[Photo provided by Hyundai Group]
South Korea’s Hyundai Group, which used to spearhead inter-Korean ventures before ties were cut off, plans to form a multinational consortium of corporations, public entities and international funds to finance revived and future infrastructure projects in North Korea.
Hyundai Group last week launched a task force team in anticipation of renewed inter-Korean cooperation after the April 27 summit between the leaders of the two Koreas.
Hyundai Asan, the flagship unit of the Hyundai Group, will work to capitalize on its exclusive rights to seven infrastructure projects in North Korea following the first-ever inter-Korean summit in 2000. The agreement gives the company the authority to spearhead seven projects, including the development of electricity and communications infrastructure, railway, airport in Tongcheon, dam on Imjin River, development of water resources from Mount Kumgang, and other tourist attractions in the North.
It, however, no longer has the financial means for the massive projects.
Hyundai Asan has logged 200 billion won ($185.1 million) in operating losses over the past ten years and other units are also running low on cash.
Hyundai Group does not think North Korea will object to a multinational consortium. The agreement between Hyundai Asan and North Korea stipulates that “Hyundai should lead the project but could raise the financing from other sources, including foreign governments, funds and international organizations.”
Some have raised concerns whether the 30-year business rights are still valid as they have not been properly exercised for the past 18 years since the two parties signed on the agreement. Hyundai Asan, in response, claimed its rights cannot be unilaterally nullified and that any issues regarding the project could be smoothed over with talks with North Korea.
Hyundai Asan once led tourism programs to Mount Kumgang resort in North Korea and is the individual business holder of a joint industrial park in the North Korean city of Kaesong, which is now under control of the North Korean authorities after Seoul shuttered the complex in protest against Pyongyang’s fourth nuclear test and launch of a long-range missile.
By Hwang Soon-min and Kim Hyo-jin
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]