It’s about trust, not sports and bread

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It’s about trust, not sports and bread

Xiyang Group Chairman Zhou Furen, one of the 500 wealthiest men in China, is skeptical of North Korea. The founder of the steel giant suffered a major loss of 240 million yuan ($38.6 million) from investing there. In 2012, the corporation lamented online that investing in North Korea was a nightmare, and that it was clear regime officials were nothing but swindlers.

In 2006, Xiyang Group participated in the development of the Musan iron mine in North Hamgyeong Province. Problems began when North Korea unilaterally changed the contract.

Two years later, North Korea said the tax on resources would be increased by 25 percent. Then Xiyang Group decided to withdraw from the project. Surprised by the decision, North Korea presented a document to keep the original contract, signed by the standing committee of the Supreme People’s Assembly. Then, when Xiyang Group succeeded in producing high-quality iron in 2011, North Korea suddenly made 16 new demands, including that Chinese and North Korean workers be paid the same. When Xiyang Group rejected the proposal, North Korea broke the contract and cut off water and power supplies. In the end, Xiyang had to leave.

This is exactly what’s happening at the Kaesong Industrial Complex now. In November 2014, North Korea’s standing committee of the Supreme People’s Assembly unilaterally revised 13 wage-related clauses and notified Korea. The rate of increase, which was agreed to be kept under 5 percent, is now 5.18 percent. Seoul is trapped in a dilemma over 0.18 percentage point. But officials say it’s not the change that matters, but the unilateral change and that the notification was unacceptable.

Innocent companies are caught between Seoul and Pyongyang, too, and the businessmen attending the 10th general meeting of the Kaesong Industrial Complex Corporate Association were anxious. The next pay day, April 10, is approaching, but South and North Korean authorities have been unwavering. The association’s chairman, Chung Ki-sup, argues North Korea is hardly being reasonable, and the Xiyang Group chairman could not agree more.

Obviously, North Korea suffered the biggest loss from Xiyang Group’s withdrawal: It lost Chinese investors to Russia, and the Musan iron mine ceased operations last year. North Korea seems to be desperate for foreign investment. Though of course, it argues that its “failed investments” were due to the fact that its contracts were not properly reviewed.

North Korea’s ruler Kim Jong-un emphasizes the globalization of bakery skills and sports. But what North Korea should globalize is trust, not baguettes and archery.

The author is a political and international news writer of the JoongAng Ilbo.

JoongAng Ilbo, Mar. 27, Page 29


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