12/12/2025

BIZ & FINANCE FRIDAY | DEC 12, 2025

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Japan govt reportedly plans new tax breaks

Taiwan to keep production of ‘most advanced’ chips at home: Deputy minister TAIPEI: Taiwan plans to keep making the “most advanced” chips on home soil and remain “indispensable” to the global semiconductor industry, a deputy minister said on Wednesday. The democratic island makes more than half of the world’s chips, and nearly all of the most advanced ones, that power everything from smartphones to AI data centres. Its dominance of the industry has long been seen as a “silicon shield” protecting it from an invasion or blockade by China – which claims the island is part of its territory – and an incentive for the United States to defend it. But the threat of a Chinese attack has fuelled concerns about potential disruptions to global supply chains and has increased pressure for more chip production beyond Taiwan’s shores. “We will try to maintain the most advanced technology in Taiwan, and to be sure that Taiwan continues to play an indispensable role” in the semiconductor ecosystem, Deputy Foreign Minister Francois Chih-chung Wu told AFP. “I think it’s the same logic for every country, even countries not under such a very complicated geopolitical situation.” The island does not have enough land, water or energy to accommodate the fabrication plants, or fabs, needed to meet soaring demand for chips, “so step by step we enlarge our investment in the world, but still linking with Taiwan”, said Wu. Taiwan’s TSMC, the world’s largest chipmaker, has already invested in fabs in the United States, Japan and Germany. And earlier this year the firm pledged to spend an additional US$100 billion on US chip plants, as President Donald Trump threatened to impose tariffs on overseas-made semiconductors. However, replicating TSMC’s factories in the US is full of challenges, said Wu, citing Taiwan’s “very special culture to make the semiconductors very well”. The best way to reduce risks to the chip industry was not to move fabs abroad but to “prevent the war”, Wu said. – AFP HK cuts interest rate but major banks decline to follow suit HONG KONG: Hong Kong’s de-facto central bank lowered yesterday its base interest rate by 25 basis points to 4%, in line with a cut by the US Federal Reserve, but major lenders declined to pass on the reduction to customers. Hong Kong’s monetary policy moves in lock-step with the United States as the city’s currency is pegged to the greenback in a tight range of 7.75-7.85 per dollar. It was the third easing by the Hong Kong Monetary Authority (HKMA) this year and followed a similar cut late in October. HSBC and Bank of China (Hong Kong) said yesterday they would maintain their best lending rates in Hong Kong at 5%. Standard Chartered Bank said it would keep its HK dollar best lending rate unchanged at 5.25%. All three lenders kept their savings rates unchanged. The banks did not provide reasons, but HKMA CEO Eddie Yue told reporters that lenders would take into consideration factors including interbank rates and the cost of capital when making decisions on interest rates. “Many banks had mentioned in their rate cut last time that the current savings rates are getting close to zero,”Yue said. “The pace of future rate cuts remains quite uncertain, which may influence the interest rate environment in Hong Kong.” – Reuters

o Takaichi pursuing reflationary policy to boost economy

mid-sized businesses, and have a projected return on investment of more than 15%, the Nikkei added. The government has set the target of doubling annual capital expenditure to ¥200 trillion by 2040. After decades of deflation, annual capital spending in the world’s fourth-largest economy exceeded ¥100 trillion in the past fiscal year for the first time in 32 years. The new incentives would fall under so-called special tax measures. While pursuing a reflationary policy, Takaichi’s administration has also said it plans to cut wasteful spending and has set up a panel which aims to act like the now-disbanded US Department of Government Efficiency which is reviewing such special tax measures. The Nikkei has previously reported that the government plans to trim tax incentives on research and development costs, while boosting such tax breaks for companies in fields such as artificial intelligence and quantum technology. – Reuters

This week, Parliament’s lower house is set to pass an ¥18.3 trillion (RM481 billion) supplementary budget for this fiscal year to fund a massive stimulus package. Most of that will be financed through new debt issuance. But with debt at more than twice the size of its economy, Japan is widely viewed as needing to fix its tattered public finances. That task has become more urgent as the Bank of Japan is dialling back its decade-long, ultra-loose monetary policy that has kept borrowing costs near zero. Concerns about debt burden have sent benchmark government bond yields to 18-year highs. According to the Nikkei , the planned tax breaks are set to be included in a tax reform outline due to be published later this month. The Industry Ministry estimates a reduction of around ¥400 billion in annual tax revenue due to the new measure, it said. To be eligible for the tax break, the capital spending must exceed ¥3.5 billion for large firms and ¥500 million for small and

TOKYO: Japan’s government plans to introduce additional tax breaks to spur corporate investment, the Nikkei business daily reported yesterday – a move which comes despite growing concerns in financial markets about the country’s rising debt. Tax breaks under consideration include either giving companies a tax credit of up to 7% of capital expenditure or allowing them to immediately start accounting for depreciation on the assets purchased, the Nikkei reported, without citing sources. Japan’s Industry Ministry declined to comment on the report. New Prime Minister Sanae Takaichi believes expansionary fiscal policy is needed to boost economic growth.

People walk in front of the Bank of Japan building in Tokyo. – REUTERSPIC

Asia equities see biggest foreign outflows in six years HONG KONG: Asian equities witnessed their largest monthly foreign outflows in nearly six years in November, driven by a selloff in high-flying technology stocks as concerns over stretched valuations prompted investors to cut exposure. moves reflected rising unease about how long the artificial intelligence-driven rally could last. “Investors in recent years built a very high level of concentration on a few AI-related trades, so even a minor deviation from sky-high expectations can cause significant market fluctuations,” he said. infrastructure through 2026–27 is likely to keep chip supply tight, supporting earnings for Asian semiconductor firms and underpinning valuations even if an AI bubble eventually forms, Goldman Sachs said.

The MSCI Asia-Pacific Index has risen 23.13% so far this year and is on track for its strongest annual performance in eight years. “Asia equities delivered a resilient performance in 2025, supported by policy measures, robust domestic demand, and AI-driven innovation across key markets,” said Mike Shiao, chief investment officer for Asia ex Japan at Invesco. “Looking ahead, we expect the US dollar to remain on a weakening trajectory, a trend that has historically benefited Asia equities.” – Reuters

Foreigners sold a net US$22.1 billion of shares in November across Taiwan, South Korea, India, Thailand, Indonesia, Vietnam and the Philippines, marking the heaviest monthly outflow since the US$33.32 billion net sale in March 2020, LSEG data showed. Taiwan saw US$12.04 billion in net foreign selling, while South Korea recorded US$9.75 billion, its biggest monthly outflow since March 2020. Herald van der Linde, head of equity strategy for Asia Pacific at HSBC, said the

India, Thailand and Vietnam also saw foreign withdrawals of US$425 million, US$388 million and US$286 million, respectively. Bucking the trend, Indonesian and Philippine equities attracted US$731 million and US$59 million in foreign inflows. Sentiment has improved slightly in December, with Taiwan and South Korea drawing US$2.58 billion and US$1.84 billion in foreign inflows by Wednesday’s close. Heavy hyperscaler spending on AI