It came behind Hong Kong and topped major categories except for one.
Singapore loses to Hong Kong in The Heritage Foundation's economic freedom index for 2018, landing on the second spot for the freest economy the world.
According to the index, Singapore's economic freedom score rose by 0.2 points from 2017 to 88.8 points. There were improvements in government integrity, labour freedom, and property rights outweighing lower scores for the business freedom and fiscal health indicators.
The Lion City also ranked second amongst 43 Asia-Pacific countries.
The index gave scores based on four categories: rule of law, government size, regulatory efficiency, and open markets.
"Singapore’s highly developed free-market economy owes its success in large measure to its remarkably open and corruption-free business environment, prudent monetary and fiscal policies, and a transparent legal framework," Heritage said.
In the rule of law category, Singapore saw the obtained score of 98.4 for property rights. Its score for judicial effectiveness dipped to 90.9.
"Singapore is one of the world’s least corrupt countries, although the power of deeply entrenched political elites continues to raise concerns," the index said.
For the government size category, Singapore's score of 90.6 for government size is the highest. Its score in fiscal health dropped to 80, its lowest score.
"The top individual income tax rate is 22%, and the top corporate tax rate is 17%. The overall tax burden equals 13.6% of total domestic income," the index said.
In terms of regulatory efficiency, the city state's scores in labour freedom and monetary freedom rose to 92.6 and 85.2 respectively.
The index explained, "Labour laws allow for relatively free hiring and firing practices, but the Ministry of Manpower has started making approvals for foreign labour more difficult."
Singapore's scores in the open markets category remained unchanged from last year. Its scores for freedom in trade hit 90, investment hit 85, and financial hit 80.
"Trade is extremely important to Singapore’s economy; the combined value of exports and imports equals 318% of GDP. Essentially, there are no tariffs. Nontariff barriers impede some trade," the index said.
It also said that the government's opening to foreign banks resulted in 95% of banks operating in Singapore becoming foreign-owned.
Do you know more about this story? Contact us anonymously through this link.