Hong Kong's government may hike taxes to tackle chronic budget woes, while Indonesia reports weak trade figures.
A Hong Kong government committee says that introducing a sales tax could help the territory fight its ballooning budget deficit. The government warns that the deficit has become a chronic problem that will exist even after economic growth rebounds.
The territory's deficit is expected to reach about $8.5 billion for this fiscal year, or about five percent of estimated gross domestic product.
Even if the government imposes a sales tax, it could take one-and-a-half years or longer to implement it. So in the meantime, it may introduce a land and sea departure tax and make large spending cuts in the budget for the next fiscal year, which will be unveiled Wednesday.
Ian Perkin is the chief economist for Hong Kong's General Chamber of Commerce. He says that most Hong Kong people dislike the idea of a general sales tax. "Overwhelmingly, apart from taxation professionals who like the consumption tax idea, everyone is against it," he says. "The man on the street, who is faced with paying it, the tourism industry and most business people are opposed to this tax."
In South Korea, the government's trade office says that vehicles were the nation's number one export to the United States in 2001, outpacing semiconductors for the first time in eight years.
South Korea sold U.S. buyers nearly $6 billion worth of cars last year, while sales of semiconductors dropped by more than half to $3.4 billion. However, computer memory chips ranked as the country's top overall export. South Korea's Samsung Electronics and Hynix Semiconductor are among the world's top three chip makers. Together, they control about 45 percent of the global market.
In Southeast Asia, Indonesia is reporting a weakening in its trade balance, which could hurt its growth targets for the year. Jakarta says that in January, exports fell 18 percent from a year ago, while imports declined 36 percent.