Monday, November 26, 2007

Universal Studios picks site for South Korean theme park

Universal Studios picks site for $3.1 billion South Korean theme park

Universal Parks & Resorts and South Korea's Gyeonggi province said they have agreed on plans for a $3.1 billion theme park to be built south of Seoul.

The park, to be built in the city of Hwaseong, is set to open in 2012 and will lead to the creation of over 58,000 new jobs, said a press release provided by Universal Parks & Resorts, the operator of Universal Studios theme parks, and Gyeonggi province. The release said the two sides would sign a formal agreement later.

Universal Parks & Resorts, a division of General Electric Co.'s NBC Universal, operates parks in Orlando, Florida, and Hollywood, California, in the United States, as well as in Osaka, Japan.

The parks include attractions based on Universal films including "E.T. The Extra-Terrestrial" and "King Kong," as well as movies made by other studios such as "Spiderman" and "Shrek."

Universal, which first announced plans for a park in South Korea in May, is cooperating with South Korean partners including Posco Engineering & Construction Co., a unit of steelmaker Posco.

Universal Parks & Resorts is also developing Universal Studios parks in Singapore and Dubai.

The location, about 19 miles south of Seoul and also close to its main international airport in Incheon, will be conducive to attracting both South Korean visitors as well as those from nearby China, the release said.Plans are for the facility to also include a convention center, hotels golf courses and an outlet mall, the release said. ◦

Friday, November 23, 2007

North Korea: Capitalist sprouts in unfertile soil

SOME members of North Korea's elite have long drunk the world's most expensive cognac and nibbled caviar. Others in Pyongyang, capital of the world's last Stalinist regime, drive luxury imported cars. Fairness and equality are proudly touted as the hallmarks of North Korea's self-reliant brand of socialism. But with more cash circulating under the country's economic reforms and goods more plentiful, Pyongyang residents are fast becoming consumers. Remarkably, some are also becoming investors in the property market—despite the government's theoretical monopoly on the allocation of housing.

Inspired by neighbouring China, North Korea initiated economic reforms in 2002. Most wage and price controls were dropped and the market was opened to some private commerce. After five years of reform, the new wealth has gravitated mainly to the city's privileged class.
One recent trend is for residents to trade up to bigger, newly built apartments. Under the country's Land Law, passed in 1977, all land belongs to the country and co-operatives, and cannot be bought, sold or even occupied. Yet a North Korean student who studied in China says businessmen are satisfying the demand for up-market housing by obtaining land rights from the local authorities and financing construction with capital from their customers. Chinese experts on North Korea say that the government itself has actually played an active role. Some of its agencies have financed the redevelopment of their properties with capital from their staff. They have then turned a profit by selling the new apartments through the government's housing department.

The student says each apartment covers about 150 square metres (1,600 square feet) and costs as much as $40,000 in the popular Moranbong and Central districts of Pyongyang. Construction is now under way at six or seven sites in the capital's residential areas. The building methods used are outdated, dominated by handmade concrete bricks. A five-storey building can take six months to complete. Because the construction is illegal there are fears that some of the newly built blocks might lose their permits or be confiscated even if they have already been paid for.
Officially, each citizen is entitled to receive 14 square metres of living space. But occupation, rank and “contribution” to the country can make a big difference. A “hero mother” who gives birth to triplets would receive a 200-square-metre home. One 28-year-old woman, who works as a tour guide, boasts of living in the Moranbong district in a 170-square-metre apartment with four bedrooms and two bathrooms, thanks to her father's senior government position. Only married couples are eligible for an apartment from the government, but the guide, who says she is single, claims to be wangling one for herself.

The government probably tolerates privately financed buildings because it is strapped for cash and cannot afford to build housing for its citizens. Many uncompleted, suspended building projects dot Pyongyang's skyline. Cranes gather rust, still perched on top of the buildings. North Koreans hope that foreign capital will help finish the buildings. According to, a website covering business in North Korea that is based in China's border city of Dandong, the government is soliciting $50m-60m for Pyongyang's historic Taedong-gang Hotel. The building, where “Dear Leader” Kim Jong Il spent many years with his father, Kim Il Sung, burned down four years ago. The government is also hoping foreign investors will stump up $30m-45m for the partly completed Ryugong Hotel, which was designed to be Asia's tallest, with 105 floors. Construction has been stalled since 1992 because of a lack of funds.

