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With the second inter-Korean summit just one day away, the heads of South Korea’s large conglomerates have been busy calculating what they could earn during the three-day visit to the North, when they accompany the president beginning on October 2. The summit talks, the first in seven years, are expected to focus on expanding economic cooperation between the two Koreas, which experts believe will open the gate for South Korean companies to launch profitable businesses in the North.

South Korean President Roh Moo-hyun will be accompanied by a total of 18 CEOs of the nation’s large conglomerates who, according to officials, include: Yoon Jong-yong, head of Samsung Electronics, Chung Mong-koo, head of Hyundai Motor Group, Chey Tae-won, chairman of SK Group, and Koo Bon-moo, chairman of LG Group.

They are expected to use the visit to the North as an opportunity to draw up blueprints for their North Korean businesses, on which they could work out detailed investment plans later on. Though major companies are saying that no concrete plans have been decided, observers forecast there is the possibility that some of them could come up with unexpected large-scale business cooperation projects as they will have time with the heads of the two Koreas.

The business leaders are busy reviewing the previous inter-Korean cooperation projects and analyzing their feasibility, informed sources say. Of note is that Hyundai Motor Group’s Chairman Chung is reportedly weighing a possible business in the North, an about-face from his previous lukewarm stance on inter-Korean cooperation. Experts say that he may consider cooperation in the areas of rolling stock or logistics.

Observers say that Hyundai Motor Group will push for cooperation in a bid to preempt the North Korean market, rather than considering profits right away. POSCO is eyeing a plan to engage in natural resource development and Hyundai Group is paying especially close attention to expanding economic cooperation in the border city of Gaeseong. Hyundai Chairwoman Hyun Jeong-eun will accompany President Roh and company officials expect her visit will help them to obtain exclusive licenses for developing seven major inter-Korean cooperation projects, including tourism. Samsung and LG are also reportedly interested in expanding their investments in the North as both are already operating businesses there.

Still, experts anticipate that companies will be cautious in making decisions on their investments in the North. “After visiting the North, we will decide where to cooperate on a mid- and long-term basis,” Koo of LG Group said.

“We think it is meaningful to participate in this historically important moment, in which inter-Korean cooperation takes a forward-looking turn,” Chey of SK Group said, without specifying the company’s business plans.

An anonymous official who is part of the delegation to the North noted that there is still a way to go before profits can be made from business ventures in the North, adding that businesses with investment plans should wait until a new president takes office next year.

Experts see the uncertain investment opportunities in the North as being attributed to South Korean companies’ lukewarm stance on the matter. “How the North nurtures the investment environment for South Korean conglomerates will be the key to the expanded investment of the South’s big companies,” Dong Yong-seung, a Samsung Economic Research Institute researcher, said.

Kim Seok-jin, a researcher at the Korea Institute for Industrial Economics and Trade, said, “Outside the Gaeseong industrial complex, South Korean companies risk high logistics costs. And they are suspicious about whether they will be guaranteed their right to management and property in the communist country. Such hurdles should be removed first before companies decide on investments in the North.”
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