Malaysian investor allows Jeju Island to resume suspended development project
SEOUL, AJU - South Korea's southernmost resort island of Jeju will be able to resume the development of land frozen in litigation after a Malaysian investor showed generosity to settle a prolonged legal dispute over the suspended construction of a major tourist site that would have a casino, hotels, a high-class shopping mall and condominiums.
Berjaya Corporation Berhad, a Malaysia-based corporation which controls a wide array of businesses, agreed to drop a five-year-old damage suit against the Jeju Free International City Development Center (JDC), a state organization which had launched a project to build the Yerae resort complex in Seogwipo in the southern part of Jeju Island.
Through a series of negotiations, Berjaya agreed to accept 125 billion won ($104 million) in compensation by the middle of August in return for transferring all the business rights of the Yerae complex, which was part of various development projects pursued by the special government-controlled corporation to turn the semi-tropical volcanic island into a major tourist destination in Asia.
At a press conference on July 1, JDC head Moon Dae-rim praised Berjaya for making a "big decision" to accept the amount of compensation at the level of its investment principal. The decision liberated South Korea and JDC from lawsuits, he said, vowing to pursue a new project on consent from landowners and local residents.
Berjaya established a joint venture with JDC for the Yerae complex, which was to stretch 740 million square meters, with a total investment cost of 2.5 trillion won by 2017. Originally, JDC had tried to build a luxury, value-added resort complex targeting the wealthy elderly and tourists, but some landowners filed a suit, claiming it went against public welfare.
Construction began in 2013, but South Korea's highest Supreme Court ordered the suspension of construction in 2015. The Malaysian partner filed a lawsuit seeking 350 billion won in compensation. Separately, Berjaya took preliminary action for investor-state dispute settlement (ISDS), a system through which investors can sue countries for discriminatory practices.
"We should completely forget original plans like a casino and skyscrapers," Moon said, suggesting Jeju should respect the voice of local residents who want the balanced development of land for public and commercial interest. A majority of landowners have filed a lawsuit to cancel the registration of ownership transfer.
Moon called for an amicable settlement with landowners and local residents to push for a completely new project that would utilize 140-room condominiums and other facilities already built in the Yerae site.
Jeju used to be a place favored by Chinese property investors and tourists. The island has drawn a large influx of Chinese money, helped by a 2010 visa program that grants permanent residency to investors who purchase property worth $50,000 or more. Land owned by Chinese nationals soared from 1.64 million square meters in 2012 to 9.14 million square meters in 2015, with development projects led by Chinese investors pushing up housing prices.
However, development projects with Chinese money came to a standstill in 2017 due to a travel ban imposed by Beijing in retaliation for the deployment of an advanced U.S. anti-missile system called THAAD in South Korea. Complaints also grew among local residents about the development that seeks only commercial interests.
In April 2019, South Korea's first for-profit hospital built by a Chinese investor in Jeju lost its license due to a legal dispute over how to run it and a negative public perception, four months after hospital operators received conditional approval to start their business only for foreigners.