North Korean Economy Watch

Korea Times
Kim Rahn
3/27/2007

Peaceful resolution of the North and South Korea situation will bring more American travelers to Korea, said Walter Keats, president of Asia Pacific Travel.

Keats, founder of the American travel agency, came to Korea to participate in the American Society of Travel Agents (ASTA) International Destination Expo that began in Cheju on Sunday.

Korea is not a familiar travel destination to Americans, partly because they do not know much about the country but also because they think the divided country is unsafe, said the head of the one-on-one tourism operator in an interview with The Korea Times.

“The problem is that right now in the back of everybody’s mind, there’s North Korea, there’s a war. Million soldiers along the line, missiles and a nuclear test _ these are bad things for tourism. The sooner the North and South situation can be resolved peacefully, the more interesting stuff there will be for all kinds of people,’’ Keats said.

The 61-year-old travel expert with a 30-year career has visited South Korea about 20 times and North Korea, three times. His company arranges trips to North Korea, mainly Mt. Kumgang and even Pyongyang when Arirang performances are presented, but not many Americans know they can visit the Stalinist state, he said.

Asia Pacific Travel plans a trip in May first to Beijing to get visas for North Korea, to Pyongyang for an Arirang performance, and back to Beijing to head for Seoul. Travelers will then visit North Korea’s Mt. Kumgang from the South Korean border, and will travel around South Korea.

“We can’t visit Mt. Kumgang from the North. What we are trying to do is to have people go to North Korea and come across the Demilitarized Zone (DMZ) by land to South Korea. That will be a good tour, a real tour of Korea,’’ Keats said.

The company provides custom itineraries, using its knowledge and experience to make a tour just for each customer.

“Our main customers are 50-75 years old people, who are experienced travelers. Most Americans start traveling domestic cities, and then they go to Canada, Mexico, and then Europe. When they grow more experience and confidence that they can go anywhere, they are ready to go to Asia,’’ the tourism veteran said.

He said Korean tourism’s advantage is the compact size of the country. By driving for seven to 10 days, tourists can have a really good trip in Korea, Keats said.

The president added that the Cheju promotion will be more effective to Americans in Korea and other Asian countries rather than to Americans in the United States.

Korea Times
Kim Sue-young
3/25/2007

South Koreans will now be more easily able to visit the Kaesong area in North Korea as an invitation from the North is not required, officials of the Unification Ministry said.

For visit to the joint inter-Korean industrial complex in the city, the North Korean association on economic cooperation used to issue an invitation but an admission ticket from the Kaesong Industrial District Management Committee (KIDMC) is now sufficient, they said.

“Recently, North Korean authorities which manage the complex and the committee agreed to abolish the invitation system during a discussion over rules on entry and stay,’’ an official said on condition of anonymity. “Instead, visitors should get a pass from the committee and long-term visitors who will stay for more than seven days should register at North Korea’s immigration office.’’

The two Koreas are talking over details to simplify the entry but have difficulties narrowing differences on the amount of charges that visitors should pay for the pass and registration, he said.

Officers of South Korean companies in the area, however, expressed worries over North Korea’s possible demand for expensive fees.

“Under the previous rules, visitors had to pay some amount of money when they obtained documents for stays, extended expiration dates or changed their addresses,’’ another official said asking to remain anonymous.

“Companies in the complex, however, may face problems doing business in the complex if the burden from those fees are heavier than the convenience brought by dropping the invitation system.’’

As for the worries from resident companies in Kaesong, the ministry official said, “It is unavoidable to impose some amount of money for guaranteeing a person’s identity.’’

Both sides are still discussing reasonable charges, he added.

Meanwhile, the North is pushing to establish a special economic zone on two islets located near the border of China. The zone is aimed at gaining China’s investment and reviving the declining economy, another source said.

Pyongyang is seeking to create a free trade zone on the Bidan and Wihwa islands on the Yalu River bordering China and has sounded out South Korean companies on their investment plans for the project, the source said.

