[EDITORIALS]Economics Lesson for PyongyangThe Mount Kumgang tours have hit a dead end due to worsening financial problems. The tour program, "the precious son of the sunshine policy" may be discontinued after 30 months of operation because the Hyundai Group is losing money fast. The government and both the opposition and ruling parties are discussing the future of the tour program, and the people are paying attention to how North Korea will respond to Kim Yoon-kyu, the president of Hyundai Asan Corporation, who visited Pyongyang Tuesday to negotiate a plan to revive the troubled business.
To get straight to the point, the North should accept the Hyundai's proposals, reduce the payments from Hyundai, allow development of overland routes and designate a special tourist zone. Such a decision will not only benefit the North but also revive the troubled tours, helping to reinforce inter-Korean cooperation and reconciliation.
The number of tourists in the Mount Kumgang program has been plunging rapidly since April, and the company had to reduce the number of tours from 41 to 13 in May. Yet the number of tourists on some trips was reportedly less than one third of the number of crewmen on the ship, clearly indicating that the business is unprofitable. Under such circumstances, Hyundai Asan is incapable of paying the North. The North should show a flexible attitude to resolve the problems. Pyongyang should change its pricing policy from receiving $12 million of monthly fixed payment from the Hyundai to collecting payments based on the number of tourists entering the mountain area. The North should turn its eyes to methods to increase the number of tourists by accommodating them more comfortably and expanding the areas of tourist activities.
Without such measures, the Mount Kumgang tour business has no future. The ruling party reportedly considered forming a consortium between public and private companies or supporting the business by using the inter-Korean cooperation fund. Yet, such plans will not win public support, nor are there companies willing to pour money into the unprofitable business. It is now up to the North.