Finance Chief Dodges Question on 1.99 Million Non-Occupant Homeowners

The $200 billion investment package in the United States, the designation of a semiconductor fab in the Honam region and its investment timeline, the direction of tax code revisions including property taxes, and the controversy over leveraged exchange-traded funds emerged as the main points of contention at the parliamentary audit of economic ministries on the 6th, covering the Ministry of Finance and Economy, the Ministry of Trade, Industry and Energy and the Ministry of Climate, Energy and Environment.

On the U.S. investment, the government reaffirmed its existing position that any agreement with Washington would be premised on commercial viability. Deputy Prime Minister and Finance and Economy Minister Lee Hyoung-il said at the audit of the National Assembly's Finance and Economy Committee that for the nuclear power plant construction project, which involves $120 billion, "actual remittances will be made only after commercial viability is verified and all procedures under domestic law, including the Korea-U.S. Strategic Investment Act, have been completed." He also reiterated the government's position that the Alaska liquefied natural gas project remains "under review."

South Korea and the U.S. had earlier agreed to build a total of eight large nuclear reactors in the U.S. and to remit up to $10 billion by the end of this year if Washington requests it. Rep. Lim Yi-ja of the People Power Party said, "Why was $2.4 billion for the Texas gas combined-cycle plant remitted immediately without verification, while for the $10 billion in nuclear projects a prepayment was promised first?"

Lee said, "Investment funds will be paid out only after commercial viability is finally verified and all procedures under domestic law, including those in the National Assembly, are complete," adding that "the timing and scale of recovering the investment in the nuclear project also still need to be examined." The remarks amounted to another reaffirmation of the government's position that further negotiations on the U.S. investment are needed.

The scale and viability of the Alaska LNG investment also became a point of contention. When Rep. Jung Tae-ho of the Democratic Party of Korea asked whether the $50 billion to $55 billion figure cited on the U.S. side was the actual investment amount, Lee said it "could be determined as we examine it," indicating that even whether to invest has yet to be decided.

Trade, Industry and Energy Minister Kim Jung-kwan, however, stressed that the Alaska LNG project had taken on new strategic value. Speaking at the audit of the National Assembly's Trade, Industry, Energy, SMEs and Startups Committee, he said, "It is true that the Alaska LNG project had not moved forward because its commercial viability was clearly low," but added that "there is clearly an aspect in which new strategic value has emerged in the course of the Middle East war." Difficulties in importing LNG from the Middle East because of the war have increased demand for U.S. LNG, he said.

Property tax reform also came under scrutiny. Rep. Yoon Hu-duk of the Democratic Party disclosed an analysis of data submitted by the National Data Agency, saying, "Of about 12 million single-home owners in one-household units nationwide, 1.99 million, or 16.6%, do not live in the home they own," and that "among them, those who own a single home they do not occupy and who fall within the scope of a tax overhaul centered on residence number about 110,000 nationwide and about 90,000 in Seoul." He then asked, "That is about 4.9% of all single-home owners in Seoul — is that a large number?" It is the first time the number of single-home owners in Korea who do not live in their own home has been disclosed. Lee sidestepped a direct answer, saying, "It seems to depend on how you look at it."

On the controversy over single-stock leveraged ETFs, economic officials all bowed their heads. Lee said, "I feel apologetic that the outcome inflicted losses on the public." Kwon Dae-young, first vice minister of finance and economy, also said, "The leveraged ETFs were introduced by a decision of the Financial Services Commission." The remark denied allegations that Kwon, who was FSC vice chairman at the time, had pushed through the introduction over internal objections, amid reports that discussions on introducing single-stock leveraged ETFs took place at a closed-door meeting chaired by Kim Yong-beom, then presidential policy chief.

At the Climate, Energy, Environment and Labor Committee, lawmakers clashed over whether power and water could be supplied to the planned semiconductor industrial complex in the southwestern region. Climate, Energy and Environment Minister Kim Sung-hwan said of the 6.3 gigawatts of electricity the complex would require that "the assessment of Korea Electric Power Corp. and of experts is that it can be fully supplied with electricity generated in the Honam region."

On the complex's industrial water needs, estimated at up to 650,000 tons a day, Kim said, "Industrial demand in Honam is very weak, so most of the water from the Yeongsan and Seomjin rivers has been used only for agriculture or to maintain river flows," adding that "there is talk of drought, but that is a nationwide issue and responding to it is a separate matter."