Archive for the ‘Inter-Korean summit’ Category

Samsung Electronics to consider investment in N.K if better business environment is guaranteed: executive

Friday, October 5th, 2007


South Korean electronics giant Samsung Electronics Co. will consider investing in North Korea if the communist country provides better infrastructure and business-related regulations as promised in an agreement reached during the just-ended inter-Korean summit talks, the company’s top executive said Friday.

“We will review investment opportunities in the North if Pyongyang provides systems and regulations needed for safe business operation there, and guarantees improvement in the passage of civilians, customs clearance and communications as promised, along with a stable supply of electricity and water,” Yun Jong Yong, head of Samsung Electronics, said in a statement issued after returning from Pyongyang.

Yun and other business leaders accompanied President Roh Moo-hyun for the second-ever inter-Korean summit talks.

As they wrapped up the three-day summit, President Roh and his North Korean counterpart, Kim Jong-il, on Thursday agreed to a number of inter-Korean business projects, including accelerating the expansion of an industrial complex in the North’s border city of Kaesong, where more than 20 South Korean small- and medium-sized enterprises run facilities.

They also agreed upon improving related regulations for the passage of civilians, customs clearance and communications, which many businessmen have cited as challenges hindering operation in the North.

Yun said the leaders of the two Koreas had more “tangible” negotiations — especially on inter-Korean economic cooperation — than then South Korean President Kim Dae-jung had with the North Korean leader at the previous meeting held seven years ago.

Since the 1990s, Samsung Electronics has been engaged in business in the North, including software development projects, but has made little large-scale investment in the communist country.


Two Koreas discuss oil exploration at summit

Friday, October 5th, 2007


Leaders of the two Koreas discussed issues relating to oil field development and exploration at the latest summit in Pyongyang, South Korea’s top economic policymaker said Friday.

“The oil development issue was discussed at the summit, and North Korean leader Kim Jong-il expressed keen interest in the South’s oil field and gas exploration projects,” Finance Minister Kwon O-kyu said in a press briefing.

“South Korea also discussed the development of resources in North Korea, including oil fields.”

Kwon said the oil development issue may continue to be discussed at talks of the proposed Joint Committee for Inter-Korean Economic Cooperation, a committee to be formed through upgrading the status of the existing Inter-Korean Economic Cooperation Promotion Committee in an effort to accelerate bilateral economic cooperation.

Kwon played down concerns about potential financial burdens on the government from proposed inter-Korean business projects.

At the three-day summit, ended Thursday, the two Koreas agreed on a range of cross-border business projects, including creation of a special economic zone at the North’s western port city of Haeju, development of an existing port of Haeju, and expansion of an industrial complex in the North Korean border town of Kaesong.

The two also agreed to jointly repair and maintain the North’s dilapidated expressway linking Kaesong and Pyongyang, as well as the North’s railway between Kaesong and Sinuiju on the North’s western Chinese border.

The two countries also decided to construct an inter-Korean joint shipbuilding complex in Nampo, near Pyongyang.

South Korea will be able to finance the development of Haeju port through a proposed 2 trillion won (US$2.2 billion) overseas port development fund, which will be created by the nation’s port authority, Kwon said.

In a related note, Maritime Minister Kang Moo-hyun said in a meeting with reporters that about 220 billion won will be spent for the development of the port which will have eight berths, including two container berths.

The government will also able to attract international cooperation for repairing the railways since it is part of a wider international railway project of Trans-Siberian Railway, he said.

South Korean shipyards, which hold a combined 45 percent share of the global market, by investing in the envisioned shipbuilding complex will be able to maintain their competitiveness through access to North Korea’s cheap labor, Kwon said.

In case of the summit’s impact on domestic financial markets, Kwon declined to make concrete predictions, but said rising expectations of improving profitability and competitiveness by domestic businesses might be able to boost investor spirits.


Summit Reveals Fashionable Pyongyang

Friday, October 5th, 2007

Korea Times
Kim Tong-hyung

It will be quite a long time before Pyongyang earns its stripes as a hip and happening city if it ever does. But, judging by the glimpses revealed during the three-day summit, it seems that not all is gray and grim in the North Korean capital.

First lady Kwon Yang-suk and other South Korean officials ran into a room full of headsets Wednesday at Pyongyang’s Grand People’s Study Hall as students managed to keep a straight face scribbling down English conversations played on tape.

