North Korean Economy Watch

According to Yonhap:

Hyundai Asan Corp., the company that pioneered inter-Korean commercial ties, said Tuesday that its loss from the suspension of its North Korea tour programs is estimated at nearly 1 trillion won (US$909 million) over the past six years.

The company said on the eve of the 16th anniversary of starting the tours to Mount Kumgang on North Korea’s east coast that it has also been forced to reduce its workforce by up to 73 percent.

Before visits were stopped, the company employed 1,084 people to handle tours to Mount Kumgang and the city of Kaesong, but the staff has been slashed to just 285. Kaesong was the capital of the Goryeo Dynasty (918-1392).

The estimate is based on the assumption that some 300,000 tourists would have visited the scenic mountain and seaside resort on an annual basis if the ban was not placed. For Kaesong, Hyundai Asan said the loss in earnings was calculated on the premise that some 100,000 people would have visited the city per year.

Seoul banned all tourists from visiting the isolated country after a North Korean guard shot a South Korean visitor dead in July 2008 at Mount Kumgang. South Korea said the North must formally apologize for the mishap and assure that the tragedy will not occur in the future.

Tourists first started visiting the mountains in November 1998 and by 2008, over 1.93 million made the trip to the North.

“The halt in tourism to the mountain resort has cost the company 809.4 billion won, while losses brought on by a ban on tourism to the ancient city of Kaesong on the west coast, has ballooned to 125.2 billion won with the total reaching 934.7 billion won,” the company said. They added that if tours do not resume soon, the loss in earnings will reach the 1 trillion won mark.

The halt in tourism is particularly painful because the company, part of the larger Hyundai Group, invested 226.8 billion won in various facility investments and US$486.69 million to acquire land and operational rights from Pyongyang.

Hyundai Asan said that despite troubles, it has a plan in place that can restart tours in two months, with its top executives still hoping that cross-border relations will improve so operations can resume.

Read the full story here:
Hyundai Asan faces 1 tln won loss on N. Korea tour suspension
Yonhap
2014-11-18

Institute for Far Eastern Studies (IFES)

The opening ceremony for the Chongsu Tourist Development Zone, an area designated as one of North Korea’s economic development zones (EDZ), took place on October 30, 2014.

According to a report on October 31 by the Korean Central News Agency (KCNA), the Chongsu Tourist Development Zone is an EDZ which was developed under the July 23, 2014 decree of the Standing Committee of the DPRK Supreme People’s Assembly, and covers nearly 3,800 hectares in various parts of Pangsan-ri and the Chongsong Workers’ District in Sakju County, North Phyongan Province.

It was reported that the Chongsu Tourist Development Zone was opened through cooperation between North Korea’s North Phyongan Provincial People’s Committee and China’s Liaoning Province, Dandong City People’s Government, and Dandong Overseas Travel Co. Ltd.

In an interview with the KCNA, Kwak Jin Ho, director of the North Phyongan Provincial People’s Committee’s Department for Economic Zone Development, said about the development prospects of the Chongsu tourist zone: “This area will be developed into a tourist zone equipped with modern tourism and service facilities while also highlighting the distinct characteristics of Korean folklore.”

Director Kwak also stated, “The zone’s infrastructure, public facilities and tourist service facilities will all be built to meet modern standards. Currently there are plans to construct factories for special product manufacturing, as well as areas for livestock, orchards and fisheries. With these targets, there are also plans for a cultural recreation district, Korean folk village, general services area, Korean folk hotel, as well as processing plants for spring water, fruits, wild greens and kimchi.”

In addition, Director Kwak said in the interview, “The hillsides will be transformed into orchards to create a tourist destination filled with scarlet and white peaches and other high quality fruit trees.” With regards to visiting the area, Director Kwak stated, “Due to the geographical location of the tourist zone being along the border, tours are generally half-day or one-day trips.”

It was also noted that the Chongsu and Youlgol Revolutionary Historic Sites will be included among visitor destinations, and that there are plans to include the Chongsong Bridge, which was used in the Korean War, and other Pangsan-ri locations as tourist destinations.

With regards to the tourist development zone, the KCNA expressed its anticipation, saying, “When it begins, tourism will attract many tourists to this zone and will therefore form an international tourism link between Chongsu and Dandong, China.”

