Freedom Barometer Asia 2012

Freedom Barometer Asia 2012
Mikls Romndy Pett Jarupaiboon Corinna Johannsen
Foreword to the 2012 edition of the Freedom Barometer Asia

By Dr. Rainer Adam, Regional Director, Southeast and East Asia, Friedrich Naumann Foundation for Freedom, Bangkok, Thailand I am proud to present to you this fourth edition of our Freedom Barometer Asia. Our efforts to measure freedom in its main dimensions - political, legal and economic - have been blessed by further progress. Now that we have four data sets, we have been able to carry out a variety of tests enabling us to overcome the fact that we mix data from various sources and base years. We do this in order to have the newest and freshest data available for our readers. Thereby we avoid the drawback to present old data, as in some index reports suffering from delays of two or more years. We tested a data set where all sources referred to 2010 as base year and compared it with a data set that included the newest data for the same year 2012. The outcome is elucidating. It confirmed our earlier hypothesis that the differences are not significant, so that the presentation of the newest data does not lead to distortions. For the 17 countries in our survey, no position change occurred for the first ten in the list (Japan to Thailand). Cambodia changed position only because in 2012 it was included for the first time in the Economic Freedom of the World Index. Therefore in 2012, we had a complete data set available for the first time. As a result Cambodia went up from position 15 to 11, thereby displacing the former 11th place Vietnam and all subsequent countries sending them down one position. Otherwise no change occurred in the ranking of the countries included in the study. The total score deviation of each country in percentage points ranged from +0.58% for South Korea to -5.23% for the Philippines for the countries in the first ten positions of our ranking. For the last four countries (North Korea, Laos, Brunei and Myanmar) the deviations were more drastic, ranging from +10% to -25%, which is significant. However, since these countries do not possess full data sets anyway and their rankings were also not affected, these differences are negligible as regards the overall outcome of our Freedom Barometer. For 2012, we have now complete data sets for 13 countries and territories (Japan, Hong Kong, Taiwan, Singapore, South Korea, Mongolia, Malaysia, Indonesia, Philippines, Thailand, Cambodia, Vietnam and China). For the four remaining countries (Myanmar, Brunei, Laos and North Korea) we have only partial data, but we continue including them in our survey. The very fact that the data sets are not complete is also an indication that these countries are not free. Otherwise governments would make the missing data available and/or international organisations would have access to the relevant data sources. As regards Myanmar, we have seen tremendous positive change in 2012. To the amazement of many democracy analysts, the transition from a military regime to a more open polity has run smoothly. The by-elections in April 2012 were deemed free and fair by observers and democracy watch organisations. Since the set of economic freedom indicators is complete and only the variable Independence of the Judiciary is missing, we are cautiously optimistic that Myanmar will make some progress in subsequent years if the current political reforms are continued. All countries with full data sets have increased their freedom score with the exception of Hong Kong (-1.3%), Singapore (-0.1%), South Korea (-0.56%) and Vietnam (-1.86%). Japan maintained the number
one spot and leads the ranking as the freest country in Asia. The nations that have improved most in our Freedom Barometer are Thailand (+8.2%), Malaysia (+3.5%) and Taiwan (+2.4%). A further important change we introduced in 2012 is our data source on human rights. From this year on we will use the data sets provided by Maplecroft, a British consultancy. All previous data sets were changed accordingly, since Maplecroft made also data available so that we could adjust the sets for the previous years. However, in order to avoid duplication with other data sources, we did not use all 31 variables, selecting only 20 from Maplecroft. Last year we decided to include Hong Kong in our Freedom Barometer. We felt that because of Hong Kongs special status within the Peoples Republic of China, it deserved a chapter of its own. As 2012 marked the 15th anniversary of Hong Kongs handover to China, we decided to put a spotlight on Hong Kongs development since 1997. Our first-ever Freedom Barometer Special Report examines if 15 years of one country, two systems has changed the territorys status as one of the major financial hubs of the world. We hope that you will enjoy our findings. Our website www.freedombarometer.org has also been further improved. It allows you to compare selected data sets and countries with each other as far as our freedom score is concerned. We will strive for further improvements next year. Your comments and suggestions are, as always, highly welcome. I hope you will find our newest Freedom Barometer Asia as useful as previous editions. I wish you a pleasant and informative journey through our Freedom score.
TABLE OF CONTENTS
I. Special Report - Hong Kongs Death: Greatly Exaggerated II. The Concept III. Components and Variables IV. Country Chapters
Japan Hong Kong Taiwan Singapore South Korea Mongolia Malaysia Indonesia The Philippines Thailand Cambodia Vietnam China Myanmar Brunei Laos North Korea
1 11 12 14 15 19 25 31 37 41 47 53 59 65 71 77 83 89 95 99 103
Annex I - Overview Annex II - Methodology and Data Sources Annex III - Press Freedom Index Conversion Table
107 121 125
I. Hong Kongs Death: Greatly Exaggerated

A Special Report on Hong Kong 15 Years After the Handover by Andrew Work The reports of my death are greatly exaggerated. -Mark Twain So it goes with Hong Kong. However, just because the patient is alive does not mean he is leading a healthy lifestyle. In 1995, Fortune magazine ran a cover story entitled The Death of Hong Kong. This was the most famous of a cohort of negative Nostradamuses who were sure that the end of the British era was the end for the charmed colony on the shore of the South China Sea. To quote the authors of the article, Louis Kraar and Joe McGowan, the naked truth about Hong Kong's future can be summed up in two words: It's over. On the 15th anniversary of the 1997 Handover, it is obvious that it is not over. In fact, Hong Kong has grown stronger and weathered many storms. The dire predictions have not come true. However, some developments not foreseen by Fortune have a very high likelihood of weighing down Hong Kongs legendary resiliency in the face of economic hardship.
A Place to Make Money Kraar and McGowans article was not all doom and gloom - only mostly. With its six million enterprising citizens (mostly overseas Chinese), its magnificent harbour and financial wealth that includes some US$ 52 billion in government reserves [1995] alone, Hong Kong will remain the gateway to fast-growing South China. As such, it will continue to be, as one local billionaire puts it, 'a place where you can make plenty of money.' That much has remained true - in a sense. Hong Kong is surely a place where many have made their fortunes. Since the Handover, the vast majority of wealth has been made in real estate and the stock markets. A 2010 report described how the number of millionaires rose and fell with the state of the real estate and property markets. A full 47% of millionaires were classed non - working (housewives and retirees), but had significant wealth tied up in assets. 1 One in 14 Hong Kong citizens were considered millionaires with an average of HK$ 3.8 million in liquid assets and net assets of almost HK$ 10 million. However, in many other areas, the article was well off the mark.
http://www.thestandard.com.hk/news_detail.asp?pp_cat=30&art_id=94927&sid=27175826&con_type=3
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Requiem for a Vibrant International Commercial and Financial Hub? What's indisputably dying though is Hong Kong's role as a vibrant international commercial and financial hub home to the world's eighth - largest stock market, 500 banks from 43 nations, and the busiest container port on Earth. Today Hong Kong stands an even more important international commercial and financial hub. In 2008, Fortunes sister publication named the worlds three great cities that sit at the heart of global trade and finance and coined a term for them: Nylonkong 2. While the awkward moniker did not catch on, the sense that Hong Kong was, as its government self-styles it, Asias World City became accepted by its denizens and the global community. Instead of being the worlds eighth largest stock market, it is the seventh3. Two on the list are almost purely national affairs (Tokyo and Shanghai). By value of securitised derivatives, it is number one in the world. Most impressively, Hong Kong was the number one global issuer of IPOs in 2006, 2007, 2009, 2010 and 20114. In addition to mega-Chinese financial and industrial IPO s, it has attracted a variety of international firms ranging from Russian aluminium firms (Rusal), to Swiss mining interests (Glencore), to famous Italian luxury brands (Prada). The Hong Kong Stock Exchange is developing new rules to enable the listing of mining firms, starting with later stage firms, which are hoped to allow more speculative ventures. Particularly noteworthy is Hong Kongs development as an RMB trading centre. In 2011, over 187 banks (165 of which are overseas banks) from over 30 countries were involved in Hong Kongs RMB trading platform5. Regular citizens can withdraw cash in RMB from ATMs in many locations in the city. As the RMB becomes more freely available, Hong Kong stands to benefit as the clearing house for the RMB global trading network. Hong Kong currently hosts offices from over 244 banks 6. The growth, rather than the decline, of the sector calls into question where Kraar and McGowan sourced their original estimate.
http://www.time.com/time/magazine/article/0,9171,1704398,00.html http://www.world-exchanges.org/files/file/stats%20and%20charts/2011%20WFE%20Market%20Highlights.pdf http://online.wsj.com/article/SB10001424052702303822204577464263469270318.html http://www.hkma.gov.hk/media/eng/publication-and-research/hkrmb/hkma-rmb-booklet.pdf
Hong Kong Monetary Authority - http://vpr.hkma.gov.hk/cgi-bin/vpr/index.pl Broken down: licensed banks 154; restricted license banks 20; deposit taking companies 20; local representative offices - 60.
Commerce and Trade Hong Kong is still the worlds third busiest container port, after Shanghai and Singapore. It peaked in volume in 2011, moving 24.4 metric TEUs 7 after a slowdown in 2010 in response to conditions in the United States and Europe. This growth occurred even as multiple local competitors proliferated. Other top ten ports in China include Shenzhen, Ningbo-Zhoushan, Guangzhou Harbour and Qingdao. Two of the other top ten are in the Pearl River Delta near Hong Kong. Clearly, the competition has not hurt Hong Kong, and it continues to be a vibrant centre of international trade.
Taxation and Government Spending Taxation and government spending are intimately linked, the former being justified mostly by the latter. In this respect, Hong Kong continues to outperform. The taxation system has remained largely unchanged since the Handover. Indeed, denizens of Hong Kong who are not tax professionals find tax news from other jurisdictions perplexing. Hong Kong still has no capital gain tax, no dividend tax, no tax on interest, no machinery tax, no import or export tax, no GST or VAT, and no tax on wine and beer. As such, the complex web of exemptions that complicate many jurisdictions tax codes simply does not exist in Hong Kong. Hong Kong does tax spirits (of the alcoholic variety), tobacco and newly imported cars. Corporate tax rates stand at 16.5% with relatively few exemptions. There is only one level of taxation that contrasts favourably with federal jurisdictions, which may have multiple taxation levels (for example, national plus state/provincial plus municipal). PricewaterhouseCoopers Paying Taxes 2012 report shows Hong Kong at the top of its three measures, namely, Ease of Paying Taxes (#3), Tax Payments (#1) and Time to Comply (#12) 8. Income tax is progressive and only applies above a threshold that exempts more than half of the households in Hong Kong from any tax. The top tax rate is 17%, but very few pay it. Combining household income exemptions and reductions in taxable income for children and adult dependents mean that income tax is a relatively rare imposition in Hong Kong. Taxation is simple and those who qualify can normally complete the two-page form in a couple of minutes. Tax is paid in advance, anticipating earnings, but is easily reduced or waived in the event of changing personal circumstances such as leaving Hong Kong, unemployment or starting a new business, usually with a simple one-page letter. As mentioned, dividends are not taxed, so risk-taking business owners can receive their income tax-free. The Hong Kong government can maintain this low tax system by keeping spending below revenue. While this seems simple, the governments of most developed nations have a difficult time doing so. Deficits in Hong Kong are a once-in-a-decade occurrence, considered to be wildly irresponsible and made bearable by massive reserve holdings. The government regularly predicts dire outcomes in
http://www.pdc.gov.hk/docs/Hkport.pdf
PwCs Paying Taxes 2012 report shows Hong Kong at the top of its three measures, namely Ease of Paying Taxes (#3), Tax Payments (#1) and Time to Comply (#12).
perhaps one of the most successful budgetary sandbagging exercises in the history of the world. In recent years, the problem has been excess revenue, even after eliminating taxes (hotel taxes, wine and beer tax), lowering taxes (corporate tax) and exempting (one-off reductions on income tax) taxes 9. Plans to reduce or exempt taxes have given way from public demand to one-off payouts and energy subsidies for residents as so few pay taxes that tax waivers and reductions would not benefit them. The government has a stated intent of keeping government expenditure below 20% of the GDP, i.e. at 17.3% from 2011 to 201210. It has ranged above that in recent years 11, but there does seem to be a commitment to use it as the benchmark. The government does receive support for its spending through the Hong Kong Jockey Clubs massive charitable work. The Jockey Clubs government enforced monopoly on gambling enables their donations to reach virtually every aspect of Hong Kong life, including universities, schools, basic research projects, orphanages, sports, job training and many more. This is not accounted for in government spending records, and the determination of funding is made by the 12 Stewards of the Hong Kong Jockey Club Foundation, not government officials.
Is the Rule of Law under Threat? But as Hong Kong becomes a captive colony of Beijing and increasingly begins to resemble just another mainland city, governed by corruption and political connections rather than the even-handed rule of law, it seems destined to become a global backwater. Troops of the People's Liberation Army, which has already formed links with the powerful local criminal gangs known as "triads," will stroll the streets. Broadly speaking, Hong Kong has kept itself clean. Like any developed economy, there is occasional hanky-panky that comes to the attention of local law enforcement and the territorys very free press. The Independent Commission Against Corruption, in perhaps an example of too much of a solution for very minor a problem, had to resort to a major investigation of hotel concierges taking a cut of revenue from clients referred to as local tailors 12. They have had meatier targets in recent years, but the problems have thus far been confined to local mishaps - not incidents directly involving Beijing, the PLA or a mainland conspiracy. Some seemingly sweetheart deals for former top-level political figures to obtain cut-rate retirement premises in Hong Kong made the press, resulting in investigations in some cases, and retraction before execution in others. The biggest scandals surrounding the recent, vigorously contested election for Chief Executive (Hong Kongs highest office) centred on whether the
9
http://www.thenational.ae/thenationalconversation/industry-insights/economics/hong-kong-flush-with-surplus-butgovernment-remains-unloved
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http://www.heritage.org/index/country/hongkong#limited-government http://www.economist.com/node/16591088
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http://www.thestandard.com.hk/news_detail.asp? we_cat=4&art_id=67632&sid=19491871&con_type=1&d_str=20080624&fc=2 12http://archive.news.gov.hk/isd/ebulletin/en/category/lawandorder/081009/html/081009en08004.htm
candidates had illegal structures (meaning structures that fail to comply with building codes) in their various properties in Hong Kong. This is hardly the stuff of a civilisation in terminal decline. Transparency Internationals 2011 Corruption Perceptions Index gave Hong Kong a score of 8.4 out of 10 (compared to Chinas 3.6). This placed it at #12 in the world - just ahead of its one-time ruler, the United Kingdom (tied at 16th with Austria and Barbados). The Index measures the perception of bribery of public officials, kickbacks in public procurement, embezzlement of public funds and the effectiveness of public sector anti-corruption efforts. It seems that corruption and political connections have some way to go yet in making Hong Kong into just another mainland city. The PLA does have a presence in Hong Kong through its occupation of former British military premises - although many of those were turned into recreational facilities for Hong Kong community groups. However, the only time one would see anyone from the PLA in Hong Kong would be on their wildly popular open days, with thousands of tickets being scooped up in a couple of hours each year. Indeed, much more visible are the frequent visits from foreign navies, especially American, whose visits provide a welcome retail spending boost in some of the more salacious sectors of the economy.
Hong Kong vs. the World: Reactions to the Global Financial Crisis In 2008, the world plunged into what has been called the biggest financial crisis since the Great Depression of the 1930s. Then, as now, Hong Kong was impacted by a general slowdown in global trade. However, it has not reacted to the global crisis as many jurisdictions did. Time Magazines famous 1965 cover declaring We Are All Keynesians Now13 rang true in 2008 as American, European, and Asian governments took enthusiastically to easy money and government deficits. Even Canada, after running a decade of consecutive surpluses, was dragged into deficit spending 14. Hong Kong, however, was different. Increasing local calls for government spending did produce much head-nodding and promises to attend to the coming disaster with more unspecified government support and stern warnings about the likelihood of depressed government revenues. However, the government continued its practice of projecting small surpluses or deficits and then producing (often ginormous) surpluses. Hong Kong has not had it all easy during this time. Following the Handover, growth from 1997 to 2002 stood at only 1.9%. However, this was not seen as a result of Kraar and McGowans Death of Hong Kong article, but was due to the Asian Financial Crisis that swept through the region. 2003 was a disastrous year as SARS hammered Hong Kong. However, this did not significantly change Hong Kongs practice of conservative budgeting to create surplus after surplus. The city has bounced back quickly from each setback.
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http://www.time.com/time/magazine/article/0,9171,842353,00.html http://www.cbc.ca/news/interactives/canada-deficit/
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On the regulatory front, many countries saw fit to dramatically increase the regulation of their financial institutions. While Hong Kong is constantly fine-tuning its financial regulatory environment, it has experienced no American Dodd-Frank or Sarbanes-Oxley style draconian reform. Calls to ban short-selling were resisted in Hong Kong. That being said, naked short-selling has always been banned in Hong Kong, and the Exchange recently tightened rules surrounding short selling 15. Capital markets, as opposed to some Southeast Asian counterparts, remained open and free. Regulators are well-regarded and have been recruited to positions in other jurisdictions that are viewed as needing reform, such as the UK. A case in point is Martin Wheatley. The former CEO of the Hong Kong Securities and Financial Commission will be heading the new Financial Conduct Authority, which regulates the British banking sector. Grumbles about hot money from China that contribute to sky-high real estate prices have recently resulted in some minor tweaks regarding the small taxes on property sales, but investing in Hong Kong remains wide open to locals and foreigners alike. However, most Hong Kong citizens understand than as an open economy, there are only a limited range of options available because the major global economies, especially the United States, continue to enforce rock bottom interest rates and wave after wave of quantitative easing. The Hong Kong dollars peg to the US dollar ensures that Hong Kong will continue be along for the ride on American monetary policy. One area where Hong Kong has moved in line with global regulations is double taxation agreements 16. On the one hand, this makes Hong Kong a more attractive location for international firms to set up their operations. Profits generated in Hong Kong will be taxed at Hong Kongs low rates and not taxed a second time when repatriated. However, this also means responding to requests from partner jurisdictions to turn over targeted people or the financial records of certain companies on request an obligation Hong Kong has avoided for many years. Growing desperation of Western governments has seen them try to impose themselves on smaller, low tax jurisdictions. Interestingly, and contrary to Kraar and McGowans thesis, Chinas takeover of Hong Kong actually helped Hong Kong in this respect. The OECDs Financial Action Task Force (FATF) rejected calls to blacklist Hong Kong in 2000 and 2009, due in large part to Chinas support17 . What were the offending characteristics of Hong Kong in the FATFs eyes? Hong Kongs low tax system, sophisticated banking facilities and its lack of currency and exchange controls...18 China may again prove useful to Hong Kong in terms of economic freedom in the area of international commerce. China recently backed Hong Kongs entry in the proposed China-ASEAN Free Trade Agreement. Given Hong Kongs openness to general trade, the agreement would be more about Hong Kong-based companies gaining greater access to ASEAN markets. However, as one of Hong Kongs few taxes are on new cars, Southeast Asian nations may ask for tax free entry for their vehicles.
