Asia Pacific News
LAST UPDATE: June 10, 2025
India cenbank deputy flags concerns in microfinance sector, urges reforms
RBI Deputy Governor M. Rajeshwar Rao warned on June 5 that India’s microfinance sector is grappling with high interest rates, over-indebted borrowers, and aggressive recovery methods; he urged the adoption of stronger credit assessment frameworks and more ethical practices.
Insight
This alert from the RBI indicates mounting stress within the microfinance sector, where lenders continue to charge high margins despite access to cheaper capital. The deputy governor’s call for ethical reforms signals a strategic pivot from profit-driven to socially responsible finance, which could lead to tighter regulations and a restructuring of incentive systems to protect borrowers.
Japan to consider buying back some super-long government bonds, sources say
Japan is evaluating the repurchase of 20–40-year government bonds to tackle ballooning yield levels and oversupply, aligning with planned reductions in future bond issuance; a decision is expected after market consultations scheduled for June 20–23.
Insight
By exploring bond buybacks, the government and BOJ aim to stabilize yields and restore confidence in Japan’s long-dated bond market. This measure, coupled with tapering bond issuance, suggests a more active fiscal approach to debt management. Political motivations are evident, with authorities seeking to defuse bond market volatility ahead of key parliamentary sessions, although the final rollout remains contingent on budgetary approval and careful market calibration.
Malaysia to Expand Services Tax From July 1 to Trim Deficit
From July 1, Malaysia will extend its services tax to sectors such as construction, finance, healthcare, education, rentals, and beauty, and impose a 5–10% sales tax on non-essential items, aiming to reduce its deficit from 4.1% to 3.8% of GDP.
Insight
The Malaysian government’s expansion of its tax base represents a deliberate effort to generate diversified revenue and manage public finances more sustainably. Although this tax shift may cool discretionary consumer and rental markets, it also reflects a proactive stance on structural reforms. However, stakeholder resistance—especially from industries like property rentals and finance—may complicate implementation and require careful communication strategies.
