Harvesting Peace @ DPRK (North Korea)

A Post-Mission Report

By MIKOspace

First DPRK Business Mission 2018

18-22 September 2018

At The Dawn of Peace @ DPRK (North Korea)

We were there when peace began in the Korean Peninsula. 

From 18-22 September 2018, invited by the DPRK Committee for the Promotion of International Trade (KOMT) in conjunction with the DPRK Ministry of External Economic Relations (MEER), our 5-day fact-finding Business Mission was designed to empower and facilitate Singapore companies, businesses, investors, CEOs and entrepreneurs to explore and grow market opportunities and possibilities in the Democratic People’s Republic of Korea.

This historic First Business Mission to DPRK, invited by the DPRK Committee for the Promotion of International Trade (KOMT) in conjunction with the DPRK Ministry of External Economic Relations (MEER), was an exclusive opportunity for discovery and inspiration to uncover and leverage on the diversity that

DPRK can add to the global marketplace of international trade and development.

We returned with a bundle of US$2+ billion worth of investment projects, possible the largest number by any business missions from Singapore to any countries.

We are however prohibited by current sanction laws to secure any of the projects in any formal contractual manner.  In the meantime, potential Korean partners and the participants shall continue to exchange ideas and suggestions on the possible nature and outcome of future project ventures.  The following are some of the investment-ready ventures:

·         Korea International Exhibition and Convention Complex (KIECC) – US$250m

·         30-Storey 5-Star Hotel in the KIECC Complex – US$150m

·         Tourist Bus Station – US$5.55m

·         Petrol Filling Stations – US$2.64m

·         Pelotherapy Clinic – US$1.8m

·         Offshore Seafood Farm – US$2.4m  

·         Seafood Distribution – US$500,000

·         Wonsan-Mt Kumgang Railway Renovation – US$324m

·         Brewery – US$53m

·         Songdowan Hotel Renovation – US$105m

·         Haean Hotel Hotel Renovation – US$25m

·         Mokran Restaurant Renovation – US$2.6m

·         Tanphung Restaurant Renovation – US$700,000

·         Health Service Complex – US$4.55m

·         Department Store Renovation – US$7.4m

·         Wonsan Lighting Apparatus Factory – US$2.75m

·         Wonsan Hotel Facilities Factory – US$2.13m

·         Development of a Singapore Industrial Park – US$600m-US$1billion

The Koreans expressed great interest, enthusiasm and eagerness to work with Singaporeans, whom they regard as the more experienced, modern and knowledgeable alternative to their current abundance of PRC Chinese businessmen already in DPRK.  Indeed, most of our Business Mission participants have richly diverse and vast hands-on business and management experiences in several ASEAN countries, as well as China, Japan, Europe and the USA.        

On 19 September 2018, DPRK Leader Kim Jong Un and South Korea President Moon Jae-In signed the Pyongyang Declaration which also affirmed their earlier April 2018 Historic Panmunjeom Declaration. Together, they declared to the world to abide thoroughly by and faithfully implement the 2 Agreements and to take practical measures to transform the Korean Peninsula into a land of permanent peace. 

We arrived on the previous day at the modern Pyongyang FNJ Airport in the late afternoon, to be greeted and processed by a smiling and friendly Immigration Officer, and worked our way through Customs after baggage claims.  Modern baggage handling equipment and security screening sensors made for a smooth clearance.  Laptops and mobile phones were also carefully inspected for objectionable pictures and apps. The airport clearance was significantly faster and more efficient than in Beijing, Vietnam, Bangkok and Dubai (recently visited).   

Several senior staff from our Host KOMT warmly welcomed and greeted our arrival as we exit Customs. The 25-min road trip through Pyongyang streets saw many people walking along the roads, while others packed the numerous electric tram buses. There were also many cars, but no traffic jam. Traffic lights and ample road-signs make Pyongyang city indistinguishable from any developed modern metropolis. Many beautiful public parks, with landscaped bushes and flowers have gatherings of people with children and families, exercising or otherwise just resting by themselves or with loved ones.  Also saw so many students in their common sailor-like uniforms (Primary School) and white blouse (shorts)/blue skirt (trousers) co-ordinates for older kids.  The streets and roads were clean and litter-free, unlike some parts of China, Hochiminh city, Malaysia, Indonesia, India and many European cities.

We finally arrived at the 4+ (but likely 5-star) Potonggong Hotel located beside the famous Potonggang (or Pothong) River which winds itself through Pyongyang City.  Check-in was instantaneous with passports in exchange for room keys.  Well-lighted air-conditioned rooms have bottled water, large beds with clean sheets, clean towels and usual toiletries, shower heads and a bathtub with hot&cold water, bath robes and the indispensable furry slippers.  Tap water is also drinkable.  A kettle with cups and glasses provide abundant water for the unquenchable. The colour TV with remote controls has mostly Chinese channels and also English news channels like Aljazeera and RT.  No BBC or CNN or Fox. Free internet connection is available via an Ethernet box in the room, while WIFI is available at the hotel lobby for just US$1.60 for 10 minutes.  What more can a tired traveller ask for?   

