朝鲜商业月刊 2012 年 5 月

International Focus on North Korea: Opportunities and Challenges

Overview:

In May 2012, North Korea (DPRK) dispatched its ceremonial head of state, Kim Yong Nam, alongside two top economic officials to Singapore and Indonesia. This diplomatic move aimed to attract foreign investment and expand economic partnerships, particularly in light of strained relations with South Korea and escalating global sanctions.

Key Developments:

Economic Diversification and Investment Attraction: North Korea has been focusing since 2009 on enhancing its economy through light industry development, foreign investment attraction, and trade expansion. Seeking to diversify its trade and import natural resources while exporting consumer goods, the country looks towards Southeast Asia for support. Singapore is highlighted as a model for direct foreign investment, while resource-rich Indonesia provides insights into mining revenue generation.

Singapore as an Economic Model: Singaporean businesses have supplied North Korea with a variety of goods, including Heineken beer, Hello Kitty items, and Western cuisine like hamburgers and Belgian waffles. North Korea seeks to replicate Singapore’s success in attracting foreign investment, especially for its special economic zones.

South Korea-China Free Trade Agreement: South Korea is negotiating a free trade agreement with China that could benefit North Korea by lowering tariffs on products made in North Korea’s special economic zones, making investment more favorable.

Investment in Infrastructure: Jilin Province in China is investing significantly in border infrastructure, including a high-speed railway line and highways, aiming to connect major North Korean towns with China, potentially creating economic growth opportunities.

Competition for Investments: Multiple investment agencies within North Korea compete for investments, indicating a level of rivalry among top officials. These agencies operate within a complex system where cross-agency communication is poor, suggesting potential for rent-seeking activities if managed poorly.

Aminex PLC Withdrawal: British energy company Aminex PLC withdrew from North Korea after signing a deal covering offshore exploration, citing concerns over international sanctions. The decision allowed Aminex to focus on its African portfolio.

Chinese Investment in North Korea: China’s increasing trade with North Korea has tripled since 2005, with a notable increase in mineral imports from North Korea to China. This highlights growing interest in exploiting North Korea’s natural resources for export through joint ventures.

Conclusion:

Despite ongoing sanctions and political tensions, North Korea actively seeks to diversify its economic partners and attract foreign investment, particularly from Southeast Asian countries and China. The government's efforts to develop infrastructure and improve trade relations suggest a strategic approach to overcoming economic challenges and enhancing national prosperity. However, internal competition among investment agencies and the management of foreign investments pose significant challenges to sustainable economic development.