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  • Military brass rebel against academy merger at hearing
    Military brass rebel against academy merger at hearing SEOUL, August 26 (AJP) - President Lee Jae Myung and Defense Minister Ahn Gyu-back remain committed to merging South Korea's Army, Navy and Air Force academies into a single institution, but a raucous public hearing Wednesday exposed the depth of resistance among academy alumni, retired officers and military experts. What was supposed to be a forum for public debate quickly descended into angry shouting, profanity and heckling at the Defense Convention Center in Yongsan, central Seoul. Much of the anger was directed at Ahn, whose absence became an issue before the policy discussion even began. "Bring Ahn here now," some attendees shouted. Kim Hong-chul, head of the Ministry of National Defense's defense policy office, represented the ministry instead. Ahn's absence had already drawn criticism from academy alumni groups, which had demanded that the minister personally attend and hear their objections. The tension was apparent from the outset. Attendees shouted over organizers and demanded that the ministry scrap parts of its planned presentation. When officials asked the audience to remain seated and wait for the question-and-answer session, angry voices responded with profanity. "Shut your mouth!" one attendee shouted at the moderator. Others yelled at officials to "come down" from the stage. Organizers repeatedly appealed for what they called a "mature discussion culture," saying the hearing could not proceed if participants continued shouting without microphones. Even technical problems became part of the protest. When a promotional video prepared by the ministry failed to appear properly on screen, an opponent joked that "heaven helped us," drawing reactions from the audience. The video was eventually skipped and the ministry moved directly to its policy presentation. The confrontation intensified when the heads of alumni associations representing the three service academies took the floor. Park Pan-jun, president of the Korea Military Academy alumni association, accused the government of trying to push through the merger without sufficient consultation. "They are handling the closure of the service academies the way gangsters handle business," Park said. He argued that the plan would require the government to close the existing academies, build a new campus at the Jaun-dae military complex in Daejeon and relocate units already based there, resulting in massive public spending. "I am certain this plan cannot be carried through to the end," Park said. "It will only waste the national budget and the country's resources." Park also criticized Ahn for staying away from the hearing, saying alumni groups had specifically asked the minister to attend because he was ultimately responsible for the policy. "We asked that the minister come, listen, answer questions and tell us what he intends to do," Park said. "But once again, the minister stayed away." Lee Beom-rim, president of the Naval Academy alumni association, delivered an even sharper warning. Lee criticized the ministry for announcing plans to preserve monuments and memorial facilities at the existing academy sites before Wednesday's hearing, arguing that such preparations suggested the merger had effectively already been decided. "If you say you are holding a public hearing to listen to the people, then are all these procedures nothing more than a formality to establish procedural legitimacy?" he said. "Are you saying the train will keep running even if the dogs bark?" Lee continued. "Dogs do not only bark. They can bite and tear." He then addressed Ahn directly. "I warn the defense minister once again not to go down in history as a sinner." Hwang Sung-jin, president of the Air Force Academy alumni association, pointed to President Lee's own recent remarks that government proposals should remain open to criticism and revision during public consultation. "Why is the Ministry of National Defense not applying the commander-in-chief's own instruction to the creation of the Armed Forces Academy?" Hwang asked. Behind much of Wednesday's anger was another set of remarks by Lee earlier this month. During a televised government briefing on Aug. 5, Lee criticized the historical role of Korea Military Academy graduates in South Korea's military coups and questioned why the institution had never been held accountable. He urged Ahn to move quickly on integrating the service academies. Lee's comments have since become a rallying point for opponents, who argue that the merger risks being interpreted as political punishment rather than military education reform. Kim Se-jin, secretary-general of the civic group Future Thinking and one of three anti-merger panelists, rejected the president's characterization during Wednesday's debate. Kim argued that criminal responsibility belonged to individuals who took part in past coups, not to an educational institution or generations of cadets who had nothing to do with them. "The government has already decided the conclusion and is only pretending to listen," Kim said earlier in his presentation, accusing officials of repeatedly producing new justifications for the merger after previous arguments came under criticism. He later directly challenged Lee's remarks about three coups and questioned why today's cadets should bear responsibility for the actions of past graduates. "Is Korea Military Academy a school of potential coup criminals?" Kim asked. Even one panelist supporting the creation of a unified academy sought to distance the reform from the idea of collective punishment. Doo Jin-ho, head of the Eurasia Center at the Korea Research Institute for National Strategy, said it was an undeniable historical fact that some Korea Military Academy graduates had participated in past coups and political intervention. But, he said, "it is difficult to justify attributing the historical wrongdoing of certain individuals to the Korea Military Academy as an educational institution, including its past, present and future graduates." "The essence of creating the Armed Forces Academy is not whether to impose punitive responsibility