The 317 trillion won ($282 billion) project to develop a tourist complex city across Muuido and Yongyudo islands near Incheon International Airport has collapsed due to the ongoing economic stagnation and investment delays.

The Incheon Free Economic Zone said Thursday that it canceled the contract with 8City, a private consortium organized back in 2007 to construct the tourist attraction complex, officials said.

Considering the economic hardships, the IFEZ has extended investment deadlines 13 times so far but the consortium failed to meet the basic requirements, such as establishing a special purpose company, increasing capital or supplying financial resources, they said.

With the development plan back to square one, the local residents are to be offered monetary compensation and will be allowed to exercise their property rights within the month, according to the IFEZ.

8City, however, pledged to continue the project according to schedule, claiming that the IFEZ’s announcement was unilateral and legally groundless.

By Bae Hyun-jung (tellme@heraldcorp.com)