Daewoo Shipbuilding to enter economic district in N. Korea

Daewoo Shipbuilding to enter economic district in N. Korea. February. 11, 2012 04:29. alwaysj@donga.com shcho@donga.com.

Daewoo Shipbuilding & Marine Engineering will advance into a special economic district in North Korea in a first among South Korean companies.

The Hwanggeumpyong district, located in Sindo County, North Pyongan Province, is a project that North Korea and China are seeking to jointly develop. Daewoo’s investment will likely become the first in the North by a South Korean company after the death of North Korean leader Kim Jong Il.

“We will construct a dockyard for ship repair and facilities for steel structure business in areas around Hwanggeumpyong, North Korea, and Dandong, China, in partnership with Rilin Group of China,” Daewoo said, adding, “We`re discussing with Rilin Group the investment amount and schedule for groundbreaking.”

Hwanggeumpyong, a small island measuring 11.45 square kilometers at the estuary of the Yalu River, is linked with Dandong of China`s Liaoning province due to long-term sedimentation.

Pyongyang and Beijing agreed to develop the area into a special economic district, and held a groundbreaking ceremony in June last year. They will start construction from late next month.

Daewoo’s advance into Hwanggeumpyong will be conducted under a joint venture with Rilin, which is based in Dandong. The two companies earlier exchanged a memorandum of understanding on comprehensive cooperation in ship repair, wind power and nuclear energy in January last year. Afterwards, Daewoo formed a task force under direct control of CEO Nam Sang-tae within its planning and coordination office, and has been secretly pushing for the project.

A Daewoo source said, “Our decision has been affected by the fact that this area is a logistical hub, where natural resources from northern Chinese provinces, Russia, Inner Mongolia and North Korea converge. Hence, the company can open a beachhead to seek new businesses, including natural resources development, in the coming years.”

The company will build a dockyard for ship repair first because of the relatively short time needed at low cost. It will also move into natural resource development by using Dandong and Hwanggeumpyong as its base.

“We will announce a finalized plan on the project after holding a board of directors meeting in April,” Daewoo said. Daewoo`s advance into the district, which symbolizes North Korea’s reform and opening, could lead other South Korean companies to advance into the North.

Isolated because of international sanctions resulting from its development of nuclear weapons, North Korea plans to seek economic cooperation with other countries, including China, by using Hwanggeumpyong as a base.