Business in North Korea

There's a debate among North Korea observers about the wisdom, viability, and profitability of doing business in the most isolated country in the world. Some see North Korea as an untapped and potentially ripe market for business ventures. Others see such ventures as an exercise in futility, citing the country's unpredictable legal infrastructure for foreign businesses. If some see business as a means of engaging North Korea and encouraging leaders to pursue reforms, others will view such activities as morally reprehensible, providing the regime with hard currency and cash.

A couple years ago I blogged about the rapid rise of cell phone users in North Korea. The numbers continue to rise (close to 3 million now). But from the standpoint of Orascom, the Egyptian telecom company which owns a 75% stake in Koryolink, its business venture under the Kim regime has not fared well. As Andrei Lankov writes in NKNews

In late November the Egyptian building and telecom company Orascom finally admitted what had been known in narrow circles for two years: that its North Korean state partners had taken over the joint Koryolink cellphone network, and that Orascom had been unable to reap any profit from its seemingly successful investment in North Korea.

The Wall Street Journal provided further details.

Koryolink, which now accounts for 85% of Orascom’s revenue and profit, says it hasn’t been able to send any funds out of North Korea in 2015 due to local currency controls and international sanctions targeting Pyongyang’s nuclear weapons program...The setback [for Orascom], underscores the risk of doing business in North Korea, where foreign firms have complained that property and profits have been appropriated by the government.

It could be possible that industries such as telecommunications which have implications for regime control, or mining which relates to security, may be more restricted than other industries. On the whole then, foreign business in NK, while no cake walk, has potential given Kim Jong-Un's desire in recent years to boost investments through special economic zones. As if to counter negative press on Orascom, the Pyongyang Times claimed to have "hundreds" of foreign investors. Likewise, a credible source mentioned that 2015 was a pretty good year for North  Korean tourism, ,despite the Ebola ban barring travel to North Korea the first few months. In fact, Uri Tours has organized snowboarding trip to Masikryong ski resort, even bringing professional snowboarders to accompany tourists. In short, there's no conclusive evidence to argue that business ventures are either good or bad for investors.