The building mini-boom is good for the tiny cognac-sipping elite. But its members must worry about how the poverty-stricken majority, reared on promises of equality, will react to the sight of their new homes and growing prosperity. ◦

Thursday, November 22, 2007

Chinese imports of TVs, videos unveiling world to N. Koreans

By Blaine Harden
The Washington Post

SEOUL, South Korea — Cheap Chinese TV sets and video players, together with pirated videotapes and DVDs, are lifting the lid on information reaching the North Korean people, according to defectors and experts on Kim Jong-Il's dictatorship.

The unsealing process — underway for nearly a decade and accelerating this year — coincides with the crumbling of North Korea's centralized economy and the rise of street markets.
In those markets, doing business daily nearly everywhere in the North, are cut-rate electronics and knockoff videos that have acquainted a sizable number of North Koreans with the wealth and razzmatazz of the capitalist world.

Watching South Korean soap operas and Hollywood movies inside North Korea, defectors say, is scary, exhilarating and depressing.

"We closed the drapes and turned the volume down low whenever we watched the James Bond videos," said a North Korean woman, who two years ago fled her fishing town in a boat with her husband and son. "Those movies were how I started to learn what is going on in the world, how people learned the government of Kim Jong-Il is not really for their own good."

The woman, 40, who now lives in a Seoul suburb and did not want her name published because her parents are still in the North, said Chinese consumer electronics began to trickle into her coastal region in the mid-1990s, when massive crop failures and widespread famine forced the government to tolerate private trading.

By 2002, when Kim officially approved limited market reforms, she said, she and her neighbors could sell fish for cash. She used that cash to buy, among other manufactured goods from China, a color television and a videotape player.

In addition to Bond movies, she said, she learned about the world beyond North Korea from Hong Kong gangster films and from South Korean television, which she could receive on her Chinese-made TV.

Her son, now 17, said his understanding of the United States — where he hopes one day to live — was formed by watching old videos of "Charlie's Angels." ◦

Tuesday, November 06, 2007

Why Korea has a Bright Future

by Jeremy Siegel, Ph.D.

My 14-hour Korean Air flight on a non-stop Boeing 747 airliner from New York to Seoul took the polar route over Siberia and China right towards the South Korean capital. But when the plane approached North Korea, it turned sharply east to the Yellow Sea and then hugged the coast before veering west to land at Incheon, the sparkling new airport completed in 2001, a year before Korea hosted the World Cup.

The detour is mandated by North Korea which does not allow South Korean aircraft over their airspace, a restriction that adds nearly an hour to the flight. The north-south division has been a central feature of Korea over the past half century, influencing its politics and economics. But the country is now looking forward, seeking its place in Asia’s future amid the growing economic power of China.

I was invited to Seoul by Mr. Park Hyeon-Joo, Founder and Chairman of the Mirae Asset Group, one of Korea’s fastest growing financial companies. The firm was one of the sponsors of a conference honoring the 20th anniversary of the National Pension Service, Korea’s social security system. Korea, in contrast to the US, invests some of its massive $250 billion trust fund in equities and was considering the advantages of an even higher allocation.

An Asian Economic Success
South Korea is enormously successful. Its per capita income is more than 60% of that of the US, up from only 8% in the early 1960s. Seoul is the second most populated metropolitan area in the world (behind Tokyo), with over 22,000,000 residents. It is a modern Asian metropolis with little sign of poverty.

The country has come a long way from the 1998 Asian crisis that spread from South Asia to Korea. At the height of the crisis, the South Korea’s market index, the KOSPI, fell 74% from 1150 to 277. But lately the market has been surging and in October the index surpassed 2000 and Korean stocks now have a market value over $1 trillion.

Despite the recent bull market, the valuation of Korea’s stock market is still quite compelling. The KOSPI index is selling at only 15.5 times this year’s earnings, a valuation that compares favorably with 19 time earnings in Indonesia, 24 in India, and the 50s for the booming Chinese stock market.

Investors looking to invest in the country can buy the iShares MSCI South Korea Index ETF (EWY), which trades on the New York Stock Exchange.

The Korean won is also strong, rising from 2000 to the dollar at the height of the crisis to 900 today, about the same rate it was before the Asian turmoil began. In dollar terms, the Korean stock market has increased more than ten-fold over the past decade.

