North Korean Economy Watch

Inside North Korea: A Report by Good Friends Chairman Venerable Pomnyun and Seungjoo Baek
SAIS US Korea Institute
September 19, 2007

For audio, click here. 

Chairman of the Good Friends Center for Peace, Human Rights and Refugees, the Venerable Pomnyun, briefed audience members at SAIS on current trends inside North Korea, including issues surrounding the current food crisis caused by the flooding, continuing health crisis, and the breakdown of the education system.

Good Friends, one of the largest Korea-based organizations providing humanitarian aid inside the D.P.R.K. and to refugees in Northern China, contributes some of the most accurate and timely reports on conditions inside North Korea. The Venerable Pomnyun visited Washington D.C. with a team of experts to discuss the on-going food shortage and proliferation of non-government controlled information. While here, they briefed Congress and held a day-long conference at CSIS.

Highlights of his comments (paraphrased, not direct quotes):

• In contrast to the much lower number of famine deaths provided by Stephan Haggard and Marcus Noland Pomnyun maintained the 3 million number claimed by Good Friends in the past.
• He provided a short narrative of coping mechanisms people have adopted to stay afloat (selling and manufacturing in homes). Society is being sustained by activities that are still considered illegal.
• He claims the food situation is getting worse, and he does not think the DPRK can resolve the situation on its own.  Now people buy all their food on the market.
• He claims that people’s lives are not improving.
• TB is on the increase along with other epidemics.  Since there is no electricity, water is not clean. 
• He offered that there are four levels of hospitals: clinics at the town level, hospitals in cities and some towns, hospitals at province level, and specialist offices in the Pyongyang area.
• Hospitals and clinics are not working at the city/province level.  The situation is better in Pyongyang hospitals.  The amount of international medical aid, however, is not enough for even the Pyongyang hospitals.
• Medical aid is the second most needed good (after food).  People do not get medicines from the hospital, but from the markets.  With low salaries, however, medicines are difficult to afford.  [Because the institutional environment is still not supportive of entrepreneurship] there are qulaity problems with pharmaceuticals purchased at the markets.
• The education system, though ‘free’ is not functioning well.  Due to the food shortage problem, students do not go to school.  Teachers also do not come to class.  The cost of education is being pushed back to students directly.  For example, students buy chalk for teachers.  As a result, however, poor students cannot attend school.  The rich students are hiring tutors, so we are seeing a market in private education emerge in the DPRK.
• The DPRK is slowly moving to a private economic system.  Men who cannot get work are now jokingly referring to themselves as “guard dogs,” because they sit at home all day.
• North Koreans do not trust the government or party.  People on their death beds are telling their children to trust their descendents, not the government.  People still spend much of their time trying to subsist, but these complaints will not become a political issue.  The political system is stable and will not collapse any time soon.

Korea Times
Lee Hyo-sik
10/18/2007

Finance and Economy Minister Kwon O-kyu plans to call on the global financial community to increase support for North Korea’s economic projects when he attends the annual meetings of the International Monetary Fund (IMF) and the World Bank in Washington D.C on Oct.20-22. The country’s top economic policymaker will also ask international financial institutions to allow the Stalinist state to become a member.

Kwon is planning to brief IMF meeting participants as well as U.S. administrative officials and lawmakers on the outcome of the inter-Korean summit between President Roh Moo-hyun and North Korean leader Kim Jong-il early this month.

He has said the government will attract funds from the World Bank and other international financial institutions, as well as from the private sector, for a range of large-scale inter-Korean economic cooperation projects, which is expected to cost billions of dollars over the years.

Hyundai Research Institute projected that the establishment of a special peace zone in the West Sea area and other economic cooperation projects between the two Koreas will cost $11.2 billion (10.3 trillion won). The state-run Korea Development Bank (KDB) and other institutions have put forth even larger spending estimates for the envisioned economic cooperation between the two Koreas _ as much as 60 trillion won over the next 10 years.

While in the U.S., Kwon is also scheduled to meet with the U.S. trade representative Susan Schwab to discuss the ratification of the Korea-U.S. free trade agreement (FTA). He plans to ask Schwab as well as other U.S. administrative and congressional officials to urge the Congress to quickly approve the bilateral trade accord.

He will also have a series of interviews with the U.S. media to promote the trade agreement and publicize the second inter-Korean summit. Seoul and Washington signed the deal in June, and Korea submitted the agreement to the National Assembly last month for ratification.

