Archive for the ‘Mt. Kumgang Tourist Special Zone’ Category

3.6% of South-North cooperation fund spent in 2010

Monday, October 25th, 2010

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-10-25-1
10/25/2010

There has been a sharp drop in inter-Korean exchanges resulting from the chill in relations on the peninsula. This has led to a mere 3.6 percent of the inter-Korean cooperation fund being tapped as of the end of September. In 2009, 8.6 percent of the allocated funds were spent, but this year, even at the end of the third quarter, not even half that much has been allocated.

The National Assembly’s Unification, Foreign Affairs and Trade Committee found in an audit of the Ministry of Unification’s public documents that almost 1.2 trillion Won had been allocated for inter-Korean cooperative projects, but a mere 41.7 billion Won had been spent. 1.4 billion Won was spent on socio-cultural exchanges, while 13.1 billion Won was spent on humanitarian aid, 10.7 billion Won supported economic cooperative projects, and 16.7 billion Won was advanced in support of those companies and groups planning additional projects. On the other hand, the Ministry of Unification is loaning 60 billion Won from the inter-Korean cooperation fund to South Korean companies invested in economic cooperative projects that are suffering losses due to the May 24 measures, which restrict exchanges due to the sinking of the Cheonan.

In 2008, the first year of Lee Myung-bak’s administration, only 18.1 percent of the inter-Korean cooperation fund was spent, and this percentage has fallen every year since. Now at an all-time low, it appears that the rate of spending will continue to fall in the future. With the May 24 measures, the Kaesong Industrial Complex was exempted from trade restrictions. In addition, other inter-Korean trade worth approximately 80 million USD (90 billion Won) has been permitted. This includes 639 different cases of imported goods manufactured from raw materials or parts sent to the North prior to the May 24 restrictions, amounting to 31.15 million USD, and 269 cases of pre-ordered exports amounting to just over 49 million USD.

On the other hand, losses due to the halt of tourism to Mount Keumgang and Kaesong have amounted to 628.5 billion Won over the last two years. According to a report submitted to the National Assembly by the Korea Tourism Association on the impact of halting these tourism projects, losses of 548.2 billion Won had been incurred by August, and that is expected to grow to 628.5 billion Won by the end of the year.

Mount Keumgang tours were halted in July 2008, while Kaesong tours were stopped in November of the same year. Since then, the Korea Tourism Association has lost 10.5 billion Won in profits, while private-sector companies including Hyundai-Asan and its partners have lost 465.2 billion Won. In addition, restaurants, rest stops, visitor centers and other businesses in the border town of Koseong, Kangwon Province have lost 72.5 billion won due to the lack of tourists travelling across the border to Mount Keumgang, pushing total losses by the government and private sector to over 500 billion Won.

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DPRK reopens “seized” RoK assets in Kumgang

Saturday, August 7th, 2010

According to Yonhap:

North Korea has reopened a South Korean-built hotel and restaurant in Mount Kumgang on its eastern coast and has started to receive visitors, a pro-Pyongyang daily published in Japan said Saturday.

The Choson Sinbo said Hotel Kumgangsan and the Mokrangwan restaurant opened for business July 20 and will offer services to both foreign and local guests.

However, the Choson Sinbo reported that none of the visitors has spent the night at the 215-room hotel.

“All the tourists so far have stayed overnight at Wonsan and only visited the mountains during the day,” it said. Wonson is located further north in South Hamgyong Province.

The hotel was built and operated by South Korea’s Hyundai Asan Corporation and had been used by tourists from the South until 2008, when a North Korean guard shot and killed a female tourist at a nearby beach.

Since the fatal shooting, Seoul has banned tourists from the mountain report, with Pyongyang taking steps in early October to freeze all Hyundai assets and start its own independent operations. Hyundai employees at the site were also expelled from the resort.

The tours to Mount Kumgang — hailed as a symbol of reconciliation between the countries — began in late 1998, and nearly 2 million South Koreans visited the zone before they were suspended.

South Korean’s Unification Ministry said local companies invested an estimated 420 billion won (US$374 million) to develop the border resort that includes a golf course, several restaurants and a 157-room floating hotel called the Haekumgang.

A group of Chinese diplomats recently visited Kumgang.

Read the full story here:
N. Korea reopens hotel, restaurant on scenic Mount Kumgang: newspaper
Yonhap
8/7/2010

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DPRK takes PRC diplos to Kumgang

Thursday, August 5th, 2010

Accroding to the Choson Ilbo:

North Korea apparently offered a tour to the Mt. Kumgang resort to some 20  Chinese embassy staff last month but did not tell South Korea’s Hyundai Asan, which built the facilities there and has the exclusive right to run the tours. A Unification Ministry official said this was “a clear violation” of Hyundai’s operating rights.