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http://www.hkex.com.hk/eng/newsconsul/hkexnews/2012/120510news.htm http://www.ird.gov.hk/eng/tax/dta_inc.htm
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http://www.thestandard.com.hk/news_detail.asp? we_cat=21&art_id=80518&sid=23372803&con_type=1&d_str=20090406&fc=2
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http://www.lowtax.net/lowtax/html/hongkong/hong_kong_banking_confidentiality.html
While the issue of Hong Kongs involvement will supposedly be decided in November 2012, China appears to be in its corner19. The economic freedom has been a mighty contributor to Hong Kongs legendary resilience. The Fraser Institute's Economic Freedom of the World report and the Heritage Foundations Index of Economic Freedom have ranked Hong Kong at #1 since their respective inceptions. Hong Kongs stock markets, real estate and labour costs have all moved up and down with the citys economic fortunes, allowing for readjustment and recovery. It is in this area where weak spots are arising as regulatory creep comes to Hong Kong.
The Best or the Worst of the West? Hong Kongs legendary economic freedom has been marvelled at by economists and proved seductive to business people, investors and entrepreneurs alike. However, a rising civil society demanding more of its government, usually in the streets, has resulted in a mix of defence of freedoms and some stunning retreats from it. Power in the Streets The development of Hong Kongs street protest culture hit a high point in 2003 when approximately 500,000 people took to the streets to protest against the imposition of a law that would address the post-Handover treason legislation, the so-called Article 23 legislation. There have been many peaks since then, including recent efforts to oppose the introduction of a new Moral, Civic and National Education seen by many as extolling the virtues of a one-party state 20. However, regulatory creep in some cases and major new programmes in others have reduced economic freedom in ways that will make it hard for Hong Kong to recover from future setbacks and hamper its efforts to face future challenges. Mandatory Investment? Since the Handover, the government has moved to force people to invest in government-approved mutual fund investments called the Mandatory Provident Fund (MPF). Far from providing people with an adequate retirement fund, the Fund is resented by most Hong Kong residents who see it as an imposition on their choice of how to use their money 21 and suspect that its fees are designed to generate profits for approved financial firms 22. In 2011, a government proposal to put HK$ 6,000 per person into their MPF funds resulted in massive protests and a government climb-down23. The
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http://english.cntv.cn/20120830/100147.shtml http://www.economist.com/node/21562985 http://mobile.theasset.com/inside.php?tid=20930 http://www.oxfam.org.hk/filemgr/1706/tickingtimebomb_22Mar2011_SCMP.pdf http://hongkongbusiness.hk/financial-services/in-focus/each-hong-kong-permanent-resident-receive-6000

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government continues to refine the programme to allow more choice of providers (currently controlled by employers), but the programme remains an unloved imposition on citizens.
Medical Restrictions The Hong Kong Medical Council (HKMC), with its licensing monopoly over Hong Kong doctors, has become more and more restrictive over time. It has routinely increased the licensing requirements over decades to ensure that the new supply of practitioners is almost 100% Hong Kong-trained. Experienced doctors coming to Hong Kong would need to repeat the onerous conditions of residency imposed on fresh graduates. In addition, it has banned advertising that would allow upstart doctors to compete with doctors with established brands (older established doctors). Both moves mean that senior doctors with prestigious foreign degrees can avoid competing with younger, less costly but similarly credentialed rivals. With an ageing population, restricting the supply of medical practitioners puts the private and public sectors at the whim of doctors who can charge top dollar for their cartelisation of medical services. Prosecution and enforcement of HKMC rulings is paid for and executed by the government. The most egregious example of this practice was brought to light when ex-president of the Philippines Estrada came to Hong Kong for an orthopaedic knee surgery. Dr. Christopher Mow, a leading orthopaedic surgeon and Deputy Chief of Orthopaedic Surgery at Stanford Hospital (of Stanford University) was banned from performing the surgery as he was not accredited in Hong Kong. However, it seems that some doctors are fighting back. The Hong Kong Medical Association (HKMA), a professional association of doctors, has members who have challenged the advertising restrictions in court. Even the Hong Kong government is now seeking to create circumstances where Commonwealth doctors can return to fill urgent vacancies - not a popular move among local doctors 24. Faced with overburdened doctors fleeing the public system, they are seeking to loosen the traditional chokehold on supply held by the HKMC25. However, the HKMA is aligned with the HKMC on this issue. The opening of the medical sector may require quite some time and vicious infighting as the government opposes the entrenched sector players they have created through the granting of monopoly. Labour Regulations One of the biggest moves in Hong Kong since the Handover that impacts labour flexibility and the territorys ability to recover from economic adversity is the imposition of a minimum wage in April 2012.
24
http://www.hkma.org/english/about/about.htm
25
http://www.thestandard.com.hk/news_detail.asp? we_cat=4&art_id=115507&sid=33854374&con_type=1&d_str=20110926&fc=1
Introduced at a time of very low unemployment rate, the full impact of minimum wage will only be seen when the next downturn arises. Indeed, anecdotal evidence of senior citizens employed as cleaners and security guards suggest they are losing their jobs, likely the last they will ever have, as employers of small operations jettison their now more expensive employees. While guards and cleaners in large firms are expected to survive the cull, small operators have been shedding lowproductivity staff. Guards have received a double hit in recent years with the imposition of a new licensing regime beyond the ability of most senior security guards to comply with, forcing them out of the profession. If the next downturn results in many people permanently leaving the workforce, welfare applications will rise, putting a strain on government budgets. Exclusion of young people at the entry level of the workforce could see the creation of permanently unemployed people. A regular feature of the socalled developed economies, Hong Kong has escaped this phenomenon due to downward movements in labour costs during downturns. This new floor could pose serious challenges that will only become apparent during downward business cycle trends. More powerful unions are making good use of their street power after succeeding in getting minimum wage increased. They are going after standard working hours as the next target. Employers, already burdened by new regulations requiring them to track the hours of low income workers (even those whose pay is higher than the minimum wage) and faced with increasing exposure to lawsuits and labour strife, are bracing for another round of job-killing measures and red tape. Competition Law In addition, the Hong Kong government has passed a bill to create a competition law that seems to incorporate the worst of all possible legislations. It carries the government exemptions of Singapore, the legal vagueness and openness to political manipulation of the American system and penalties even more draconian than the European system. Widely opposed by the business community, the law was gleefully welcomed by the legal sector that saw a windfall in the making. One lawyer was indiscreet enough to post the following quote (which has since been removed): The absence of a general competition law in Hong Kong could be denying these [law] firms a chance to build up a new area of practice which in other jurisdictions can be a major profit centre. 26 Businesses are bracing for higher legal fees, a more complex operating environment and a higher level of uncertainty - all the hallmarks of a system that provides disincentive to invest.
Greatly Exaggerated, but with a Grain of Truth Clearly, Kraar and McGowan were off the mark with their predictions regarding Hong Kong. Hong Kong continues to be vibrant and top the Economic Freedom charts worldwide. Freedoms of speech
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http://www.legco.gov.hk/yr09-10/english/bc/bc12/papers/bc121115cb1-372-2-e.pdf
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and assembly are vigorously exercised. Rather than dying in all the ways predicted by Fortune, the only part they got right was that it would still be a marvellous place to make money and has been for 15 years since the Handover. Kraar and McGowan predicted Hong Kongs death on the basis of overbearing Chinese involvement putting the dead hand of bureaucracy on the invisible hand that generates jobs, wealth and success. None of that has transpired. What they did not foresee was home-grown street movements demanding socialist measures that have been the blight of Western economies. Hong Kong still tops the charts and is even making advances in some ways. Financial regulations are well-regarded and under continual improvement to correct defects and open new markets. Hong Kong by and large did not catch the Keynesian flu that now bedevils developed economies. The danger is not a mortal wound, but rather death by a thousand cuts. Introducing labour restrictions, new legal entanglements, and costs to individuals and businesses are being implemented at the rate of about one major issue every two years. Taken separately, each one is annoying to business and discouraging for investment. However, a major downturn - many of which have struck in the past 20 years - will reveal where these measures have weakened Hong Kong. The question is whether the improvements in sectors like financial markets and government budgeting will be enough to compensate for the misallocation of resources and increasing regulatory burden generated domestically. Hong Kong continues to be a beacon to the world as an example of the benefits of economic and personal freedoms. However, if these freedoms are slowly strangled off, it will be a historical example not a living one. Properly expanded and enhanced, Hong Kongs freedoms and resulting success could inspire workers, policymakers and entrepreneurs for generations to come.
About the author Andrew Work is a co-founder of the Lion Rock Institute, Hong Kongs leading free market think tank. His work on economics and public policy has been published in over 15 publications including The Wall Street!Journal Asia, the South China Morning Post, Hong Kong Economic Times, Hong Kong Lawyer and many more. He! has appeared before business organisations, government departments, the Legislative Council of Hong Kong and on!television and radio to promote the work of The Lion Rock Institute. Andrew is a permanent resident of Hong Kong and passionately committed to the future success of this city. He is the!ex-President of McGill Universitys Hong Kong alumni (B.Sc. 1994) and received his MBA from the University of!Victoria (2002). He!is married and has two children, little Hong Kongers Victoria Karen (WEI Nuo) and Charlotte Alisha (WEI Rui). Andrew cut his teeth on free market ideals in the Free Trade election of 1988 in Canada with the pro-free trade! Progressive Conservatives. In addition to organizing youth sector political activity, he worked for The Honourable! Tom Siddon on Parliament Hill in Ottawa. After coming to Asia, Andrew worked in the events management and!community building sector for 7 years, including stints with The Canadian Chamber of Commerce in Hong Kong and The Economist. Andrew was the Executive Director of The Canadian Chamber of Commerce in Hong Kong from 2007-2012. He is currently pursuing entrepreneurial ventures when not acting as the Section Leader of the Beaver Colony of the 1st Hong Kong Canadian Scout Group.
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II. The Concept

The Freedom Barometer Asia project of the Friedrich Naumann Foundation Regional Office for Southeast and East Asia in Bangkok has been developed as a means to measure freedom, in all its complexity, in selected Asian countries. In contrast to most other indices, this project is not limited to simply one aspect of freedom, be it political or economic. Instead, the Freedom Barometer combines the most significant elements of economic, civil and political freedom with a specifically liberal perspective. However, as there is no need to reinvent the wheel, we use the data of existing indices and combine them in a new way. Also, in order not to overburden our new Barometer, we have limited ourselves to 10 main variables applied to three different categories, namely, political freedom, rule of law and economic freedom. The degree of POLITICAL FREEDOM is measured based on the level of Free and Fair Elections, the Absence of Unconstitutional Veto Players and the Freedom of the Press. Free and fair elections are the basis of any democracy. Unconstitutional veto players can beleaguer democratic processes. (This pertains in particular to unconsolidated democracies in Asia.) Therefore, we have included these as a variable in the Freedom Barometer in order to determine whether elected officials effectively have the power to govern. Freedom of the press is the third component of political freedom. Article 19 of the 1948 Universal Declaration of Human Rights underlines: Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers. Because freedom of the press is seen as both a prerequisite for free and fair elections and as being highly political in nature, this variable forms part of our political freedom dimension. In terms of the RULE OF LAW, the Freedom Barometer comprises the following three variables: Independence of the Judiciary, the level of Corruption and Human Rights Protection. Independence of the judiciary constitutes an elementary part of the freedom of the individual and, as the Universal Declaration of Human Rights demands: All are equal before the law and are entitled without any discrimination to equal protection of the law. All are entitled to equal protection against any discrimination in violation of this Declaration and against any incitement to such discrimination. As independence of the courts and checks and balances are mutually dependent upon each other, both of these aspects are combined in one variable. Without an independent constitutional court or other independent legal institutions, true separation of powers is impossible. Corruption contradicts equal treatment and represents a violation of the rule of law, and high levels of corruption correlate negatively with high levels of judicial integrity; thus, both factors are interlinked in complexity. Human rights protection, as a fundamental element of freedom, constitutes the third variable of the rule of law dimension. Without the rule of law, there cannot be effective human rights protection. Without respect for human rights, the rule of law is unthinkable. The relationship between ECONOMIC FREEDOM and a functioning democracy is a widely accepted fact and is the reason for its inclusion in the Freedom Barometer Asia. However, of the five aggregate variables evaluated in the Economic Freedom of the World Report, we have included only four. This is due mainly to the nature of the access to sound money indicator which, in our view, seems to have
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little bearing on the political economy as a major factor in the determination of a democracys quality and an economys freedom. The four variables included in the Freedom Barometer are: Security of Property Rights, the Size of Government (with regards to expenditures, taxes and enterprises), Regulation of Credit, Labour and Business and the Freedom to Trade Internationally. These are major rallying points for liberals around the world.
III. Components and Variables

POLITICAL FREEDOM The indicator Free and Fair Elections is characterised by several essential considerations: Are there appropriate laws in place? Are the active and passive rights to vote guaranteed? As free and fair elections also include the right to form parties and to campaign, we also need to ask these questions: Does the campaign period allow a plurality of opinion? Is the actual voting process free from state interference? Is the counting of the votes uninhibited by state or other actors manipulation? In addition, is a legal change of government possible? We primarily rely on the Freedom of the World report by Freedom house for this indicator. The component Absence of Unconstitutional Veto Players is mainly derived from the following questions: Do unelected actors which do not possess a constitutional mandate have legal or constitutional privileges to delimit the authority of the designated political leaders? Are those privileges exercised? Do unelected actors have informal veto power? How often do coups occur? Has civilian control been established over the military? The Freedom in the World report published by Freedom House is the main source used in determining this variable. In evaluating Press Freedom, the following questions are taken into account: Are there relevant laws in place and are they respected? Is freedom of speech and plurality of opinion respected (e.g. through ownership)? In addition, are journalists persecuted because of their work? The main source for this indicator is the Freedom of the Press report by Freedom House.
RULE OF LAW The Independence of the Judiciary constitutes the major determinant of the rule of law. It is essential that everyone is treated equally before the law; judges must not decide in favour of one particular political actor for either political or financial reasons (i.e. due to bribes). Checks and balances are also a measure of the rule of law. Disputes between governmental institutions must be resolved through legal means. The dominance of one single, overweening institution violates the principle of checks and balances and gives rise to undemocratic or corrupt practices. The main source for this indicator is the Fraser Institutes Economic Freedom of the World Report.
The extent of Corruption represents another vital factor under the category of the rule of law. Corruption violates the law and contradicts equal treatment of citizens. The main source for this variable is the Corruption Perceptions Index by Transparency International.
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Human Rights constitute the third element of the rule of law in the Freedom Barometer. To measure this variable, the following questions apply: Do relevant laws exist? Is anyone persecuted because of his/her race, colour, gender, language, religion, national or social origin, political or other opinion, property, birth or other statuses? Are basic human rights observed by the state apparatus? Does forced labour exist? Is the death penalty practised? The main source for this indicator is Maplecrofts Human Rights Risk Atlas.
ECONOMIC FREEDOM Economic freedom is an important supporting pillar of democracy, as pointed out above. Its variables are taken directly from the Economic Freedom of the World Report without being altered in any way, except that one indicator has been left out. In other words, we use the following four variables in our Freedom Barometer: Security of Property Rights, Size of Government, Regulation of Credit, Labour and Business and Freedom to Trade Internationally. Security of Property Rights is one of the key principles of economic freedom. This macro-indicator consists of several variables, such as judicial independence, impartial courts, protection of property rights, legal enforcement of contracts and regulatory restrictions of sale of real property. Admittedly, there is a certain overlap with the Independence of the Judiciary indicator. However, we think the overlap is minor, resulting from the composite nature of the security of property rights indicator, whose main focus is on property rights. The indicator Size of Government consists of expenditures, taxes and enterprises. This includes the level of general government consumption, the degree of transfers and subsidies of the state, the involvement of the government in enterprises and other investments and the top marginal tax rate. Regulation of Credit, Labour and Business constitutes the third indicator of economic freedom. Credit market regulations influence the degree of ownership of banks, the level of foreign bank competition and the extent of private sector credit. Labour market regulations comprise the existence of a minimum wage, hiring and firing regulations, centralised collective bargaining, mandated cost of hiring, mandated expenditure of work dismissal and conscription. Furthermore, business regulations consist of price controls, administrative requirements, bureaucracy costs, expenses incurred when starting a business, the extent of corruption, licensing restrictions and cost of tax compliance. The indicator Freedom to Trade Internationally includes areas of taxes in international trade, regulatory trade barriers, the size of the expected trade sector, black-market exchange rates and international capital market controls.
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IV. Country Chapters

The Freedom Barometer Asia 2012 covers countries of Southeast and East Asia. In our 2012 index we included the following nations: Brunei, Cambodia, China, Hong Kong, Indonesia, Japan, Laos, Malaysia, Mongolia, Myanmar, North Korea, Philippines, Singapore, South Korea, Taiwan, Thailand, and Vietnam.
The table below depicts the ranking of the countries on the Freedom Barometers 0-100 scale:
RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
COUNTRY Japan Hong Kong Taiwan Singapore South Korea Mongolia Malaysia Indonesia Philippines Thailand Cambodia* Vietnam China Myanmar Brunei Laos North Korea
2010 76,10 75,44 71,27 70,73 69,58 62,27 54,48 53,42 50,05 49,82 14,14 38,94 36,41 17,01 17,78 7,74 1,60
2011 76,52 75,51 71,56 70,55 69,47 61,35 54,16 53,70 51,30 48,39 13,69 40,30 36,42 18,97 17,33 7,32 1,19
2012 76,88 74,52 73,28 70,47 69,08 62,21 56,08 53,84 52,81 52,34 43,35* 39,55 36,95 22,68 8,12 2,07
Only incomplete data sets available for countries below
Explanatory Note: For some countries, only incomplete data sets were available to us. We decided to include them in our ranking as well. The fact itself that in some cases reliable information is nearly impossible to obtain may bear witness to the level of freedom enjoyed in the respective countries, and we wanted to provide a frame of reference. Countries with incomplete data sets are marked * in the report. *In the case of Cambodia, a complete data set became available to us this year. This explains the rather huge leap of this country in our ranking.
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Japan
Population: 127.37 million Population growth: -0.077% Labour force: 65.93 million by occupation: ! agriculture! ! industry ! ! services ! GDP: USD 4.497 trillion growth rate: -0.7% per capita: USD 35,200 by sector: ! agriculture ! ! industry ! ! services ! Unemployment rate: 4.6% Pop. below pov. line: 16% HDI: 0.901 HDI rank: 12 (of 187) 1.2% 27.3% 71.6%
3.9% 26.2% 69.8%
Scources: CIA World Factbook 2012; UNDP Human Development Report 2011;
POLITICAL FREEDOM
Free and Fair Elections Absence of Unconstitutional Veto Players Press Freedom 0 2,5 5,0 8,33 7,80 7,5 10,0 9,64
RULE OF LAW
Independence of the Judiciary Corruption Protection of Human Rights 0 2,5 5,0 6,75 7,5 10,0 8,05 8,00
ECONOMIC FREEDOM
Security of Property Rights Size of Government Regulation of Credit, Labour, and Business Freedom to Trade Internationally 0 2,5 5,0 5,80 7,83 7,16 7,5 10,0 7,52
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A. POLITICAL FREEDOM
Japan is a liberal democracy and as such holds regularly free and fair elections. The Prime Minister is the head of government and the Emperor serves as the ceremonial head of state. The legislative body, the House of Representatives, is elected every four years, while the second chamber, the House of Councillors, is elected every six years. Political participation is generally free and unrestricted, but the Liberal Democratic Party (LDP) had remained in power for almost 55 years until it was defeated in the 2009 elections by the Democratic Party of Japan. Japan has a very strong civic culture with numerous civic, human rights, welfare and environmental organisations that can assemble freely and voice their opinions without restrictions. The same goes for the founding of parties and interest groups. Not only do all societal groups have the chance to express their demands, but they can also integrate them into the political process.
