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N. Korea Picks Hyundai as Partner for Kaesong Tour-Not

Wednesday, January 24th, 2007

Well it seems that reports of the deal were premature–Hyundai Asan is not a shoe in. the updated report is below. The original story in the Korea Times is posted belw it.

N.K. denies report it will keep Hyundai Asan as partnerfor Kaesong tour
Yonhap
1/24/2007

North Korea on Wednesday denied reports that it withdrew plans to change its partner for tours of Kaesong, a border town, and collaborate with Hyundai Asan Corp., the operator of tours to the North’s Mount Geumgang, the North’s official media reported.

According to the Korean Central News Agency, a spokesman for the Korean Asia-Pacific Peace Committee (KAPPC) said it “has no formal agreement with the Hyundai side over the issue of tour of Kaesong and, moreover, there was no agreement with the latter in this regard in recent days.”

“The KAPPC’s stand (on the Kaesong tour project) is consistent and it feels no need to examine or consider any change,” it added.

Korea Times
1/21/2007
Lee Jin-woo

North Korea has hinted that it is willing to start the long-delayed Kaesong tourism project with Hyundai Asan instead of Lotte, a Unification Ministry official said on Sunday.

“When former Unification Minister Lee Jong-seok visited the Kaesong industrial complex on Dec. 8, North Korean officials said they have finalized their decision to carry out the project with Hyundai,” said the official on condition of anonymity due to the sensitivity of the issue.

The former minister stepped down from the post on Dec. 11. His successor, Lee Jae-joung, has not made any specific comment on the issue.

The official also said North Korea’s Asia Pacific Peace Committee has given a positive signal to Hyundai Asan Chairman Yoon Man-jun during Yoon’s visit to a joint inter-Korean tourist site at Mt. Kumgang in North Korea.

Pyongyang has not issued any official document to confirm the verbal promise of the committee, according to the ministry and Hyundai.

Pyongyang has asked Seoul several times to accept Lotte Tour, a subsidiary of Lotte Group, in place of Hyundai Asan, the North Korea-related business arm of Hyundai Group.

The South Korean government, however, has rejected the request, saying, “The contract signed between the North and Hyundai is still effective and legally binding unless the two sides agree to nullify the deal.”

On June 30, the former unification minister met with Lotte Tour Chairman Kim Ki-byung, asking the chairman not to get involved in the inter-Korean business.

Experts said the North and Hyundai are expected to have a tug-of-war over the Stalinist state’s request for a payment of $150 per tourist to Kaesong, the capital of the Koryo Kingdom (918-1392).

Pyongyang has set the higher admission fee, nearly 20 times more than the $20 Hyundai pays to North Korea for every South Korean traveler to Mt. Kumgang. Hyundai has claimed the demand is outrageous.

Since July 1, the North has banned South Korean visitors to the Kaesong inter-Korean 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 Kaesong during their visit to the industrial complex.

The Stalinist state also stirred much controversy by signing an overlapping contract with a small South Korean company, Unico, in 2005 despite its initial contract with Hyundai Asan to develop golf courses at the Kaesong Industrial Complex.

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

Hyundai plans to develop a total of 66 million square meters of land by 2012, including information-technology complexes and residential districts at the industrial complex. The project commenced at an historic inter-Korean summit in June 2000.

Posted in Asia-Pacific Peace Committee, Kaesong Industrial Complex (KIC), Mt. Kumgang Tourist Special Zone, Special Economic Zones (Established before 2013), Tourism | Comments Closed

A dismal year at Kumgang, but tour firm still hopeful

Tuesday, January 23rd, 2007

Joong Ang Daily
Seo Ji-eun
1/22/2007

Last year was a nightmare for Hyundai Asan Co., the sole domestic operator of inter-Korean businesses. But the Hyundai Group affiliate sees brighter days ahead for its tourism program at Mount Kumgang, a scenic North Korean resort, this year, and is stepping up marketing efforts.

Earlier this month the company launched a radio ad campaign featuring a decades-old Korean children¡’s song including the lyric, “Let¡’s go to Mount Kumgang.” The commercial does not identify Hyundai Asan as the tour operator, and Hyundai Asan said the broadcast was aimed at promoting the destination among tourists.

