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N. Korea lays stumbling block for Pres. Park`s economic community plan

N. Korea lays stumbling block for Pres. Park`s economic community plan

Posted October. 19, 2013 07:41,   


Amid strained inter-Korean relations following stalled talks over Mount Kumgang tourism and North Korea`s postponement of family reunions, Pyongyang announced Friday a plan to build a high-tech industrial park in its border city of Kaesong through joint ventures with foreign capital.

While the North has reportedly been seeking to open six special economic zones and three special tourism zones in Sinuiju, Nampo and Haeju, among other places, it is the first time that the impoverished communist state announced a plan to build special economic zone in Kaesong.

Through a series of statements by various state organizations, including the Committee for the Peaceful Reunification of Korea, the National Defense Commission and other organizations, denouncing South Korean President Park Geun-hye by citing her actual name, North Korea has been showing an attitude indicating it does not need Seoul`s help. In late October, the two Koreas were scheduled to hold a joint investor relations session in an attempt to attract foreign investment in the Kaesong Industrial Complex. But the North canceled the session on Tuesday, saying it was not the right time to do so, before holding its own investor relations session in Pyongyang on the following day for economic experts from Canada and Malaysia. On Wednesday, the North announced that it had established the "Korean economic development federation" to help foreign businesses and organizations to advance to the special economic zones.

Some analysts say that the North`s behavior to the collapse of the three-way forum in Beijing on the economic cooperation among South Korea, North Korea and China. Initially, the North was scheduled to announce its plan for economic development in its northeastern region. The forum was canceled, however, after Seoul refused to allow South Korean economic organizations to participate.

"Just as North Korea withdrew the exclusive right it gave to Hyundai Asan to operate tours to Mount Kumgang, it can claim that the inter-Korean agreement on the Kaesong industrial Complex is expired," said Kim Kyu-cheol, director of the Inter-Korean Economic Cooperation Research Institute. The two Koreas agreed to expand the Kaesong Industrial Complex to up to 66.12 million square meters in three stages. Only after developing 3.3 million square meters in the first stage, however, the project has stopped since 2007.

It is uncertain whether the North will be able to attract investment from foreign high-tech companies to Kaeseong. The North has yet to fully lift restrictions on traffic, customs and telecommunications for South Korean companies in Kaesong. In late September, a German company completed its due diligence inspection of a potential investment site in Kaesong but reached a preliminary conclusion not to invest in Kaesong where even Internet access is not allowed. Furthermore, international sanctions have been imposed on most high-tech equipment that can potentially be turned into strategic materials, which are not allowed to be sent to the North.

"Until the Kaesong Industrial Complex is in the current state, the South Korean government has provided almost preferential benefits such as roads, electricity and water supply," said an official at a South Korean company operating at the Kaesong Industrial Complex. "The North will find it hard to provide the same utility services to foreign companies."

A South Korean government official said, "We are studying whether the North is capable of high-tech industries at a time when it cannot properly operate the textile industry and what the North`s true intention is."