Hong Kong Remains World’s Most Open Economy – For Now

by Mary Swire, Tax-News.com, Hong Kong

05 January 2005

Hong Kong has retained its position as the world’s most open economy according to the annual Heritage Foundation/Wall Street Journal Index of Economic Freedom, although with many emerging nations rapidly opening up their economies, analysts have warned that the Chinese territory should not rest on its laurels.

For the eleventh consecutive year, Hong Kong assumed top spot in the index, thanks to its status as a free port and its low tax, laissez faire economy which places few restrictions on trade and investment.

Just below Hong Kong in the index was the city-state of Singapore, also a free port, whilst Luxembourg was positioned in third place.

Surprisingly, Estonia was seen as the fourth most liberal economy according to the index, highlighting the rapid progress being made in the former communist states of the eastern bloc towards opening up their economies to outside investment.

"A lot of other countries are making the right moves in the right direction," Edwin J. Feulner, president of the Heritage Foundation, told Dow Jones Newswires.

"Hong Kong can never take its standing as number one for granted,” he warned.

Feulner advised the Hong Kong government against introducing new taxes, such as the much talked about sales tax, if the jurisdiction is to maintain its long-standing position as the world’s freest economy.

“That would be the first thing I would caution Hong Kong on: look very hard before you start enacting any new taxes," he stated.

The news was welcomed by the SAR government, and Financial Secretary Henry Tang commented yesterday that the Hong Kong authorities “would spare no effort” in maintaining or further improving the territory’s attractiveness to international business.

"I am pleased that the virtues we have been upholding to keep Hong Kong flourish as a free market economy have once again been reaffirmed by the international community," Mr Tang remarked.

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