The economic zone would specialize in areas such as trade, distribution, light industries and tourism, it added.

Koryo Tours
March 2, 2007

North Korea has finally confirmed that the Arirang Mass games will be hosted in Pyongyang during the period of April 15th – May 15th this year, we also expect the event to be repeated from August to October but this is not definite yet.

It has also been announced that US citizens will be accepted into DPRK at this time, the only other opportunities Americans have had to travel to North Korea have been in 1995, 2002, and 2005 also for Mass Games events, there are the usual added limitations for US tours (3 night stays as a maximum, must fly both ways from Beijing) but it remains the most fascinating chance of your life to visit a truly enigmatic place to see the kind of event that only the North Koreans can pull off, please see tour dates and itineraries on our website www.koryogroup.com.

Korea Times
Kim Yon-se
2/26/2007

Hyundai Asan is considering building three golf courses in Kaesong, North Korea, by 2012 as its first round of development projects at the Kaesong Industrial Complex have almost been completed.

According to sources, the inter-Korean tourism operator of Hyundai Group is in talks with the North to build an 18-hole golf course in the North Korean city by 2010 and two more by 2012.

A Hyundai Group official said the proposed golf course would be the second of its kind. One golf course has already been developed near Mount Kumgang and is scheduled to open to South Korean tourists later this year.

In a statement, however, Hyundai Asan predicted that it will take some time before the plan is realized as the North’s stance has yet to decided.

The company said talks between the two countries for the second development project would be possible after the first project is completed.

North Korea has stirred controversy by negotiating with a small South Korean company, Unico, to build a golf course despite its initial contract with Hyundai Asan to develop golf courses around the Kaesong Industrial Complex.

Since last July, the North has banned South Korean visitors to the industrial complex from visiting the city’s downtown area including historic sites.

Hundreds of South Koreans, mostly businesspeople and government officials, had been allowed to make an excursion to the city of Kaesong during their visit to the industrial complex.

Hyundai had signed a memorandum of understanding (MOU) with Emerson Pacific Group, which has been constructing golf courses at the scenic resort area at Mount Kumgang, for the project in Kaesong.

Joong Ang Daily
Seo Ji-eun
2/26/2007

Hyundai Asan Co., an exclusive operator of tour packages between South and North Korea, said yesterday tourists will be allowed to travel to the inner part of scenic Mount Kumgang in the North, an area that has been off-limits, as early as April.

Assisted by the recent agreement on the North’s nuclear issue, Hyundai and North Korea discussed the further opening of the mountain last week.

“The two sides have the same opinion about allowing tourists into inner Mount Kumgang,” said a Hyundai Asan spokesman. “The tour will be possible around early April.”

After visiting the area to look into the feasibility of travel last May, Hyundai Asan forecast it would begin the new service last autumn, but its plans were derailed by the North’s missile and nuclear tests.

According to the Hyundai Asan spokesman, technicians from both Koreas will be gathering as early as possible to talk about constructing roads, developing tour courses and mending facilities.

The leisure arm of Hyundai Group aims to attract 400,000 tourists to Mount Kumgang this year. Although the firm set the same target last year, it ended up achieving 260,000, partly as a consequence of reduced tourism following the nuclear test.

To meet the goal this year, the firm plans to shorten travel times by operating planes that link Seoul’s Gimpo airport to Yangyang in Gangwon province, near Mount Kumgang. Also, a duty-free shop run by the Korea National Tourism Organization will be launched in March and a golf course and spa facilities are slated to open in October.

Reuters (Hat tip DPRK studies)
2/26/2007

Senior officials from South and North Korea resume talks on Tuesday, seven months after dialogue broke down in acrimony over Pyongyang’s missile tests.

Following are key points in the ties between the two:

STILL AT WAR

– An armistice ending the 1950-53 Korean War dominates the relationship between the two Koreas. Nearly 1.2 million North Korean soldiers and South Korea’s 680,000 troops remain in a tense military standoff despite political and commercial ties that have warmed since 2000.

