North Korea takes aim at foreign
investors By Yvonne Su
BEIJING - After decades of isolation,
North Korea, one of the world's last surviving
Stalin-style socialist command economies, is
launching a 10-year economic development plan,
with an ambition to boost the country's gross
domestic product (GDP) to $360-400 billion.
Pyongyang has put attracting foreign
investment at the heart of the State Strategy Plan
for Economic Development, setting up a National
Development Bank and assigning an insurance
company to protect foreign investors.
Reaction has been mixed among Chinese
businesspeople who do work with North Korea. While
some believe the new plan will open
more business opportunities,
others say it is still not a good time to start
investing across the border.
plan, according to the state-run Korean Central
News Agency, will focus on building up
infrastructure as well as developing agriculture
and other basic industries such as electricity,
coal, oil and metals.
It appears a
departure from the military-first policy that has
dominated North Korea society for decades, but
economic experts point out that this is not a new
"They [the North Koreans] have
been talking about opening up for so many years
now," said a trader based in Dandong, a Chinese
city border North Korea, who only gave the surname
of Lu. "They just never executed the policy."
The ambitious plan, designed to build a
"kangsong taeguk" (strong and prosperous
nation) from 2012, comes as the North Korean
government is still suffering under an aid
blockade from South Korea, Japan and the United
States. To compound its financial concerns, United
Nations sanctions have shrunk illicit revenue from
drug trafficking, currency counterfeiting and
According to the US
Central Intelligence Agency's (CIA) World Fact
Book, North Korea's annual GDP is estimated at
some $40 billion over the past few years.
The 10-year plan's projects include
developing the east coast port of Wonsan into a
ship construction zone, establishing the border
city Sinuiju as a light industry zone, and
building the port city Nampho into a food
processing and pharmaceutical center, according to
people familiar with the plan. Pyongyang also
plans to develop two offshore islands on the Yalu
River into free-trade zones.
the plan, the North Korean government will set up
a National Development Bank and assign Taepung
International Investment Group to solicit foreign
investments. Taepung's chairman, Park Chol-su, a
Korean-Chinese, has been named as the National
Development Bank's vice president.
According to Korean media, Park was born
in 1959, graduated from China's Yanbian University
and received a master's degree in business and
commerce from the University of International
Business and Economics in Beijing. He later
developed close ties with senior North Korean
officials by importing gasoline directly from the
Middle East to North Korea in the late 1990s. Some
businessmen suggested Park and Taepung are backed
by Kim Yang-gon, the director of the United Front
Department of North Korea's Workers' Party.
Emphasizing the government's
determination, sources involved in the plan are
optimistic. "There are a lot of business
opportunities in North Korea now," said a
Beijing-based consultant who is involved in the
project, speaking on condition of anonymity. The
consultant suggested Pyongyang plans to tout for
business by offering its mining resources.
Seasoned North Korea-related businessmen
questioned Taepung's relationships with the North
Korean government, raising doubts over how Taepung
will help foreign investors apply for licenses and
transfer profits out of the country.
North Korean government officials have also
questioned Taepung's capacity to attract foreign
investment, according to foreign businessmen and
"Taepung's reputation among
some North Korean officials is that it talks a lot
but delivers very little," said a Singapore-based
business consultant who declined to be named.
Taepung's chairman, Park, could not be
reached for comment.
Most traders in
China's border city Dandong, meanwhile, said they
had neither heard of Taepung nor of any new
economic policies from their North Korean
Kim Jong-il, North Korea's
leader, has reportedly begun visiting
manufacturing operations, which some
Korea-watchers interpret as a sign of start of
economic reform. The Pyongyang Times newspaper has
again begun highlighting news about new factories,
new shops and food productions.
Pyongyang's 10-year plan comes 18 months
after it conducted its second nuclear test, a step
which Chinese academics believe gave North Korea
the confidence to push for economic development.
"The success of the nuclear test made
North Korean leaders feel safe enough to shift its
focus to build the country," said Zhang Yushan,
researcher at the Jilin Academy of Social
Sciences, adding that the fact that North Korean
military is playing a less significant role in the
Workers' Party of Korea is another sign of the
regime's determination. "Even though they still
talk about the 'Songun', or military-first
policy, the main control has quietly shifted to
North Korea has tried to boost
its economy since 1984, when the government then
introduced the Joint Venture Law to solicit
foreign investments. In 1991, the government
established the Rajin-Sonbong special economic
zone, hoping to match China's experience of using
special economic zones to promote reform and
opening up. In July 2002, the government
introduced the "Measure for the Strengthening of
the National Economy", increasing workers' wages
and legalizing market trading.
September 2002, it again tried to establish a
special zone in the border city, Sinuiju, but the
project didn't go anywhere after China arrested
the special zone's representative Yang Bin for tax
evasion. In 2009, Pyongyang unexpectedly
introduced a currency reform to suppress its
currency's role in the distribution of goods and
services. The policy, which lopped off two zeros
from the previous paper currency, led to rampant
inflation and eating into whatever savings people
"It is still not a good time
to invest in North Korea," said Zhang Yungjing, a
Dandong based trader. "I know people who have
invested there can't even get their capital back.
Let alone make a profit."
Su is a Beijing-based journalist.
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