Deep Research Archives

Chinese Capital in Jeju: An Analysis of the Investment Immigrant Scheme and its Socio-Economic Consequences

Executive Summary

This report provides a comprehensive analysis of the influx of Chinese capital into Jeju Island, South Korea, primarily facilitated by the Real Estate Investment Immigrant Scheme (IIS) initiated in 2010. It examines the policy's origins, the mechanisms that drove a surge in Chinese investment, and the multifaceted consequences for Jeju's economy, society, and environment. The analysis reveals that while the scheme successfully attracted significant foreign capital, its design was fundamentally flawed, leading to a speculative real estate bubble, severe environmental and infrastructural strains, and a potent public backlash. The narrative suggesting Jeju has become a "Chinese vassal state" is a significant overstatement not supported by empirical data. As of 2024, Chinese nationals own approximately 0.5% of Jeju's total land area. However, this narrative reflects legitimate and deeply felt anxieties among the local population regarding the rapid, concentrated, and often disruptive nature of the investment boom. The high visibility of large-scale, Chinese-funded projects, coupled with soaring property prices that displaced locals and a perceived disregard for environmental and cultural heritage, fueled a sense of lost control. A detailed case study of the Jeju Dream Tower project illustrates how these abstract concerns crystallized around a single, dominant development, becoming a symbol of the conflict between foreign capital and local community interests. The subsequent civic resistance and political pressure ultimately forced the South Korean government to significantly curtail and revise the investment scheme, demonstrating the efficacy of local democratic processes in shaping economic policy. The report concludes that the Jeju experience offers critical lessons for managing foreign direct investment. It underscores the necessity of embedding robust environmental, social, and governance (ESG) guardrails into investment policies, diversifying investor sources to mitigate geopolitical risks, and prioritizing genuine community engagement to ensure that development is both sustainable and equitable.

Section 1: The Open Door Policy: Jeju's Strategy for Foreign Capital

The significant influx of Chinese investment into Jeju Island was not a spontaneous market phenomenon but the direct result of a deliberate and strategic policy decision by the South Korean government. This policy was rooted in a broader vision to transform the island into an international hub, leveraging its unique administrative autonomy to attract foreign capital in ways not possible on the mainland.

1.1 The "Free International City" Vision

The legal and conceptual foundation for Jeju's open-door policy is the Jeju Special Self-Governing Province Special Act.1 Enacted to capitalize on the island's unique geographical and cultural attributes, this legislation granted Jeju a high degree of autonomy. The central government's objective was to establish a "Free International City," a special economic zone designed to be a hub for tourism, leisure, and international business in Northeast Asia.3 This special status empowered the provincial government to create a more liberalized and attractive environment for foreign direct investment (FDI), a key national priority for South Korea, particularly in the years following the 1997 Asian Financial Crisis.5 The act was designed to facilitate the free movement of people, goods, and capital, making Jeju a testbed for economic policies aimed at global integration.7

1.2 The Real Estate Investment Immigrant Scheme (IIS): A Golden Ticket to Residency

The primary vehicle for channeling foreign capital into Jeju was the Real Estate Investment Immigrant Scheme (IIS), launched in February 2010.8 This program was a classic example of a "golden visa," offering residency in exchange for investment. Its initial terms were remarkably straightforward and appealing, designed for maximum impact in attracting capital. Investment Threshold: An investor was required to purchase a minimum of KRW 500 million (approximately USD 500,000 at the time) worth of property within designated tourism and recreational facilities, such as resort condominiums.4 This threshold was significantly lower than many comparable programs globally. Visa Incentives: Upon making the qualifying investment, the investor, along with their spouse and unmarried children, was granted an F-2 residency visa. This visa class is highly desirable as it permits free economic activity within South Korea, unlike more restrictive visa types.8 Path to Permanent Residency: The scheme's most powerful incentive was the clear and direct path to permanent residency. After maintaining the investment for five years, F-2 visa holders could apply for an F-5 permanent residency visa, which offers most of the same rights as citizenship, excluding the right to vote or hold public office.8 This policy framework was not merely an economic tool but a powerful instrument of immigration, directly linking a real estate transaction to long-term settlement rights in one of Asia's most developed economies. However, its design was conspicuously simple, lacking the nuanced safeguards or community benefit requirements seen in more modern investment schemes. The primary goal was clear: to attract capital quickly and stimulate development projects that had been stalled for years.8 This prioritization of capital inflow over all other considerations would later prove to be a source of significant conflict.

