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Hong Kong Remains World's Freest Economy

by Mary Swire,, Hong Kong

17 January 2007

Hong Kong has been ranked as the world's most free economy for the thirteenth consecutive year by the Heritage Foundation, the free market think tank.

The Heritage Foundation's latest annual Index of Economic Freedom, published in conjunction with the Wall Street Journal, aims to produce a user-friendly index as a tool for policymakers and investors.

This year's study assessed 10 broad factors in 157 economies worldwide. These factors included: business freedom, trade freedom, fiscal freedom, freedom for government, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption and labour freedom.

Once again, Hong Kong retained its position as the freest economy in the world, followed by Singapore and Australia.

Hong Kong was ranked first in four broad factors - trade, investment, financial freedom and property rights. The city also ranked among the top 10 in another four areas, namely fiscal freedom, freedom from government, monetary freedom and labour.

The report said that Hong Kong's income tax and corporate tax rates were extremely low, and overall taxation was relatively small as a percentage of GDP. It also noted Hong Kong's simple business regulation and highly flexible labour market. Hong Kong was wide open to investment, it said, with virtually no restrictions on foreign capital.

The Foundation complimented Hong Kong on being one of the world's leading financial centres, with an extensive banking and services industry that was transparent and regulated non-intrusively. It highlighted the fact that the judiciary was independent of politics, the city was virtually corruption-free, and it had an exemplary ability to protect property rights.

"We see the role of the Government as that of a facilitator," responded Hong Kong Financial Secretary, Henry Tang.

"We provide a business-friendly environment where all firms can compete on a level playing field and establish an appropriate regulatory regime to ensure integrity and smooth functioning of a free market. We also have an irreplaceable role in interactions with other governments, for instance, on market access negotiations," he observed.

"We will study the report carefully and strive to preserve fervently those strong aspects of our economic freedom, while enhancing those other aspects where there is room for further improvement," Tang concluded.

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