FKI plans new liaison branch in Pyongyang

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FKI plans new liaison branch in Pyongyang

The Federation of Korean Industries, the country’s most influential business organization, plans to establish an office in Pyongyang, North Korea.

“The purpose of the FKI’s outpost in Pyongyang will be for South Korean private companies to act as a mediator for economic cooperation and unification,” a high-level FKI official on Sunday told the JoongAng Ilbo.

Once the office is up and running in the North Korean capital, it will offer consulting services to South Korean companies on investments and economic cooperation.

The FKI, through unofficial channels, recently asked the South Korean government to approve a visit to North Korea’s Masikryong Ski Resort, an ambitious entertainment project pushed by North Korea’s Kim Jong-un.

“It is a message from the South Korean private business sector to both the South and North Korean governments that we are willing to participate in economic development plans with North Korea,” said the FKI official.

The FKI last August established an economic unification committee and has been looking into various possibilities that could advance economic cooperation between the two Koreas.

“This year marks the 70th anniversary of the division of the two Koreas, but conflict and mistrust between the two have deepened further,” said Kim Byung-yeon, an economics professor and deputy director at Seoul National University’s Institute for Peace and Unification Studies. “An outpost of change like the Kaesong Industrial Complex that not only stimulates but leads North Korea to open up is needed.”

Until now, economic cooperation with North Korea has largely been led by the South Korean government. As a result, initiatives like Mount Kumgang tourism have been greatly affected by political and social tensions.

Businesses see greater cooperation with North Korea as one way to help overcome four “lows” that have held back South Korea - low growth, low investment, low interest rates and low inflation.

“North Korea offers huge economic potential with its population of 25 million and connections to North Asian and Russian markets,” said Lee Seok-ki, a senior researcher specializing in North Korean industries at the Korea Institute for Industrial Economics and Trade.

“Private-sector led joint development with North Korea would open doors of opportunity and help both the North and South make huge leaps economically.”

Lee Seung-cheol, FKI vice chairman, proposed turning North Korea into the Switzerland of Asia by joining forces with South Korean companies to develop an industrial complex in mountainous areas specializing in organic food, healing and tourism. Roughly 80 percent of North Korea is mountains and uplands.

The next step would be to expand industrial cooperation in manufacturing and other areas.

On top of economic cooperation, the FKI wants the government to enhance existing cooperation by constructing a second Kaesong Industrial Complex and allowing foreign companies to have their own operations there.

According to the South Korean Unification Ministry, commercial trade between North and South Korea in the first three months of the year was $710 billion, with 99 percent of it coming from the Kaesong Industrial Complex. The value of products entering and exiting there has increased from $18 million in 1989 to $2.3 billion today.

“Other than the exchange of goods, businesses like investment cooperation,” said Cho Bong-hyun, an analyst at IBK Institute. “It is worth considering turning one or two of the 19 economic development complexes in North Korea into a second Kaesong Industrial Complex.”

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