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

North Korea’s Kumgang plans

Monday, December 21st, 2020

By: Benjamin Katzeff Silberstein

Kim Tok Hun, the North Korean premier, visited the Mt Kumgang Tourism Zone on Sunday December 20th, 2020. KCNA:

He called for pushing ahead with the development project of turning Mt Kumgang area into modern and all-inclusive international tourist and cultural area under yearly and phased plans and thoroughly maintaining the principle of conveniences and architectural beauty first in the construction so that people can fully enjoy natural beauty.

He stressed the need to build the tourist area our own way in which national character and modernity are combined while in good harmony with the natural scenery of the diamond mountain so as to turn the famous mountain of the nation into the one well-known for serving the people and a cultural resort envied by the whole world.

(Source: “Kim Tok Hun Learns about Development of Mt Kumgang Tourist Area,” Korean Central News Agency, 20/12/2020.)

Why pay attention to the tourism industry in the middle of a global pandemic? It may seem odd, but in fact, it follows along the same pattern as many other North Korean pronouncements on economic policy through the year. Consider, for example, Kim Jong-un’s many dressing-downs of industrial managers, who can scarcely be personally blamed for the poor state of the economy. The government knows that the pandemic will be over one day, and is attempting to lay the groundwork for when that happens. Tourism has been a key focus of Kim Jong-un’s economic policy, and the pandemic itself has not changed this.

What does this tell us about North Korean plans for Mt Kumgang? The statement itself does not give any hints of a change in policy direction, but the word “international” above is perhaps noteworthy. North Korea has made clear for some time that it does not intend to involve the South Korean government in plans to develop Mt Kumgang. Rather, it seeks to have tourists come from other neighboring countries, and South Koreans will of course be welcome, depending on how relations between the countries evolve, but not in running the zone. Perhaps the word choice seeks to emphasize this direction.

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Hyundai Asan losses in the DPRK

Tuesday, November 18th, 2014

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

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DPRK holds investor forum in Dalian

Monday, September 22nd, 2014

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

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Kumgang Resort operational status (UPDATED)

Monday, July 14th, 2014

Pictured above (Google Earth): April 2010 satellite imagery of the Kumgang tourist resort

The Kumgang resort was receiving 400,000 visitors per year until in July 2008 it became the scene of a terrible tragedy, the shooting of a South Korean tourist. Following the incident, the South Korean government prohibited its citizens from visiting the resort until the DPRK allowed a joint-Korean investigation of the shooting and made a guarantee of future safety.  The DPRK never agreed to these terms so the park fell idle.

The suspension of the project has cost the DPRK government millions of dollars. In response it has moved to pressure the ROK government to change course and allow the tours to resume. Below I have kept a timeline of the course of these events and their outcomes.

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2014-7-14: The Hankyoreh marks July 11–the 6th anniversary of the day when tours to Mt. Keumgang in North Korea were suspended. 

“As a result of the suspension of tourism to Mt. Keumgang, we have lost nearly 1 trillion won [US$981 million], including the 300 billion won [US$294.32 million] invested in the facilities and an estimated 530 billion won in lost revenue,” the investors said. They urged the governments of North and South Korea to immediately hold working-level talks to resume tourism to Mt. Keumgang and to hold reunions for divided families.

“The position of the government is that the issue of the safety of its citizens must be resolved before it can allow tours to Mt. Keumgang to resume. In addition, given the continuing UN Security Council sanctions in response to North Korea’s nuclear and missile testing, which occurred after tours to Mt. Keumgang were halted, we think that the tours cannot be resumed until the government indicates that doing so would not be in violation of UN sanctions,” said Ministry of Unification spokesperson Kim Ui-do during a regular press briefing on July 11.

2012-11-27: The Hankyoreh reports that North Korea provided a written guarantee for the safety of tourists at Mt. Kumkang during 2010 working level talks with the South Korean government.

2011-9-6: South Korea asks foreigners not to invest in Kumgang saying such investments would violate existing property rights.

2011-9-6: Park Chol-su, head of Daepung International Investment Group, said he wants to discuss with South Korea’s Hyundai Asan how to handle its assets at the North’s Mount Kumgang.