However, there has recently been growing opposition to ratification of the Korea-U.S. FTA in the U.S. Congress. Many lawmakers, including Democratic Party presidential contender Hillary Clinton, are openly opposing the agreement, claiming it will have negative effects on the U.S. manufacturing industry and job growth. They also said Korea should do more to open its markets to U.S. industrial and agricultural products.

To promote Korea as a regional financial hub, minister Kwon plans to hold a meeting with heads of leading international investment banks and prominent financers to ask for more investment in Korea and increasing cooperation with Korean financial firms.

Additionally, a number of local bankers and heads of other financial institutions will converge in the U.S. capital for the meetings and hold talks with executives from global financial institutions.

Bankers include Kookmin Bank President Kang Chung-won, Woori Financial Group Chairman Bahk Byong-won, Shinhan Bank President Shin Sang-hoon, Hana Bank President Kim Jong-ryul and Export-Import Bank of Korea President Yang Cheon-sik.

Among others, Korean Federation of Banks Chairman Yoo Ji-chang, Korea Asset Management Corp. CEO Kim Woo-suk and Korea Investment & Securities CEO Yoo Sang-ho are flying to Washington.

Marcus Noland Response… 

N.K. needs technical help before joining int’l financial institutions: U.S. expert
Yonhap
10/19/2007

North Korea must first receive technical assistance from international financial institutions before it can join them and begin receiving monetary aid, a U.S. expert said Friday.

Pyongyang, viewed as one of the most secretive regimes in the world, has to provide certain economic data and follow standardized practices and procedures in order to be able to join financial institutions, Marcus Noland, a senior fellow at the Institute for International Economics, told Yonhap in an e-mail interview.

Noland proposed first inviting North Korea in as an observer “to begin the process of education and technical assistance to support their economic transition” into full membership.

North Korea had said it wanted to join such institutions in 1996, but lost all interest after finding out it would not immediately begin receiving money, according to Noland.

Since then, it has not indicated willingness to adopt the transparency and openness required for membership into the institutions, he said.

Outside aid to the North is heavily constrained by various sanctions, notably by the U.S., which brands Pyongyang as a state sponsor of terrorism. The designation requires Washington to vote against monetary loans and assistance programs to North Korea through international organizations, such as the World Bank and the International Monetary Fund (IMF).

In an annual IMF meeting here next week, South Korean Finance Minister Kwon O-kyu is expected to call on the global community to increase support for North Korea’s economic development, and to allow Pyongyang to become a member of global financial institutions.

His recommendations follow an inter-Korean summit earlier this month that highlighted economic cooperation and progress in six-nation efforts to denuclearize the Korean Peninsula.

Noland questioned whether Pyongyang would be willing to be subjected to the scrutiny required for a membership into the international financial system.

“Frankly speaking, the most important thing that the international financial institutions could immediately provide to the North Koreans is technical assistance,” he said.

“But again, it is not at all clear that they are particularly interested in becoming members of these organizations or reforming their internal practices in ways that would allow them to make full use of membership.”

Such assistance could involve setting up processes, procedures and regulations to reform North Korea’s laws and practices, he said.

North Korea also has to provide the necessary data, a process which international institutions could assist by providing basic standards, such as data collection standards.

North Korea and financial institutions also need to come up with a strategic plan, said Noland. If, for example, Pyongyang wanted to set up a stock exchange, the institutions would assist in starting it and revising relevant laws in the North, he said.

Yonhap
10/19/2007

South Korea has spent nearly 4 trillion won (US$4.36 billion) over the last six years to provide rice and fertilizer to North Korea, the Ministry of Agriculture and Forestry said Friday.

In a report forwarded to lawmakers for this year’s parliamentary audit, the ministry said Seoul spent 3.33 trillion won to send 2.2 million tons of rice to Pyongyang from 2002 to August of this year.

It said 400,000 tons of rice were shipped every year from 2002 to 2004, while 500,000 tons were shipped in 2005. Numbers dropped to 100,000 tons last year after Pyongyang fired off rockets and exploded a nuclear device.

This year, 400,000 tons have been sent to make up for poor harvest in the North.

Of the total, 2.1 million tons of rice were sent as low interest, long-term loans to be paid back in 20 years after a grace period of 10 years.

The ministry said 620 billion won were spent to send about 2 million tons of fertilizer to the North in the cited period.

Opposition lawmakers claimed the government had diverted 2.18 trillion won from the country’s grain management special account to provide North Korea with agricultural support.

