North Korea seeks in­vestors for brew­ery

The Pak Banker - - BUSINESS -

For the bold­est fron­tier mar­ket in­vestor: North Korea is look­ing to raise $39 mil­lion from for­eign in­vestors to fund a new brew­ery in Won­san, an eastern port city where leader Kim Jong Un has big de­vel­op­ment am­bi­tions.

The iso­lated coun­try re­cently an­nounced more than 100 sep­a­rate projects seek­ing for­eign in­vest­ment in the Won­san-Kum­gang De­vel­op­ment Zone, a moun­tain­ous re­gion where leader 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 seek more than $150 mil­lion 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 Spa­vor, who will lead a del­e­ga­tion of in­vestors to Py­ongyang next month to dis­cuss the brew­ery and other projects.

North Korea is home to over 20 spe­cial eco­nomic and de­vel­op­ment zones which use a grey mar­ket ex­change rate to value the lo­cal cur­rency and 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 (OTMT.CA), 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 2.5 mil­lion, ac­cord­ing to a first quar­ter reg­u­la­tory fil­ing.

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