KT, Lotte see profits up North

As the two Koreas continue to ramp up talks, South Korean conglomerates see a gold rush in the North’s underdeveloped market, and they’re busy organizing task forces to take advantage of it.

KT said on Tuesday it launched a task force that will support economic cooperation between the two Koreas. Its main focus will be on supporting the South Korean government’s economic projects in North Korea, especially those related to information and communications technology (ICT) and software development.

The task force is composed of departments that will play different roles in assisting government support, infrastructure development and humanitarian support for North Korea. KT President Ku Hyeon-mo was appointed to lead the team, which mainly consists of senior executives.

“We will continue to do our best to strength cooperation between the two Koreas, not only in ICT, but also in the social and cultural fields,” Ku said in a statement.

The mobile carrier already has experience working with North Korea. It installed communication lines connecting the two Koreas for South Korean companies in the Kaesong Industrial Complex for 10 years, until the complex was shut down in early 2016.

Lotte Group is also preparing to organize its own task force focused on business in North Korea. However, details on the task force’s members or what kind of businesses the group is planning to launch in North Korea have not been decided, according to a Lotte spokesman.

“[Regarding business in North Korea,] we have experience in confectionery, and there seems to be a high possibility that we will tackle that sector once more,” said a Lotte spokesman. “But for now, the group is examining many areas of support and business opportunities.”

The retail and food conglomerate worked on a major plan to establish a Choco Pie and mineral water factory in North Korea back in 1995. The idea eventually wasn’t realized as relations between the two Koreas soured.

But Lotte’s Choco Pies do have a significant history at the Kaesong Industrial Complex. From 2008 to 2014, Lotte supplied 200 million to 300 million won worth of the snacks per month to North Korean workers.

Construction stocks rose sharply after South Korean President Moon Jae-in and North Korea’s leader Kim Jong-un signed the Panmunjom Declaration last month.

North Korea’s poor infrastructure suggests huge potential gains for South Koreans companies that could develop its roads, buildings, power grid and technology.

Some experts, however, remain cautious about doing business in the North. At this early stage, they say, it’s impossible to say whether relations between the North and South will continue to improve.

“There is so much uncertainty in the future relations of the two Koreas that any plans from domestic companies won’t mean much,” said Lee Seok-ki, a senior researcher at the Korea Institute for Industrial Economics & Trade, at a seminar hosted by the Federation of Korean Industries.

“As long as we are under the scrutiny of the United Nations, economic cooperation between the two Koreas is practically impossible, as it goes against UN restrictions,” said Dr. Lim Soo-ho of the Institute for National Security Strategy.

BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]