Party bells ring for North Korea

Ulhas Joglekar ulhasj at
Fri Apr 28 11:42:30 PDT 2000

Business Standard April 28, 2000

Party bells ring for North Korea Businessmen from the South are hungry to resume old ties, says Barun Roy So, get ready for the 'Made in North Korea' labels to bloom in the department stores of the world, because that's going to be the first outcome of the process of detente set rolling by South Korean President Kim Dae-Jung to reunite the two Koreas.

When President Kim joins his northern counterpart for a historic summit meeting in the North Korean capital of Pyongyang from June 12 to 14, economic cooperation will dominate the agenda since it's easier to achieve and is a much better way to start the journey towards an eventual political union.

The two halves of the peninsula seem to be hungry for cooperation, especially businessmen in the South. They think cooperation makes eminent sense for everybody and are grateful that President Kim has had the courage to hack at a relationship that has remained frozen since the division of the peninsula at the end of World War II.

It makes sense because southerners can take some of their industries across the border to avail of cheap labour in the north, in much the same way that investors from Hong Kong, when it was still a British colony, took their enterprises over the border to China to regain their competitive advantage.

North Koreans now realise that a 'Hong Kong-isation' of their half of the peninsula may be the only practical way for them to salvage their tottering economy because hardly anybody, except the South Koreans, will even remotely consider the North, in its present state, for investment.

In contrast, South Koreans have deep emotional roots in the North. That is a part of the country they were forced to leave after the war. It was there where many of the leaders of South Korean industry grew up, some in poverty, and that is where they would like to return to improve the lot of their northern sisters and brothers. They share the same language, culture, beliefs, and traditions, and the same blood flows in their veins.

This bond is stronger than any business interest can ever be. It is this bond between overseas and mainland Chinese that reinforced the foundation of China's latter-day economic growth.

One proof of how strong the bond is came in January 1989, when Chung Ju-Yung, founder and honorary chairman of the Hyundai Group, made the first official trip to the North by any South Korean. He visited Mt Kumgang, a holy mountain on the eastern seaboard, a picture of, which hangs in most Korean homes.

83 years ago, Chung was born in a town near Mt Kumgang and to him the trip was like a pilgrimage. On June 16, 1998, he made history again when he crossed the military demarcation line in a convoy of 50 trucks carrying 500 head of cattle. It was a token gift but big on goodwill. Chung has now dedicated his the rest of his life to developing business links with the North.

Hyundai has obtained the exclusive right to develop a 4,000 sq km tourist complex around Mt Kumgang, where no taxes will be levied and no restrictions applied on foreign currency transactions.

Cruises to Mt Kumgang began in November 1998 and are becoming increasingly popular. Over 3,00,000 southerners visited the place in 1999 and the number is expected to reach 1.6 million by 2011.

Hyundai's plans for the North also include a 16,200 acre industrial complex on the west coast. There are proposals for other such complexes, and it is these that South Korea's textile manufacturers, among others, are so excited about.

Tee-shirt manufacturers will certainly be among the first to set up operations in the North, where workers will be equally efficient and production costs will be significantly lower.

A Hyundai research institute report says the proposed industrial parks in the North will help revitalise South Korea's declining light industry and give North Korea an opportunity to earn at least $20 billion a year through exports.

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