– The two have enough missiles and artillery pointed at each other to largely destroy major cities on both sides of the Korean peninsula.

POINTS OF EXCHANGE

– An industrial park in Kaesong just a few minutes’ drive from the heavily-fortified border is home to 21 companies employing about 12,000 North Korean workers.

– About 1.4 million South Koreans have visited the Mount Kumgang resort in the North just above the border on the east since the tours began in 1998. Roughly a quarter of a million made the visit in 2006 even as tension spiked following the North’s missile and nuclear tests.

– About 102,000 people crossed the border last year, not including Kumgang tourists and most of them South Koreans visiting the North for business. The total exchange of people was 269,336 as of the end of 2006.

TRADE

– Cross-border trade was $1.35 billion in 2006 up from $1.05 billion a year ago, largely from the strength of the Kaesong industrial park.

HUMANITARIAN AID

– South Korea has supplied between 200,000-350,000 tonnes of fertiliser a year to the North since 2000.

– It has also shipped up to 500,000 tonnes of rice a year to the North in the form of low-interest, long-term loans. Food aid has been suspended since the North’s missile tests in last July.

REFUGEES, PRISONERS OF WAR AND ABDUCTEES

– South Korea believes more than 1,000 of its people are still alive in the North either as civilian abductees or as prisoners captured during the Korean War.

– North Korea has said 10 South Korean POWs and 11 civilians were alive there.

– More than 1,000 North Koreans each year have fled hunger and persecution in the North and sought refuge in the South. In the first six months of last year, 854 arrived in the South for a total of 8,541. (Source: South Korean Unification Ministry, Kaesong Industrial District Management Committee, Reuters)

Yonhap
2/18/2007

A British travel firm is organizing an escorted tour of North Korea in April when the secretive nation celebrates the birthday of its late president, who is still venerated by the North as the “great leader.”

Steppes Travel has been recruiting customers from November for the April 11-26 trip to North Korea, advertised in the firm’s Web site as “the last bastion of communism in the world” and an experience that “will surely leave a lasting impression in your mind.”

The price is 2,795 British pounds (US$5,462) per person, and minimum 10 clients must sign up.

The package starts at Mansudae where the statue of North Korea’s late leader Kim Il-sung is flanked by monuments to the anti-Japanese struggle and the Korean War, and Mangyongdae, Kim’s birthplace. The tourists will then visit Kim’s residence Kumsusan on April 15, his birthday, where they are likely to see one of the country’s largest festivities.

Korea Times
2/5/2007

Hyundai Asan, the company specializing in inter-Korean business cooperation, Monday marked its eighth anniversary.

The affiliate under the Hyundai Group, led by Hyun Jung-eun, the widow of Chung Mong-hun, the successor of the group founder Chung Ju-yung, said that this year it plans to attract 400,000 tourists to Mt. Kumgang, the North Korean scenic mountain on the East Coast.

Hyundai Asan also said that it also will push ahead with tours of Kaesong, a historic North Korean city near the inter-Korean border that is home to a South Korean-invested industrial complex, this year so as to meet its sales target of 300 billion won.

Under its plan, Hyundai plans to hold working-level meetings with North Korea so as to hasten the start of the Kaesong tours.

However, industry observers say that Hyundai may find it difficult to meet this year’s sales goal because of the nuclear confrontation between Pyongyang and the international community. Last year, Hyundai set its target for tourists at 400,000 but fell short at 240,000 after a series of provocative actions by the North starting with its test of a nuclear device.

That worsened the financial situation of Hyundai Asan, forcing it to make 10 percent of its work force at its headquarters work from home in a restructuring move.

Hyundai officials said that this year the situation may improve, but this would be unlikely to have any direct bearing on its bottom line.

Korea Herald
Kim Yoon-mi
2/5/2007

Eight years have passed since the late Chung Ju-yung, the former chairman of Hyundai Group, initiated the first inter-Korean tourism business with Hyundai Asan Corp., which operates tours to North Korea’s Mount Geumgang resort.