“The grain account is aimed at helping local farmers. but the government is using it to supplement the inter-Korean cooperation fund,” said Rep. Hong Moon-pyo of the conservative Grand National Party.

He said that because it will take some time to recover the money, any shortcomings in the grain fund will have to come from the regular account and that will create a burden for taxpayers.

The government asked lawmakers to approve 909.6 billion won for next year’s inter-Korean cooperation fund. This year, the fund amounts to 870.4 billion won.

The money will be used to send 500,000 tons of rice and 400,000 tons of fertilizer to North Korea.

Financial Times
Anna Fifield
Richard McGregor
10/18/2007

China suspended key rail freight services into North Korea last week after 1,800 wagons carrying food aid and tradeable goods crossed into Kim Jong-il’s hermit state but were never returned.

Absconding with Chinese wagons would be a strange move for North Korea because Beijing is Pyongyang’s closest political ally and biggest provider of food, goods and oil. Analysts monitoring North Korea said Chinese officials had privately complained to them that the North Koreans were dismantling Chinese wagons and selling them back as scrap metal.

The Chinese railway ministry suspended a number of rail freight services into North Korea on October 11, humanitarian agencies operating in North Korea told the Financial Times. The ministry told international aid agencies that it would not send any more wagons into North Korea until Pyongyang returned the 1,800 Chinese wagons.

Tony Banbury, Asia director for the UN World Food Programme, said that the curtailed service had held up the delivery of 8,000 tonnes of maize and wheat already stockpiled in Dandong, a Chinese border town. “We now have significant amounts of food but we can’t deliver it,” Mr Banbury said.

Reliefweb, a United Nations website for aid agencies, reported that the delivery of food stocks into North Korea had been “critically affected by the cessation of movement of railway wagons from China”.

An official with China’s railway ministry said yesterday that it was not aware of any suspension of freight services into North Korea.

But Fu Xue, of the Dandong Tianda International Freight and Forwarding Company, said there had been delays in the return of wagons but that North Korea had asked for permission from China.

North Korea has frequently failed to pay for goods or to pay back debt. It has also long been accused of relying on currency counterfeiting and drug smuggling to stay afloat.

But purloining Chinese wagons would be a brazen move. China is already thought to be disillusioned by Pyongyang’s refusal to embrace economic reform. It was also angered by North Korea’s decision last year to conduct a nuclear test despite Beijing’s objections.

North Korea has a history of not returning vehicles. In 1998, the late Chung Ju-yung, founder of South Korea’s Hyundai Group, donated 1,001 cows to North Korea to make amends for stealing a cow as he escaped from the north as a boy.

Pyongyang said the cows should be transported on Hyundai trucks. The trucks were never seen again.

Joong Ang Daily
Jo Dong-ho
10/9/2007

The summit meeting was quite successful. Some say it was because North Korea’s nuclear program was not on the agenda. Relinquishing its nuclear ambitions is the North’s card for normalizing ties with the United States and receiving rewards.

Costs cannot worry us either, because South Korea’s economy has grown so much that we can now pave a road even for a village on a remote mountain. If the size of government projects for culture cities or innovation cities were reduced, we would have trillions won, or billions more dollars, available.

As an economist, I would like to focus on roles of the government and the market discussed in the summit meeting. The ultimate question of economics can be summarized as how the market and the government will divide their roles to get maximum benefits out of limited resources.

The economics of past 200 years concludes that the best way is for the private sector to make independent decisions in economic activities and for the government to manage the rules so that those activities will be carried out fairly and smoothly. This can be likened to the relationship between players and referees in a sporting event.

The same principle applies to economic cooperation between South and North Korea.

Easing military tension, which will reduce the risk of investing in North Korea, is something that only the government can do. Repairing railways and roads is also the responsibility of the government. To improve transportation, communication and customs are the same. The private sector cannot do those jobs on its own.

However, building a shipyard or developing tourism on Mount Baekdu is for the private sector to carry out. But as these projects were agreed upon in the summit meeting, they must be carried out without feasibility studies. These projects were being discussed even before the summit meeting.

Private companies have been interested in them for years, but they have not made the decision to pursue them for many reasons, including low profits. Now the leaders of the two Koreas have made an agreement so these projects must be carried out. North Korea will probably make more unreasonable demands. The South Korean government will have to provide subsidies, and that will increase the burden on the South Korean people.

Some may find it disturbing that I criticize a few projects when there were many other good agreements reached. But these projects show the South Korean government’s basic view on economic cooperation with the North.

