North Korea May Open for Business

North Korea May Open for Business

A number of firms are making inquiries about the now-shuttered joint industrial complex in North Korea’s border city of Kaesong, industry sources said Sunday, as the two Koreas move to implement a set of agreements signed during their leaders’ historic summit last month.

According to the insiders from a private task force representing South Korean firms that had operated factories in the Kaesong Industrial Complex, the inquiries have recently been made by both South Korean and foreign companies asking how they can possibly open new businesses or rent sites at the industrial park.

“There are many inquiries by the companies saying that they want to set up operations at the Kaesong complex as the relationship between two Koreas is showing signs of improvement,” a task force official said.

Similar inquiries have also been made at the Seoul-based Hyundai Group, which has launched a special team to prepare for the possible resumption of its business projects in North Korea.

The new team, headed by Group Chairwoman Hyun Jeong-eun, will be in charge of drawing up a road map on its strategies for economic cooperation with North Korea, including the now-stalled tourism program to the North’s Mount Kumgang and the joint industrial park in Kaesong, it said.

“We are currently very discrete, as nothing is certain, such as whether local or foreign businesses can open businesses there,” said a group official, who asked not to be named, adding that everything will be certain after the summit between leaders of the United States and North Korea slated for June 12.

Opened in 2004, the factory zone had housed 124 South Korean firms employing more than 54,000 North Korean workers to produce labor-intensive goods, such as clothes and utensils.

Hyundai Asan Corp., a key operator of the joint factory park and the tour program, earned the business rights for seven major social overhead capital projects, including those for the development of electricity, communication and railroads, from the North in 2000.

In 2004, the company also won the sole right to rent the site over the next 50 years, with nearly half of the property site remaining empty, officials said.

The local firms that had operated factories in the complex, meanwhile, are pushing to gain access to North Korea as early as next month, after the Washington-Pyongyang meeting.

“The reopening of the complex depends on the result of the N. Korea-U.S summit, but the resumption should kick off before the end of this year,” an official who asked not to be named said, adding that the visit to the complex should be made as early as possible to reduce preparation time.

Companies with operations at the complex said the closure resulted in 1.5 trillion won (US$1.3 billion) in losses, but the South Korean government estimated their losses to be 786 billion won.

Last month, South Korean President Moon Jae-in and North Korean leader Kim Jong-un held talks at the border village of Panmunjom and reached an agreement on a wide range of measures to ease tensions and boost ties, including the complete denuclearization of the Korean Peninsula.

In 2008, ex-President Lee Myung-bak shut down the tourism program to the North’s scenic mountain on the east coast after a South Korean tourist was killed there for entering a restricted area. The following administration under the ousted former President Park Geun-hye closed the Kaesong Industrial Complex in 2016 amid North Korea’s military provocations.

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Shayne Heffernan Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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