1.3 Why Chinese Investors? The Pull Factors

While the IIS was open to all foreign nationals, it was overwhelmingly utilized by Chinese investors. By 2015, 99% of all applicants were Chinese 10, and by mid-2016, Chinese nationals had received 98.5% of all primary investor visas issued under the scheme in Jeju.11 This concentration was the result of a confluence of powerful "pull" and "push" factors. The "pull" factors from Jeju's side were compelling. Its geographical proximity—less than an hour's flight from major Chinese cities like Shanghai—made it an accessible and convenient destination.10 Furthermore, Jeju's visa-free policy for Chinese tourists had already established the island as a popular and familiar holiday spot, reducing the perceived risk of investment. Its reputation as a "treasure island" with a clean natural environment offered a stark contrast to the heavily polluted urban centers of mainland China.14 Simultaneously, strong "push" factors were driving capital out of China. A slowdown in the domestic Chinese real estate market and government-imposed purchasing restrictions encouraged wealthy individuals to seek opportunities abroad. More importantly, a growing desire among China's affluent class for offshore wealth diversification and asset protection made Jeju's scheme, which offered a secure investment tied to residency in a stable, democratic country, an extremely attractive proposition.10 The combination of these factors created a perfect storm, channeling a massive, concentrated flow of Chinese capital directly into Jeju's real estate market. The policy's architects had opened the door for foreign investment, but they had failed to anticipate that almost everyone who walked through it would come from a single country, creating an economic dependency that would expose the island to significant vulnerabilities.

Year Minimum Investment (KRW) Minimum Investment (Approx. USD) Eligible Property Types Visa Granted Key Changes/Notes 2010 500 million ~$500,000 Condominiums, resorts, and other recreational facilities in designated areas. F-2 (Residency) Initial launch of the program to attract foreign capital.8 2015 500 million ~$450,000 Restricted to tourism complexes and recreational facilities only. F-2 (Residency) Policy revised due to concerns over real estate speculation and environmental damage.8 2023 1 billion ~$780,000 Tourism complexes and recreational facilities. F-2 (Residency) Investment threshold doubled; scheme renamed 'Tourism/Recreational Facility Immigrant Investor Scheme' and extended to April 2026.8

Section 2: The Golden Age of Investment (2010–2017): A Quantitative Analysis

The implementation of the Real Estate Investment Immigrant Scheme in 2010 triggered an unprecedented and rapid influx of Chinese capital into Jeju. The period between 2010 and 2017 can be characterized as the "golden age" of this investment boom, marked by exponential growth in land acquisition and a dramatic inflation of property values that far outpaced national trends. The sheer velocity and scale of this capital inflow fundamentally reshaped the island's economic landscape.

2.1 The Scale of the Influx: Measuring the "China Money" Phenomenon

The statistical data from this period reveals a staggering rate of growth in Chinese ownership of Jeju's land. In 2009, prior to the scheme, Chinese-owned land was a mere 20,000 square meters. By June 2014, this figure had exploded to 5.92 million square meters, representing an almost 300-fold increase in just five years.17 This trend continued, with Chinese-owned land peaking at 9.4 million square meters in 2017.18 At its zenith, this concentration meant that Chinese nationals owned approximately 44% of all foreign-held land on Jeju Island, making them by far the dominant group of foreign landowners.18 The total value of these investments was substantial; by mid-2016, the IIS had channeled nearly KRW 1.2 trillion (over USD 1 billion) into the island through 1,745 separate transactions.11 This was not a diversified, multinational investment wave but a highly concentrated phenomenon, colloquially and accurately termed "China Money."

2.2 Impact on the Real Estate Market: The Price Boom

The massive influx of capital, combined with a willingness among Chinese buyers to pay significant premiums, had a dramatic and immediate effect on Jeju's real estate market. Between December 2011 and December 2014 alone, Chinese land ownership increased by an incredible 483.7%.4 This surge in demand created a speculative bubble, detaching local property values from underlying economic fundamentals. Official government data on "benchmark prices"—a conservative measure of typical property value—showed that land values on the island increased by over 40% between 2012 and 2016. However, actual market prices rose far more dramatically, with reports of Chinese investors frequently paying three to four times the prevailing market rate to secure properties, particularly in desirable areas.14 This hyperinflation is starkly visible when comparing Jeju's housing price index to national averages. While property markets in Seoul and other mainland cities were experiencing modest growth or even declines between 2010 and 2013, Jeju's market began a steep upward trajectory that would continue unabated until 2017.20 This divergence clearly indicates that the boom was not part of a national trend but a localized phenomenon driven primarily by the investor visa scheme.

2.3 The Human Dimension: Visa Issuances

The direct link between investment and immigration is confirmed by the visa statistics. By June 2016, a total of 3,963 F-2 visas (for both primary investors and their family members) had been issued in Jeju. This figure represented an overwhelming 98.6% of all such visas issued across South Korea, highlighting that the real estate investment scheme was, in practice, almost exclusively a Jeju-based program.11 The nationality data is even more telling: of the 1,415 primary investor visas issued in Jeju during this period, 1,395 (98.5%) went to Chinese nationals. The remaining 1.5% was distributed among a handful of other nationalities, making the program a de facto channel for Chinese immigration.11 This data provides unequivocal evidence that the policy, while neutral on paper, created a highly specific bilateral flow of capital and people between China and Jeju Island. The policy did not simply attract foreign investment; it specifically attracted Chinese investment, creating a dynamic that would have profound and lasting consequences. Year Area Owned by Chinese Nationals (m²) % of Foreign-Owned Land in Jeju % of Total Jeju Land Area Assessed Value (KRW Billions) 2010 40,000 0.8% 0.002% 0.8 2011 1,220,000 15.8% 0.066% 20.1 2012 3,150,000 31.0% 0.170% 130.5 2013 4,370,000 36.1% 0.236% 295.6 2014 8,340,000 43.1% 0.451% 765.2 2015 9,140,000 44.4% 0.494% 801.0 2016 8,420,000 39.8% 0.455% 789.5 2017 9,400,000 44.5% 0.508% 812.1 2024 9,200,000 (approx.) 42.2% (of 21.79m m²) 0.497% 591.6

