Archive for the ‘Inter-Korean summit’ Category

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Haeju in N.K. seem playing bigger role

Tuesday, October 16th, 2007

Korea Herald
Ko Kyoung-tae
10/16/2007

South Korean experts yesterday called on the government to develop Haeju, a North Korean port which South and North Korean leaders recently agreed to develop as a special zone, into a business hub covering a wide array of industries, from fisheries to manufacturing.

Jeong Hyung-gon, an economist at the Korea Institute for International Economic Policy, recommended in a seminar yesterday that the special zone of Haeju should be transformed into a comprehensive economic zone so as to expand inter-Korean economic ties.

He cited several Chinese free economic zones as good models for the joint-development project. “It should be developed like Shenzhen or Dongguan,” Jeong said.

These two coastal cities have been locomotives of China’s red-hot economic growth since the Beijing administration opened them to the global economy in the late 1970s.

Jeong’s speech implies that North Korea should also substantially open Haeju to foreign investors, including South Korean companies.

South Korean President Roh Moo-hyun and North Korean leader Kim Jong-il recently agreed to transform this harbor city into another joint industrial complex.

A special peace zone will be set up along the coast of Haeju, with the purpose of developing joint fisheries and establishing a new economic zone.

The city is geographically advantageous to South Korean manufacturers because it is close to Incheon Port, the nation’s second-largest harbor.

“The Haeju project and Gaeseong Industrial Complex should be complementary to each other,” Jeong said.

But he cautioned that Seoul and Pyongyang should settle their dispute over the Northern Limit Line in the West Sea, in order to effectively operate the Haeju special zone.

The sea border was unilaterally drawn by the U.N. forces at the end of the 1950-53 Korean War, but there has been no legal agreement on the demarcation between the two Koreas.

This has caused frequent military and diplomatic conflicts, including two deadly naval clashes in the West Sea, and has been a major obstacle to co-developing Haeju.

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Posted in Economic reform, Inter-Korean summit, Political economy, Special Economic Zones (Established before 2013) | Comments Closed

Warring Factions Competing for Power in North Korea

Monday, October 15th, 2007

Donga Ilbo
10/15/2007

Our source on the ground in North Korea informed us that he conducted various interviews with North Korean refuges in China yesterday, and shared this information with a variety of civilian experts on North Korea and the Bush administration officials.

― What was the difference Kim Jong Il showed this time, compared with the 2000 summit?

“He didn’t look good. Chinese, Russian and American exports do not believe that Kim could hold on to power for more than five years. When he’s gone, North Korea will probably get bogged down in a power struggle. That may be a critical moment on the peninsula. The South Korean government has to closely monitor the situations in North and has to prepare itself with diverse contingency plans. Washington does not give much attention to the inter-Korean matters. The Middle East primarily occupies America’s attention. That’s not going to help South Korea.”

– Despite the physical condition, Kim still looked powerful, didn’t he?

“Warring factions are constantly waging hostile power struggles around Kim. Each of them has its own access to arsenals and power to mobilize troops. Also, each faction has a well-established human network. In addition, army generals further divide the army. Diverse personal connections stemming from the old days have transformed into factions. A sudden disappearance of Kim from power will probably spur them into action, putting North Korea in a very dangerous situation.”

– We have noticed the different attitude of Kim Jong Il. He acted differently in the 2000 summit with Kim Dae-jung. What do you say of it?

“Yes, that’s true. First, his lukewarm attitude must have come from his weakened health. Second, he did not expect as much from Roh as from Kim [Dae-jung]. Kim [Jong Il] seems to have considered the recent summit as an opportunity to inform the world of his positions on various issues. Otherwise, he did not want to commit himself to binding promises.”

― Kim seems to have acted differently on the first day of Roh’s arrival compared to the second day. Do you agree?

“We don’t have to overreact to each and every move of Kim. His ailing physical condition may have led to different emotional reactions. On the first day, Kim did not approach Roh and did not smile. I believe he did it intentionally. He must have wanted to show that Roh could not boss him around, and his regime did not need anything.

― What impact, if any, will the recent inter-Korean summit have on Kim Jong Il’s power?

“I don’t think it will have any. Kim is the one who makes the final calls in North. Nonetheless, he has to maintain balance among the factions. In short, he cannot make decisions without considering their opinions. When Roh suggested the withdrawal of troops from the DMZ, Kim declined it vehemently on the spot. The incident demonstrated Kim’s prearrangement with the army and the army’s prior consent to the summit.”

