Regionally, Malaysia took fourth place after Singapore, the Philippines and Cambodia, followed by Indonesia and Laos in fifth and sixth position.
According to the Institute for Democracy and Economic Affairs (IDEAS), Malaysia scored an overall 7.19, an improvement of 0.19 points year on year.
“The improved outlook is indicative of a greater sense of individual economic freedoms afforded to the populace,” it said in a statement.
Areas in which Malaysia had improved were “Size of government”, “Regulation” and “Access to sound money”.
Size of government reflects the scale of government intervention in a country, while access to sound money is judged by how effectively the country adopts policies that generate low inflation.
The regulation score meanwhile shows the level of restrictions on businesses.
These components were ranked on a scale of one to 10, with a higher value indicating a corresponding level of economic freedom.
In terms of size of government, Malaysia scored 6.93, an increase from its previous score of 6.63.
Access to sound money saw an increase from 6.85 to 7.01, while regulation of credit, labour and business recorded an increase from 8.62 to 8.72.
In terms of legal system and property rights, Malaysia dropped to 5.76 from 5.87 previously.
Freedom to trade internationally also saw a drop from 7.56 to 7.51.
IDEAS noted that this year’s report had introduced rankings adjusted for gender disparity, using the Gender Disparity Index (GDI) which is generated using data from the World Bank’s report on Women, Business, and the Law.
The World Bank dataset tracks the existence of legal and regulatory barriers imposed on women that may impede their ability to participate in formal economic activity.
On this front, it said, Malaysia’s overall ranking experienced a significant decline of 14 places from 51st to 65th.
In this context, Malaysia holds seventh place in terms of countries with the largest decrease in EFW rank, with countries from the Middle East and the Gulf states ranked above it.
IDEAS added that Malaysia’s 0.67 GDI score had contributed to its overall decline in the legal system and property rights category, pointing out that Malaysia remains one of 19 countries in the EFW where women are legally required to obey their husbands and/or are prohibited from working outside the home without their husbands’ permission.
The EFW report, published by the Fraser Institute in Canada, ranks countries on the consistency of their institutions and policies in promoting economic freedom.
This year’s report took into consideration a total of 159 countries.