North Korea Promotes Foreign Investment Opportunities

Via NK News, a report on North Korea’s efforts to promote foreign investment opportunities amid ongoing investor concerns:

North Korea is renewing a push for further international cooperation and business investment in 2015, according to a Wednesday report by the Korean Central News Agency (KCNA).

The article promotes a series of trade fairs taking place in Pyongyang throughout the year, including some that it claims are being organized in conjunction with foreign countries.

“The Korean International Exhibition Corporation concentrates efforts on strengthened international exchange through trade fair(s), pursuant to the DPRK state policy on fostering the external economic relations in a multilateral way,” the article read.

“This year will also see various trade fairs co-sponsored in Pyongyang by the DPRK and other countries, including a German trade fair on November 2-5.”

Some of those that have attended past trade fairs noticed an increased interest and attendance from foreign attendees.

“The North Korean trade fairs over the years have been growing and if you compare the 2014 fairs with the ones in 2013 you can see a growing interest,” Paul Tija, of the Dutch firm GPI Consultancy, told NK News.

“The number of participating companies like exhibitors and the number of visitors and countries involved increased so in general the amount of interest is growing.”

The announcement, however, follows a tumultuous period for foreign companies involved in, or looking to become involved in North Korean markets and investment opportunities.

The borders of the country had been abruptly closed by North Korean authorities on October 24 due to the implementation of strict Ebola quarantine measures, not lifted until early this month.

Foreign tour companies experienced a short-term drop in revenue, while the measures also renewed concerns over the long-term viability of conducting business in North Korea. This is despite indications that North Korea has been placing a greater focus on economic development over the past two years.

While North Korea is again promoting tourism and highlighting the international investment opportunities, the impact of the ban is still being felt.

Tija cited another example of a Dutch company involved in agriculture-related trade in North Korea that, due to border closure, was unable to conduct its business for 2015.

“They had to be in North Korea this winter because of the upcoming planting season, which could not take place, so the whole business cycle is missed and that is not an example of a transactions that could take place.”

The uncertainty of the border closure will likely mean that attendance for the spring trade fair itself, scheduled for May 11, will be affected as the planning and securing of placements at such fairs typically takes place months prior to the event.

“Of course the events like the closure of the borders (do) not make life easy including with the planning of these events. Until one week ago I was not sure ago I was not sure if it would make sense to promote the trade mission in 2015,” Tija said.

“On the short term it is a little bit of a handicap, the last six months I would say. One could also imagine for the upcoming spring fair people it will have a negative result because the planning should have taken place months before.”


North Korea has also recently made public efforts to counter claims of its involvement in money laundering activities and allay fears of how it uses the funds accrued from foreign business activities.

In January North Korea publicly stated its commitment to boost “international cooperation for anti-money laundering and combating of financing of terrorism” via state media.

Some of this activity however still appears to be continuing, with the 2015 Panel of Experts draft report saying that following investigations, “the country continues to use multiple circumvention techniques to mask its involvement in both legitimate and illicit transactions.”

“Potential investors must understand that legal risks flow from political risks,” Joshua Stanton, author of the One Free Korea blog told NK News.

“Sooner or later, some provocation will cause the (U.S.) President or Congress to impose new sanctions, and these will raise the reputational and compliance costs of doing business in North Korea to levels shareholders will be unwilling to tolerate. Banks, in particular, take know-your-customer rules seriously.”

While the promotion of the trade fairs may signal attempts by Pyongyang to take steps toward increasing legitimate trade and investment from foreign countries and entities, it may not necessarily mean that the North Korean government is willing to adhere to common business practices expected in established foreign markets.

This again presents issues for countries and investors looking to economically engage North Korea and bring about broad positive economic changes as a result.

“There are several questionable assumptions in the conventional, ‘Sunshine’ theory of engagement: One, that the regime is interested in anything more than a small, steady, necessary amount of investment with controllable people in controllable places; two, that it is willing to accept social or political change as the price of it; and three, that profiteering or capitalism necessarily equate to political or economic reform,” Stanton told NK News.

“I’m skeptical of all three of those assumptions. The evidence so far mostly shows that Pyongyang is embracing state capitalism and using some of the proceeds to isolate the rest of the country. That’s only good news if you forget that some of history’s worst totalitarians were state capitalists.”

This entry was posted on Friday, March 13th, 2015 at 4:04 am and is filed under North Korea.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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