Malaysia is ranked 71 out of 144 countries by the 2012 Economic Freedom of the World annual report, moving up seven places compared to last year.

The report is produced by Canada’s Fraser Institute and 86 other think-tanks globally, and released today by the Institute for Democracy and Economic Affairs (Ideas), a local NGO.

azlan Ideas chief executive Wan Saiful Wan Jan said the report, which included 144 nations representing more than 95 percent of the world’s population, actually measured Malaysia’s performance in 2010 as it has a lag of two years due to the delay in global data release.

“And this is actually a very important report for Malaysia because it measures our performance in the year after (Prime Minister) Najib Abdul Razak announced the New Economic Model (NEM) and the Economic Transformation Programme (ETP),” he said in a press release today.

He believed the NEM and ETP has produced a positive impact on the level of Malaysia’s economic freedom which has helped to improve our position in the global ranking.

According to the report, Malaysia has improved in all the categories measured by the index (from one to 10 where a higher value indicates a higher level of economic freedom):

  • Size of government: improved to 6.13 from 5.55 in last year’s report
  • Legal system and property rights: improved to 6.86 from 6.54
  • Access to sound money: improved to 6.52 from 6.50
  • Freedom to trade internationally: improved to 7.25 from 7.23
  • Regulation of credit, labour and business: improved to 8.03 from 7.61
NONE While expressing confidence in the government’s economic agenda, Wan Saiful ( right ) reminded that the government must avoid offering populist handouts and subsidies as the general election gets nearer, as it will have a negative impact on our standing globally.

The report, he said, also showed that a more liberal economic system is positively linked to higher income per capita and economic growth.

“Similarly, if we want to help the poor in our society, the report also found that a more liberal economic system is positively linked to the level of income of the poorest.  

“This means that we can possibly improve the life quality of the poorest in Malaysia if we remain committed to further liberalising our economy,” he explained.

HK tops ranking again

Hong Kong again topped the rankings of 144 countries, followed by Singapore, New Zealand, and Switzerland. Australia and Canada tied for fifth overall.

Meanwhile the United States plunged to its lowest-ever ranking of 18, down from 10 in 2008 and second overall in 2002.

The Economic Freedom of the World report is the premier measurement of economic freedom, using 42 distinct variables to create an index ranking countries around the world based on policies that encourage economic freedom.

Economic freedom is measured in five different areas: (1) size of government, (2) legal structure and security of property rights, (3) access to sound money, (4) freedom to trade internationally, and (5) regulation of credit, labor, and business.