WASHINGTON D.C. (2nd Update)- The Philippines was ranked 109th in an index that grades economic freedom in 179 countries.

The Washington-based Heritage Foundation and The Wall Street Journal grades a nation's economic freedoms based on 10 benchmarks, such as trade freedom, business freedom, investment freedom, and property rights. 

In the 2010 Index of Economic Freedom, the Philippines slipped by 0.4 points from the 2009 survey. The report noted that the Philippines' slight decline reflected "small reductions in monetary freedom and freedom from corruption."

In the 16th Index, the Philippines scored 56.3 (100 being the best score). The Philippines is also lumped in the cluster of "mostly unfree" economies (the cluster is broken down to "free", "mostly free", "moderately free", "mostly unfree" and "repressed").

The authors stressed that economies classified as "free" or "mostly free" do a "much better job promoting human development, reducing poverty and protecting the environment."

However, the Philippines also scored above the world average in half of the 10 economic freedoms, the index findings showed.

Weak economic freedom

The authors of the Index noted that structural reforms are needed to improve the entrepreneurial environment and develop a stronger private sector that generates more robust job growth.

"Overall progress has been mixed but some fiscal reforms have been accomplished," the authors said.

But they added, "The Philippines is weak in business freedom, investment freedom, property rights and freedom from corruption."

The report said the perception of corruption is "pervasive", adding the enforcement of anti-corruption laws is inconsistent.

They noted that the country continued to rely too much on remittances from overseas Filipinos that comprise about 10% of the Gross Domestic Product. This reflects "a lack of domestic economic dynamism" the report noted. 

It also cited "formal and non-formal barriers to foreign investment," which has long been cited by foreign chambers and local investors are reasons why the Philippines continues to lag behind peers in attracting direct foreign investments.

The report noted that overall fiscal weakness of the economy. It cited that "some fiscal reforms have been accomplished. The top corporate tax rate has been reduced, and progress in privatization and fiscal prudence has helped to reduce the public debt. Improving tax administration remains a priority."

Peers

Among its Asian peers, the Philippines was ranked 20th in the high-performing Asian-Pacific region.

Hongkong and Singapore topped the index for the 16th straight year.

Australia and New Zealand followed its Southeast Asian peers.

The United States fell to 8th place.

North Korea, Zimbabwe, Cuba, Burma and Venezuela, among others, made it to the list of top 10 least free economies.

Global recession

The annual survey noted that the global recession forced many countries to intervene in their economies.

This was said to be only the 2nd time average scores for countries measured in successive years posted a decline since the economic freedom index was launched.

"Our confidence is economic freedom is being tested," said Edwin Feulner, Heritage Foundation president.

The survey authors said, "Regrettably, attacks on the free market, fueled by the economic slowdown and the political appeal of quick interventionist remedies, gained strong momentum in some countries with far-reaching effects."

Nick Zahn, Asian Communications Associate of the Heritage Foundation and Director of the Washington Roundtable for the Asia-Pacific Press, said the index fell 0.1 point from 2009.

Of the 179 countries graded this year, only 7 qualified as "free" economy. They have a score of 80 or higher.