Note: Data is compiled and synthesized from multiple sources for illustrative purposes. Percentages and values are approximate based on available reports from different years.17 The 2024 data reflects a slight decrease from the peak but stabilization in recent years. Year Jeju Housing Price Index (YoY % Change) National Housing Price Index (YoY % Change) Seoul Apartment Price Index (YoY % Change) 2010 N/A 1.40% -2.60% 2011 N/A 6.17% -2.30% 2012 5.1% -1.42% -6.10% 2013 1.2% 0.24% N/A 2014 2.0% 1.80% N/A 2015 7.8% 3.42% 5.90% 2016 14.2% 0.80% 8.90% 2017 10.1% 1.47% 12.60% 2018 -1.7% 1.00% 17.60%

Note: Data is synthesized from multiple sources including the Korea Real Estate Board and Real Estate 114 to illustrate comparative trends. Exact index values may vary between sources, but the trend of Jeju outperforming the national average during the 2012-2017 boom is consistent.20

Section 3: The Unforeseen Consequences: Economic, Social, and Environmental Strains

While the Investment Immigrant Scheme was successful in its primary goal of attracting a massive volume of foreign capital, this success came at a significant cost. The policy's narrow focus on investment figures, without adequate consideration for its broader impacts, created a series of negative externalities that placed severe strain on Jeju's local community, infrastructure, and natural environment. The economic benefits, while tangible, proved to be a double-edged sword, creating new problems that fueled widespread public discontent.

3.1 The Economic Double-Edged Sword

On one hand, the influx of capital achieved its intended short-term goals. It revitalized a stagnant construction sector, led to the development of large-scale resort and tourism facilities that had been stalled for years, and generated a significant increase in local tax revenues.8 These developments created jobs and provided a visible boost to certain sectors of the island's economy. However, these benefits were not evenly distributed and came with severe downsides for the local population. The most immediate and painful consequence was the hyperinflation of the property market. Soaring real estate and rental prices quickly made housing unaffordable for many Jeju residents, with some tenants being forced out of their homes as buildings were sold to foreign investors at premium prices.14 A survey conducted in 2014 revealed that a majority of Jeju residents believed the scheme should be abolished, with "land encroachment and reckless development" being their top concern.26 Furthermore, the economic activity was often highly concentrated within the new, foreign-oriented developments. Projects like the Dream Tower included "foreigner-only" casinos, and many of the condominiums were marketed exclusively to wealthy tourists, creating economic enclaves that had limited integration with or benefit for local small businesses.27 This led to a perception that the scheme was facilitating a form of economic extraction, where profits were repatriated rather than reinvested into the local community.

3.2 Social and Cultural Discontent

The sheer speed and scale of the demographic and physical changes on the island created significant social friction. The overwhelming dominance of a single nationality among the investors fueled a narrative of "land encroachment by the Chinese".8 This concern was less about xenophobia and more about the perceived loss of local control and the erosion of Jeju's distinct cultural identity, which residents feared was being diluted by large-scale, homogenous developments that did not respect the local character.26 The nature of the investment also contributed to this discontent. Many of the foreign property owners were absentee landlords who purchased real estate as a pure investment or a means to secure residency, without any intention of becoming part of the local community. This led to accusations of "hit-and-run" investment, where investors extracted value (residency status and potential capital gains) without contributing to the social fabric of the island.26 This dynamic created a sense of alienation among locals, who felt their home was being sold off to outsiders with no genuine connection to the island's future.

3.3 Environmental Toll of "Reckless Development"

Perhaps the most potent driver of public opposition was the environmental cost of the development boom. The term nan-gaebal, meaning "reckless" or "indiscriminate" development, became the rallying cry for civic groups and residents who witnessed the degradation of Jeju's prized natural landscape.16 Jeju's status as a UNESCO World Natural Heritage Site made its residents particularly sensitive to environmental issues, and the rapid construction of massive concrete resorts was seen as a direct threat to this heritage.27 Beyond the aesthetic impact, the new developments placed an immense and unsustainable burden on the island's infrastructure. The proliferation of large-scale resorts and condominiums led to severe traffic congestion in areas like Jeju City, creating what opponents termed a "traffic hell".28 An even more critical issue was the strain on the island's limited water resources. Civic groups calculated that the new tourism facilities would consume vast quantities of water, leading to inevitable shortages for the local population and necessitating costly new infrastructure projects, the burden of which would fall on local taxpayers.28 This demonstrated a fundamental failure of the policy: it incentivized development without requiring investors to contribute to mitigating the infrastructural and environmental costs they were creating, leaving the local community to bear the consequences.

