Jeju Island’s Financial Woes: A Critical Analysis of Oh Young-hoon’s Administration

Jeju Island is facing a mounting debt crisis, with concerns raised over financial management practices during the administration of Governor Oh Young-hoon. A recent presentation by Baek Sang-gyu, former expert member of the Jeju Provincial Council’s Budget and Settlement Special Committee, highlighted a pattern of negligence, carelessness, and neglect in the island’s financial affairs. This analysis delves into the key issues, examining the rising debt, declining income, and perceived lack of proactive solutions.

Declining Income and Increasing Debt

According to Baek’s analysis, Jeju Island’s per capita income in 2024 was 24.61 million won, representing 88.4% of the national average and a drop to 17th place among South Korea’s 17 local governments. Simultaneously, the tax burden on residents is increasing, with a gap of 650,000 won compared to the national average – the largest disparity on record. Despite the absence of major infrastructure projects like subways, the debt per person has reached 3.3 million won.

The general debt compared to the island’s Gross Regional Domestic Product (GRDP) stands at 5.48%, triple that of other regions. This signifies that 10% of the value of all goods produced by Jeju residents annually is now public debt. The situation is projected to worsen, with principal and interest repayments expected to reach 180 billion won in 2026 and a combined 500 billion won in 2028, encompassing both management debt and deposit accounting transactions.

Criticism of Externalizing Blame

Baek Sang-gyu criticized Governor Oh Young-hoon’s administration for attributing the financial difficulties to external factors, such as poor domestic tax revenue and a downturn in the local economy. He argued that the administration is failing to address internal issues and demonstrate a willingness to reorganize financial strategies. Instead, the focus remains on securing government-funded projects rather than addressing fundamental economic challenges.

Concerns Over Tax Distribution and National Budget Allocation

The presentation too raised concerns about the distribution of value-added tax and the allocation of the national budget to Jeju Island. Beyond the 3% ordinary grant tax, questions were raised regarding where the remaining national budget is directed. Baek criticized the administration’s response to changes in local tax consumption tax standards and national tax laws, deeming it inadequate.

Limited Impact of Economic Development Strategies

Baek argued that current economic development strategies, such as fostering modest and medium-sized businesses and attracting listed companies, have a limited impact on tax revenue for the region. He characterized Jeju Island’s approach to the “five poles and three special forces” initiative as timid and lacking a sense of urgency for regional economic recovery.

Lottery Fund Penalties and Missed Opportunities

Jeju Island has consistently faced penalties related to the lottery fund, totaling 6.1 billion won in 2016 and escalating to 30 billion won under the reorganization plan approved in February 2026. Baek questioned the effectiveness of projects funded by the lottery and criticized the lack of effort to persuade the central government and secure a fairer share of these resources.

Looking Ahead

The financial challenges facing Jeju Island require a fundamental shift in approach, moving beyond externalizing blame and prioritizing internal reforms. Addressing the rising debt, declining income, and inequitable tax distribution will be crucial for ensuring the island’s long-term economic stability and prosperity. A more proactive and assertive approach to engaging with the central government and implementing sustainable economic development strategies is essential.