An international study aimed at providing information on economic freedom for policy-makers and investors categorised Malaysia as "mostly unfree" in its statistical ranking of 161 economies worldwide.

The study entitled 2001 Index of Economic Freedom conducted by the Heritage Foundation, one of America's largest public policy research organisations, and co-published by the Wall Street Journal ranked Malaysia 75, along with five other countries.

The [#1]report[/#] has been published on Heritage Foundation's website.


"To stabilize his regime, prime minister Mahathir Mohamad prosecuted and jailed his political rival Anwar Ibrahim. He also imposed capital controls on the economy; the subsequent economic recovery has been generated largely by generous public spending and the global demand for electronics," the report said.

It further stated the ruling party's victory in the last general elections "came at the cost of alienating ethnic Malays who form the party's political base" and the subsequent developments in national politics caused much anxiety among foreign investors.

"This victory could lead to the eventual dissolution of Mahathir's coalition, and the politicisation of the judiciary could erode the rule of law.

Government control

"The institution of government controls on the economy has worried many foreign investors, and economists note that other countries in the region have attracted more foreign investment," it said.

Among the 10 indicators the report used for measuring economic freedom were the level of corruption, the fiscal burden of the government, the rule of law, trade policy, restrictions on banks and black market activities.

Each country was rated based on the average of the indicator scores. The scales run from one to five, of which a score of one signifies the most conducive environment to economic freedom, while a score of five signifies otherwise.

Malaysia was given an overall score of three. The other five countries which had the same score were Ivory Coast, Mongolia, Saudi Arabia, Uganda and Swaziland. Topping the index was Hong Kong with an average score of 1.30, while United States ranked fifth with 1.75.

Other Asean countries rated in the index included Singapore at the second spot, Thailand at 27, Philippines (81) and Indonesia (114).

'Irresponsible statement'

Meanwhile, Finance Ministry parliamentary-secretary Hashim Ismail dismissed the index as an 'irresponsible statement' by those parties who feel "uncomfortable" with the progress and achievements of this country.

"They (foreigners) are just uncomfortable and uneasy with the developments we have achieved in Malaysia so far," he said.

He added contrary to what was published in the index of economic freedom, there have been some other reports suggesting Malaysia is one of the most free countries.

"Malaysia has won its reputation as a champion for individual freedom. Even the religious minorities in this country are treated justly and equally," he said.

Hashim also said the government will not make any move in response to the index as it feels that individual freedom and rights are well preserved and upheld in this country.