on a particular academy," Doo said. "It should be about how to scientifically redesign the officer training system for the future security environment." The government has framed the merger largely as a response to changes in modern warfare. Officials argue that military operations increasingly span land, sea, air, space, cyber and the electromagnetic spectrum, while artificial intelligence and unmanned systems are blurring traditional boundaries between the armed services. Under the basic plan announced July 16, the Army, Navy and Air Force academies would be integrated into a single four-year institution at Jaun-dae in Daejeon. The government says the overhaul is intended to strengthen joint operations and prepare future officers for a rapidly changing security environment. Cadets would receive more common education during the early part of their studies before moving into more service-specific training. The ministry also argues that the reform would help the armed forces cope with South Korea's shrinking pool of military-age recruits while creating an officer corps better equipped for joint warfare. Opponents do not necessarily dispute those challenges. They argue instead that the government has failed to demonstrate why they require dismantling the existing academy system. They warn that integration could weaken the service-specific expertise, institutional identity and traditions developed separately by the Army, Navy and Air Force. That divide was visible throughout Wednesday's hearing. As Kim Hong-cheol attempted to explain the ministry's case, audience members repeatedly heckled him. At one point, after another burst of profanity, Kim responded from the podium: "Please do not swear. If you want to swear, do it after this is over." Around 300 people attended the hearing, including ministry officials, cadets, retired officers, academy alumni and members of the public. Cadets seated inside largely watched the confrontation without making public remarks. The ministry plans to incorporate views collected at the hearing as it draws up a more detailed blueprint around October. The government had previously said it would gather public opinion before finalizing the plan. But Wednesday's confrontation showed that the dispute has moved well beyond questions of curriculum, campuses and military efficiency. The merger has become entangled with competing interpretations of South Korea's history of military rule, distrust of the government's motives and fears among the services that decades-old institutional identities could disappear. If the scene in Yongsan was any indication, drawing up the blueprint may prove considerably easier than building consensus around it. AJP Takeaways • South Korea's Defense Ministry faced fierce opposition at a public hearing on plans to merge the Army, Navy and Air Force academies, with shouting, profanity and heckling repeatedly disrupting proceedings. • Defense Minister Ahn Gyu-back's absence further angered academy alumni, who accused the government of treating the hearing as a formality after effectively deciding to proceed with the merger. • President Lee Jae Myung's criticism of Korea Military Academy graduates' role in past military coups has deepened resistance, with opponents arguing that today's academy and cadets should not bear collective responsibility for historical wrongdoing. • The government says a unified Armed Forces Academy in Daejeon would strengthen joint warfare capabilities and prepare officers for AI, unmanned systems and a shrinking military-age population, while opponents warn it could erode service-specific expertise and traditions. 2026-08-26 18:05:18
  • Warning on Suspicious Capital Increases: Where is the Money Going?
    Warning on Suspicious Capital Increases: Where is the Money Going? Capital increases are a common method for companies to raise funds, typically for new business investments, facility financing, or improving financial structures. However, there has been a recent trend of capital increases with unclear uses of funds. Instances of failing to clearly specify the intended use of funds raised through capital increases have become more frequent. This has led to a significant rise in correction requests from the Financial Supervisory Service (FSS) this year. Analysts in the securities industry are calling for increased scrutiny to ensure that funds raised through capital increases are used for genuine financial improvements, as unclear purposes could lead to embezzlement or breach of trust.According to the FSS, companies such as Hanul Semiconductor, Sangji Construction, and Agent AI have recently received correction requests regarding their securities registration statements related to capital increases. Hanul Semiconductor and Sangji Construction each received four correction requests, while Agent AI received three. All these companies repeatedly supplemented information regarding the use of funds, transactions with affiliates, and financial conditions during the capital increase process, indicating a lack of clarity about the intended use of the funds.Hanul Semiconductor initiated a capital increase on April 15 by issuing 4.7 million common shares, raising 22.8655 billion won through a rights offering followed by a public offering of unallocated shares. After several corrections, the company submitted its fourth amended registration statement on July 16, reducing the number of shares to be issued to 3.8 million and the total amount to 19.076 billion won. However, it decreased the operating funds while maintaining 8 billion won for debt repayment.Hanul Semiconductor plans to use the funds from the capital increase to repay loans borrowed from its subsidiary, Hanul Vision. Hanul Vision is a special purpose company (SPC) wholly owned by Hanul Semiconductor, with assets of 8.041 billion won, liabilities of 8.02 billion won, and equity of only 21 million won as of the end of 2025. It has not generated any revenue and recorded a net loss of 2 million won. Essentially, it has been acting as a financial conduit supplying funds to Hanul Semiconductor while holding significant debt.Sangji Construction has also faced scrutiny over the unclear use of its capital increase funds. The company issued 2.2 million