Here is coverage in KCNA (2014-11-1):

Chongsu Tourist Zone Opens in DPRK

Pyongyang, November 1 (KCNA) — A ceremony took place on Thursday to open the Chongsu Tourist Zone in the DPRK to visitors.

The Chongsu Tourist Zone is an economic zone to be developed under the July 23, Juche 103 (2014), decree of the Presidium of the DPRK Supreme People’s Assembly, which covers some parts of Pangsan-ri and Chongsong Workers’ District in Sakju County, North Phyongan Province. Its total area is more than 3 800 hectares.

The work for opening the zone has been pushed ahead under the cooperation between DPRK’s North Phyongan Provincial People’s Committee and China’s Liaoning Province, Dandong City People’s Government and Dandong Overseas Travel Co. Ltd.

According to Kwak Jin Ho, director of the Economic Zone Development Department of the North Phyongan Provincial People’s Committee, the zone will turn into a tourist development zone equipped with modern facilities.
Its development project includes the construction of tourist service establishments and supply bases such as cultural recreation district, Korean folk village, folk hotel and production bases for specialties, livestock and marine products and fruits. Hillocks of the zone will be changed into orchards of high-yielding fruit trees as a tourist destination.

Half-day or one-day tour is mainly encouraged in the zone while its development going on as it is located in a frontier. The tourist destinations will include Chongsu and Youlgol revolutionary sites associated with activities of Kim Hyong Jik, an indomitable revolutionary fighter, and Chongsong Bridge used during the 1950-1953 Korean War.
The tourism in the zone will provide an international tourist link between Chongsu and Dandong, China.

Here is video coverage:

Here is coverage in the Pyongyang Times:

An inaugural ceremony was held on October 30 at Pangsan wharf to signal the start of tour of the Chongsu Tourism Development Zone in Sakju County, North Phyongan Province.

The participants got aboard a pleasure boat and went up the Amnok River enjoying sightseeing.

The Chongsu Tourism Development Zone was set up by a decree of the Presidium of the DPRK Supreme People’s Assembly on July 23 2014, and it covers part of Pangsan-ri and Chongsong workers’ district in Sakju County.

The zone faces part of Dandong, Liaoning Province, China on the other side of the Amnok River.

It is spread over some 3 800 hectares, with 1 413 hectares in Pangsan-ri and 2 330 hectares in Chongsong district.

It is to be developed with much emphasis on the Korean folk taste and equipped with latest service facilities for tourists.

The project includes building of infrastructure, public amenities, service facilities and bases for processing specialities, animal husbandry, and fruit and fish farming.

Major objects to be developed are amusement district, folk village, service district, folk inn, spring water factory and other establishments for processing fruit, wild edible greens and kimchi.

A variety of good fruit tree species will be planted on hills to add to the green scenery of the zone.

Tour of sites will be conducted in parallel with development of the zone.

A tour spans half or one full day, given that the zone borders China.

On the list of the tourist sites are the Chongsu and Youlgol revolutionary sites associated with activities of Kim Hyong Jik, an outstanding leader of Korea’s anti-Japanese national liberation movement, the broken Chongsong bridge which had been used by Chinese People’s Volunteers when they entered the Korean front during the Fatherland Liberation War (June 1950 – July 1953), the seat of Pangsan-ri, historical relics from the period of the feudal Joson dynasty in the Chongsong workers’ district.

The start of tour of the zone will help forge an international tourist link between Chongsu and Dandong and promote regional tourism and economic development.

According to Yonhap:

One of South Korea’s small and mid-sized manufacturing companies (SME) at the inter-Korean industrial complex has applied for business closure due to falling sales, officials said Thursday.

…

An unidentified small manufacturer for watch and mobile phones cases on Wednesday submitted an application for dissolution to the committee handling affairs at the joint park, according to officials from Seoul’s unification ministry.

It marked the second case since June 2009 that South Korean firms operating at the Kaesong Complex have closed their businesses. It also marked the first time since the operation of the park had been halted briefly last year.

The company, which had employed about 100 North Korean workers, has been suffering from business setbacks since 2012 as its annual sales fell to US$300,000 from its peak of some $700,000.

The Yonhap report does not mention the name of the company that is closing up shop.

The first firm to go bankrupt in the KIC was the Living Art/Sonoko Factory.