The company is also offering discounts of 25 percent for people born in the year of pig, which falls this year and every 12th year, and students who took college entrance exams late last year. One parent per student can also receive the discount, which will last until late next month.

Perhaps helped by those events, a Hyundai Asan spokesman said the number of reservations for January has passed 10,000, which is around the monthly average.

“When tour programs to the inner part of Mount Kumgang launch this spring and the golf resort opens in October after starting trials in June,” the spokesman said, “we definitely expect more tourists unless unexpected political factors erupt.”

Hyundai Asan earlier in the month said it aims to attract 400,000 tourists to the North Korean mountain this year. It set the same goal last year but fell far short with 240,000 tourists when reservations plummeted after North Korea’s missile launch in July, severe floods during the summer and the North¡’s nuclear test in October. Immediately after the nuke test, 65 percent of customers began to cancel their reservations, and a large portion of travelers who would have crowded the resort to see the autumn foliage didn’t come.

More than 300,000 people, a record-breaking figure, visited Mount Kumgang in 2005.

Meanwhile, a government source close to North Korea said yesterday that North Korea would start a tourism project at Kaesong, a joint inter-Korean business site in the North, with Hyundai Asan instead of Lotte Tours, the company North Korea wanted to work with instead. Neither the Unification Ministry nor Hyundai Asan released an official statement regarding that issue.

Posted in Mt. Kumgang Tourist Special Zone, Tourism | Comments Closed

N. Korea to focus on inter-Korean economic projects in 2007: think tank

Monday, January 22nd, 2007

Yonhap
1/22/2007

North Korea will put strong emphasis on inter-Korean economic projects this year as the communist state insinuated that it is suffering from economic difficulties, a state-run think tank said Monday.

In its new year commentary, Pyongyang partially admitted that its economy is in bad shape and said its highest priority for 2007 is boosting the sagging economy, the Korea Development Institute (KDI) said in a report.

“Unlike in previous years, when the North placed political ideology, the military and the economic sector, in that order, as its three key areas of importance, North Korea set the economic sector ahead of those two other sectors in the commentary this year,” the KDI said.

“The North also skipped over commenting on a series of economic achievements, except for saying that it has secured a foothold for a new leap. … In addition, it said that it has gone through the ‘worst adverse situation’ in the past 10 years, showing that the economy was still suffering from difficulty in 2006.”

To boost the economy, the North may actively push for inter-Korean economic projects and depend on the South for increased economic support as its economic cooperation with other nations such as the United States and Japan has come to a near halt, the institute said.

In the commentary, the North also used a slogan, “put an importance on the Korean people,” a comment indicating increased inter-Korean cooperation, the KDI said.

Every Jan. 1, the communist nation releases its new year commentary on three state dailies, including the Rodong Sinmun, one of the only sources of information on the country’s economic policy plans.

Under the title, “Create a prosperous era of the Songun (military-first) Choseon,” the North urged its people to make concerted efforts to solve the economic problems in 2007 and make the country an economic power as a socialist nation.

According to many analysts, the North’s annual economic growth may have fallen below 1 percent last year, down from an estimated 1 percent growth in 2005 and 2.2 percent in 2004. A variety of global economic sanctions against Pyongyang could have contributed to the slower growth in 2006, the institute said.

Posted in Economic reform, Foreign direct investment, Songun, South Korea, Special Economic Zones (Established before 2013) | Comments Closed

China allows tour of Mt. Geumgang via S. Korea

Monday, January 22nd, 2007

Yonhap
1/22/2007

China has issued a permit to allow its citizens to take a tour of the North Korean Mount Geumgang, via South Korea, tourism officials said Monday.

Hyundai Asan Corp., the operator of the tourism business at the scenic mountain, signed an exclusive contract with a travel agency affiliated with China’s communist youth organ, they said.

