Report: Weak rule of law drags down Philippine economic freedom ranking

MANILA, Philippines — The Philippines remains as a “moderately free” country in terms of economic freedom, with the nation’s weak rule of law outpacing improvements in trade freedom and judicial effectiveness.

The Philippines got an above average economic freedom score of 65.0, making it the 61st freest state out of 186 countries tracked in the Heritage Foundation’s 2018 report released Saturday.

However, the Philippines’ overall score dropped by 0.6 point while its ranking slipped three notches from 58th spot last year.

IN THE PAST: Phl improves in economic freedom ranking

Heritage defines economic freedom as "the fundamental right of every human to control his or her own labor and property."

Read more about Philippines Economy. See more from the 2018 Index.

The index gave scores based on four categories: rule of law, government size, regulatory efficiency, and open markets.

Across Asia-Pacific countries, the Philippines ranked 13th out of 43 nations in the region.

According to Heritage, the Philippines continued to be dogged by absence of entrepreneurial dynamism and lack of “deeper institutional reforms” on business freedom, investment freedom, and the rule of law.

Heritage also noted receding investor confidence late last year due to “rapid decline” in Philippine President Rodrigo Duterte’s popularity.

Meanwhile, the country’s judicial system, despite having “strong” independence, remains weak and vulnerable to political influence, Heritage found.

Reports of forced labor in the Philippines likewise continue.

“Corruption and cronyism are pervasive, and the country is a regional money-laundering hub. The President’s strong-arm tactics reinforce a culture of impunity,” Heritage said.

“The Philippines recognizes and protects property rights, but enforcement is weak,” it added.

Despite these setbacks, Heritage nonetheless said the Southeast Asian country’s enhanced transparency of its building regulations made it easier to deal with construction permits.

The government openness to foreign investment is above average while local labor costs are relatively low, and workers are highly motivated, Heritage noted.

Developments were also seen in terms of the country’s fiscal health while efforts to gradually modernize the financial sector remain “relatively stable and sound.”

“The government has increased subsidies under President Duterte and maintains price controls on pharmaceuticals and some food and household fuel items,” the report also said.