BUSINESS

[Newsmaker] Hyundai Group holds out hope for NK projects

By Korea Herald

Group’s NK investment arm remains cautious, but says it’s a mission it wants to carry on

  • Published : Jul 3, 2017 - 18:36
  • Updated : Jul 3, 2017 - 18:45
Hyundai Group, the sole South Korean investor in North Korea, is seeking to resume its inter-Korean resort business which was abandoned nearly a decade ago after the fatal shooting of a tourist from the South.

According to media reports Monday, the conglomerate, now led by the founder’s daughter-in-law, is planning to request Seoul’s permission to visit the North in August to hold a memorial ceremony for its late former chairman, Chung Mong-hun.

The group has been holding the memorial service for him every year at Kumgangsan, a mountain in the North where the company has a resort, but skipped the service last year in the face of rising tension in inter-Korean relations.

However, a shift in the political landscape under Moon Jae-in -- South Korea’s newly elected leader who is open to dialogue with Pyeongyang -- seems to be awakening hopes for Hyundai, experts said of the plan. In this regard, the plan to visit the North is a chance to resume the politically vulnerable but symbolic project for inter-Korean ties, they added.

The Hyundai Group headquarters in Seoul. (Bloomberg)

If approved by both Seoul and Pyeongyang, Hyundai Group is likely send senior officials including Chairwoman Hyun Jeong-eun, the widow of Chung, who killed himself in 2003.

Chung was the fifth son of Hyundai Group Founder Chung Ju-young who was a North Korean refugee and the successor to his father’s inter-Korean projects. Unlike other conglomerate leaders, the Hyundai founder saw the reunification of the two Koreas as a personal mission and hoped for his sons to carry on with that unfinished task.

But Chung Mong-hun killed himself amid a scandal that accused him of illegally funneling money to the North in support of then-President Kim Dae-jung’s Sunshine Policy.

Chung, with his ailing father, was the one who started the Kumgangsan tours in 1998, carrying South Koreans via sea to the North Korean mountain. He continued to focus on the inter-Korean project while his brothers took parts of Hyundai Group during years of sibling feuds that ended in 2001 when their father died.

Hyundai’s project was widely seen as a contributor to inter-Korean relations, despite questions over its sustainability, the transparency of the money sent and the safety of tourists in the North, with which South Korea is still technically at war,

The tours even physically reconnected the two Koreas by allowing South Koreans to cross the demilitarized zone for trips to Kumgangsan.

But the tours have been suspended since a South Korean tourist at the resort was shot dead by a North Korean soldier. Hyun immediately visited Pyongyang and met then-North Korean leader Kim Jong-il. She said the late Kim promised to prevent a recurrence of the incident, but the tour program has been halted ever since.

Despite hopes for revival of the tours, its North Korean operator Hyundai Asan said nothing has been confirmed yet.

“We have held the ceremony every year and are considering a visit to Kumgangsan, where we have erected a monument in memory of former Chairman Chung and nothing more,” said Kim Ha-young, a senior official at Hyundai Asan. “The reports on Hyundai Asan resuming North Korean tourism are a bit exaggerated,” he said, adding that the business can only be resumed if an agreement is reached between Seoul and Pyeongyang, such as lifting a ban on inter-Korean economic activities.

The company has so far made 260 billion won in direct investment on its Kumgang project, while losing some 1.5 trillion won in opportunity costs, when calculating the profit the company might have earned if business had kept going for the past nine years, he said.

Despite lacking a concrete timeline and continued political volatility, however, Hyundai Asan will never give up on the North Korean project.

“The inter-Korean project is the foundation of Hyundai Asan and is the reason for our operation,” Kim said. “Not to mention, the founder’s spirit (for reunification),” he said.

By Cho Chung-un (christory@heraldcorp.com)