Free and Fair Elections
The press in Japan is generally free and unrestricted. Most print media and broadcasting stations are privately owned. Access to the internet is uninhibited. The only obstacle to freedom of the press in Japan is the kisha kurabu, or press clubs. To ensure news coverage is homogeneous, these clubs foster relations between politicians, bureaucrats and media representatives. In exchange for direct access to politicians and latest information, journalists tend to practice self-censorship so as not to lose their sources. This, in turn, leads to failures to hold politicians accountable, pressure them for transparency and question their decisions and policies.
Press Freedom
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In the political system of Japan, there are no unconstitutional veto players of significance. All potential veto powers such as the military or influential business groups are under civilian control. Powerful interest groups are completely integrated into the political process and adhere to the democratic institutions and mechanisms in influencing politics and policies. Therefore, there is no potential threat to the stability and integrity of the government by external forces.
Absence of Unconstitutional Veto Players
However, it should be noted that during the 2011 nuclear meltdown at the Fukushima power plant in the wake of the earthquake and tsunami incident, excessive restrictions were put on news coverage.
B. RULE OF LAW
Independence of the Judiciary
Japanese courts are considered to be independent of government, administrative or legislative interference in their day-to-day business. The legal system is rather efficient and public trials generally fair.
Corruption
The iron triangle of the LDP, bureaucrats and big business is frequently said to be a breeding ground for corruption. Significant reform efforts have been launched to combat corruption stemming from the triangle, mostly by loosening ties between the government and big business. However, the problem of corruption remains. In March 2011, for example, Japans Foreign Minister Seiji Maehara resigned after admitting he had accepted a political donation from a foreign national, which is a violation of campaign finance laws. Nevertheless, corruption rates in Japan are considered relatively low. In Transparency Internationals 2011 Corruption Perceptions Index, Japan was ranked 14th out of 183 countries.
Human Rights
In theory, human rights are well respected in Japan. The constitution guarantees freedoms of assembly and association, and a number of active human rights, social welfare and environmental groups exist in the country. Citizens of all faiths can also worship freely. There are no restrictions on academic freedom. However, some aspects of human rights present causes for concern. For instance, Japan retains the death penalty and continues to impose it. In 2012, seven convicts were hanged (as of October). Although the Japanese Constitution prohibits unequal treatment based on race, creed, sex or other social statuses, descendants of feudal-era outcasts and the indigenous Ainu minority continue to have difficulty gaining equal access to housing and employment opportunities. Meanwhile, women sometimes face discrimination in employment and sexual
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harassment on the job. But Japanese women hardly report incidents of abuses for fear of damaging family reputation and due to other social mores.
C. ECONOMIC FREEDOM
Property, both real and intellectual, is well protected. However, obtaining patents and copyrights can be a tedious procedure. Contracts are generally highly respected.
Security of Property Rights
Government spending (which includes consumption and transfer payments) has risen, now equalling about 42% of the GDP. It is likely to rise further due to an increase in social welfare payments for Japans ageing population. Overall tax revenue, representing 28.1% of the GDP, consists of a rather high income tax rate (40%), an average corporate tax rate (30%), value added tax and taxes on interest and real estate.
Size of Government
Labour regulations are comparably flexible. The non-salary cost of an employee is moderate and firing procedures are uncomplicated, but regulations regarding work hours are rigid. Meanwhile, lifetime employment guarantees hamper the development of a more flexible labour market.
Japans weighted average tariff rate stands at 1.6%. Potential obstacles to international trade include import/export bans and restrictions, opaque regulations, state trade of some goods and an inefficient customs administration.
Freedom to Trade Internationally
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Japan was ranked at the 20th place out of 183 countries surveyed in the World Banks 2012 Doing Business report, reflecting prudent regulations regarding starting, running and closing a business in the country. It takes 23 days and 8 procedures to start a business, while obtaining a business license requires 14 procedures and 193 days. Bankruptcy proceedings are uncomplicated.
Regulation of Credit, Labour, and Business
Hong Kong
Population: 7.15 million Population growth: 0.421% Labour force: 3.703 million by occupation: ! agriculture ! ! industry ! ! services ! GDP: USD 355.6 billion growth rate: 5% per capita: USD 49,800 by sector: ! agriculture ! ! industry ! ! services ! Unemployment rate: 3.4% Pop. below pov. line: n.a. HDI: 0.898 HDI rank: 13 (of 187) n.a. 6.8% 93.2%
n.a. 6.9% 77.0%
POLITICAL FREEDOM
RULE OF LAW
ECONOMIC FREEDOM
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The Basic Law, Hong Kongs constitution, provides for the election of the Chief Executive, the head of government. However, the Chief Executive is not elected directly by the population; he is elected by the Election Committee, an electoral college of 1,200 Hong Kong residents from different constituencies. According to an amendment to the original version of the Basic Law, 35 of the 70 seats of the Legislative Council (Legco) are to be elected directly. The other members are elected by functional constituencies, which represent key economic and social sectors. The latest Legco election took place in September 2012 and was generally regarded as free and fair in terms of the procedures. The democratic camp strengthened their position by winning 27 of the 70 seats. Meanwhile, in the Chief Executive election held in March 2012, the pro-Beijing Leung Chun-ying received the majority of votes cast. Overall, legislative and executive elections in Hong Kong cannot be regarded as meaningful elections as they are built on and around a semi-democratic structure.
Moreover, there are powerful businesses and other economic groups and organisations in Hong Kong that seek to represent their interests through their presence in both the Election Committee and the Legislative Council.
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The situation of veto players in Hong Kong is complicated. On the one hand, the Basic Law provides for an independent judiciary; hence, in theory, the judiciary could act as a veto player with its rulings affirming law and justice instead of political judgements. On the other hand, Chinas National Peoples Congress (NPC) maintains the right to interpret and review the Basic Law as it sees fit; thus, the power of Hong Kong's Final Court of Appeals is effectively limited. In this regard, mainland China qualifies as a major veto player in Hong Kong politics. Indeed, it has repeatedly asserted that Hong Kong politics is ultimately decided in Beijing and has used its influence to thwart political developments deemed unfavourable to it.
Press Freedom
While freedom of the press is generally respected and protected efficiently by the Hong Kong laws and authorities, there have been some worrying developments. The influence of mainland China is becoming increasingly strong and has led some media outlets to practice self-censorship. Some Hong Kong media owners allegedly have ties to the Chinese Communist Party and thus do not allow anything to be printed or broadcasted that questions the Chinese government. Also, journalists have at times been obstructed during their work and held back from covering certain topics and events.
B. RULE OF LAW
An independent judiciary is provided for in the Basic Law. By and large, the Hong Kong judiciary is independent from improper influence, and the trial process is generally fair. However, there has been increasing discomfort with Chinas influence on court decisions. As previously mentioned, mainland Chinas NPC retains the right to make final interpretations of the Basic Law, which in effect limits the power of Hong Kongs Court of Final Appeals. A case in point happened in June 2011, when the Court adhered to Beijings more stringent guarantee of sovereign immunity in a lawsuit involving an American investment fund and the government of Congo. After a split decision, the Court requested the NPCs interpretation of the Basic Law, marking the first such referral by the Hong Kong judiciary. The NPC Standing Committee confirmed the decision in August of the same year. This event has been viewed in different lights. Beijing, for example, saw this action as having positive meaning for the implementation of one country, two systems. However, others regarded this as a test of the independence of the Hong Kong judiciary, as seeking Beijings interpretation undermined the status of the local courts.
Corruption
Hong Kong is generally regarded as having very low rates of corruption. It was the 12th least corrupt place out of 183 countries according to Transparency Internationals 2011 Corruption Perceptions Index. The main agency responsible for combating corruption in Hong Kong is the Independent Commission Against Corruption (ICAC), which receives
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complaints and has an extensive mandate to investigate. For example, it can examine bank accounts and business documents, and ask suspects to disclose their assets. In 2011, it prosecuted 283 persons in 142 cases, with 241 persons convicted among the prosecutions completed during the year. Despite all those efforts, business interests do maintain considerable clout on the Legco. In July 2012, the ICAC charged two billionaire businessmen, a former high-ranking civil servant and two other men with bribery-related offences. The arrests represent one of the biggest corruption scandals in Hong Kong in decades. Whether the event may affect its reputation as one of the least corrupt economies in the world remains to be seen.
In general, Hong Kong residents enjoy a high level of civil and political liberties. Human rights are guaranteed under the Basic Law as well as under the Bill of Rights Ordinance. Legislation that contradicts the provisions laid down in the Basic Law can be declared unconstitutional by the courts. However, decisions by Hong Kong immigration authorities to deny entry to several visitors who were critical of the Chinas human rights record in 2011 have raised concerns that the territorys autonomy is being compromised. Fears over police powers have also grown after the police force adopted a more confrontational approach in dealing with students and the media during the official visit of a Chinese state leader in August 2011.
Human Rights
C. ECONOMIC FREEDOM
Private property and the freedom of exchange are generally well protected under the Basic Law. All land is controlled by the government which, through public auctions, issues renewable leases until 2047. However, the enforcement of intellectual property protection is somewhat problematic. Pirated media and other counterfeit products are readily available and sold more or less openly.
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Size of Government
Government spending (which includes consumption and transfer payments) is low, accounting for 17.3% of the GDP. Government policies aim at maintaining a balanced budget. Hong Kongs tax rates are low. The income tax rate is set at between 2 and 17% (adjusted by deductions and allowances, or at a flat 15% of gross income, whichever is lower). The highest corporate tax rate is 16.5%. Overall, tax revenue represents about 13% of the GDP.
Hong Kongs regulations and laws provide for a transparent financial sector, which not only withstood the challenges of past financial crises, but also cemented Hong Kongs status as a leading international financial hub. Banks are under the supervision of the Hong Kong Monetary Authority, with regulations applying equally to domestic and foreign banks. Credit is given at market terms. Starting, running and closing a business is uncomplicated, and has been made even easier with the recent introduction of online registration services for companies and businesses. It now takes no more than three days and three procedures to start a business. Obtaining a license can be done in 67 days and 6 procedures.
International trade is subject to only few obstacles, such as pharmaceutical, food and energy labelling regulations. Hong Kongs weighted average tariff rate is 0%.
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Taiwan
Population: 23.23 million Population growth: 0.171% Labour force: 11.2 million by occupation: ! agriculture! ! industry ! ! services ! GDP: USD 887.3 billion growth rate: 4% per capita: USD 38,200 by sector: ! agriculture ! ! industry ! ! services ! Unemployment rate: 4.4% Pop. below pov. line: 1.16% HDI: n.a. HDI rank: n.a. 1.1% 32.0% 66.9%
5.2% 35.9% 58.8%
POLITICAL FREEDOM
RULE OF LAW
ECONOMIC FREEDOM
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Elections in Taiwan live up to democratic standards. Results are usually undisputed and the whole electoral process is closely monitored by the media. The 2012 parliamentary and presidential elections were widely perceived as free and fair. Ma Ying-jeou was re-elected as president for the second term, even though in the run-up to the elections, his liberal opponent Tsai Ing-Wen of the Democratic Progressive Party had been seen as a strong competitor. However, mainland China stated rather clearly what the election result should look like in order to maintain and foster relations between the two countries. In the end, this might have influenced the majority of voters who opted for stability instead of voting for a candidate that might have taken a tougher stance towards Taiwans bigger neighbour. Political participation and pluralism are vibrant in Taiwan. Opposition parties can operate freely and without restrictions. The civil society is meaningfully included in the political process.
Press and media operate relatively free and unrestricted in Taiwan: different opinions and views are voiced, criticism towards government policies is tolerated, the Internet is free and foreign journalists can travel and report without restrictions. It is therefore safe to say that government influence on the press is minimal. Lately, however, there have
Press Freedom
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There are no veto players without a constitutional mandate in the political system of Taiwan. Despite occasional strong disagreement on policy matters, there is a broad consensus among political actors concerning Taiwans political system as a market-based democracy, and so there are no noteworthy anti-democratic powers that could act as an unconstitutional veto player. Nevertheless, mainland China plays a crucial role in Taiwans political everyday life and politicians frequently refrain from backing policies that might annoy China. In other words, Chinese influence over Taiwanese inner politics, trade and foreign relations is considerable and China thus certainly qualifies as an important veto player in the political system of Taiwan.
been some efforts by the government to restrict critical press voices. Ever closer commercial ties between Taiwan and China have also driven media owners and journalists to practice selfcensorship, albeit on a limited scale.
B. RULE OF LAW
The Taiwanese court system is independent of political interference, and trials are generally fair. However, in recent years there have been concerns over the selection of judges for high-profile cases as well as corruption scandals that call judicial independence into question. In June 2011, in an effort to reform the legal system, the legislature passed a law (scheduled to take effect in 2012) that would allow for the removal of corrupt and incompetent judges.
Corruption
Corruption remains a problem in Taiwan, albeit significantly less serious than in the past. The country saw a string of highprofile corruption cases in the past two years, including those involving judges, an ex-diplomat and even its former presidents. As recent as August 2012, prosecutors uncovered another bribery case implicating former National Fire Agency chief Huang Chi-min, suspected of accepting NT$100m (about US$ 3.4m) in bribes for procurement projects during his tenure from 2003 to 2009. Indeed, the government has shown an attempt to deal with the problem of corruption among midand low-level public officials by setting up the Agency Against Corruption in July 2011, operating under the Ministry of Justice. However, the Agency does not have the authority to prosecute ministerial-level officials. Taiwan was listed at the 32rd position out of 183 countries surveyed in Transparency Internationals 2011 Corruption Perceptions Index.
Human Rights
Human Rights are generally protected and respected in Taiwan. Freedoms of assembly and expression are observed, although protesters can be prosecuted for failing to obtain a permit or obey police orders to disperse under the Assembly and Parade Law. Taiwanese academics are generally allowed to write and lecture without interference, and residents are free to practice their faiths. Although civil society groups are required to register with the government, registration is often granted
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easily and NGOs normally operate without harassment. The police largely refrain from arbitrary detention, and lawyers are allowed to monitor interrogations to prevent abuses.! The Taiwanese Constitution provides for the equality of all citizens. Six seats in the legislature are reserved for indigenous people, giving them representation that exceeds their share of the population. However, some aspects need improvement. One worrying trend is, although the number of executions had dropped since 2002 and the country gave no death sentences during 2006-2009, the issue of death penalty resumed in 2010, with five people executed in 2011. Taiwan has yet to achieve gender equality, as women still face job discrimination and receive lower pay than men on average. Moreover, the island continues to be a destination for human trafficking, and a large number of foreign workers in the country are without legal protection from abuses by employers.
C. ECONOMIC FREEDOM
Property rights are adequately protected under Taiwanese law. The courts honour and enforce contracts, but the judicial process can be slow at times. Several laws have been passed to enforce the protection of intellectual property rights; yet pirated CDs and DVDs, counterfeit pharmaceuticals and fake luxury goods still are readily available.
Government spending has dropped from 18.5% to 16% of the GDP. Recent privatisation and deregulation measures led to the state playing a smaller role in Taiwans economy. Taiwan has a comparatively high income tax rate of 40% and a corporate tax rate of 17%. Additionally, a surtax of 10% is charged on undistributed profits. Other taxes comprise value added tax and property tax. Overall tax revenue represents about 8.4% of the GDP.
Size of Government
Taiwans financial sector is modern and competitive. Foreign investors operate freely. The government, through its own institutions which account for roughly half of the countrys financial assets, dominates banking. Foreign banks have a limited role.
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Taiwanese regulations well protect the freedom to start, run and close a business. The introduction of a one-stop shop for business registration has greatly facilitated the starting of a business and application for a license. The former now can be done in just ten days and three procedures. A license can be obtained in 125 days and 25 procedures. Closing a business is an uncomplicated process. The World Bank ranked Taiwan at the 25th place in its 2012 Doing Business report. Labour regulations are fairly inflexible. The non-salary cost of a worker is low, although firing procedures can be costly and complicated. Regulations on work hours are not flexible.
Taiwans weighted average tariff rate is set at 2.5%. With trade with China being the only exception, the state does not interfere significantly with foreign trade. In the case of China, regulations to control Taiwans trade and investment dependency on the mainland are in place. Amongst the obstacles to foreign trade are import and export bans and restrictions, state trade in some goods and weak enforcement of intellectual property rights.
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Singapore
Population: 5.35 million Population growth: 1.993% Labour force: 3.237 million by occupation: ! agriculture ! ! industry ! ! services ! GDP: USD 318.9 billion growth rate: 4.9% per capita: USD 60,500 by sector: ! agriculture ! ! industry ! ! services ! Unemployment rate: 2% Pop. below pov. line: n.a. HDI: 0.866 HDI rank: 26 (of 187) 0.0% 26.6% 73.4%
0.1% 19.6% 80.3%
POLITICAL FREEDOM
RULE OF LAW
ECONOMIC FREEDOM
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Elections are held every five years in Singapore and voting is mandatory. Citizens who fail to cast a ballot are excluded from the electoral register and banned from participating in future elections, unless they present an acceptable reason for not voting and pay a fine. The last general election in 2011 resulted in the ruling Peoples Action Party winning 81 out of 87 seats. There is no independent authority to monitor the electoral process. Political pluralism is practically non-existent despite it being officially encouraged by the government. The opposition is often intimidated and the space for political participation is heavily restricted. Reformers who could challenge the governments power are denounced as dissidents and can be silenced by the government at any time. Thus, oppositional political parties have virtually no space to operate. Still, the opposition parties proved to be much more active; in the run-up to the last election, they filed candidates for 82 of the 87 directly elected seats. However, this can hardly be taken to mean that Singapore is an electoral democracy.
All national media in Singapore are controlled by the Singapore Press Holdings, leading them to practice self-censorship. On several occasions, not only are foreign newspapers subject to lawsuits and forced to pay high fines, but they also have their circulations restricted. Moreover, political films and documentaries are entirely banned. Although the Internet is widely accessible, the government keeps track of online content and blocks some websites. However, the use of social media such as Facebook and Twitter are on the rise, especially amongst the younger generation. Political activists have also recently begun to make use of these media.
Press Freedom
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There are no unconstitutional veto players in the political system of Singapore. The government entirely controls the countrys politics. Oppositional groupings that could be a potential threat to the countrys ruling elite usually are broken up immediately.
