This content is from: Local Insights

Macau: The Asia Pacific’s seventh freest economy

Pedro CortésMarta Mourão Teixeira
On January 14 2014, the Macau Monetary Authority reported that, according to the 2014 Report on the Index of Economic Freedom (the Index) drawn by the Heritage Foundation, the Macau Special Administrative Region (SAR) takes 29th place amongst the 178 ranked global economic systems, as well as seventh place out of 42 countries in the Asia-Pacific region, right after Hong Kong, Singapore, Australia, New Zealand, Chinese Taiwan and Japan.

The score awarded to Macau's economic freedom is 71.3. Its overall score is quite higher than both world and regional averages.

Since 2009, when it was firstly graded in the Index, Macau has been registering high scores in economic freedom. In comparison with last year, the overall score of Macau has declined 0.4 points, owing to decreases in fiscal freedom, monetary freedom and freedom from corruption. Otherwise, investment freedom has been improving, further enhancing market openness. The higher scores awarded to Macau, in addition to investment freedom, are the government spending, trade freedom, monetary freedom and financial freedom parameters.

The Foundation's report states that Macau has long benefited from global trade and investment and defines its entrepreneurial environment as generally efficient and streamlined, and property rights as relatively well respected. Further, the Heritage Foundation refers to Macau as one of the world's leading tourism destinations, its service sector representing almost 90% of GDP and over 70% of total employment.

The report is expected to contribute to the continuous growth of the economy in Macau, further attracting foreign investment and putting Macau in a more competitive place within the world economies.

In our view, Macau's ranking in the report is only possible due to the principles affirmed by the Joint Declaration signed between People's Republic of China and Portugal. Such principles are formalised in the Macau Basic Law; article 107 stipulates the autonomy of the Macau Government to formulate monetary and financial policies, safeguard the free operation of financial markets and all kinds of financial institutions, and regulate and supervise them in accordance with law.

Pedro Cortés and Marta Mourão Teixeira

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