common shares to raise 18.744 billion won through a preferential public offering. It plans to use the entire amount for operating funds and to lend to its subsidiary, Kyleroom Dosan, which is the developer of the 'Sangji Kyleroom Escala' project in the Nonhyeon-dong area of Gangnam, Seoul.The issue lies in the financial condition of Kyleroom Dosan. As of the end of the first quarter of 2026, Kyleroom Dosan's equity was reported to be in the negative. Recent disclosures by Sangji Construction regarding its real estate development projects indicate that Kyleroom Dosan is in a state of capital erosion and is a project implementation company that has not generated any revenue. Consequently, the capital raised by Sangji Construction will be funneled into a real estate development project of a subsidiary that is already in a capital erosion state. This means that participants in the capital increase will bear the financial risks of both Sangji Construction's financial condition and the performance and project financing risks of Kyleroom Dosan.Agent AI has undergone a series of capital reductions and increases. The company decided to consolidate 20 common shares with a par value of 500 won into one share, resulting in a 95% capital reduction, followed by a capital increase of 18.7359 billion won. It plans to issue 3,990,609 new shares, with 15.9129 billion won allocated for operating funds and 2.823 billion won for debt repayment. The amount the company aims to raise exceeds its annual revenue. Therefore, it is essential to assess whether the new funds will merely cover existing business losses or lead to new growth opportunities, such as expanding into renewable energy generation.There are also cases where capital increases have been misused to create the appearance of stock manipulation or fraudulent transactions. RF Semi is a notable example. In 2023, RF Semi pursued a 20 billion won third-party allocation capital increase, with CEO Ban Jae-yong's company, Hanwha Jinpyeong Electronics (now RF Industry), acquiring the new shares, resulting in a change of management control. Hanwha Jinpyeong Electronics became the largest shareholder after investing 20 billion won on June 1 of the same year. However, the former and current executives of this company have been arrested and indicted for violating capital market laws through false disclosures and promotions related to entering the secondary battery business.A financial investment industry official stated, “For capital increases that receive repeated correction requests, it is crucial not only to consider the scale of the increase or the discount rate but also to comprehensively verify the intended use of funds, financial risks, and transactions with major shareholders and affiliates. Especially when funds are transferred to affiliates, it is necessary to check the financial condition of the respective company and the likelihood of fund recovery.” 2026-08-26 18:04:20
  • Regulatory Scrutiny Shifts Focus of Rights Offerings to Smaller Firms
    Regulatory Scrutiny Shifts Focus of Rights Offerings to Smaller Firms Financial authorities are tightening their review of securities registration statements for capital increases, leading to a shift in the dynamics of the rights offering market. As requests for corrections have become more frequent, causing delays in deal timelines or even withdrawals of capital increases, large securities firms are increasingly selective in taking on these deals based on profitability and risk assessments. In contrast, smaller securities firms are seeing a rise in their participation in underwriting and subscription activities, particularly among KOSDAQ companies, shifting the market's focus from large firms to smaller ones. According to data from the Financial Supervisory Service, there were 33 initial securities registration statements related to capital increases submitted by KOSDAQ companies from January 1 to August 25 this year. Companies must submit a securities registration statement (equity securities) when pursuing a capital increase, detailing the type and scale of the securities to be offered. Quarterly data shows an expanding role for smaller securities firms in the rights offering market. In the first quarter (January to March), large securities firms led three capital increases, while smaller firms managed two, giving a slight edge to the larger firms. However, in the second quarter (April to June), large firms handled nine cases compared to 13 for smaller firms, indicating a narrowing gap. By the third quarter (July 1 to August 25), large firms had only one underwriting case, while smaller firms recorded five, widening the gap significantly. This trend is attributed to the government's focus on enhancing shareholder value, which has made the review process for securities registration statements more stringent. As the review process has become more rigorous, the time and personnel required for drafting and responding to corrections have increased, while profitability has decreased, prompting large securities firms to selectively take on capital increase deals. Industry experts note that this has opened up new business opportunities for smaller securities firms. Notably, since July, SK Securities has led four underwriting cases based on the securities registration statements disclosed. SK Securities appears to be actively pursuing capital increase underwriting as one of its main business areas. Analysts suggest that the tightening regulations in the rights offering market pose a burden for large firms while creating new opportunities for smaller firms. Industry observers believe this trend may continue for the foreseeable future.An industry insider stated, “As the review criteria related to shareholder rights protection have become stricter than in the past, there is a growing expectation to provide more specific justifications for the purpose of capital increases and the use of funds. Even after submitting a securities registration statement, repeated correction requests or delays in timelines can occur, leading large firms to be more selective about taking on high-risk deals.” * This article has been translated by AI. 2026-08-26 18:04:20
