HONG KONG - SINGAPORE remains the world's second-freest place to do business, according to the 2010 Index of Economic Freedom.

Hong Kong edged out the Republic for the 16th consecutive year to top the rankings, compiled by The Heritage Foundation, a conservative Washington- based think tank, and The Wall Street Journal.

Australia and New Zealand grabbed third and fourth spot respectively.

The United States, however, saw its standing dented: it is placed at No. 8, down two places from a year ago.

Canada pushed the US from the top seven economies deemed to have an entirely free economy because of 'notable decreases in financial freedom, monetary freedom and property rights', the report said.

That means the US has lost its claim to being an unrestricted economy.

The rankings are based on criteria that include economic openness, trade, the efficiency of domestic regulators and the rule of law.

Singapore retained its second- place ranking despite a relatively poor score in the financialfreedoms category.

The index authors described last year as a mixed, sometimesnightmarish, time for economic freedoms. Several of the world's top economies - including China, Britain and the US - floundered because of 'unsuccessful attempts to spend their way to prosperity'.

'If the policies in the US don't improve in the coming years then I think we could see a continued slide in economic performance there, and that would have significant negative repercussions for the world economy as a whole,' said Mr Terry Miller, a director at The Heritage Foundation.

The index's premise is that a higher degree of economic freedom yields higher levels of prosperity and per-capita income.

The index showed that half of the world's major economies curtailed economic freedoms to some extent last year.

Mr Miller said that the US should not have bailed out a number of stricken banks in the past year, arguing that it would have been better to let market forces decide their fate.

'I want the US government to really back off - I would prefer them to do nothing than what they're doing now because then I think we would get out of this crisis quickly and the market would adjust,' said Mr Miller, who added that the US' current spending woes were partly a spillover from the Bush administration.

Britain also fell in this year's index, to 11th out of the 179 countries graded.

Meanwhile, China, a relative laggard on the economic-freedom charts with a ranking of 140, saw its score drop because of 'significant declines' in investment and labour freedoms.

The authors added that a massive lending spree by its banks was now exacerbating the risk of asset bubbles.

Cuba, Zimbabwe and North Korea rounded out the bottom of the list.