North Korean Economy Watch

Mount Kumgang tour goal to fall well short of 400,000
Joong Ang Daily
12/18/2006

The number of South Korean tourists to a scenic North Korean mountain resort is expected to fall far short of the initial target of 400,000 for this year due to inter-Korean tensions, South Korean tour organizers said yesterday.

About 1.3 million South Koreans have visited Mount Kumgang since the communist North opened the area to outsiders in 1998 to earn badly needed hard currency.

The South Korean tour operator, Hyundai Asan Corp., had planned to attract 400,000 tourists to the area this year, but the number is expected to reach slightly more than half of the the target, company officials said.

The sharp drop in the number of tourists to the resort can be attributed to recurring tensions caused by the North’s multiple missile tests on July 5 and its first-ever nuclear weapons test on Oct. 9, they said.

“We had aimed for 400,000 visitors for the year, but the North Korean nuclear crisis caused a significant problem,” a Hyundai Asan official said, citing the North’s missile and nuclear tests.

According to Hyundai Asan, a total of 230,224 people, mostly South Koreans, visited the resort in the first 11 months of the year, and the number of visitors in December is not expected to be more than 10,000.

The North’s mountain resort is reachable from South Korea by bus within an hour.

I have been fortunate enough to visit the DPRK twice in the last few years (2004 pictures) (2005 pictures). Anyway, one of my travel companions on the 2004 trip has written a book about his experiences.

I have no idea what his persective is, how prominently I am featured (probably not much), or even if it is a good book, but I will probably buy a copy just to bone up on my spanish and put on a shelf with my photo albums.

Check it out here: El país del presidente eterno (The Country of the Eternal Pesident)

Joong ang Daily
11/20/2006

Hyundai Asan Corp., a South Korean company spearheading inter-Korean economic projects, said yesterday it is considering slashing jobs or wages at a scenic North Korean mountain resort that has been opened to Koreans.

The restructuring underscores how Hyundai Asan is struggling with a falling number of tourists to Mount Kumgang on North Korea’s east coast amid growing security concerns over the communist neighbor’s nuclear test in early October.

North Korea has opened the mountain to Koreans since 1998 as part of the South Korean government policy of engaging North Korea and helping Pyongyang’s moribund economy.

“The number of tourists is sharply falling to less than 100 people a day, due to the North’s nuclear test and seasonal factors,” said Hyundai Asan Chief Executive Yoon Man-joon, who was visiting the mountain resort to mark the eighth anniversary of the tourism project.

“We are now studying a number of ways to narrow losses, including a reorganization of the workforce,” he told reporters.

After the North’s missile tests in July and nuclear test last month, the tourism project is now facing its biggest challenge with the daily number of tourists dropping as low as 80, Hyundai Asan officials say. Hyundai Asan is delaying its plan to open the inner part of the mountain to South Korean tourists to March or April next year because of the falling number of tourists, Mr. Yoon said.

Joong Ang Daily
11/18/2006

Eight years have passed since the first tourist from South Korea entered North Korea to explore Mount Kumgang, one of North Korea’s most scenic mountains, but the picture at Hyundai Asan, operator of the tour program, is not so picturesque.

Demand for the tour has plummeted after North Korea’s nuclear weapon test last month.

Only 22,000 tourists visited Mount Kumgang in October, a popular fall season. Originally, 40,000 made reservations but almost half canceled because of the nuclear test.

For the first 10 months of 2006, a total of 226,000 tourists have visited the North Korean mountain, 20 percent less than the previous year and well below the company’s target of 350,000 for this year.

“Next year the tour area will be expanded to inner-Kumgang, and a golf course will be ready in May. We expect to attract more tourists,” said an official from Hyundai Asan.

Meanwhile, two conservative citizen groups, Right Korea and the Citizens’ Coalition to Stop Nuclear Development of North Korea, rallied Thursday. They want the tours stopped, saying it is a source of foreign currency for North Korean dictator Kim Jong-il.

From Yonhap
11/1/2006
Yonhap

North Korea on Wednesday said it would take “stern measures” against South Korea following any changes to a tourism program to the North’s Mount Geumgang, a South Korean project recently accused of funneling hard currency to the communist state.

