May 29, 2001	atimes.com

The Koreas Hyundai still has a mountain to climb SEOUL - The latest effort to resuscitate Hyundai Asan's Mount Kumgang tourism project has failed completely, and the loss-losing cooperative project in North Korea is expected to continue to undermine the company's recovery. A Hyundai Asan delegation, led by the company's president Kim Yoon-kyu, returned home on Monday from a trip to North Korea that produced no breakthrough in its efforts to put the project back on track. Hyundai Asan had hoped its brokering of deals with North Korea would produce some winners, especially the shuttling of tourists on package tours from South Korea's east coast to the scenic coastal mountain chain 30 kilometers north of the Demilitarized Zone. Instead, operations in North Korea have been a dead weight on the chaebol, and Hyundai Asan lost 100 billion won (US$77.6 million) last year. During talks with North Korea, Hyundai proposed three ways to reverse its mounting debt: a reduction in the $12 million monthly fee the North collects, opening of an overland route and the designation of special tourist zones in the North. All three were rejected. The dispute boils down to arrears in the monthly concession fee. Hyundai has fallen $34 million behind during the first four months of 2001 and appears unable to make any of its payment this month. North Korean officials made it clear that Hyundai must first clear its deferred payments before they will discuss the requested revisions. However, the North did acknowledge that a heavy reduction in the number of travellers has damaged the company. Hyundai called on the North to grant an extension on the payment of overdue fees or agree to peg the fees as a proportion of the number of Mount Kumgang travellers. The North has shown no willingness to comply, but has also refrained from threatening to cancel the project entirely as retaliation for the unpaid concession fees. The failed negotiations have put Hyundai Merchant Marine, the arm charged with transporting the travellers up the East Sea route, under pressure again to decide whether it will continue to set sail for Mount Kumkang. Unless the entire project comes to a halt, the shipping company plans to implement its contingency plan, which calls for curtailing operations. The shipping firm, which had put four vessels into service for the project, currently operates only two ships. An official at the firm hinted his company could withdraw yet one more down the road. (Asia Pulse)

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