B. RULE OF LAW
The Singaporean governments overwhelming success rates in court cases call into question the countrys judicial independence, not least because opposition politicians and parties who are prosecuted often end up going bankrupt. Whether the government pressures judges or simply appoints those who share its conservative philosophy remains unclear.
Corruption
Singapore has traditionally been lauded for its strict adherence to a no-tolerance policy on corruption. The main agency responsible for combating corruption is the Corrupt Practices Investigation Bureau (CPIB), which has been equipped with extensive powers to investigate and prosecute corruption cases. As the CPIB operates rather effectively and civil servants receive high salaries, corruption remains low in Singapore. However, corruption allegations do rise to the public scene every once in a while. These include the case in June 2012 involving two senior bureaucrats accused of obtaining sexual favours from female executives of companies that supplied information technology and goods to their organisations. Nevertheless, Singapore continues to be perceived as one of the least corrupt countries in the world. In the 2011 Corruption Perceptions Index surveyed by Transparency International, Singapore was ranked 5th out of 183 territories.
Human Rights
The human rights situation in Singapore remains a cause for concern. Although the rights to free speech, peaceful assembly and association are constitutionally guaranteed, the government continues to impose restrictions in the name of security, order and public interest. Religious practice is allowed as long as it does not violate any other regulations, and most groups worship freely. However, religious actions perceived as threats to racial or religious harmony are not tolerated. Academics do engage in political debate, but their viewpoints rarely deviate from those of the government on matters related to the country. The Societies Act requires that organisations of more than ten people register with the government, and only registered parties and associations may engage in an organised political activity. Political speeches are tightly regulated. Although citizens right to privacy is generally respected, the Internal Security Act and the Criminal Law Act permit warrantless searches and arrests if national security, order or
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public interest are perceived to be under threat. Meanwhile, ethnic Malays continue to lag behind ethnic Chinese or Indians in terms of education and income levels, and they reportedly face discrimination in employment. What is more, Singapore continues to sentence people, including foreign nationals, to death for a number of crimes (particularly drug-related ones) and is amongst the countries with the highest execution rates compared to the number of citizens. In 2011, at least four people were hanged according to Amnesty International.
C. ECONOMIC FREEDOM
Both private and intellectual property rights are well protected under Singaporean law. Contracts are secure, and if urban needs make the acquisition of real estate necessary, compensation will be provided. Singapore has one of the regions most sophisticated intellectual property rights regimes. The Intellectual Property Office is the country's leading agency serving as government advisor on intellectual property rights and promoting intellectual property awareness.
Government spending is still relatively low, standing at 17% of the GDP. The state is involved to a considerable extent in the economy through government-linked companies. The top income tax rate equals 20%, whereas the top corporate tax rate is 17%. Other taxes include value-added tax and property tax. Overall tax revenue accounts for about 14% of the GDP.
Size of Government
Singapores financial sector is highly competitive. Banking is dominated by three groups, the largest being the governmentowned Development Bank of Singapore. An additional 114 foreign banks operate more or less freely. Starting, running and closing a business are fairly uncomplicated under Singapore's regulations. Starting a business takes a mere three days and three procedures. Getting a business license can be done in 11 procedures and 26 days. Closing a business is uncomplicated.
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Singaporean labour regulations are flexible. The non-salary cost of an employee is low; dismissing one is easy. Work hour regulations are flexible.
Singapore is one of the freest countries in the world with respect to foreign trade. A founding member of the Association of Southeast Asian Nations and the Asia-Pacific Economic Cooperation, Singapore promotes the reduction of trade barriers between member states. Singapores foreign trade, by and large, is liberalised; its weighted average tariff rate is 0%. However, some import and export restrictions, service market barriers and licensing requirements continue to be obstacles to foreign trade.
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South Korea
Population: 48.86 million Population growth: 0.204% Labour force: 25.1 million by occupation: ! agriculture ! ! industry ! ! services ! GDP: USD 1.574 trillion growth rate: 3.6% per capita: USD 32,100 by sector: ! agriculture ! ! industry ! ! services ! Unemployment rate: 3.4% Pop. below pov. line: 15% HDI: 0.897 HDI rank: 15 (of 187) 2.6% 39.2% 58.2%
6.4% 24.2% 69.4%
POLITICAL FREEDOM
RULE OF LAW
ECONOMIC FREEDOM
37
Elections in South Korea are generally free and fair. The electoral process has constantly improved since 2002 and, although contesting in an election is rather costly, the influence of money-politics has declined in recent years. The president, who can only serve one term, is elected every five years. The members of the National Assembly are elected for four-year terms. Political pluralism and participation are strong in South Korea; several political parties contest in elections and there is also a great variety of active NGOs.
There are no veto players who lack a constitutional mandate in the South Korean political system. Civilian control over the army has successfully been established. Other influential groups do not carry much weight in politics. However, government transparency remains comparatively low which, in part, may be contributed to widespread corruption.
B. RULE OF LAW
The South Korean judiciary is fairly independent. The process of justice appointment is formally transparent and adequately covered by public media. The Constitutional Court itself has underlined its independence through a number of cases where it ruled against the government. However, the independence of the courts is sometimes questioned, as state prosecutors are occasionally ordered to launch investigations (particularly into tax matters) aimed at intimidating political rivals or other dissidents.
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Media are mostly free and unrestricted in South Korea. There are several privately owned newspapers that operate freely. However, the National Security Law (NSL) subject all actions perceived as favouring North Korea and questioning the legitimacy of the South Korean state to punishment. This leads to a certain degree of self-censorship so as to avoid prosecution. Nevertheless, the press in South Korea is significantly freer than in other countries in the region.
Press Freedom
Corruption
Despite the overall health of the political system, bribery, influence peddling and extortion have not been eradicated from South Korean politics, business and everyday life. A recent corruption scandal involved the current presidents brother and several of his political aides, all accused of accepting graft for political favours. South Korea was ranked 43 out of 183 countries surveyed in Transparency Internationals 2011 Corruption Perceptions Index.
Human Rights
In general, human rights are protected in South Korea. However, there are laws limiting them, such as the abovementioned NSL which enables the authorities to prosecute South Koreans reading North Korean publications, listening to North Korean broadcasts or visiting North Korea. South Korea retains the death penalty, but no executions have been carried out since 1997. The South Korean Constitution provides for freedom of religion; however, Buddhist groups have accused the current administration of religious bias.!Academic freedom is unrestricted, with the exception of limits on statements of support for the North Korean regime or communism in accordance with the NSL. South Korea respects freedom of assembly; yet the law requires that police be informed in advance of all demonstrations and that assemblies not undermine public order. Human rights groups, social welfare organisations and other NGOs are active and operate without governmental interference for the most part.!Nevertheless, the countrys few ethnic minorities are still vulnerable to legal and societal discrimination.!Although gender equality is guaranteed by law, women face discrimination in practice, with men enjoying more social privileges and better employment opportunities.
C. ECONOMIC FREEDOM
Private property is well protected under South Korean law and expropriation is unlikely. The courts can be slow in deciding on contractual matters, though. The protection of intellectual property rights, on the other hand, is deficient. Piracy of copyrighted materials is not uncommon.
Size of Government
Government spending has increased to 33.1% of the GDP, whereas public debt stands at 33% of the domestic output.
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South Korea has a top income tax rate of 35% and a top corporate tax rate of 22%. Other taxes include value added tax and property tax. The introduction of a simplified tax payment mechanism has benefited companies, with several taxes merged and residents now able to pay labour taxes and contributions jointly and online. Overall tax revenue represents about 25.6% of the GDP.
South Koreas financial sector is in the process of undergoing reforms aimed at improving transparency and efficiency, and ending state-directed lending. As a result, the financial sector is becoming more competitive. The restructuring of the banking system during the past decade has resulted in weak institutions being merged or shut down. Foreign banks own majority stakes in some large commercial banks, but there are restrictions imposed on foreign ownership. The government has to some extent retreated from private banks, but still keeps some ownership positions. South Korean laws regulate the starting, running and closure of a business fairly well. Starting a business has been made easier with the introduction of StartBiz Online, a system that offers online incorporation, and can be done in only seven days and five procedures. A business license can be obtained in 12 procedures and 30 days. Closing a business is a straightforward process. However, labour regulations are inflexible. The non-salary cost of a worker is moderate, and firing procedures are complicated. Work hour regulations are inflexible.
On its path to further trade liberalisation, South Korea has negotiated free trade agreements with the United States, the European Union, ASEAN, Chile, Peru and Singapore during the last couple of years. Meanwhile, some obstacles to foreign trade, such as prohibitive tariffs, import and export restrictions, complicated regulations and adjustment tariffs and taxes remain.
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Mongolia
Population: 3.18 million Population growth: 1.469% Labour force: 1.147 million by occupation: ! agriculture ! ! industry ! ! services ! GDP: USD 13.43 billion growth rate: 17.3% per capita: USD 4,800 by sector: ! agriculture ! ! industry ! ! services ! Unemployment rate: 9.9% Pop. below pov. line: 39.2% HDI: 0.653 HDI rank: 110 (of 187) 15.8% 32.6% 51.6%
33.5% 11.5% 55.0%
POLITICAL FREEDOM
RULE OF LAW
ECONOMIC FREEDOM
41
In Mongolia, elections are generally free and fair. The Prime Minister is elected by the party or coalition that has won the most seats in parliament. The President is the head of state and the armed forces. The last presidential election was held in 2009 and was considered to be in compliance with democratic standards amongst independent international observers. However, some criticism remains. For example, voting procedures and constituencies in parliamentary election have frequently been subject to change during the last few years. The subdivision of electoral districts has also alternated between multi-member and single-member districts. Concerns are that these changes might distort confidence in democratic governance. Political participation and pluralism are constitutionally guaranteed and are also protected in practice. Civil society groups, including trade unions, can usually operate without governmental restrictions.
Freedom of the press is generally respected by the government. There is a great variety of privately owned newspapers and broadcasting stations. The public also has access to foreign media and the government does not interfere with internet usage. However, in the countryside, not many people have access to alternative sources of information. Instead, they have to rely on the state-owned national Mongolian broadcaster. Meanwhile, some journalists practice self-censorship for fear of being prosecuted under the controversial State Secrets Law. However, media restrictions imposed during the state of emergency in 2008 have been lifted. A new law on press freedom, aimed at improving the legal environment of the media sector, was discussed by
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Press Freedom
There are no unconstitutional veto players in the political system of Mongolia. Civil control over the military has been established. Business interests or other pressure groups remain subordinate when it comes to policy-making. That the government does not always operate with complete transparency has been a cause of concern. Nevertheless, the integrity of the government is not threatened by extra-legal powers.
government officials, media organisations and civil society representatives during 2011.
B. RULE OF LAW
In theory, the Mongolian judiciary is independent. However, this is largely eroded by rampant corruption which affects the decision-making process. Moreover, judges are often nominated and selected in opaque nomination processes based on personal or party relationships rather than professional qualifications.
Corruption
Corruption remains a serious problem in Mongolia. Although the Independent Authority Against Corruption has made progress in tackling corruption since 2007, the challenge persist. In April 2012, former President Nambaryn Enkhbayar was arrested and charged for corruption. Four months later, the Mongolian court found him guilty of illegally privatising a hotel, misusing television equipment donated to a monastery to broadcast from his own television station, and other corruption charges, and sentenced him to four years in prison. Moreover, as the resource-rich country is in the middle of a mining boom with skyrocketing economic growth, those in power are presented with opportunities to accumulate their own wealth. According to Sumati Luvsandendev, the country's leading pollster, nine Mongolians out of ten believe that politicians are making personal gains from "special arrangements" with foreign enterprises over mining rights. Mongolia was ranked 120 out of 183 countries in the 2011 Corruption Perceptions Index published by Transparency International.
Human Rights
Mongolias human rights record is making some progress. In January 2012, the government took a vital step towards full abolishment of capital punishment as it approved a bill aimed to scrap the death penalty. Freedoms of assembly and association are respected. A number of non-profit groups which receive most of their funding from foreign donors operate without government restrictions. Freedom of religion and academic freedom are also largely observed. However, other aspects of human rights remain poor. The police force is known to make arbitrary arrests, detain citizens for long periods and beat prisoners. Deaths in jails due to inadequate nutrition, heat and medical care continue to occur. Only 60% of
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the female population have access to university education. Although domestic violence is prohibited by law, social and cultural norms discourage women from reporting such crimes.
C. ECONOMIC FREEDOM
Law enforcement with regard to property rights protection is weak. Judges tend either not to respect contracts at all or simply to ignore their contents. The same applies to the protection of intellectual property, where enforcement is lax, and pirated products are readily available.
Government spending (including consumption and transfer payments) is relatively high, equalling about 35% of the GDP. Mongolia has a low top income tax rate of 10% and a moderate corporate tax rate of 25%. Other taxes comprise value-added tax, excise tax on alcohol and vehicles, and dividend tax. Overall tax revenue represents about 34% of the GDP.
Size of Government
Starting, running and closing a business are protected by the country's regulatory environment. Starting a business takes 13 days and 7 procedures. Obtaining a business license can be done in 208 days and 19 procedures. However, declaring bankruptcy can be a lengthy and burdensome process. Labour regulations are comparatively flexible. The non-salary cost of a worker is average, whereas firing an employee is a straightforward and costless procedure. Regulations on work hours, however, are not flexible.
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The last year saw a restructuring of the banking sector, meaning private access to credit is now easier. By and large, the government stays out of the financial sector, and foreign investors enjoy a mostly unconstrained access to the domestic capital market. Ten of the 16 private banks currently operating in the country are foreign-owned. The number of state-owned banks has been reduced. Additionally, there exist a number of smaller, mostly unregulated lending institutions.
Mongolias weighted average tariff rate is about 5.1%. International trade is relatively free and liberalisation is ongoing. Still, import and export restrictions and taxes, weak enforcement of intellectual property rights, and inefficient and corrupt customs implementation pose an obstacle to international trade.
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Malaysia
Population: 29.18 million Population growth: 1.542% Labour force: 11.91 million by occupation: ! agriculture! ! industry ! ! services ! GDP: USD 453 billion growth rate: 5.1% per capita: USD 15,800 by sector: ! agriculture! ! industry ! ! services ! Unemployment rate: 3.1% Pop. below pov. line: 3.8% HDI: 0.761 HDI rank: 61 (of 187) 12% 40% 48%
13% 36% 51%
POLITICAL FREEDOM
RULE OF LAW
ECONOMIC FREEDOM
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In Malaysia, universal suffrage has been established and legislative elections are held every five years. The last general election took place in March 2008, during which opposition parties have succeeded in breaking the two-thirds majority of the ruling coalition for the first time since 1969. The National Front (Barisan Nasional; BN), which had won 198 of 219 seats of the lower house in the 2004 election, only managed to secure 140 seats in 2008. However, the election cannot be regarded as entirely free and fair, as the BN has repeatedly been accused of tampering with voter registration lists. Also, there are repressive laws that restrict the media and the opposition parties and limit the chances of contesting parties to reach and mobilise more voters. That the opposition parties managed to win a considerable number of votes despite all the limitations they face suggests that the BNs dominance is diminishing. In terms of political pluralism and participation, the government tolerates civic groups as long as they refrain from criticising or questioning government policies. However, a large number of civic activities are constrained by laws. For example, the rights to freely associate and assemble are severely limited, with any assembly of more than three people requiring a public permit. The police can also arrest participants even without a warrant. The role of NGOs is therefore rather restricted through the lens of liberal democratic standards.
The government of Malaysia holds the effective power to govern without being threatened by any extra-legal veto powers. The military as well as powerful business groups comply with the rules set up by the government. However, some Malay nationalist organisations have increasingly gained influence and put pressure on the government to uphold policies which favour the Malay ethnic majority at the expense of other ethnic groups.
Freedom of the press is restricted in Malaysia. Despite constitutional guarantees, a number of laws impose heavy restrictions on free speech. Television and radio stations as well as virtually all print media are closely tied to the ruling party. The 1984 Printing Press and Publications Act requires
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Press Freedom
publishers to get an official license which needs to be renewed annually. However, licenses can be revoked without an explanation or a judicial process if the respective media source publishes content deemed likely to be prejudicial to public order, morality, security or national interest. As a consequence, self-censorship is practiced by all types of media. Online-media are much freer as they are hardly subject to government supervision. Thus, the Internet has become the major forum for political discussions and functions as a counterweight to the government-controlled media. However, the government has pressed charges for defamation against online journalists and political bloggers.
B. RULE OF LAW
The independence of the Malaysian courts is largely compromised by executive influence. There are, however, signs of slight improvement. In January 2012, the opposition leader Anwar Ibrahim was acquitted of sodomy charges after a twoyear trial. Some welcome the verdict as a sign of greater judicial independence and the positive impact of the current governments reform initiatives. However, others view it as merely part of the administrations public relations in order to garner voter support for the general elections scheduled in 2013.
Corruption
Corruption, both in the public and private sectors, remains a major challenge in Malaysia. Despite the implementation of several anti-corruption initiatives amongst them the 2010 Whistleblower Protection Act, which grants civil servants and informants more competencies and protection the problem persists. Malaysia slipped to number 60 out of 183 territories listed in Transparency Internationals 2011 Corruption Perceptions Index, down four places compared to the 2010 ranking.
Human Rights
Despite the governments promises to address human rights issues, the human rights situation remains problematic. The death penalty has not been abolished. A number of extrajudicial killings carried out by military and paramilitary forces have been reported. Freedoms of assembly, association and expression are restricted. Ethnic Malays and other
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indigenous people, known collectively as the Bumiputera, continue to receive preferential treatment over other ethnic groups in areas such as higher education, civil service jobs and business affairs. Exploitation and abuse of foreign workers by employers are not uncommon. Gender equality is not yet achieved: women, especially within the Muslim community, do not enjoy the same rights as their male counterparts and are often subject to discrimination, harassment and violence.
C. ECONOMIC FREEDOM
Acquisition, use and sale of private property are largely protected by respective Malaysian laws. However, there are certain exceptions: Borneos indigenous population is subject to forced relocations to pave the way for big infrastructure projects, often leading to civil unrest. Corporate lawsuits often drag on for more than a year and in the end may be decided according to political motivations. Intellectual property rights are another problematic matter. Despite plans to ratify the World Intellectual Property Organisation Copyright Treaty, enforcement remains weak.
Government spending (which includes consumption and transfer payments) amounts to about 30% of the GDP. Taxes in Malaysia stand at average levels. The highest individual income tax rate is 26%, whereas the maximum corporate tax rate is 25%. Overall tax revenue accounts for about 15.7% of the GDP.
Size of Government
Malaysias banking sector continues to grow, with 27 commercial banks operating under the Central Banks oversight. Efficient supervision and mergers have made banks more competitive and helped them to remain stable despite the effects of the global financial crisis. The Islamic banking sector continues to expand, with its institutions now account for 21% of the countrys total banking assets, reinforcing Malaysias status as a global hub for Islamic finance. Steps to ease regulations regarding starting, running and closing a business have been implemented. No minimal capital
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is required in order to launch a business. Merging company, tax, social security and employment fund registrations, and providing same-day registration services have made starting a business considerably easier. It now takes merely four procedures and six days to start a business. Obtaining a license can be done in 22 procedures and 260 days. Special courts that handle foreclosure proceedings have been established. The World Bank ranked Malaysia at the 18th spot out of 183 countries in its 2012 Doing Business report (up from 23rd in 2011). Labour regulations are flexible. Although dismissing an employee may be complicated and costly, his non-salary cost is low. A minimum wage is unknown and working hours are regulated flexibly.