“Foul attempts are underway in the South by (South Korea’s) Grand National Party to destroy the Mount Geumgang tourism project, which is a symbol of North-South economic cooperation,” said a spokesman for the North’s Korean Asia-Pacific Peace Committee in a statement carried by the country’s Korean Central News Agency.

“We will always treasure the hope and wish of South Korean peoples toward Mount Geumgang, but we make it clear that we would have no choice but to sternly take corresponding measures if an irreversible situation is created by the Grand National Party,” it said.

The statement follows claims by the South Korean opposition party that cash paid to the communist nation in return for the North’s opening of the inter-Korean border to allow South Korean tourists to the mountain could be helping the North’s nuclear and other weapons of mass destruction programs.

The opposition’s claims and demands to halt the inter-Korean project intensified after Pyongyang conducted a nuclear test on Oct. 9, defying all international warnings and appeals.

The U.N. Security Council has adopted a resolution on North Korea that prohibits the transfer of any financial resources or other materials that could benefit the North’s weapons program.

Seoul refuses to shut down cross-border roads to the North Korean mountain and a North Korean border town, Kaesong, where the two Koreas are jointly developing a large-scale industrial complex for South Korean firms.

Hyundai Asan, the South Korean developer of the Mount Geumgang resort, pays an average US$1 million a month to the North Korean committee in admission fees for South Koreans traveling there, while the country’s firms operating at the Kaesong complex are paying about US$600,000 each month in wages to some 8,700 North Koreans working there.

One of the ways, partly proposed by the opposition GNP, to cut currency inflows to the communist nation was to pay the fees and wages in goods, instead of cash.

The North, however, said the idea is not even worth mentioning, saying it is as outdated as it is absurd.

“The Grand National Party, which puts the interests of foreign forces before those of the nation and tries to realize its scheme to take power by violating the nation’s interests, would pay high prices,” the North Korean statement said, adding the country will closely watch South Korea’s move.

From the Korea Times:
10/22/2006
Kim Sue-young

Fines on Mt. Kumgang Tourists Rise

An increasing number of tourists have been fined this year at Mt. Kumgang in North Korea, the Ministry of Unification reported yesterday.

Some 1,177 fines were levied by North Korea from January to July, the highest figure to date with $16,800, being paid to the North’s officials according to the report. (more…)

From the Joong Ang Daily:
10/19/2006
Seo Ji-eun

Hyundai Asan Corp. is facing another tough challenge to its Mount Kumgang tour operation amid mounting pressure to suspend business due to suspicions that it has inadvertantly helped North Korea develop nuclear weapons.

So far the company is still in business, but it may be forced to withdraw.

U.S. Assistant Secretary of State Christopher Hill said on Tuesday that the Mount Kumgang tour “seems to be designed to give money to the North Korean authorities.”

According to Hyundai Asan, North Korea has received up to $457 million since 1999 in return for allowing Mount Kumgang tours.

Experts point out that the reason the United States opposes the tourism business while not objecting to the Kaesong Industrial Complex, also operated by Hyundai Asan, is because the majority of payments from the tour company go directly to the North Korean government. Kim Sung-han, head researcher at the Institute of Foreign Affairs & National Security, said, “The United States views the Kaesong Industrial Complex as acceptable in that the major portion of capital injected into that project consists of labor costs of the North Korean workforces in actual operation there. However, Mount Kumgang is understood as being mainly for the sake of the regime.”

Political critics speculate that U.S. Secretary of State Condoleezza Rice, in a meeting with the President Roh Moo-hyun scheduled for today, may officially request a halt for the program. There is speculation of a second North Korean nuclear test, which would likely increase international sanctions against the North.

Officials at Hyundai Asan are discussing ways to retain the tour business, which accounted for 40 percent of revenue last year. Tourists to the scenic resort in the North have sharply decreased of late, making it hard for Hyundai Asan to achieve its annual goal of 350,000 visitors.

The North Korean business arm of Hyundai Group is mulling the delivery of rice, medicine and fertilizer to sustain cash flow and quell notions that it is aiding North Korea.

An executive from Hyundai Motor Co. said, “We are afraid consumers in the United States might be confused. We have no choice but to explain that Hyundai Motor and Hyundai Asan belong to different groups.”