According to the website of China’s Foreign Ministry, the officials toured the scenic mountain resort for three days from July 21 at the invitation of North Korea’s Foreign Ministry. The officials toured sites in Mt. Kumgang that require permission from Hyundai Asan. “The splendid peaks and strange rock formations of Manmulsang, the spectacular scenery of the Haekum River, the flowing waters of the Kuryong Falls… listening to the tour guide made us feel like we were in Shangri-La,” a participant wrote. There is also a photo of them in front of the Kuryong Falls.

In 2000, Hyundai Asan paid US$500 million to North Korea for the exclusive right to operate seven projects in the North, including tours to Mt. Kumgang. But Hyundai Asan said it was unaware of the tour for the Chinese diplomats. “When our tourism operations ran smoothly, North Korea always informed us when they were bringing guests into Mt. Kumgang,” a Hyundai Asan staffer said. “It’s objectionable that they offered the tour without notifying us.”

In April, North Korea froze real estate in Mt. Kumgang belonging to Hyundai Asan and the South Korean government and said it would allow Chinese travel agencies to operate tours to the resort. When a number of Chinese travel agencies began offering tours, the South Korean government and Hyundai Asan protested, and in May Culture and Tourism Minister Yu In-chon sent an official letter to the Chinese government explaining that the freeze was a breach of contract and asked Beijing to take the resort off the list of travel destinations.

“The fact that Chinese diplomats, who must have been aware of the delicate situation, visited Mt. Kumgang is simply puzzling,” a South Korean official said.

Read the full story here:
N.Korea Takes Chinese Diplomats on Mt. Kumgang Tour
Choson Ilbo
8/5/2010

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China bans travel to Kumgang

Sunday, July 25th, 2010

According to Arirang News:

China has temporarily issued a ban on tours to North Korea’s Mount Geumgang resort.

A source in Beijing says the government has ordered local travel agencies to tentatively hold off on selling tour packages to Mount Geumgang and most agencies have responded by taking down such offers from their websites.

Observers say the latest move could be in line with Seoul’s request to Beijing in May to refrain from holding tours to certain areas of Mount Geumgang as North Korea has violated the terms of the contract by seizing South Korean assets at the resort.

While tours to the North Korean resort have been suspended since April following the sinking of the Cheonan China has been operating tours to Mount Geumgang since March.

Read full story here:
China Bans Tours to N. Korea’s Mount Geumgang Resort
Arirang News
7/23/2010

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Creditors cut off Hyundai Asan

Sunday, July 11th, 2010

According to the Economic Times of India:

Creditors stopped providing new loans Thursday to South Korea’s troubled Hyundai Group, which runs a shipping line and major business projects in North Korea, officials said.

Nine of the group’s 12 units will receive no fresh loans “until the group accepts our demands”, said a spokesman for Korea Exchange Bank, the largest of 13 creditors.

The decision does not affect Hyundai’s better-known operations such as automaking and shipbuilding, which were hived off from the original group into financially separate businesses after the 1997-98 financial crisis.

The Hyundai Group includes the country’s biggest bulk carrier Hyundai Merchant Marine and Hyundai Asan, which operates the troubled projects in the North.

The group was picked by creditors in May as a financially distressed conglomerate. But it has refused to sign a deal to sell non-core assets to reduce debts, insisting its financial health is improving.

Debt piled up last year as Hyundai Merchant Marine suffered heavy losses due to the global business slump. However the shipping line posted 154 billion won (126 million dollars) in operating profit in the second quarter of this year.

“Creditors have ignored our position that such a deal will weaken our competitiveness at a time when the group is improving its financial structure,” a group spokeswoman said, without giving total debt figures.

Hyundai, once South Korea’s largest business empire, has been dowgraded to a second-tier conglomerate since its automaking and shipbuilding arms were hived off in 2000 and 2002.

Hyundai Asan’s projects in North Korea, including the Mount Kumgang tourist resort, have been in trouble since a conservative government took office in Seoul in early 2008.

The Kumgang tours were suspended in July 2008 after North Korean soldiers shot dead a Seoul housewife who strayed into a military zone, causing losses to the South Korean company of tens of millions of dollars.

A day trip from the South to the North’s historic city of Kaesong was later also suspended.