Foreign trade is, in principle, liberalised, but protectionism regarding key enterprises proves to be a barrier for foreign investors. The governments New Economic Policy makes Malaysia a somewhat difficult place for foreign direct investment. Talks with the United States regarding a free trade agreement were unsuccessful, (with the United States preferring a possible involvement of Malaysia in the framework of the Trans-Pacific Partnership rather than a bilateral FTA). However, Malaysia profits greatly from the ASEAN-Australia-New Zealand FTA, which was implemented in 2008.
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Indonesia
Population: 248.6 million Population growth: 1.04% Labour force: 117.4 million by occupation: ! agriculture ! ! industry ! ! services ! GDP: USD 1.139 trillion growth rate: 6.5% per capita: USD 4,700 by sector: ! agriculture ! ! industry ! ! services ! Unemployment rate: 6.6% Pop. below pov. line: 12.5% HDI: 0.617 HDI rank: 124 (of 187) 14.7% 47.2% 38.1%
38.3% 12.8% 48.9%
POLITICAL FREEDOM
RULE OF LAW
ECONOMIC FREEDOM
53
Democratic legislative national elections have been held every five years since 1999, with the latest one taking place in 2009. The President and the Vice President, the House of Representatives, the Regional Representative Council and the local Houses of Representatives are all directly elected by the people. Elections have been largely considered free, fair and in compliance with democratic standards by all participants and observers. Still, some irregularities were reported, as the Indonesian Electoral Commission failed to register more than ten million potential voters during the 2009 election. As a result, the Supreme Court ordered a partial recounting of the votes. Indonesia enjoys a significant level of political pluralism and participation. There is a great variety of non-governmental organisations and local interest groups involved in communal politics, and the rights of assembly and association are generally respected.
A broad spectrum of television and radio broadcast stations operate freely and independently in Indonesia for the most part. However, bloggers and online activists have been reported to face harassment. In one case, a woman who had blogged about her bad experience in a national hospital was given a sixmonth suspended jail term for libel. An increasing number of journalists have also been subject to attacks and violence. Moreover, foreign journalists are not allowed to travel to West Papua and report about the ethnic separatist insurgency without a special permit.
Press Freedom
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The elected government effectively holds the power to govern without any interference. However, there is another actor powerful enough to step in if it sees fits: the military. The Indonesian armed forces maintain the right to interfere with the government and its decisions if it feels that national unity and stability are under threat. Furthermore, some small radical Islamic groups strive to abolish democratic standards and replace them with a theocratic state. These groups have lately gained relevance and strength and are trying to coerce the government to pass legislation in their favour.
B. RULE OF LAW
Although the Indonesian judiciary, particularly the Constitutional Court, has shown its independence in some cases, the court system remains largely marred by corruption and other weaknesses. Low salaries for judicial officials and impunity for illegal activities exacerbate the problems of bribery, forced confessions and interference in court proceedings by military personnel and government officials at all levels. In June 2011, the parliament passed a bill that curtailed the powers of the Constitutional Court, but the Court annulled the controversial articles in the law and managed to restore its powers. Nevertheless, the deterioration of the quality of the judiciary remains a cause for concern.
Corruption
Corruption in Indonesia remains rampant. However, the Corruption Eradication Commission (Komisi Pemberantasan Korupsi; KPK), established in 2002, has been successful in a series of high-profile cases. To illustrate, in March 2011, former chief detective Susno Duadji was sentenced to three and a half years in prison for graft and embezzlement. Later that year, Democratic Party treasurer Muhammad Nazaruddin was charged with corruption related to preparations for the 2012 Southeast Asian Games in South Sumatra. In another case, Wafid Muharram, suspended Sports and Youth Affairs Ministry Secretary, received a three-year sentence for bribery. This has given rise to public expectations that acts of corruption, even if committed by senior officials, will be prosecuted. Nevertheless, due to attempts by the ruling elite to weaken anti-corruption bodies, particularly an anti-corruption law passed in 2009, the authority and independence of both the KPK and the Anti-corruption Court have been eroded, and the problem persists. This explains why Indonesia continues to be perceived as having high rates of corruption, with it being placed at number 100 out of the 183 territories surveyed in Transparency Internationals 2011 Corruption Perceptions Index.
Human Rights
The human rights situation in Indonesia has improved over the last decade, along with its democratic consolidation, strong civil society and free media. Freedoms of expression and assembly are generally upheld, and academic freedom respected. However, some severe human rights
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concerns remain. For one, Indonesia still practices capital punishment. Security forces officers continue to enjoy relative impunity for abuses against civilians. Although many religions are recognised, religious minorities still suffer from discrimination and intimidation. Intolerance was also reflected in incidents of violence against Christians and Ahmadiyah, a socalled heretical Muslim group, which erupted during 2011. In sum, the human rights situation in Indonesia is not as precarious as in some other countries in the region, but the country has yet to take the steps necessary to ensure greater compliance with international human rights standards.
C. ECONOMIC FREEDOM
A deficient legal framework, ineffective administration and patronage networks affect the security of property rights. In many cases, court rulings are arbitrary and judges tend to rule against foreigners in business disputes. The otherwise welcome decentralisation of mining rights, which now can be decided at regional and local levels, has often produced contradictory and confusing contracts which may lead to social conflict. The often unclear ownership of land rights also poses a problem, most notably for the rural population. The protection and enforcement of intellectual property is weak, which results in a growing market for counterfeit goods.
Government spending (including consumption and transfer payments) has decreased to 16.7% (down from 19.2%) of the GDP. Indonesias fiscal deficit has declined to 1% (from 2.6%), whereas its public debt is rather low, having fallen to under 30% of the GDP. A fiscal reform brought taxes to average levels, resulting in a top income tax rate of 30% and a corporate tax rate of 25%. Other taxes include value added tax and property tax. Overall tax revenue equals 11.4% of the GDP.
Size of Government
Indonesias financial system has been gradually restructured since the late 1990s. More than 120 commercial banks (four of which are state-owned) dominate the efficient banking system.
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Additionally, more than 1,800 (mostly smaller) banks cater to a predominantly rural clientele. The Indonesian Central Bank functions as a supervising and monitoring body. A weak regulatory framework impedes the freedom to start, run and close a business. Measures such as streamlining and simplifying the application process for businesses have had little impact so far. Starting a business takes 8 procedures and 45 days, which is more than the world average of 7 procedures and 30 days. Getting a business license requires a total of 13 procedures and 158 days. Closing a business is both complicated and costly. The World Bank ranked Indonesia at the 129th place (2011: 126th) out of 183 countries in its 2012 Doing Business report. While restrictive labour regulations keep the non-salary cost of an employee at an average level, they also make his dismissal costly.
Indonesias weighted average tariff rate stands at 3.1%. To meet requirements of the WTO, ASEAN Free Trade Area and Asia-Pacific Economic Cooperation, Indonesia will have to continually reduce tariffs until 2020. At present, international trade suffers from a complicated system of licensing requirements, lacklustre implementation of trade policies, deficient enforceability of contracts and property rights, and a corrupt customs office.
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Philippines
Population: 103.76 million Population growth: 1.873% Labour force: 40 million by occupation: ! agriculture ! ! industry ! ! services ! GDP: USD 395.4 billion growth rate: 3.7% per capita: USD 4,100 by sector: ! agriculture ! ! industry ! !services ! Unemployment rate: 7% Pop. below pov. line: 26.5% HDI: 0.644 HDI rank: 112 (of 187) 12.8% 31.5% 55.7%
33% 15% 52%
POLITICAL FREEDOM
RULE OF LAW
ECONOMIC FREEDOM
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National elections for the presidency and both houses of congress took place in May 2010. The Liberal Party candidate Benigno "Noynoy" Aquino, son of the late former president Corazon Aquino, was elected president with 42% of total votes. The elections were widely regarded as free and fair. Preelectoral violence was low compared to previous elections. Corruption and electoral fraud allegations against President Aquino could not be verified. Political participation is comparatively open, with the government having restricted the rights of assembly only during a brief period between 2005 and 2006. These restrictions were lifted afterward as a result of public pressure. In general, the Philippines have a tradition of freedom and civil liberties.
Unconstitutional veto players are not completely absent in the political system of the Philippines. In 2006, there was an alleged coup attempt. Before President Aquino was elected in 2010, former president Gloria Macagapal-Arroyo successfully installed some of her closest allies in key government positions such as the judiciary, military and police forces and the executive branch. This had been rather challenging to the new administration as these actors had the power to block decisions of the present government, until the successful impeachment of the Arroyoappointed Chief Justice Renato Corona in May 2012. Nevertheless, the overall situation can be judged as relatively stable as for now, hence positioning the Philippines at midrange within this section.
The constitution of the Philippines protects the freedom of the press, but the Philippine state has repeatedly failed to provide safety for those who exercise this freedom. The Committee to Protect Journalists, a non-profit organisation, ranks the Philippines third (behind Iraq and Somalia) in its 2012 Impunity Index. Seventy journalists have been killed in the past two decades, 32 of them in the infamous 2009 Maguindanao massacre. After his election, President Aquino
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Press Freedom
pledged to put an end to the killings, and met with press freedom groups in order to discuss measures to strengthen capacities of law enforcement bodies and witness protection programmes. It is uncertain to what extend his policies will be able to deal with legal constraints and a deeply-rooted culture of impunity. However, the appointment of former Human Rights Commissioner Leila de Lima as Justice Secretary signals an end to the practices of the past. The signing of the Law against Enforced Disappearances in 2012 is a credible attempt by the administration to make good on its promise to end the culture of impunity.
B. RULE OF LAW
The 2011 Global Competitiveness Report by the World Economic Forum lists the Philippine judiciary as the least independent among ASEAN countries. Corruption in court is also rampant due to low pay. The Philippine judiciary is therefore highly vulnerable to external pressure and influence. The newly appointed Chief Justice Maria Lourdes Sereno has embarked on an ambitious programme to address failings in the system.
Corruption
The Philippines have been plagued by corruption and cronyism in both business and government. Although official anticorruption agencies have been established, namely the Office of the Ombudsman and the Presidential Anti-Graft Commission (PAGC), they have mixed records. According to some, the former was compromised under the Arroyo administration due to a decline in the number of convictions, while the PAGC lacks enforcement capabilities. The country has seen a number of high-profile cases in recent years. In October 2012, former President Gloria Macapagal-Arroyo was arrested on corruption charges and accused of fraudulently transferring money from a Philippine charity - her third indictment since she stepped down three years earlier. The Philippines was ranked 129 out of 183 countries surveyed in Transparency Internationals 2011 Corruption Perceptions Index. However, it should be noted that the Philippines has improved slightly from ranking 134 in 2010.
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There were also other examples of positive developments. In a survey published in September 2012 by Social Weather Stations (SWS), a survey institute, corruption in the Philippines is down dramatically. When company executives compare the present administration to the past one, 71% see less corruption now, and only 2% see more. When the general public compared the two administrations in an SWS national survey in May 2012, 64% saw less, and only 5% saw more corruption now. The most radical change is in the Office of the President, which improved in net sincerity in fighting corruption to an Excellent +81 in 2012, from a Bad -37 in 2009. There remains much to be done though, with corruption cases progressing "too slowly" and honest business practices remaining "unsatisfactory".
President Aquino staked his personal reputation on reaching an agreement with the main muslim group, the MILF, followed by negotiations which resulted in a framework peace agreement signed in October 2012. Internal divisions in the NPA have made it impossible for them to reach an agreement with the Aquino government, although the pressure on them to do so is mounting.
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The!Philippines!is home to a thriving civil society sector and a vibrant media. Religious and academic freedom are generally respected. Freedom of assembly is obser ved and demonstrations are common, although rallies require permits. Its gender equality has also improved as women have made many social and economic gains in recent years. However, human rights are severely restricted in a number of aspects. To start with, abuses against civilians committed by armed opposition forces, including the communist New Peoples Army (NPA) and various Islamist Moro groups, are still reported. Moreover, socioeconomic deprivation and political disenfranchisement, and resentment toward Christian settlement felt by the Muslim minorities have played a central role in the Muslim separatist movement, causing severe hardship for many of the 15 million inhabitants of Mindanao and nearby islands, and claiming more than 120,000 deaths since it erupted in 1972.
Human Rights
C. ECONOMIC FREEDOM
According to the latest Economic Freedom in the World Report 2012, economic freedom in the Philippines increased dramatically in 2010, the first (half) year of the Aquino administration. Out of 144 countries, the Philippines jumped from 77th to 61st place.
In theory, property rights and laws to protect them are firmly entrenched in the Philippine legal system and this, in turn, draws investment into the economy. But slow courts and, in some cases, disregard for contracts raise concerns. A constitutional amendment regarding full ownership of land and businesses aims to lift restrictions for foreigners. Intellectual property rights enforcement remains troublesome.
Size of Government
Government expenditures, (which include consumption and transfer payments), have risen to 18.5% of the GDP. Taxes are rather high. The top income tax rate is 32%, whereas the top corporate tax rate is set at 30%. Additionally, Philippine citizens have to pay VAT, real estate tax and an inheritance tax. Overall tax revenue is about 13% of the GDP.
With 38 commercial banks operating in the Philippines, banking dominates the financial sector. Five big commercial banks - two of them state-owned - control a sizeable share of the total assets. The government runs a small Islamic bank, which caters mostly to Muslim citizens in the South. Although credit is generally allocated at market terms, banks have to lend part of their money to preferred sectors. To start, run, and close a business is constrained by a multitude of regulations. Starting a business takes about 35 days and 15 procedures. A business license can be obtained in as much as 30 procedures and 85 days. A new insolvency law regulates the liquidation and reorganisation of bankrupt companies. Non-salary costs of an employee are low, but inflexible labour regulations make firing an employee a complicated procedure.
The weighted average tariff rate is 4.8%. Recognising the importance of trade liberalisation, consecutive Philippine
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governments have taken measures to facilitate this. Several regional and bilateral FTAs led to an ever increasing exchange between the Philippines and other countries in the region. Among the obstacles to international trade are high tariffs, import and export restrictions, access barriers to the Philippine service market, opaque customs valuations, corruption and, (as mentioned above), a weak intellectual property rights regime.
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Thailand
Population: 67.09 million Population growth: 0.543% Labour force: 39.62 million by occupation: ! agriculture ! ! industry ! ! services ! GDP: USD 609.8 billion growth rate: 0.1% per capita: USD 9,500 by sector: ! agriculture ! !industry ! ! services ! Unemployment rate: 0.7% Pop. below pov. line: 8.1% HDI: 0.682 HDI rank: 103 (of 187) 13.3% 34.0% 52.7%
40.7% 13.2% 46.1%
POLITICAL FREEDOM
RULE OF LAW
ECONOMIC FREEDOM
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Thailands most recent general election took place in July 2011 and swept the populist Puea Thai Party to a majority of 265 seats in the 500-member parliament. Yingluck Shinawatra, sister of the controversial ex-prime minister Thaksin Shinawatra, became Thailands first female prime minister. Although the elections were free and fair for the most part, some instances of vote buying, smearing of rival candidates, and threatening of law enforcement agencies were reported. In theory, the Thai Constitution provides for universal suffrage. In practice, however, there are exceptions. Buddhist monks, for example, cannot cast a ballot. Members of certain ethnic minorities, such as the hill-tribes in northern Thailand, are also deprived of their right to vote as they are not acknowledged as Thai citizens. In addition, the 2007 Constitution introduced the undemocratic provision of an only half-elected Senate, with the other half of which to be appointed by a special committee. The right to stand for election is also constrained. With some exceptions, only citizens with a bachelors degree or higher may contest an election, which effectively excludes about 95% of the population from running for political office. Political pluralism and participation in Thailand are largely unrestricted. A host of NGOs address the interests of various groups including farmers, women, students and workers. However, reports suggest that NGOs working on sensitive political subjects are not free from harassment.
The army, though not vested with any constitutional or electoral mandate, is still of great political significance and certainly qualifies as an unconstitutional veto player. The clout of the army was made obvious on several occasions during the last few years. In late 2008, the military leadership refused to disperse protesters of the Peoples Alliance for Democracy, a royalist political group, who had hi-jacked Bangkoks two airports and the Government House in order to oust the then prime minister Samak Sundaravej. By contrast, in 2010, during the anti-government protests of the United Front for Democracy against Dictatorship, Thailands rowdy Thaksin supporters, the army intervened on request of the prime
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minister at the time, Abhisit Vejjajiva. This shows that not every Thai government can rely on the armed forces to follow its orders. The army may interfere if it feels necessary, regardless of its constitutional mandate (or lack thereof).
Press Freedom
A great diversity of media, including radio, television, newspapers and internet forums, in Thailand makes up one of the most developed media structures in all of Asia. Yet, freedom of the Thai press is restricted. Reporters Without Borders, in its most recent report, ranked Thailand at number 137 of 179 surveyed countries - a considerable improvement compared to last years ranking. However, the strict lse-majest laws forbidding any criticism or sign of disrespect towards the royal family remain in place. These laws are more frequently misused to target scholars, activists and journalists who report on sensitive issues. In some cases, they are invoked simply to rid political competition.
B. RULE OF LAW
The 2007 Constitution restored Thailands judicial independence and independent Constitutional Court. However, the Thai courts often play a decisive role in determining the outcome of political disputes, for example, in the ouster of the People Power Party government in 2008, generating complaints of judicial activism and political bias. Nevertheless, in non-political cases, the judiciary is rather impartial and wellbalanced.
Corruption
Corruption is prevalent both in the private and public sectors, particularly when business and government meet. The most common forms of corrupt behaviour include bribery, nepotism, facilitation payments and collusion. The countrys political climate in recent years has been characterised by tension and instability, much of which is based on cases and accusations of politicians corruption which have called into question governmental legitimacy. Indeed, numerous lawmakers as well as politicians from major parties have been linked to corruption charges during their time in power. Thailand was ranked at number 80 out of 183 countries
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surveyed in Transparency Internationals 2011 Corruption Perceptions Index.
While Thailand has restored the freedoms of expression and assembly in its 2007 Constitution, and is home to a large number of civil society groups and NGOs serving various interests, there are indicators showing that certain basic rights are far from being respected. For instance, there has been a surge in the use of lse-majest laws to silence critics in recent years, with 400 of such cases proceeding to trial in 2010 and 2011. A combination of martial law and emergency rule remains in effect in the four southernmost provinces. Thailands hill tribes are not fully integrated into society and face restrictions on their freedom of movement. Many have not gained citizen status, which means they are ineligible to vote, own land, attend state schools or receive protection under labour laws. Thailand has not ratified United Nations conventions on refugees, and the authorities forcibly repatriate Burmese and Laotian refugees on a regular basis. While according to the laws women enjoy the same legal rights as men, they remain subject to economic discrimination in practice and vulnerable to domestic abuse, rape and sex trafficking. Thailand retains the death penalty, although the last execution was in August 2009.!