From the Joong Ang:
Ministry: North got $1 billion since 1998
10/18/2006
Lee Young-jong
Ser Myo-ja

The Unification Ministry yesterday defended itself against accusations that the Roh Moo-hyun administration and its predecessor, that of Kim Dae-jung, were at least partly responsible for giving the North the cash it needed to fund its nuclear weapons programs.

Ministry data released yesterday said that South Korea sent nearly $1 billion in cash to the North from March 1998 until August of this year. The ministry said those payments were in connection with “legitimate economic activities.” Nearly half of that cash flow, it said, was from tourism receipts at North Korea’s Mount Kumgang resort, and almost all the remainder was a $500 million payment by Hyundai Group to North Korea for exclusive rights to run the tours.

When Hyundai Group first began the tour program in 1998, Lim Dong-won, then the Blue House senior secretary for security affairs, ordered the Unification Ministry to devise ways of monitoring the payments to ensure that they were not diverted to military uses. But a Unification Ministry official recently admitted the obvious: “There was and is no way to see how the North spent the money,” he said.

The same is true in the other inter-Korean programs, although the amounts are relatively smaller. Nearly $21 million has been paid to the North in the Kaesong Industrial Complex project, including the wages of 800 North Korean workers there. The few million dollars remaining in the total were payments for South Koreans to attend events such as the annual Arirang Festival.

The ministry’s statement yesterday said the Hyundai payment of $500 million was made in August 2000. In fact, it was made in June, just before the first inter-Korean summit that month, and a special counsel who looked into the then-secret payment described it as an inducement for North Korea to agree to the summit. Seven persons were later convicted of violating Korea’s foreign exchange laws in connection with the matter.

Critics on the right believe the ministry’s estimates are woefully incorrect; the Grand National Party, for example, has put the amount at $8.4 billion over the past eight years.

The ministry also challenged the Grand National Party’s argument that South Korea had spent nearly 2.2 trillion won ($2.3 billion) for a failed light-water reactor project in North Korea.

The ministry said the figure was only about 1.4 trillion won.

It also noted that that project was an international one and had begun under the Kim Young-sam administration in 1994. Only a tiny part of that funding involved cash payments to North Korea, the ministry said.

From Yonhap:
Suspension of inter-Korean business only hurts S. Korea: official
10/13/2006

Suspending South Korea’s joint business projects with North Korea would do more harm to the South than the North while doing little to convince the communist state to halt additional nuclear tests, a ranking South Korean official said Friday.

“Cutting off (inter-Korean economic projects) now would only show our firm will (to retaliate against North Korea for its claimed nuclear test) by inflicting wounds on parts of our own body,” the official told reporters, asking not to be identified.

“The damage North Korea would suffer would be very insignificant compared to the damages we would suffer,” the official added.

The remarks came amid calls from here and abroad for the Seoul government to immediately halt cross-border business projects with the North in retaliation for the North’s claimed nuclear test on Monday.

The main opposition Grand National Party (GNP) claims the country’s economic cooperation for the impoverished North has helped the North’s missile and nuclear weapons program.

“In the current situation, (South Korea) must strengthen its alliance with the United States and actively participate in U.N. Security Council sanctions on the North while cutting off all of its cash assistance to the North,” GNP floor leader Kim Hyong-o said Friday at a party leadership meeting.

An average of 40,000 South Koreans travel to a scenic resort on North Korea’s Mount Geumgang every month, paying about US$1 million in admission fees to the North, according to Hyundai Asan, the South Korean developer of the resort.

Fifteen South Korean companies also pay about $600,000 a month on average to North Korea in wages for the 8,700 North Korean employees at an industrial complex being developed by the two Koreas near the North’s border town of Kaesong, according to the Unification Ministry.

The government official, however, said the government had no immediate plans to scrap the inter-Korean projects, claiming the money paid to the North through the projects is not aimed at assisting the North’s weapons program and that the amount is insignificant.

He said the country would align its North Korea policy and economic cooperation with a U.N. Security Council resolution when one is passed, but claimed a U.S. draft of the resolution, even if approved by the Security Council, would not call for a suspension or reduction of inter-Korean economic cooperation.

“Vice Foreign Minister Yu Myung-hwan said at the National Assembly Thursday that there is nothing in the U.S. draft resolution” that would call for a suspension of the two cross-border projects, the official said.

