N Korea taking lessons from Singapore

AP, SEOUL

Mon, May 14, 2012 - Page 5

Less than two weeks after being punished with new UN sanctions, North Korea has sent its ceremonial head of state and two top economic officials to Singapore and Indonesia on a trip that appears aimed at drumming up outside investment.

North Korea Parliament Presidium President Kim Yong-nam arrived in Singapore on Friday for his first reported trip overseas since former North Korean leader Kim Jong-il’s death in December last year.

He traveled yesterday to Indonesia with two senior economic officials, according to North Korean state media.

Kim Yong-nam often represents Pyongyang abroad.

The weeklong visit comes on the heels of new UN sanctions imposed on North Korea for launching a long-range rocket last month in defiance of Security Council resolutions banning it from nuclear or ballistic missile activity. Pyongyang insists the launch was an attempt to launch a satellite into space.

Washington suspended an agreement to provide North Korea with food aid and the North could face more punishment if it follows the launch with an atomic test as it did in 2006 and 2009.

Even as it has risked punishment by developing missiles, Pyongyang has also focused, since 2009, on improving its economy by developing light industry, attracting foreign investment and expanding trade.

With ties remaining tense with Seoul, North Korea is looking elsewhere to build economic partnerships.

Singaporean entrepreneurs are already supplying the well-to-do in Pyongyang with everything from Heineken beer to Hello Kitty, and have introduced some locals to hamburgers, fried chicken and Belgian waffles.

North Korea is looking to diversify its trade, import natural resources and export consumer goods with Southeast Asia’s help.

Singapore offers an attractive model for attracting direct foreign investment, while resource-rich Indonesia could give pointers on how to make money from minerals, said Cho Bong-hyun, a research fellow at the IBK Economic Research Institute in Seoul.

Kim Yong-nam visited a food factory and an electronics manufacturer in Singapore on Saturday, the Korean Central News Agency (KCNA) said.

The North Koreans may also use the trip to Singapore to learn how to develop a successful growth model that does not threaten the political power structure, said Andray Abrahamian, executive director of Choson Exchange, a -Singapore-based nonprofit group that has provided business and legal training for about 200 young North Korean government officials and students.

“Singapore’s development trajectory has been attractive to a number of countries who are interested in maintaining political stability to manage rapid economic growth,” he said.

Trade and investment between North Korea and Southeast Asia have waxed and waned over the past 12 years.

From 2000 to 2006, trade with 11 Southeast Asian countries — including Indonesia, Singapore and Thailand — accounted for between 10 percent and 12 percent of North Korea’s foreign trade, but after Singapore and others pledged to enforce UN sanctions, trade with the region dropped to less than 2 percent in 2010, according to the Korea Institute for International Economic Policy in Seoul.

North Korea has sought to reverse that trend. In 2010, Singapore was North Korea’s sixth-largest trade partner, according to the Korea Trade-Investment Promotion Agency in Seoul.

In recent years, the North has developed two special economic zones, in Rason in the northeast and Hwanggumphyong in the northwest, and is looking to Singapore for guidance, analysts said.

“Since the 1990s, North Korea has consistently said that it sees Singapore as a model for its special economic zones,” said Lim Soo-ho, a researcher at Samsung Economic Research Institute in Seoul.

Accompanying Kim Yong-nam is Ri Kwang-gun, who heads the North Korean Joint Venture and Investment Commission in charge of attracting foreign investment.

Pyongyang could also try to sell itself to manufacturers looking for cheap labor as well as boost exports of its consumer products, analysts said.

The other economic official in the delegation is North Korean Minister of Light Industry An Jong-su, KCNA said.

Meanwhile, South Korea is set to negotiate with China on a free trade agreement that could lift tariffs on products made in North Korea’s special economic zones, making investment in North Korea more favorable.

“North Korea has the cheapest labor in the world, less than half of China’s [rates],” Lim said. “Foreign investors can manufacture goods in North Korea and export them to China.”

Indonesia could provide guidance on how North Korea might exploit mineral resources that the North Korea Resources Institute in Seoul estimates are worth more than US$10 trillion, analysts said.

Indonesia has had strong ties with North Korea since 1964. In 1965, when late North Korean founder Kim Il-sung paid Indonesia a visit, then-Indonesia president Sukarno presented him with an orchid dubbed the Kimilsungia.

On Tuesday, North Korean and Indonesian officials signed an agreement to share news stories, photographs, video and TV footage, and eventually swap journalists, the Indonesian Ministry of Foreign Affairs said in a statement.