― After the summit, Roh defined Kim Jong Il as competent ruler. Do you agree?

“Kim Jong Il is a shrewd ruler when it comes to internal control. Of course, his regime is immoral and oppressive. Still, Kim maintains his power by controlling and confronting factions against each other. Kim Jong Il is competent only in that respect. But I don’t believe he cares about ordinary North Koreans and their welfare when making policy decisions.”

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Gov’t refrains from using “reform, openness” to describe Kaesong industrial park

Wednesday, October 10th, 2007

Yonhap
10/10/2007

The Unification Ministry has dropped the words “reform and openness” to describe the South Korea-invested industrial park in the North’s border town of Kaesong from its Web site in an apparent bid not to provoke the North.

North Korean leader Kim Jong-il complained in the second-ever inter-Korean summit in Pyongyang last week that South Korea has been using the Kaesong industrial park as a scheme to force reform and openness in the communist North, whereas Pyongyang had gained little from the inter-Korean economic cooperation project.

President Roh Moo-hyun responded by saying in the North Korean capital that North Korea should not be described as a subject of reform and openness.

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Posted in Economic reform, Foreign direct investment, Inter-Korean summit, Kaesong Industrial Complex (KIC), Mt. Kumgang Tourist Special Zone, Political economy, RoK Ministry of Unification, Special Economic Zones (Established before 2013) | Comments Closed

Reports cite high cost of North business

Wednesday, October 10th, 2007

Joong Ang Daily
Limb Jae-un
10/8/2007

Days after both Koreas vowed to heighten cooperation, a lawmaker said yesterday in a report that the Kaesong Industrial Complex, the experimental site combining South Korean technology and North Korean labor, has been unprofitable so far.

In addition, the Ministry of Construction and Transportation said in a report yesterday that repairs to the airport on Mount Paektu will cost 280 billion won, or $304 million.

One of the agreements signed at the inter-Korean summit Thursday calls for allowing South Korean tourists to visit the scenic mountain on the Korea-China border.

“In terms of the runway length, Samjiyon Airport can accommodate large airplanes, such as a Boeing 747, but the condition of the airport is bad,” said an official of the construction ministry, who asked for anonymity. The airport, located on a plateau 1,000 meters, or 3,280 feet, above sea level, needs advanced navigation facilities, he said.

Despite the optimistic discussions during last week’s summit, inter-Korean economic cooperation has so far had dismal results, according to a report from Grand National Party Representative Lee Han-koo. Thirteen out of 16 companies operating at the Kaesong Industrial Complex are currently in the red, he said. Their debt is four times higher than their assets, he said. The combined assets of the 16 companies is only 4.5 billion won and their average annual sales is 790 million won.

“The biggest problem of the economic cooperation is that the relevant information has been held back from the public,” Lee said.

Meanwhile, a top European official said North Korea must go through serious reforms to become a viable investment destination for Europe.

North Korea is unattractive for Europe because “the conditions for investment are not safe enough and the regulatory environment is not predictable,” Guenter Verheugen, the EU Industry and Enterprise Commissioner, said in an interview with The Associated Press on Saturday.

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Posted in Aviation, Economic reform, Inter-Korean summit, Kaesong Industrial Complex (KIC), Political economy, Special Economic Zones (Established before 2013), Tourism, Transportation | Comments Closed

Sound economics

Wednesday, October 10th, 2007

Joong Ang Daily
Jo Dong-ho
10/9/2007

The summit meeting was quite successful. Some say it was because North Korea’s nuclear program was not on the agenda. Relinquishing its nuclear ambitions is the North’s card for normalizing ties with the United States and receiving rewards.

Costs cannot worry us either, because South Korea’s economy has grown so much that we can now pave a road even for a village on a remote mountain. If the size of government projects for culture cities or innovation cities were reduced, we would have trillions won, or billions more dollars, available.

As an economist, I would like to focus on roles of the government and the market discussed in the summit meeting. The ultimate question of economics can be summarized as how the market and the government will divide their roles to get maximum benefits out of limited resources.

The economics of past 200 years concludes that the best way is for the private sector to make independent decisions in economic activities and for the government to manage the rules so that those activities will be carried out fairly and smoothly. This can be likened to the relationship between players and referees in a sporting event.

The same principle applies to economic cooperation between South and North Korea.

Easing military tension, which will reduce the risk of investing in North Korea, is something that only the government can do. Repairing railways and roads is also the responsibility of the government. To improve transportation, communication and customs are the same. The private sector cannot do those jobs on its own.