LA Times:
Helen Sung
10/8/2006

“WHEN I was in North Korea last year …,” I began, over dim sum one recent Sunday afternoon with a professor friend, a sophisticated Manhattanite.

“You’ve been to North Korea?” he interrupted. “Anyone can go,” I told him. “It’s a tour.”

While living in Seoul last year, I learned that a division of the South Korean mega-conglomerate Hyundai has been operating tours to Mt. Kumgang from South Korea since 1998. Considered the most beautiful mountain range on the Korean peninsula, Mt. Kumgang has been immortalized for centuries in poetry, art and song.

Before the Mt. Kumgang tour, South Koreans had been unable to travel north of the demilitarized zone — at least it was legally barred. The DMZ, established in 1953 at the end of the Korean War, sliced Korea in two, leading to the Republic of Korea in the south and the Democratic People’s Republic of Korea, or DPRK, in the north. The 2 1/2 -mile-wide DMZ sealed off the border between the two Koreas. To this day, tensions remain. Just last week, North Korea vowed to go ahead with a nuclear test, to the increasing dismay of world leaders.

But for Americans, to whom North Korea rarely, if ever, grants tourist visas (though it does to other foreigners), the tour offers one way to get inside the Communist country.

“Let’s go!” I said to a South Korean photographer friend and colleague after I learned of the tours.

“No way. It’s just a tourist trap,” he scoffed. “I heard they monitor everything, and you can’t go anywhere on your own. It’s not like you see the real North Korea or meet any regular North Koreans.”

“That’s all part of the charm of going to a totalitarian country,” I said, trying to persuade him. “Don’t you want to see what it’s all about?”

In the end, he did. Who wouldn’t want to peek inside one of the most politically isolated countries in the world?

*

Papers in order

TO go on the trip, we filled out simple registration forms and submitted copies of our passports and photographs to the tour agency. A couple of days later, our reservations were confirmed, and we submitted payment in South Korean won, equivalent to about $350 per person for the two-night, three-day trip. (For visa information, contact North Korea’s United Nations office, [212] 972-3105.)

On a wintry February morning, we assembled at a meeting point 100 miles northeast of Seoul and received identification cards that we were to wear at all times.

Mobile phones, high-powered camera lenses and South Korean magazines were among the items not allowed into North Korea. The tour included journalists (two Germans and a South Korean), the photographer I was traveling with and about 100 South Korean tourists.

Some of the tourists came to sightsee, but I suspect more came for the opportunity to set foot on northern soil.

We drove through the DMZ — the idea of it turned out to be more thrilling than the actual act — escorted by South Korean military. We passed vast dirt fields marked by occasional shrubs, trees and tunnels. Our tour guide warned us not to take any pictures.

At the military demarcation line our tour bus stopped. Two North Korean soldiers boarded. As one soldier stood guard at the front of the bus, the other strolled down the aisle, counting heads as he went. Once the soldiers left the bus, we were allowed to continue.

Whereas the south was highly industrialized and modern, the north looked like the land that time forgot. Civilians were walking, riding bicycles and pushing wheelbarrows. Other than the occasional military truck, there were no vehicles. Tattered pieces of cloth covered cracked and broken windows in abandoned-looking houses with worn roofs and crumbling tiles.

I saw the first of many carvings that marred the smooth surfaces of towering mountains in and around Mt. Kumgang. Etched in large Korean and Chinese characters, the signs touted the leadership of former Chairman Kim Il-Sung and current leader Kim Jong II.

Once at the mountain resort, we lined up to clear immigration. The North Korean official gave my American passport and Korean face a quizzical look. Maybe he had never met a Korean American.

“How safe is the tour?” I asked Young Sil Jung, a Hyundai Asan tour guide.

“It’s very safe,” she said. “It’s like South Korea.”

Indeed. It felt more like I was at a South Korean resort — maybe because I essentially was.

Hyundai Asan had developed a resort consisting of a hotel (a second has since opened), cozy wooden cabins, a hot springs spa and a rest area where frenetic South Korean pop music blared from loudspeakers in the parking lot.

There was a Family Mart (a South Korean chain of convenience stores akin to 7-Eleven). A sprawling shop sold North Korean souvenirs, the most popular being whiskey (purportedly made from snakes) and cigarettes “made in D.P.R.K.”

