Southeast Asia rides into a Musk-sort of DOGE

For decades, Southeast Asia’s bureaucracies were like shrines: respected, huge, and impossible to change. However, Musk’s DOGE has become some sort of role model. Indonesia and Vietnam are set to cut costs. Just like Musk has done with America, some people will lose jobs.

Indonesian President Prabowo Subianto said that he would be cutting $19 billion. This is about 8.5% of the state budget from this year.

On the other hand, Vietnam wants to do more. To Lam, the leader of the Communist Party, has reduced the number of government ministries and agencies from 30 to 22 and eliminated half of the party commissions and parliamentary groups. 

This is not all. Malaysia’s government just fired 30,000 contract workers who didn’t have a certificate that they graduated from high school. Cambodia is next in line to be cut down because its bureaucracy grew after the leadership changed in 2023.

“There is no safe havens for weak officials” – To Lam

The way some Southeast Asian leaders have talked about firing thousands of mostly low-wage workers sounds a bit heartless, just like Musk’s words. Lam thinks that the government shouldn’t be “safe havens for weak officials.” 

According to him, “If we want to have a healthy body […] sometimes we must take bitter medicine and endure pain to remove tumors.” People in charge of transportation were told to get out! The Ministry of Labor is getting done with,  and State-run media outlets have either merged or gone away. 

At the local level, party and state agencies have been combined to work on Asia’s economic future. The Vietnamese government wants to eliminate 20% of all state jobs by 2030. Vietnam is even changing its administrative plan. Half of the country’s provinces and 70% of commune-level governments will be gone.

In theory, there would be fewer problems if there were fewer provinces and officials. The government calls it a “revolution” that fits with Vietnam’s “era of national rise.”

However, not all departments will be affected. To Lam was the country’s toughest cop; therefore, the Ministry of Defense has not been touched. He has made sure that his friends have kept their whip hand in the communist ranks, especially before the National Congress in January.

The money saved will pay for the free school meals program

In Indonesia, this is the order. Public works, a 73% cut and other departments 30% to 50% less. Tens of thousands of contractors have lost their gigs with the state, and it looks like public servants are being told to leave their offices by 4 p.m.

However, the spending cuts are for the other ministries, not for allies, which is important to note. Prabowo, who used to be the defence minister, has not touched the Ministry of Defense.

Prabowo says that the money saved will pay for his signature $28 billion-a-year free school meals program. However, some people have questioned why kids should go without food at home, which is what his cuts to social spending will probably do for some, just so they can have a slightly better lunch at school. 

Of course, some people think it’s all about politics and power. Less government means fewer groups and more competition for jobs that give people money, which means that those at the top have more power. 

In fact, Prabowo says that two-thirds of the savings will be put into the national wealth fund he just established. Unlike Indonesia’s old one, this fund goes straight to the president.

The USAID and tariffs have increased pressure on the state budgets

The United States stopped giving aid overnight, and tariffs could show up just as fast. France and Japan aren’t able to make up the difference. Free trade is barely alive, and every country in Southeast Asia wants to move up the value chain as soon as possible. 

To that end, governments have three options: raise taxes, borrow more money, or cut spending. Even though state debt isn’t impossible to handle, most governments naturally avoid it. It doesn’t make sense to raise taxes when tax collection is, well, a mess.

In 2022, taxes brought in an average of 14.3% of the world’s gross domestic product. Thailand was the only Southeast Asian country that did not rank above that. Indonesia only got 11%. That might change if things are more efficient, but it would take a long time. Cutting costs seems to make more sense.

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