Global player wins N Korea's only JV
bank By Tom Tobback
BEIJING -
Media attention shifted from the Ryongchon railway
disaster to the six-way working-level talks here last
week, while the very quiet visit of a certain British
businessman to Pyongyang, reported tersely by the
official Korean Central News Agency (KCNA) this month,
went unnoticed. But it was far from unimportant. In
fact, it was a major signal of North Korea's willingness
to open up its economy. Dr Johnny Sei-hoe Hon, formerly
of Hong Kong and now chairman of the UK-based Global
Group of Companies, agreed to take over North Korea's
only joint-venture bank, Hon told Asia Times Online on
Tuesday in a telephone interview.
Hon, 32,
identified by the KCNA as "chairman of the British
Global Group", is a British citizen with roots in Hong
Kong who received a PhD in psychiatry from Cambridge
University, but his psychiatric expertise was apparently
not the reason he visited Pyongyang. He was officially
received by Choe Thae-bok, chairman of the North Korean
parliament, or the Supreme People's Assembly (SPA). Hon
presented Choe with a gift for the leader of the
Democratic People's Republic of Korea (DPRK), Kim
Jong-il.
As usual, KCNA reported nothing more
than that the two parties had "a friendly talk", but it
is clear that the visit was related to Pyongyang's
efforts at economic reform, initiated in July 2002, and
possibly to new plans for its problematic special
administrative region (SAR) of Sinuiju, which Pyongyang
announced in September 2002. This SAR, modeled after
Hong Kong, would have its own legislative council and
and no border customs duties or visa requirements.
Japanese and South Korean journalists rushed to the
Chinese border city of Dandong. Surprised Chinese border
officials did not even allow them to exit China and
cross the bridge over the Yalu River into Sinuiju, North
Korea.
Chinese-Dutch businessman Yang Bin, who
built a flower and property empire based in Shenyang,
China, was sworn in as the first governor of the Sinuiju
SAR in September 2002. He told the press at that time
that the area would become a totally capitalist area,
and that all current residents would have to move out.
However, just days before Yang intended to take up his
post in Sinuiju in November 2002, the Chinese
authorities arrested him on charges of fraud - details
were not made public - and he is currently serving an
18-year prison term in China.
North Korea's
three special economic zones This arrest was
widely interpreted as a Chinese veto for a SAR on its
border with North Korea. It seems the DPRK authorities
did not check their economic plan with Beijing. In 1991
North Korea had established another special economic
zone, Rajin-Sonbong, around the Tumen River Basin, along
its Russian and Chinese borders in the east. This
strategic region was intended to serve as a transport
corridor for landlocked northeastern China. Despite
support from the United Nations, the zone has failed to
attract investment. A third and more promising special
economic zone, the Kaesong Industrial Park, is situated
on the Demilitarized Zone (DMZ) and will provide cheap
labor to South Korean enterprises.
Since the
arrest of Yang Bin, several potential candidates for
governor of Sinuiju have been named in the regional
press, but no announcements have been made; like other
investment projects in North Korea, Sinuiju has been
stalled, a casualty of the nuclear standoff between
Pyongyang and Washington.
However, the Global
Group, of which Johnny Hon is founder, chairman, and
chief executive officer (as described on his website),
defines itself as "an evolving organization with diverse
business ventures spanning the globe. Every new
undertaking illustrates our skill in choosing the right
opening in the right market - and most importantly, at
the right time."
The group specializes in
financial consultancy, wealth management, high-growth
companies, and online betting. Interestingly, Pyongyang
has indeed been involved in the online gaming industry
since 2002, when a South Korean businessman, Kim
Beom-hoon, set up a gambling website hosted in Pyongyang
(www.jupae.com). Kim is also running the one and only
Internet cafe in North Korea, in Pyongyang.
Hon
revealed to Asia Times Online that his Global Group is
taking over the majority stake in the Daedong Credit
Bank (DCB), the only foreign joint-venture bank in North
Korea, from a British company based in Hong Kong. The
Daedong Credit Bank, run in Pyongyang by Nigel Cowie,
has been serving the expatriate community and the few
foreign business ventures in North Korea for many years.
"Our stake in the DCB will facilitate further
investment projects; the Supreme People's Assembly [SPA]
has offered us business proposals which we will consider
in due time," Hon said. Currently he is awaiting the
due-diligence report by Deloitte & Touche for his
Daedong Credit Bank deal.
Johnny Hon - right
man, right time, unusual place It would not be
the first time Johnny Hon has been involved in unusual
places and situations: since 2003 he has been commercial
attache for Anjouan in Britain. This island in the
Indian Ocean declared its independence from Comoros in
1997, and installed its own president and parliament,
attracting a crowd of international offshore banking
professionals. Anjouan is not a country per se, but an
autonomous entity, part of a confederation of the Union
of the Comoros.
In 2002 Johnny Hon founded the
Global Bank Ltd, registered in the "State of Anjouan"
(www.globalbank.tv), which offers its clients "the
highest level of privacy and discretion when dealing
with their personal and corporate affairs".
Unfortunately serious internal conflicts have recently
emerged within the financial authorities of Anjouan,
whose officials appear to have been eager to provide
licenses for offshore banks, and Hon confirmed to ATol
that he will not continue his activities there until the
situation is cleared up.
It remains to be seen
what advice the Global Group can offer to revive the
North Korean economy, but probably professional help
from international financial institutions such as the
International Monetary Fund (IMF), the World Bank and
the Asian Development Bank (ADB) would be a safer bet
than venture-capital companies such as Hon's Global
Group.
Two weeks ago, the US State Department
issued its 2003 World Terror Report, confirming North
Korea as a terror-supporting country. For the first
time, the abduction of Japanese citizens in the 1970s
was given as the principal reason for keeping the DPRK
on this list, and thus excluding North Korea from
membership of international financial institutions.
Another reason is that Pyongyang continues to provide a
safe haven for four surviving members of a group of the
Japanese Red Army Faction that hijacked a domestic Japan
Airlines flight in in 1970 and diverted it to North
Korea, according to the State Department report. Tokyo
has repeatedly urged Pyongyang to extradite the
hijackers, but Pyongyang wants something in return.
Japanese Prime Minister Koizumi is to pay a
one-day visit to Pyongyang this Saturday, and he is
expected to seek the return of the families of five
surviving abductees (see Koizumi's perilous Pyongyang summit,
May 18). If this happens, the quid pro quo would be
expected to be Japan's economic aid and perhaps movement
toward normalized diplomatic relations.
Then the
United States will have to be very creative if it wants
to retain North Korea on its list of terror-sponsoring
states next year - and Pyongyang's engagement with
Tokyo, diplomatic and economic, may finally take off.
Tom Tobback is the creator and editor
ofPyongyang Square, a website
dedicated to providing independent information on North
Korea. He is based in Beijing.
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