30/08/2025

BIZ & FINANCE SATURDAY | AUG 30, 2025

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South Korea to boost spending in bid to spur AI-led growth SEOUL: South Korea’s government plans to raise budget spending for next year by the steepest pace in four years as the country’s new president seeks to spur economic growth through a policy of boosting investment in artificial intelligence. In its annual spending plan released yesterday, the finance ministry set total government expenditure for 2026 at 728 trillion won (RM2.2 trillion). That is up 8.1% from 2025, outstripping the 2.5% increase this year and marking the biggest jump since 2022, excluding the two supplementary budgets introduced so far this year. President Lee Jae Myung, who took office on June 4, has vowed expansionary fiscal policy to boost growth, in contrast to the three years of the administration of his conservative predecessor Yoon Suk Yeol who prioritised fiscal sustainability. Last week, the government unveiled economic policy plans with a top priority on AI investment, as it slashed growth projections amid downward pressure from US tariffs and a long-term population shock. “Fiscal policy needs to prime the pump to grow the spark of recovery,“ Finance Minister Koo Yun-cheol said. Asia’s fourth-largest economy grew in the second quarter at the fastest pace in more than a year, on robust technology exports and a rebound in consumer spending, but faces headwinds from higher US tariffs introduced this month. The country’s central bank held interest rates steady for a second straight review on Thursday but flagged further easing to counter the hit to growth from US tariffs. South Korea’s fiscal deficit will widen to 4% of GDP in 2026, sharply up from 2.8% in 2025, as tax revenue is projected to only rise 3.5% to 674.2 trillion won, the ministry said. The debt-to-GDP ratio is estimated to rise to 51.6% from 48.1%. After next year, the government plans to slow expenditure growth to maintain it at an annual average rate of 5.5% for 2025-2029. It sees the debt-to-GDP ratio rising to 58% by 2029. Spending on social welfare will be raised by 8.2% to 269.1 trillion won in 2026, with more government projects to try to boost the country’s flagging birthrate – the lowest in the world. Spending on research will be raised by a record 19.3% to 35.3 trillion won for AI investments and industrial policies by 14.7% to 32.3 trillion won to support tariff-hit exporters. Spending on the cultural industry will also rise 8.8% to 9.6 trillion won to further grow a sector riding a global boom. Amid growing US pressure to lift defence spending, it will be raised by 8.2% to 66.3 trillion won – equivalent to around 2.4% of GDP. The government will issue 232 trillion won of treasury bonds in 2026, with the net increase in bonds projected at 115.7 trillion won and planned issuance to finance the fiscal deficit seen at 110 trillion won. The issuance ceiling of dollar-denominated and won-denominated foreign exchange stabilisation bonds will be set at US$1.4 billion and 13.7 trillion won, respectively. The budget plan will be submitted to the National Assembly, currently controlled by the ruling Democratic Party, for approval. – Reuters

US low-value package tariff exemption ends

WASHINGTON: The US tariff exemption for package shipments valued under US$800 (RM3,374) ended yesterday, raising costs and disrupting supply chain models for e commerce companies, small businesses using online marketplaces and consumers alike. The US Customs and Border Protection (CBP) agency began collecting normal duty rates on all global parcel imports, regardless of value, country of origin, or mode of transportation at 12:01am EDT (0401 GMT) yesterday. It offered a flat-rate duty option of US$80 to US$200 per package shipped from foreign postal agencies for six months. The move broadens the Trump administration’s cancellation of the de minimis exemption for packages from China and Hong Kong in May as part of an effort to halt shipments of fentanyl and its precursor chemicals into the US “President Trump’s ending of the deadly de minimis loophole will save thousands of American lives by restricting the flow of narcotics and other dangerous prohibited items, and add up to US$10 billion a year in tariff revenues to our Treasury,” White House trade adviser Peter Navarro told reporters on Thursday. “This is a permanent change,” a senior administration official said, adding that any push to restore the exemptions for trusted trading partner countries was “dead on arrival.” The de minimis exemption has been in place since 1938, starting at US$5 for gift imports and was raised from US$200 to US$800 in 2015 as a means to foster small business growth on e-commerce marketplaces. But direct shipments from China exploded after President Donald Trump raised tariffs on Chinese goods during his first term, creating a new direct-to consumer business model for e-commerce firms Shein and Temu. The National Coalition of Textile Organizations called the move a “historic win” for US manufacturing by closing a loophole that allowed foreign fast-fashion firms to avoid tariffs and import apparel sometimes made with forced labor, undercutting American jobs. “The administration’s executive action closes this channel and delivers long overdue relief to the US textile industry and its workers,” the group said. CBP has estimated that the number of packages claiming the de minimis exemption jumped nearly 10-fold from 139 million in fiscal 2015 to 1.36 billion in fiscal 2024 - a rate of nearly 4 million per day. Retail analysts say that the end of de

o New import duties squeeze shippers and push up consumer prices as ‘below US$800 parcels’ lose relief