Read the full story here:
S. Korean firm at Kaesong park faces biz failure
Yonhap
2014-10-30

UPDATE 4 (2014-10-23): Here is coverage in the Choson Ilbo:

North Korea signed US$1.3 billion worth of investment deals with Chinese businesses at a trade fair in the Chinese border city of Dandong last week.

China’s Xinhua news agency on Monday quoted one of the organizers of the trade fair as saying, “North Korean and Chinese businesses signed letters of intent covering 60 trade and investment pacts amounting to $1.26 billion.

“Another eight letters of intent were signed between North Korea and businesses in other countries involving $11.6 million worth of trade and $100 million worth of investments.”

Around 500 North Korean officials attended the trade fair, including those in charge of economic development.

But the amount of deals struck was smaller than last year (93 deals worth $1.6 billion), due to deteriorating relations between Beijing and Pyongyang.

Skeptics also point out there is no guarantee that the letters of intent will materialize into concrete investments.

UPDATE 3 (2014-10-20): Here is additional coverage by Yonhap:

In an apparent bid to lure Chinese investors, North Korea has publicized somewhat detailed information about its workforce during an annual trade with China, boasting of a well-educated pool of labor.

The North’s National Economic Development General Bureau released a booklet to show off its labor force at the five-day trade fair, which ended on Monday in the Chinese border city of Dandong.

According to the booklet, North Korea’s total population stood at 24.34 million as of last year. About 12.17 million people constituted a “prepared labor force that can adapt to randomly-chosen professions,” according to the booklet.

North Korea also boasted that it extended compulsory education by one year to 12 years from this year.

“In our country, the level of education is high and the potential of intellectual capability is solidly prepared,” the booklet said. “There is no unemployment, labor striking or sabotage in our country.”

North Korea sent 68 business entities to this year’s North Korea-China Economic, Trade, Culture and Tourism Expo, the third of its kind, down about 30 percent from last year.

The decline in North Korea’s participation at this year’s show underscored the continued strain in bilateral relations, particularly since the North’s third nuclear test in February last year and the execution of the North Korean leader Kim Jong-un’s once-powerful uncle, Jang Song-thaek, who had close ties with Beijing.

UPDATE 2 (2014-10-20): Here is coverage from Xinhua:

A 500-strong trade delegation from the Democratic People’s Republic of Korea (DPRK) is promoting the country’s investment opportunities at a four-day expo in China’s border city of Dandong, Liaoning Province.

The third China-DPRK Economic, Culture and Tourism Expo, closing on Tuesday, has seen 70 million yuan (about 11.6 million U.S. dollars) of trading, agreements on eight investment contracts worth 100 million U.S. dollars, and 60 trade agreements worth 1.26 billion U.S. dollars in total.

Shi Guang, mayor of Dandong, said the expo has drawn 100 DPRK exhibitors, 96 companies from Russia, India, China’s Taiwan and Hong Kong, as well 210 companies from the Chinese mainland. About 250,000 visitors from 20 countries and regions have attended.

The DPRK is developing a Special Economic Zone to help implement its opening-up policy.

Kim Jong Sik, an official with the DPRK Economic Development Association,ssaid the zone is open up to any countries interested in establishing economic and trade relations with the DPRK.

The zone will be dedicated to external trade, assimilating foreign investment and improving the country’s economy, he said.

According to the official, the DPRK has clinched bilateral trade and investment protection agreements with more than 30 countries and mapped out an economic structure including metallurgy, mining, production of construction materials, machinery, garment making, shipbuilding, agriculture and aquaculture.

Kim said the country’s human resources, environment and tourist resources are key factors to appeal to foreign investment. It has been working to optimize investment laws.

The city of Dandong faces the DPRK across the Yalu River. Construction of a bridge linking both sides has been basically completed. It is expected to help facilitate the DPRK’s exchanges with the outside world.

UPDATE 1 (2014-10-18): According to Yonhap:

North Korea is still showing off its products at an annual trade fair with China, but the number of North Korean business entities attending the event this year was about 30 percent less than last year.

The mood is subdued at the five-day trade fair in the Chinese border city of Dandong, reflecting strained political ties between North Korea and China amid Beijing’s signals of displeasure with Pyongyang’s nuclear ambition.