However, building a shipyard or developing tourism on Mount Baekdu is for the private sector to carry out. But as these projects were agreed upon in the summit meeting, they must be carried out without feasibility studies. These projects were being discussed even before the summit meeting.

Private companies have been interested in them for years, but they have not made the decision to pursue them for many reasons, including low profits. Now the leaders of the two Koreas have made an agreement so these projects must be carried out. North Korea will probably make more unreasonable demands. The South Korean government will have to provide subsidies, and that will increase the burden on the South Korean people.

Some may find it disturbing that I criticize a few projects when there were many other good agreements reached. But these projects show the South Korean government’s basic view on economic cooperation with the North.

In fact, in all the projects agreed upon, there is a vague guideline for the division of roles between the government and the market. The same is true with the agreement to complete the first step of construction at the Kaesong Industrial Complex earlier than planned and to start the second step. The Hyundai Asan Corporation and the Korea Land Corporation are the ones doing the industrial park project, not the government.

These companies have their reasons for managing the industrial park project in its first stages. The government cannot and should not agree to implement the project at a faster speed. After North Korea tested its nuclear bomb, there was pressure to halt that project. Then the government said it could not intervene because it was led by the private sector. But the government has now agreed to complete it at an earlier date.

Some maintain that these agreements will improve inter-Korean relations so there is no use in dividing the government and the market. But it is more important that economic cooperation between South and North Korea improves properly than quickly. Let’s say the improvement of economic cooperation between South and North Korea is of the utmost value so the government can lead economic projects. But there must be good reasons for the government to intervene in the market.

The government has said until now that it supported economic co-operation with the North in an attempt to induce North Korea to open its doors and reform its economy. But that no longer sounds like enough. When providing assistance, the supporter must make sure that the party that receives assistance tries to stand on its own. But the president said we should not mention this in the summit meeting.

Six months ago, at an event for businessmen in the fisheries industry, the president said the government would provide support if need be, but what is most important is their own will and efforts.

One of President Roh’s strengths is that he is not afraid to say what he needs to say. That he could not say what he had to say to Kim Jong-il is what is most regrettable about the meeting.

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Posted in Foreign direct investment, Inter-Korean summit, International Aid, Kaesong Industrial Complex (KIC), Political economy, Special Economic Zones (Established before 2013), Tourism | Comments Closed

Kim Jong il speaks in front of western cameras

Friday, October 5th, 2007

Until recently, I was only aware of two recordings of Kim Jong il’s voice.  The first was his proclamation, “Long live the Korean People’s Army,” to a crowded Kim il Sung square.  The second recording was made by kidnapped South Korean film director Shin Sang-ok.  

This week, we got a third from the inter-Korean summit.  Click here to see it on Youtube. 

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Jokes, drinks and non-working cars on last day

Friday, October 5th, 2007

Joong Ang Daily
Kim Soe-jung
10/5/2007

President Roh Moo-hyun’s two-night, three-day visit to North Korea concluded with a friendly luncheon with North Korean leader Kim Jong-il followed later by enthusiastic cheering on the streets.

After signing a declaration at 1 p.m. yesterday, Roh and Kim dined together for about two hours at Paekhwawon State Guest House, clinking glasses, sipping wine and having a friendly conversation.

“President Kim Dae-jung also sat on this seat,” Kim said to Roh, sitting next to him at a round table.

“There have been reports that I have diabetes or heart problems but that’s not true at all,” Kim said.

“There have been reports about even my slightest movements. I think they are novelists, not journalists,” he said, drawing laughter from the audience. “But it does not feel bad to be widely covered.”

Roh and Kim said goodbye to each other about 3:15 p.m. at the front door of the guest house. “This is it,” said Kim. “Take care,” the two leaders said to each other.

Roh left the guest house where he stayed during the visit after leaving a message in the guestbook reading, “Thank you for the warm welcome. I appreciate it.”

Before the luncheon, Roh and First Lady Kwon Yang-sook visited an auto plant in Nampo city, about a 50-minute drive from Pyongyang. The plant produces about 1,000 vehicles per year, with 216 employees.

Roh and Kwon got in a sedan called “Junma,” manufactured with auto parts from South Korea’s Ssangyong Motors, and started the car. But the car did not move. Hyundai Motor Group Chairman Chung Mong-koo helped the president, but the car still did not move.

