(News Focus) Hyundai Asan upbeat on deal to resume projects with N. Korea

By Kim Deok-hyun
SEOUL, Aug. 17 (Yonhap) -- South Korea's troubled Hyundai Asan Corp. received a
welcome boost Monday after North Korea agreed to reopen its border with the South
and resume tour programs.
The company, which operates joint business projects in North Korea, has grappled
with financial woes since its major tour to the North's scenic Mount Kumgang was
halted in July last year, after a South Korean female tourist was shot dead when
she strayed into a restricted military zone at the resort area.
The agreement, announced a day after a meeting in Pyongyang between North Korean
leader Kim Jong-il and Hyun Jeong-eun, chairwoman of the South's Hyundai Group of
which Hyundai Asan is an affiliate, revived hopes for the South Korean firm that
its shattered inter-Korean businesses could be put back on track.
Another tour to the North's western border city of Kaesong was also suspended
late last year amid escalating tensions with Pyongyang over Seoul's policy of
linking its generous aid to the North's nuclear weapons program.
The company's only remaining project, a joint industrial zone in Kaesong, is also
faltering due to soured inter-Korean ties.
Although it remains unclear whether Hyundai could restart its businesses anytime
soon because any resumption of tours to the North requires approval by the South
Korean government, company officials were optimistic about the future.
"It feels like that we're nearing the end point of a long and dark tunnel," said
an official at Hyundai Asan.
Hyundai Asan pioneered the sightseeing of the North Korean mountain resort in
1998. More than one million South Koreans have visited it since.
As of July this year, the suspended tours have cost Hyundai Asan 170 billion won
(US$135.9 million) in lost sales.
The company posted a net loss of 25.7 billion won in the first-quarter of this
year, more than a loss of 21.3 billion won for all of last year. To stay afloat,
Hyundai Asan cut more than half of its workforce to 401.
However, other than the conciliatory agreement by North Korea and Hyundai, other
matters remained unclear, including whether the South Korean government would
approve a resumption of tours to the North.
Park Dae-shik, head of international division at the Federation of Korean
Industries, said the agreement might eventually pave the way for resuming
inter-Korean exchanges.
But, Park cautioned that the South Korean government would be reluctant to
restart full-blown cross-border businesses unless there is progress in
dismantling the North's nuclear weapons program.
In another headache for Hyundai Asan, South Korea is currently in dispute with
North Korea over its demand for steep hikes in wages and land fees for the
Kaesong industrial zone.
Currently, some 40,000 North Koreans are being hired by about 100 small-sized
South Korean companies at the park for a monthly wage of about $75. The North is
seeking a four-fold wage increase and a 30-fold hike in land rents.
With the future of the park in uncertainty, domestic and foreign buyers have
begun cutting back on their orders for garment and other labor-intensive goods
produced at the park. One South Korean company has already pulled out of the
park.
(END)