Hong Kong remains world's freest economy

Hong Kong remains the world's freest place to do business while the US has lost its claim to an unrestricted economy, according to an annual report published yesterday.

Hong Kong, a former British colony which was returned to China in 1997, edged out rival Singapore to claim top spot for the sixteenth consecutive year in the 2010 Index of Economic Freedom.

Australia and New Zealand grabbed third and fourth spot respectively.

The report is compiled by The Heritage Foundation, a conservative Washington-based think tank, and The Wall Street Journal.

Ireland, Switzerland, Canada, the US, Denmark and Chile rounded out the top ten list, which is based on criteria including economic openness, trade, the efficiency of domestic regulators, and the rule of law.

But Canada pushed the US from the top seven economies deemed to have an entirely free economy due to "notable decreases in financial freedom, monetary freedom, and property rights," the report said.

"The US government's interventionist responses to the financial and economic crisis that began in 2008 have significantly undermined economic freedom and long-term prospects for economic growth," the report said.

With an economic freedom score of 67.2, Malta's economy stands in 48th place.

Malta's economic freedom score has increased by 1.1 points from last year to 67.2, making the economy the 48th freest in the 2010 Index. The score increase reflects a large increase in investment freedom.

"Malta ranks 22nd out of 43 countries in Europe, and its overall score is just above the regional average," the index report said.

"Many aspects of business formation in Malta are relatively well organised and straightforward, and the overall entrepreneurial environment is flexible and dynamic. The judiciary is independent and fairly efficient, providing strong protection of property rights.

"The financial market is small but sound, and open to foreign competition. The financial sector has weathered the global financial crisis relatively well."

The index report lists challenges to economic freedom in Malta to include burdensome taxation, a high level of government spending, and rigid labour regulations, hindering growth in employment opportunities.

"The overall freedom to start, operate, and close a business is relatively well protected under Malta's regulatory environment. Existing regulations are relatively straightforward and applied uniformly most of the time. Malta has adopted transparent and effective policies and regulations to foster competition," the index report said.

The UK stands in 11th place (-2.5), Germany (23rd, +0.6) followed by Cyprus (+0.1), France is 64th (+0.9), Italy is 74th (+1.3), Libya is 173rd (-3.3).

Mainland China was ranked 140 in the list of 183 countries with Cuba, Zimbabwe and North Korea rounding out the bottom of the list.