Malaysia has secured the 45th position in the 2023 World Economic Freedom Index, achieving a score of 65.7. This ranking places Malaysia within the “moderately free” category, according to the Heritage Foundation’s index, which assesses economic policies and conditions across 184 countries.
Key Factors in Malaysia’s Economic Freedom
The Economic Freedom Index evaluates twelve distinct aspects of economic freedom, categorized into four broad pillars:
- Rule of Law:
- Property Rights: 65.7
- Judicial Effectiveness: 65.5
- Government Integrity: 48.2
- Government Size:
- Tax Burden: 83.9
- Government Spending: 81.4
- Fiscal Health: 42.8
- Regulatory Efficiency:
- Business Freedom: 70.5
- Labor Freedom: 58.2
- Monetary Freedom: 79.1
- Market Openness:
- Trade Freedom: 83
- Investment Freedom: 60
- Financial Freedom: 50
These scores reflect a mixed landscape where Malaysia shows strength in areas like tax burden and trade freedom, while facing challenges in government integrity and fiscal health.
Regional and Global Comparisons
Globally, Singapore leads the index with a score of 83.5, showcasing its robust economic policies. In the Asia-Pacific region, Malaysia ranks ninth, trailing behind leaders like Singapore, Taiwan, and New Zealand. Within Southeast Asia, Malaysia comes in third, following Singapore and Brunei.
The Broader Impact
The index provides a comprehensive overview of the economic freedoms available within countries, categorized by the ability to support entrepreneurial activities through legal and regulatory frameworks. Malaysia’s moderately free status indicates its middle-ground position in providing such economic conditions, compared to its regional counterparts and the global leaders.
Outlook and Implications
As Malaysia continues to navigate its economic landscape, the scores highlighted by the Heritage Foundation’s index will play a critical role in shaping its policies and reforms. Enhancing areas like government integrity and fiscal health could improve its standing in future rankings and, more importantly, bolster its economic resilience and attractiveness as an investment destination.
The data compilation period, from July 1, 2022, to June 30, 2023, reflects recent global economic dynamics and Malaysia’s adaptive strategies. Understanding these metrics offers crucial insights for policymakers, investors, and citizens alike, aiming to foster a more conducive environment for economic growth and development.
