North Korean Economy Watch

Joong Ang Daily
10/5/2007
Moon Gwang-lip

A raft of economic deals, including easing restrictions for South Korean companies hoping to invest on the western part of North Korea, new rail lines and more effective cooperation between the two countries filled yesterday’s agreement.

President Roh Moo-hyun and his North Korean counterpart Kim Jong-il agreed to accelerate the expansion of the Kaesong Industrial Complex in the North Korean border city.

Some economists and businesspeople in the South hailed the accord as a possible initial step toward developing the entire western section of North Korea.

Lim Soo-ho, a researcher at Samsung Economic Research Institute, said the agreement will provide a driving force for the two Koreas to produce “substantial” economic exchanges.

“The agreement to upgrade the dialogue channel for economic cooperation shows the North’s willingness to push forward with wider inter-Korean economic exchanges,” Lim said.

In the joint declaration made yesterday on the final day of Roh’s three-day visit to Pyongyang, the two Koreas agreed to upgrade the Inter-Korean Economic Cooperation Promotion Committee, the discussion channel between the two nations, from a vice minister-level group to a minister-level group.

Lim said the North’s willingness to make deals “has already been shown by its agreement to improve the ‘three-tong.’ ”

Three-tong refers to the poor conditions of passage (tonghaeng in Korean), communication (tongsin) and customs clearance procedures (tonggwan), which have been singled out as the biggest hurdles for the North in attracting outside investment into the Kaesong Complex, where more than 20 South Korean firms employ about 15,000 North Korean workers.

In the agreement, the two leaders agreed to “promptly complete various institutional measures” to tackle those areas.”

Currently, entry to the Kaesong Industrial Complex is only granted several days after it is requested. Cell phones and the Internet are not available in the area due to a lack of facilities. It also takes considerable time to clear customs.

In other accords, the two Koreas agreed on development projects in west coast areas of the North, including the establishment of cooperative complexes for shipbuilding in Anbyon and Nampo.

In addition, they agreed to create a “special peace and cooperation zone in the West Sea” encompassing Haeju. Civilian ships from North and South Korea will be allowed to pass through the Northern Limit Line, the de facto sea border between the two countries.

It was also agreed that freight rail services would be opened between Munsan and Bongdong.

“The agreements may be seen as the North preparing to develop its whole west coast region as an extension of the Kaesong Complex,” Lim said. “That is a positive sign for businesses interested in investing in the North.”

Business groups in the South welcomed the agreements, calling them substantial.

“I believe the inter-Korean summit this time will relieve businesses, at home and abroad, of concerns over uncertainty regarding investment in North Korea and encourage them to extend their investment in inter-Korean economic cooperation,” Yoon Man-joon, CEO of Hyundai Asan, which has exclusive rights to South Korean tourism to the North, was quoted as saying by Yonhap.

In a visit to Kaesong Industrial Complex last night, Roh said he won’t take political advantage of the new economic opportunities.

“The Kaesong Industrial Complex is a place where the two Koreas will become one and share in a joint success, not to make the other party more reformed and accessible,” Roh said. “We will work hard to make workers more comfortable working here. I wouldn’t call it reform or openness.”

He said reform and openness is considered good in the South.

The government said it is still too early to hazard a guess about the cost of putting the new plans into action.

“We cannot figure out yet how much money is needed to implement the new agreement,” said an official of the Ministry of Budget and Planning, who refused to be identified. “But we guess a lot of money is not needed for next year, as it is just a preparation period.”

Still, the government has earmarked 1.3 trillion won ($1.4 billion) for next year’s inter-Korean economic cooperation projects.  Of that, 900 billion won has been set for use by the government, with 430 billion won available to businesses involved in implementing the new agreement.

Joong Ang Daily
Ser Myo-ja and Chung Ki-hwan
10/5/2007
The Northern Limit Line remains in place, but vessels from both North and South Korea will be allowed to cross the “special peace and cooperation zone” in the Yellow Sea, according to yesterday’s agreement.

