Tense Inter-Korean Relations... Hyundai Group Says "Will Watch Calmly"

Employees are heading to work on the morning of the 24th at the Hyundai Group building in Jongno-gu, Seoul, where the Hyundai Asan office is located, amid North Korean State Affairs Commission Chairman Kim Jong-un's critical remarks and directives regarding tourism in Mount Kumgang. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Yoo Je-hoon] As North Korea's declaration to cut off communication lines has led inter-Korean relations into a severe chill, Hyundai Group, a symbol of 'inter-Korean business,' is on high alert. With the Kumgangsan tourism project at a crossroads, if inter-Korean relations deteriorate further, it could become difficult even to estimate when the inter-Korean business might resume.

There is particular concern over Kim Yo-jong, First Deputy Director of the Workers' Party of Korea, mentioning Kumgangsan and Kaesong Industrial Complex?core elements of Hyundai Asan's inter-Korean business maintained for over 20 years. To date, Hyundai Group (Hyundai Asan) has invested funds exceeding 1.4 trillion KRW, including ▲$480 million (approximately 560 billion KRW) for the Kumgangsan tourism business rights ▲$510 million (approximately 580 billion KRW) for social overhead capital (SOC) projects in the Kaesong Industrial Complex ▲226.8 billion KRW in tangible assets within Kumgangsan ▲40 billion KRW for offices and accommodations in the Kaesong Industrial Complex.

However, Hyundai Group has effectively suspended its inter-Korean business since the 2008 Park Wang-ja shooting incident and the 2012 May 24 sanctions. Hyundai Asan, which oversees Hyundai Group's inter-Korean business, has accumulated sales losses approaching 1.5 trillion KRW from 2008 through last year.

This inter-Korean business of Hyundai Group seemed to enter a new phase with a favorable breeze in inter-Korean relations following the first inter-Korean summit in 2018. In April last year, a paid-in capital increase worth 41.4 billion KRW was also executed to renovate various facilities located in Kumgangsan and Kaesong.

However, the situation reversed when Kim Jong-un, Chairman of the Workers' Party of Korea, stated in October last year regarding South Korean assets in Kumgangsan, "Remove all the shabby South Korean facilities that make one feel unpleasant just by looking at them." Although the North delayed asset removal earlier this year citing the spread of COVID-19, there are growing concerns that the situation could worsen again due to the current developments.

Hyundai Group, having experienced repeated tensions and recoveries in inter-Korean relations in the past, intends to monitor the situation calmly without overreacting. A Hyundai Group official said, "It is true that we are taken aback by the sudden news," adding, "As we have done so far, we will calmly observe the situation without being swayed by every development."

This content was produced with the assistance of AI translation services.