“Repeating is the best,” said a North Korean student when asked what is the secret to learning English, providing no relief to his peers in the South who hear the same thing until their eardrums wear out.

Perhaps improving cooperation between the two Koreas will do little to better the foreign language skills of students from either side of the border who grab English books with the same enthusiasm as a kid force-fed vegetables.

However, it seems clear that Pyongyang’s youngsters of today are more concerned about internationalization than they appeared in the first inter-Korean summit seven years ago.

South Korean delegates went on to tour the Kim Chaek University of Technology where they found students, mostly studying English, searching for video files and text stored in computers.

The university’s library has 420 desktop computers, 2 million books and more than 10 million electronics books that can be accessed via a local area network (LAN) connection or from telephone modems at home.

North Korean officials were eager to show their elite students studying English to South Korean authorities, quiet a surprise from a country dominated by the “Juche,” or self-reliance, ideology.

And at least on the educational front, it seems that computers are becoming a part of everyday life for Pyongyang’s younger generation, although they are far behind their tech-savvy southern neighbors who have television on their cell phones.

Not every picture of change in Pyongyang was staged. South Korean correspondents have sent photos of young North Korean women gliding through the streets in clothes that seemed to be ripped from Vogue magazine. Some even had heavy mascara that would qualify them for a Johnny Depp pirate movie.

Bright colors of yellow and pink were easily seen among the women waving their hands to the limousine convoy of South Korean delegates upon their Pyongyang arrival.

Surely, North Korean fusionists have come a long way since their universally pale makeup and grayish attire seen by South Korean reporters during the 2000 summit.

Even North Korean government officials involved in the formal talks looked a little more contemporary than last remembered, with many of them suited up in tailor-cut, three-button suits.

The security officials looked better too. Gone were the bodyguards with big hats, khaki uniforms and oversized gun holsters who flocked around former South Korean President Kim Dae-jung back in the first talks.

Instead, North Korean bodyguards today were dressed in black suits and moved with a hand on their earpieces, making them hardly distinguishable them from their South Korean counterparts.


S. Korean Shipbuilders Question Joint Complex in North

Friday, October 5th, 2007

Korea Times
Kim Yoo-chul

Daewoo Shipbuilding Unveils Plan to Build $150 Mil. Shipyard in Northern Coastal City

South Korean shipbuilders and analysts questioned the economic viability of the proposed plan to build a joint shipbuilding complex in the wake of the inter-Korean summit.

The agreement between the two Koreas calls for the two sides to construct a joint shipbuilding complex in the North’s port city of Nampo, near Pyongyang.

Most officials from major South Korean shipbuilders say that too many things are uncertain as of yet though Daewoo Shipbuilding & Marine Engineering (DSME) unveiled a bold plan to build a $150 million block plant in the North’s city of Anbyeon.

“When issues of transportation, communication, customs and capital see improvement, we will build a block plant in the North Korean city with production capacity of 200,000 tons a year,’’ DSME President Nam Sang-tae told reporters Friday.

“We will start to begin the process within this year after certain issues are solved,’’ Nam said, adding the company looks to begin production from early 2009.

He said the company is seriously considering in participating in joint projects by the two Koreas in the North’s western city of Nampo.

Unlike Daewoo Shipbuilding, Hyundai Heavy Industries, the world’s No.1 shipbuilding company, showed reservations.

“The announcement itself is good. But it is not the right time to start business talks with North Korea, given a lack of credibility and geopolitical uncertainties,’’ said a high-ranking official from Hyundai Heavy Industries.

Asked about the possibility of finding another investment area for South Korean shipbuilders in North Korea, the official said it is likely but needed a few years as the building of infrastructure there will need massive funding.

The production capacity in the North’s shipbuilding industry was 258,000 tons in 2004, about 3.1 percent that of the South’s 8.24 million tons in the same year, according to a report from the Korea Development Bank. There are eight shipyards in North Korea, including Wonsan and Najin. Total employees in the industry were 25,000, the report shows.

Analysts also said the announcement is not `fresh material’ to boost share prices in shipbuilders.

“There was no immediate positive impact on stock prices, nor will there be a negative ones in the long term,’’ said Lee Jae-kyu, an analyst from Mirae Asset Securities.