The deal for a joint fishing zone along the maritime border between the two Koreas angered South Korean fisherman and conservatives.

“We oppose the plan,” said Kim Jae-sik, a 46-year-old fisherman representing Yeonpyeong Island in the Yellow Sea near the border. “We will lose our fishing sources when large ships from the two Koreas flock to the area.”

The joint fishing zone is intended to avoid accidental military clashes, the two leaders said. The top defense officials from the two countries will meet in Pyongyang next month to discuss military measures, including safety guarantees inside the zone.

The inter-Korean deal also agreed to open a direct maritime route in the Yellow Sea to allow travel by Korean civilian vessels. The North’s Haeju Harbor will open for that purpose. The deal did not mention the limit line.

South Korean conservatives said they are concerned that the South has yielded to the North’s longtime challenge to the de facto maritime border.

Grand National Party Chairman Kang Jae-sup said, “I am concerned that the plan for establishing a joint fishing zone and the peace waters is a shortcut to incapacitating the Northern Limit Line.”

The Korea Veterans Association also issued a statement in opposition. “The North has initiated two sea battles so far to disable the line,” the association said. “Without a national consensus, no agreement should be made at the defense ministers’ talks next month regarding NLL.”

North Korea has never agreed to the limit line, which was established by a a United Nations commander in 1953. In 1999, the two Koreas’ navies clashed in a battle after the North crossed the line. Another sea skirmish took place in 2002 with the loss of six South Korean soldiers.

Experts also expressed concern that the military border was pushed aside in the name of economic cooperation. “Building the peace zone in the Yellow Sea and allowing the North’s civilian vessels to directly travel in the western waters on the Haeju route have provided an opening for the North to nullify the Northern Limit Line,” said Yoo Ho-yeol, a North Korean studies professor at Korea University.

Ahn Byung-min, a North Korea expert at the Korea Transport Institute, pointed to the economic gains for the direct sea route. “Inter-Korean maritime shipments have had to detour until now, but the direct route will save a lot of time and logistics costs,” Ahn said. “In terms of the economy, it is a very constructive agreement.”

Fishermen at the northern-most Baeknyong Island worried their movements will still be restricted while North Koreans freely come down to catch fish. “Since the 1970s, the North Koreans frequently violated the border and operated in the southern area,” said Choi Jong-nam, a Baeknyong fisherman. “What if things do not change for us?”

Yonhap
10/5/2007

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.

Korea Times
10/5/2007

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.

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

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

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.

Daily NK
Kwon Jeong Hyun
9/28/2007

With the 2nd Inter-Korea Summit Talks coming up in five days in Pyongyang, the North Korean authorities have officially begun regulations of civilian migrations.

An inside source in North Korea said in a phone conversation on the 27th, “Control of civilians have become significantly toughened due to events of national importance, so the top (government) has completely limited travel permit approval numbers of average civilians to Pyongyang and the border regions.”

People’s Units’ chairs are in the midst of temporarily working on a reporting system which analyzes the data of civilian migrations and daily reports them to the security office.

North Korea still requires travel permits for moves to other regions from the place of residence. The inspection of permits becomes even more difficult when public transportation such as rails are used.

In particular, entry into Pyongyang, Yongbyun (nuclear power plants), Hwadaegun (Musoodan rocket launching site), and the northern border unit requires special travel permissions that are different from normal permits. For these special regions, an approval number, which signifies “special business,” is needed.

After the March of Tribulation, incidents of the Safety Agents issuing travel permits after receiving bribes were rampant, but recently, the regulation of such permits and travel restrictions on special regions have become more stringent. Restrictions on the issue of travel permits have significantly increased since the Local People’s Assembly representative elections on July 29th.

The source said, “After Chuseok (fall holiday), the order restricting the issue of all border and Pyongyang-related permits was announced at the People’s Unit meeting. With the Summit talks several days ahead, meetings of key leaders have all been cancelled and all entry and exit prohibited.”