Posted in China, Mt. Kumgang Tourist Special Zone, South Korea, Tourism | Comments Closed

DPRK scores last place in economic freedom (again)

Tuesday, January 16th, 2007

Heritage 2007 Index of Economic Freedom

North Korea’s economy is 3% free, according to our 2007 assessment, which makes it the world’s least free economy, or 157th out of 157 countries. North Korea is ranked 30th out of 30 countries in the Asia–Pacific region, and its overall score is the lowest in the world.

North Korea does not score well in a single area of economic freedom, although it does score 10 percent in investment freedom and property rights. The opening of the Kaesong industrial venture in cooperation with South Korea has been a start in foreign investment.

Business freedom, investment freedom, trade freedom, financial freedom, freedom from corruption, and labor freedom are nonexistent. All aspects of business operations are totally controlled and dominated by the government. Normal foreign trade is almost zero. No courts are independent of political interference, and private property (particularly land) is strictly regulated by the state. Corruption is virtually immeasurable and, in the case of North Korea, hard to distinguish from necessity. Much of North Korea’s economy cannot be measured, and world bodies like the International Monetary Fund and World Bank are not permitted to gather information. Our policy is to give countries low marks for specific freedoms when it is country policy to restrict measurement of those freedoms.

Background:
The Democratic People’s Republic of Korea has maintained its Communist system since its founding in 1948. A serious economic decline began in the early 1990s with the end of economic support from the Soviet Union and other Communist-bloc countries, including China. Floods and droughts all but destroyed the agricultural infrastructure and led to severe famine and dislocation of the population during the 1990s. South Korean and Chinese investments in the economy have alleviated dire conditions. The government continues to rely on counterfeiting foreign currency and sales of missiles for money. That and the nuclear ambitions and isolationism of Kim Jong Il reinforce North Korea’s status as the hermit kingdom.

Business Freedom – 0.0%
The state regulates the economy heavily through central planning. The economic reforms implemented in 2002 allegedly brought some changes at the enterprise and industrial level, but government regulations make the creation of any entrepreneurial activities virtually impossible. The overall freedom to start, operate, and close a business is extremely restricted by the national regulatory environment.

Trade Freedom – 0.0%
The government controls all imports and exports, and formal trade is minimal. Data on North Korean trade are limited and compiled from trading partners’ statistics. Most North Korean trade is de facto aid, mainly from North Korea’s two main trading partners, China and South Korea. Non-tariff barriers are significant. Inter-Korean trade remains constrained in scope by North Korea’s difficulties with implementing needed reform. Given the lack of necessary tariff data, a score of zero is assigned.

Fiscal Freedom – 0.0%
No data on income or corporate tax rates are available. Given the absence of published official macroeconomic data, such figures as are available with respect to North Korea’s government expenditures are highly suspect and outdated.

Freedom from Government – 0.0%
The government owns all property and sets production levels for most products, and state-owned industries account for nearly all GDP. The state directs all significant economic activity. The government implemented limited economic reforms, such as changes in foreign investment codes and restructuring in industry and management, in 2002.

Monetary Freedom – 0.0%
In July 2002, North Korea introduced price and wage reforms that consisted of reducing government subsidies and telling producers to charge prices that more closely reflect costs. However, without matching supply-side measures to boost output, the result of these measures has been rampant inflation for many staple goods. With the ongoing crisis in agriculture, the government has banned sales of grain at markets and returned to a rationing system. Given the lack of necessary inflation data, a score of zero is assigned.

Investment Freedom – 10.0%
North Korea does not welcome foreign investment. One attempt to open the economy to foreigners was its first special economic zone, located at Rajin-Sonbong in the northeast. However, Rajin-Sonbong is remote and still lacks basic infrastructure. Wage rates in the special zone are unrealistically high, as the state controls the labor supply and insists on taking its share. More recent special zones at Mt. Kumgang and Kaesong are more enticing. Aside from these few economic zones where investment is approved on a case-by-case basis, foreign investment is prohibited.