He expects the scale of investments by the South Korean shipbuilder in joint projects to be small in the near future as shipbuilding-related facilities require large amounts of capital and time.

“If the joint projects materialize, the complex will be constructed in the form of a `block plant’ _ repairing vessels or producing components. Therefore there will be no huge momentum in shipbuliding stocks,’’ Ahn Ji-hyun from NH Securities said.


Inter-Korean Projects to Cost Over $ 11 Bil.: Report

Friday, October 5th, 2007

Korea Times

More than $11 billion is needed to implement cross-border business projects that the leaders of the two Koreas agreed to at the historic summit this week, a local research institute estimated Friday.

Wrapping up a three-day summit, the second one since 2000, South Korean President Roh Moo-hyun and North Korean leader Kim Jong-il on Thursday agreed to a number of inter-Korean business projects.

According to Hyundai Research Institute, the development of a special economic zone in Haeju, the North’s western port city, will cost about $4.6 billion. Around $2.5 billion will be spent to finance the expansion of an industrial complex in the North Korean border city of Kaesong.

A project to build leisure facilities around Mount Baekdu is expected to cost $1.3 billion, the research institute said.

The estimated cost, when it is financed over five years, is equivalent to 8.75 percent of the North’s gross domestic income, and 0.25 percent of the South’s gross domestic product, Hyundai Research said.

The two leaders called for rapidly expanding the South-supported industrial park in the North’s border town of Kaesong and launching cross-border freight transportation via an inter-Korean railway between the South’s Munsan and the North’s Pongdong.

The two Koreas also agreed to jointly repair and maintain the North’s dilapidated expressway linking Kaesong and Pyongyang, as well as the North’s railway between Kaesong and Sinuiju on the North’s western Chinese border.

As part of a bilateral agreement to boost relations in tourism, history, language, education, culture, sport and art, the Koreas agreed to open a direct air route between Seoul and Mount Paekdu, allowing South Koreans to tour the scenic North Korean mountain on the North’s northern border with China.

The research institute, meanwhile, projected that the North would get $138 billion worth of economic benefits and the South $4.8 billion should the inter-Korean business projects be implemented as planned.


2nd South-North Korean Summit Joint Statement

Thursday, October 4th, 2007

Institute for Far East Studies
NK Brief No. 07-10-4-2

1. The South and the North shall uphold and endeavor actively to realize the June 15 Declaration.

The South and the North have agreed to resolve the issue of unification on their own initiative and according to the spirit of “by-the-Korean-people-themselves.”

The South and the North will work out ways to commemorate the June 15 anniversary of the announcement of the South-North Joint Declaration to reflect the common will to faithfully carry it out.

2. The South and the North have agreed to firmly transform inter-Korean relations into ties of mutual respect and trust, transcending the differences in ideology and systems.

The South and the North have agreed not to interfere in the internal affairs of the other and agreed to resolve inter-Korean issues in the spirit of reconciliation, cooperation and reunification.

The South and the North have agreed to overhaul their respective legislative and institutional apparatuses in a bid to develop inter-Korean relations in a reunification-oriented direction.

The South and the North have agreed to proactively pursue dialogue and contacts in various areas, including the legislatures of the two Koreas, in order to resolve matters concerning the expansion and advancement of inter-Korean relations in a way that meets the aspirations of the entire Korean people.

3. The South and the North have agreed to closely work together to put an end to military hostilities, mitigate tensions and guarantee peace on the Korean Peninsula.

The South and the North have agreed not to antagonize each other, reduce military tension, and resolve issues in dispute through dialogue and negotiation.

The South and the North have agreed to oppose war on the Korean Peninsula and to adhere strictly to their obligation to nonaggression.

The South and the North have agreed to designate a joint fishing area in the West Sea to avoid accidental clashes. The South”s Minister of Defense and the North”s Minister of the People”s Armed Forces have also agreed to hold talks in Pyongyang this November to discuss military confidence-building measures, including military guarantees covering the plans and various cooperative projects for making this joint fishing area into a peace area.

4. The South and the North both recognize the need to end the current armistice regime and build a permanent peace regime. The South and the North have also agreed to work together to advance the matter of having the leaders of the three or four parties directly concerned to convene on the Peninsula and declare an end to the war.

