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Jakarta, CNBC Indonesia – Singapore has overtaken Hong Kong as the country with the freest economy in the world. Hong Kong’s half-century reign as the country with the world’s freest economy has come to an end.

Hong Kong has dominated the “Global Economic Freedom” report published by the independent Canadian think tank the Fraser Institute for more than two decades. However, in the 2023 edition released on Tuesday (9/19/2023), the city’s overall score fell by 0.07 points.

This is due to the decline of judicial independence, impartial courts and legal integrity, as well as increased military interference, according to the latest data collected in 2021.

Losing the top spot would likely hurt the ego of Hong Kong’s government, which has long touted the city as having the world’s freest economy.

The Asian financial hub fell to second place, behind Singapore, in the Global Index of Economic Freedom for the first time since its debut in 1970. The Fraser Institute report released Tuesday was based on 2021 data, and The institute said the Fraser Institute report released Tuesday was based on 2021 data. The rankings are expected to fall further in coming years.

Recent changes in Hong Kong illustrate how economic freedom is closely linked to civil and political freedom.

Hong Kong fell to second place, while Switzerland, New Zealand and the United States rounded out the rest of the top five. And the archipelago country, namely Indonesia, is ranked 74th.

The Hong Kong government called the report’s claims about the city’s justice system “totally baseless and unsupported by objective evidence,” the South China Morning Post reported Wednesday. Hong Kong government officials did not immediately respond to requests for comment.

Hong Kong’s failure in the report reflects the country’s struggle to maintain its reputation as a global financial center, after years of isolation due to the pandemic and political instability.

One of Hong Kong’s attractions for international business is the reputation of its judicial system. The city’s courts differ from those in China, where actions are opaque and effectively controlled by the ruling Communist Party.

Since President Xi Jinping imposed a national security law on Hong Kong in June 2020, their independence has been called into question. Last month, Chief Executive John Lee further fueled those concerns when he said judges should follow his wishes and ban controversial protest songs from the internet, saying they threaten national security.

Last year, Britain moved to remove the top judges from Hong Kong’s highest appeal court, saying China was using the national security law to undermine fundamental rights and freedoms in the former British colony.

In 2021, the administration of U.S. President Joe Biden warned investors about the risks of doing business in Hong Kong and said China’s efforts to exert greater control over the financial center threatened the state with right and put employees and data at risk.

Indonesia’s ranking stagnates
Indonesia is ranked 74th out of 165 countries. Indonesia moved up one rank from its previous position of 75.

Economic freedom takes into account five aspects, namely the size of government, property rights and legal system, financial conditions, freedom of international trade and regulation.
Indonesia received the highest score for financial conditions, 9.54. Estimates include monetary growth, inflation and financial standard deviation.

However, looking at the past 40 years, Indonesia’s position has always been stagnant. In 1980, Indonesia was ranked 69th, then moved to 52nd in 1990. Indonesia’s position was 68th in 2010, 69th in 2015, 72nd in 2019, and 75th in 2020.

Indonesia’s position lags far behind that of regional countries. Singapore has long been among the top three rankings in the Economic Freedom Index.
Besides Singapore, the other Asian countries at the top of the ranking are Japan (20) and South Korea (42).
In the Southeast Asia region, besides Singapore, the countries at the top of the ranking are Malaysia (56) and Brunei (59).

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