In a show of attempting to warm relations between North and South Korea, Samsung CEO Jay Y. Lee is joining President Jae-in Moon on a trip to Pyongyang. The trip, according to reports, will take place Tuesday. The meeting is set to focus on improving economic relations between the two Koreas, and support Moon’s ongoing plans.
In the past year, President Moon has laid out sprawling plans that would open North Korea up somewhat to South Korean trade. Namely, his plan would help connect South Korea to the rest of Asia by land, opening up ample opportunity for both countries.
The visit, which will see various chaebol (Korean family-run conglomerates) leaders, will be with North Korean Vice Premier Ri Ryong Nam. The Vice Premier is a high-ranking North Korean official, and hosting several South Korean leaders is a massive step for North Korea. Lee is joined by the head of Hyundai, as well as several other chaebol heads.
Whether the meeting will lead to any real change in how North Korea handles foreign investment remains to be seen. Similar visits were held in both 2000 and 2007, but nothing much came of them. This one seems to have more steam behind it, as President Moon is seriously pushing for stronger economic ties. However, North Korea is an odd, risky investment, even for Samsung.
North Korea as an Investment
As North Korea is heavily sanctioned, its economy has shrunk more than 3% in the last year. While the country has a vast array of untapped natural resources and a huge workforce, it’s hard to capitalize on. For one thing, the multiple sanctions and increased scrutiny from the West could hinder growth in the region. North Korea has a highly unusual culture and demographic, and could present a mixed blessing for Samsung.
The various chaebol leaders will likely discuss more than just setting up shop in their northern neighbor’s borders, though. Also likely to be discussed are trade routes. As it stands, the DMZ is largely an impassable barrier to travel overland. If that barrier were to be broken down slightly, trade with the rest of Asia would become much easier for South Korean companies.
In either event, North Korean investment will likely prove a complex issue for South Korea. While President Moon has many wide-ranging plans for relations for the two countries, he’s still dealing with North Korea. If any country defies expectations at any turn, it’s the unusual and unpredictable North Korea.