Organizers had said that about 100 North Korean business entities would attend the annual exhibition, but only 68 of them actually attended this year’s event. About 100 North Korean business entities attended last year’s exhibition.

The crowd was also noticeably smaller than it was last year.

“This year, we didn’t bring many products. Instead of selling products, we come here with hopes to meet with Chinese people who want to invest in our factory,” said an official at a North Korean trading firm who spoke on the condition of anonymity.

The decline in North Korea’s participation at the North Korea-China Economic, Trade, Culture and Tourism Expo, which began its five-day run Thursday, underscored the continued strain in bilateral relations, particularly after the North’s third nuclear test in February last year and the execution of the North Korean leader Kim Jong-un’s once-powerful uncle, Jang Song-thaek, who had close ties with Beijing.

In what many analysts believe was a message to North Korea, Chinese President Xi Jinping paid a two-day visit to South Korea in July this year, breaking a long-standing tradition by Chinese heads of state of visiting Pyongyang before Seoul.

North Korea’s bilateral trade with China stood at US$4.05 billion in the first eight months of this year, down 1.1 percent from the same period last year, according to Chinese customs data.

Economic development, along with the expansion of its nuclear capability, has been a new focus of North Korea’s policy under young leader Kim Jong-un, who took over in late 2011 after his father, Kim Jong-il, died.

North Korea, beset by poor infrastructure and international sanctions over its nuclear and missile programs, has announced plans to set up an economic development zone in each of its provinces.

Despite sanctions that discourage foreign investment, Kim Jong-sik, an official at the North’s National Economic Development General Bureau, told an audience at the exhibition that Pyongyang would set up a “one-stop service” that makes it easier for foreigners to invest in the country.

“With regard to economic development zones, we will simplify immigration procedures and build a one-stop service, which has been widely introduced around the world, to try to fully guarantee conveniences of foreign investors,” Kim said.

ORIGINAL POST (2014-10-16): According to Yonhap:

North Korea and China kicked off an annual trade exhibition on Thursday, with about 2,000 Chinese companies attending, organizers said.

The five-day trade fair in the Chinese border city of Dandong, where more than 70 percent of bilateral trade between the two nations is conducted, suggests economic ties between Beijing and Pyongyang remain largely unaffected despite the North’s nuclear and missile programs.

About 100 North Korean business entities will attend the North Korea-China Economic, Trade, Culture and Tourism Expo, the third of its kind.

At last year’s exhibition, North Korea and China signed 93 preliminary deals worth US$1.6 billion. It has not been confirmed whether the deals usually lead to actual shipments.

Besides North Korea and China, companies from Hong Kong, Russia, Thailand and Taiwan will join this year’s exhibition, organizers said.

North Korea’s bilateral trade with China stood at US$4.05 billion in the first eight months of this year, down 1.1 percent from the same period last year, according to Chinese customs data.

North Korea’s exports to China declined 0.8 percent on-year to $1.84 billion during the eight-month period, while imports fell 1.2 percent to $2.21 billion, the data showed.

Here is coverage of the first and second expo.

Read the full story here:
N. Korea, China kick off annual trade fair
Yonhap
2014-10-16

Pictured Above (Google Earth): The road linking the KIC and South Korea

According to the Daily NK:

A bridge and northern parts of a road and connecting South and North Korea built by Pyongyang, for which Seoul provided 25.3 billion KRW [23.6 million USD] worth construction materials and equipment, are in decrepit conditions, according to documents obtained by a South Korean lawmaker.

“A strip [5km] of the northern side of the road connecting to the Kaesong Industrial Complex and parts of Tongil Bridge [220m] are extremely run-down, with cracks and severe forms of distortion,” representative Ha Tae Keung from the ruling Saenuri Party said, citing data submitted by Korea Land and Housing Corporation and Korea Expressway Corporation on Thursday. “However, the southern part of the project [5.1km], which cost us 68 billion KRW [63 million USD] is in good condition,” he stated.

“According to safety tests, the bridge and road are expected to progressively deteriorate, raising concerns of a major accident,” Ha said. “We may face another disaster such as the Seongsu Bridge collapse [in South Korea in 1994].”