In fact, in all the projects agreed upon, there is a vague guideline for the division of roles between the government and the market. The same is true with the agreement to complete the first step of construction at the Kaesong Industrial Complex earlier than planned and to start the second step. The Hyundai Asan Corporation and the Korea Land Corporation are the ones doing the industrial park project, not the government.

These companies have their reasons for managing the industrial park project in its first stages. The government cannot and should not agree to implement the project at a faster speed. After North Korea tested its nuclear bomb, there was pressure to halt that project. Then the government said it could not intervene because it was led by the private sector. But the government has now agreed to complete it at an earlier date.

Some maintain that these agreements will improve inter-Korean relations so there is no use in dividing the government and the market. But it is more important that economic cooperation between South and North Korea improves properly than quickly. Let’s say the improvement of economic cooperation between South and North Korea is of the utmost value so the government can lead economic projects. But there must be good reasons for the government to intervene in the market.

The government has said until now that it supported economic co-operation with the North in an attempt to induce North Korea to open its doors and reform its economy. But that no longer sounds like enough. When providing assistance, the supporter must make sure that the party that receives assistance tries to stand on its own. But the president said we should not mention this in the summit meeting.

Six months ago, at an event for businessmen in the fisheries industry, the president said the government would provide support if need be, but what is most important is their own will and efforts.

One of President Roh’s strengths is that he is not afraid to say what he needs to say. That he could not say what he had to say to Kim Jong-il is what is most regrettable about the meeting.

Korea Times
10/9/007

Most impoverished North Koreans do not have access to food aid sent by South Korea due to corruption and lack of proper monitoring, a human rights group said Tuesday.

“Many North Korean defectors have said they heard about a considerable amount of food aid from South Korea, but they have not received any of it,” said Kay Seok, a researcher for the United States-based non-governmental organization Human Rights Watch, citing North Koreans who recently defected from one of the world’s poorest countries.

The remark comes amid accusations by critics here that hundreds of thousands of tons of South Korean rice aid may be funneled each year to the North Korean military and elite groups.

The Roh Moo-hyun administration, which has engaged the communist North despite Pyongyang’s detonation of a nuclear bomb in October last year, has often been criticized for failing to ensure that the food aid is distributed to those in need.

In an interview with Washington-based Radio Free Asia, Seok said the food aid is sold for profit in the North, stressing that South Korea needs to demand proper monitoring to ensure that the aid reaches the intended recipients.

One of the reasons that South Korean food aid does not reach poor North Korean people is that the food is given to privileged people or sold for profit by them, she explained.

“At the moment the food aid arrives at the port, merchants flocked about and buy it with U.S. dollars,” she said.

“In the course of the shipment to the final destination, shippers, stationmasters and high-ranking officials take the food either for themselves or for sale. Even sentinels take it,” according to defectors who witnessed it, she said.

South Korea has been providing North Korea with food aid since the mid-1990s. It resumed shipping aid to North Korea in June after a hiatus of more than one year as the North began taking steps toward nuclear disarmament. The promised aid, which consists of 400,000 tons of rice, will be delivered over the coming months.

Yonhap
Tony Chang
10/8/2007

South and North Koreas’ top health officials have tentatively agreed to cooperate in modernizing regional hospitals in the communist country, Seoul’s health minister said Monday.

“During unofficial talks with North Korean Health Minister Choi Chang-sik, we’ve agreed to seek joint projects to modernize provincial hospitals in the North,” Byun Jae-jin, South Korea’s health minister, told reporters.

Byun was part of a Seoul delegation that accompanied President Roh Moo-hyun during his summit with North Korean leader Kim Jong-il last week, where both sides also agreed to end military hostility and significantly expand inter-Korean cooperation in various fields.

The minister said last week that the two Koreas agreed to cooperate in welfare and medicine, possibly forming an inter-Korean medical body to deal with future peninsula-wide epidemics, Seoul’s top health official said Thursday.

Choi, along with other top North Korean officials, reportedly requested South Korea to construct a pharmaceutical factory in Nampo, near the North Korean capital of Pyongyang, according to Byun.

Seoul’s on-and-off aid to the communist state has mostly focused on food and other necessities, while medical supplies to North Korea have been largely organized by non-governmental organizations and other private agencies.

North Korea’s lack of basic medical supplies has often been cited in local and foreign media, with the country often requesting health-related supplies to combat diseases such as malaria and scarlet fever from the South.