Section 4: A Towering Symbol: The Jeju Dream Tower Case Study

No single project encapsulates the complexities, controversies, and public sentiment surrounding the Chinese investment boom in Jeju more than the Jeju Dream Tower. This massive integrated resort, a joint venture between Korean and Chinese capital, became the physical embodiment of the anxieties over development, foreign influence, and the perceived disregard for local concerns. Its journey from conception to completion is a microcosm of the broader issues that defined this era.

4.1 The Project's Genesis and Scale

The Jeju Dream Tower is a landmark development in the heart of Jeju City, notable for its immense scale in a predominantly low-rise urban landscape. The project was a collaboration between a Korean tourism company, Lotte Tour Development, and one of China's largest state-owned real estate developers, the Greenland Group.29 The primary construction was handled by another major Chinese state-owned enterprise, the China State Construction Engineering Corporation (CSCEC), which provided an unconditional completion guarantee, highlighting the significant role of Chinese state capital in realizing the project.32 Initially envisioned as a 218-meter, 56-story skyscraper, the plan was later revised down to twin 38-story towers standing at 169 meters following public and administrative pressure.29 Despite the reduction, it remains the tallest building on Jeju Island. The complex houses a 1,600-room Grand Hyatt hotel, a shopping mall, and, most controversially, a large foreigner-only casino, which involved relocating and massively expanding an existing casino license held by Lotte Tour.33

4.2 The Epicenter of Controversy

From its inception, the Dream Tower was a lightning rod for public opposition. Civic groups and local residents mounted a sustained campaign against the project, citing a range of deep-seated concerns that went to the heart of Jeju's identity and future. Skyline and Landscape Damage: Opponents decried the project as a "twin monster building" that would permanently scar the skyline of Jeju City and obstruct views of the iconic Hallasan Mountain, which many consider the island's sacred and natural landmark.36 The sheer verticality of the structure was seen as a violent intrusion into the island's cherished natural landscape. Infrastructure Overload: The project's scale raised immediate and practical concerns about its impact on local infrastructure. Activists and residents predicted that the massive influx of tourists and service vehicles required by a 1,600-room hotel and casino complex would overwhelm the already congested road network of Nohyeong-dong, creating a state of perpetual "traffic hell".28 Furthermore, the enormous water consumption of such a facility was flagged as a critical issue that would exacerbate the island's existing water scarcity problems, placing an undue burden on public resources.28 Social Impact of the Casino: The proposal to include a large-scale casino was a major flashpoint. Even though it was designated as "foreigner-only," civic groups and residents feared it would normalize and expand the gambling industry on the island, leading to negative social consequences such as crime and addiction.29 The casino was viewed not as a benign tourist amenity but as a "social evil" that prioritized profit over the well-being of the community. Lack of Public Consultation and Alleged Manipulation: A core grievance was the perception that the project's approval process was "anti-democratic" and had been pushed through without meaningful public consultation or consent.36 This sentiment was powerfully validated when a former executive of LT Casino (the Lotte Tour subsidiary) was jailed for manipulating the results of a mandatory social impact survey required for the casino license transfer. The court found that the polling firm had been instructed to find "casino-friendly groups" to skew the results, confirming the worst fears of civic groups about collusion and a subversion of the regulatory process.35 The Dream Tower, therefore, became more than just a building. It was a tangible symbol that crystallized all the abstract fears associated with the investment boom. It represented the physical dominance of foreign-backed capital, the threat to Jeju's natural environment, the potential for social decay from the gambling industry, and a profound failure of governance to protect the interests and heed the voice of the local community.

Section 5: The Backlash: Civic Resistance and Policy Reversal

The widespread negative consequences of the unchecked investment boom catalyzed a powerful and organized backlash from Jeju's civil society. This sustained public pressure, rooted in deep-seated concerns about the island's future, ultimately compelled the provincial and national governments to fundamentally rethink and overhaul the Real Estate Investment Immigrant Scheme. The policy's evolution from an open invitation to a highly restrictive program is a direct testament to the efficacy of this civic resistance.

5.1 The Voice of the People: Civic Groups and Public Opinion

The opposition was spearheaded by a coalition of local organizations, including the Jeju Solidarity for Participatory Self-government and Environmental Preservation, which brought together 17 distinct civic groups.28 These organizations became the public face of the resistance, articulating a coherent set of grievances and demands. Their primary objective was clear: the complete abolition of the investor scheme, or at the very least, a drastic revision to mitigate its harmful effects.16 Their campaign was highly effective because it was backed by strong public sentiment. A pivotal 2014 public opinion survey commissioned by the Jeju Provincial Council provided clear evidence of this widespread discontent. The survey found that nearly 60% of Jeju residents wanted the scheme to be terminated by its scheduled sunset date in 2018. Only 14.8% supported its continuation with improvements.26 The reasons cited by respondents mirrored the arguments of the civic groups, with "land encroachment and reckless development" (57.2%) and "damage to cultural identity" (13.5%) being the top concerns.26 This data armed politicians and activists with a clear public mandate to challenge the policy.

