Cambodia drops 8 places in Economic Freedom Index

• Apr 17, 2020

Cambodia’s ranking in the Index of Economic Freedom dropped by eight places from last year, a negative sign for a country seeking to expand its economy and become a major player in Southeast Asia.

This year, Cambodia registered 57.3 points in the Index of Economic Freedom, putting it in 113th spot among 180 countries. Last year, the Kingdom held the 105th spot after posting a score of 56.8 points.

Cambodia’s poor performance in the rankings contrasts directly with that of neighbouring Vietnam, which improved its standing by 23 places. Vietnam is now the 105th freest economy in the world after being ranked 128th last year.

“Economic freedom has been in decline in Cambodia since 2017, and this year, its economy is again considered mostly unfree,” the study stated.

The drop in rankings has mostly been attributed to lesser investment freedom. In 2019, Cambodia obtained a score of 60 points in that category, which dropped to 50 points a year later.

The Index of Economic Freedom is co-produced by the Heritage Foundation, a prominent American think-tank with connections to the Republican Party and conservative causes, and by the Wall Street Journal, one of the top publications in the United States.

The rankings are based on total 12  factors: property rights, judicial effectiveness, government integrity, business freedom, labour freedom, monetary freedom, tax burden, government spending, fiscal health, trade freedom, investment freedom and financial freedom.

Cambodia’s position, despite being decided by reputable organisations,  may be contested from some corners, especially with Cambodia’s continuing effort to open up its economy and the nation’s well-earned reputation of being one of the most attractive and best investment destinations in Southeast Asia.

The drop in rankings, however, hardly put a dent on Cambodia’s economic performance.

“Economic growth has benefitted from the openness of other countries, particularly the European Union, to exports of garments and strong demand for travel goods and remains strong at an average of 7.1 percent over the past five years,” the report continued.

Despite its shortcomings, Cambodia’s economy has been one of the fastest-growing in the world in the last five years. But the study indicated that Cambodia needs to implement reforms and do more to free its economy.

“Sustained growth over the long term will require the implementation of deep, broad, and well-institutionalised reforms to improve scores for judicial effectiveness and government integrity, as well as improved property rights and a better regulatory environment to enhance the domestic business environment,” the report said.

Despite the low ranking, Cambodia was higher than other countries, including India (120), Ukraine (124), Brazil (144), Argentina (149), Lebanon (157) and Iran (164).

Singapore obtained a total score of 89.4 points, making it the freest economy in the world, followed by by Hong Kong (89.1) and New Zealand (84.1).

North Korea (4.2 points), Venezuela (25.2) and Cuba (26.9) are ranked as having the most repressed economies in the world.

Source: https://www.khmertimeskh.com/50714184/cambodia-drops-8-places-in-economic-freedom-index/