By Hui Yue Lam Adelaide
North Korea is attempting to attract foreign direct investment to aid in economic development in the sanction-hit country.
And it seems to be working, a little.
FDI in North Korea reached US$ 79 million in 2012, a 40 percent increase from the year before and more than double 2010, according to the UN Conference on Trade and Development.
The total invested in the country over the past few decades comes to US$ 1.475 billion, reports the BBC.
Though still one of the smallest levels in the world, the increase in FDI is steady, experts say.
To attract investors, Pyongyang announced last year that it would set up 14 new special economic zones.
Most are wary of investing in a country so closed and unpredictable as North Korea, with the majority of foreign money coming from China and Russia. However, last year, Mongolia acquired 20 percent of the state-run oil refinery.
Other recent foreign investments include a Czech-built brewery and a high-tech industrial park that North Korea says is being designed and built by Hong Kong, Singapore, Australia, the Middle East and Africa.
The only North Korean mobile phone company Koryolink, is 75 percent owned by Egyptian firm Orascom.
Last year, North Korea set up an office to attract overseas Korean money, Yonhap, South Korea’s largest news wire service, reported.
Even Hong Kong has a stake. The popular Emperor Resort & Casino in the remote Rason special economic zone on the northeast border with China and Russia is owned by Hong Kong business magnate Albert Yeung.
The casino, like the zone itself, attracts wealthy mainland Chinese gamblers carrying bags of money who arrive on a Chinese-built road from Jilin province. The Emperor Group paid North Korea US$ 1.6 million to lease the casino site for 50 years, according to the SCMP.
The only other casino in the country is a small, shabby affair in the basement of the Yanggakdo Hotel in Pyongyang owned by Macau casino tycoon Stanley Ho. Like the Emperor, the casino is open only to foreigners
North Korea has loosened, or some say have lost, a little of its tight grip on the economy since the devastating revaluation of its currency in 2009. Since then, the black market rate for won has dropped 99 percent, Reuters reports.
Private markets that trade in Chinese Yuan and US dollars have sprung up as a result and the North Korean government can do little to stop it.
David Wong, President of The Chinese Manufacturers’ Association of Hong Kong, visited North Korea in 2008 on a trade mission. But after inspection, he decided the country was a poor investment choice.
“It’s really not a favorable place for investment as the communist monarchy has been facing economic sanctions,” Wong said.
“We would think of business conditions like labor cost, approval application and carriage in trade missions to emerging economies like India, Cambodia, Vietnam. But North Korea is a rare case that we even don’t want to consider since the unstable political environment matters a lot,” Wong added. “I won’t consider investments in North Korea so far.”