5.2 Government's Response: From Promotion to Restriction

Faced with escalating public anger and undeniable evidence of the scheme's negative externalities, the government was forced to act. The policy pivot occurred in two major phases: The 2015 Restriction: The first significant rollback came in 2015. Responding directly to criticism about speculative real estate purchases and environmental damage, the Jeju provincial government narrowed the scope of eligible investments. The scheme was restricted to apply only to tourism complexes and recreational facilities within designated zones, effectively ending the practice of purchasing condominiums anywhere on the island for residency purposes.8 The impact was immediate and dramatic, causing investment demand to "plummet" and marking the beginning of the end for the investment boom.8 The 2023 Overhaul: As the scheme's 2023 expiration date approached, the debate over its future intensified. While some business interests favored its continuation, the prevailing public sentiment remained negative. The Ministry of Justice ultimately opted for a compromise that represented a major overhaul. The scheme was extended for another three years, but the investment threshold was doubled from KRW 500 million to KRW 1 billion (approximately USD 780,000).8 Additionally, the program's name was officially changed to the "Tourism/Recreational Facility Investment Immigration System" to further distance it from general real estate speculation.8

5.3 The Post-Boom Cooldown

The cumulative effect of these policy changes, compounded by external factors, led to a dramatic cooling of Jeju's property market. The 2015 restrictions were the primary catalyst for the slowdown. This was exacerbated by the 2016 THAAD missile defense system dispute between Seoul and Beijing, which led to an unofficial Chinese ban on group tourism to South Korea and a broader chilling of bilateral relations.16 China's own tightening of capital outflow controls and the global disruption caused by the COVID-19 pandemic further suppressed investment, to the point where investment through the scheme became virtually non-existent after 2020.16 The result has been a significant market correction. After peaking around 2016-2017, Jeju's real estate market has been in a state of steady decline, with property prices falling and commercial vacancy rates rising.23 The speculative bubble, inflated by a decade of policy-driven foreign investment, had finally burst. This entire cycle, from boom to bust, illustrates a powerful lesson in how local democratic action can successfully counter and reshape a major economic policy driven by the forces of international capital, reasserting community values over purely financial incentives.

Section 6: Conclusion: Reassessing the "Vassal State" Narrative

The notion that Jeju Island has become, or is becoming, a "Chinese vassal state" is a powerful and evocative narrative that has resonated both domestically and internationally. However, a comprehensive analysis grounded in empirical data reveals a more complex reality. While the influx of Chinese capital has had a profound, and in many ways disruptive, impact on the island, the "vassal state" claim is a significant exaggeration that conflates economic influence with sovereign control.

6.1 A Quantitative Reality Check

The most compelling evidence against the idea of a territorial takeover lies in the land ownership statistics. As of 2024, land owned by Chinese nationals accounts for approximately 9.2 million square meters, which constitutes about 0.5% of Jeju's total land area of 1,850 square kilometers.44 While this figure represents a substantial portion (around 42%) of all foreign-owned land on the island, it is a small fraction of the island as a whole.22 To put it plainly, 99.5% of Jeju Island is not owned by Chinese nationals. This single statistic fundamentally refutes any claim of a demographic or territorial "occupation." The narrative of Chinese dominance stems not from the total area controlled, but from the concentration and visibility of their investments.

6.2 The Power of Perception vs. Reality

The "vassal state" narrative is not a reflection of quantitative reality but a product of socio-economic anxiety. It was born from the lived experience of Jeju residents who witnessed a rapid and destabilizing transformation of their community. The key drivers of this perception were: Velocity of Change: The investment boom was not a gradual process but a sudden shock to the system. The explosive growth in property prices and construction occurred over a very short period (roughly 2011-2016), creating a sense of being overwhelmed and losing control.14 Economic Dislocation: The speculative bubble priced many locals out of the housing market, creating a tangible sense of economic disenfranchisement. The perception was that the island's most valuable asset—its land—was being sold off for the benefit of wealthy foreigners, while residents bore the costs.14 High Visibility and Concentration: Chinese investment was not spread thinly across the island. It was concentrated in highly visible, large-scale projects like the Dream Tower and other resort complexes. These developments physically dominated the landscape and became powerful symbols of foreign influence, making the presence of Chinese capital seem far larger and more pervasive than the 0.5% ownership figure would suggest.28 Lack of Integration: The "foreigner-only" nature of many facilities and the absentee status of many investors created a sense of parallel economies and societies, reinforcing the idea that this was an external force acting upon Jeju, rather than an integrated part of its community.27 Therefore, the narrative is best understood not as a literal claim of political subjugation, but as a metaphor for the perceived loss of local agency, the disruption of community life, and the environmental and cultural costs imposed by a poorly regulated wave of global capital.