2011-8-31: Chinese tourists arrive in Kumgang on Mangyongbong.

2011-8-30: South Korea calls for international boycott of Kumgangsan resort

2011-8-28: Taephung Investment Group outlines new Kumgang business plan

2011-8-24: Kumgang opened to DPRK and Chinese toursits

2011-8-23: South Korean workers leave Kumgang

2011-8-22: DPRK orders expulsion of remaining South Korean staff, auctioning of assets

2011-8-19: Hyundai officials visit Kumgang amid dispute over fate of company assets

2011-8-6: Steve Parks claims he has signed an MOU with the DPRK government

2011-6-2: “DPRK Law on Special Zone for International Tour of Mt. Kumgang” released. PDF of the statute here.

2011-4-29: SPA designates Kumgang special zone

2011-4-1: DPRK rescinds Hyundai’s Kumgang contract rights

2010-11-15: Kumgang re-fozen

2010-10-31: Family reuniuons were held there in October/November

2010-8-7: DPRK using Kumgagn assets to serve tourists in the North

2010-5-16: Taephung shows Chinese investors Kumgang

2010-5-3: Most South Korean and Chinese employees leave

2010-4-25: The National Defense Commission takes over the properties and puts the Korea Taepung International Investment Group in charge of attracting investors and tourists to the resort.

2010-4-23: Seoul denounces the seizure

2010-4-11: Chinese tourists began arriving at the resort (here and here).

2010-4-11: Employees told to leave/sealed up

2010-4-11:The DPRK “seizes” the Hyundai properties in the Kumgang resort

2010-3-24: Investors worried about losing out

2010-3-18: DPRK threatens to seize Kumgang Resort

2010-3-18: Hyundai-Asan’s chief offers to resign

2010-3-10: DPRK threatens to revoke contracts with South Korean partner, Hyundai-Asan

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ROK extends bridge loans to firms that invested in the DPRK

Friday, April 25th, 2014

According to Yonhap:

South Korea said Friday it will extend 20 billion won (US$19.2 million) in loans to companies that have been in financial trouble for years due to the suspension of their businesses with North Korea.

The decision came four months after South Korean investors called for special low-interest loans to help ease their financial pinch following the shutdown of their businesses.

South Korea has suspended a tour program to Mount Kumgang since 2008 when a female South Korean tourist was shot dead by a North Korean soldier near the mountain resort on the North’s east coast.

Seoul’s move dealt a heavy blow to South Korean companies that invested in the North’s mountain resort, including Hyundai Asan, the inter-Korean business arm of Hyundai Group.

North Korea has since repeatedly called for the resumption of the tour program, which served as one of a few legitimate revenue sources for the cash-strapped country.

South Korean businessmen involved in projects in North Korea suffered further setbacks in 2010 when Seoul slapped sanctions on Pyongyang over the deadly sinking of a South Korean warship blamed on the North.

Under the sanctions, South Korea has suspended inter-Korean projects and banned new investment in the North, except for their joint factory park in the North’s border city of Kaesong.

The unification ministry, which handles inter-Korean affairs, said it expected the latest extension of loans to help ease financial difficulties of the companies.

South Korea has extended special loans worth 62.6 billion won ($60.1 million) to more than 230 local companies involved in cross-border projects with North Korea in recent years.

This week, the North called on South Korea to lift the sanctions imposed on Pyongyang in retaliation for the sinking in March 2010 that killed 46 South Korean sailors.

South Korea has called for, among other things, the North’s admission of its involvement in the sinking in return for lifting of the sanctions, though Pyongyang has refused to take responsibility for the deadly attack.

Read the full story here
S. Korea to extend 20 bln won to firms with ties to N. Korea
Yonhap
2014-4-25

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North Korea enacts new tax regulations in Mt. Kumgang tourist zone

Thursday, March 21st, 2013

Institute for Far Eastern Studies (IFES)
2013-3-21

North Korea announced that it has instituted a new law to begin levying tax in the Mount Kumgang Tourist Zone which has been — until now — a tax-free zone. In addition, a personal protection regulation for tourists was also added to its tourism regulations. North Korea has been modifying laws pertaining to the Mt. Kumgang area in order to develop it as a special tourism zone.