  • Surge in Regulatory Corrections for Capital Increases Amid Concerns Over Poor Use of Funds
    Surge in Regulatory Corrections for Capital Increases Amid Concerns Over Poor Use of Funds Regulatory corrections regarding capital increases by listed companies have surged this year, as many firms pursue capital increases with unclear plans for fund usage. The Financial Supervisory Service (FSS) has tightened its review standards, leading to an increase in cases where companies withdraw their capital increase plans.As of August, the FSS has issued 66 correction requests for securities registration statements, significantly surpassing last year's total of 43 and 56 in 2024.Specifically, among 15 listed companies that submitted securities registration statements for capital increases in the third quarter but have yet to finalize issuance conditions, six received two to four correction requests from the FSS, while seven received one request. Only two companies did not receive any correction requests. Companies that finalized their issuance conditions this month also made multiple corrections. Clobot submitted six corrections to its securities registration statement, while SensorView submitted three. Some, like SomeAge, made four corrections but ultimately withdrew their capital increase decision on August 5.The trend of withdrawing capital increases has also increased compared to previous years. As of August 26, there have been 23 cases of capital increase withdrawals through corrections, including four from KOSPI and 19 from KOSDAQ. This already exceeds the total of 22 withdrawals (three from KOSPI and 19 from KOSDAQ) that occurred throughout the last year.Correction requests are a procedure by which the FSS asks companies to supplement important information included in their securities registration statements. If the FSS determines that significant matters affecting investor judgment are insufficiently explained or require additional information, it will issue a correction request.The increase in correction requests indicates a growing concern over 'poor capital increases.' There are numerous cases where companies have unclear plans for how they will use the funds raised through capital increases, including instances where the funds are used to pay down debts of affiliated companies.A source in the financial investment industry stated, "Since capital increases dilute the value of existing shareholders' stakes, it is crucial to verify how the funds raised will be used. Given that there are capital increases with unclear purposes, the regulatory atmosphere is that simply needing funds is not a sufficient reason to allow capital increases." 2026-08-26 18:04:20
  • Frequent Meetings Between President Lee and Business Leaders Raise Concerns
    Frequent Meetings Between President Lee and Business Leaders Raise Concerns Frequent meetings between President Lee Jae-myung and major business leaders have created a mix of expectations and concerns within the business community. While these gatherings provide an opportunity to convey industry challenges directly, there is significant pressure from the government to expand investments.According to reports from political and business circles on August 26, President Lee held a private dinner with SK Group Chairman Chey Tae-won on August 20, followed by a meeting with Samsung Electronics Chairman Lee Jae-yong on the same day. He is also expected to meet with Hyundai Motor Group Chairman Chung Eui-sun soon.During these meetings, discussions are anticipated to focus on specific investment strategies related to three major mega projects aimed at regional balanced development and securing dominance in artificial intelligence (AI) and semiconductors, as well as how to respond to U.S. investment pressures.The Lee administration has been actively engaging with major corporate leaders to discuss U.S. investments and mega projects aimed at reducing tariff barriers. In fact, President Lee has met with the heads of the four largest conglomerates a total of 33 times in official and unofficial settings this year alone.The most frequent meetings have been with Chairman Lee Jae-yong, with 12 encounters this year across various forums, dinners, and overseas trips. Considering that Lee also attended the first meeting of business leaders after President Lee's inauguration and a public-private meeting for U.S.-Korea tariff and security negotiations, the two have met 14 times over the past 14 months, averaging once a month.Chey Tae-won, who serves as the chairman of the Korea Chamber of Commerce and Industry, has met with President Lee eight times this year, while Chairman Chung Eui-sun has met him seven times.President Lee's frequent outreach to these three leaders is crucial as they hold the keys to the success of the mega projects. While investments in regions like Gyeonggi, Chungcheong, and Gyeongsang provinces have made significant progress at the private sector level, investments in the Honam region are largely driven by the government, with private companies following suit.Although government and political support measures to encourage investments in the Honam region are beginning to take shape, the most pressing concerns for businesses—such as tax incentives and talent acquisition plans—remain incomplete. Compounding the issue, the U.S. has begun to openly pressure Samsung Electronics and SK Hynix regarding expanding semiconductor investments in response to the Honam semiconductor cluster initiative.Industry insiders emphasize that the upcoming private meeting between President Lee and the three business leaders should focus on what the government can concretely promise to support businesses, rather than imposing additional demands.One industry insider remarked, "Unlike the U.S., which wields tariffs and market leverage, and Japan, which offers various investment supports, South Korea is burdened by strong labor unions and civic groups that hinder corporate activities. Without pro-business support measures, it is challenging to find incentives for large-scale domestic investments amid a reality where only 'excess profit' distribution is sought."* This article has been translated by AI. 2026-08-26 18:04:10
  • SK Innovation CEO Earns Highest Compensation Among Korean Refinery Leaders
