The ROK government-run Korea Small Business Institute (KOSBI) is investigating ways to assist the DPRK economy in incorporating into global value chains (GVCs) and inter-Korean industrial cooperation.
In a call for third-party assistance published earlier in the month, the KOSBI argued that small and medium enterprises (SME) were likely to play a key role in future inter-Korean cooperation.
The KOSBI is asking a potential subcontractor to develop a policy for “actively supporting” the North Korean national economy, suggesting Pyongyang’s ongoing focus on light industry could be an area of cooperation.
The research will outline proposals for “concrete specialization between South and North Korea” based on an analysis of the potential of North Korean businesses.
“The traditional products of the [South Korean] small and medium companies, including footwear manufacturing and electronics assembly in the clothing and sewing sector, have the potential for growth,” the proposal, seen on Tuesday by NK News, reads.
“When considering the development potential of the fields of IT and science, the entry of the South Korean small and medium-sized enterprises into the North’s markets can be activated.”
Researchers are also requested to highlight fields in which South Korean SMEs could cooperate with North Korea light industry, and conduct a “detailed investigation on the current situation of the North Korean industry and the actual condition of the external competitiveness.”
“Through the structural analysis of global value chains, the geo-economic positioning optimized for the North Korean industry should be identified and the direction for upgrading [the industry] within the global value chains should be suggested,” it added.
The KOSBI particularly emphasizes the necessity of building a “multilateral production network, including China, to improve the stability of the inter-Korean cooperation in case the entry of the South Korean companies to the North is resumed.”
Production networks centered on China raise the necessity of researching new structures for inter-Korean economic cooperation, it argued.
The researchers are also asked to come up with new models for cooperation to allow the incorporation of the North Korean economy into a planned future free trade agreement (FTA) between South Korea and the Eurasian Economic Union (EAEU).
The project could “generate a new growth engine for the entire economy of the Korean peninsula,” the report concluded, adding that the proposal was opened to potential partners last week and the application process will end on Sunday.
The KOSBI will allocate LRW 50 million (USD$46,546) to the project, which is scheduled to be complete by October.
Last month’s Panmunjom Declaration saw the two Koreas agree to “actively implement the projects previously agreed in the 2007 October 4 Declaration, in order to promote balanced economic growth and co-prosperity of the nation.”
Seoul and Pyongyang also agreed to connect and modernize the “railways and roads on the eastern transportation corridor as well as between Seoul and Sinuiju for their utilization” as a first step.
In May, the South and China agreed to review a railway construction project connecting Seoul and Sinuiju to China to “support the North Korean economic development.”
Edited by Oliver Hotham
Featured Image: Korean Central News Agency (KCNA)
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