Human Rights
Private property is generally adequately protected; however, the legal process can be lengthy, and judgements are sometimes influenced by illegal means. Registering property has become more costly as the registration fee has increased. The protection of intellectual property is deficient; product piracy is vibrant despite the efforts of the Central Intellectual Property and International Trade Court. Another concern is the possibility of government disclosure of trade secrets to protect any public interest that has no commercial objective. It is questionable to what extent related data are protected against unfair use.
Government spending, which includes consumption and transfer payments, has risen to 20.4% of the GDP. A further
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Size of Government
C. ECONOMIC FREEDOM
rise is to be expected, mainly due to the implementation of various government subsidy schemes. Thailand has a top income tax rate of 37%, which is rather high. Its corporate tax rate of 23% is at a comparatively average level. Other taxes include value added tax and property tax. Overall tax revenue accounts for about 15% of the GDP.
Sixteen commercial banks were operating in Thailand as of 2010. Capital markets are well developed; the stock exchange is vibrant and open to foreign investors. Credit is usually given on market terms. Starting, running and closing a business can be done freely. Starting a business has been made easier with the introduction of a one-stop shop and now takes 29 days and 5 procedures. Getting a business license can be done in 8 procedures and 157 days. Declaring bankruptcy is an uncomplicated process. Labour regulations are flexible. The non-salary cost of a worker is low, and firing one is easy. Regulations on working hours are business-friendly. A controversial rise of the daily minimum wage to THB 300 will take effect in 2013.
As one of the founding members of the ASEAN Free Trade Area, Thailand has negotiated free trade agreements with Australia, China, India, Japan, and New Zealand. Yet, since the 2006 coup, the dismantling of certain trade barriers has come to a halt. In 2011, the United States and the WTO pointed out that high tariffs pose an obstacle to market access in a number of sectors. Thailands obstruction of efforts to protect intellectual property rights on an international basis has repeatedly placed the country on the Priority Watch List of the Office of the U.S. Trade Representative. Import bans and restrictions and opaque customs valuations continue to complicate its international trade.
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Cambodia
Population: 14.95 million Population growth: 1.687% Labour force: 8.8 million by occupation: ! agriculture! ! industry ! ! services ! GDP: USD 33.89 billion growth rate: 6.1% per capita: USD 2,200 by sector: ! agriculture ! ! industry ! ! services ! Unemployment rate: 3.5% Pop. below pov. line: 31% HDI: 0.523 HDI rank: 139 (of 187) 30% 30% 40%
57.6% 15.9% 26.5%
POLITICAL FREEDOM
RULE OF LAW
ECONOMIC FREEDOM
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Cambodia cannot be considered an electoral democracy although elections are held fairly regularly. Its electoral campaigning and process are usually subject to coercion, violence and intimidation. During the 2008 legislative elections, some of the irregularities were allegedly perpetrated by the ruling Cambodian Peoples Party (CPP), which dominates the countrys political scene. Evidence suggests that the CPP successfully bought and/or intimidated competitors. Sam Rainsy, Cambodias most prominent opposition party leader, returned to exile in 2010, just in time to escape his conviction for statements he made earlier about the Cambodian government ceding territory to Vietnam. In two court trials, he was convicted in absentia to a total of 12 years in prison on charges of misinforming the public and manipulating documents. If these judgements are not revoked, he will not be able to stand in the next national elections scheduled to be held in July 2013. Given the above, political pluralism is only very limited in Cambodia. By means of repression and threat, the CPP aims to establish a quasi one-party system. Moreover, economic growth during the last decade has helped the CPP to garner increased public support for Prime Minister Hun Sen.
The Cambodian political system does not allow any room for potential veto-players. On the positive side, civilian control over military and security forces has been established. The Cambodian constitution, widely considered to be a very liberal one, establishes a system of checks and balances. But in practice the CPP is in firm control of the country. This has to a certain extent subverted the division of powers. In consequence, Cambodia scores poorly in this section even though there are basically no veto players in a traditional sense.
The Cambodian government allows limited freedom of speech. For Cambodians, the major source of information are national broadcasting stations, with only about 10% of the population having access to print media. The number of journalists tried in libel and defamation charges has been continuously on the rise in the past few years. In September 2012, Mam Sonando,
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Press Freedom
one of Cambodias most prominent human rights defenders and radio broadcasters, was sentenced to 20 years in jail for inciting rebellion against the government. (He had participated in a protest against forced evictions.) Moreover, journalists often face threats and physical assaults. As a result, they often resort to self-censorship. However, satellite-dishes are allowed, enabling some to receive uncensored information from abroad. The Internet is generally free from governmental control, but as of now only a fraction of the population has access to it.
B. RULE OF LAW
Although the Constitution of Cambodia nominally provides for judicial independence and emphasises that the legislative and executive branches shall not have judicial power, due to an absence of practical safeguards, the judiciary remains weak and the courts continue to operate as an arm of the CPP. The country suffers a severe shortage of legal professionals, and its judges by and large lack adequate training, making them more vulnerable to political interference.
Corruption
Abuse of power by government officials for personal gain is prevalent in Cambodia. While the country has experienced economic growth in recent years due to increased investment in the textile manufacturing, construction, agriculture and tourism, those in power are presented with opportunities for wealth accumulation from these enterprises. Efforts by international donors to introduce tough anti-corruption measures have been shunned by the government. The severity of this problem is well reflected in Transparency Internationals 2011 Corruption Perceptions Index, where Cambodia was ranked at 164th place out of 183 surveyed countries.
Human Rights
That Cambodia abolished the death penalty for all crimes two decades ago deserves merit. However, Cambodias human rights record in all other respects remains questionable. The CPP continues to restrict free speech, intimidate journalists and dissenters by means of lawsuits and criminal prosecution. Peaceful protests by workers, farmers, and land owners are usually dispersed, often enough by violent means.
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In 2011, the Cambodian government pressed forward a law that would allow it to shut down NGOs, community-based civic groups, informal associations and grassroots networks on arbitrary grounds. Many versions of the draft have been presented to the public to date. If enacted, the law will have adverse impacts on the growth and activities of both the civil society and the media, as the law may be used to force a few critical voices in the country into silence. Meanwhile, Cambodian women continue to face economic and social discrimination. They lag behind men in education and are vulnerable to domestic violence. Poor women and girls are often trafficked inside and outside of the country for prostitution, making it one of Asias major trafficking hubs.
C. ECONOMIC FREEDOM
Property rights are not effectively protected. Land owners can be expropriated by government agencies if it is in public interest (which is often rather broadly defined). Land grabbing and forced evictions happen at an alarming rate and often leave whole communities homeless. Perpetrators are rarely prosecuted. A consultation project with the World Bank was meant to find a solution to this problem, but the Cambodian government decided to withdraw in 2010. The protection of intellectual property rights is equally lacklustre. Counterfeit goods such as car parts, electronic equipment, pharmaceuticals and apparel are readily available. Relevant laws are rarely enforced.
Government spending (which includes consumption and transfer payments) equals 18.3% of the GDP. Despite increased spending during the past year, Cambodia manages to maintain a balanced budget. Cambodias income and corporate tax rates are set at 20%. Other taxes include value added tax, excise tax and accommodation tax. Overall tax revenue accounts for about 8% of the GDP.
Size of Government
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As of 2011 (the latest data available), 32 commercial banks operated in Cambodia. Additional financial services are offered by 8 specialised banks and 29 micro-finance institutions. A new regulation which allows credit bureaus to gather and swap credit reports has strengthened Cambodias credit information system. Starting, running and closing a business are subject to a number of regulations. In its 2012 Doing Business report, the World Bank ranked Cambodia at the 138th position out of 183 countries. Starting a business takes 9 procedures and 85 days. Getting a license is a time-consuming process of 21 procedures, which on average take a whopping 652 days. Inflexible and ineffectively enforced labour regulations thwart job creation and productivity growth. The non-salary cost of an employee is low, but regulations regarding work hours are rigid.
The weighted average tariff rate stands at 8.7%. Cambodias trade regime has undergone two decades of gradual trade policy liberalisation. An ASEAN member-country, Cambodia also joined the ASEAN Free Trade Zone which has led it to reduce tariffs on imports from other member countries. A number of non-tariff trade barriers have been removed, but some import bans and restrictions, non-automatic import licensing, a weak intellectual property rights protection system and an inconsistent customs administration still pose obstacles to international trade.
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Vietnam
Population: 91.51 million Population growth: 1.054% Labour force: 46.48 million by occupation: ! agriculture ! ! industry ! !services ! GDP: USD 303.8 billion growth rate: 5.9% per capita: USD 3,400 by sector: ! agriculture ! ! industry ! ! services ! Unemployment rate: 2.3% Pop. below pov. line: 14.5% HDI: 0.593 HDI rank: 128 (of 187) 22.0% 40.3% 37.7%
48.0% 22.4% 29.6%
POLITICAL FREEDOM
Free and Fair Elections 0,36 Absence of Unconstitutional Veto Players 0,38 Press Freedom 0 1,60 2,5 5,0 7,5 10,0
RULE OF LAW
ECONOMIC FREEDOM
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There is only one legal political party in Vietnam: the Communist Party of Vietnam (CPV), which holds all the power. There are no democratic multi-party elections, neither at the national nor the local levels. Still, elections are held regularly. The most recent election to the 500-member National Assembly (NA) took place in May 2011, but the CPV was the only political party legally allowed to take part in them. Only a handful of non-party members were allowed to run for election, 14 of whom won seats. This illustrates the level of political participation and pluralism in Vietnam - there is practically none. The NA is completely controlled by the CPV and government policy is determined by the executive branch of the party, the Politburo. As the most basic principle of any democratic system free and fair elections - is not implemented, Vietnam cannot be considered, even remotely, as an electoral democracy.
There are no veto players of any kind in the political system of Vietnam, as all power is centred in the hands of the CPV. Nevertheless, governance follows a legal-bureaucratic rule instead of a despotic one. All policies are entirely determined directly or indirectly by the CPV.
B. RULE OF LAW
Vietnamese courts are only partially independent. The judiciary is subservient to the CPV, which controls courts at all levels. Fair trials are hardly possible as the judicial system is
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Freedom of the press is restricted in Vietnam and critics of the government are silenced by means of court orders or other forms of harassment. Foreign journalists need a government permit to travel to places other than Hanoi. Satellite television is officially reserved to senior party officials, international hotels and foreign businesses (although many households have satellite dishes). All print media and broadcasting stations are tightly controlled by the government. Internet access is restricted through legal as well as technical means even emails with content criticising the government are banned.
Press Freedom
marred by political influence, endemic corruption and inefficiency. Judges rarely rule against members of the government. Some even refuse to hear sensitive cases for fear of negative consequences. Yet the independence of the courts, however deficient as it may seem, has improved during the last years. Wages have been increased and a judicial reform has done its part to improve the independence of judges.
Corruption
Corruption and abuse of office are rife in Vietnam. Although senior CPV members and government officials have acknowledged growing public discontent, they have mainly responded with a few high-profile prosecutions of corrupt officials and private individuals rather than comprehensive reforms. Government decisions are made with little transparency, and revelations of contracts with Chinese and other foreign companies for major mining or development projects have generated considerable controversy. The country was ranked at number 112 amongst 183 surveyed nations in Transparency Internationals 2011 Corruption Perceptions Index.
Human Rights
Human rights are restricted in Vietnam. The Vietnamese government systematically curtails freedom of association, religion and peaceful assembly. Academic freedom and freedom of expression are rather limited. Those who question government policies, expose official corruption or call for democratic alternatives to one-party rule are subject to police harassment and intrusive surveillance, detained for long periods of time without access to legal counsel and sentenced to increasingly long terms in prison for violating national security laws. Land disputes have increased in numbers as the government seizes property to lease to domestic and foreign investors. Ethnic minorities suffer discrimination in society, and some local officials restrict their access to schooling and jobs. Harassment, arrests and occasional attacks directed at religious minorities, such as Hmong Christians, are not uncommon. Despite more economic opportunities for women, they continue to face discrimination in wages and promotion. Many women are victims of domestic violence, and thousands each year are trafficked internally and externally and forced into prostitution.!As of 2012, 29 recognised crimes in Vietnam
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carry the death penalty, with a number of death sentences imposed during this year.!
C. ECONOMIC FREEDOM
Until recently, the protection of property rights in Vietnam was rudimentary at best: contracts were weakly enforced, dispute settlement could take years, and the state had ultimate ownership of all land. However, in 2003, some changes were brought about by a new land law. Foreigners can now engage in real-estate deals and lease land for 50-70 years which can be renewable. From 2009 onwards, foreigners who meet certain criteria can own apartments in Vietnam. In line with the countrys bid to enter the WTO, an intellectual property law covering copyrights and industrial property, amongst other things, was enacted. However, intellectual property rights are often infringed and weakly enforced.
The financial sector is underdeveloped and suffers from a high degree of state involvement. Government policy favours stateowned enterprises and determines money lending, which is done mostly by four big state-owned banks. Regulations and transparency are not in line with international standards. Some comparatively small foreign banks are allowed to operate in Vietnam. Starting, operating and closing a business are subject to a multitude of regulations. It takes 44 days and 9 procedures to start a business. Obtaining a business license requires 10 procedures and 200 days. Bankruptcy procedures are slow and complicated. Vietnam slipped to number 98 in the World Banks 2012 Doing Business report (from position 90 in 2011).
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Government spending has increased to 33.4% of the GDP. Progress in privatisation and restructuring of state-owned enterprises has been slow. Tax reforms in 2009 led to decreases in both top income and top corporate tax rates to 35% and 35%, respectively. Other taxes include value added tax and tax on property transfer. The overall tax revenue equals 22.3% of the GDP.
Size of Government
But as Vietnam with its 63 cities and provinces is a highly decentralised country, administrations in a growing number of provinces have improved. Entry costs have been cut and in some cases a business license can be obtained in as little as seven days. Labour regulations are inflexible. The non-salary cost of hiring a worker is moderate, but firing an employee is difficult. Informal labour activities are widespread.
Since the 1980s, the government has taken steps to liberalise trade. This process was marked by several events: the countrys entry into the Association of South East Asian Nations ( ASEAN ) in 1995 and into the Asia-Pacific Economic Cooperation in 1998; the conclusion of a bilateral trade agreement with the United States in 2000, which granted Vietnam favoured nation status; and its entry into the WTO in 2007. Its ASEAN membership has led to a sharp reduction of tariffs on imports from other member countries. Despite these developments, international trade still faces obstacles arising from import bans and restrictions on some products, import taxes and licensing requirements, opaque regulations, inadequate enforcement of intellectual property rights, corruption and customs inconsistencies.
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China
Population: 1.343 billion Population growth: 0.481% Labour force: 795.5 million by occupation: ! agriculture ! ! industry ! ! services ! GDP: USD 11.44 trillion growth rate: 9.2% per capita: USD 8,500 by sector: ! agriculture ! ! industry ! ! services ! Unemployment rate: 13.4% Pop. below pov. line: 2.8% HDI: 0.687 HDI rank: 101 (of 187) 10.1% 46.8% 43.1%
36.7% 28.7% 34.6%
POLITICAL FREEDOM
Free and Fair Elections 0,36 Absence of Unconstitutional Veto Players Press Freedom 0 1,67 1,50 2,5 5,0 7,5 10,0
RULE OF LAW
Independence of the Judiciary Corruption Protection of Human Rights 1,08 0 2,5 5,0 7,5 10,0 3,60 4,89
ECONOMIC FREEDOM
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In the People's Republic of China (PRC), there are no direct national elections. Direct elections are held only at district and municipal levels. The national legislative body, the National People's Congress (NPC), is elected by the sub-national congresses. By and large, the NPC is a symbolic body that serves to approve legislation proposed by the Communist Party of China (CPC). Elections at local levels lack significance as candidates are usually pre-selected and approved by the CPC. Only a few self-nominated candidates have so far been elected. National leaders are officially chosen during the national party congress held every five years, but decisions are usually made beforehand and behind closed doors. The 18th National Congress of the Communist Party of China was held on November 8th 2012. It was announced that President Hu Jintao and Premier Wen Jiabao, leading Politburo members, will step down from their posts and be succeeded by Xi Jinping and Li Keqiang, respectively. Furthermore, the number of Politburo Standing Committee (PSC) seats was reduced from nine to seven. Former Chairman of the Communist Party Jiang Zemin exerted considerable influence in shaping the composition of the new PSC, even though he does not hold an official position anymore. Analysts say that five of the seven PSC members are either allies or protgs of the octogenarian former chairman, suggesting that family connections and patronage networks play an increasingly important role in the appointment process to the PSC. A number of leading party members has expressed unease with this development. During the past decade, marginal opening of the electoral process at local levels and in some districts has been observed as party secretaries were put to public vote in response to an increasing public discontent over corruption. Despite these developments, China is far from fulfilling the minimal requirements of an electoral democracy.
Although the NPC is formally the highest legislative body in China, the political process remains largely dominated by the CPC, particularly by the nine-member Politburo. There is no challenge to the Chinese states monopoly on the use of force, with the exception of the autonomous regions of
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Tibet and Xinjiang, where secessionist activities challenge the PRC's notion of one China. The military is under civilian control and since all power is concentrated in the hands of the CPC, there is no force to challenge it. Factual power, therefore, does not lie with the elected legislative body, but with the CPC which is also in complete control of the judiciary. As a result, the CPC is not only the sole political player, but is also a very powerful veto player acting without a constitutional mandate in the Chinese political system. This is reflected in the low score China achieves in this section.
Press Freedom
Even though the Chinese constitution provides for the right to free speech, freedom of the press is heavily restricted. The government regularly adopts repressive measures including coercion, torture, abduction and imprisonment to keep control of everything that is printed, broadcasted or published online. Journalists are frequently threatened. Especially since what has been referred to as the Arab Awakening, with some in China aspiring a Jasmine Revolution in the Tunisian image, authorities have been vigorously enforcing control over online and social media. Bloggers, online activists and dissidents have been under tremendous pressure with their and their families lives at stake. Some of the more prominent recent human rights activists cracked down on by Chinese authorities include regime critic Ai Weiwei, Nobel Peace Prize laureate Liu Xiaobo and human rights activist and lawyer Chen Guangcheng.
B. RULE OF LAW
Despite growing legal awareness among citizens, the Chinese governments open rejection of genuine judicial independence undermines legal reform and efforts to limit the CPCs control over the courts. Interference by the CPC may have lessened, but its influence still looms over verdicts and sentences, particularly in politically sensitive cases, and the judicial institutions and mechanism remain weak. Judicial corruption, largely due to scant remuneration of judges and lack of court funding, is another serious problem that leaves negative impact on Chinas judicial independence and its legal system as a whole.