With regard to the nuclear issue on the Korean Peninsula, the South and the North have agreed to work together to implement smoothly the September 19, 2005 Joint Statement and the February 13, 2007 Agreement achieved at the Six-Party Talks.

5. The South and the North have agreed to facilitate, expand, and further develop inter-Korean economic cooperation projects on a continual basis for balanced economic development and co-prosperity on the Korean Peninsula in accordance with the principles of common interests, co-prosperity and mutual aid.

The South and the North reached an agreement on promoting economic cooperation, including investments, pushing forward with the building of infrastructure and the development of natural resources. Given the special nature of inter-Korean cooperative projects, the South and the North have agreed to grant preferential conditions and benefits to those projects.

The South and the North have agreed to create a “special peace and cooperation zone in the West Sea” encompassing Haeju and vicinity in a bid to proactively push ahead with the creation of a joint fishing zone and maritime peace zone, establishment of a special economic zone, utilization of Haeju harbor, passage of civilian vessels via direct routes in Haeju and the joint use of the Han River estuary.

The South and the North have agreed to complete the first-phase construction of the Gaeseong Industrial Complex at an early date and embark on the second-stage development project. The South and the North have agreed to open freight rail services between Munsan and Bongdong and promptly complete various institutional measures, including those related to passage, communication, and customs clearance procedures.

The South and the North have agreed to discuss repairs of the Gaeseong-Sinuiju railroad and the Gaeseong-Pyongyang expressway for their joint use.

The South and the North have agreed to establish cooperative complexes for shipbuilding in Anbyeon and Nampo, while continuing cooperative projects in various areas such as agriculture, health and medical services and environmental protection.

The South and the North have agreed to upgrade the status of the existing Inter-Korean Economic Cooperation Promotion Committee to a Joint Committee for Inter-Korean Economic Cooperation to be headed by deputy prime minister-level officials.

6. The South and the North have agreed to boost exchanges and cooperation in the social areas covering history, language, education, science and technology, culture and arts, and sports to highlight the long history and excellent culture of the Korean people.

The South and the North have agreed to carry out tours to Mt. Baekdu and open nonstop flight services between Seoul and Mt. Baekdu for this purpose.

The South and the North have agreed to send a joint cheering squad from both sides to the 2008 Beijing Olympic Games. The squad will use the Gyeongui Railway Line for the first-ever joint Olympic cheering.

7. The South and the North have agreed to actively promote humanitarian cooperation projects.

The South and the North have agreed to expand reunion of separated family members and their relatives and promote exchanges of video messages.

To this end, the South and the North have agreed to station resident representatives from each side at the reunion center at Mt. Geumgang when it is completed and regularize reunions of separated family members and their relatives.

The South and the North have agreed to actively cooperate in case of emergencies, including natural disasters, according to the principles of fraternal love, humanitarianism and mutual assistance.

8. The South and the North have agreed to increase cooperation to promote the interests of the Korean people and the rights and interests of overseas Koreans on the international stage.

The South and the North have agreed to hold inter-Korean prime ministers” talks for the implementation of this Declaration and have agreed to hold the first round of meetings in November 2007 in Seoul.

The South and the North have agreed that their highest authorities will meet frequently for the advancement of relations between the two sides.

Oct. 4, 2007

[Document signed by both Roh Moo-hyun and Kim Jong Il]


A postcard from Pyongyang

Tuesday, October 2nd, 2007

Joong Ang Daily
Brent Choi

At 10 a.m. on June 28, I boarded a Koryo Air flight at Seoul’s Gimpo Airport, bound for Pyongyang. It took only one hour for the flight, organized by the non-governmental organization Movement for One Corea, to arrive at Pyongyang’s Sunan Airport, a two-story building bearing a large photo of the late North Korean leader Kim Il Sung ― not exactly an impressive sight for an airport.

There were 14 aircrafts at Sunan, including one helicopter. Seven were jets and six were old-style propeller planes. Most seemed in disrepair and sat beneath large covers. There wasn’t a single foreign plane there, a reminder of how isolated North Korea has become.

Four tourist buses came to fetch us. Each one carried about 30 visitors. About half were members of the Movement for One Corea. The rest were paying customers like me who had forked over around 2.5 million won ($2,750) for the tour of the North.

