MOUNT KUMGANG – Some nine miles north of Korea’s demilitarized zone, a menu hanging on a coffee shop’s wall offers regular coffee for $2, ice cream and a sandwich each for $3 and fresh fruit juice for $4. Although the coffee machine and counter are well-maintained, no one is here to serve these items. Instead the owner, who just rented the space not long ago, said she serves Peking duck. A few steps away, the sign of the convenience store Family Mart is painted over and its glass wall is covered with black plastic bags.
Stores closed, welcome center shut and parking lot empty, Mount Kumgang is a neglected luxury resort caught in the politics of North and South Korea. The North has been eager for its reopen but the South, which holds the rights, has refused to budge.
Kumgang holds spiritual allure to ethnic Koreans, who view it as the start of Korea’s 5,000-year history
The Mount Kumgang tourist region was built in 1998 by the South Korean conglomerate Hyundai Asan. The group paid $1 billion to the North Korean government for 50 years of exclusive rights to the area, and spent an additional $400 million to build the 530-square kilometer complex. The resort once boasted 10 hotels, 10 restaurants, an 18-hole-golf course, gift shops, a hot springs spa, a performing arts center, hiking paths, bus tours to the mountains and seaside and even its own hospital.
Kumgang holds spiritual allure to ethnic Koreans, who view it as the start of Korea’s 5,000-year history. But no tourist is allowed to travel alone to the resort. When it opened, Hyundai offered one- to three-days package tours. Its travel agency said some 1.96 million tourists visited the resort from1998 to 2008, including some 12,000 who came from beyond South Korea. The resort brought in $487 million for the North Korean government during the 10 years of South Korean operation.
The seemingly smooth cooperation between the two Koreas ended in July 11, 2008, after a South Korean woman was shot dead by the North Korean military. The North Korean government insisted Park Wang-ja, a 53-year-old tourist, entered the military zone, ignoring warnings from guards. The South Korean government wasn’t convinced and shut down the tours until the North would allow a joint-investigation and provide a guarantee of safety for future resort visitors. The North denied the requests and expelled “unnecessary” South Korean workers in August 2008.
Seventeen months later, Pyongyang adopted threatening tactics, hoping to force the South to resume the tour. In March 2010, the North Korean government first threatened to revoke the contract with Hyundai. A month later, North Korea’s National Defense Commission seized all the properties and assigned the newly funded (and short-lived) Korea Taepong International Investment Group to run the resort. Since then North Koreans have sought international investments and foreign tourists. The first group of Chinese tourists arrived that spring and domestic ones started arriving August 2010.
REVIVING THE RESORT
The South, on the other hand, denounced the North’s seizure as illegal and has called for foreign investors and tourists to boycott the resort. Due to the government’s suspension of the tours, the Mount Kumgang entrepreneurs association, which includes 49 companies that have invested in the resort, said its members have lost some $981 million in investment and revenue as of July. The association urged its government to resume the tours as soon as possible. Hyundai sent a team of technicians to the resort for safety checks in July. Jun Hyun-chul, manager at Hyundai Asan, said the company now plans to reopen the resort within two months once the two Korean governments reach an agreement on tourism resumption.
The North…finds itself short of facilities to entertain tourists
The bus ride to the resort from North Korea’s capital city Pyongyang takes seven hours. The road was paved in the 1970s and hasn’t been properly repaired since then. As part of efforts to lure Chinese tourists, the North once tried tours linking Rason and Kumgang by ferry. Royale Star, a Soviet era-built boat, ended up sailing to the resort just four times last year until the Chinese government responded to Pyongyang’s third nuclear test by banning its tourists from traveling there. China later lifted the ban, but Royale Star had decided to pursue business elsewhere.
The North, furthermore, finds itself short of facilities to entertain tourists. It is struggling to take advantage of the resort’s sophisticated machinery. Hyundai Asan’s three power generators were likely not in full operation when the resort was hit by a blackout at night last month. In the food court the meat slicer, oven, grill stove and espresso machines lay untouched. In another building, ATM machines are stored in a back corner with chairs and display cabinets. The resort’s only photo studio is locked up, along with its hi-tech photographic processing machines. Karaoke players are one of the few remaining machines in use as North Korean waitresses sing and dance to entertain tourists. The duty-free shop, lately invested in by a Hong Kong company, carries random products ranging from European liquors to Japanese skin-care products.
This year, foreign tourists stay in the Oekumgang Hotel, a 173-room-hotel converted from the resort of former leader Kim Jong Il’s mother, Kim Jung Suk. For foreign tourists, this resort that opened in 1998 makes Pyongyang’s claimed-to-be five-star hotels outdated. The crystal lighting, artificial flowers, carpeting and other interior material of the resort bring foreign tourists traveling from Pyongyang back to the 20th century.
North Koreans did try to improve the resort by bringing in foreign investors. Taepung, which took over the resort in 2010, introduced a 10-yearplan for updating the resort’s operation. The first phrase includes a $150-million investment in the nearby Wonsan airport, a $150 million investment for pavement of the 310-kilometer Pyongyang-Wonsan-Kumgang connecting road and $250 million for two 11,500 KW power stations. Taipung repeatedly invited business delegations from China, Malaysia and even the U.S. to evaluate the investment possibilities. But all of the efforts were in vain, and Taepung was dissolved in August 2012.
According to a North Korean business representative, the Geneva-based five-star hotel chain, Kempinski, sent a delegation to evaluate the possibility of operating the golf course, restaurants and other facilities in 2010. In May 2011, South Korea’s monthly Minjog 21 magazine reported that Kempinski had reached an agreement to operate the resort with North Korea’s Committee of Investment and Joint Ventures. But Kempinski said they can’t confirm the visit, and they didn’t seem to send a delegation in 2010.
As none of the projects has lured any investors, the North has only managed to bring in Chinese tourists to the resort twice a week this year. A luxury resort that received 400,000 tourists annually remains essentially a ghost town. This might explain why North Koreans are so eager to bring South Koreans back.
Main picture: Todd Mecklem, Flickr Creative Commons
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