Financial Freedom – 0.0%
North Korea is a Communist command economy and lacks a private financial sector. The central bank also serves as a commercial bank with a network of local branches. The government provides most funding for industries and takes a percentage from enterprises. There is an increasing preference for foreign currency. Foreign aid agencies have set up microcredit schemes to lend to farmers and small businesses. A rumored overhaul of the financial system to permit firms to borrow from banks has not materialized. Because of debts dating back to the 1970s, most foreign banks will not consider entering North Korea. A South Korean bank has opened a branch in the Kaesong zone. The state holds a monopoly on insurance, and there are no equity markets.

Property Rights – 10.0%
Property rights are not guaranteed in North Korea. Almost all property belongs to the state, and the judiciary is not independent.

Freedom from Corruption – 10.0%
North Korea’s informal market is immense, especially in agricultural goods, as a result of famines and oppressive government policies. There is also an active informal market in currency and in trade with China.

Labor Freedom – 0.0%
The government controls and determines all wages. Since the 2002 economic reforms, factory managers have had more autonomy to set wages and offer incentives, but the labor market still operates under highly restrictive employment regulations that seriously hinder employment and productivity growth.

Posted in 2002 Economic reforms, Agriculture, Arms shipment, Banking, Central Bank, Counterfeiting, Economic reform, Finance, Fiscal & monetary policy, Foreign direct investment, Illicit activities, Insurance, International trade, Kaesong Industrial Complex (KIC), Mt. Kumgang Tourist Special Zone, Price liberalization, Private property, Rason Economic and Trade Zone (Rajin-Sonbong) | Comments Closed

Buddhism in North Korea

Monday, January 15th, 2007

Korea times
Andrei Lankov
1/15/2007

Some time in the late 1940s, a young Russian journalist made a tour of the Mt. Kumgang, accompanied by a local official. The numerous Buddhist temples scattered in the valleys attracted his attention, but the official assured the Soviet visitor: “Do not worry, we will take care of them. We will close most of them, and will find a good use for others _ like, say, resorts for the working masses.”

It is difficult to say what the journalist felt back then, but when he recalled this episode in the early 1980s in his memories, his disdain was palpable. But this is indeed what happened to many _ indeed, most _ Buddhist temples in North Korea.

For decades, the North Korean state was almost unique in its hostility to all forms of religion. Indeed, few if any Communist states ever came close to proclaiming and enforcing a complete ban on all kinds of religious activity _ aside from North Korea, such a ban existed only in Albania, another ultra-Stalinist state (Pol Pot introduced the same policy in his infamous “Democratic Kampuchea,” but he did not stay in power long enough).

In the late 1980s, a very limited amount of religious activity came to be tolerated, but for some 25 years, between 1960 and 1985, North Korea had neither temples nor officially recognized religious groups.

However, if all religions are bad for the North Korean authorities, not all of them are equally bad. Some of them are worse, while others were ranked as marginally more tolerable.

For the North Korean regime in its early years, it was the Christianity that was clearly seen as an embodiment of evil.

This attitude was prompted by the fact that Christianity was a recent introduction, with too, too strong connections to foreign powers, above all, to the United States. It was both “reactionary” (as every religion) and anti-national.

The most acceptable religion probably was Chondogyo, or the Teaching of the Celestial Way. Nowadays, this eclectic cult has somewhat waned and does not play a major role in either Korea, but for a century, from the 1860s to the 1940s, it was a important force in the spiritual life of the country.

Its leaders and activists were prominent in two major outbreaks of the nationalist movement _ the Tonghak Uprising of the 1890s and the March First Movement of 1919, and this tradition made the North Korean authorities somewhat more tolerant towards it.

Buddhism fell somewhere between. It could not boast the nationalist credentials of Chondogyo _ on the contrary, in the colonial era many Buddhists collaborated with the Japanese (as a matter of fact, some colonial administrators saw Buddhism as the “religion of empire” and actively promoted it). At the same time, it did not have Christianity’s close associations with “imperialist” powers.

The land reform of 1946, proclaimed by the North Korean authorities (but actually designed by the Soviet military) inflicted the first major strike on Buddhism, and all land holdings of religious institutions were confiscated. This left the monks without any means of existence and drove many of them from the monasteries.

To keep the Buddhists under control, the Korean Buddhist Union was created in late 1945 as an umbrella organization. It did not so much represent the believers as make them accountable to the emerging state bureaucracy. This was a standard device: Similar bodies were created for other religions as well.

