Hyundai Group¡¯s Mt. Kumgang project causes US$200-million deficit

Hyundai Asan Corporation had accumulated a deficit of US$263.7 million (227.07 billion won) as of the end of this June since it started to offer the Mt. Kumgang tour program in 1998, government data showed Tuesday.

Officials attributed the result to heavy investments in the initial stage of the project and subsequent poor performance in attracting tourists.

According to data presented to the National Assembly by the Unification Ministry, Hyundai Asan spent US$375.57 million (413.1 billion won) on the tour program until the end of June, but earned only US$169.2 million (186.1 billion won) in revenues.

Specifically, Hyundai Asan paid US$270 million to the North in return for allowing the company to offer the tour program and spent US$155.7 million in rental and operation fees of cruise boats. On the other hand, the company earned US$156.24 million from sales of souvenirs and US$12.95 million from running hot spas.

Meanwhile, Hyundai is due to pay US$942 million to the North over six years and three months after the launch of the tour program in return for the program¡¯s approval. The data also showed that the company had paid US$294 million as of the end of August.

Hyundai pays US$200 per tourist to the North in fees for the tour program and the ministry data showed that this makes up about 30 percent of a tourist¡¯s fees.

Ministry officials said that the deficit was larger than they had expected because Hyundai found it difficult to attract tourists, particularly since the project to develop tourist facilities such as beach resorts and golf courses in areas near Kumgang was delayed. But they predicted that the program would begin to turn a profit from 2003 as Hyundai targets.

Kim Young-Sik spear@donga.com