Hyundai to form international consortium for NK biz

By Kim Yoo-chul

One of the best-known names in business here is preparing to take advantage of the country's improving relations with North Korea.

While there are lots of questions over whether U.S. companies want to invest heavily in the North given the many uncertainties, Hyundai Group is betting big on new kinds of gambles there.

The conglomerate said Wednesday it was seeking to establish a consortium in anticipation of launching several sizable economic projects in North Korea.

"We are having discussions with businesses that want new business opportunities in North Korea. Among them are well-known international and domestic companies, as well as international funds. We can't name the partners we are talking to given the sensitivity of the issue," a Hyundai official said.

The group is planning to acquire companies that are now on sale via its investment arm in order to diversify its business portfolio.

Hyundai Group has exclusive rights authorized by the South Korean government to handle and manage all significant business projects relating to North Korea, meaning its profits are dependent upon developments of North-South relations.

The group reached an agreement with North Korea in August 2000 under which Pyongyang guaranteed exclusive rights to the business group to handle seven social overhead capital (SOC) businesses linked to electricity, telecommunications, railroads, tourism and others until August 2030.

"A large investment in SOC will encourage private investment later. What we have to do is find trustworthy business partners to restart economic projects in North Korea in close collaboration with the group. Hyundai needs help from foreign funds and international organizations," the official said, adding "quite a few" have approached Hyundai.

Over the last decade, the combined operating losses of Hyundai Asan, the group's flagship affiliate, reached over 200 billion won as it was forced to shut down business projects in the North because of worsening ties between the two Koreas.

Hyundai Group separated into several business groups in 2000, parting ways with Hyundai Motor, Hyundai Department Store and Hyundai Heavy Industries groups. It had been involved in various business projects in North Korea, including a mountain resort at Mount Geumgang and the Gaeseong Industrial Complex, where South Korean companies paid North Korean workers to manufacture shoes, watches and other goods.

The group official said they were closely monitoring the upcoming June 12 summit between North Korean leader Kim Jong-un and U.S. President Donald J. Trump, as well as other potential challenges and changes to the sanctions in place on the North.

Deputy Prime Minister Kim Dong-yeon said last week Seoul was considering "various scenarios" to resume economic cooperation with Pyongyang, though declining to elaborate.

But he said Seoul has set $900 million as its initial fund to help get such economic projects on track.