While all Christian churches ceased to function immediately after the Korean War, services were held in some Buddhist temples until the early 1960s. It is even possible, even if not particularly likely, that some services continued through the dark age of North Korean religious history, the period between 1960 and 1980.

Of course, the former Buddhist monks were subjected to strict surveillance and numerous restrictions were placed on their social advancement. However, it seems that they fared better than former Christian activists and priests.

The Buddhist Union was quietly disbanded in 1965 _ at least, for years nothing was heard about this body for nearly a decade, and in all probability it fell out of existence for some time. However, from around 1975 the representatives of the North Korean Buddhist Association were again seen at international gatherings where they scorned the U.S. imperialist warmongers and their South Korean puppets, all the while explaining how happy the masses in their country were to be led by the “Great Leader.”

The 1970s and 1980s witnessed a large-scale restoration of old Buddhist temples, and these days there are 63 officially recognized temples in North Korea. Some of them are allegedly used for religious services, but it is not clear when the services are real and when they are nothing but carefully staged performances for the sake of foreign visitors. It is known that nowadays there are some 300 monks in the North, all receiving their wages from the state and taking care of the temples.

Thus, by the standards of North Korean religious policy, the treatment of Buddhism was not particularly harsh. However, it seems that Buddhism is not positioned to experience a dramatic revival in future. It appears that the North will eventually go Christian, and this Christianity is likely to be of a radical, nearly fundamentalist, variety. At least this is what can be guessed from the study of the events of the recent decade.

Posted in Civil society, Korean Buddhist Association, Mt. Kumgang Tourist Special Zone, Real estate, Religion, Sports, Tourism | Comments Closed

Gaeseong site opened for lease

Friday, January 12th, 2007

Korea Herald
Lee Joo-hee
1/12/2007

The newest building in the inter-Korean industrial park in Gaeseong will be up for lease from early next month, Unification Minister Lee Jae-joung said yesterday.
The apartment-style factory, with a space of some 8,000 pyeong (25,000 square meters), will be large enough for as many as 40 small manufacturers.

Units in the building, constructed by the Korea Industrial Complex Corporation, will be leased to smaller-sized businesses making garments, accessories and other such goods, the Office of Gaeseong Industrial Complex Project at the ministry said.

The building will be completed this June, it said.

This is the first open lease of a building in the industrial park since North Korea’s missile launches last July.

“We have agreed that there was no reason to delay the lease any longer, considering it would provide momentum to the economy and offer opportunities for small- and medium-sized businesses,” Lee said in a weekly press briefing.

The Gaeseong park is favored by companies seeking low rental and labor costs.

But the sale of the remainder of the main complex is still suspended due to a deadlocked security situation following the North’s nuclear test last October.

Output at the industrial park surpassed $10 million for the first time in December last year, Lee said.

Touching on the reported spread of scarlet fever in the North, the minister said the government will not provide medical aid.

“As scarlet fever is not a fatal infectious disease we deem that North Korea will be able to solve the problem on its own. There will be no aid regarding this matter.”

Scarlet fever broke out in northern Ryanggang Province in October last year.

Good Neighbors International, a South Korean civic organization, shipped 36 types of medicines, including penicillin and antibiotics worth some $5 million, to the region.

Last month, the Join Together Society, a humanitarian aid group in Seoul, shipped a total of 400,000 doses of penicillin to the North.

Posted in Epidemics, Good Friends, International Aid, Kaesong Industrial Complex (KIC) | Comments Closed

N. Korea sets up law office for foreigners’ investment

Friday, January 12th, 2007

Yonhap
1/12/2007

North Korea has established a consultation office to provide legal services for foreign investors, according to the North’s official media Friday.

The office, called Pyongyang Law Office, is to give advice with regards to the foreign investment law, the Kaesong Industrial Complex, the Mount Geumgang tourism law and the North’s legal system, the Korean Central News Agency (KCNA) said.

The services will be provided for not only foreign investors, but also overseas Koreans, institutions, business entities and residents in the communist country, KCNA added.