Several North Korean guides, who seemed rather shy, met us. They warned us not to take photos while the bus was moving and not to approach local people.

That afternoon our group toured Pyongyang. We first went to Mansudae to see a giant statue of Kim Il Sung. The guides lined up visitors in four groups and bowed low before the statue, in the manner of a Japanese person stooping before their emperor. Less than a tenth of our party followed the guides’ example.

Most were more impressed by the sheer size of the statue and wanted to take a picture. My roommate, a man named “Jo,” the head of a sewing factory, started taking pictures like crazy, using four different cameras.

I was a North Korea specialist for one of the major dailies in South Korea for almost a decade. In the eyes of the journalist that I am, North Korea seemed to have long ago lost sight of the balance between the spiritual and physical worlds.

Wherever we went there were slogans saying “Revolution” and anti-Japan exhortations, along with praise for Kim Il Sung and Kim Jong-il by female guides who spoke as if they were still living the 1930s.

The North’s excessive deification of the two Kims seemed ironic, given that its ideology is based on Marxist-Leninism.

I stayed at the Yanggakdo Hotel near the Taedong River. It was in a relatively good state with abundant food and clean rooms. But it was reserved for foreign visitors. The rest of Pyongyang still seemed to be struggling with the “Arduous March” that began in the 1990s. The grey, sordid building next to ours seemed like it hadn’t been repainted or repaired in any way for at least 10 years. The roads were also bumpy with cracks.

Passersby, men in gray suits and women in traditional hanbok, all looked tired and depressed and looked at the ground. Only the little children shot occasional glances toward our modern foreign bus, a rare sight in Pyongyang.

Our dialogue with the guides proved to be one of the most interesting aspects of the five-day trip.

At first the visitors and guides gave basic introductions and began talking about non-contentious issues like the weather. After “testing the waters,” the North Korean guides then began to ask about South Korea’s political situation including the upcoming presidential election, while the South Koreans barraged the guides with questions about nuclear programs. Not everyone was engrossed in politics. Some guys asked about local women.

The guides I met this time differed from those I encountered in the past. When I visited Mount Kumgang in 1998, all the guides were over 50 and would start arguments with visitors over things like unification and the presence of U.S. forces.

The guides in Pyongyang were much younger, mostly in their 30s. It seemed like a rapid generational change is under way in the North, with the older generations who survived the struggle against Japan or the Korean War, and even those who grew up under Kim Il Sung in the 1970s and 1980s being supplanted by those in their 30s and 40s, the so-called “Arduous March” generation who were teenagers during the famine years of the 1990s.

Our young guides were from this group and displayed a strong loyalty toward Kim Jong-il. They belonged to the elite class of the country, having graduated from Kim Il Sung University.

These guides didn’t bother to hide the tough conditions faced by North Koreans. When I asked about the food situation, they replied that everything was “tense” and rations were suspended from time to time. When that happened they came to Pyongyang Market a couple of times a week to purchase rice. If that was the life of young elites from the ruling Workers’ Party, I was afraid to ask about the common people.

However, from the bus window I could see people flocking to fish in rivers, lakes and just about any little puddle they could find that might contain some food.

The energy supply wasn’t good either. We went to Mount Myohyang on the third day. During a two-hour ride from Pyongyang I saw only nine cars; two Mercedes that belonged to high officials, four of our tour buses, two trucks and an old bus.

Pyongyang is divided into 10 administrative districts. At present they receive electricity in turns. Even the Juche Tower on the Taedong River turns off its lights at 11 a.m. Outside Pyongyang the hardships must be far more severe.

One of the guides insisted that the “war-mongering” United States had provoked the North into developing a nuclear program. He added that the United States can never be trusted. It sounded like the North would never give up on its nuclear program.

It seemed like even these new, young guides didn’t really understand the contradictions and problems within the regime. I told the young quides that to end its isolation and improve its economy, the country must improve relations with the United States by giving up its nuclear program and adopting some of free market principles.

The young people in the North didn’t seem to understand this. For example, I asked one guide about prices ― a basic of the market economy.

He said prices are determined by “the state authority.” He and his colleagues knew nothing about concepts like marginal cost or profits. I realized it was useless to mention interest rates, inflation or foreign exchange.