E-commerce giants and small businesses alike are bracing for shipping disruptions under new US rules. – UNSPLASH PIX

from countries with Trump-imposed duty rates below 16%, such as Britain and the European Union, US$160 from countries between 16% and 25%, such as Indonesia and Vietnam, and US$200 from countries above 25%, including China, Brazil, India and Canada. But postal services must shift to full “ad valorem” duty collection based on the value of the shipments by Feb 28, 2026, the second official said. This official acknowledged that some foreign postal services have suspended mail to the US but said the administration was working with foreign partners and the US Postal Service to minimize disruptions. Kelly Ann Shaw, a former senior White House trade official during Trump’s first term, said she expected the removal of the de minimis exemption to cause some initial turmoil, but expressed confidence it would be worked out over time. “I think there will be growing pains as this unfolds, but it is US law,” said Shaw, now with the Akin Gump law firm in Washington. “There will be a bit of a transition time while CBP figures out how to process these low-value shipments, which it hasn’t had to do in many years.” – Reuters intentionally, deliberately, willfully, or even recklessly... Rather, the SEC alleges that Mr Musk late-filed a single beneficial ownership form three years ago, and fully corrected any alleged error immediately upon its discovery. There is no ongoing violation,“ the Tesla and SpaceX CEO’s lawyers said. The SEC did not respond to a request for comment outside regular business hours. Musk has long feuded with the SEC, including after it sued him in 2018 over his Twitter posts about possibly taking Tesla private and having secured funding to do so. – Reuters

minimis will likely raise prices for many goods sold through e-commerce companies, as goods that previously avoided tariffs because of the exemption will ultimately be charged duties. This may put such firms on a par with costs for more established retailers like Walmart, which tend to import merchandise in bulk containers that are subject to tariffs. CBP has collected more than US$492 million in additional duties on packages shipped from China and Hong Kong since their exemptions were eliminated on May 2, another Trump administration official said. The official said that full tariff rates will apply to all packages shipped by express carriers such as FedEx, United Parcel Service and DHL. These firms are better set up to collect duties and process customs data than traditional postal agencies. Foreign postal agencies can opt to collect and process the duties based on the value of the package contents, or opt for the flat rate method by collecting a flat tax based on Trump’s “reciprocal” tariff rates currently in place on goods from the country of origin. Based on CBP guidance issued on Thursday, parcels would be charged US$80

Musk seeks dismissal of SEC lawsuit on his 2022 Twitter stake BENGALURU: Billionaire Elon Musk filed a motion on Thursday to dismiss the US Securities and Exchange Commission’s (SEC) civil lawsuit that accused him of waiting too long in 2022 to reveal his large stake in social media platform Twitter, later renamed as X. In a complaint filed in Washington DC federal court in January, the SEC said Musk violated federal securities law by waiting 11 days too long to disclose his initial purchase of 5% of Twitter’s common shares. It sought to force Musk to pay a civil fine and give up profits that the SEC said were a result of the violations. Lawyers for Musk said on Thursday the billionaire stopped purchasing additional shares of then-publicly-listed Twitter and filed his disclosure one business day after his wealth manager consulted securities disclosure counsel about potential filing requirements. An SEC rule requires investors to disclose within 10 calendar days when they cross a 5% ownership threshold, which would have been by March 24, 2022 in Musk’s case. The SEC said that at the expense of unsuspecting investors, Musk instead bought more than US$500 million (RM2.1 billion) of Twitter shares at artificially low prices before finally revealing his purchases on April 4, 2022, by which time he owned a 9.2% stake. The SEC sued Musk on Jan 14, six days before Republican President Donald Trump took office and made Musk a special adviser to slash the federal workforce and spending. Musk faced a deadline to respond to the court yesterday. Musk’s lawyers said the case should have not been brought and the billionaire did not mean any harm. They said the SEC’s action against Musk “reveals an agency targeting an individual for his protected criticism of government overreach.” “The SEC does not allege that Mr Musk acted