KNTO¡¯s Participation In Mt. Kumgang Project, `Nothing More Than A Drop In the Bucket`

Although the Korea National Tourism Organization (KNTO) and Hyundai Asan have decided to proceed with the Mt. Kumgang tourism business after forming a consortium, the business is considered to be unprofitable.

Rep. Kim Il-Yun (Grand National Party), a member of the National Assembly¡¯s Culture-Tourism Committee, said yesterday that after ``having examined the Mt. Kumgang Tourism Business Plan`, a conclusion was reached that the plan is unrealistic and unprofitable.`` The plan was attached to the application form for the approval of the change in the business, submitted by the KNTO and Hyundai to the Ministry of Unification on 20th.

According to the KNTO and Hyundai joint plan of the `Mt. Kumgang Tourism Business`, profits of the Mt. Kumgang tour business are estimated based on the following conditions; an anticipated amount of expense per tourist for the Mt. Kumgang tour through the land route is 371,000 won; opening of the Mt. Kumgang tour through the land route beginning October 2002; an anticipated tourists per year is approximately 0.45 million people; 40 percent of the tourists (0.18 million people), consisted of high school students, are expected to visit Mt. Kumgang for their school excursion.

If the plan follows these conditions, an amount of estimated profit is 6.1 billion won in 2003, and 6.2 billion in 2004. Compared with the total amount of investment funds of 269.1 billion won, these profits reach only 2.3 percent and 3 percent, which do not even meet the half of bank credit interest rates. Especially, the condition for making profits is based on other profit making businesses, such as establishing duty free shops and rental businesses. Therefore, a fierce criticism on the Mt. Kumgang tour business as well as the government¡¯s approval for the business is anticipated.

According to the KNTO and Hyundai Asan¡¯s estimation of profits and losses, a total profit of 42.4 billion won is estimated from the Mt. Kumgang tour business and the rental profits, excluding the amount of 47.4 billion won of the prime sales costs. However, a total deficit of 52.8 billion is anticipated if the KNTO and Hyundai would have to pay 95.2 billion won to North Korea. Therefore, if the issue of paying fees to North Korea is not improved, the Mt. Kumgang tour business will not be free from a deficit. Rep. Kim said that ``there is a high possibility of resulting a deficit since 269.1 billion won are to be invested. It is clear that Mt. Kumgang tour project is not a business with profitable future, but a business that is run by the taxpayers¡¯ money through the KNTO.``

Kim Young-Sik spear@donga.com