Lofty inheritance tax forces South Koreans to sell homes and move abroad

Nikkei Asia News Roundup – Detailed Summary

Key Concepts:

• Myanmar Vaccination Rates & Civil War Impact
• Singapore Vertical Farming & Food Security
• China’s Natural Gas Production & Shale Gas Development
• Japan Airlines & East Japan Railway Collaboration
• Ant Sports’ Puma Stake Acquisition
• Vietnam Furniture Exports & US Tariffs
• Copper Price Surge & AI Demand
• Thailand’s Japanese Restaurant Decline
• South Korea’s Inheritance/Estate Tax System & Reform Debate

1. Regional Economic & Public Health Updates

Myanmar is experiencing a decline in vaccination rates due to the ongoing civil war, jeopardizing public health progress and potentially creating a “lost generation” of children, as warned by UN agencies. This highlights the severe impact of political instability on essential healthcare services.

Singapore is pioneering a new approach to food security with the operation of the world’s tallest indoor farm. This initiative, driven by limited land availability, focuses on vertical farming as a solution to increase domestic food production and reduce reliance on imports.

China’s natural gas production reached a record high last year, fueled by state-backed investment in shale gas and other non-conventional sources. This production level now covers approximately 60% of the country’s domestic consumption, indicating a growing energy independence.

Japan Airlines (JAL) and East Japan Railway Company are collaborating to integrate rail and air travel, aiming to enhance convenience for foreign tourists. This partnership involves developing combined travel products and ticketing systems, signaling a shift towards greater cooperation between former rivals to capitalize on the tourism sector.

Ant Sports Products, a subsidiary of Ant Group, is acquiring a 29% stake in German sportswear giant Puma for €1.5 billion ($1.78 billion). This acquisition expands Ant Sports’ portfolio, which already includes brands like FILA, DESCENTE, and Kappa, strengthening its position in the global sports apparel market.

Vietnam’s furniture industry, the world’s second-largest exporter after China, is diversifying its export markets to the Middle East and India in response to the impact of US tariffs. This demonstrates the industry’s adaptability in navigating trade challenges and seeking new opportunities.

2. Commodity Markets & Global Economic Indicators: Copper

The price of copper has surged to an all-time high, driven by speculation surrounding increased demand from the artificial intelligence (AI) sector. Investors are building up inventories as a hedge against potential tariffs, particularly those associated with former US President Trump’s policies. Copper, often referred to as “Dr. Copper” due to its role as a leading indicator of global economic health, experienced a 40% price increase over the past year, reaching around $13,000 per metric ton in January.

Analysts predict a significant copper supply shortfall within the next 10-15 years. This is attributed to declining ore grades (a 40% decrease over the last three decades) and the increasing difficulty and cost of mining deeper, more challenging ore bodies. The development timeline for new copper mines has also lengthened to an average of 17 years from discovery to production, according to S&P Global, further exacerbating the supply concerns.

3. Thailand’s Restaurant Sector & Expatriate Trends

The number of Japanese restaurants in Thailand experienced its first decline in 2025, falling 2.3% to 5,781 establishments compared to 2024. This decrease reflects both an economic slowdown and a reduction in the Japanese expatriate community in Thailand. According to the Japan External Trade Organization (JETRO) Bangkok office, this marks a turning point after consistent growth since 2007.

The decline was most pronounced in Bangkok, with a 2.4% drop to 2,609 restaurants. JETRO attributes this to a decrease in Japanese expatriates and tourists, key customer segments for these establishments. The diminishing dominance of Japanese automakers in Thailand, facing increased competition from Chinese and other manufacturers, is contributing to the decline in the Japanese expatriate population, which fell from 82,574 in 2021 to 72,13 as of October last year.

4. South Korea’s Inheritance Tax System: A Deep Dive

South Korea’s inheritance and estate tax system is facing increasing scrutiny due to its high top rate of 50% – the second highest in Asia after Japan (55%). This rate has remained unchanged for three decades, while property values and overall wealth have significantly increased.

In 2007, only 0.7% of individuals qualified for the top 50% tax rate. By 2023, this figure had risen to 6.8%, indicating a substantial increase in the number of estates subject to the highest tax bracket. The 40% tax rate, applicable to estates exceeding 1 billion won (approximately $700,000), has also seen a significant increase in application.

The high tax burden is forcing some individuals to sell their homes to cover inheritance taxes, while others, particularly high-net-worth individuals, are relocating to countries like Singapore and Hong Kong to avoid the tax. A specific anecdote was shared about an individual who had to sell their own home to pay the inheritance tax on their mother’s estate.

Politically, there is broad agreement that the system needs reform, but no consensus on the best approach. The main opposition party proposes lowering the top rate to 40% and expanding deductions, while the ruling party favors maintaining the top rate but increasing deductions. Public skepticism exists regarding whether changes will primarily benefit the wealthy. A resolution is not expected in the near future, and the issue is likely to be a key topic in upcoming elections. South Korea’s low birth rate and housing situation further complicate the issue, as rising property values contribute to increased tax liabilities.

Synthesis/Conclusion:

The Nikkei Asia News Roundup highlights a diverse range of economic, political, and social trends across Asia. From the challenges of civil war impacting public health in Myanmar to the innovative solutions for food security in Singapore, the report showcases the region’s dynamism and complexity. The surge in copper prices underscores the importance of commodity markets and the growing demand driven by technological advancements. The situation in South Korea regarding inheritance tax exemplifies the challenges of balancing wealth distribution, economic realities, and political considerations. Overall, the report provides a snapshot of a rapidly evolving region grappling with both opportunities and challenges.