Investors keen to buy into N. Korea
Pyongyang will benefit from peace on the peninsula, with South Korea's Moon already outlining potential joint economic projects
North Korea is being wooed both by the US and South Korea with diplomatic phrases that describe it as "brimming with prosperity", and an extraordinary proposal to create "three economic belts" connecting the two Koreas.
North Korea, too, has been liberalising its economy to attract foreign companies, and several are already keen to invest in the impoverished nation.
US Secretary of State Mike Pompeo broke the news many investors were waiting for, when he declared on May 13 that if the Pyongyang regime agrees to dismantle its nuclear weapons programme, the US would allow its companies to invest in its energy, infrastructure and agriculture sectors, all of which the North needs.
Prospects of peace on the Korean peninsula brightened after a meeting between North Korean leader Kim Jong Un and South Korean President Moon Jae In last month.
If the Trump-Kim meeting next month results in a breakthrough, it would enable Mr Moon to implement his plan to develop the "three economic belts".
At their April 27 meeting, Mr Moon gave Mr Kim a booklet on the "Korean Peninsula New Economic Initiative" outlining the joint economic projects that could be started if relations improved.
The "three economic belts" Mr Moon announced last year comprise an energy and resource belt along the coast of the Sea of Japan, covering Mount Kumgang, Wonsan and Rason; a trans-west sea economic belt focusing on industry, logistics and transportation surrounding the North Korean city of Sinuiju; and a border peace belt along the demilitarised zone, which will help improve tourism flows.
A slew of companies from Britain, Germany, Italy and South-east Asia are already operating in North Korea.
Germany's DHL Express has had a presence for about 20 years, and Egypt's Global Telecom Holding controls the majority of shares in North Korean 3G provider, Koryolink.
Despite facing international sanctions, North Korea's economy grew at its fastest pace in 17 years in 2016, said South Korea's central bank; its gross domestic product rose 3.9 per cent from the previous year.
Prospects for eventual reunification of the peninsula will brighten even more, provided a formal peace treaty can be concluded.
For now, the North is keen on the lifting of the United Nations sanctions that were tightened last year. These have prohibited exports of coal, iron, lead and seafood. The sanctions also ban new joint ventures between North Korea and foreign companies and equity investments by foreign companies.
Pyongyang has realised that foreign investment and technology inflows are essential to help develop its primitive economy. Yet, it remains wedded to its juche ideology of self-reliance.
The North has, nonetheless, since 1992 been issuing extensive laws to encourage foreign capital investments, free trade and economic zones, foreign enterprises and joint ventures.
But does it possess the ability to attract, protect and retain foreign investors?
At a conference in Beijing in 2015, scholars from Pyongyang and China disagreed over this question, with the former saying North Korea offered legal and financial incentives, and the Chinese raising doubts because of UN sanctions.
For now, any easing of sanctions would send a signal to foreign investors that it is safe to invest in the North.
The writer is editor-in-chief of The Calcutta Journal of Global Affairs. This article appeared in The Business Times yesterday.
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