Choson Ilbo
Song Hee-young
10/8/2007

One of the facts confirmed in the second inter-Korean summit is that North Korea is willing to push ahead with an open economic policy. Though he is reportedly averse to the terms of reform and opening, North Korean leader Kim Jong-il agreed to add Haeju, Nampo, Anbyeon and Mt. Baekdu as open areas, along with Mt. Kumgang and the Kaesong Industrial Complex. He also permitted opening infrastructure like railroads and ports.

Slow as it is, the direction of the flow can be confirmed. It resembles China’s early opening stage from the late 1970s to early 1980s when Deng Xioaping first pushed his reform policies.

Considering the pace, outsiders were pessimistic about reform in China then, and they predicted failure for companies that invested there. By the 1990s, however, it was clear that tremendous changes had taken place.

Korean entrepreneurs doing business in Kaesong and Mt. Gumgang believe that the North won’t move backwards now. Projects in those areas continued unhindered even during the nuclear test crisis, they point out. Unlike in the past, minor problems are eventually resolved through dialogue, albeit slowly, they testify.

“Now the North Koreans know the taste of money,” one businessman said, and they have begun to feel the fever for making more. A primitive sort of capitalist consciousness is growing, he said, and North Koreans are beginning to realize that making profits through a steady business is better than hoping for a windfall from the millions in aid money the Kim Dae-jung administration donated to the regime.

Having suffered through the Korean War, armed commando raids, naval skirmishes off the western coast and the nuclear crises, many South Koreans might dismiss the changes. Businessmen who were forced to hand over computers and fax machines as “entrance fees” or “meeting charges” when they visited Pyongyang may insist that nothing will change unless the regime is replaced.

But Mao Zedong’s Red Guards were also never expected to change, but they emerged as major Wall Street investors in three decades. If they truly feel the taste of money, there is no reason why the generations that follow Kim Jong-il will not change.

Now that we’ve seen the signs of such change, however small, we have to transform our formula for investing in the North. The government, above all, has to abandon its stance of controlling, coordinating and managing cross-border investment. The time has come to trust our businessmen. There should be no special treatment simply because the counterpart is North Korea; instead the government should leave investment in the North up to the investors, as it does with Vietnam and Africa.

Our corporations have had plenty of experience in the North. Daewoo, Hyundai, the Peace Motors Corp. owned by the Unification Church, and not a small number of small- and medium-sized firms have invested across the border. Many have come back with bitter tales, but now they can distinguish promising projects from dubious ones. They have paid their tuition.

What’s more, South Korean entrepreneurs have accumulated experience in making money in other dictatorial socialist countries, such as China, Russia and Eastern European nations, accessing the top leaders and breaking through bureaucratic barriers. In dealing with communists, businessmen can be far more competitive than public servants.

Nevertheless, the government requires advance notification when any South Korean company wants to contact North Korea, and the Unification Ministry and National Intelligence Service often get involved with even the smallest details. As it is now, North Korea asks our government what it can request from our businesses and the president had to be accompanied by a group of conglomerate heads when he visited Pyongyang.

Businesses that are forced to deal with our close-minded public servants in addition to the North Korean regime are liable to abandon cross-border plans altogether, especially when profitability is questionable. This is why the larger businesses have in many cases been the most reluctant to invest in the North.

Now that the opening of North Korea at last seems certain, it’s time that we adopted the same formula that succeeded in China. It was our businessmen who rushed into China first, and they contributed toward reconciliation and establishment of diplomatic ties between the two countries. We went through the same procedures in Russia and Vietnam.

The idea that the government should be the one to build industrial parks and conduct business and wage negotiations in North Korea is outmoded. When it comes to investing across the border, the government’s job should be to guarantee business freedoms. Then the investors should be left to negotiate with the regime and work out how to make money.

Associated Press (Via the New York Times)
10/3/2007

North Korea will provide a complete list of its nuclear programs and disable its facilities at its main reactor complex by Dec. 31, actions that will be overseen by a U.S.-led team, the six nations involved in disarmament talks said Wednesday.

Chinese Vice Foreign Minister Wu Dawei said that as part of the agreement, Washington will lead an expert group to Pyongyang ”within the next two weeks to prepare for disablement” and will fund those initial activities.

”The disablement of the five megawatt experimental reactor at Yongbyon, the reprocessing plant at Yongbyon and the nuclear fuel rod fabrication facility at Yongbyon will be completed by 31 December 2007,” said Wu, who read the statement from the six nations to reporters, but did not take any questions.

