Philippines 'Unfree' Due To Graft, Reports U.S. Think Tank

Manila, Philippines (AHN) - The Philippines was rated mostly 'unfree,' landing in 92nd place out of 157 countries listed in the annual Index of Economic Freedom released yesterday by the U.S.-based Heritage Foundation.

The influential U.S. think-tank said the overall score for the country was essentially unchanged from last year.

"The Philippines is ranked 15th out of 30 countries in the Asia-Pacific region, and its overall score is roughly equal to the regional average," according to the index.

The foundation noted that the main weakness of the country is a problematic judiciary and widespread corruption.

The judicial system enforces the law weakly. Judges are nominally independent, but several were appointed strictly for political reasons and are corrupt, according to the group.

It noted that organized crime is a strong deterrent to the administration of justice, and delays and uncertainty continue to concern investors.

"Despite some progress, enforcement of intellectual property rights remains problematic," Heritage said.

Corruption is perceived as widespread, pervasive and long-standing, it said.

Enforcement of anti-corruption laws is inconsistent, and the public perception of judicial, executive, and legislative corruption remains high, the group said.

The economy remains heavily reliant on remittances from Filipinos working abroad and lacks adequate investments in infrastructure and education, according to the study.

The Philippines is relatively weak in business freedom, investment freedom, property rights, and freedom from corruption, it added.

"The government imposes both formal and non-formal barriers to foreign investment. Inflation is fairly high, and the government subsidizes the prices of several basic goods," according to the study.

"The judicial system is weak and subject to extensive political influence. Organized crime is a major deterrent to the administration of justice, and bureaucratic corruption is extensive," it said.

The Philippines scored relatively well in just two areas: trade freedom and government size. "Fiscal freedom is average because income and corporate tax rates are burdensome, although overall tax revenue is low as a percentage of gross domestic product (GDP)," the think-tank added.

The average tariff rate is low, yet non-tariff barriers are significant. Total government expenditures in the Philippines are equal to roughly 20 percent of national GDP, according to the report.

According to the Heritage Foundation, although obtaining a business license in the country takes less than the world average of 234 days, closing a business can be difficult and lengthy.

The country's weighted average tariff rate was 3.1 percent in 2005.

Import and export restrictions, quotas, service market access barriers, import and export taxes, burdensome import licensing requirements, restrictive and non-transparent standards, labeling and other regulations, domestic bias in government procurement, inconsistent and non-transparent customs valuation and administration, export subsidies, widespread corruption, and weak protection of intellectual property rights add to the cost of trade, according to the study.