South Korea to Invest in Port Up North

Sources: South Korea Looks to North for Growth, S Korean Port Eyes Investment in North

South Korea’s dominant shipping terminal, Busan Port Authority (“BPA”) seeks to invest in Rajin, a port in North Korea. BPA’s president, Lee Gap-Sook stated that the company is looking to the north largely because there is no direct channel between North and South Korea. They aim to develop Rajin into a major port for shipping containers by investing over $130 million to expand the port and keeping a budget for the port of over $32 million. This plan was spurred on by the historical summit between North and South Korea last week.

This is not the first attempt at making Rajin an economic base for South Korean companies. In the 1990s, North Korean authorities tried to authorize a special economic zone in Rajin, but the effort was not successful. Rajin is viewed by both nations as key because of its vicinity to the Chinese border. In fact, North Korea has a joint venture with China to build a road from China to Rajin, a project that is estimated to cost almost $80 million.

Questions:

1) What are some of the major obstacles both North and South Korea will have to overcome to establish an economic base in North Korea for South Korean companies?

2) What other social and political benefits might flow from an economic integration of the North and South?