North Korea factory park seeks foreign investors

Kaesong, North Korea, June 23 : Foreign executives saw both the potential and the risk of investing in North Korea as they toured an industrial park on Thursday while regional powers urged Pyongyang not to launch a long-range missile.

The trip to the Kaesong Industrial Park by 200 executives, diplomats and journalists came as Seoul, Tokyo and Washington said there were indications North Korea was planning to launch a ballistic missile.

The park, run by an affiliate of the Hyundai group, is located just a few hundred metres (yards) north of the Demilitarised Zone that divides the peninsula. It is about 70 km (45 miles) northwest of Seoul.

Seoul sees the Kaesong Industrial Park as a model of integration between the capitalist and communist economies of the two Koreas, and perhaps easing eventual unification.

Some tour participants emphasised the political and social implications of a South Korean-run complex in the North.

''This shows me the North is basically accepting the inevitable,'' said Pietro Doran, who runs Doran Capital Partners, a private equity firm in South Korea.

''You can't have so many North Koreans exposed to so many foreigners and not have any consequences.'' But any attempt at conversation with the workers, beyond simple greetings, were discouraged by a small group of guides who steered the visitors away.

Hyundai Asan helped organise the visit of a cosmetics container plant, a shoe factory and a garment factory in order to attract foreign investment to the industrial park where the main selling points are cheap land and labour.

Some saw great potential, noting the large amount of land for the project, good prices and proximity to Seoul and its transport hubs.

''This is an extremely impressive plan, very ambitious and well-organized,'' a French company executive said. ''The logistics are remarkable, the factories are very clean, and the workers are clearly competent.'' Others said they will avoid Kaesong because of the difficulties of doing in a business in a communist state and the possible repercussions of producing goods in a country shunned by many leading economies.

There are currently 15 South Korean companies in the industrial park, manufacturing goods ranging from cosmetic cases to watches to shirts and fishing shoes. Of the park's 8,361 workers, 7,723 are North Korean, Hyundai Asan said.

South Korean factories at Kaesong pay a minimum monthly wage of for workers along with a .50 fee for social insurance, for a 48-hour workweek. The money is not paid directly to the workers, but instead goes to the North Korean government, which then dispenses the wages.

At the Samduk Stafild shoe factory, where North Korean workers are turning out golf, skateboarding and hiking shoes, two young North Korean workers shook their heads in bewilderment when asked where the plant's break room was.

''What's a break room?'' one of them asked.

Reuters