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Foreigners kept back from N.Korean industrial park

October 13, 2005

By Lindsay Beck

KAESONG, North Korea (Reuters) – Nearly a year after a
North Korean industrial park started shipping goods to the
South in what was seen as a tentative step toward market
reform, there is little sign of any trickle-down effect on its
economy.

In fact, seen from the North, there is precious little sign
of anything.

Foreign journalists were taken to the outskirts of the
park, on secretive North Korea’s side of the heavily fortified
Demilitarised Zone, on Thursday but were allowed only a glimpse
of a cluster of buildings on the horizon.

Choe Kyong-jin, of the Kaesong Foreign Affairs Department,
said the closest the visitors would be allowed was 1.2 km, or
less than a mile, away.

“The system of our country and others is different, so this
area is banned to other people,” he told visiting foreign
journalists grouped on a bridge over a nearly dried-up river,
adding he had been to the park only twice.

The interpreter said she had not only not been to the park
before, she had not even heard of it, but she was confident of
its success.

“It can promote good ideas,” she said.

Critics say the Kaesong Industrial Park, home to clothing
and kitchenware firms among others, faces stiff competition
from nearby, low-cost China. They say communist North Korea,
starved of energy, does not pass on full $57.50 monthly wages
to the workers in the park and is a difficult business partner.

The economy in North Korea, whose nuclear weapons program
has prompted four rounds of multilateral talks in China, is
largely moribund despite — some say because of — piecemeal
market reforms introduced in July 2002.

But advocates of the park say the site offers cheaper labor
than even China and easy access to the South’s market and ports
courtesy of a new road through the Demilitarised Zone.

There was no sign of industrial life outside the park,
which is still in its early stages. During the 30-minute
briefing on the bridge, only one car drove by.

But most traffic — dozens of South Korean vehicles a day
– is heading South. From the southern side of the
Demilitarised Zone the vehicles and buildings are clearly
visible, and a cross-border railway track will soon be
inaugurated.

LIMITED CAPITALISM

In the North, crops were being harvested by hand under the
autumn sun and in the nearby city proper of Kaesong, people
traveled by foot or bicycle. There were no private cars.

A diplomat attending an EU workshop on economic reform in
North Korea said the park was a means of deepening ties with
the capitalist South and attracting foreign capital. North and
South Korea are still technically at war, as the 1950-53
hostilities ended with an armistice rather than a peace treaty.

“If it is also an experiment with limited capitalism, they
didn’t say so explicitly,” the diplomat said.

The subsidiary of South Korea’s Hyundai Group responsible
for development in North Korea this month ousted an executive
who was a confidant of Pyongyang’s leaders and helped build the
Kaesong park’s pilot project..

Hyundai Asan Corp.’s board of directors voted to remove Kim
Yoon-kyu as vice chairman on the grounds they suspected him of
siphoning off about 820 million won from construction projects
and taking payments for his personal use, the company said in a
statement.

Hyundai Asan is also responsible for the Kumgang mountain
resort, also just north of the DMZ but on the east coast of the
peninsula, where the number of tourists allowed to visit was
halved to 600 a day from September 1 after Kim was sacked.




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