    SK Innovation CEO Earns Highest Compensation Among Korean Refinery Leaders In the first half of this year, Choo Hyung-wook, CEO of SK Innovation, received the highest compensation among the leaders of South Korea's four major refiners. However, a significant portion of his pay includes a settlement from long-term performance-linked stock (PSU) awarded in the past. Excluding this, Heo Se-hong, Vice Chairman of GS Caltex, had the highest total compensation.According to the semi-annual reports from the refining industry released on August 26, Choo received a total of 2.733 billion won in the first half of the year, which includes a salary of 630 million won, a bonus of 700 million won, stock-based compensation of 1.4 billion won, and other income of 3 million won. This marks an increase of approximately 115% compared to 1.271 billion won in the same period last year.The significant rise in Choo's compensation is largely attributed to the stock-based compensation, which accounted for more than half of his total pay. The 1.4 billion won from stock-based compensation stems from PSU awarded during his tenure as CEO of SK E&S before the merger. Excluding this, his salary and bonuses total 1.333 billion won.When stock-based compensation is excluded, Heo Se-hong of GS Caltex emerges as the highest-paid executive among the refinery leaders, with a total compensation of 2.01 billion won in the first half, up about 41% from 1.415 billion won during the same period last year.At GS Caltex, CEO Kim Sung-min received 713 million won, the lowest among major refinery executives whose total compensation exceeds 500 million won. The pay gap between Heo and Kim is approximately 1.3 billion won, indicating a compensation structure that favors the owner-executive Heo.Anwar Al-Hijazi, CEO of S-Oil, received 1.16 billion won in the first half, reflecting a 116% increase from 537.6 million won in the same period last year, the highest growth rate among major refinery executives.In contrast, both Song Myung-jun and Jeong Im-joo, CEOs of HD Hyundai Oilbank, earned less than 500 million won in the first half, so their individual compensation details were not disclosed in the semi-annual report. According to capital market laws, companies are required to disclose the individual compensation of the top five employees whose total pay exceeds 500 million won.Looking at the first half performance of the four refiners, SK Energy, responsible for SK Innovation's refining business, reported sales of 25.1892 trillion won and an operating profit of 1.9344 trillion won. GS Caltex achieved the highest operating profit among the four, with sales of 29.7071 trillion won and an operating profit of 4.1874 trillion won.S-Oil reported sales of 20.2862 trillion won and an operating profit of 2.1961 trillion won, while HD Hyundai Oilbank recorded sales of 17.1929 trillion won and an operating profit of 2.7576 trillion won.However, it is challenging to directly compare the compensation of executives across different companies with their respective performances. Each company has different methods for calculating performance bonuses and the timing of long-term incentives. Additionally, stock compensation awarded based on past performance, like that of Choo, can significantly inflate total compensation in a specific quarter.A source in the refining industry stated, "The compensation of CEOs varies based on each company's pay structure, policies, and criteria for performance bonuses. Therefore, it is somewhat difficult to make uniform comparisons over a specific period."* This article has been translated by AI. 2026-08-26 18:04:10
  • Government Considers Expanding Residency Exceptions for Non-Resident Homeowners
    Government Considers Expanding Residency Exceptions for Non-Resident Homeowners The government is considering expanding the exceptions for recognizing 'actual residence' to alleviate the capital gains tax burden on non-resident homeowners. Proposals include recognizing unavoidable non-residency due to childcare and family care, but concerns have been raised that increasing exceptions may complicate the administrative burden of verifying actual residency.According to relevant departments on the 26th, the government and the ruling Democratic Party are reviewing measures to expand the recognition of residency periods for non-resident homeowners in response to growing backlash against the tax burden during the legislative notice period for the 2026 tax reform plan.The original government proposal allowed for a maximum of three years of residency recognition if a homeowner moved due to unavoidable reasons such as schooling, work, illness, overseas residence, or caring for parents after living in the home for a certain period.However, during the legislative notice period from April 4 to 20, over 10,000 public opinions were submitted to the Ministry of Legislation regarding the real estate tax reform. A significant portion of these opinions opposed the differentiated taxation on non-resident homeowners and the restructuring of long-term holding special deductions centered on actual residence.In response, the government and ruling party are considering adding childcare and family care to the list of exceptions. They are also discussing the relaxation of the requirement for a minimum of one year of prior residency and the regional requirements for moving to another city or county. There are calls to reflect various non-residency reasons that may arise in reality, such as remodeling, long-term assignments, and education for children with disabilities.During a high-level government ruling party meeting on the 23rd, consensus was reached on this direction. Park Sung-jun, the chief spokesperson for the Democratic Party, stated, "There is a consensus within the government and the party regarding the expansion of residency recognition for those who are non-resident due to unavoidable reasons and other diverse opinions raised."The challenge is that broadening the exceptions may dilute the policy intent of restructuring the tax system around actual residency. Narrowing the recognition criteria could disadvantage homeowners who are temporarily away from their homes, but overly broad criteria could potentially include a