foundation lists the Philippine economy as 'moderately free' and ranks the country 73rd out of 178 countries in its 2021 Index of Economic Freedom.
Washington-based economic think tank The Heritage Foundation lists the Philippine economy as 'moderately free' despite being beset by what it calls as the country's overly bureaucratic regulatory environment, weaknesses in judicial system, and government's inability to solve corruption.
Metro Manila (CNN Philippines, March 5) –Washington-based economic think tank The Heritage Foundation listed the Philippine economy as"moderately free" despite being hampered by what it calls as the country's overly regulatory bureaucratic environment, weaknesses in judicial system, and government's inability to solve corruption.
The Philippines garnered a score of 64.1 to rank 73rd out of 178 countries inThe Heritage Foundation's 2021 Index of Economic Freedom.The country's ranking slipped three places from its previous standing in 2020, where it finished in 70th place with a score of 64.5.
The economic think tank also attributed the"decline in trade freedom" as the reason for the Philippines' lower ranking this year. The country, whose score is under the economic freedom index's"moderately free" category, is also ranked 12th out of 40 countries in the Asia-Pacific region. headtopics.com
The annual economic freedom index used four parameters to determine a country's economic freedom: Rule of Law, Government Size, Regulatory Efficiency, and Open Markets.The Heritage Foundation recognized the Philippines' respect for property rights but noted the"inadequate and sporadic" enforcement of laws. It also highlighted the pervasiveness of corruption and cronyism in the country.
"The property registration process is time-consuming and expensive. Courts are inefficient, biased, corrupt, slow, and hampered by low pay, intimidation, and complex procedures," the economic think tank rated."There is little accountability for powerful politicians, big companies, or wealthy families."
The country's regulatory inefficiency also lagged behind according to the 2021 Index of Economic Freedom, where"business freedom" continues its decline for three years now amid ignorance in labor laws mandating employment standards."It now costs more to obtain an electricity connection, and the recovery rate when resolving insolvency has dropped. According to the World Bank, subsidies and transfers consume more than one-quarter of the government's annual budget," the Heritage Foundation noted in its report.
The economic freedom index underscored the Philippines' high individual income and corporate tax rates, which are at 35% and 30% respectively, and other value-added and environmental taxes. It also said the government's spending amounted to 20.5% of the country's gross domestic product (GDP) for the past three years and public debt accounts to 38.6% of GDP. headtopics.com
"The overall tax burden equals 14.0 percent of total domestic income," the index said.Restrictions in investments in several sectors continue to hinder the country's trade freedom in the index, despite having a stable financial sector and 10 preferential trade agreements and 285 nontariff measures in effect. The country's trade-weighted average tariff rate is around 5.4%.
"Foreign investment is generally welcome, and the investment code treats foreign investors the same as it treats domestic investors. However, investment in several sectors remains restricted. Capital markets are underdeveloped," the report mentioned.
The Philippine economyplunged to -9.5% in 2020,the country's sharpest economic drop since the Philippine Statistics Authority started collecting data on annual growth rates in 1946, due to crippled consumer spending and business activities shuttered by the COVID-19 pandemic.Read more: CNN Philippines »
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