After the 20-minute visit to the plant, Roh went to a memorial tower to commemorate Seohaegapmun, a seawall built in 1986.

He wrote, “North Korean people are great,” at the guestbook there.

After the luncheon, Roh attended a ceremony to plant a pine tree he had brought from the South at a botanical garden in Pyongyang.

Kim Yong-nam, the nominal head of the communist country, and Roh scattered soil from Mount Halla in the South and Mount Paektu in the North around the root of the tree. They watered it with water from lakes in both mountains.

Roh left Pyongyang amidst cheering from the city residents carrying pink azalea bouquets.

On his way home, Roh visited the Kaesong Industrial Complex for the first time as the country’s president.

He arrived back in Seoul after 9 p.m. last night.

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Posted in Automobiles, Inter-Korean summit, Political economy, Pyonghwa Motors, Transportation | Comments Closed

First air route planned between two Koreas

Friday, October 5th, 2007

Joong Ang Daily
Ser Myo-ja and Kim Han-byul
10/5/2007

Thank you for flying, we’ll be landing in North Korea soon.

That announcement could be heard on a regular basis as the inter-Korean summit agreement laid out the groundwork for the first regular air route between North and South Korea.

Passengers will be allowed to fly from Seoul to an airport on Mount Paektu, on the North Korea-China border, according to the deal.

President Roh Moo-hyun and North Korean leader Kim Jong-il said the new air route is intended to boost inter-Korean tourism to the mountain. In 2005, Kim promised such a program to Hyundai Asan Chairwoman Hyun Jeong-eun during her visit. With cooperation from the Korea National Tourism Organization, Hyundai Group’s North Korea business arm began preparing for it, although nothing substantial now exists.

Standing 2,744 meters (9,002 feet), Mount Paektu has been worshiped by Koreans throughout history as the place of their ancestral origin, according to the foundation legend.

“The air route will be the starting point for new aviation cooperation between the two Koreas,” said Ahn Byung-min, a North Korea expert at the Korea Transport Institute. “The runway of Samjiyon Airport in the mountain has been repaired a bit, but other facilities, including the terminal, need more work.”

Since Kim’s promise to Hyun, the South has provided material to repair the military airport, located 1,300 meters above sea level.

Hyundai Asan welcomed the agreement yesterday, saying it has already researched various tour packages and promotional strategies. The company said it will consult with the government to expedite the beginning of the tour.

Tourism industry sources said tourists take no trips in the winter. So if everything somehow came together and the airport was fully upgraded, the earliest the trip could be offered is next spring.

Yun Chi-sul, owner of the travel agency Mount Paektu.com, said, “May is still wintertime on Mount Paektu. Some trips have been canceled even in early June.” He has sold tour packages to the North Korean mountain since 1998 by using routes from China.

South Korea’s two major airlines, Korean Air and Asiana, also welcomed the news, expecting increased demand. About 100,000 South Koreans visit the mountain via China each year by using air and car routes to the mountain. Direct air travel is expected to cut the travel time to about an hour.

The Ministry of Construction and Transportation said more detailed agreements need to be worked out between the two Koreas for the flights to actually be operated. Whether the North will allow a plane to fly above its inland areas or force it to detour above the Yellow Sea is still unclear.

Roh and Kim also agreed yesterday to send inter-Korean cheer teams to the 2008 Beijing Olympics via the Gyeongui Line, which links Seoul and Shinuiju in the North. It will be the first non-ceremonial use of the restored inter-Korean railroad, the leaders said.

“We will have to wait and see how far the railroad can be used for the travel,” said Ahn, of the Korea Transport Institute. “The North probably will feel a burden in allowing a civilian train from Seoul to run through the entire country.” The train trip from Seoul to Beijing will be 1,614 kilometers (1,002 miles).

The 518.5-kilometer-long Gyeongui Line, completed in 1906, was severed during the Korean War. The two Koreas agreed to restore the railroad in 2000 at the ministerial talks, and the South has spent 545.4 billion won ($588.7 million) for railroad construction, including 180.9 billion won worth of material and equipment sent to the North. After several setbacks, the two Koreas tested the restored railroad on May 17 of this year.

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Economic inroads a cornerstone of deal

Friday, October 5th, 2007

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.

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Posted in Cell phones, Communications, Foreign direct investment, Inter-Korean summit, Internet, Kaesong Industrial Complex (KIC), Political economy, Railways | Comments Closed

‘Joint fishing zone’ skirts limit-line issue

Friday, October 5th, 2007

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?”

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