Japan's dawdling DOGE

Insight: Japan's DOGE equivalent, the prosaically named “Special Tax Measures and Subsidy Review Office,” is gathering steam…slowly. Its mandate is to eliminate low-impact tax incentives and subsidies to fund Prime Minister Sanae Takaichi's promised two-year cut to the tax on food, as well as her ‘industrial policy’-driven investments into Japan’s future growth sectors like robots and biotechnology. But in its first sweep, the new office found only JP¥17 billion (about US$100 million) in subsidies to eliminate and negligible savings on the tax side. This month, therefore, the government expanded the scope of the review to target over 200 government-managed funds holding more than JP¥7 trillion yen in combined balances, with specific funds such as the "Beyond 5G Fund" and "Space Strategy Fund" under scrutiny. The administration hopes to have all this wrapped up in a December tax and budget package that passes before year-end. 

Impact: Time is running short for the government, and the cost-cutting that was supposed to fund the food tax cut has so far produced only negligible savings. One issue is that the DOGE office has no legal enforcement powers, and bureaucratic resistance has kept actual abolitions to a bare minimum. Coalition dynamics compound the difficulty since the Japan Innovation Party, whose support underpins the government's legislative majority, has demanded the abolition of 65 tax incentives to generate JP¥700 billion yen. This figure is 700 times larger than the government's own result, signalling contentious negotiations ahead. Meanwhile, the record FY2027 budget request has unsettled bond markets, pushing the 10-year JGB yield above 2.8% and raising the cost of debt servicing. With the economy still stuck in neutral, the only realistic options to fill the 5-trillion-yen hole are additional bond issuance or clawbacks from social security or local government allocations. None of these fully meet Takaichi's "no deficit bond financing" pledge — so it looks like she will have to break either one election promises or the other. 

The number of agricultural drones that XAG — the second largest producer of such products after DJI — predicts will be needed in China to cover the labor shortage incurred by rural-urban migration and demographic decline over the next three years. Climate change and the increase in extreme weather are also demand drivers. XAG’s products autonomously clean, recharge, refill and plan the spraying routes, also helping overcome the drone pilot supply crunch. Justin Gong, senior vice president of XAG, predicts that “every farmer in the future will have their own robot”.

Insight: Malaysia’s export machine is having a very good moment. Overseas shipments jumped more than 50% year-on-year in September, after rising 45% in August, while GDP grew a stronger-than-expected 5.3% in the third quarter. Much of the momentum is coming from the global AI investment boom, which is funnelling fresh demand and capital into Malaysia’s long-established semiconductor industry. SoftBank founder Masayoshi Son is reportedly ready to invest US$50 billion in AI infrastructure, while Penang is literally creating new land for the next wave of technology manufacturing through its “Silicon Island” project. For a country that fell short of its earlier ambition to become an advanced economy, AI has handed it an unexpected second shot.

Impact: The bigger opportunity is not simply to make more chips, but to make more valuable ones. Penang already accounts for roughly 5% of global semiconductor exports, yet Malaysia remains strongest in lower-value assembly and testing rather than areas such as chip design and advanced packaging. If the current investment cycle helps it climb that value chain, the AI boom could do more than lift exports: it could accelerate Malaysia’s push towards high-income status. The risk is timing: trillions of dollars of global AI infrastructure spending could ultimately prove excessive. But for Malaysia, the greater mistake may be sitting out the boom and discovering too late that the window to move up the value chain has closed. 

Insight: It’s a fine line between being a good neighbor and perhaps being a little too dependent on one. Last week, Indonesia Energy Minister Bahlil Lahadalia warned that it could halt energy exports to countries that fail to show it sufficient “respect” before following through with an approximately 8% reduction in pipeline natural gas exports to Singapore, citing domestic energy requirements. While no explicit and official links have been made between the gas cuts and the haze dispute, the timing was particularly interesting. Just days earlier, Singapore had invoked its Transboundary Haze Pollution Act, issuing warnings to over 20 companies linked to the region's worst haze episode in more than a decade. Meanwhile, President Prabowo Subianto has adopted increasingly nationalistic rhetoric in response to external criticism, declaring that Indonesia “fears no one” in response to global index provider MSCI's warning of Indonesia’s potential downgrade to standalone market status. The convergence of these developments illustrates how quickly economic relationships can become entangled with political tensions.

Impact: The episode offers a reminder that economic interdependence can be both a source of strength and a point of vulnerability. As resource-rich countries become increasingly assertive about their economic sovereignty, access to critical commodities and infrastructure can no longer be taken for granted. This is particularly relevant for ASEAN, where ambitious initiatives such as the ASEAN Power Grid depend on countries deepening their reliance on one another for energy resilience and security. Singapore may have diversified its energy imports sufficiently to absorb the immediate impact, but not every country may be so lucky. For businesses, too, managing geopolitical risk increasingly means looking beyond conventional supply chain considerations to understand the political dynamics underpinning cross-border relationships. After all, being a good neighbor may help keep the peace, but it doesn't necessarily guarantee that the lights will stay on. 

Neon-lit streets, bustling markets, mountains and seas: this is the Hong Kong portrayed in the latest music video from The Weeknd, popular Canadian singer-songwriter, for his single 'Hong Kong.' Premiered at his Kai Tak concert earlier this month, the new track samples Faye Wong’s 1993 classic “Monsoon”, while its video brings back the cinematic romance of Wong Kar-wai. It is The Weeknd's love letter to the city, but also a journey down memory lane to an era when Hong Kong’s music and movies travelled far beyond its shores. The response has travelled, too: fans at home and abroad have shared nostalgic tributes, while listeners have flocked back to Faye's original recording — turning one star's homage into a wider conversation about the city and its enduring cultural pull.

Listen to and watch the video for 'Hong Kong' here.