Further, he said, “The northern border region or other controlled areas are not exceptions. Money will not do anything when trying to attain travel permits. Due to the fact that the issue of permits, with the exception of deceased reports, has been completely disallowed in surrounding cities of Pyongyang, such as Pyongsung or Nampo, the discontents of merchants who are dependent on travelling are high.”

With restrictions on civilian migrations, the price of commodities at the Jangmadang (market) has also been raised. Chinese products have to be brought back from the North Korean-Chinese border region, but because travel permits have not been issued, the transport of goods is difficult.

For industrial products, if the border region lowers the price, then prices go up in inland regions such as Kangwong, South and North Hamkyung, etc., because Chinese products coming in from border cities Shinuiju and Hyesan, Yangkang are not able to move inland. The inland is the opposite. However, the amount of rice coming in from inland regions is high, so their prices end up hiking up.”

However, the source said, “This time, the management will probably end at one-time inspection because the South Korean President is visiting. The jangmadang price levels will not skyrocket.”

Regulations regarding private visits of Chinese through Chinese travel agencies have not occurred yet.

It appears that the North Korean authorities, in order to prevent accidents and events which could happen around the Summit talk period, have strengthened preventative means.

One source who is residing in Musan, North Hamkyung, said, “In order to ensure the success of national events, lectures for leaders, with the content of hindering behind-the-scenes maneuvering of enemies and accidents and events on a timely basis, are taking place. Strict disciplinary actions for those who divulge national secrets and illegal use of cell phone are being emphasized.”

The source relayed, “Border guards are telling smugglers, ‘Wait just a few more days. After the national event (the Summit Talks), regulations will be relaxed. The situation nowadays is that smuggling is self-restrained.”

Yonhap
9/24/2007

Heavy rains caused by last week’s typhoon have destroyed some 107,910 hectares of crop field in North Korea, the country’s state media reported Monday.

Many parts of southwestern North Korea, including its capital Pyongyang, were flooded, leaving at least 14,000 homes and 8,000 buildings submerged or damaged from rains spawned by Typhoon Wipha, the North’s official Korean Central News Agency (KCNA) said. However, it didn’t report on possible human casualties.

Last month, North Korea was hit by its heaviest rainfall in 40 years, leaving some 600 people dead or missing and about 100,000 people homeless.

“Many parts of road destroyed in August were repaired in a short time, but some 90 bridges and roads were buried or destroyed again by heavy rains last week,” KCNA said.

In the southwestern part of North Korea such as South Hwanghae, North Hwanghae, South Pyongan provinces and Pyongyang, the total rain from Sept. 18-21 averaged between 250 millimeters and 470 millimeters, KCNA reported.

The floods in August damaged some 200,000 hectares of farmland in North Korea, according to KCNA report on Aug. 26.

The DPRK pulled a “Ross Perot” with the Arirang Mass Games this year. 

After initially announcing that severe flooding would not interrupt the performance (as it had in 2006) the games were in fact cancelled because much of the population was mobilized for infrastructure repairs.

Well, I guess things are manageable again, at least in Pyongynag, because the Mass Games are back on.  According to Koryo Tours:

September 6th IMPORTANT UPDATE: We have just been informed that the mass games, which were suspended due to the flooding, will be back on from September 17th. All tours going to DPRK between then and October 10th will be able to see the games.

UPDATE:
N. Korea to resume ‘Arirang’ mass gymnastic performance
Yonhap
9/23/2007

North Korea will resume its annual large-scale artistic performance that was suspended last month due to damages from heavy rain, the country’s official media reported Sunday.

“The Arirang Festival will continue … amid strong interest at home and abroad,” the North’s Korea Central Television Station reported.

The first part of this year’s show was held between mid-May and May 20, and ran every day except Sundays for about 80 minutes starting at 8 p.m. The second part, which was to run from Aug. 1 to mid-October, was suspended last last month due to flood recovery efforts by many North Koreans.