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Corruption is endemic in China, with sectors that are heavily regulated by the state, such as banking, finance and construction, most susceptible to the problem. The Chinese government acknowledges that corruption poses a serious threat to political stability and economic growth and has launched a number of anti-corruption efforts targeted at both the public and private sectors. For instance, in 2011, it criminalised bribery of officials of foreign governments and international public organisations, in line with the United Nations Convention Against Corruption. Its domestic antibribery provisions and enforcement activities have also recently been broadened in scope. Initiatives such as these have led to the exposure of some major corrupt business deals, and are hoped to help prevent potential corruption and other improper misconduct in the future. However, as the judicial system is weak and lacks independence, prosecution is selective. Incidents of corruption affecting the legal system and political interference in dispute settlement are not uncommon. China occupied the 75th place out of 183 territories surveyed in Transparency Internationals 2011 Corruption Perceptions Index.
Corruption
C. ECONOMIC FREEDOM
Individuals and companies can own personal property, but the ultimate owner of land is the state. This means that land
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Despite rapid socio-economic change and modernisation, China continues to be ruled under an authoritarian one-party system which greatly restricts freedoms of expression, association and religion. China still practices the death penalty; although the number of executions is unclear, it is believed to be one of the worlds highest. China maintains extremely repressive policies in areas populated by ethnic minorities such as Tibet, Xinjiang and Inner Mongolia. NGOs are required to register and comply with strict regulations, and they are subject to closure at the discretion of the government. Harsh suppression of human rights activists and lawyers, oftentimes by extra-judicial measures, is frequently reported. Gender equality remains an acute problem as women are still largely vulnerable to domestic violence, employment discrimination and discriminatory social attitudes.
Human Rights
tenure can only be obtained via long-term leases. Property protection is weak; corrupt local officials often, and with impunity, illegally seize land. Intellectual property protection is not duly enforced. Violations of copyrights and patents, brand names, trademarks and trade secrets are rampant. The weakness of the judicial system often forces affected companies to seek arbitration.
Size of Government
Chinas government expenditures (which include consumption and transfer payments) are still rather low. Government spending has risen from 20% to 23% of the GDP. State ownership prevails in most economic sectors. China has a high income tax rate of 45% and a moderate corporate tax rate of 25% (20% for small businesses). Newtechnology businesses benefit from a reduced corporate tax rate of 15%. Other taxes include value added tax and real estate tax. The overall tax revenue amounts to 17.5% of the GDP.
Starting a business takes 38 days and 14 procedures (according to World Bank data). The freedom to establish and run a business is hindered by Chinas regulatory environment and the fact that there is little regulatory openness. Labour regulations prove to be an obstacle to overall employment and productivity growth. The non-salary cost of employees is high; dismissing a worker often requires prior consultation with the responsible labour bureau or union. A labour law introduced in 2008 grants employees a number of new contractual rights. Four government-run banks control over 50% of assets. The state determines the allocation of credit, a result of which is that state-owned enterprises are the primary beneficiaries. However, the government has recently taken some steps to improve the banking system. The listing of the big stateowned banks on the stock exchanges has brought in fresh funds and led to increased transparency. Foreign banks can now operate more or less freely in China, although the scale of their operations remains limited.
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Chinas entry into the World Trade Organisation has liberalised its international trade. The level of government interventions and import barriers has decreased and average tariff rates have been lowered to less than 10%. China has entered several bilateral and regional FTAs. One example is the ASEAN-China FTA, which has created the worlds largest trading bloc of nearly two billion people. However, some restrictions remain in place. Import and export bans on certain goods, complicated regulations and standards and a corrupt customs administration add to the cost of international trade.
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Myanmar*
Population: 54.58 million Population growth: 1.07% Labour force: 32.53 million by occupation: ! agriculture ! !industry ! ! services ! GDP: USD 83.74 billion growth rate: 5.5% per capita: USD 1,300 by sector: ! agriculture ! ! industry ! ! services ! Unemployment rate: 5.5% Pop. below pov. line: 32.7% HDI: 0.483 HDI rank: 149 (of 187) 38.2% 18.2% 43.6%
70% 7% 23%
POLITICAL FREEDOM
RULE OF LAW
Independence of the Judiciary Corruption Protection of Human Rights 0 1,50 0,53 2,5 5,0 7,5 10,0
ECONOMIC FREEDOM
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Myanmar's first general election in 20 years was held in November 2010. Unfortunately, despite much anticipation, it cannot be deemed democratic. The military junta barely left the outcome to chance. The 2008 Constitution reserves one quarter of the 664 parliamentary seats for army personnel. The Union Solidarity and Development Party secured 76.5% of the votes for the remaining 498 seats. Observers reported widespread electoral malfeasance during the election, which cemented the army's considerable sway over the nominally civilian government. Moreover, the conditions accompanying the election were extremely unfair. The election laws severely limited the ability of many political parties to field candidates. To illustrate, contesting parties had to pay a non-refundable registration fee of Kt 500,000 (about $ 600) per candidate. This sum equals one years salary for a civil servant. Furthermore, parties and their candidates were barred from giving speeches or publishing material that tarnish the image of the state or the armed forces, and from criticising the constitution. Nonetheless, recent developments suggest that the space for political participation and pluralism is gradually opening up. Recent by-elections in April 2012 were largely free and fair. Also, during 2011, the government freed a considerable number of political prisoners and enacted a law which, for the first time, allows peaceful political protests - provided they do not threaten national sovereignty, national stability, or laws that preserve morality.
The army continues to exert some influence on Burmese politics. However, it is gradually retreating from its once prominent role. A major cabinet reshuffle in August 2012 which had sidelined a number of hardline minister left over from the days of army rule was largely unopposed by the army.
The Burmese constitution provides for freedom of the press. Since May 2011 print media no longer have to submit articles to the Press Scrutiny Board prior to publication (postpublishing censorship still happens, though). Newspapers are testing the boundaries of their new freedom. For example, the
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Press Freedom
term "prisoners of conscience" is now allowed by the Press Scrutiny Board, along with calls for releases. Articles about and images of Aung San Suu Kyi and the NLD are accepted, something which had been unthinkable until recently. As this publication was going to press, a revision of the Burmese Press Law was under way. Further relaxation of press regulations is anticipated.
B. RULE OF LAW
Independence of the Judiciary Corruption
No data available.
As the country's political system lacks transparency and accountability, corruption is rampant at both the national and local levels. Bribery, often referred as tea money, is prevalent in every activity affiliated with state officials or anyone in a position of power. Economic reforms that had begun under the military regime were continued in 2011. This included the privatisation of many state assets. Some observers fear that, like in the past, this might primarily benefit family members and associates of senior government officials and risk the creation of a new generation of business magnates whose control of industries is dependent on government connections and other forms of collusion. In Transparency International's 2011 Corruption Perceptions Index, Myanmar was ranked at the 180th place out of 183 countries. However, is is all but certain that Myanmars considerable reform efforts will take full effect in the near future. Therefore, a reduction of corruption levels seems likely.
Human Rights
Myanmar showed signs of positive change in 2012. The new government has released hundreds of political prisoners, enacted laws on forming trade unions and freedom of assembly, eased official media censorship and allowed the opposition to register and contest by-elections. Peace treaties have been concluded with almost all of the ethnic armed groups (the exception being the Kachin Independence Organisation). But some political prisoners remain and simmering ethnic tensions have led to clashes in Rakhine State. Reports accuse Burmese security forces of using forced labour and extrajudicial killings.!
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C. ECONOMIC FREEDOM
Neither real nor intellectual property is protected. As a consequence, competition between economic actors is low. Big state-owned enterprises and companies with ties to the army dominate the industry. Private and foreign companies who are in dispute with governmental organisations have little chance of fair arbitration. Those who have been illegally expropriated rarely get compensated.
Government expenditures (including consumption and transfer payments) have risen to 11.5%. The low level of government spending is due to a general lack of capacity rather than restraint on the part of the government. With top income tax rate of 20% and a top corporate tax rate of 30%, Myanmar has moderately high tax rates. The overall tax revenue has risen to about 5% of the GDP.
Size of Government
The labour market is subject to heavy state intervention. Regulations regarding wage rates and working hours are not always observed. However, a new law signed in October 2011 brings to an end the 1962 Trade Unions Act, which banned all trade unions in the country. The bill permits the formation of
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Private entrepreneurs until now had limited access to credit and the government controlled banking through state-owned institutions which tended to direct funds to big government or army projects rather than to private businesses. But a number of prudent reforms is in the making. Government initiatives provide credit to SMEs through short-term loans. An amendment of the Central Bank of Myanmar Law of 1990 will give the central bank operational autonomy. It will now be able to set interest rates, manage reserves, and conduct open market operations without prior approval from the Ministry of Finance. In April 2012 the exchange rate of Myanmars currency was set at 818 kyat to the dollar (for decades the official exchange rate had been rather unrealistic 6.2 kyat to the dollar) and the central bank announced that in future the kyats value would be determined at daily currency auctions. Additionally, a nation-wide network of ATM machines is currently being rolled out and will make transferring funds easier.
unions with a minimum size of 30 people and allows Burmese workers to legally go on strike, provided they do not impede transport infrastructure or threaten security.
Myanmar has been a WTO member since 1995. However, because of extensive intervention on the part of the state, foreign trade is more or less limited to the export of natural gas, agricultural products, gem stones and timber. Gas exports are managed by the state-owned Myanma Oil and Gas Enterprise through joint ventures with foreign companies. The freedom of private entrepreneurs to engage in international trade is restricted by import/export bans and regulations, high taxes and fees, complicated permit and licensing requirements, frequent policy changes, corruption, and import and export quotas for certain goods.
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Brunei*
Population: 408,786 Population growth: 1.691% Labour force: 198,800 by occupation: ! agriculture! ! industry ! ! services ! GDP: USD 21.24 billion growth rate: 1.9% per capita: USD 50,000 by sector: ! agriculture ! ! industry ! ! services ! Unemployment rate: 2.7% Pop. below pov. line: n.a. HDI: 0.838 HDI rank: 33 (of 187) 0.8% 66.7% 32.5%
4.2% 62.8% 33.0%
POLITICAL FREEDOM
Free and Fair Elections 1,07 Absence of Unconstitutional Veto Players Press Freedom 0 2,50 2,50 2,5 5,0 7,5 10,0
RULE OF LAW
ECONOMIC FREEDOM
Security of Property Rights Size of Government Regulation of Credit, Labour, and Business Freedom to Trade Internationally 0 2,5 5,0 7,5 10,0
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There has been little political change in Brunei. The country remains under the absolute rule of Sultan Hassanal Bolkiah Muizzaddin Waddaulah and his family. The last legislative elections were held in 1962, the results of which were annulled. The state of emergency that was declared back then has never been lifted since. The mostly appointed Legislative Council completed its fiveyear term in March 2011. The 29-member Council included five indirectly elected members from village councils, but the majority of the Council comprised either family members of the Sultan or loyalists. In June 2011, the Sultan replaced it with an entirely appointed and expanded 33-member council. Nonetheless, he initiated a significant reorganisation of the Cabinet of Ministers in May 2010 which was widely perceived as a small step towards improving governance, although the principal aim was to attract foreign investment. Overall, demands for political reform remain low as the countrys rich oil and gas reserves allow the government to sustain high employment and low tax rates, and to grant various benefits so as to keep the population content.
Brunei saw some minor improvements in terms of press freedom during the last year. But journalists still face substantial restrictions. They are subject to a fine or even imprisonment if their reports are considered false and malicious. Any criticism of the Sultan and his family is strictly forbidden and officials are legally allowed to shut down newspapers that are suspected to be too critical. However, apart
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Press Freedom
There are no veto players in the political system of Brunei. The Sultan is the only and absolute ruler. Moreover, there is basically no genuine political activism or pluralism. The only political party is the ruling National Development Party as all other parties were disbanded during 2007-2008. With regards to non-governmental organisations, most operating in Brunei are business or professional interest groups. Any organisation with more than ten members is required to register with the government; yet, registration can be denied for any reason. Thus, Brunei achieves a very low score in this section.
from the main national newspaper, there are newspapers in the Malay and Chinese languages. Citizens may also access Malaysian-based television and satellite channels. Access to the internet is relatively free, but content perceived to be subversive may not be published online.
B. RULE OF LAW
No data available.
The government of Brunei claims it will not tolerate corruption of any kind. The law stipulates criminal penalties for official corruption, and the government generally implements them effectively. Its anti-corruption bureau has successfully prosecuted a number of lower-ranking officials over the past few years. However, some officials engage in corrupt practices with impunity. Nevertheless, in the 2011 Corruption Perceptions Index surveyed by Transparency International, Brunei was ranked the second least corrupt nation in ASEAN after Singapore and at 44th place out of 183 countries an impressive standing given that it is ruled by an absolute monarchy.
Human Rights
Amongst the most pressing human rights issues facing Brunei are restrictions on religious freedom and limitations on freedoms of speech, press, assembly and association. An inability of citizens to change their government, human trafficking, discrimination against women and exploitation of foreign workers are also causes for concern. However, there were no reported cases of government officials directly committing human rights violations. Although death sentences continue to be passed in Brunei, the last execution was carried out in 1957.
C. ECONOMIC FREEDOM
Security of Property Rights Size of Government
No data available.
No data available.
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No data available.
Regulation of Credit, Labour, and Business Freedom to Trade Internationally
No data available.
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Laos*
Population: 6.59 million Population growth: 1.655% Labour force: 3.69 million by occupation: ! agriculture ! ! industry and ! services ! GDP: USD 17.66 billion growth rate: 8.3% per capita: USD 2,700 by sector: ! agriculture ! ! industry ! ! services ! Unemployment rate: 2.5% Pop. below pov. line: 26% HDI: 0.524 HDI rank: 138 (of 187) 27.8% 34.8% 37.4%
75.1% n.a.
POLITICAL FREEDOM
Free and Fair Elections Absence of Unconstitutional Veto Players Press Freedom 0 1,60 2,5 5,0 7,5 10,0
RULE OF LAW
ECONOMIC FREEDOM
99
Elections in Laos are neither free nor fair. When the Lao People's Revolutionary Party (LPRP) came to power in 1975, it abolished all political parties and installed a single-party system known as democratic centralism. Elections for the National Assembly are held every five years. However, in order to ensure the party's influence, candidates have to be approved by the LPRP. The April 2011 elections for the National Assembly saw 190 candidates, including five independents, contest for 132 seats. State media put the voter turnout at 99.6% and highlighted voters great enthusiasm in exercising their political rights to ensure qualified candidates win the seats. However, the role of the National Assembly in elections is minimal, not least because the real policy makers had been elected by 576 delegates at the Party Congress one month earlier. This electoral system is based on the 1991 Constitution that instates the LPRP as the sole legitimate political party and provides for the LPRP to take the leading role at all levels of government. In line with the Laotian political system, the level of political participation and pluralism is low. There are no political civic organisations. Freedom of assembly is constitutionally provided for, but does not exist in practice. Every formal gathering requires permission, which is hardly ever granted.
All power lies within the Politburo of the LPRP; the elected members of the National Assembly are in fact powerless. The armed forces are completely under the control of the LPRP, and there is no other power in Laos strong enough to even remotely challenge the dominance of the ruling party. What is more, the public has no means to hold the government accountable, and government actions are generally neither transparent nor open.
All media in Laos are state-owned. The Ministry of Information and Culture strictly controls everything that is published and broadcasted in the country. Any criticism of the government or discussion about controversial political subjects
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Press Freedom
may lead to severe punishment. Very few people in Laos have access to the Internet. Worse yet, the Lao government has recently been provided with the latest technology to censor online communication by the Chinese government, and this eliminates any effect the Internet could have on civil society. Only people living in the border regions can access information and news from foreign sources.
B. RULE OF LAW
No data available.
Laos is heavily burdened by high levels of corruption. Rarely are laws aimed at tackling graft enforced. Moreover, the fact that the government controls virtually every aspect of a citizens life only increases opportunities for bribery. Furthermore, the rapid expansion of logging, mining and other extractive industries, and the influx of a large number of Chinese and Vietnamese companies foster greater corruption, as these businesses are reported to have bribed local officials for access to land. Laos was placed at the 154th position out of 183 countries listed in Transparency Internationals 2011 Corruption Perceptions Index.
Human Rights
Human rights remain limited in Laos. State control over most of the facets of life means that freedoms of expression, association and peaceful assembly are severely restricted. Some domestic non-governmental welfare and professional groups exist, but they are prohibited from pursuing political agendas and are strictly controlled by the state. Religious freedom is constrained: the LPRP controls the training of Buddhist clergymen and supervises their temples, and Christians are often jailed or expelled from villages for proselytising. Academic freedom is not respected: university professors cannot teach or write about politically sensitive issues. Government surveillance of the population has been scaled back in recent years, but searches without warrants still occur. Members of ethnic minority tribes, particularly the Hmong, are constantly vulnerable to discrimination and harsh treatment. Although laws guarantee gender equality, genderbased discrimination and abuses are rampant. Tradition and religious practices have put women in an inferior position in
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terms of education, employment opportunities and benefits. The death penalty remains a mandatory punishment for some drug offences, although no official statistics on this are revealed to the public.
C. ECONOMIC FREEDOM
No data available.
No data available.
Size of Government
No data available.
No data available.
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North Korea*
Population: 24.59 million Population growth: 0.535% Labour force: 12.2 million by occupation: ! agriculture ! ! industry and ! services ! GDP: USD 28 billion growth rate: 4% per capita: USD 1,800 by sector: ! agriculture ! ! industry ! !services ! Unemployment rate: n.a. Pop. below pov. line: n.a. HDI: n.a. HDI rank: n.a. 23.0% 43.4% 33.6%
35% 65%
POLITICAL FREEDOM
Free and Fair Elections Absence of Unconstitutional Veto Players Press Freedom 0 0,30 2,5 5,0 7,5 10,0
RULE OF LAW
ECONOMIC FREEDOM
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At the end of 2011, the world witnessed the succession of Kim Jong-Un, the youngest son of the late Kim Jong-Il, as North Koreas dictator. North Koreans were confronted with a fait accompli, as public participation in the transition of leadership was restricted to the expression of grief at the loss of Kim Jong-Il and then to the rejoicing at the immediate advancement of their new Supreme Leader. However, North Koreans do go to polls, generally held every five years. At the national level, citizens elect a legislature - the Supreme Peoples Assembly. Additionally, people elect representatives to city, county, and provincial peoples assemblies. But the term election is misleading when it comes to North Koreas political system. Candidates for office must be a member of the Democratic Front for the Reunification of the Fatherland, which is a coalition of the countrys three political parties. Before elections, each party may nominate candidates for office; the Democratic Front then selects a single nominee for each political post, presents this list to the voters, who then have the choice of either voting for or against each candidate. What this means is that the people do not choose representatives and are restricted to merely confirming candidates chosen by the unelected Democratic Front. Moreover, voting is practically mandatory - police forces are guaranteed to find out the whereabouts of any person eligible to vote but failing to do so. North Korea also displays its uniqueness when it comes to political participation and pluralism. To be sure, there are other political parties in addition to the all-powerful Workers Party of Korea (WPK), but they are bound by law to follow the WPKs political agenda. Individual political participation is required by the state as a sign of respect to the Supreme Leader, i.e. it is mandatory. Refusal to participate in certain political activities is perceived as a lack of support for the government and, in turn, leads to severe punishment.
