----------
Economic freedom essentially means individual liberty,
the freedom of an individual to voluntarily exchange various goods and services
in various markets, as a seller or buyer, as a producer or consumer, the
individual has various choices whom to buy and sell and to whom not to buy or
sell. The individual is also protected from aggression and coercion by bullies
who will rob them the fruit of their hard work.
Sadly, this kind of economic freedom is deprived to many
people in Asia. Their freedom to put up a business is often restricted by
various government regulations and bureaucracies. For those who manage to
officially put up legitimate businesses, they have to pass to the consumers the
cost of various regulations, taxes and mandatory fees.
The Fraser Institute, a free market think tank in Canada,
produces the Economic Freedom of the World (EFW) annual reports. These reports
are presented in various countries around the world, including the Economic
Freedom Network (EFN) Asia annual conferences.
The EFW is composed of five main areas: (1) Size of
government (its annual consumption, state enterprises, income tax rates), (2)
Legal system and property rights (judicial independence, impartial courts, legal
enforcement of contracts, reliability of the police, etc.), (3) Sound money
(money growth, inflation, freedom to own foreign currency account), (4) Freedom
to trade internationally (tariff rates, trade regulations, black market
exchange rate, control of people and goods movement), and (5) Regulations
(credit, labor, business incl. cost of tax compliance).
A score is given in each area and sub-areas for each
country to indicate degree of economic freedom. Thus, high government spending
and taxes means low score in area one, weak enforcement of private property
rights means low score in area two, and so on.
Table 1 shows Below is a summary table of the scores of
selected countries in Asia over the last 15 years. Has economic freedom in our
continent improved or regressed over these years?
As of the EFW 2013 Report, half of the 21 Asian countries
ranked 75th or better out of 152 countries covered worldwide. The
other half ranked 80th or lower.
In what areas do many Asian countries score low, meaning
in what areas their governments need to improve to give their citizens more
economic freedom?
The next table will show this. Not included in this list are
outliers Hong Kong, Singapore and Myanmar. The first two scored high in all
areas while the latter scored low in all areas.
Many countries in Asia need to improve the enforcement of
the rule of law, they need to relax the various restrictions in sound money,
international trade, and business regulations.
Economic freedom and individual liberty are ends by
themselves. They are not means to certain other objectives like national
sovereignty or forced equality in society. Governments, politicians, business
and civil society leaders in Asia should learn to appreciate more the value of
individual freedom and individual responsibility.
See also:
Business 360 11: Avoiding Middle Income Trap, September 19, 2013
Business 360 12: Optimum Size of Government, October 13, 2013
Business 360 13: US Government Shutdown and Lessons for Asia, November 28, 2013
Business 360 14: Middle Income Trap and Economic Freedom, January 02, 2014
EFN Asia 32: Day 2 of Conference 2013 in Bangkok, November 09, 2013
1 comment:
Sometimes, owning a business or not, we still need to manage our income, especially when it comes to taxes and that’s the hardest part. Hiring a tax advisor will be a good step to start when you have to deal with small business tax but it is also effective whether your purpose is to manage personal income or manage a business. Thank you for sharing your thoughts! Would love to see more updates from you.
Post a Comment