Korea plans East Asia's next great
lure By Erik Mobrand
SEOUL - The South Korean island province
of Jeju was granted expanded autonomy over several
areas of administration on July 1 in a bid to make
it an international center on par with Hong Kong
or Singapore.
The volcanic island south of
the Korean Peninsula, now a major destination for
domestic tourists, is seeking to expand its image
to attract vacationers and investors from abroad.
The new measures represent the most recent effort
to make South Korea a "hub of Northeast Asia".
As a special autonomous province, Jeju
(also transliterated Cheju) has greater discretion
over areas such as education, taxation, finance
and policing. The new status, approved in the
National
Assembly in February,
brings with it tax breaks to firms investing on
the island, as well as visa-free entry to citizens
of all but eight countries. The island seeks
especially to attract foreign interest in building
high-caliber schools and hospitals that would draw
students and patients from South Korea and abroad.
To promote Jeju's expansion, Seoul has
established the Jeju International Free City
Development Center (online at www.jdcenter.com).
The center offers information about opportunities
on the island to potential investors.
The
future of Jeju Island is modeled explicitly on the
experiences of other cosmopolitan island-cities,
especially Hong Kong and Singapore, and the
Portuguese island of Madeira. South Koreans hope
that autonomy can help Jeju follow in the path of
Madeira, which saw rapid growth in its economy
after being granted greater autonomy in the 1970s.
Today that island ranks behind only Lisbon in per
capita income in Portugal.
In discussions
of plans for Jeju, South Korean media use the term
Honggapore (Honggap'oru) in referring to
the notion of an international city. While South
Korea is well integrated into the international
economy as a major player and Seoul has become a
world-class metropolis, the capital has managed to
modernize while picking up little of the
cosmopolitan flavor of Hong Kong or Singapore.
Branch offices of foreign firms tend to be staffed
by locals, and businessmen from overseas are as
scarce in Seoul's financial districts as the sound
of foreign language.
The national
government, along with the Jeju provincial
government, is seeking to build an international
city virtually from scratch. Some 500,000 people
reside on Jeju, many of them spread out among
coastal and inland villages.
To draw in
foreign capital, Jeju is offering tax incentives.
Foreign firms investing at least US$10 million on
the island are exempt from taxes for the first 15
years, while domestic firms are exempt for 10. The
provincial government will also provide cheap
leases on public land and buildings.
Perhaps in response to Singapore's success
in building a reputation as an international
center for medical care, Jeju is aiming to channel
investment into hospitals. Regulations now allow
foreign firms to establish hospitals staffed by
physicians with overseas qualifications.
Jeju International High School will open
in 2009 for South Korean and international
students. The hope is that it will be the first of
many international schools on the island. To make
the island more attractive for educational
facilities, the government does not require all
instructors to hold teaching licenses.
The
most direct measure to make international
influences more visible on the island is a
loosening of visa regulations. The island is now
more open than the rest of South Korea to visitors
from other parts of Asia, including China, India,
the Philippines and Vietnam.
An
international business hub? The journey to
becoming a center for international business may
be a long one for Jeju.
Home to just over
1% of the nation's people and just under 1% of its
wealth, Jeju remains a far cry from Seoul - let
alone "Honggapore". One-quarter of the island's
$6.6 billion economy is based on tourism, and only
3% on manufacturing. Driving around the island,
one finds occasional stone quarries and lone
factories between farm fields and hills, but
nothing like the massive industrial complexes that
dominate South Korean manufacturing. In seeking to
build an international city in a place that has
hardly seen industry, Jeju is trying to leapfrog
several phases of economic development.
Expanding the island's human resources is
one key challenge, as the workforce will have to
transform from being oriented to the needs of
farming and simple services to delivering high-end
services. Attracting foreign investment requires
speakers of foreign languages, and today Jeju is
no better equipped than the rest of South Korea
when it comes to English. The international school
is intended to help in this direction.
Autonomy, in fact, may be a mixed blessing
for Jeju's future. While the provincial government
can take measures to reduce some costs of doing
business on Jeju, the province on its own does not
have the resources to build the infrastructure and
the facilities that would help attract business.
Increased support from Seoul might in some ways be
more conducive to the island's strategy.
Concentrating resources rather than decentralizing
authority over them would seem to be more
appropriate for developing Jeju, or any other
locale, as a regional or international hub. Given
that the measures are not costly for the central
government, one might question how serious
authorities in Seoul are about contributing to
Jeju's project.
Even where the island does
have discretion, the province's efforts to promote
international interest may be insufficient.
Business taxes have been pushed down to 25%, but
that may not be low enough to make Jeju
competitive. The new rate falls above Singapore's
20% business tax and Hong Kong's 17%.
A
global tourist destination? It is clear why
South Korean tourists flock to Jeju. The island
can seem almost tropical, with palm trees and
warmer weather than the mainland provinces. It's a
cheap 50-minute flight from Seoul. And it's the
closest thing to diversity in Korean culture, with
its own folk symbols and customs distinct from the
peninsula. Those reasons have made it the South
Korean honeymoon destination.
Attracting
visitors from abroad, who can choose from among
Hawaii, Bali and Phuket for resort vacations, is a
more daunting task. Weather is seasonal, and the
beaches, while scenic, are not large. Jeju sees
about 5 million tourists each year, but the vast
majority are South Koreans. If Jeju is becoming an
international vacation destination, it remains a
well-kept secret. During a visit by Asia Times
Online this month, the beaches remained almost
abandoned despite beautiful weather.
In
the first half of this year, all but 190,000 (or
7%) of the 2.6 million tourists to visit Jeju were
South Koreans. Almost all overseas visitors came
from within East Asia, with 80,000 from Japan and
54,000 from the People's Republic of China (Jeju
Tour News, July 7-12). Those statistics suggest
Jeju might have greater potential to emerge as a
Northeast Asian regional resort town than as the
next Bali. They also imply that the province might
have reason to concentrate first on developing the
Chinese - and Japanese - language skills of
locals, before English.
Local newspapers
also reflect concern about the consequences of lax
regulations on entry of foreign nationals. Will
Jeju see an influx of immigrants from China, who
are neither investors nor tourists, and who
overstay their 30-day legal visits? The new rules
would seem to have implications beyond Jeju for
South Korea's border control, as well. Citizens of
China, South Asia and Southeast Asia - the major
source areas for South Korea's guest workers and
foreign brides - are now able to enter the country
without visas and might find ways to move on to
other parts of South Korea.
Jeju is
Korea's only island province, having been upgraded
to that status in 1946. For several centuries, the
island remained relatively disconnected from the
peninsula and developed a culture distinct in many
ways from that in other parts of Korea.
The island is known in South Korea
especially for Satsuma oranges, diving women
(haenyo) and basalt rocks used for making
walls and sculptures.
Erik
Mobrand is finishing a PhD in politics at
Princeton University, where he specializes in
Chinese and Korean affairs.
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2006 Asia Times Online Ltd. All rights reserved.
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