The guides were also nostalgic for the past. “In the ’80s we were able to buy cheap rice, fish and clothing,” one pretty guide told me, adding that the North’s goal is to return to this “golden era of socialism.”

The guides knew next to nothing about life overseas. Only two out of 10 guides had visited Seoul. Nobody else had been outside North Korea and nobody spoke English or Chinese.

On the other hand, they were both “well-informed” and “ignorant” about the situation in Seoul. They seemed to know all the little details of the nomination race between Grand National Party candidates Lee Myung-bak and Park Geun-hye, yet they lacked the political common sense to interpret them. To them the Grand National Party was a synonym for “the bad party,” just as Washington was a synonym for evil.

A tailor’s shop on the third floor of the Yanggakdo Hotel was the most popular place for tourists. Complete suits were priced at $130, half the cost of a similar garment back in Seoul. I bought one and it was no different from those made by skilled tailors in the South.

The problem was that the tailor had limited raw materials. When the tourists heard about the shop 100 of them rushed to place an order, but it could only satisfy the first 20 people.

I couldn’t understand this. The tailor could have earned much-needed foreign currency. But she lacked the fabric and staff and she needed permission from above to get more of either. “North Korea has truly screwed up its distribution of resources,” one professor on the trip said.

Another example of the “screwed-up” economy was our hotel. The Yanggakdo was built in 1995 and is supposed to be the best in Pyongyang. It has 47 stories and 1,001 suites, yet only 300 rooms were occupied during our stay ― a 70 percent vacancy rate.

“If this was Seoul, you’d probably be fired for leaving the place this empty,” I told the hotel manager. He wasn’t the least bit impressed. “My duty here is to make sure everyone is comfortable. It’s the state’s responsibility to bring in the guests,” he replied.

I came to realize that the inefficient management of the North Korean regime stems from this “instruction policy” in which everything is determined by one person ― Kim Jong-il, the Chairman of the National Defense Commission.

North Korean society revolves around instructions given by Chairman Kim ― literally.

On the fourth day we went to Okryugwan, a famous naengmyeon cold noodles restaurant, where the food lived up to its reputation. I complimented the guide and she said the tasty noodles were thanks to “The Dear Leader.”

According to the guide, Kim instructed the cook how to make the soup and where the vinegar should be added, in the soup or in the noodles. I thought she was kidding but her expression told me otherwise.

Then I learned that Kim Il Sung University teaches that the Goryeo Kingdom (918 to 1392) was the first kingdom to unite the Korean Peninsula, instead of the Silla Kingdom (57 BC to AD 935) as believed by the South. Until the ’60s, the North learned the same thing as the South but then instructions to change came from above.

Having the same leader intervene in every little decision from food to history is bound to extinguish the creativity and richness of people and culture.

North Korean propaganda is also a source of inefficiency. Around 75 percent of television news was filled with the late leader Kim Il Sung’s past activities or praise for current leader Kim Jong-il. The media in South Korea is an agent for change, because it shows new developments around the world. In the North it blocks society from growing up.

North Korea’s Juche ideology is about self-reliance, but the people of this country long ago lost the ability to stand on their own feet. They blindly hang on to every word and action of their single leader.

Back on the plane, two thoughts crossed my mind.

First, how long will the North be able to withstand this inefficient regime? Second, if the North is able to maintain its backward-looking society through isolation and propaganda, perhaps it will last longer than anyone imagines. Only the future will tell.


Summit Spurs Stock Re-Rating

Tuesday, October 2nd, 2007

Korea Times
Yoon Ja-young

The second inter-Korea summit is expected to lay the ground not only for the establishment of a permanent peace on the peninsula but for further re-rating of the Seoul stock market, analysts said.

They said that Seoul stocks, burdened so long with the so-called “Korea discount” due to geopolitical concerns, will get a fresh boost as President Roh Moo-hyun entered North Korea for a summit with the North’s leader Kim Jong-il.

The main index KOSPI closed above 2,000 points again Tuesday as it closed at 2,014.09 points, up 51.42 points, or 2.62 percent, on the balmy news from north on top of the bullish New York bourse.

Most analysts agree that the summit will have a positive effect on the bourse in the long term. They advise investors to pay attention to stocks that have to do with social overhead capital (SOC) projects in North Korea.