Since Hyundai Asan’s tour businesses have been held back by the North’s mixed messages and frequent changes in Seoul’s policy toward Pyongyang, they plan to attract 400,000 South Korean tourists and fast-track the official launch of tour of the North Korean city of Gaeseong, Hyundai officials said yesterday.

Hyundai Asan president and CEO Yoon Man-joon on Saturday paid a tribute to the family graveyard of the late Chung Ju-yung and Chung Mong-hun with Hyundai Asan executives. Yoon asked them to put forward their best efforts to meet the 2007 business target, Yonhap News reported.

“Although we had some difficulties last year, I’m doing my best to do better. We will see a good result this year if every one gets proactive,” Yonhap News quoted Yoon as saying.

Hyundai Asan’s tourism plan in Gaeseong was dampened when North Korea requested to sign a deal with another Korean company Lotte Tours Co. in August 2005, despite the earlier contract with Hyundai Asan.

In January this year, North Korea seemed turning to the original contract with Hyundai Asan when Seoul’s Unification Minister Lee Jae-young and Hyundai Group chairwoman Hyun Jeong-eun visited an industrial complex in Gaeseong on Jan. 24.

However, Pyongyang media once again denied South Korea’s local reports that the North will promote Gaeseong tourism with Hyundai Asan.

The biggest blow to Hyundai Asan last year was North Korea’s nuclear test on Oct. 9. With the tension created on the Korean peninsular after North’s nuclear test, the number of Mount Geumgang tourists plummeted, causing the failure of Hyundai Asan to meet the initial target of 400,000 vivitors. The number reached only 240,000 last year.

Hyundai Asan’s posted sales of 235 billion won ($249 million) and an operating profit of 2 billion won last year, which is a disappointing performance according to experts.

This year, Hyundai Asan said it will beef up its profitability by launching a new tour package to inner Geumgang, a golf course at the mountain resort, and offering a Gaeseong tour.

According to the company, it will open a new tour of inner Geumgang in April, have a test round at the golf course in June and open it in late October, aiming to attract more tourists.

For the Gaeseong industrial complex, Hyundai Asan said it will complete laying the ground work on the 3.3 million square meters of land by June and start working-level meetings on the second-phase development of the area with North Korean officials later on.

“The urgent issue for our company this year is to establish a solid profit structure so that it won’t be shaken by North Korean issues,” Yonhap quoted an official at Hyunda Asan as saying.

Chinese schools renamed after border mountain
Joong Ang Daily
2/2/2007

China has renamed 18 primary and secondary schools after [Pektu] a scenic mountain that straddles the border with North Korea, a Chinese committee said.

The Committee for the Protection, Development and Management of the Changbaishan Protection Zone under the control of the Jilin Province, northeast China, said Wednesday it changed the names in July of last year to boost the protection of the mountain. The provincial government administers the Chinese part of the mountain.

The schools now have 11,000 students and 1,720 teachers, according to the committee.

The 2,750-meter (9,000-foot) peak, the highest on the Korean Peninsula, is a major tourist attraction for both Koreans and Chinese. North Korea signed an agreement in the 1960s to secede the territorial rights to about half of Mount Paekdu to China.

China has irritated Koreans by claiming the ancient Goguryeo Kingdom (B.C. 37-A.D. 668), which ruled most of northeastern China as well as the northern half of the Korean Peninsula, was a Chinese provincial government.

Some South Koreans insist the 1904 agreement between China and Japan on the transfer of China’s Yanbian region, which encompasses Mount Paekdu, should be nullified because Korea’s diplomatic sovereignty was deprived at that time, several years before Japan formally colonized the Korean Peninsula in 1910.

In September last year, China issued a directive to about a dozen hotels operating there, including four run by South Koreans and one by an ethnic Korean resident of Japan, to cease operations and leave by year’s end. The move was seen as part of its initiative to make the Mount Paekdu area a United Nations Educational, Scientific and Cultural Organization World Heritage site.

In a related move, Jilin Province has announced its plans to develop the mountain as the country’s highest-level tourism zone.