2010 Index of Economic Freedom-- Hongkong Beats Indonesia in Business Freedom

Kamis, 21 Januari 2010

illustration/ilustrasi

JAKARTA, KOMPAS.com — Hongkong is the most free for investing. While Indonesia is at the 114th rank out of 183 countries in the 2010 Index of Economic Freedom.

The data comes from the annual report released by the Heritage Foundation, a conservative institution based in Washington DC, together with the Wall Street Journal, Wednesday evening.

Hongkong, scoring 89.7, beat its rival Singapore (scoring 86.1), and claims the status as the most reliable for investments for 16 consecutive years in the 2010 Index of Economic Freedom.

Indonesia scored 55.5, which puts it into the 'mostly unfree' category. Other countries in this category are, among which, Kenya, Bhutan, Serbia, Morocco, Lebanon, Tanzania, the Philippines, Brazil, Sri Lanka, and Senegal.

From the aspect of business freedom, Indonesia scored 53.1. To start a business in Indonesia the process takes more than 35 days, and to obtain a business permit it takes more than 18 days; both periods are longer compared to most other countries'. And to close a business in Indonesia also takes time and money.

As for the freedom of trade, Indonesia's score is 77.9. The averate tariff in Indonesia is 3.6 percent since 2007. There are restrictions and bans on import and export, market access is hampered, regulations are not transparent, and even the customs tends to be corrupt - those negative considerations ad to the cost of trading in Indonesia.

For fiscal freedom, Indonesia's score is 81.9. Indonesia has reduced taxation to a moderate level as part of the fiscal reform. Income tax at the highest is 30 percent, which has gone down from the previous 35 percent. Corporate tax at the highest is 28 percent, which has been reduced from 30 percent. For the previous year, taxation income in total compared with the Gross domestic product is 11.3 percent.

Top 10 countries in the index are: Hongkong, Singapore, Australia, New Zealand, Ireland, Switzerland, Canada, the US, Denmark, and Chile.

And here is a recap of Indonesia's scores:
Business Freedom 53.1
Investment Freedom 35.0
Trade Freedom 77.9
Financial Freedom 40.0
Fiscal Freedom 81.9
Government Spending 89.1
Monetary Freedom 70.8
Property Rights 30.0
Freedom from Corruption 26.0
Labor Freedom 50.8

(Femi Adi Soempeno /Kontan/C17-09)