Jeju Governor: Jeju Deserves Special Treatment

Kim Tae-hwan, governor of Jeju, said, “Jeju Province should be treated as a real Special Self-governing Province. The new government should not stick to the principles of equity.”

For that, he asked the new government to cut corporation tax, exempt the province from taxation and establish an offshore financial center. He added, “The biggest challenge threatening Jeju’s tourism industry is high cost. We’ll put an emphasis on lowering the cost by drawing support from residents this year.”

― Will the launch of the Lee Myung-bak government affect Jeju’s effort to become a free international city?

“If President Lee Myung-bak takes the initiative to support Jeju Province in the beginning days of his office, the Jeju Free International City project would grow rapidly. If Jeju Province makes a good use of its resources and its status of Special Self-governing Province, its competitiveness will be comparable to those of Hong Kong and Singapore. If the government eases regulations and gives more freedom in the flow of people, products and capital, Jeju can turn itself into a highly competitive free international city.”

― However, many experts have criticized, saying, “Even though Jeju is now considered Special Self-governing Province, it still has difficulties drawing foreign investment and is surrounded by heavy regulations.”

“That’s right. Why did the government designate Jeju as Special Self-governing Province? Jeju needs to be treated as a real Special Self-governing Province. But, the principles of equity have hampered Jeju’s growth as a Special Self-governing Province. The new government should break the inefficient principles. President Lee promised to treat Jeju as a real Special Self-governing Province. (Governor Kim presented a brochure containing Lee’s presidential campaign promises.) Jeju deserves special treatment. Who else but Jeju has done away with its lower level local governments? No other province or city can follow Jeju.”

― What should be done?

“Jeju should be presented with the authority to govern itself. For example, it needs to lower corporation tax, exempt Jeju from taxation and establish an offshore financial center.”

― Some experts are worried that if Jeju becomes a duty-free zone, duty-free products sold in Jeju can flow into other provinces.

“We have already come up with countermeasures by consulting a high-profile agency.”

― Do you mean you’re waiting for the decision of the central government? I think you need to make more efforts in order to persuade the government. Drawing foreign investment can be a good start.”

“Malaysia’s Berjaya Group plans to invest $800 million in establishing a resort-type residential and commercial complex in Jeju. We’ve already drawn $2 million and we’ll set up a joint venture in March. If a foreign firm invests more than $500 million in Jeju, we’ll allow the firm to run casinos exclusively for foreigners. It’s our incentives.”

― How much investment Jeju has drawn since it was designated Special Self-governing Province back in July 2006?

“Foreign investors decided to invest nearly 1.5 trillion won in seven projects and local investors promised to invest 2.3 trillion won in eight projects.”

― Now, no local government with uncompetitive projects can get the central government’s budget. Have you developed any attractive projects which can be funded by the central government?

“There’s no aquarium in Jeju which is surrounded by the sea. Certainly, we attempted to build an aquarium via BTO (Build-Transfer-Operation) measures. However, we’ve changed our plan to create an aquarium through BTL (Build-Transfer-Lease) measures. We’re discussing how to establish an aquarium with the central government.”

― Jeju is considered Korea’s best tourist attraction. However, it has been blamed for rip-offs and unkind attitudes of shop owners, at the same time.

“Jeju’s biggest challenge is high cost. I’ll definitely deal with it this year. I believe charges on golfing should be lowered to a level comparable to their counterparts in Southeast Asia. A golf course in Jeju even halved its cart fee from 80,000 won to 40,000 won. If one or two golf courses begin to lower their charges, their competitors will follow the case.”

― Administrative guidance is not enough.

“We’ll encourage golf courses and other shops to lower prices by promoting those cutting prices in local newspapers and other media. We’re also considering a new system forcing all shop owners to publicly release their prices in order to raise transparency.”

― Lots of tourists have complained that shop owners charge exorbitant prices on foreign tourists and local tourists coming from other provinces.

“In the past, residents in Jeju Province didn’t want the development of their homeland. That’s why the government urged shop owners to sell products to Jeju residents at a cut rate, as Hawaii does. However, we’re trying to correct past practices. Since Jeju residents have changed a lot, unfair practices will gradually disappear.”

― Do you have any other policies but for price cut to promote tourism industry?

“Recently, increasingly more people have shown interest in the convention industry. Since Jeju has attracted a series of large-scale international conventions, it is now considered as one of Asia’s ten popular convention cities. We’ll also nurture the sports industry by taking advantage of Jeju’s warm climate in winter. Jeju has two duty-free shops, one in the airport and another in the port. But the Jeju government is now negotiating with the central government to set up additional duty-free shop in Jungmun Resort Complex.”

― Jeju Island is known for only tangerines and tourism. What efforts have you made to diversify Jeju’s industrial structure?

“The manufacturing industry accounts for a mere 3 percent of Jeju’s overall industrial output. Jeju needs to change its industrial landscape. Certainly, Jeju has a potential to become a hub of biotechnology. Think about Mount Halla. Jeju’s clean water represented by Jeju Samdasoo can be a great growth driver of the island.”

― One of Jeju’s core projects in 2008 is ‘health care.’ But, other local governments are considering similar projects. Will Jeju successfully differentiate itself from other provinces?

“Jeju is fundamentally different from other provinces. Unlike other provinces, Jeju can let a foreign firm establish a for-profit hospital. That means a foreign-funded hospital can run a hotel. Telemedicine is also available. The Jeju government has already signed memoranda of understanding with Philadelphia International Medicine Management & Development, a U.S. medical corporation based in Pennsylvania, and a Japanese medical corporation in Tokyo.

― I doubt whether the healthcare project is suitable for Jeju which lacks overall population and specialists.

“Tens of thousands of Korean patients go to the U.S. whose medical cost is far higher than that of Korea. Our healthcare project will turn profitable only if we can draw those patients. Why don’t you imagine Jeju’s clean atmosphere? Jeju can be competitive in terms of medical tourism in the near future.”

― If Jeju wants to draw top-rate doctors, it should deal with education issues.

“As part of the central government’s projects, an English education city will be established in Jeju. We’re discussing the issue with the central government in order to begin building the city next year at the latest and open first three international schools in March 2010.”

― What’s the concept of this English education city? Most other local governments have failed to successfully run English villages.

“English village refers to extracurricular activities. However, English schools located in an English education city will teach students in English. Only two subjects of Korean and Korean history will be delivered in Korean. We’re planning to build 12 schools including seven elementary schools, four middle schools and one international high school. We’ll also create an English education center to nurture qualified teachers.”

― Choose three pending issues which should be dealt with the central government.

“I will give you four issues: helping Jeju’s effort to become the world’s best free international city, exempting Jeju from taxation, reducing corporation tax to 12 percent, and building another international airport. Most of all, a new international airport should be built and run round the clock. The government needs to hurry since the Jeju International Airport will get saturated by 2020 and it takes around eight to ten years to build a new airport.

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