…

The connecting road from South Korea to the inter-Korean Kaesong Industrial Park in the North began in September 2002 and was completed in 14 months. Seoul put 68 billion KRW [63 million USD] behind the project for its side and provided 25.3 billion KRW [23.6 million USD] worth of construction materials and equipment for Pyongyang to build its section.

Read the full story here:
Dilapidated Roads to Kaesong a Major Safety Concern
Daily NK
Lee Sang Yong
2014-10-14

Institute for Far Easter Studies (IFES)

In a September 29, 2014 interview by the Choson Sinbo, Director of North Korea’s Ministry of External Economic Affairs, Oh Tae Bong, reported that business in North Korea’s newly established economic development zones (EDZ) is gradually being ramped up. In the interview, Oh mentioned the Jindo Export Processing Zone in Nampo City as an example where foreign investment capital is being prepared for the construction of substructure facilities such as piers and power plants and factories for heavy industry like cement and steel.

The Jindo Export Processing Zone carries out technology transfers and exports completed industrial products to foreign countries. Specifically, Secretary Oh emphasized, “Several countries have expressed great interest in the Jindo Export Processing Zone, and investment contracts have already been signed with a few targets such as Hong Kong.” If the Jindo Export Processing Zone succeeds, it is expected that more processing zones will be developed around the country. If development goes smoothly, the structure of primary export products, including underground resources, would change drastically and promote product diversification.

Secretary Oh also talked about the results achieved through economic cooperation with neighboring countries, saying, “Our nation is consulting with Russian governmental organizations regarding the cooperation issues experienced with railroad reconstruction and modernization.” He mentions that certain agreements have already been made in August 2014, and commented that “Relations between two countries have great effect on foreign economic activity, such as investments.” In other words, despite the US and UN imposed economic sanctions against North Korea, Russia has taken an active stance toward economic cooperation with North Korea.

With regards to the Ministry of External Economic Affairs (formerly the Ministry of Foreign Trade), Director Oh explained that the ministry was newly reorganized in June 2014 to expand the state’s foreign economic activities. According to Oh, the ministry will contribute to the strengthening of economic ties between nations, and take unified command over trade, joint ventures, attraction of foreign capital, and economic development zones.

More specifically, Secretary Oh stated that “Since the Ministry of Trade, the Joint Venture and Investment Commission, and State Economic Development Committee have all been combined into one body responsible for foreign economic enterprises, business complexity has disappeared and unity has been secured.” It is said that, first, the process procedures necessary in economic trade activities have been simplified. Second, the combining of various departments among the three committees into one single organization has improved work efficiency. Finally, the agency-centered system has disappeared, allowing for a much more efficient foreign economic industry.

The Congressional Research Service “recently” published two reports which relate to the DPRK:

The U.S.-South Korea Free Trade Agreement (KORUS FTA): Provisions and Implementation
September 16, 2014: 2014-9-16-KORUS-Kaesong
June 2, 2011: Imports-from-North-Korea-2011

(Although this report focuses mostly on US-ROK issues, there is detailed discussion of the complex negotiations around the Kaesong Industrial Complex (KIC).)

Iran-North Korea-Syria Ballistic Missile and Nuclear Cooperation 
April 16, 2014: 2014-4-16-Iran-Syria-Missile

You can download most former CRS reports dealing with the DPRK here.

Institue for Far Eastern Studies (IFES)

The Kaesong Industrial Complex (KIC) was reactivated on September 16, 2013 after a five-month shutdown due to North Korea’s withdrawal of North Korean workers from the complex. One year has passed without interruption of operations. However, while most of production activities were resumed to pre-shutdown levels, previously discussed agreements between the two Koreas are not meeting expectations in terms of transportation, customs, communications, security for personnel and vehicles, upgrades to meet international standards, and normalization for development of the KIC.

The tentative suspension of the KIC lasted from April 8 to September 16, 2013. During this period, all aspects of both production and export were frozen completely. After restarting operations, gradual progress was made, with production in October 2013 down only 32.7 percent compared to March of the same year (pre-suspension), totaling approximately 30.8 million USD. By May 2014, average monthly production totaled nearly 42.8 million USD, showing a strong recovery to a total of 93.5 percent of pre-suspension production capacity.