6.3 The Legacy of the Investment Boom

The long-term legacy of the Investment Immigrant Scheme is complex. On one hand, it succeeded in attracting over a trillion won in capital, funding major developments and boosting the construction sector. On the other hand, it failed to generate sustainable or equitable growth. The policy left behind a legacy of environmental strain, infrastructural deficits, and a distorted real estate market that is still undergoing a painful correction.25 Perhaps the most significant and positive legacy, however, was the galvanization of Jeju's civil society. The public backlash against the scheme and projects like the Dream Tower demonstrated the power of a well-organized and determined local community to influence policy. It forced the government to acknowledge the severe limitations of a development model that prioritizes capital attraction above all else. The subsequent policy reversals and the implementation of stricter controls represent a victory for local democracy and have established a powerful precedent for a more cautious and community-focused approach to future foreign investment initiatives. The experience has taught Jeju and, by extension, South Korea, a crucial lesson: the true measure of successful development is not just the amount of investment attracted, but the ability to harness that investment for the genuine and sustainable benefit of the local community.

Section 7: Recommendations for Sustainable Foreign Direct Investment

The experience of Jeju Island with the Real Estate Investment Immigrant Scheme offers a critical case study for governments worldwide seeking to attract foreign direct investment (FDI) without succumbing to its potential negative externalities. The initial policy's failure to balance economic incentives with social and environmental safeguards provides a clear blueprint for what to avoid. Based on the lessons learned from Jeju, the following recommendations can help formulate more resilient, sustainable, and equitable FDI policies. Incorporate "Smart" Guardrails and Community Benefit Agreements: Blunt policy instruments, such as a simple investment threshold for residency, are insufficient. Future schemes should incorporate "smart" guardrails that tie investment to tangible local benefits. This could include mandating the use of a certain percentage of local labor and materials in construction projects, requiring contributions to an infrastructure development fund to offset increased strain on public services like roads and water, and creating formal partnerships with local businesses to ensure economic benefits are distributed more broadly. Mandate Independent and Binding Environmental and Social Impact Assessments (ESIAs): For any large-scale FDI project, a rigorous and independent ESIA should be a non-negotiable prerequisite for approval. The controversy surrounding the manipulated survey for the Jeju Dream Tower casino highlights the danger of allowing developers to control this process.35 The body conducting the assessment must be impartial, and its findings—particularly regarding environmental protection and infrastructure capacity—should be legally binding on both the investor and the approving government body. Diversify Investor Sources to Mitigate Geopolitical Risk: Jeju's over-reliance on a single source of capital—China—made its economy exceptionally vulnerable to shifts in bilateral relations, as demonstrated by the fallout from the THAAD dispute.16 Governments should actively pursue a diversified FDI portfolio by marketing investment opportunities to a wide range of countries and regions. This approach not only reduces economic dependency but also mitigates the risk of any single foreign power gaining undue political or economic leverage. Strengthen National Security Reviews for Strategic Assets: Investment in sensitive or strategic locations like Jeju, which hosts critical infrastructure, requires a robust national security review process that goes beyond purely economic considerations.46 This framework, as Korea is now reinforcing, should assess potential investments for risks related to espionage, covert influence, and the potential for economic coercion. This is particularly crucial for investments in or near critical infrastructure, such as ports and military installations. Prioritize and Formalize Community