S. Korean firms survey N.K.-Russia project, cautious about joining
2014/02/20 14:02
SEOUL, Feb. 20 (Yonhap) -- A South Korean consortium was cautious about joining a North Korea-Russia economic project, its officials said Thursday after their four-day onsite inspection last week.
The consortium is comprised of three South Korean companies - the state-run railroad operator Korea Railroad Corp. (KORAIL), the country's largest steelmaker POSCO and the No. 2 shipping company Hyundai Merchant Marine Co. They are potential participants in the so-called Rajin-Khasan logistics project, which would make the North Korean port city of Rajin a logistics hub by connecting it to Russia's Trans-Siberian Railway.
Last September, Russia reopened a 54-kilometer track linking its border city of Khasan and Rajin after a five-year renovation.
South Korean President Park Geun-hye and her Russian counterpart Vladimir Putin agreed during their summit meeting in Seoul in November to help South Korean firms join the project, which would open a roundabout path to investing in the North. Direct investment in the isolated neighbor has been prohibited since May 2010 as a part of punitive measures for the deadly sinking of a South Korean patrol boat blamed on Pyongyang.
The project is also closely connected with "the Eurasian Initiative," aimed at expanding economic cooperation with Eurasian countries, proposed by Park last year. The policy is built on the idea that exchanges between South Korea and Eurasian nations, especially Russia, could help induce North Korea to open up and ease tensions on the Korean Peninsula.
An 18-member delegation for the consortium had inspected Rajin, the North's No. 3 dock on its northeast coast, and the railway between Rajin and Khasan, the nearby Russian eastern border city, from Feb. 11 through 13.
"The inspection was carried out in the three sectors of finance, railway and port," an official from the consortium said.
"This was no more than an inspection to examine the potential of (the consortium's) participation (in the Rajin-Khasan project). In short, it was a visual inspection," another official said. "The consortium can conduct a detailed business feasibility study only after more inspections."
The South Korean body has reportedly decided to use the inspection findings as its internal data without releasing them.
According to Seoul officials, the consortium plans to acquire a 50 percent stake in RasonKonTrans, the North Korea-Russia joint venture that will carry out the rail and port renovation project, for up to 200 billion (US$186.8 million). North Korea holds a 30 percent stake in the joint venture, with Russia owning the rest. A final decision on the planned stake purchase will be made after an inspection on the project site, they said.
The stake purchase is the only way for South Korean companies to invest in North Korea because of the 2010 sanctions.
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