significant number of long-term holders as exceptions.Issues of verification also remain. It needs to be determined how to distinguish between merely changing residency registration and actually relocating one's primary residence, as well as what documentation will be required to confirm non-residency reasons such as childcare, caregiving, or job relocation. As the number of exceptions increases, the administrative burden on tax authorities, as well as the potential for disputes with taxpayers, may also grow.Future discussions are expected to focus on how to design the recognition period and regional scope. Establishing criteria that protect genuine users while maintaining the principle of taxation based on actual residency will be crucial.Kim Jeong-sik, an emeritus professor of economics at Yonsei University, noted, "There are elderly individuals who rent out their homes after retirement and live elsewhere, using the rental income as retirement income. If the tax burden on non-residents increases, it could reduce the retirement income for this demographic."He added, "With significant backlash against the strengthened capital gains tax on high-value properties, simultaneously regulating non-resident homeowners could lead to even greater opposition to the policy. If the goal is to lower the prices of high-value properties, it is necessary to clarify the policy objectives and focus the tax system on that area."* This article has been translated by AI. 2026-08-26 18:04:00
  • Government Revises Property Tax Plan for Non-Residents with One Home
    Government Revises Property Tax Plan for Non-Residents with One Home The government has begun revising its plan to reduce the comprehensive real estate tax burden for non-resident homeowners, following pushback from the ruling party regarding tax burdens based on residency status. This marks a significant change just over 20 days after the initial tax reform proposal was announced.According to relevant authorities on the 26th, the Ministry of Economy and Finance is considering increasing the basic deduction for non-resident homeowners above the 900 million won outlined in the tax reform plan. Options include maintaining the current 1.2 billion won or aligning it with the 1.4 billion won deduction for resident homeowners.The tax reform plan announced on the 3rd of this month proposed raising the basic deduction for resident homeowners from 1.2 billion won to 1.4 billion won while lowering it to 900 million won for non-resident homeowners. The intention was to focus tax benefits on those using their homes as primary residences while reducing benefits for properties held for investment purposes.The fair market value ratio is set to increase from the current 60% to 70% for both resident and non-resident homeowners by 2028, and the cap on the comprehensive real estate tax burden will rise from 150% to 200% of the previous year's tax amount. This structure would significantly increase the tax burden for non-resident homeowners due to the combined effects of reduced basic deductions and increased fair market value ratios.According to government estimates, a non-resident homeowner aged 60 who has owned a property valued at 2 billion won for 10 years would see their comprehensive real estate tax rise from 27,600 won to 1.14 million won in 2027 and 1.52 million won in 2028. The government has determined that the disparity in tax burdens based solely on residency status needs to be addressed.In response, the Democratic Party requested during a high-level government meeting on the 23rd that the government not differentiate between resident and non-resident homeowners for the comprehensive real estate tax. Democratic Party leader Kim Min-seok stated, “Adjusting the basic deduction for non-resident homeowners from 1.2 billion won to 900 million won and increasing the tax burden cap to 200% requires thorough deliberation.”Revisions to the increase in the fair market value ratio and the expansion of the tax burden cap are also under review. The ruling party is advocating for restoring the basic deduction for non-resident homeowners to 1.2 billion won and maintaining the current 150% cap on tax burdens. However, the government is leaning towards a plan that preserves a difference in deductions, offering 1.4 billion won for residents and 1.2 billion won for non-residents to provide more benefits to actual residents.The long-term capital gains tax special deduction is expected to shift towards a resident-focused approach while broadly recognizing unavoidable non-resident circumstances. The government plan proposes eliminating holding period deductions starting in 2029 and allowing deductions of 8% per year, up to a maximum of 80%, based on residency duration.Currently, periods of non-residency due to schooling, employment, medical treatment, overseas stays, or caring for parents can be recognized as residency for up to three years if certain conditions are met. The government and ruling party are considering adding non-residency reasons that taxpayers cannot easily avoid, such as childcare, caring for grandchildren, family caregiving, and reconstruction or remodeling.Deputy Prime Minister and Minister of Economy and Finance Ku Yun-cheol stated on the 24th during a National Assembly budget committee meeting, “We aim to recognize residency when there are reasonable grounds for non-residency to resolve the issue,” adding, “We will listen to various voices from the public to devise a more reasonable plan.”Concerns that uniformly increasing the tax burden for non-resident homeowners could lead landlords to pass on tax costs to tenants or evict current tenants to occupy the properties themselves have influenced the revision discussions. Conversely, eliminating the difference in basic deductions and broadly recognizing non-resident exceptions could weaken the reform's intent to reduce long-term benefits for high-value properties.The Ministry of Economy and Finance plans to finalize the scope of revisions reflecting the discussions with the ruling party and submit the tax law amendment to the National Assembly on the 3rd of next month after meetings with deputy ministers and the Cabinet. However, issues not addressed at the government submission stage are likely to be further adjusted during the National Assembly review process.* This article has been translated by AI. 2026-08-26 18:04:00