Hyundai Asan also operates a jointly-run industrial estate in the North whose operations have sometimes been hit by political tensions.

Read the full story here:
S Korean banks end new loans to Hyundai Group
Economic Times
7/8/2010

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RoK asks China to ban Kumgangsan tours

Wednesday, May 19th, 2010

According to Yonhap:

Seoul has requested that Beijing exclude North Korea’s Mount Kumgang resort from its list of group tour destinations allowed for its people while it seeks understanding on a dispute over the North’s recent illegal freeze of South Korean assets there, the Ministry of Culture and Tourism here said Tuesday.

Late last month, the North froze most South Korean assets at the resort on the east coast, including five South Korean government-run facilities, citing Seoul’s refusal to resume cross-border tours.

The tours, once a cash cow for the poverty-ridden communist country, were suspended in 2008, when a South Korean tourist was shot dead by a North Korean soldier guarding a restricted area. Seoul has demanded a full investigation into the case and safety guarantees for South Korean tourists. The demands have yet to be met.

On May 11, South Korean Culture Minister Yoo In-chon sent China’s national travel agency a letter saying that the North’s asset freeze is a violation of an inter-Korean contract, and asked China’s help in making the North withdraw the unlawful step, the ministry said.

Read the full story here:
S. Korea asks China to ban Mount Kumgang tours
Yonhap
5/18/2010

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RoK ministries asked to suspend aid to DPRK

Wednesday, May 19th, 2010

According to the Donga Ilbo:

The Unification Ministry said Monday that it has asked ministries to suspend aid to North Korea requiring government budget.

The ministry had issued recommendations to delay the signing of new contracts and the shipment of materials to the North to companies involved in inter-Korean cooperation.

Ministry spokesman Chun Hae-sung said, “We sent official letters to 10 related ministries, including the Strategy and Finance Ministry, the Health and Welfare Ministry, and the Korea Forestry Service Friday asking for the temporary suspension of assistance projects for North Korea run by those ministries.”

“This measure has been taken in light of the North’s seizure of South Korean real estate in the Mount Kumgang area and the grave nature of inter-Korean relations of late.”

Seoul has also begun efforts to survey inter-Korean projects conducted by the 10 ministries. Last year, the ministries ran a budget of six billion won (5.2 million U.S. dollars) to assist the North.

The Unification Ministry also contacted companies involved in inter-Korean cooperation, excluding those operating at the Kaesong Industrial Complex, to refrain from making new contracts, investment and visits Tuesday and Wednesday last week.

With analysts saying Seoul has taken a series of measures in the wake of the Cheonan sinking, a Unification Ministry source said, “Since the situation in inter-Korean relations has gotten grave and highly treacherous, we informed related ministries as a preemptive measure to reduce risks.”

Unification Minister Hyun In-taek also told reporters Monday, “We can hardly say that we’ve taken any practical countermeasures.”

Read the full story here:
Ministries Asked to Suspend Aid to N. Korea
Donga Ilbo
5/18/2010

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South Korean employees leave Kumgang

Tuesday, May 4th, 2010

According to the Korea Herald:

Twenty-four South Koreans — 18 employees of Hyundai Asan Corp. and six of its partner firms such as Emerson Pacific — returned home yesterday following 36 Chinese employees who left the resort on Sunday.

This leaves only 16 people to look after the resort — 12 Hyundai Asan employees and four of Emerson Pacific’s golf course.

North Korea last week told all but 16 employees of the South Korean companies operating in the Mount Geumgang resort to leave after announcing that it “seized” or “froze” South Korean real estate assets within the tourist zone.

The Seoul government has repeatedly said that it will take firm countermeasures against the North’s “illegal and unjust actions that are fundamentally detrimental to inter-Korean relations” in consideration of various circumstances.

The Seoul government is reportedly weighing several options including cutting inter-Korean trade or tightening control over goods entering the North.

North Korea last week attached “confiscation” stickers on facilities owned by the South Korean government and the state-funded Korea Tourism Organization such as the spa center and a building for reunions of families separated by the border.

They also “froze” tourism assets owned by private companies such as Hyundai Asan, sticking notes on the doors and keyholes of hotels, duty free shops and restaurants that have been dormant for nearly two years.

The Seoul government suspended tours to the Mount Geumgang resort after a South Korean tourist was shot dead there in July 2008.