As North Korea is known to be one of the world's most repressive political systems, there are no other actors challenging the government. Everything is either state-owned or state-controlled, so the government holds all effective power to govern. The public has no means of holding government
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officials accountable, as government policies and actions are never transparent or open. However, the absence of veto players in the political system of North Korea can hardly be seen as a positive thing by democratic standards. Thus, North Korea obtains the score of 0.00 in this section.
Press Freedom
All media in North Korea are state-owned, so there is absolutely no freedom of press or expression. Internet access is restricted to only a few thousand people and foreign websites are generally blocked. The only way to get uncensored information is through the black market, by getting items such as radios equipped to receive foreign broadcasts, pirated movies or mobile phones. However, trading on the black market is very much a risk. People face heavy punishment if authorities learn of such activities.
B. RULE OF LAW
No data available.
Corruption penetrates every level of the state and the economy. North Korea shared the bottom rank (182nd) with Somalia in Transparency Internationals 2011 Corruption Perceptions Index.
Human Rights
The North Korean government engages in systematic human rights violations. It is known to regularly carry out arbitrary arrests, unlawful detentions, torture and other forms of illtreatment on its population, including children. North Koreans are denied freedom of assembly and the right to organise political opposition. There is no functioning civil society. The death penalty is still practiced, with executions periodically held in public. Moreover, the government classifies citizens into 53 subgroups based on their perceived loyalty to the regime. The rating given to an individual has an impact on every aspect of his/her life, including access to education or health facilities, food and employment opportunities.
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C. ECONOMIC FREEDOM
No data available.
Security of Property Rights Size of Government
No data available.
No data available.
No data available.
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Annex I - Overview
The Freedom Barometer Asia 2012 covers countries of Southeast and East Asia. In our 2012 index we included the following nations: Brunei, Cambodia, China, Hong Kong, Indonesia, Japan, Laos, Malaysia, Mongolia, Myanmar, North Korea, Philippines, Singapore, South Korea, Taiwan, Thailand, and Vietnam.
The table below depicts the ranking of the countries on the Freedom Barometers 0-100 scale:
RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
COUNTRY Japan Hong Kong Taiwan Singapore South Korea Mongolia Malaysia Indonesia Philippines Thailand Cambodia* Vietnam China Myanmar Brunei Laos North Korea
2010 76,10 75,44 71,27 70,73 69,58 62,27 54,48 53,42 50,05 49,82 14,14 38,94 36,41 17,01 17,78 7,74 1,60
2011 76,52 75,51 71,56 70,55 69,47 61,35 54,16 53,70 51,30 48,39 13,69 40,30 36,42 18,97 17,33 7,32 1,19
2012 76,88 74,52 73,28 70,47 69,08 62,21 56,08 53,84 52,81 52,34 43,35* 39,55 36,95 22,68 16,14 8,12 2,07
Only incomplete data sets available for countries below
Explanatory Note: For some countries, only incomplete data sets were available to us. We decided to include them in our ranking as well. The fact itself that in some cases reliable information is nearly impossible to obtain may bear witness to the level of freedom enjoyed in the respective countries, and we wanted to provide a frame of reference. *In the case of Cambodia, a complete data set became available to us this year. This explains the rather huge leap of this country in our ranking.
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Political Freedom 2010 0,00 0,00 0,10 0,00 0,00 0,30 0,00 0,00 0,30 0,00 0,00 1,60 2012 2010
PRK 2011
LAO 2011 0,00 0,00 1,50
2012 0,00 0,00 1,60
1. Free and fair elections 2. Absence of unconstitutional veto players 3. Press freedom
Rule of Law 1. Independence of the judiciary 2. Corruption 3. Human Rights n.a n.a 1,50 n.a. n.a. 0,89 n.a. 1,00 0,77
n.a. 2,00 4,14
n.a. 2,10 3,72
n.a. 2,20 4,32
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Economic Freedom 1. Security of property rights 2. Size of Government: Expenditures, Taxes and Enterprises 3. Regulation of credit, labor and business 4. Freedom to trade internationally n.a. n.a. n.a. n.a. 1,60 1,19 n.a. n.a. n.a. n.a.
n.a. n.a. n.a. n.a. 2,07
n.a. n.a. n.a. n.a. 7,74
n.a. n.a. n.a. n.a. 7,32
n.a. n.a. n.a. n.a. 8,12
TOTAL SCORE
BRU 2011
MYA 2011 1,07 0,00 0,60
2012 1,79 1,67 1,50
Rule of Law 1. Independence of the judiciary 2. Corruption 3. Human Rights n.a. 5,50 6,21 n.a. 5,50 5,76 n.a. 5,20 4,87
n.a. 1,40 0,52
n.a. 1,40 0,45
n.a. 1,50 0,53
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n.a. n.a. n.a. n.a. 16,14
3,19 6,33 3,73 1,34 17,01
3,19 6,33 4,15 1,78 18,97
3,19 6,33 4,39 1,78 22,68
TOTAL SCORE
CHN 2011
VIE 2011 0,36 0,83 1,70
2012 0,36 0,83 1,60
Rule of Law 1. Independence of the judiciary 2. Corruption 3. Human Rights 4,91 3,60 1,22 4,95 3,50 0,93 4,89 3,60 1,08
4,64 2,70 3,12
4,78 2,70 2,96
4,33 2,90 2,78
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Economic Freedom 1. Security of property rights 2. Size of Government: Expenditures, Taxes and Enterprises 3. Regulation of credit, labor and business 4. Freedom to trade internationally 6,38 4,51 5,62 7,38 36,41 36,42 6,10 6,57 6,41 4,43
6,25 4,98 6,05 6,57 36,95
6,01 6,27 6,34 6,87 38,94
5,98 8,10 6,70 6,19 40,30
5,88 8,04 6,46 6,37 39,55
TOTAL SCORE
CAM 2011
THA 2011 2,86 3,33 3,80
2012 5,71 4,17 4,00
Rule of Law 1. Independence of the judiciary 2. Corruption 3. Human Rights n.a. 2,00 2,88 n.a. 2,10 3,25 3,46 2,10 2,91
5,33 3,40 2,92
5,53 3,50 2,80
5,34 3,40 3,26
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4,61 7,89 6,54 7,50 43,35
5,94 7,42 6,85 7,57 49,82
5,64 7,08 7,01 6,84 48,39
5,35 7,43 7,05 6,63 52,34
TOTAL SCORE
PHI 2011
INA 2011 8,57 5,00 4,70
2012 8,57 5,00 5,10
4,72 2,80 2,51
4,66 2,80 2,54
4,33 3,00 2,43
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4,37 8,31 6,92 6,69 52,81
4,44 7,45 6,08 7,05 53,42
4,66 7,58 6,32 6,87 53,70
4,48 7,90 6,29 6,74 53,84
TOTAL SCORE
MAS 2011
MGL 2011 8,93 8,33 6,10
2012 8,93 8,33 6,30
2,56 2,70 5,84
2,64 2,70 5,45
2,67 2,70 5,43
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6,86 6,13 8,03 7,25 56,08
5,71 7,71 7,23 7,16 62,27
5,63 7,11 7,48 6,98 61,35
5,67 7,45 7,47 7,26 62,21
TOTAL SCORE
KOR 2011
SIN 2011 3,57 5,83 3,20
2012 4,29 5,83 3,30
7,99 9,20 6,55
7,73 9,30 6,41
7,73 9,20 5,71
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6,50 6,85 6,86 7,21 69,08
8,38 8,17 8,50 9,34 70,73
8,39 8,12 8,60 9,40 70,55
8,38 8,06 8,92 9,05 70,47
TOTAL SCORE
ROC 2011
HKG 2011 3,57 5,00 6,80
2012 3,57 5,00 6,70
8,39 8,20 7,74
8,58 8,40 7,18
8,47 8,40 7,21
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7,02 7,45 6,94 7,55 73,28
8,10 9,41 8,78 9,55 75,44
8,36 9,35 8,90 9,37 75,51
8,18 8,89 9,08 9,02 74,52
TOTAL SCORE
Political Freedom 2010 9,64 8,33 7,90 9,64 8,33 7,90 9,64 8,33 7,80 2012
JPN 2011
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7,49 6,59 7,73 6,10 76,10 76,52 7,56 7,38
7,48 5,89
7,52 5,80 7,83 7,16 76,88
Economic Freedom 1. Security of property rights 2. Size of Government: Expenditures, Taxes and Enterprises 3. Regulation of credit, labor and business 4. Freedom to trade internationally
TOTAL SCORE
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118
119
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Annex II Methodology and Data Sources

A. Methodology
The Freedom Barometer Asia 2012 is based on highly regarded sources. The dimensions Political Freedom and Rule of Law are drawn from four main sources, namely Freedom House (2012), Transparency International (2011), the Fraser Institute (2012) and Maplecroft (2012). With regards to the economic dimension, we use the data provided by the 2012 Economic Freedom of the World Report (data values of 2010), supported by the Heritage Foundations 2012 Index of Economic Freedom, the 2012 Bertelsmann Transformation Index and the World Banks Doing Business 2012 report. We acknowledge a lack of synchronicity within our data. However, as the overlap of indicators is rather limited, we expect those irregularities from time differences to be levelled out. Although we are aware of the problems inherent in this approach, our aim is to use the latest data available, even when asynchronous.
DIMENSION I - POLITICAL FREEDOM 1. Free and Fair Elections The score of this component is based on Freedom Houses Freedom in the Word Index 2012, with checklist questions relating to: (A) the electoral process, and (B) political pluralism and participation. Freedom House assigns a maximum of 12 points to checklist question (A) and a maximum of 16 points to checklist question (B), so the maximum total score is 28 points. We convert this score into our pattern of 0-10 points, with 10 points being the best possible score. For example: Country A scores 16 out of 28 possible points in Freedom Houses evaluation, which corresponds to a percentage of 57.14%. This will then translate into a Freedom Barometer score of 5.71 on the 0-10 scale. 2. Absence of Unconstitutional Veto Players This component is based on checklist question (C) of Freedom Houses Freedom in the World Index 2012: the functioning of government. Freedom House assigns a maximum of 12 points to this checklist question. The pattern described above is used in calculating the score of this component in the Freedom Barometer. 3. Press Freedom This variable is based on the Freedom of the Press Index 2012 published by Freedom House. Freedom House evaluates press freedom using 23 methodology questions and 109 indicators in three categories, namely, the legal, political and economic environments. For each question, a lower number of points is given for a free environment, whereas a high number indicates little press freedom. Every country is rated in the above-mentioned categories, with the final score being based on the total number: A score of 0 to 30 places a country in the free group, a score of 31 to 60 in the partly free group, and a
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score of 61 to 100 in the not free group. We will then convert the Freedom House score into our 0-10 scale. For the detailed conversion table, please refer to Annex III.
DIMENSION II - RULE OF LAW 1. Independence of the Judiciary Our score is based on sub-question (A), judicial independence in terms of legal structure and security of property rights, of the Economic Freedom of the World Report published by the Fraser Institute. Since the report follows the same scoring pattern as our Freedom Barometer, no conversion is needed. 2. Corruption This component is based on the Corruption Perceptions Index by Transparency International. No conversion of the score is necessary, since the index adopts the same scoring pattern as the Freedom Barometer. 3. Human Rights Our score is based on Maplecrofts Human Rights Risk Atlas. It evaluates human rights risks in 197 countries worldwide, across a range of 23 indicators, totalling 31 indices and 7 composite indices. For the purpose of our report, we have taken the data from the following 20 indices of the Human Rights Risk Atlas: Arbitrary Arrest and Detention Index; Extrajudicial or Unlawful Killings Index; Disappearances Index; Torture and Other Ill-Treatment Index; Internal Displacement and Refugees Index; Child Soldiers Index; Security Forces and Human Rights Index; Discrimination in the Workplace Index; Child Labour Index; Forced or Involuntary Labour Index; Trafficking Index; Freedom of Association and Collective Bargaining Index; Working Conditions Index; Discrimination in Society Index; Freedom of Thought, Conscience and Religion Index; Freedom of Opinion and Expression Index; Human Rights Defenders Index; Womens and Girls Rights Index; Indigenous Peoples Rights Index and Minority Rights Index. Maplecrofts Human Rights Risk Atlas adheres to the same scoring system as the Freedom Barometer. A score of 0 indicates a high risk in the pertinent area, whereas a score of 10 indicates a low risk. No conversion is therefore needed. The Freedom Barometers human rights evaluation is derived from the average score of the above-mentioned indices.
DIMENSION III - ECONOMIC FREEDOM 1. Security of Property Rights The source of this score is the Fraser Institutes Economic Freedom of the World Report, (Area 2 Legal Structure & Security of Property Rights). Since the report and the Freedom Barometer follow the same scoring pattern, no conversion is necessary. Additional data and information are obtained from the Heritage Foundations Index of Economic Freedom, the World Banks Doing Business report and the Bertelsmann Transformation Index.
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2. Size of Government: Expenditures, Taxes and Enterprises This score is based on the Fraser Institutes Economic Freedom of the World Report (Area 1 - Size of Government). Since the report and the Freedom Barometer follow the same scoring pattern, no conversion is necessary. Additional data and information are obtained from the Heritage Foundations Index of Economic Freedom, the World Banks Doing Business report and the Bertelsmann Transformation Index. 3. Regulation of Credit, Labour and Business This indicator is based on the Fraser Institutes Economic Freedom of the World Report (Area 5 Regulation of Credit, Labour and Business). Since the report and the Freedom Barometer follow the same scoring pattern, no conversion is needed. Additional data and information are drawn from the Heritage Foundations Index of Economic Freedom, the World Banks Doing Business report and the Bertelsmann Transformation Index. 4. Freedom to Trade Internationally The source of this score is the Fraser Institutes Economic Freedom of the World Report (Area 4 Freedom to Trade Internationally). Since the report and the Freedom Barometer follow the same scoring pattern, no conversion is needed. Additional data and information are drawn from the Heritage Foundations Index of Economic Freedom, the World Banks Doing Business report and the Bertelsmann Transformation Index.
B. Main Data Sources

1. Freedom House a) Freedom of the World Index: Freedom House assesses the degree of political rights and civil liberties. It uses a checklist of 25 questions, 10 of which are related to political circumstances, while the other 15 concern civil liberties. The ten political questions consist of three questions on the electoral process, four on political pluralism and participation and three on the functioning of government. The civil liberty questions comprise four questions about freedom of expression and belief, three on associational and organisational rights, four on the rule of law and the other four on personal autonomy and individual rights. A team of analysts evaluates the results and creates the scores and ratings. About one-third of the analysts are Freedom House staff, whereas the rest are experts from academia, media, think tanks and human rights communities. b) Freedom of the Press Index: Freedom House provides analytical reports and numerical ratings regarding the freedom of the press in 197 countries worldwide. Countries are given a total score of 0 (best) to 100 (worst) based on 23 methodology questions and 109 indicators in three categories: legal environment, political environment and economic environment. A score of 0 to 30 will place a country in the free press group, a score 0f 31 to 60 in the partly free press group, and a score of 61 to 100 in the not free press group.
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The results of the survey are derived from a multi-layered process of analysis and evaluation by a team of regional experts. In addition to its core research team headquartered in New York, Freedom House relies on data provided by members of the International Freedom of Expression Exchange, a network of organisations that advocate free expression, and employs a number of outside consultants. 2. Transparency International The Corruption Perceptions Index aims at measuring corruption based on the perceived levels of corruption. It contains 13 different opinion polls and studies of 11 independent institutions. To guarantee the quality of the index, the methodology adopted is supervised by a board of experts, the Index Advisory Committee. 3. Maplecroft Maplecroft, a global risk and strategic consulting firm, provides monitoring and analysis of political, economic, social and environmental risks. Its Human Rights Risk Atlas surveys 197 countries worldwide in five human and labour rights risk areas: complicity and lack of the rule of law; human security; labour rights and protection; civil and political rights; and access to remedy. A total of 31 indices and 7 composite indices determine human rights risks in the above-mentioned areas. However, as we want to avoid an overlap with other variables of the Freedom Barometer (e.g. Independence of the Judiciary), we use the data of only 20 of the 31 indices of the Human Rights Risk Atlas (see Annex II Methodology - DIMENSION II - RULE OF LAW - Human Rights). 4. Economic Freedom of the World The Fraser Institute, a liberal Canadian think tank, together with its various partners worldwide, (including the Liberal Institute of the FNF), publishes the Economic Freedom of the World Report annually. The report contains the following five components: 1. Size of Government: Expenditures, Taxes and Enterprises 2. Legal Structure and Security of Property Rights 3. Access to Sound Money 4. Freedom to Trade Internationally 5. Regulation of Credit, Labour and Business These variables are sub-divided further. For the purpose of our index, we do not include the third component: Access to Sound Money. 5. The Heritage Foundation The Heritage Foundation, an American think tank and proponent of the principles of free enterprise, limited government and individual freedom, annually publishes the Index of Economic Freedom. To measure the degree of economic freedom in selected countries, ten components in four categories (rule of law, limited government, regulatory efficiency and open markets) are evaluated and rated on a 0-100 scale (with 100 being the best). The combined average score determines the overall economic freedom score. 6. The Word Banks Doing Business Report The World Banks annual Doing Business report analyses regulations affecting business activities in 183 countries. The areas covered by the report include, but are not limited to the following topics:
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starting a business; dealing with construction permits; registering property; obtaining credit; protecting investors; paying taxes; trading across borders; enforcing contracts; closing a business and employing workers. 7. Bertelsmann Transformation Index The Bertelsmann Foundation, a German think tank, bi-annually releases the Transformation Index, a ranking of 128 countries that depicts each countrys transformational success to democracy and market economy. In respect of democracy, market economy and political management, the Bertelsmann Transformation Index assesses 17 criteria that are divided into 52 questions. The data collected are then presented in two sub-indices: the Status Index and the Management Index.
Annex III Freedom House - Freedom of the Press Index Conversion Table
FH 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 FB 10,00 9,90 9,80 9,70 9,60 9,50 9,40 9,30 9,20 9,10 9,00 8,90 8,80 8,70 8,60 8,50 8,40 8,30 8,20 8,10 FH 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 FB 8,00 7,90 7,80 7,70 7,60 7,50 7,40 7,30 7,20 7,10 7,00 6,90 6,80 6,70 6,60 6,50 6,40 6,30 6,20 6,10 FH 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 FB 6,00 5,90 5,80 5,70 5,60 5,50 5,40 5,30 5,20 5,10 5,00 4,90 4,80 4,70 4,60 4,50 4,40 4,30 4,20 4,10 FH 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 FB 4,00 3,90 3,80 3,70 3,60 3,50 3,40 3,30 3,20 3,10 3,00 2,90 2,80 2,70 2,60 2,50 2,40 2,30 2,20 2,10 FH 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 FB 2,00 1,90 1,80 1,70 1,60 1,50 1,40 1,30 1,20 1,10 1,00 0,90 0,80 0,70 0,60 0,50 0,40 0,30 0,20 0,10 0,00
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Freedom Barometer Asia 2012

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Freedom Barometer Asia 2012

Mikls Romndy Pett Jarupaiboon Corinna Johannsen

Foreword to the 2012 edition of the Freedom Barometer Asia