President Lee Jae-myung has ordered stronger holding burdens on corporate non-business real estate. The move appears aimed at redirecting capital tied up in real estate toward productive sectors and finding ways to utilize idle land.
"Capital is locked up in unproductive areas, particularly the real estate market, and converting this to productive sectors is an important government task," President Lee said at the first plenary session of the National Economic Advisory Council held at the Blue House on Wednesday. "Let's review a direction that massively increases the holding burden on corporate non-business real estate."
Non-business real estate refers to land and buildings that companies acquire but do not actually use for business operations or hold in excess of their needs. In the past, such assets were subject to heavy taxation at the acquisition, holding, and disposal stages, but most related regulations were relaxed or abolished after the Asian financial crisis to promote corporate investment.
"Companies are holding excessive amounts of real estate they don't even need," President Lee said. "We will expand regulations in stages, starting with housing, then farmland, and eventually general real estate." The remark is interpreted as a signal to increase tax burdens on real estate held without actual usage plans, inducing companies to convert such properties to business use or sell them. The president appears to have in mind the possibility of using non-business land released to the market as housing sites, connecting it to expanded housing supply.
President Lee also mentioned the need for stock tax reform. He cited the need for dividend income tax benefits centered on small shareholders and reform of the transaction tax and capital gains tax system, stating that measures to incentivize long-term investment should be reviewed.
On labor policy, he ordered that "we must approach this with pragmatism, not ideology." Regarding the system requiring conversion to permanent employment after two years, he pointed out that "there are side effects where employment is terminated at one year and 11 months without reaching two years." He criticized the system excluding voluntary job leavers from unemployment benefits as "pre-modern."
Meanwhile, the National Economic Advisory Council proposed expanding nuclear power plant operations, adjusting electricity rates to reflect actual costs, and temporarily making public transportation free as countermeasures to the Middle East crisis.
"Restart Nuclear Plants Past Design Life... Tax Benefits for Non-Middle East Oil Facilities"
Suggestions emerged that grounds should be established to continue operating nuclear power plants whose design life has ended, in order to overcome the energy supply crisis caused by the Middle East war. At the first plenary session of the National Economic Advisory Council held at the Blue House on Wednesday, as President Lee ordered that "we must turn crisis into opportunity," advisory committee members offered a series of recommendations for improving the Korean economy's fundamentals and transforming its industrial structure.
"There was much content worthy of actual policy adoption, which was helpful," President Lee said in his opening remarks, hinting at the possibility of policy implementation. "In the short term, the Middle East war poses a considerable threat to our economy, but in the long term, this is the point when the Korean economic system must fundamentally change," he said. "We must do our best so that citizens no longer suffer and can enjoy a hopeful future through short-, medium-, and long-term preparations." He emphasized that "we can use this situation as an opportunity to make a new leap forward and establish a new system."
In the energy sector, expanding nuclear power utilization and diversifying supply chains were presented as core tasks. Park Won-joo, head of the Strategic Economic Cooperation Division, said, "We need to maximize nuclear power plant operations this winter by adjusting maintenance schedules," adding that "institutional grounds should be established to allow continued operation of nuclear plants whose design life has ended, even if temporarily."
The need for adjustments to the electricity rate system and demand management was also raised. "Rational adjustment of electricity rates is necessary," Park said. "It's also time to review demand management policies such as temporarily making public transportation free." Regarding the price ceiling system introduced in response to surging oil prices, he assessed that "it contributed to initial market stabilization, but needs to be phased out in preparation for a prolonged crisis."
Measures to reduce energy supply chain dependence on the Middle East were also presented. Park suggested "bypassing the Strait of Hormuz to secure oil from Indonesia, Malaysia, Vietnam, and Australia, while also retrofitting refinery facilities to process non-Middle East crude oil and expanding temporary investment tax credits for this."
What drew attention that day was President Lee's remarks suggesting stock tax reform. Kim Dong-hwan, an advisory committee member for the Growth Economy Division, said, "Separate taxation on dividend income only applies to wealthy individuals who pay comprehensive income tax, while small investors who receive dividends still pay dividend income tax." He proposed creating "products that give small investors temporary dividend income tax benefits so that citizens have opportunities to make long-term investments in quality stocks." President Lee responded, "That makes sense. I think we can review a measure targeting only small shareholders."
President Lee notably said, "We must make it impossible by any means to profit from speculating in real estate for the industrial economic system to function properly." This is interpreted as recognition that normalization of the real estate market and advancement of capital markets must occur together for "productive finance" to be possible, where capital moves to cutting-edge industries that represent the nation's future growth engines.
President Lee approached labor issues from the same perspective. Mentioning Labor Minister Kim Young-hoon, who comes from the Korean Confederation of Trade Unions, and Industry Minister Kim Jung-kwan, who has a business background, he said, "Labor regulations should not be bound by ideology and values but approached pragmatically to create policies that help workers in the long term." He added, "Living in the world is about pragmatism."
He pointed out that the compensation system between regular and irregular workers is fundamentally flawed. "It is common sense that more unstable labor should receive greater compensation," he said, emphasizing the need to improve treatment of irregular workers. He criticized the current system that does not provide unemployment benefits to voluntary job leavers as "pre-modern." This is interpreted as revealing his judgment that transitioning to an economy centered on cutting-edge industries is difficult with the current labor market structure.
"More Unstable Labor Deserves Greater Compensation" - Emphasis on Need for Improved Treatment of Irregular Workers
At the senior secretary meeting, President Lee also emphasized, "Regardless of when or how the Middle East war ends, the world before and after the war will be completely different." He stressed that "we must accelerate energy supply source diversification and the transition to a renewable energy-centered society, industrial structure innovation, and also step up cultivation of future growth engines such as Artificial Super Intelligence (ASI), next-generation Small Modular Reactors (SMR), and AI robots."
Additionally, Blue House spokesperson Jeon Eun-su reported that at the closed-door senior secretary meeting, it was shared that superintelligence beyond Artificial General Intelligence (AGI) was defined as a core national strategic asset, and the next five years were identified as a golden opportunity for preempting the SMR market.
President Lee Says "Have Policy Office Review"... Companies on Alert Over Real Estate Holdings
Strengthened Burden on Non-Business Real Estate Holdings
According to Seoul Economic Daily's analysis of major corporate business reports, with President Lee's mention of reviewing "a direction that imposes massive holding burdens" on corporate non-business real estate, domestic companies holding investment real estate worth trillions of won are now on alert. Major companies including POSCO Holdings (005490.KS), which has accumulated 1.69 trillion won in investment real estate, are expected to expedite classification of real estate holding purposes and disposal procedures.
Based on the analysis of major companies' business reports as of the end of last year, POSCO Holdings held 1.6916 trillion won in investment real estate.
LG (1.0828 trillion won) and SK (1.0603 trillion won) also exceeded 1 trillion won, while Lotte Holdings (630.9 billion won), Hyosung Heavy Industries (475.9 billion won), and Hyundai Motor (005380.KS) (165.2 billion won) hold hundreds of billions of won each. Investment real estate of these six companies alone totals 5.1067 trillion won, and the overall scale is expected to be even larger when including Samsung Electronics (005930.KS), which does not separately disclose the amount.
Investment real estate refers to real estate owned by companies for simple rental income or capital gains purposes, distinguished from tangible assets used in business operations. If a manufacturing company holds a warehouse actually used in its business...
