Inter-Korean Projects Gasping for Air

Korea Times
Kim Yon-se

Hyundai Group is struggling to normalize its inter-Korean businesses, including tours to Mt. Kumgang and operation of the Kaesong Industrial Complex in North Korea.

Due mainly to North Korea’s nuclear test last October, the number of South Korean tourists to Mt. Kumgang stood at less than 250,000 this year, falling short of the group’s initial goal of 400,000.

The figure is smaller than 301,822 posted in 2005 and 272,820 posted in 2004.

Furthermore, Hyundai Asan, the tourism unit of the group, had to conduct manpower restructuring and delayed monthly payments to some employees amid worsened profitability this year.

The Mt. Kumgang tours accounts for about 70 percent of the total sales of Hyundai Asan and the company expects it will manage to avoid seeing operating losses, compared with operating profits of 5.6 billion won last year.

Amid political factors, such as complaints from the United States about the inter-Korean business, company officials are concerned that Hyundai Asan is facing another deficit.

It reported operating losses of 10 billion won or more per annum over the past few years _ 29.04 billion in losses in 2001, 38.54 billion won in 2002, 57.34 billion won in 2003 and 10 billion won in 2004.

Regarding the Kaesong Industrial Complex, the U.S. had speculated that payments to North Korean employees there are flowing into military funds to produce weapons. But the allegations have been said to be groundless after the Ministry of Unification made public relevant documents.

A major difficulty is that the South’s conglomerates including Samsung have little willingness to invest in the complex amid the growing uncertainties.

Expressing anxiety over external and internal difficulties, a Hyundai Group official said, “We don’t care about interference from the U.S. The development of inter-Korean businesses and relations are assignments for Koreans in the South and North. No group except us will do that.’’

In the free trade agreement (FTA) talks between South Korea and the U.S., the latter said it will not regard goods from Kaesong as free trade deal items.


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