There was even a Hyundai duty-free shop selling Ferragamo, Chanel and Prada, among other luxury brands. At the restaurant, an all-you-can-eat buffet featured warming pans piled high with seasoned beef, shrimp, sautéed vegetables and tofu, noodles and steamed rice.

There was no hint that we were in one of the poorest, most oppressed countries in the world, and the scene in the hotel lobby, where a Filipino band sang American pop songs, bumped us into the realm of the surreal.

*

Trail ‘guides’

AS we headed out the next morning for our first day of hiking, our tour guide warned us not to take unauthorized photos, especially of North Korean guides, who were more like minders who kept close watch over us. Male and female guides monitored the trails to ensure tourists did not litter or show disrespect to the many monuments to father and son.

As I walked along Guryongyeon trail, an easy hike over gently ascending terrain, the North Korean guides chatted amiably with the South Koreans. I met a 68-year-old South Korean man, just a boy when Korea was divided, who had wanted his whole life to see the beauty of Mt. Kumgang. When I asked him how he felt, he replied, “There are no words.”

I could see what he meant. Mt. Kumgang was impressive with its great, hulking mountains and tall, craggy peaks. At Bibong Falls, South Korean ice climbers looked like ants scaling a towering waterfall that had been transformed into a wall of sheer ice.

At the bottom of the mountain, North Koreans sold roasted potatoes and fermented rice wine to the tourists for $1 each, accepting only American dollars. “They know the smell of money now,” said Ha Jung Byun, a senior manager with Hyundai Asan.

North Koreans were selling more local products at nearby Samilpo Lake. In a large, windowed room overlooking the frozen lake, women sold steamed mussels and potato pancakes, as well as North Korean calendars and cigarettes.

The next day, we hiked Manmulsang trail, known for its thousands of interesting rock formations. It’s a rigorous hike but worth it. The scope of the surrounding rugged peaks and the steep gorges and valleys were magnificent.

At the base of the trail, I met a director of the North Korean guides. He peppered me with questions about American politics and criticized the United States, saying that the “imperialist country” needed to stay out of North-South Korea relations.

I was curious how he felt about American tourists. He replied that he welcomed Americans and all foreigners to come view the beauty of Mt. Kumgang and meet North Koreans. On the way back, the Hyundai Asan guide pointed out dirt fields where the company planned to build a beach resort and golf course. Why anyone would want to go on the tour to North Korea to lie on a man-made beach or play golf was beyond me. The real merit of this tour was the sliver of Communist life I had seen on the way to the mountain resort and meeting some real North Koreans.

GETTING THERE:

From LAX, Korean Airways and Asiana offer nonstop service to Seoul. All Nippon Airways, Northwest, JAL and United offer connecting service (change of planes). Restricted round-trip fares begin at $939.

The meeting point for the tour is at a hotel called Kumgangsan Condo, about 100 miles northeast of Seoul. Round-trip charter bus service from Seoul is available to the meeting spot for $30. The bus trip takes about four hours.

TELEPHONES:

To call the South Korean numbers listed below from the U.S., dial 011 (the international dialing code) and 82 (country code for South Korea), followed by the number.

WHERE TO STAY:

JW Marriott Hotel Seoul, 19-3, Banpo-dong, Seocho-gu, Seoul; (888) 236-2427, http://www.marriott.com . An upscale, luxury hotel in central Seoul near shopping and business districts. Doubles begin at about $225.

Ibis Seoul, 893-1, Daechi-dong, Gangnam-gu, Seoul; 2-3011-8888; http://www.ambatel.com . A new hotel offering simple yet good-quality accommodations for the budget-conscious traveler. Doubles begin at $90.

BEFORE YOU GO:

To go on the Mt. Kumgang tour, visitors must register with a travel agency and provide the requisite documentation at least 10 days before the desired departure date. In Los Angeles, Smile Tour, (213) 365-2100, provides booking and other tour information. Hyundai Asan also provides information in English; call 2-3669-3691.

TOUR PRICES:

Hyundai Asan offers two-night, three-day packages starting at $290 (all prices are per person based on double occupancy), depending on the season and level of accommodations. The price includes lodging, breakfast, entrance and departure immigration fees, and hiking-related fees. Shorter trips are also available.

TO LEARN MORE:

Korea National Tourism Organization, (800) 868-7567 or (323) 634-0280, http://www.tour2korea.com .