Engagement and Consent: The most profound lesson from Jeju is the ultimate power of local public opinion. A lack of genuine community consultation breeds resentment and opposition, which can ultimately derail projects and undermine policy stability.26 FDI policies must include legally mandated, transparent, and early-stage channels for public engagement. For projects of significant scale or impact, mechanisms for securing community consent, such as a local referendum or approval by an elected council, should be considered. This ensures that development proceeds with a social license to operate, fostering a partnership between investors and the host community rather than an adversarial relationship. 참고 자료 SPECIAL ACT ON THE ESTABLISHMENT OF JEJU SPECIAL SELF-GOVERNING PROVINCE AND THE DEVELOPMENT OF FREE INTERNATIONAL CITY, 8월 4, 2025에 액세스, https://elaw.klri.re.kr/eng_service/lawView.do?hseq=28899&lang=ENG SPECIAL ACT ON THE ESTABLISHMENT OF JEJU SPECIAL SELF-GOVERNING PROVINCE AND THE DEVELOPMENT OF FREE INTERNATIONAL CITY, 8월 4, 2025에 액세스, https://elaw.klri.re.kr/eng_service/lawView.do?hseq=6398&lang=ENG Indigenous Island Autonomy and Special Economic Zone Status - Shima Journal, 8월 4, 2025에 액세스, https://shimajournal.org/article/10.21463/shima.196.pdf Foreign Investment Dilemma: Real Estate on Jeju Island, Korea - FOCUS on Geography, 8월 4, 2025에 액세스, http://www.focusongeography.org/publications/articles/jeju/index.html Alien land ownership - KoreanLII, 8월 4, 2025에 액세스, http://www.koreanlii.or.kr/w/index.php/Alien_land_ownership China meets Jeju Island: provincializing geopolitical economy in East Asia - ResearchGate, 8월 4, 2025에 액세스, https://www.researchgate.net/publication/347179332_China_meets_Jeju_Island_provincializing_geopolitical_economy_in_East_Asia Climate Change and Tourism Sustainability in Jeju Island Landscape - MDPI, 8월 4, 2025에 액세스, https://www.mdpi.com/2071-1050/15/1/88 S. Korea's Real Estate Investment Threshold Is Doubled in May, US$ 780 000. - Citinavi, 8월 4, 2025에 액세스, https://www.citinavi.net/single-post/s-korea-s-real-estate-investment-threshold-is-doubled-in-may-us-780-000-in-may-2023 일몰제 앞둔 부동산투자이민제 폐지냐 개선이냐 - 제주일보, 8월 4, 2025에 액세스, http://www.jejunews.com/news/articleView.html?idxno=2190577 Jeju Island, Korea – Trading real estate for residency | JLL, 8월 4, 2025에 액세스, https://research.jllapsites.com/jeju-island-korea-trading-real-estate-for-residency/ 외국인 부동산투자이민 현황과 시사점 - 국회입법조사처, 8월 4, 2025에 액세스, https://www.nars.go.kr/fileDownload2.do?doc_id=1LU93cg69NX&fileName=(%EC%A7%80%ED%91%9C%EB%A1%9C%20%EB%B3%B4%EB%8A%94%20%EC%9D%B4%EC%8A%88%2064%ED%98%B8-20161004)%EC%99%B8%EA%B5%AD%EC%9D%B8%20%EB%B6%80%EB%8F%99%EC%82%B0%20%ED%88%AC%EC%9E%90%EC%9D%B4%EB%AF%BC%20%ED%98%84%ED%99%A9%EA%B3%BC%20%EC%8B%9C%EC%82%AC%EC%A0%90.pdf Information>Our Policies>Immigrant Investor Scheme for Public Business (IISPB), 8월 4, 2025에 액세스, https://www.immigration.go.kr/immigration_eng/1853/subview.do South Korea doubles threshold for investor visa - Uglobal, 8월 4, 2025에 액세스, https://www.uglobal.com/en/investment/posts/south-korea-doubles-threshold-for-permanent-residency-visa/ Treasuring the “Treasure Island of Korea”: A Cautionary Tale of Chinese Real Estate Development in Jeju Island | Yale Journal of International Law, 8월 4, 2025에 액세스, https://yjil.yale.edu/posts/2017-03-02-treasuring-the-treasure-island-of-korea-a-cautionary-tale-of-chinese-real-estate Chinese Investment in Foreign Real Estate and its Interactions with the Host State and Society: The Case of Jeju, South Korea - ResearchGate, 8월 4, 2025에 액세스, https://www.researchgate.net/publication/331450096_Chinese_Investment_in_Foreign_Real_Estate_and_its_Interactions_with_the_Host_State_and_Society_The_Case_of_Jeju_South_Korea 저작자표시-비영리-변경금지 2.0 대한민국 이용자는 아래의 조건을 따르는 경우에 한하여 자유롭 - 서울대학교, 8월 4, 2025에 액세스, https://s-space.snu.ac.kr/bitstream/10371/183491/1/000000170340.pdf 제주도, 외국인 소유 토지 43%가 중국인 - 메디컬월드뉴스, 8월 4, 2025에 액세스, https://www.medicalworldnews.co.kr/m/view.php?idx=1409466514 [부동산 Eye] 제주도에 '여의도 3배' 중국인 땅 언제부터일까 - 아시아경제, 8월 4, 2025에 액세스, https://cm.asiae.co.kr/article/2017120814492238256 외국인에게 넘어간 제주 땅, 여의도 면적 2.4배, 8월 4, 2025에 액세스, https://www.jejusori.net/news/articleView.html?idxno=177901 [News Focus] Seoul apartment prices keep skyrocketing since 2017 - The Korea Herald, 8월 4, 2025에 액세스, https://www.koreaherald.com/article/2097847 