Can US firms invest in North Korea? By Kim Yoo-chul

North Korea is one of the world’s most secretive countries with lots of unpredictability. While some say the country has an improved understanding of free market economies, it is still ruled by an often chaotic leader.

The question is who is ready to start or own a business there? Literally, nobody.

South Korea’s Hyundai Group is the only authorized private business partner of the North, and has the exclusive right to pursue its tourism-centric business there, following approval by Pyongyang.

But some American venture capitalists are hoping to be ready for a possible corporate invasion of the reclusive state with growing expectations that the international community may offer financial assistance packages if Pyongyang opens up its economy after denuclearization.

“Washington plans to give the go-ahead to some private businesses and investors to open up offices in North Korea if Pyongyang completes dismantling its nuclear arsenal as planned,” E-Best Securities said in a report Thursday.

Chances, however, are slim for the time being that the North will welcome advances from U.S. capital or joint ventures in the near future, according to analysts.

U.S. President Donald Trump presented ideas of what the North could get if it “completely dropped” its nuclear programs for a permanent peace on the Korean Peninsula and in Northeast Asia.

“As an example, they have great beaches,” Trump said at a news conference after his meeting with North Korean leader Kim Jong-un in Singapore, June 12. “You see that whenever they are exploding their cannons into the ocean. I said, ‘Boy, look at that view. Wouldn’t that make a great condo?'”

Some private companies are establishing internal taskforces to develop such plans said lawyers in Seoul with knowledge of the issue, as North Korea is the last untouched market in the region. They said some private non-Korean businesses have approached them to explore possible business chances with Pyongyang.

“The North is known to have a skilled workforce in the aerospace and agricultural industries and the country has abundant raw materials such as coal and iron ore. The North needs to modernize its electricity distribution system and advance technology for agricultural industry,” said a government official asking not to be named.

Citing independent research by Radio Free Asia, the E-Best report said Intel, Microsoft, Google, Dell, Starbucks, Ford ands Boeing didn’t respond to questions about their plans, if any, for doing business in North Korea.

There is concern over the possibility that assets invested in the North could be confiscated for political purposes. While electricity and water are a must for businesses, it is questionable whether the North can guarantee their supply. The North lacks even the basic ways to address and resolve business disputes.

The Gaeseong Industrial Complex, which was built more than a decade ago in the North, was closed twice before the North confiscated South Korean assets in 2016. The combined losses for the 123 companies there were about $1.3 billion, and the North didn’t compensate them after the complex was shut down.

Representatives at Samsung and LG, the country’s leading conglomerates, say they have no plans to explore business opportunities in North Korea.

Any drastic change in the business climate there after President Moon Jae-in’s third summit with the North’s leader Kim Jong-un in Pyongyang, next month, will not be unprecedented.

Once-closed Myanmar, Vietnam and China opened for business winning business deals from around the world. Moon Chung-in, a senior presidential advisor, recently claimed North Korea wants U.S. investment.

“President Moon will tell the North’s leader Kim during their third meeting in Pyongyang the economic benefits the North can get once sanctions are lifted. Moon has proposed the establishment of a railroad community including the United States and North Korea. I believe this is a step toward the development of the North’s economy,” said Lim Eul-chul, a North Korea expert at Kyungnam University here.

Source:koreatimes.co.k