HYUNDAI ASAN HOPING TO BENEFIT FROM NORTH-SOUTH

C O N F I D E N T I A L SEOUL 001698

SIPDIS

E.O. 12958: DECL: 10 YEARS AFTER KOREAN REUNIFICATION
TAGS: PGOV PREL PINR SOCI ECON KN KS
SUBJECT: HYUNDAI ASAN HOPING TO BENEFIT FROM NORTH-SOUTH
THAW

REF: SEOUL 1617

Classified By: POL M/C James L. Wayman. Reasons 1.4 (b/d).

Summary
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1. (C) Hyundai Asan is preparing to move quickly to resume
tourism to Kaesong city and Mount Kumgang in the event of a
breakthrough in North-South relations, according to company
executive vice president Jang Hwan-bin. Jang claimed that
word-of-mouth reports about the Kaesong Industrial Complex's
good working conditions and high wages are attracting
employees from throughout the DPRK. Hyundai Asan is hoping
for speedy improvement in inter-Korean relations while KJI is
still alive; once KJI dies, company executives fear their
many agreements with DPRK entities will be meaningless.
Hyundai Asan moves money to North Korea via a Russian bank,
Jang said. He added the company was in no rush to expand
tourism to Mount Paektu. End summary.

No Green Light from MOU
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2. (SBU) Hyundai Asan Executive Vice President Jang Hwan-bin
told us on October 22 that the company is preparing to move
quickly in the event there is a major breakthrough in
North-South relations (reftel). Jang said Asan could
immediately resume day tours to Kaesong city and be prepared
to revive Mount Kumgang tourism in approximately 30 days.
Despite tantalizing media speculation about an imminent
North-South thaw, Jang lamented that the Ministry of
Unification (MOU) and Blue House were still telling the
company "to hold"; what Hyundai Asan wants, Jang emphasized,
is a "green light."

KJI's Appetite for Economic Reform?
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3. (SBU) Jang, who has traveled frequently to North Korea,
claimed that the overall success of the Kaesong Industrial
Complex (KIC) has created a desire for major economic reform
among North Korean workers and key members of the elite.
Through word-of-mouth, "everybody in North Korea" knows about
the KIC's good working conditions and comparatively high
wages, Jang said. Workers were coming from as far away as
Hamhung, Jang related, adding that he had recently heard a
credible story about a doctor at a major Pyongyang hospital
who resigned to take a job sewing clothes at KIC's very
successful Shin Won company.

Hoping To Cash in Before KJI Dies
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4. (C) Despite the high political risk and red ink, Jang
explained that Hyundai Asan is still "in business" with North
Korea because of the will and vision of Hyundai's late
Chairman Chung Mong-heon, who had a "special relationship"
with KJI. Jang said KJI felt somewhat responsible for
Chung's suicide in the wake of the 2003 "cash-for-summit"
scandal. Since Chung's death, KJI has invited his widow
twice to North Korea to meet with him -- a privilege only
extended to Hyundai Asan. Because of that "special
relationship," the company has signed numerous agreements
with multiple DPRK entities and is ready to develop North
Korea once political conditions are favorable. He said the
company fears, though, that these agreements will become
"meaningless" in the event of KJI's death; that, Jang
explained, is why Hyundai Asan is anxious for speedy
improvement in inter-Korean relations "while Chairman Kim is
still alive."

Pariah Banking Challenges
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5. (C) Jang noted that once Mt. Kumgang and Kaesong city
tours resume, the DPRK will earn approximately USD two
million per month. Jang explained that, after a "lengthy and
difficult search" and having been turned down by banks in
Singapore, Australia and China, Hyundai Asan and the DPRK now
use a Russian bank.

Mt. Paektu: Are We There Yet?
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6. (C) In closing, Jang related that Hyundai Asan was in no
hurry to begin tours to Mount Paektu, a scenic area along the
Sino-Korean border. Jang said he had accompanied Chairwoman

Hyun and all of the company's key staff on a harrowing 2007
trip to the area. He recalled that, "on orders of KJI," the
Hyundai Asan entourage had boarded a late-model Mercedes
sedan and a posh bus and been driven aboard a cargo plane.
The group had actually sat in their vehicles until the
Soviet-era behemoth landed in a snowstorm on a primitive
runway that had been cleared with shovels by thousands of
North Korean troops. Jang joked that "the infrastructure up
there" needs a lot of work.
STEPHENS