A number of South Korean businesses are mulling long-term projects to do businesses in North Korea, a local business lobby official said Friday.
The South's business circles largely remain cautious about making investments in the communist neighbor amid the U.N.-led sanctions against it and uncertainty about conditions. But they are paying keen attention to the ongoing dialogue phase and an envisioned peace process, according to Jung Bong-ho, head of international cooperation at the Federation of Korean Industries (FKI).
"The number one principle is to follow the government's policy," he said at an economy-related session of an annual forum, co-hosted by Yonhap News Agency and the Ministry of Unification, on Korea peace.
Citing an FKI survey of member firms, he said roughly half of them are considering investments in the North "from a long-term perspective."
Some business leaders hope for the government to play a leading role in laying groundwork such as policy and systemic support, Kim said.
It could include a basic agreement on inter-Korean economic cooperation, he said.
Kim Hyo-jin, who's in charge of the North Korea Business Center at Samjong KPMG Accounting Corp., stressed that the North is in urgent need of infrastructure investment for its stated top goal of economic development.
"What's needed first is investment in construction, logistics, railway and other infrastructure projects," Kim pointed out. "Ironically, however, it's hard to put huge amounts of civilian capital into the sectors."
That's why the government needs to use public funds for infrastructure projects in the North if the peace process moves forward and sanctions are eased or lifted, Kim said.
A question is how quickly the North will become a "normal country" truly attractive to foreign investors, he added.
Former Vice Unification Minister Lee Kwan-se called for the government to map out phased plans for a "new economy" involving North Korea in connection with the issues of denuclearization, sanctions and security assurances.
"There are 27 special economic development zones in North Korea," said Lee, who serve as director of the Institute for Far Eastern Studies at Kyungnam University.
He added, "The government needs to prepare for what to do in connection with development when North Korea's door is open some day."
Lim Gang-taek, a senior researcher at the Korea Institute for National Unification, said sanctions are the biggest obstacle for now but that it's important to build up mutual trust for future economic cooperation.
"In that sense, a dual-track strategy is necessary to comply with U.N. sanctions and seek ways to promote development cooperation through international agencies," he said.
On inter-Korean railway cooperation, Ahn Byung-min, a senior researcher at the Korea Transport Institute, said the two sides can push for projects to standardize related terminologies and systems. (Yonhap News)