The Bush administration welcomed the agreement, calling it significant progress.

”These second-phase actions effectively end the DPRK’s production of plutonium — a major step towards the goal of achieving the verifiable denuclearization of the Korean Peninsula,” said Gordon Johndroe, spokesman for the White House’s National Security Council.

The complex at Yongbyon has been at the center of North Korea’s nuclear weapons programs for decades and is believed to have produced the nuclear device Pyongyang detonated a year ago to prove its long-suspected nuclear capability.

Since then, Pyongyang rejoined the six-nation disarmament negotiations that involve the United States, China, Japan, Russia and South Korea as well as North Korea. Under a broad agreement reached in February, North Korea pledged to disable its nuclear programs in return for 1 million tons of heavy fuel oil or other assistance.

Wednesday’s statement outlines the next steps in the February deal. Although negotiators tentatively agreed on the statement Sunday after four days of talks, it was forwarded to their capitals for approval, leading to a delay in its public release.

The statement also said the U.S. and North Korea will ”increase bilateral exchanges and enhance mutual trust” but did not set a specific timetable for when Washington will remove Pyongyang from a list of countries that sponsor terrorism — a key North Korean demand. Arrangements will be made in future meetings between the two on normalizing their relations, the statement said.

In addition, the statement reiterated the five other countries’ commitment to deliver the fuel oil and other energy and economic assistance as spelled out in the February deal.

Shortly after Wednesday’s deal was announced, however, Japan said it would not provide aid to North Korea or lift its economic sanctions against the country because of a dispute over North Korea’s past abductions of Japanese citizens.

”There will be no immediate action from Japan. We will wait to see what North Korea does next,” Foreign Minister Masahiko Komura said. ”Japan’s policy remains unchanged. We will consider aid once we see progress on the abductions issue.”

Tokyo wants Pyongyang to account for its abduction of Japanese nationals in the 1970s and 1980s — a main sticking point for the two countries, which have no diplomatic ties.

Korea Times
Jane Han
10/2/2007

Economic cooperation topping the agenda for the inter-Korean summit, plus the van of corporate decision makers traveling to the North together, begs the question: Will the trip bear fruit for two-way business?

Chung Mong-koo of Hyundai-Kia Automotive Group, Chey Tae-won of SK Group, Koo Bon-moo of LG Group and Hyun Jeong-eun of Hyundai Group, who are among the 18 CEOs accompanying President Roh Moo-hyun as part of a special entourage, showed signs of hope as they departed for Pyongyang on their three-day trip that started Tuesday.

“I hope the talks will go well and further the ongoing business between the two Koreas, while opening doors to new areas as well,” said Hyundai Chairwoman Hyun.

Unification Minister Lee Jae-joung was also optimistic as he detailed some of the items, including North Korea’s expansion of social overhead capital (SOC) and construction of railroads, which may be discussed among leaders of both sides.

“As there has been much progress in the peninsula over the past seven years, we’re hoping that this experience will set a milestone in history,” he said in a television interview.

These hopes may be translated into reality through at least two scheduled business leader meetings during the summit period.

“The definition of economic cooperation between the two Koreas, so far, has implied one-way support from Seoul,” said Koh Il-dong, a research fellow of the Korea Development Institute (KDI). “But now, it’s time to break free of that old understanding and move toward real cooperation.”

And “real cooperation” is what the North bound corporate executives are looking to, as they hint some of the possibilities they have in mind.

Among the top three business topics expected for discussion _ natural resource developments, roadway and railway distribution system expansions and dockyard construction _ Hyundai-Kia Automotive Group is said to be interested in building railroad cars through its shipping affiliate Glovis, and also measure the feasibility of SOC businesses, while POSCO showed interest in forestation.

Although company officials said forestation is just a possibility, as the steel maker has shown its interest in securing carbon credit overseas, industry insiders say the opportunity will be advantageous for POSCO if cooperation comes through.

And as speculations rose that SK Group may be considering communication and energy projects in the North, company officials said plans are open for review if the right offer is made.

LG and Samsung, which are said to be mulling over their specialty areas of electronics, seem to be in the same scouting stages as others.

“Each company needs to be given the time and circumstances to carry out through market research,” said Dong Yong-sueng, a research fellow of the Samsung Economic Research Institute (SERI), implying that those are some of the accommodations that must be worked out if business is to happen.

Contrary to the high hopes, economic experts pointed out that some corporations would be wary of cooperating with North Korea, as it may ruin their reputation in the global market.