HRI: 10 Trillion Won; GNP: 30 Trillion Won

The agreement between South and North Korean leaders to promote numerous economic cooperation projects at their recent summit is raising concern as to the amount of funding required and how to raise it.

Some estimate that the additional economic cooperation could cost trillions of won. But the government is keeping silent on the specific amount necessary and how it will be raised.

The Ministry of Unification analyzes that trillions of won will be necessary for the renovation of the Gyeongui Line rail link, the repair of the Gaesong-Pyongyang highway, and the modernization of the facilities at Nampo Port in a report produced last year titled, “Economic Cooperation Projects that North Korea Needs and Seeks.”

In relation to this, the Hyundai Research Institute disclosed that more than 10 trillion won will be required to seed the economic cooperation projects agreed on in its report titled, “the Economic Effects of the Inter-Korean Summit.”

Analysis by the Hyundai Research Institute shows that 11.3 billion dollars will be required, including 4.6 billion dollars for the development of the Haeju Special Economic Zone (5 million pyeong); 2.5 billion dollars for the development of the second phase of the Gaesong Industrial Complex; 300 million dollars for the expansion of Haeju Port; 1.5 billion dollars for repairing the Gaesong-Shinuiju Railroad; 300 million dollars for repair of the Gaesong-Pyongyang highway; 200 million dollars for the construction of the Anbyeon and Nampo Complex for Cooperation in Shipbuilding; and 1.3 billion dollars for the development of a tourism-leisure facility on Mt. Baekdu. When the total amount is calculated in terms of won based on the exchange rate of September 5, it amounts to 10.3587 trillion won.

In addition, assemblyman Jeong Hyeong-geun, the leader of the Grand National Party’s task force team on actions for the inter-Korean summit, argued on the same day that, “The analysis by the Korea Development Bank, Korea Land Corporation, and the Ministry of Cooperation showed that at least 30.53 trillion won will be needed to implement the economic cooperation projects agreed on during the inter-Korean summit.”

President Gwon Hong-sa of the Construction Association of Korea, one of the envoys to North Korea for this summit, said, “Out of the 50 trillion won estimated as the cost of inter-Korean economic cooperation, the preparation of the site for the Haeju Industrial Complex will cost 2.1 trillion won on its own.

The government is probing numerous ways to raise money for inter-Korean economic cooperation, such as increasing taxes though the establishment of an earmark tax; issuing government bonds on a large scale; printing peace lottery tickets; utilizing international organizations; and utilizing private money.

In a report it produced in early 2006, the Korea Development Bank revealed that out of 59.94 trillion won in funding required for inter-Korean economic cooperation until 2015, 30.2 trillion won will have to be supplied through tax increases and governmental bonds.

At a press conference at the Central Government Complex at Sejongno, Jung-gu, Seoul on October 5, Deputy Prime Minister and Minister of Finance and Economy Kwon O-kyu said, “Since all injections of money will be promoted under the control of the National Assembly, they will be carried out based on discussions within the National Assembly, and within the boundaries the government budget can cover.”

higgledy@donga.com sunshade@donga.com