Southern Investor Revving up Business in NK

Digital Chosun/January 6, 2004
By Kim Jong-ho

That North Korea would allow a billboard for cars -- a product symbolic of capitalism -- to be put up in Pyongyang can be seen as an expression that it will actively accept a market economy. So says Park Sang-kwon, the president of Pyonghwa (Peace in Korean) Motors. Park said that since the company started putting up advertisements on Dec. 21 in six spots in Pyongyang, including Pyongyang Station, other foreign enterprises have been rushing to enter North Korea.

Pyonghwa Motors set up shop in an alliance with a North Korean company, and has been assembling cars since April 2002 at an industrial park in Nampo, using parts imported from Italian car maker Fiat. The two models it produces, the Hwiparam passenger car and the Ppeokkugi minivan, both have engine displacements of 1,600 cc. At a cost of US$13,500 (W16 million) per car, they are extremely expensive for the North Korean market.

Park said that the North Korean government gave Pyonghwa Motors a monopoly on domestic car production for the next 10 years, and that the authorities level no taxes on either car sales or the import of car parts.

The company has invested US$60 million (W72 billion) into the venture, and has one production line currently in operation. Over the next 10 years, it plans to invest an additional US$240 million (W288 billion).

The firm was unable to turn a profit last year, however, based on its sale of only 314 cars. Park said that the firm can make a profit if it sells more than 1,000 cars a year. In the North, the primary car buyers are Korean Worker Party executive members and the heads of regional administrative bodies.

Park also said that there are many South Koreans who want to buy cars for their lost relatives in the North. He said that negotiations with the North Korean authorities are underway to make those kinds of sales possible.

Park, a graduate of Joongang University, worked for a trading company in the United States for about 20 years, and since 1999 has been entrusted with the presidency of Pyonghwa Motors. The company, affiliated with the Unification Church, runs auto assembly plants in North Korea and Vietnam, and imports and sells U.S.-made Ford vehicles in South Korea.