“Before they decide to make an investment in the DPRK, foreign investors will be able to use the legal services, so it will be very useful in terms of investment safety,” said Heo Young-ho, chief of the office.

Posted in Foreign direct investment, Kaesong Industrial Complex (KIC), Mt. Kumgang Tourist Special Zone | Comments Closed

Pyongyang Law Office Opens

Thursday, January 11th, 2007

KCNA
1/11/2007

The Pyongyang Law Office, an independent corporate body, has started its operation to provide services for the solution of legal matters arising in various sectors. Ho Yong Ho, chief of the office, told KCNA that his office provides legal services upon application and assignment by foreign-invested businesses (equity or contractual joint ventures and wholly-foreign owned enterprises) and Koreans in overseas as well as by the institutions, establishments, organizations and citizens at home.

As for the categories of services, he said:

It introduces the laws and regulations of the DPRK on foreign-related matters, Kaesong Industrial Zone, Kumgangsan Tourist Zone and others.

It also holds legal consultations concerning the selection of the investment project, establishment and operation of foreign businesses, dissolution and bankruptcy of businesses, concerning documents of legal nature including feasibility study reports and memorandum of association, concerning trade, transport, finance, insurance, intellectual property, real property and concerning civil law relations between corporate bodies, corporate body and individual and so on.

Legal services are offered on the principle of fairness, promptness and legality and on the basis of the facts, laws and contracts, while the service performer is held accountable before the party concerned and the law for the service offered.

Application for the legal service may be made in person or written form, or by means of communications device. Foreign investors are well advised to consult the office prior to their investment in the DPRK, which will prove a wise choice for the guarantee of their investment security.

Posted in Foreign direct investment, Kaesong Industrial Complex (KIC), Mt. Kumgang Tourist Special Zone, Pyongyang Law Office, Tourism | Comments Closed

Kaesong Site to House 40 More Manufacturers

Thursday, January 11th, 2007

Korea Times
Lee Jin-woo
1/11/2007

Unification Minister Lee Jae-joung said Thursday that some 40 small factories, mostly clothing manufacturers, will move into the joint industrial complex in North Korea this year.

But he said it would take more time for the ministry to fully resume the halted expansion of the Kaesong Industrial Complex.

Last September, the South Korean government decided to hold off expanding the inter-Korean business venture because of heightened tension on the Korean Peninsula after the North’s launching of ballistic missiles in July. After the Stalinist state’s first-ever nuclear test on Oct. 9, tensions increased further.

“We’ve decided not to postpone helping small South Korean manufacturers, which have been struggling with adverse domestic business conditions, especially high wages,” Lee said during a press briefing at the ministry.

The manufacturing companies will move into a new five-story building constructed by the state-run Korea Industrial Complex Corp. involved in a pilot project for the industrial complex.

Construction of the building will be completed by June. It is not related to the postponed sale of the second section of the industrial complex, the minister said.

The number of North Koreans working for the 18 South Korean firms at the industrial complex surpassed 10,000 last year.

When fully expanded by 2012, the complex is expected to house about 2,000 South Korean manufacturers employing about half a million North Koreans, according to the Ministry of Unification.

The minister, however, said more progress in the stalled six-party talks is necessary for the government to resume expansion of the project.

He said he will continue discussing the matter with the Korea Land Corp., a state-run land developer, which has been involved in the Kaesong project, and Hyundai Asan, the business arm of Hyundai Group that handles the Mt. Kumgang tourism project.

Lee said the government would not provide medical aid to the Stalinist state to help stem the spread of scarlet fever, an infectious disease.

“Scarlet fever is not a fatal infectious disease. Given the significance of the disease, we believe that North Korea itself will be able to solve the problem,” Lee said.

The ministry considered providing medical aid to the North after scarlet fever broke out in the northern part of North Korea last October.

Earlier, South Korean humanitarian aid groups shipped 36 types of medicine including penicillin and other antibiotics to Pyongyang.

Posted in Epidemics, Foreign direct investment, Health care, Kaesong Industrial Complex (KIC), South Korea | Comments Closed

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