A Chinese-state affiliated and Singaporean investment group, the latter of which is allegedly directly connected to the DPRK, is calling for large-scale investment in 12 projects spanning nearly every major sector in North Korea, from transport to mining to internet and cable television development.
The ambitious plans, outlined in an August 2 press release from China Railway Investments Group, welcome foreign participation in 12 “world class opportunities” in North Korea.
“The Democratic People’s Republic of Korea (DPRK) through its window company Daegian Pte Limited of Singapore in cooperation with China Railway Investments Group Ltd (CRIG) has established a joint venture investment company in Hong Kong,” the press release says.
The joint venture, called Heuimang Investments Group Limited, will be capable of providing a “direct and exclusive conduit to the highest levels of decision making in the government of the DPRK,” the release continues. “Only the most significant of opportunities will be available through this channel which can only be accessed through Heuimang/Han Wang.”
Twelve “nominated projects” are listed by the joint venture as being exclusive focus points for foreign investment, including:
- Rason Economic Zone and other Special Economic Zones
- Rajin port, transport and associated logistics
- East Coast High-speed rail and interconnecting services
- Power generation
- National oil and gas strategy – including refurbishment of two existing refineries and exploration and exploitation of local reserves
- Gold mining and establishment of a gold bank
- Rare earth mining, metal and mineral processing
- Telecommunications and cable television
- Internet services and electronic payment platforms
- Financial services
- Agricultural development
But while many items focus on costly major infrastructure projects, the press release offered no details about the specifics of the initial investment required to catalyze the joint ventures concerns.
“I couldn’t put a figure on it to be frank with you,” said Phill Hynes, a designated spokesperson for Daegian Pte Limited, when asked by NK News for financial specifics on Tuesday. “It’s going to be evolving over time as well so, I don’t think anybody could really put a figure on it at the moment.”
“They are grouped into a fund and the initial funding will come from the consortium venture that is behind the press release,” he said, adding that the investment fund already had sufficient support to initiate projects and would become “like any other fund that will grow over time.”
CHINESE AND DPRK STATE SUPPORT
‘CRIG will lead a consortium (Financing Group) composed of Chinese enterprises to participate in infrastructure and mining development cooperative projects in North Korea’
Chinese-language records suggest co-owner of the new joint-venture investment company China Railway Investments Group (CRIG) is a partially state owned company, though owned by a different ministry to the better known China Railway Group Limited, one of the largest construction companies in the world.
“CRIG will lead a consortium (Financing Group) composed of Chinese enterprises to participate in infrastructure and mining development cooperative projects in North Korea,” a March 20 cooperative agreement framework document linked to the deal seen by NK News said.
The document adds that after the signature of the agreement, “a CRIG-led consortium, including the planning and design unit of China railway” – and several other infrastructure, mining and investment “units” – would “visit North Korea to further investigate, study and deliberate on specific issues.”
“At the moment China Railway Investment Group is the principal front company for the consortium from the Chinese side, and I say Chinese, I don’t say China,” spokesperson Phill Hynes told NK News of CRIG’s involvement on Tuesday.
In support of the 12 project areas nominated in the DPRK, “China Railway will be taking advantage of the preferential policies of the Chinese Government’s “Go Global” strategy and its model of ‘co-operation between nations’ to create Economic and Trade Cooperation Zones,” the press release added.
For its part, the Daegian Pte Singaporean limited company, chaired and co-founded by Rudi Sirr, was incorporated on March 31, 2014 and is nominated in the press release as being a “window company” of the DPRK. It is “owned by the North Korean government’s State-owned investment company,” the separate cooperative agreement framework document said.
As of yet, however, North Korean media has been yet to confirm official DPRK involvement in the project, and multiple business consultants familiar with Pyongyang’s dealings privately told NK News they had no information to confirm the deal.
Overall, Hynes told NK News that the joint venture company had been “established as vehicle for delivery of the projects” and that the impact of it would be felt soon in some areas.
“Obviously there is going to be a longer lead in period for some of the larger projects, like the Rajin port … (especially) in terms of the scoping and the preparation for it.”
Ideally as the projects develop and other projects open up the fund will become the vehicle drawing investment in for infrastructure projects in the country
And while “the high speed rail line will have a longer lead, some of the smaller projects will initiated much quicker,” he said.
“Ideally as the projects develop and other projects open up the fund will become the vehicle drawing investment in for infrastructure projects in the country.”
One researcher for a major company familiar with frontier markets such as North Korea said that if true, the deal could have a significant impact.
“This appears to be a more formalized fundraising and promotion structure for DPRK projects,” the researcher said, who requested anonymity.
“The fact that the platform appears to be supported by both the DPRK government and a Chinese-government affiliated company suggests that both sides have a strong desire to facilitate inbound investment and commercial activity in the future.”
CAUSE FOR CONCERN?
Among the projects listed as target areas for the new fund include “East Coast High-speed Rail and interconnecting services, Telecommunications & cable television, and Internet services, a national information centre and electronic payments platform.”
But those focus areas gave another observer familiar with the North Korean investment climate, who declined to be identified, cause for suspicion about the declaration of the joint venture investment company.
‘… either North Korea is about to reform drastically, or it’s a bunch of jokers selling something they can’t deliver’
“If they’re really investing in cable TV, high speed rail or internet services, it means either North Korea is about to reform drastically, or it’s a bunch of jokers selling something they can’t deliver,” the observer stated.
Kim Suk-jin, an economic researcher from the Korea Institute for National Unification (KINU), told NK News he was not familiar with the new investment joint venture group, nor of any details of such a major investment happening in North Korea.
“The only large-scale investment that I can think of taking took place in DPRK was the investment by the Egyptian company, Orascom, where they invested in the telecommunications sector, as well as in a cement company.”
Recent media reports and company statements have suggested Orascom has had significant trouble in repatriating profits from its Koryolink cellphone network, something that might otherwise give potential investors pause for thought.
Another specialist familiar with the North Korean economy, working in a research at a Seoul bank, also expressed doubts about the investment, citing the potential impact such an investment could have on Orascom’s existing Koryolink business.
“For North Korea, they would be grateful for such an investment but for Singapore and China, I don’t see why they would want to carry out such a risky project in North Korea.
“If they want to pursue a telecommunications project while Orascom is still there, I don’t see why they would because they would see that Orascom has been pushed out by this joint venture,” the specialist said.
However, Orascom’s five-year right to run the only cellphone network in the DPRK expired last year.
Additional reporting: Leo Byrne
Main picture: Tis Meyer / Planepics.org
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