In the show, some 100,000 people perform synchronized acrobatics on the field while various images are displayed in the stands. From outside North Korea, the festival is largely considered a propaganda show.

Pyongyang is eager to show off the country’s unity and its tight control over its 23 million people to the outside world amid chronic economic hardships and the standoff over its nuclear weapons program.

The resumption was at least partially expected, as South Korean officials announced earlier this week that they are pushing for the leaders of the two Koreas, Roh Moo-hyun and Kim Jong-il, to sit side-by-side to watch the performance on Aug. 2, during South Korean President Roh’s scheduled visit to the North early next month.

Devastating floods are believed to have destroyed 11 percent of the North’s farmland, and the number of dead and missing is estimated to be more than 300, with the homeless numbering about 300,000. An estimated 46,580 homes of 88,400 families were destroyed or damaged, according to the North’s media.

This year’s performance carries special significance for North Korea, as it celebrates the 95th anniversary of the birth of its founding leader, Kim Il-sung, who died of heart failure in 1994. This year also marks the 62nd anniversary of Korea’s liberation from Japan’s colonial rule and the founding of the North’s ruling Workers’ Party.

Past Stories below:

(more…)

Daily NK
Kim Chan Ku
Institute for Far Eastern Studies
9/19/2007

(UPDATE: On Oct. 23, [2008] the State Department blacklisted two North Korean companies, Korea Mining Development Corp. and Korea Taesong Trading Co., for violating U.S. bans on the sale of equipment used in building missiles or other weapons of mass destruction to Iran and Syria. Citation: “North Korean Plane Was Grounded at U.S. Request “, Wall Street Journal, Jay Solomon, 11/1/2008 )

Kimchaek boasts one of the largest steel factories and fishing ports in North Korea especially that of Daesung General Company’s east coast headquarters.

However, at once-famous seaport everything including ship, freezer, packing factory was obsolete and rust. Most of the Soviet-built machines in factories were at least 20 to 30 years old. And there were neither enough spare parts to fix machinery nor job orders, so the factories had stood still for a long time.

I consulted with local North Korean officials in Kimchaek and reached an agreement: ship repair dock will be built in Kimchaek, steel products necessary for building floating dock would be Daesung General Company’s responsibility, and other issues concerning building land factory and management of joint-stock company would be decided in Pyongyang.

Also we finished negotiation over fish export and Pollack fishing by trawler. Thus basic problems were solved.

I came back to Pyongyang on September 30. And another businessperson, Mr. Kim Sung Chan of Pamco Trading, told me his will to invest fifty percent of the capital.

All of sudden, Daesung General Company notified us that among our previous agreements, only the site of repair dock was decided and asked us to wait, promising final decision would delivered in one month.

To start first phase of building factories, it was most critical to have steel products ordered from state. We believed the promise from the North (to take responsibility of providing iron plates) and returned to America.  However, after two month had passed, there was no news from Pyongyang. Curious, I called back and was told to visit North Korea as soon as possible.

On December 9, 1989 I arrived at Sun An International Airport. In Pyongyang, vice president of Daesung General Company (president was absent, traveling abroad) said “we asked the state for iron plates, but production plan was omitted in 1990 fiscal year so one more year of waiting is inevitable, or send us steel plates.”

In other words, our business plan was totally embarrassed and we had to make a new one.  Again, I conferred with Mr. Kim and found out a solution, which was to buy a used floating dock from an American port. There was a fifty-year old used floating dock in Miami, Florida that we were able to buy. If repaired, it seemed available for another twenty years.

Finally, two obstacles had our plan failed. Firstly, it was supposed take at least three month and five hundred thousands US dollars (twice the price of dock) to convey the floating dock by sea. Secondly, (and more fundamental problem) the US government would not permit to sell the dock to North Korea. We were not even possible to transport the dock to Hong Kong and then to North Korea.

Because acquisition of required steel plate for floating dock was failed ultimately, the daring business had gone nowhere. Wasted much money and more than a year of time, I was so depressed at that time[.]