According to the Heritage Foundation’s latest survey the Philippines’ economy has improved slightly but remains low.

In its 2007 Index of Economic Freedom, the Washington-based think-tank said the Philippine economy remains “mostly unfree,” owing to weak business, investment and monetary freedoms, and to corruption.

Heritage Foundation’s scoring system in considering a country as free and unfree: as free if its average overall score ranges from 80 percent to 100 percent. Mostly free countries have an average overall score of 70 percent to 79.9 percent, while mostly unfree countries average 50 percent to 59.9 percent. Lastly, repressed countries score 0 percent to 49.9 percent.

Philippines scored 57.4 percent, placing it at 97th place among 161 countries surveyed, up from 98th place the previous year.

The Philippines was relatively unfree compared with neighbors Malaysia, which ranked 48th, and Thailand, at 50th. Indonesia and Vietnam, however, were less free than the Philippines, as the two countries ranked 110th and 138th. The Philippines’ overall score, however, was below the regional average.

The Philippines scored well in terms of fiscal freedom at 84 percent; trade freedom, 74.8 percent and freedom from government, 91.4 percent. Income and corporate tax rates, however, are burdensome, and overall tax revenue is low as a percentage of economic output.

While the average tariff rate is low, nontariff barriers are significant, Heritage said, adding the government imposes both formal and nonformal barriers to foreign investment, the first mainly through two negative lists that restrict foreigners.

Total government expenditures are equal to roughly 20 percent of economic output, and state-owned businesses do not account for a large portion of overall revenue.

The think-tank said the Philippines is relatively weak in terms of business freedom, investment freedom, monetary freedom, property rights protection. Inflation is fairly high, and the government subsidizes the prices of several basic goods, it said.

Furthermore, the judicial system is weak and subject to extensive political influence, whereas organized crime is a major deterrent to the administration of justice, and bureaucratic corruption is extensive.

“Unofficial barriers, like high levels of corruption, also impede foreign investment,” Heritage said.

The think-tank firm also noted that the Philippines has burdensome tax rates with a top income-tax rate of 32 percent, and a top corporate-tax rate of 35 percent.

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