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North Korea Seeking Investment, Joint Ventures from South Korean Firms

Donga - Seoul, 4th October 2005

North Korea held its first-ever investors relations meeting (IR) for South Korean companies on October 1 at the Yanggakdo Hotel in Pyongyang. That day in Pyongyang, the Pyongyang Hemp Textile Company, the first ever inter-Korean joint venture company, received approval and started operation.

The First Ever IR for North Korea for North Korean Companies
The National Economic Cooperation Association (NECA) under the National Economic Cooperation Agency (NECA), which recently emerged as a major North Korean window for economic cooperation with the South, explained its overall business plan to some 100 South Korean business leaders.

About 20 companies which applied in advance had the opportunity to attend individual meetings. Four companies, including Kabool Ltd., even submitted investment plans at the scene.

The association is engaged in attracting investment from South Korean businesses through four general corporations, including Saebyol, Kwangmyongsong, Gaeson and Samcholli.

Kim Yong-hak, president of Saebyol, a contractor for clothing companies, proposed, “Currently, about 60 percent of South Korea’s business with North Korea is done through China. Let’s make direct business connections through the NECA office in Dandung.”

NECA officials distributed business cards with the phone and fax numbers of the Dandung office to each South Korean businessman, saying, “Any questions, please call this number. We will have answers within the hour by contacting Pyongyang.”

Yeo Seo-hyeon, the president of Kwangmyongsong General Corporation in charge of the company’s light industry complained, “Although more than 80 South Korean companies in the private sector have promised to invest, only three to four companies are actually having investment discussions now.”

On the other hand, a South Korean businessman pointed out, “Rather than explanations of the benefits from investing in North Korea and guarantees of investment convenience, the North Korean officials had a somewhat high-handed ‘either invest or don’t’ manner.”

The North is planning to organize a second round of IR talks by end of this year by inviting South Korean businessmen to Mt. Baekdu.

First-Ever Joint Venture Firm Between North and South
The Pyongyang Hemp Textile Company, a joint venture firm of South Korea’s Andong Hemp Textile and North Korea’s Saebyol General Corporation, had its inauguration ceremony on October 1 and began joint management by the two Koreas. The company received the first certificate for operation from the NECA, setting a new milestone in the history of inter-Korean economic cooperation.

Andong Hemp Textile decided to have six engineers and two managers from the South in the North with a long-term visa extendible every six months, and is planning to deploy more managing staff gradually. The South Korean company is also expected to employ some 10,000 North Korean workers in its 24,000-pyeong plant to be built in Pyongyang in late November.

Kim Jung-tae, chairman of Andong Hemp Textile, emphasized in the inauguration ceremony, “By combining each other’s strengths, including North Korea’s ability to manage companies and human resources, and the South’s capital, technology and capability of management, we can definitely succeed.”

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