Last week, Yonhap News reported that it had obtained from North Korea a book that was released last November on North Korea’s laws and regulations on international economic policy. According to the book, North Korea adopted in June 2012 a new tax regulation for the Special Zone for International Tour of Mount Kumgang. The law was passed by the Presidium of the Supreme People’s Assembly.

The new tax regulation stipulated that any companies or individuals (foreigners and oversees Koreans) who conduct business transactions or make profit from the Special Zone for International Tour of Mount Kumgang are subjected to tax.

The business income tax applied in the Mount Kumgang zone are on average about 14 percent of one’s yearly profit (infrastructure projects including airport, railways, roads, and port construction only pay 10 percent) and individual income tax ranges from 5 to 30 percent when monthly income is 300 euros (approximately 430,000 KRW).

The tax regulation also covers property, inheritance, transaction, business, and local tax. This comes as a subordinate law under the Special Law for International Tourism in Mount Kumgang, which was enacted in May 2011 and subsequently revoked the monopoly rights of Hyundai Asan.

As such, this law likely will impact South Korean investment in the Mount Kumgang tourism industry.

In the past, working closely with Hyundai Asan, North Korea designated the tourist area as a tax-free zone. There were also no separate laws regarding the levying of taxes on foreigners except for South Korean tourists, who were required to pay 50 USD per person.

In the ‘Tourism Regulations of Mount Kumgang International Tourism Zone,’ a clause was added that specified the special travel bureau for international tourism was responsible for the protection of personal safety and property of tourists in Mount Kumgang. The special travel bureau for international tourism is under the jurisdiction of the Guidance Bureau of the Special Zone of Mount Kumgang International Tourism.

North Korea’s decision to insert a clause ensuring the safety of tourists is likely due to the fact that this issue has continually been raised as a main concern since the death of a South Korean tourist in the zone in July 2008 and subsequent halt of inter-Korean cooperation in the Mount Kumgang project.

In addition to the new tax and tourism regulations, North Korea also made new regulations pertaining to the foundation and management of enterprises; customs; access, visitation, and housing; insurance, and environmental protection, among others.

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South Korean firms losing money in the DPRK

Thursday, May 24th, 2012

According to the Hankyoreh:

South Korean businesses have suffered losses of up to ten trillion won (US$8.3 billion) from the cutbacks in inter-Korean economic cooperation under the Lee Myung-bak administration, figures show.

The losses taken by South Korean firms are fives times the 1.8 trillion won (US$1.7 billion) North Korea’s estimated losses. The results show an unintended effect of Seoul’s May 24 sanctions, which were meant to punish North Korea economically for the shooting death of a tourist at the Mt. Kumkang resort, the sinking of the Cheonan warship, and the shelling of Yeonpyeong Island. North Korea has offset these losses with increased cooperation with China.

Read more below…

(more…)

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ROK spending on inter-Korean projects lowest since 2000

Sunday, January 8th, 2012

According to the Korea Herald:

South Korea’s government last year executed the smallest amount of its inter-Korean cooperation fund in a decade, officials said Sunday, in another reflection of frayed relations with the communist North Korea.

The Unification Ministry, in charge of North Korean affairs, spent 42.6 billion won ($36.6 million), or 4.2 percent of the 1.1 trillion won fund designated as “South-North Cooperation Fund,” the ministry officials said.

The fund was used to support a Korean dictionary project, a humanitarian program by the United Nations Children‘s Fund as well as operating a facility for family reunions and an association for the inter-Korean industrial complex, they said.

Last year’s spending was the lowest level since 2000 when the two sides held their landmark summit talks and agreed on a wide range of cooperation projects as part of their reconciliation efforts.

Inter-Korean relations went to the lowest ebb in a decade after the North‘s two deadly provocations in 2010 that killed 50 South Koreans.

In 2008, when President Lee Myung-bak took office with a hard-line stance on North Korea’s nuclear program, the cooperation fund‘s execution rate plunged to 18.1 percent from 82.2 percent in 2007 under the liberal predecessor Roh Moo-hyun, the report noted.