  • Debate Intensifies Over 2026 Real Estate Tax Reforms in South Korea
    Debate Intensifies Over 2026 Real Estate Tax Reforms in South Korea Discussions surrounding the South Korean government's 2026 real estate tax reform plan are heating up. The ruling Democratic Party is demanding revisions to the proposal aimed at easing the comprehensive real estate tax burden on non-resident homeowners, while the opposition People Power Party is introducing legislation to expand tax benefits for long-term homeowners.According to relevant authorities on the 26th, the government is reviewing whether to amend the tax reform plan, which includes measures to reduce the tax burden for non-resident homeowners. The discussions between the ruling party and the government are expected to cover the scope of reasons for failing to meet residency requirements and the level of basic deductions for the comprehensive real estate tax.Earlier, on the 23rd, the ruling party and the government held a high-level meeting to discuss ways to alleviate the tax burden on non-resident homeowners. They agreed to expand the criteria for recognizing actual residency in cases where homeowners cannot reside in their properties due to unavoidable reasons such as job relocation, children's education, or caring for parents.Democratic Party leader Kim Min-seok expressed the need for revisions to the government's proposal, which lowers the basic deduction for non-resident homeowners from 1.2 billion won to 900 million won and raises the tax burden cap to 200%.The Democratic Party specifically requested that the government distinguish between resident and non-resident homeowners when imposing the comprehensive real estate tax. They emphasized the need for caution in lowering the basic deduction for non-residents amid rising tax burdens due to increased property valuations.It is reported that the ruling party generally agrees with the government's direction to adjust tax benefits based on actual residency for capital gains tax. The government is pushing to shift the long-term holding special deduction from being based on the duration of ownership to the duration of residency.The People Power Party has been consistently introducing bills aimed at reducing the tax burden for long-term homeowners. Representative Seong Mi-ok proposed a revision to the Income Tax Act that would raise the capital gains tax exemption threshold for one-household, one-home owners from the current 1.2 billion won to 1.5 billion won and increase the upper limit of the long-term holding special deduction rate from 40% to 50%.Representative Kim Eun-hye suggested recognizing property taxes and comprehensive real estate taxes paid during the holding period as necessary expenses when calculating capital gains upon the sale of a home. This aims to reduce the tax burden by considering taxes paid during the holding phase at the time of sale.Representative Park Soo-min proposed a tax deferral plan that would allow homeowners who have owned and lived in their homes for over three years to postpone the payment of a portion of the capital gains tax when moving to a property priced lower than their current home until they sell the new property. Additionally, Representative Na Kyung-won is preparing a transitional measure bill that would recognize the existing deduction rate for the holding period prior to the implementation of the long-term holding special deduction reform to prevent retroactive application.In the National Assembly, discussions are expected to continue between the ruling and opposition parties regarding whether to expand tax benefits for actual residents or alleviate the tax burden for long-term homeowners.The first major point of contention in the proposed amendments will likely be the level of relief for non-residents' comprehensive real estate tax and the timing of the repeal of the long-term holding special deduction. The National Assembly is anticipated to see ongoing debates between the parties over whether to expand tax benefits for actual residents or alleviate the tax burden for long-term homeowners. The scope of any amendments to the government's proposal could also affect the anticipated revenue impact of the real estate tax reform.Professor Ko Jun-seok of Dongguk University stated, "The market's demand is to maintain the current levels of the comprehensive real estate tax and capital gains tax. In a situation where both the comprehensive real estate tax and transaction taxes are rising, we can expect increases in market prices and rental crises." He added, "Theoretically, raising taxes could increase revenue, but in reality, that is not always the case. Increased transactions are necessary for actual revenue growth, and we need to carefully consider whether to view non-resident homeowners as speculators or genuine demanders."* This article has been translated by AI. 2026-08-26 18:04:00
  • Hyundai ties up with Nvidia for self-driving push
    Hyundai ties up with Nvidia for self-driving push SEOUL, August 26 (AJP) -Hyundai Motor will work with Nvidia to put Level 2+ autonomous-driving technology into its first mass-produced software-defined vehicle in 2028, anchoring an ambitious AI push that also includes a 50,000-GPU data center, humanoid robots and expanded robotaxi production, the South Korean automaker said Wednesday. The tie-up was declared at the company's 2026 CEO Investor Day devoted to positioning artificial intelligence and software as central pillars of a growth strategy that targets 5.55 million global vehicle sales and a market share of 6 percent by 2030. Hyundai Motor Group plans to standardize the sensor architecture used by Hyundai Motor, Kia, 42dot and Motional around Nvidia's ecosystem, allowing driving data gathered across the group to be integrated under a common standard. Under the staged plan, Hyundai will begin gathering real-world driving data with its Atria AI autonomous-driving system in Gwangju, South Jeolla Province, this year. The company will then deploy Level 2+ autonomous-driving technology through a strategic collaboration with Nvidia in 2028 on its first