North Korea wants to raise $39m (€35.5m) from foreign investors to fund a new brewery in Wonsan, an eastern port city where national leader, Kim Jong Un, has big development ambitions.
The isolated country has announced 100 projects seeking foreign investment in the Wonsan-Kumgang Development Zone, a mountainous region where Kim keeps palaces and a summer residence.
“They’re looking at this as a new East Asian business and tourism hub,” said Michael Spavor, an independent consultant who is helping a Wonsan investment committee to raise $150m in foreign funds, including for the brewery.
“It’s a nice area, it’s on the coast, and it has the same qualities and infrastructure that once made places like Shenzhen and Hong Kong such attractive investment zones,” said Mr Spavor.
North Korea has 20 economic and development zones, which use a grey market exchange rate to value the local currency and which contain separate economic laws, even allowing foreign entities to sue the state in the event of a break of contract.
Still, the impoverished country, whose formerly Soviet-style planned economy is increasingly market-driven, does not have a strong record of attracting or protecting foreign investments.
Egypt’s Orascom Telecom, which runs Pyongyang-based Koryolink — the country’s sole mobile phone network — has not been able to withdraw its profits from North Korea, despite a subscriber base of 2.5m, according to a first-quarter regulatory filing.
“Most foreign investments in North Korea have ended badly, but most of those people had very superficial understanding of the place and did not have insider connections,” said Andrei Lankov, a professor at Kookmin University in Seoul. “Those who did make good money tend to remain very silent about their success, because they don’t want to attract attention from any side,” he said.
Many would-be investors are deterred by the international isolation of the Pyongyang government, which is under heavy sanctions over its nuclear programme and human rights record. Also up for grabs in Wonsan are a bus terminal, restaurants, petrol stations and the $90m refurbishment of a faded pea-green government hotel on the water’s edge.
The brewery aims to produce 50m litres of beer a year: 20m litres of draught beer, and 30m litres in plastic bottles, the documents said. Poor infrastructure and rising demand mean many North Korean cities produce their own beers, although none sell as well as Taedonggang Beer.
“North Korean beer tastes great and, despite the really big demand for it on the east coast, there’s no large-scale brewery in the region capable of generating the supply,” said Mr Spavor.
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