Read the full article here:
S. Korean workers leave N.K. resort
Korea Herald
Kim So-hyun
5/3/2010

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NDC takes over Kumgang tours

Monday, April 26th, 2010

According to the Donga Ilbo:

North Korea seeks to directly handle tours to the Mount Kumgang area after forcing South Korea out of the venture, said a source on North Korean affairs yesterday.

Korea Taepung International Investment Group, an agency under the North’s powerful National Defense Commission, has reportedly recruited Chinese companies to help operate the tour since January this year.

The source said, “Negotiations have significantly progressed in certain aspects,” adding, “I understand the North Korean leadership is considering directly operating the Mount Kumgang tour by getting Taepung or an agency under the National Defense Commission to hire multiple Chinese companies as agencies after forcing the Hyundai Group out of Mount Kumgang and Kaesong.”

Another informed source said, “Since Taepung is an agency that holds overall authority over attracting investment for the North’s national development, the group is believed to be advising and supervising efforts to resume the Mount Kumgang tour as well.”

On this, a South Korean government source said, “Even if the North severs ties with Hyundai Asan Corp., complicated legal action will continue over the North’s violation of the contract,” adding, “No Chinese company will seek to serve as a comprehensive business operator, so the new plan appears to be the most practical alternative for North Korea.”

If Taepung or an agency under the defense commission starts to operate the tour directly, the tour program will likely be operated under a completely different system.

The tour’s South Korean operator, Hyundai Asan, has wielded comprehensive and monopolistic rights to the venture, but North Korea appears to have taken over as the operator, with multiple foreign companies taking part.

An agency under the North’s defense commission or military will likely step forward to operate the tour in lieu of Pyongyang’s Asia-Pacific Peace Committee under the ruling Workers’ Party or the Landmark General Development Bureau under the North Korean Cabinet.

And according to Yonhap:

Dozens of South Korean business officials will visit North Korea this week to comply with Pyongyang’s demand that they be present when the communist state freezes their assets at a joint mountain resort, officials said Monday, amid fears of further confiscation.

North Korea already confiscated five South Korean government-run facilities, including a family reunion center and a fire station, at its Mount Kumgang resort on the east coast last week.

The move reflected Pyongyang’s anger over Seoul’s refusal to resume cross-border tours that were halted in 2008 after the fatal shooting of a South Korean tourist by a North Korean guard near the resort.

North Korea insists it has done everything to explain the shooting and guarantee safety for future South Korean visitors. South Korea doubts the genuineness of the gestures, demanding an on-site probe participated in by its officials and tangible safety measures.

The tours earned millions of U.S. dollars for the sanctions-hit North Korean regime before they were suspended. The North Korean demand for their resumption comes as the isolated state struggles to curb its economic troubles that deepened under U.N. sanctions imposed for its two nuclear tests, the latest in May last year.

An official at Hyundai Asan, the chief South Korean operator of the now-suspended tours, said 40 people from 31 companies, including his own, applied for permits to visit North Korea on Tuesday.

The North last week demanded “real estate proprietors and agents” attend the implementation of its plan to freeze their assets, which include hotels, a golf course and a variety of shops.

Officials at the Unification Ministry in Seoul said they plan to grant the permits.

“It is our basic stance that we respect the decisions of the companies,” spokesman Chun Hae-sung said.

Dozens of South Korean firms possess 360 billion won (US$320 million) worth of real estate in the mountain tourist zone.

During a meeting with Hyundai Asan officials stationed at the resort Monday morning, North Korea did not specify which companies should attend the freeze this week, a ministry official here said.

“The North Korean authorities remained ambiguous,” the official said, declining to be identified. “That will leave the door open for anyone wanting to visit North Korea this week.”

South Koreans fear Pyongyang may be taking steps to confiscate more South Korean assets. The North seized the Seoul government-run facilities 10 days after freezing them and expelling personnel.

South Korea has pledged retaliatory measures without being specific. A senior Unification Ministry official, who spoke on the condition of anonymity, said Monday the measures would be announced by early May.

South Korea also warned North Korea will be to blame for any further deterioration of relations between the divided states.

The Korea Herald speculates on how the South Korean government might retaliate:

The government is reportedly considering limiting the volume of agricultural and marine products from North Korea or tightening regulation of imports in other ways.

Certain North Korean items, such as sand, hard coal and mushrooms, already require the unification minister’s approval each time someone wants to bring them into the South. Seoul could expand the number of such items, making the import process more troublesome.

Currently, South Korean materials going into the joint industrial park in the North’s border town of Gaeseong and products rolled out from factories there account for more than 60 percent of inter-Korean trade.