 

Breakfast has everything, ranging from eggs, toasts, noodles, fish, vegetable, rice, soups, milk, juices, coffee/tea … etc like the usual breakfast at any great hotels in the world. 

Investment and Financial Regulatory Framework

The next day, our meeting began with an overview of the financial investment regulatory framework and the applicable laws.  To the potential investor, they have sufficient details and are comprehensible in their English versions.   A complete guide to all the applicable investment laws can be found here.  They addressed the following key concern areas of potential investors:

1)   Types of Enterprises and Foreign Ownership Permitted;

2)   Contract Laws and Related Regulations;

3)   Industrial and Enterprise Dispute Settlements; and

4)   Movement of Funds and Profits Repatriation.

Mission participants were provided with the latest DPRK Investment Guide which detailed over 114-pages with information and address these key concerns of investors.  Their specific applications would however be customised to specific projects.  During discussions, there were sincere assurances of flexible accommodation to the needs of particular investors.  Some specific projects were used as illustrations. 

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Wonsan-Mt Kumgang Opportunities

A special treat to the Business Mission was the presentation on Wonsan-Mt. Kumgang International Tourist Zone (“the Zone”) by the Project Director from the Korean Economic Development Agency responsible for its development. The Zone is a massive tourism project around Wonsan, a coastal city about 180 km from Pyongyang City.  It includes the areas of Wonsan, Masikryong Ski Resort, Ullim Falls, Sogwang Temple, Thongchon and Mt. Kumgang and covers an area of some 400 km².  In 2015, DPRK announced plans to invest US$7.8 billion (S$10.6 billion) into the Zone by 2025 with the aim to attract 1 million foreign tourists.  There are more than 30 feasible investment-ready projects ranging from US$50,000 to US$500,000 to US$4-US$100millions.

We have at least 12 feasible investment-ready projects for Singaporean consideration in the post-sanction Wonsan Zone. They include renewable energy eg wind turbines, new hotel developments and renovation of older hotels, repairs and upgrading of a mountain railway system, café and restaurants, petrol service stations, lighting factory, plastic goods factory, seafood restaurant, folk martial art centre, tourist bus station, fish farm, fitness centre and several others.   

The Zone has approximately 140 historical relics, 10 sand beaches, 680 tourist attractions, 4 mineral springs, several bathing resorts and natural lakes and more than 3.3 million tons of mud with therapeutic properties for neuralgia and colitis.

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New Exhibition & Convention Centre + Hotel

We visited the 14^th Pyongyang Autumn International Trade Fair in the ultra-modern 

Pyongyang’s Three Revolutions Exhibition Hall.  Just over 320 companies, with many Chinese companies were selling everything from car batteries to "kangaroo essence" health pills. Several other countries are also represented.  For example, a Russian medical technology company is selling heart-beat monitoring wrist watches, and the kangaroo capsules, supposedly good for the health, are being sold by a New Zealand company. Businesses from a few more countries, such as Italy and Cuba, are there seeking business opportunities, but not selling anything. The local products displayed were mostly clothing, traditional medicines, cosmetics, processed foods and beverages. Several DPRK’s main electronics makers also showed off their brands' flat-screen TVs, mobile phones, laptops and tablets.

Daily visitors to the 14^th Autumn International Trade Fair exceeded 14,000 and nearly 45,000 during the entire event. The Korean International Exhibition and Convention Company (KIECC) have plans for a new exhibition cum convention complex which includes a 30-storey 5-star international hotel.  It would triple the exhibition area to accommodate 1,200 exhibitors from the current 400 capacity.  The estimated investment in the exhibition hall, without the hotel and convention centre, is US$250 million.  The entire project would likely require an investment of about US$400m-US$500m.    

Negotiations with some Chinese investors were recently terminated by the Chinese. We did not ask for the reason.  The opportunity for a Singapore-KIECC JV hereby presents itself for post-sanction agreement and execution.  The KIECC in fact invites the Singapore DPRK Business Mission to participate in the new IECC project because they knew and have seen Singapore’s experience and management expertise in mounting huge conventions and exhibitions at the Singapore Expo complex and Suntec Convention City Centre. 

Nampho Development Region - Waudo-Jindo SEZ (JINXIN Park)

We travelled to Nampho, DPRK’s largest port city on the West coast, about 50 km South-West of Pyongyang. Nampho is also the 2^nd largest city of DPRK with a population of about 1 million and occupying a land area of 1,280 sqkm.  Nampho Port has deep waters and linked with over a hundred foreign countries and regions, mainly China and ASEAN, for commercial trade.