The rate had remained at the 7 percent level between 2009 and 2010, it said.

The fund was created in 1991 to support humanitarian and economic exchanges between the divided Koreas, which remain technically at war after the 1950-53 Korean War ended in a truce. (Yonhap News)

Read the full story here:
Gov’t spending on inter-Korean projects lowest since 2000: ministry
Korea Herald
2012-1-8

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“Chinese company” given access to Kumgang facilities

Tuesday, December 13th, 2011

According to Yonhap :

North Korea has allowed a Chinese company to do business at its scenic mountain resort, a source said Tuesday, in an apparent attempt to revitalize the resort at the center of a dispute with South Korea.

The company plans to organize a cruise tour to Mount Kumgang on the North’s east coast for Chinese tourists from Hong Kong and other eastern Chinese ports, said the source familiar with the issue.

The company, which won permission to run the business until the end of 2026, also plans to run a casino, a duty free shop and a hotel in the resort, the source said.

The move comes just months after North Korea made a trial cruise from its northeastern port city of Rajin to the mountain resort to try to attract Chinese tourists.

North Korea has launched a series of tourism programs for the Chinese in an apparent bid to earn much-needed hard currency.

For a decade, South and North Korea jointly ran the tour program at the resort, a key symbol of reconciliation on the divided Korean Peninsula.

Still, Seoul halted the cross-border tour program following the 2008 shooting death of a tourist by a North Korean soldier near the resort.

Seoul has demanded a formal apology from Pyongyang for the incident, in addition to improved security measures for tourists, before resuming the tour program, a key cash cow for the North.

However, the North has expelled South Korean workers from the resort and disposed of all South Korean assets there after it unsuccessfully tried to pressure Seoul to resume the tour program.

South Korea has asked foreign countries not to invest or engage in tourism activities at the mountain resort as part of its moves to protect its property rights there.

Dear Yonhap: Would it have been too much trouble to give us the name of the Chinese company or tell us anything about it?

Read the full story here:
N. Korea permits foreign company to run business at its scenic resort
Yonhap
2011-12-3

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DPRK expanding Chinese tourism to Kumgang

Monday, October 3rd, 2011

According to Yonhap:

North Korea is expanding travel routes between China and its scenic resort in Mount Kumgang, a source familiar with the North said Monday, indicating Pyongyang’s continued efforts to earn much-needed cash from Chinese tourists.

The new routes will include extra flights from Chinese cities to Mount Kumgang on North Korea’s east coast, in addition to trains and expressways linking Beijing to the mountain resort via Pyongyang, the source said on condition of anonymity.

The move comes after North Korea recently ran a trial cruise from its northeastern port city of Rajin to Mount Kumgang.

The source also said more than 100 Chinese tourists traveled to the resort on a five-day itinerary at the end of last month.

By the end of this month, North Korea is planning to launch a tour program to Mount Kumgang from China’s northeastern city of Harbin, although it is not clear whether the flight will land in Pyongyang or at a military airport on the mountain, the source said.

North Korea is reported to be considering converting a military airfield near the resort to a civilian airport to facilitate travel to the area.

“Starting with Harbin, (North Korea) plans to operate flights for Mount Kumgang from 16 cities across China, including Beijing, Shenyang and Guangzhou,” the source said.

“They also plan to attract Chinese visitors by opening a railway and expressway linking Beijing, Pyongyang and Mount Kumgang,” the source added, saying the first train tour on the route will likely be in April.

The move comes amid a dispute over the handling of South Korean assets at the resort. Seoul halted an inter-Korean joint tour program to the resort in 2008 following the shooting death of a South Korean tourist in the area.

In protest, North Korea recently expelled South Korean workers from the resort and vowed to legally dispose of all South Korean assets there. The tour program had served as a cash cow for the impoverished North.

South Korea has asked foreign countries not to invest or engage in tourism activities at the resort in a bid to protect its property rights there.

Previous posts on Kumgang here.

Read the full story here:
N. Korea expands travel routes for Chinese tourists: source
Yonhap
2011-10-3

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