Economic Freedom Report 2006 launched in KL

YBhg Tan Sri Dato’ Mohd Sheriff Mohd Kassim, Chairman of the Board of Trustees of the Malaysian Institute of Economic Research (MIER), Dr. Mark Mullins, Executive Director of the Canadian Fraser Institute, and Dr. Wolf-Dieter Zumpfort, Deputy Chairman of the Friedrich Naumann Foundation launched the Economic Freedom of the World Report 2006 during a conference by the Economic Freedom Network Asia on 12th September in Kuala Lumpur.

The Canadian Fraser Institute compiles this annual report based on a set of numerical indicators. It measures individual freedom by assessing government consumption, the legal environment, financial markets, foreign trade, businesses and the credit and labour markets. It provides empirical evidence for the assumption that less government interference and more individual freedom lead to more wealth and prosperity.

Malaysia followed this path until the 1990s, which caused Malaysians to enjoy their current level of wealth. In an article also published on the FNF Malaysia website, the UNDP Representative Dr. Leete sees Malaysia in this respect as a role model for other developing nations.

However, strong government intervention during the Asian crises continued its grip on the Malaysian economy until 2004. According to the indicators, Malaysia suffers most from the size of its government. The level of government consumption is much higher than for example in neighbouring Thailand. Also, the Malaysian government owned a disproportionately large amount of enterprises and undertook vast investments in the economy.

The second area of concern is the over-regulation of the credit market and the business sector. Particularly striking is the low competition of foreign banks, the control of the interest rates and many price controls. A point in this case was the fixing of sugar prices, which was announced just when the economic freedom report was launched.

Finally, Malaysian entrepreneurs have to spend more time with government bureaucracy than their counterparts in Thailand, Singapore or in the Philippines.

Figures in the report finally lead to the conclusion that it is time for Malaysia to reduce government’s interference in the economy, at least to the level prior to the crisis almost 10 years ago.

To download the Economic Freedom of the World Report 2006, please visit:
http://www.fnfasia.org/efn/econindex.htm

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