The Jindo SEZ is a Special Export Processing Zone (SEZ) covering 1.8 km² and spans part of Jindo-dong, Hwado-ri and Waudo-guyŏk.  It has a Co-operation Period of 50 years.

JINXIN International Industrial Park

During discussions, ideas and suggestions included the possibility of a Jindo-Singapore (JINXIN) International Industrial Park, which may later combine with the Waudo SEZ for about 3 km² of land.  The land is currently a salt plain, like the original 30 km² land of the Sino-Singapore Tianjin Eco City (SSTEC). 

The Jinxin International Industrial Park, when realized as a JV with MEER, or other Korean agency when sanctions are eased to permit such JV, could look at the Vietnam-Singapore Industrial Park (VSIP) as a possible development model.  JINXIN shall however develop our own models with interested investors leveraging on Singapore’s industrial park experiences.

The costs of developing JINXIN have not yet been evaluated.  The removal and replacement of several hundred meters of top soil soaked with brine would add to the initial cost. Land preparation for the small 3 sqkm after that could add investments to perhaps US$200m, assuming the government takes care of the infrastructural work of connecting roads, water, gas and power.  Over time, investments by foreign companies may add several US$ billions once JINXIN is opened for business.  JINXIN may become Singapore’s flagship in DPRK, post-sanctions, in the same way that VSIP was the catalyst for Vietnam’s industrial development since 1996.  

Mangyongdae School Childrens' Palace

The Mangyongdae School Children's Palace (or Mangyongdae School Children's Palace) in Pyongyang is a public facility managed by the Korean Youth Corps in DPRK where children ages 6-17 years old can engage in extra-curricular activities, such as learning music, foreign languages, gymnastic, calligraphy, computing skills and sports.  Established on 2 May 1989, it is the largest of the numerous palaces dedicated to children's after-school activities. It is situated in Kwangbok (Liberation) Street, in the north of Mangyongdae-guyok.

The Mangyongdae School Children's Palace has 120 rooms, a swimming pool, a gymnasium and a 2,000 seat theatre.  It has 5,000 students attending various classes on a 6-monthly cycle.  The classes are free but not every child chooses to enrol.  No compulsion, a few actually dropped out after a couple of months.  Visitors were treated to a concert on a moving stage in the beautiful and spacious theatre.

Juche National Ideology

The tremendous effort and resource commitment to develop core cohorts of Korean youths beginning at 6 years old is clearly a visionary strategic and calculated initiative to create her own future based on its Juche주체ideology and seen in the practice of her unique socialist principles of independence, national economy and self-defence.  “Juche” translates to “self-reliance” in Korean.

And as peace envelops the Korean peninsula, the reality of an independent, self-confident, modernising and prosperous DPRK is already within the sights of this generation.   

The following pictures shall speak for the activities in the Palace.

Ragwon Department Store

Ragwon (Rakwon) Department store is mainly used by foreigners and well-off Koreans. “Ragwon” means “paradise” in Korean.  It is an upscale department store that only accepts western currency in Pyongyang, North Korea.  About 90% of products sold here are foreign products. The Rakwon Department Store tour also breaks from North Korean tourist tradition, as the DPRK’s shopping malls are usually not open to foreign visitors. The agency hopes that, by entering a department store only meant for local people, visitors will learn and understand more about their lives.

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Sentosa Business Centre – Singapore’s Beachhead

Dinner on the 3^rd Day brought a pleasant surprise.  The restaurant in a 4-storey building also houses a barber shop and hair-salon, massage parlour, 3 types of spa, sauna and a small gym.  In a Conference Room on top floor, we found a Singapore’s very own “Sentosa Business Centre”.  It was intended to be a haven for Singapore businessmen to interact with venture partners.  The Korean General Manager Mdm Ju told us that the building was invested by a Singaporean businessman who was no longer able to be involved personally in the venture due to sanctions and has left it to her management.  

Singapore therefore has already established a beachhead at the Sentosa Business Centre in Pyongyang.  Post-sanctions, Singapore businesses can find ready partners who are Singaporeans already in DPRK, Koreans and other foreigners, at this business club. 

Singapore has only a small window of opportunity to leverage and realise the investment goldmines offered to us as described above.  The future would belong to those who are ready for it, not those who are waiting for the skies to be blue and clearer.      

We departed Pyongyang in an expectant mood, reflecting and contemplating the sea of ready opportunities within our grasp, if not for the sanctions.  The plan is to return soon in March-April 2019 to look deeper into specific investment opportunities to realise and transform them into Singapore’s international competitive advantages and for the benefits of Singaporeans at home.  

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Anyone interested in the above projects or be part of the next DPRK expeditions or just interested in DPRK can contact me: miko.heng@gmail.com

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