Cautious approach to business with North

Korean companies` enthusiasm regarding investment in North Korea was revealed to be not that high.

According to a survey of 300 local firms on inter-Korean economic exchanges released by the Korean Chamber of Commerce and Industry on August 2, the percentages of corporations either doing business with North Korea or in the process of studying are 37.5% for large corporations, 23.7% for small- and medium-sized enterprises, with an average of 31.3%. The remaining companies answered that they either will study the feasibility after watching the trends (50.4%) or have no plans (18.3%).

On the question when investments in North Korea will turn to black, 9.5% of the corporations answered 2 years and 47.4% 5 years, and many other corporations answered that business profitability will be possible after over 5 years.

However, most of them forecast optimistically about future economic exchanges by stating that the exchanges will expand either rapidly (10.4%) or gradually (88.0%). They expected also that when South-North Korean economic exchanges become invigorated, the price competitiveness of products as well as national confidence will go up, and as a result the domestic economy will also become revitalized.

The companies not doing nor planning to do business with North Korea pointed out `lack of investment information` (26.4%) as the major reason for their being negligent. And the other reasons were insufficient system (20.9%), political instability (14.5%), very poor social overhead capital (10.0%), and others (28.2%) in that order.

A staff member of the KCCI said, "In order to induce companies¡¯ active investment in North Korea, preparation of a systematic safety device and provision of investment-related information are urgent." He also said, "The South-North Korean Civil Economic Development Council, to be formed by South Korea¡¯s five major economic bodies, must play an active role to prepare a system for economic cooperation and to provide information for investing in North Korea."