Samsung Securities said the summit will be a great boon for the bourse in the long run. “The political events between the two countries haven’t affected stock prices much. Opinions diverge regarding its effect in the short term, but it would greatly contribute to the revaluation of local stock market in the end,” said Ahn Tae-kang, an analyst at Samsung Securities.

The world was surprised when the two countries announced the summit plan in 2000 April, and the whole nation watched the historic scene on TV when former President Kim Dae-jung was greeted by North Korean leader Kim Jong-il in Pyongyang two months later.

The stock market soared after each of these events, yet change was not always predictable. When North Korea conducted nuclear tests in 2006, on the contrary, stocks continued to rise as foreign investors sought buying shares on cheap prices.

It is different this time, according to analysts. “It would be a remarkable bullish factor once the two come out with a concrete plan on economic cooperation and SOC,” said Lee Seon-yeob, an analyst at Goodmorning Shinhan Securities. It would be only symbolic if without concrete agreements, he feared, but it would still be meaningful, according to Lee.

“The two can talk about setting up special economic zones, which can give rising momentum to North Korea related stocks and improve overall investor sentiment,” Kiwoom Securities said in a report.

Samsung Securities’ Ahn cited decreasing geopolitical risk and consequent reevaluation of stocks, the economic cooperation between the two and decreasing cost of unification after North Korea’s adoption of a market system and opening of the market as meanings of the summit. “The growing possibility of the sovereign credit ratings raise and Seoul index’s incorporation into developed world indices and the risk premium decrease are some of the positive effects,” he said.

He advised investors to concentrate on large cap blue chips that will benefit from infra projects in North Korea. Hyundai Engineering & Construction, POSCO, Hyundai Merchant Marine, Hyundai Elevator, KEPCO, and Hyosung were among his top picks.

Goodmorning Shinhan’s Lee said cited SOC related businesses, including construction and power transmission as the ones to benefit from the summit. “In the first summit, all stocks related with North Korea skyrocketed, but not this time. Investors are taking out the ones that will have a visible benefit. Investors seem to know how to make a good investment,” Lee said.

North Korea-related shares rise on summit
Joong Ang Daily

Kim Bo-yung

With just a day left before the second epoch-making inter-Korean summit, North Korea-related shares surged on the Korean stock market yesterday.

The power facility industry enjoyed a moderate increase. Geumhwa PCS Co. advanced 5.5 percent, and Doosan Heavy Industries & Construction Co. climbed 2.37 percent.

The electric wire sector also posted a bull run as LG Cable and Taihan Electric Wire Co. surged 5.3 percent and 2.8 percent.

Nam Hae Chemical Corporation, a local agrichemical product manufacture, increased 5.6 percent.

However, the companies that have penetrated into the Kaeseong Industrial Complex suffered a loss.

Romanson Co. tumbled 3.3 percent and JY Solutec Co. slid 0.8 percent.

The share prices of Ewha Technologies Information, Cheryong Industrial Co. and KwangMyung Electronic, potential beneficiaries of electricity transmission from South to North Korea, dropped by 6 to 13 percent.

The second inter-Korean summit is expected to improve investment sentiment, generating strong gains across the board.

However, some market watchers warn investors not to make impulsive investments in North Korea-related shares.

“Although investment sentiment surrounding the stock market is [expected] to improve once the inter-Korean summit kicks off, it will only have a short-term effect,” said Oh Hyun-seok, the investment information manager at Samsung Securities.


NK Projects: Chance or Risk for Businesses?

Tuesday, October 2nd, 2007

Korea Times
Jane Han

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.


Internet lines of two Koreas to be linked during summit

Monday, October 1st, 2007


South and North Korea will be linked via the Internet during the summit of their leaders from Tuesday to Thursday, South Korea’s top communications service provider said on Monday.

KT Corp. said that it will reopen for three days the optical communication network which was established in July 2005 for the video reunions of families separated by the inter-Korean border, enabling the South Korean entourage and press corps to use the Internet.

North Korea originally planned to allow Internet access via China, but notified the South Korean government over the weekend of its decision to use the inter-Korean network.

Twelve personal computers have been connected to the Internet at the press center established at the Goryo Hotel in Pyongyang.

KT also plans to support a broadcasting relay for South Korean broadcasters using its Mugunghwa No. 3 satellite.