mass-produced software-defined vehicle, or SDV. Hyundai intends to use the resulting driving data to continuously train and upgrade Atria AI before progressively extending autonomous-driving capabilities from Level 2+ toward Level 4 across its vehicle lineup. The scale of Hyundai Motor Group's vehicle fleet could become an important part of that strategy. The group sells more than 7 million vehicles annually, providing a potentially large pool of real-world driving data for AI development. Hyundai is also preparing infrastructure to process that data. From 2029, the company plans to bring online a 100-megawatt AI data center in Saemangeum capable of housing more than 50,000 graphics processing units. The facility will connect data generated by Hyundai's global vehicle fleet with its in-house AI systems and computing infrastructure. The push reflects Hyundai's effort to move beyond the traditional economics of selling vehicles and capture more value from software, autonomous driving and AI. Chief Executive José Muñoz said Hyundai intends to become a "physical AI company" capable of producing and deploying robots and robotaxis as well as vehicles. "Our fundamentals have never been stronger," Muñoz said. "We are leveraging partnerships to scale new technologies and opportunities and becoming a physical AI company which will produce and deploy robots and robotaxis." Robotics is another major leg of that transition. Hyundai Motor said it plans to deploy Boston Dynamics' Atlas humanoid robot at Hyundai Motor Group Metaplant America from 2028. The group's Robot Metaplant Application Center in the United States, which opened in June, is expected to expand tenfold by the end of this year. The center recreates factory environments to train manufacturing robots, collect real-world operating data and conduct testing before deployment on production lines. Hyundai is also exploring whether its dealership network could distribute robots and whether Hyundai Capital could finance their purchase, potentially extending the group's existing automotive sales infrastructure into robotics. Robotaxis are moving closer to commercial scale as well. The first IONIQ 5 robotaxis for Waymo are scheduled for delivery in the fourth quarter of this year. The vehicles will be assembled at Hyundai Motor Group Metaplant America in Georgia using a localized supply chain. Hyundai said those vehicles could support Waymo's international robotaxi expansion from as early as 2027. Motional will also use robotaxi-ready IONIQ 5 vehicles when its commercial driverless service launches later this year. The technology push forms part of a broader product offensive designed to lift sales while improving profitability. Hyundai reaffirmed its target of selling 5.55 million vehicles globally by 2030, with electrified vehicles expected to account for 60 percent of sales, up from 23 percent in 2025. The automaker plans more than 100 vehicle launches and refreshes worldwide through 2030, including at least 18 entries into new products and market segments. Seven new vehicles are scheduled to arrive within the next eight months. One of the most significant additions will be Hyundai's first extended-range electric vehicle, or EREV. The Santa Fe EREV is scheduled to launch in the first half of 2027 with more than 600 miles of total range. It will be built at Hyundai Motor Manufacturing Alabama as part of Hyundai's broader effort to localize more production in the United States. Hyundai plans to add 1.27 million units of global manufacturing capacity by 2030, including 500,000 units in North America, 320,000 in India, 250,000 across completely knocked-down production sites and 200,000 in South Korea. In North America, the company raised its local parts-sourcing target to more than 80 percent by 2030 from 60 percent previously. More than 10 hybrid models will be offered in the region, with hybrids targeted to account for half of sales. Hyundai is also stepping deeper into battery technology. The company said its independently developed battery cells deliver more than twice the output of the high-nickel cells it previously used while reducing charging time by 40 percent. The cells will be applied to its first EREV models, while new electric vehicles launching next year will use mid-nickel NCM batteries that Hyundai says can cut battery costs by about 30 percent. A new Thermal Runaway Protection system designed to prevent heat from spreading between battery cells will debut on the Genesis GV90. Genesis itself is entering its second decade with a broader electrified lineup, including its first hybrid and EREV, while targeting annual sales of 350,000 vehicles in more than 40 markets by 2030. Hyundai expects the combination of new products, localized production and technology investment to translate into stronger margins. The company raised its 2030 consolidated operating profit margin target to above 9 percent from the previous range of 8 percent to 9 percent. It aims to reduce its cost-of-sales ratio by 3 percentage points through lower material costs, production localization and efficiency gains across the vehicle lifecycle. Hyundai maintained its 2026 operating margin guidance of 6.3 percent to 7.3 percent after recording revenue of 95.2 trillion won and an operating margin of 5.6 percent in the first half. The strategy amounts to a broad bet that Hyundai's next phase of growth will depend increasingly on computing power, software and AI as much as vehicle production. AJP Takeaways Hyundai Motor will work with Nvidia to introduce Level 2+ autonomous driving on its first mass-produced software-defined vehicle in 2028, while standardizing group sensor architecture around the Nvidia ecosystem. Hyundai plans a 100-megawatt AI data center in Saemangeum from 2029 capable of housing more than 50,000 GPUs to process autonomous-driving and vehicle data. The automaker is expanding into physical AI through Boston Dynamics humanoid robots, Waymo robotaxis and AI-enabled manufacturing while targeting 5.55 million global vehicle sales by 2030. Hyundai raised its 2030 operating profit margin target to above 9 percent and plans more than 100 vehicle launches and refreshes, including its first extended-range EV in 2027. 2026-08-26 18:03:48