South Korea (National) House Price Index: All Dwellings Sales Price Index (2021=100), 8월 4, 2025에 액세스, https://www.globalpropertyguide.com/asia/south-korea/home-price-trends 제주 땅 2179만㎡ 외국인 소유…3년 만에 증가 전환 - Daum, 8월 4, 2025에 액세스, https://v.daum.net/v/20250530150950924 Jeju property market booms after lagging for years - Korea JoongAng Daily, 8월 4, 2025에 액세스, https://koreajoongangdaily.joins.com/2021/08/05/business/economy/apartment-jeju/20210805190600534.html Korea MHP: Jeju | Economic Indicators - CEIC, 8월 4, 2025에 액세스, https://www.ceicdata.com/en/korea/median-housing-price-korea-appraisal-board/mhp-jeju Jeju's property market struggles as tourism and spending dry up, 8월 4, 2025에 액세스, https://www.chosun.com/english/national-en/2025/05/15/FQMSROSDLJD23AZKI6K5RSYT7U/ 제주도민 58% “부동산투자이민제도 폐지해야” - 제주의소리, 8월 4, 2025에 액세스, https://www.jejusori.net/news/articleView.html?idxno=154217 A Tale of Jeju Island's Dream Tower Resort: The Dark Shadow Left Behind by Foreign Investment - Korean American Youth Artists of Texas, 8월 4, 2025에 액세스, https://www.kayatexas.org/blog/jeju-islands-dream-tower-resort 초고층 '드림타워' 격한 논란...시민사회 거센 반발 - 헤드라인제주, 8월 4, 2025에 액세스, http://www.headlinejeju.co.kr/news/articleView.html?idxno=206550 [신문기사] [제주, 중국자본과의 전쟁]① 멈춰선 대형 개발사업들 - 부동산트렌드쇼, 8월 4, 2025에 액세스, https://www.rtrendshow.com/issue/press/view/?boardId=06498f8e-3fd6-ca6f-5342-ec99d21a42b9&from=%2Fissue%2Fpress%2Findex%2F%3FrecordCount%3D16%26sortType%3D21%26page%3D31 [제주, 중국자본과의 전쟁]① 멈춰선 대형 개발사업들 - 조선비즈, 8월 4, 2025에 액세스, https://biz.chosun.com/site/data/html_dir/2014/07/27/2014072701291.html Greenland Expects to Gain USD626 Million From Jeju Island's New Tallest Building in 2020, 8월 4, 2025에 액세스, https://www.yicaiglobal.com/news/greenland-expects-to-gain-usd626-million-from-jeju-island-new-tallest-building-in-2020 Lotte Tour Raises $34.5M for Jeju Project - GGB News, 8월 4, 2025에 액세스, https://ggbnews.com/article/lotte-tour-raises-34-5m-for-jeju-project/ Lotte Tour Development IR, 8월 4, 2025에 액세스, http://ir.lottetour.com/eng/Milestone Lotte Tour completes Jeju Tower financing - Focus Gaming News, 8월 4, 2025에 액세스, https://focusgn.com/asia-pacific/lotte-tour-completes-jeju-tower-financing Local opposition group accuses Lotte Tour of fudging residents' survey over casino at Jeju Dream Tower - Inside Asian Gaming, 8월 4, 2025에 액세스, https://asgam.com/2021/03/24/local-opposition-group-accuses-lotte-tour-of-fudging-residents-survey-over-casino-at-jeju-dream-tower/ [제이누리] 정의당 "드림타워 무효 ... 우 지사, 지옥의 문 열었다", 8월 4, 2025에 액세스, https://www.jnuri.net/mobile/article.html?no=18731 국회의원들도 드림타워 한 목소리로 '반대'…'中 자본 흉물' - 제주도민일보, 8월 4, 2025에 액세스, https://www.jejudomin.co.kr/news/articleView.html?idxno=55697 드림타워 사업 내일 확정…시민단체, 중단 재촉구 - 한겨레, 8월 4, 2025에 액세스, https://www.hani.co.kr/arti/area/area_general/639600.html Ex casino exec jailed for manipulated survey on Dream Tower - GGRAsia, 8월 4, 2025에 액세스, https://www.ggrasia.com/ex-casino-exec-jailed-for-manipulating-survey-on-dream-tower '투기 과열 논란' 제주 부동산 투자이민제도 결국 3년 연장 - 제주의소리, 8월 4, 2025에 액세스, https://www.jejusori.net/news/articleView.html?idxno=414526 부동산투자이민제, 폐지 아닌 보완 - 뉴스제주, 8월 4, 2025에 액세스, https://www.newsjeju.net/news/articleView.html?idxno=382006 South Korea Doubles Investment Requirement for Investor Visa - IMI Daily, 8월 4, 2025에 액세스, https://www.imidaily.com/intelligence/south-korea-doubles-investment-requirement-for-investor-visa/ 제주, 유명무실해진 투자이민제도 손본다 - 한겨레, 8월 4, 2025에 액세스, https://www.hani.co.kr/arti/area/jeju/1006605.html Chinese nationals dominate Korea's immigrant investor scheme, pouring capital into Jeju Island, 8월 4, 2025에 액세스, https://www.chosun.com/english/national-en/2024/10/15/3WCPGYQJRBADLDHUFSUHHDSAS4/ 제주도가 중국섬?… 중국 국적 외국인 소유 땅 0.5% 불과 - 세계일보, 8월 4, 2025에 액세스, https://www.segye.com/newsView/20240624512610 Foreign direct investment reviews 2024: Republic of Korea | White & Case LLP, 8월 4, 2025에 액세스, https://www.whitecase.com/insight-our-thinking/foreign-direct-investment-reviews-2024-republic-korea Ministry of Trade, Industry and Energy Pre-Announces Amendments to the Enforcement Decree to the Foreign Investment Promotion Act - Kim & Chang, 8월 4, 2025에 액세스, https://www.kimchang.com/en/insights/detail.kc?sch_section=4&idx=28949 Korea Reinforces Its Foreign Investment Review Framework - JIPYONG LLC, 8월 4, 2025에 액세스, https://www.jipyong.com/en/board/jipyongNews_post.php?seq=6887