After resuming operations, companies at the KIC experienced problems such as loss of capital, cancelled contracts by buyers, order quantity reduction, and other problems which caused uncertainty about the future of the complex. In spite of this, companies at the complex were quickly able to recover due to their own efforts and the support of various related organizations.

However, since the reactivation, not much progress has been made toward achieving the goal of “developmental normalization” of the KIC. This goal is aimed at expanding and improving the complex through cooperation between the two Koreas. Agreements have been made between the North and South to work together to make the complex better than it was before the shutdown by solving several issues related to safe entry and stay of personnel; transportation, customs, and communication in the KIC; and internationalization of the complex.

For some time after restarting operations, the agreements between the North and South were actively being pursued, and the process of developmental normalization progressed steadily. In January 2014, construction of the Customs, Immigration and Quarantine (CIQ) facilities were completed alongside the implementation of a Radio Frequency Identification (RFID) electronic entrance system, and in the following month, progress was made on agreements related to the provision of an Internet service at the KIC.

Furthermore, the joint North-South Commercial Arbitration Committee was created. In March 2014, the committee had its first meeting, which dealt with commercial disputes arising at the complex. Recently, over twenty companies from the United States, Germany, China, Russia and other countries have made inquiries to the South Korean government with regard to investing in the KIC. The Foreign Investor Support Center was also opened to attract and manage investments from abroad.

However, due to the joint ROK-US military exercises, inter-Korean relations have become strained. North Korea also has taken a passive stance toward the Kaesong agreements, leading to a situation where no real progress has since been made. South Korea has been calling out for a subcommittee in order to enforce the RFID card system, continue discussion on the introduction of Internet service, and address the problems of passage, communication and transport at the complex. Seoul has been demanding continuously for North Korean authorities to cooperate on these issues.

According to the JoongAng Ilbo:

North Korea held a rare investors relations event over the weekend and its more capitalistic and entrepreneurial manner hinted at a new openness to foreign investors and economic reform in general.

“The door is wide open. Come on in any time,” said Oh Eung-gil, president of North Korea’s Wonsan District Development General Corporation.

Oh was inviting South Koreans to invest in the North as he addressed a group of businessmen at an investors relations session at the Shangri-La Hotel in Dalian, China, on Saturday.

“We prepared all the conditions to develop Mount Kumgang and waited for the South to change its attitude,” said Oh. “But we can no longer wait, so we are trying to attract foreign investors. We have no intention to exclude the South.”

The investors relations event was arranged by the Dalian chapter of the World Federation of Overseas Korea Traders Association. About 200 Korean businessmen from around the world including Australia, China and the United States attended.

From North Korea, five delegates including Oh joined the event.

The North started its event with a presentation by Oh on the country’s laws governing foreign investments and the business environment.

“We have already simplified the investment application procedures and created regulations that meet international standards,” Oh said.

He spent a considerable amount of time to assuring businessmen that their investments, if made, will not vanish overnight.

“With Article 19 of the Foreign Investment Act, we promise that the assets of foreign investors and their companies won’t be nationalized,” he said. “If they are nationalized for an unavoidable reason, then we will make compensation for all costs.”

He also stressed that the North has abundant mineral and fisheries resources. With its 2 million educated workforce, who graduated from 300 universities, Oh said North Korea is the best place to make investments in Asia.

He said foreign companies that invest in special economic zones will only have to pay 14 percent corporate income tax and that the tax is even lower for some advanced technology industries. Making investments in the North’s infrastructure will also be tax-free, he said.

The North also held an unprecedented question and answer session. At similar events in the past, the North only made presentations without answering investors’ questions.

A businessman said he was afraid that the North Korean government could confiscate his investments, and Oh assured him that the government guarantees all legal investments by laws.

Oh even used humor to answer one businessman’s question.

“I would like to invest in hospitals,” the businessman said.

“Our [Democratic People’s] Republic of Korea offers free medical services, so it will be hard for you to make money,” Oh joked. “Please reconsider.”

Following Oh’s presentation, Ri Sing-ryol, vice president of the Wonsan District Development General Corporation, unveiled a development plan for the Wonsan-Mount Kumgang international tourism zone. He said the zone has 142 historic sites, 11 white-sand coasts and nine lakes, as well as 676 tourist venues.

The North’s Standing Committee of the Supreme People’s Assembly announced in June an ambitious plan to develop the area as an international tourism zone.

