[멈춰선 제주]② Fear brought by Chinese capital… Development project

Input 2021.02.09 06:40

February is expected to become a watershed for the tourism industry in Jeju Island. This is because, after the Lunar New Year holidays, a public opinion survey on Jeju 2nd Airport is conducted. The’Jeju Ora Tourism Complex’, which was called the largest development project in Jeju Island by investing more than 5 trillion won in project cost, is also in the middle of this month.

Both projects have not progressed in recent years, but the reasons are different. Jeju 2nd Airport was confirmed by the Ministry of Land, Infrastructure and Transport in 2015, but there has been no progress as some local residents and environmental groups concerned about environmental damage have put a brake on it.

According to the Korea Airports Corporation, the runway utilization rate at Jeju Airport is 97.9%. It is the highest among 15 domestic airports including Incheon International Airport (80.8%). The runway utilization rate is calculated as the actual number of takeoffs and landings compared to the number of times an aircraft can takeoff and landings at the airport per year, and the higher this number, the more crowded the airport is. In 2016, the runway utilization rate exceeded 100%.

The National Assembly decided at the plenary session on a budget proposal for the Ministry of Land, Infrastructure and Transport for 2021, including 47.3 billion won related to the second airport. However, a condition was attached to execute the budget after collecting the opinions of Jeju residents and completing the strategic environmental impact assessment consultation.

In a situation where Jeju Island’s tourism infrastructure is not rapidly expanded, there is also a fear of local communities over difficult development, foreign capital, and foreign inflow. Jeju Ora Tourism Complex is a case where the competence of the business operator and the ability to raise funds are a problem. As Chinese capital’s concerns about “taking profits and withdrawal” are growing, the licensing authorities and stakeholders are meticulously looking at the contents of the project.

◇ Even if China’s bubble falls…Opinions against the community are’double-edged sword’

In the background of the influx of Chinese capital on Jeju Island, the systems introduced to foster the tourism industry were compounded.
First of all, Jeju Island implemented the visa-free system in April 2002. In order to attract foreign tourists, citizens of countries that did not sign a visa (visa) exemption program with the Korean government were also allowed to stay without a visa for 30 days.

As the real estate investment immigration system was implemented in Jeju Island in 2010, a barrier was opened to foreign capital. A resident visa (F-2) is issued when a certain amount is invested in local real estate or public service projects, and a permanent resident card (F-5) is granted when certain conditions are met after 5 years.

The investment immigration system has made Jeju Island, filled with Chinese tourists, look like a’land of opportunities’ by combining the visa-free system and the Korean Wave fever. According to the Ministry of Justice, 2101 permanent residents were issued from 2016 to 2019, when the deadline for investment immigration in Jeju Island was met. Of these, about 90% were identified as Chinese.

It is also the aftermath that the real estate market in Jeju Island has heated up. According to statistics from the Korea Real Estate Agency, the annual land transaction volume of Jeju Island, which was only 19,473 parcels in 2006, has quadrupled in 2015, when the special price for Chinese tourists peaked. Real estate prices also peaked at this time.

It was in 2017 when the bubble began to fall. This is because the number of Chinese tourists plunged due to the THAAD (high-altitude missile defense system) conflict and the Han-Ryeong (限韩令), and the development projects of Chinese capital became aground as a problem in the competence of investment.

The’Songaksan New Ocean Town’ project, a 500-room hotel promoted by China’s Shinhaewon Co., Ltd., also did not exceed the threshold of the Jeju Provincial Council. On the date of controversy over environmental damage, Jeju Governor Won Hee-ryong came up with a nail to promote the designation of Mt. Songak as a cultural property. The site was purchased by Shin Hae-won and even received permission for development from the Jeju Provincial Office.

Jeju Ora Tourism Complex, which is also on the verge of collapse, is a project for JCC, a subsidiary of China’s Hualong Group, to build a recreational cultural facility with 3,570 accommodation facilities, shopping malls, and golf courses on a site of about 3.85 million square meters in Ora 2-dong, Jeju City. JCC has not passed the environmental impact review, investment qualification, and capital procurement potential verification conducted since 2015.

◇ Approval was obtained, but the business collapsed repeatedly…

However, it is pointed out that investment in Jeju Island may be reduced if the case where the project is canceled is repeated even with the permission of the province. A representative example is the situation at Jeju Greenland International Hospital that caused controversy over the’profit hospital’.

The hospital was promoted by Greenji Jeju Healthcare Town Limited, a subsidiary of Greenji Group, a state-owned real estate development company in China. In 2018, it was granted conditional permission from Jeju Island that only foreign medical tourists can treat it, but the Green Space Group did not open in response to the Provincial Office’s decision that only limited operation was possible. All hospital buildings were built. Greenland Group is in a legal dispute with Jeju Island.

Jeju Shinhwa World, a complex resort in Seogwipo City, also faced similar difficulties. Ramjeong Jeju Development, the operator of Jeju Shinhwa World, made a plan to open a’Jeju Premium Specialty Store (tentative name)’, an outlet specialized for overseas brands, in the place of the withdrawal of the Jeju Tourism Organization’s duty-free shop in April of last year. In November of last year, Seogwipo City received a registration permit to open a large-scale store.

However, this project has been stopped due to a backlash from merchant groups that it will adversely affect the local commercial district in Seogwipo City. Officials in the local tourism industry point out that premium outlets do not overlap with traditional markets or neighborhood commercial areas, and there is no fear of overlapping commercial areas as the distance to the downtown of Seogwipo City is about 30 km.

An official from the tourism industry who is pursuing a complex resort business in Jeju Island said, “Jeju Island is particularly pushed for shopping compared to other islands famous for tourism such as Singapore, Hawaii and Guam.” “There is no market size or added value as it is only focused on agricultural and fishery products and specialty products sold in the market,” he said.

Most of the overseas cities famous for tourism have premium outlets. ‘La Valle Village’ in Paris, France,’Bister Village’ in London, England, and’La Roca Village’ in Barcelona, ​​Spain are representative examples. Guam’s’Guam Premium Outlets’ and Hawaii’s’Wakele Outlets’ are famous.

Unlike Jeju Island, other local cities in Korea are also active in using the natural environment to attract tourists. Tongyeong, Gyeongsangnam-do, remodeled the upper station in 2018, celebrating the 10th anniversary of the cable car’s opening, to create an observatory, and last year introduced a’pet-friendly cable car’.

Yeosu City, Jeollanam-do, opened a marine cable car in 2014. In 2012, when the World Expo (Expo) was held, a famous singer’s song called’Yeosu Night Sea’ gained popularity. According to statistics from the Yeosu Chamber of Commerce and Industry, the number of Yeosu tourists increased from 9.88 million in 2014 to about 13.54 million in 2019. In the same year, the number of cable car users was 1.67 million. It means that 1 in 10 tourists who visited Yeosu took a marine cable car.

As the cable car emerged as an essential tourist course, other cities facing the sea are also pursuing projects one after another. Songdo in Busan started operating a maritime cable car in 2017 and Mokpo in Jeollanam-do in 2019, and recently announced that they will install a cable car connecting Yeongjongdo and Wolmido in Incheon City.