Sep 22, 2023

By KEY POINTS Singapore's ascent in the 2023 Economic Freedom of the World Index was driven by regulatory and government improvements The index cited Chinese military interference and falling trust in Hong Kong's impartiality, among others Hong Kong's score is expected to fall further as Beijing continues to suppress "freedom of all sorts" Singapore is now the world's freest economy, dethroning Hong Kong, which has held the top spot for 53 consecutive years. Repression to several economic segments ultimately led to Hong Kong's fall to the second spot. Singapore rose to the top spot in Canadian think tank Fraser Institute's recently-released 2023 Economic Freedom of the World Index that Hong Kong dominated for the past 53 years since the index started in 1970. The findings are based on 2021 data, as it is the year with the most recent comparable statistics. The report noted that Hong Kong's fall to the second spot was affected by Beijing's "new and significant barriers to entry, limits on the employment of foreign labor and increases in the costs of doing business." Singapore Holds First Contested Presidential Vote In Over A Decade Read more The Chinese military's increased interference in "the rule of law" was eroding confidence in Hong Kong courts' impartiality and as Hong Kong's economic freedom declined, Singapore rose to the top. "Driven by improvements in its size of government and regulation components," Singapore was able to claim the top spot. The index uses several tenets to gauge the economic freedom in 165 nations ranked, such as freedom of entry and competition in business markets, regulatory frameworks, ease of international trade, military interference and integrity of the legal system, among others. Hong Kong's score is expected to fall further "as the Chinese Communist Party continues to suppress freedom of all sorts," said Fred McMahon, Dr. Michael A. Walker research chair in economic freedom with the Fraser Institute. Matthew Mitchell, senior fellow at the Fraser Institute, added that Beijing's "aim was to crack down on political and civil dissent," considering how Hong Kong's economic freedom is "intimately connected with civil and political freedom." As a result of the Chinese government's continued efforts to put restraints on the private sector, the special administrative region's prosperity is expected to suffer. American think tank the Atlantic Council noted in a March report that changes in Hong Kong's political norms as instigated by Beijing may be putting the city's position as a global financial hub at risk. Singapore, on the other hand, has retained its solid economic freedom as propelled by its protection of property rights as well as enforcement of anti-corruption regulations, as per The Heritage Foundation . It also has competitive tax rates and a more transparent regulatory environment. Meanwhile, Switzerland, New Zealand and the United States claimed the third, fourth and fifth spots, respectively. Ireland, Denmark, Australia, the United Kingdom and Canada round up the Top 10. In response to the ranking's results, a spokesperson for the Hong Kong government said the city has been striving to bolster support for markets and regulate enterprises "in an appropriate manner to ensure an open and fair business environment." The spokesperson also rejected the report's findings regarding Chinese military interference and eroded trust in Hong Kong's impartiality, saying the city already enjoys a "high degree of autonomy" and has observed "equality before the law" as a fundamental principle. Read more