Last month’s inter-Korean trade volume amounted to $202 million, 63 percent of which were goods going in and out of the Gaeseong park.

Since cross border tours to Mount Geumgang have been stalled, most of the remaining inter-Korean trade volume (35 percent) consists of agricultural and marine products.

Although the growth of inter-Korean trade has slowed under the Lee Myung-bak administration, South Korea is still the North’s second largest trading partner after China, according to the Unification Ministry.

Inter-Korean trade accounts for about 30 percent of the North’s trade with other countries, while China takes up about half.

The Seoul government could also further restrict nongovernmental aid to the North, which it has limited ever since Pyongyang launched a rocket in April last year.

It could also engage to the international community about the North’s “wrongful measures.”

Read the full stories here:
N. Korea to Directly Take Over Mt. Kumgang Tour
Donga Ilbo
4/26/2010

S. Koreans to visit N. Korea as Pyongyang moves to freeze their assets
Yonhap
Sam Kim
4/26/2010

Seoul may cut trade with N. Korea
Korea Herald
Kim So-hyun
4/25/2010

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Seoul denounced seizing of ROK assets at Kumgang

Sunday, April 25th, 2010

According to Yonhap:

South Korea denounced North Korea’s decision Friday to seize five South Korean facilities at a mountain resort on its soil and warned that Pyongyang will be held responsible for the deterioration of inter-Korean relations.

“It is an illegal and unreasonable measure that undermines the very foundation of the South-North relations,” a spokesman for South Korea’s Unification Ministry said in a statement after Pyongyang said it will seize the South Korean assets at Mount Kumgang.

“The North has proven itself to be an unfit partner for normal business and transactions,” it said.

North Korea also said other non-state South Korean assets at Mount Kumgang will be frozen, and that all employees from the South at the resort will be expelled. The measures were seen as aimed at pressuring Seoul to resume the suspended mountain tour program that had been a source of foreign currency for Pyongyang.

Seoul said it will take “strong measures” against the North. It did not elaborate.

“We cannot accept the (North’s) measures, as they are in violation of contracts between North Korea and our businesses, agreements between the governments and of international laws. It is an unjust step that undermines the very foundation of South-North relations,” a ministry official told reporters.

The North’s move came at the end of a two-day inspection by North Korean military officials of the mountain resort, where dozens of South Korean businesses and private investors own various facilities that are part of the suspended tourism program.

The five facilities to be seized include a family reunion center, funded and owned by Seoul’s National Red Cross, as well as a fire station and a duty free shop. They also include a cultural center and a hot spring resort, both owned by Seoul’s Korea Tourism Organization.

Pyongyang froze the assets, worth some 124 billion won (US$112 million), on April 13 after an on-site inspection by its officials late last month. The latest inspection ended Friday.

“First, we will confiscate all five assets of the South Korean authorities that have already been frozen in compensation for our loss due to the long suspension of the tour,” an unidentified spokesman for the General Guidance Bureau for the Development of Scenic Spots said in a statement carried by the North’s official Korean Central News Agency.

The once lucrative tourism program for the impoverished North was suspended in July 2008 after a South Korean tourist was shot dead by a North Korean guard near a restricted area. Nearly 2 million South Koreans had visited the mountain resort since the tours began in 1998.

“The confiscated real estate will be put into the possession of the DPRK or handed over to new businessmen according to legal procedures,” the statement said, referring to North Korea by its official name, the Democratic People’s Republic of Korea.

The North said early last month that it will restart the tourism program with a new business partner unless Seoul agreed to resume the tours before the end of April.

“The situation has reached such an extreme phase that it is at the crossroads of a war or peace, much less thinking of the resumption of the tour. It is quite natural that we can no longer show generosity and tolerance to the south side under this situation,” the statement said.

Friday’s measure also included freezing of all assets owned by over 30 South Korean businesses and private investors.

Hyundai Asan, the main South Korean developer of the joint mountain resort, urged the North to withdraw its decision and the governments of the two Koreas to resolve the issue through dialogue.

“The road to Mount Kumgang must not be severed as the tours greatly helped promote cooperation and reconciliation between the South and the North and peace on the Korean Peninsula,” the business group said in a statement.

“We also urge our government to actively seek a solution to the current situation, as the joint economic cooperation project of the South and the North, as well as properties of businesses that invested in Mount Kumgang, now sit on the verge of a breakdown,” the statement said.

Read the full story here:
Seoul denounces N. Korea’s seizure of assets at Mount Kumgang
Yonhap
4/23/2010
Byun Duk-kun

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