“Now that the Kim Jong-un regime is settled, the North’s top priority is resolving economic hardships and strong economic reform is being pushed forward,” said Jin Jiang, chairman of the Dalian Chapter of the World Federation of Overseas Korea Traders Association.

According to the Donga-Ilbo, the patchy subject of Hyundai Asan’s assets came up:

North Korea requested South Korea to make additional investment in Mount Kumgang and Wonsan areas, claiming that “it never confiscated the South’s property,” which it had forfeited and frozen in April 2010. Oh Eung Kil, general president of Wonsan district development company under the North’s external economy ministry, told South Korean reporters at an informational session on investment in the North in Dalian, Liaoning Province, China on Saturday.

“We did not confiscate Hyundai (Asan)’s asset. We will not confiscate and will wait (going forward). We have waited for long (thus far),” Oh said. “The South’s asset is just in our territory because it is real estate, and the property is registered in Hyundai’s name.”

Notably, citing the North’s foreign investment act providing that Pyongyang does not nationalize foreigners’ asset, Oh said, “Because we cannot afford to continue waiting, blindly trusting the South, we will form ties with investors from various countries. Still, we are not excluding the South. The door is open.”

In April 2010, the North implemented a slew of measures, including forfeiture of the South Korean government’s assets such as a separated family reunion house, freezing of private sector assets including duty-free shops, and deportation of management staff. In 2011, the North enacted the “Mount Kumgang international tourism district act,” and deprived Hyundai Asan of the exclusive right to tourism projects. Hotels and other assets that were owned by Hyundai are currently operated by the North Korean authority. Experts say, “The North’s move is aimed at denying its forfeiture of Hyundai Asan’s assets, which was negatively regarded by foreigners, and displaying situation of improved investment environment.”

Meanwhile, Oh said, “Foreign shipment of unprocessed natural resources has been designated as an additional item subject to restriction of investment into North Korea.” While banning shipment of coals and others without processing in North Korea by foreign investors, the North intends to allow processing of such resources within the Stalinist country. Since the North Korean authority singled out “sale of valuable natural resources at bargain prices as a unpatriotic act” as one of the crimes allegedly committed by Jang Song Thaek who was executed late last year, Pyongyang is believed to have strictly restricted foreign shipment of natural resources.

Here is additional coverage in the Choson Ilbo.

Other posts on the Wonsan-Mt. Kumgang International Tourist Zone here. See the category tab on the right for more.

Read the full stories here:
Pyongyang woos foreign investors
JoongAng Ilbo
Choi Hyung-Kyu
2014-9-22

N.K.: ‘We never confiscated facilities from Hyundai Asan’
Donga-Ilbo
2014-9-22

From the Pyongyang Times (2014-9-20) No. 38 (2813), p4:

The Presidium of the Supreme People’s Assembly issued a decree establishing Jindo export processing area in Nampho on July 23.

The second SEZ in Nampho after the Waudo export processing area which was set up last year, the Jindo export processing area will be the first bonded processing trade hub among the 24 special economic zones built in the country.

Part of Ryongnam-ri in Waudo-District sitting on both sides of the road leading to the West Sea Barrage from the lower reaches of the Taedong River in southwest Nampho, it covers an area of 1.8 sq kilometers and has very favorable conditions of infrastructure.

It is also near Nampho Port, trade port directly leading to China and southeast Asia, and Pyongyang and Nampho cities boasting machine-building , electronic and light industries. It will provide the region with every potential for industrial growth and enough manpower.

The area is aimed at bringing in raw materials duty free and producing light industrial and chemical goods for export.

To this end, it plans to build a bonded processing trade area that encourages processing export by allowing businesses to be built on the principle of environmental protection and energy saving and promoting technology transfer and introducing new products and industrial sectors from other countries.

According to the first-stage development plan, the area will cover 180 hectares, which will be divided into 10 sections of electric and electronic appliances , leather, shoes and other light industrial goods, machine and metal products, chemical, rubber and plastic goods, fibre and clothes-making, bonded warehouses and and exhibitions, management and service, power station and reserve area.

Premiums and privileges will be offered to investors in the area according to the law on economic development zones and its enforcement rules and regulations.

The master plan of the processing area is now under examination and investors are making field surveys.

By Cha Chol