But despite this recovery, the country is at a crossroads. It is aging more rapidly than the US, and its fertility rate of 1.2 rivals Japan as one of the lowest in the world. Geopolitical risks abound as the division between the North and the South hangs over the country.

Koreans constantly debate the pros and cons of an eventual merger with the North. They are acutely aware of the cost that West Germany incurred in the absorption of East Germany. They rightfully argue that if the South absorbed the North, the cost to South Korea would be greater since North Korea is so much poorer than East Germany was when the Berlin Wall fell. Yet many feel that eventually the two countries will be united.

But there are more immediate challenges. Korea’s manufacturing is being squeezed by cheap labor from China and its electronics giant, Samsung, has been floundering of late. Increased competition is everywhere. For example, the Koreans once dominated the computer game market in China, but are now feeling stiff competition from the Chinese themselves.

Blueprint for the Future
Mr. Park, the far-sighted chairman of Mirae Asset Management, believes that Seoul can make its mark in financial services and become the financial center of East Asia. The financial industry is growing and clearly has an important place in Korea’s future. But to insure future growth Seoul would have to reduce regulation and foster an innovative and dynamic image. Today there are far too many restrictions on short selling, hedge funds, and its financial institutions are small by today’s international standards.

Yet Korea has some decided advantages. Its people are highly educated and the country sends more students to the US than any other Asian nation, including China and India. Recent political trends have turned more conservative and economic growth is being giving top priority. The five year rule of Roh Moo-hyun, a populist who promised to redress the inequalities of wealth and break up monopolies, has not been successful. As a result, Lee Myung-bak, the former Hyundai executive and mayor of Seoul, enjoys a strong lead in the polls for the upcoming presidential election.

A pro-business government is important, but Korea must do more. To achieve economic success, Seoul must retain its foreign-educated students and entice others to make their mark in Korea. Mr. Park’s presentation at the conference emphasized the importance of being a magnet for top talent. His slides showed the vibrant and colorful skyline of Pudong area of Shanghai and compared it to the clean, white, but uninteresting skyline of Seoul.

He is right: Seoul, like other Asian capitals, must compete with Hong Kong, Singapore, Shanghai, and others cities to attract the best people. We Americans should also not become complacent, as many rightfully claim that the world’s financial center is moving from New York to London and the Far East. All cities now compete in the global marketplace.

Korea’s greatest resource is its people as it has a highly educated and motivated workforce. The country rose from poverty to become one of the richest nations in Asia in a few short decades. As long as it stays focused on the future, I see no reasons why Korea cannot continue to be a leader in Asia. ◦

Status of U.S. Military Bases in Korea

The transfer of U.S. military bases to the South Koreans is on track and going smoothly, U.S. officials said as Defense Secretary Robert Gates and his top military leaders gathered Tuesday for two days of meetings with their Seoul counterparts here.

So far, 23 of the U.S. camps — vestiges of the 1950-53 Korean War — have been transferred as part of a broader plan to have Seoul assume more responsibility for its own defenses and take over its own wartime command by 2012.

While some South Koreans, including a few protesters who met Gates upon his arrival, would like to see the transfer sooner, both sides have agreed that it would take until 2012 to get all of the needed equipment and training in place.

Senior U.S. defense officials traveling with Gates said this week that the South is not yet prepared for the transfer, but is on pace to be ready by 2012.

Still, just 50 kilometers north of here, the guarded, barbed-wire fence — the DMZ — still divides the country from its northern neighbor. Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, visited the border Monday, after he arrived for the defense meetings.
The developments in the North are also a likely topic for the defense officials.

Just this week, north of that DMZ, North Korea began its long-demanded work to disable its nuclear facility at Yongbyon. The move is a result of the six-nation talks, and would be the most significant step the communist country has taken to scale back its nuclear program.
North Korea conducted its first nuclear test in October of last year.

The North has promised to disable the reactor at Yongbyon by the end of the year in exchange for energy aid and other political concessions from the other five nations: the U.S., China, Japan, South Korea and Russia. One of those concessions that has sparked some debate is the possibility that North Korea could eventually be taken off the U.S. list of states that sponsor terrorism.

Removal from the list has long been a goal of Pyongyang, but the North would have to meet requirements stipulated under U.S. law.

Gates said Tuesday that the meetings in Seoul will largely focus on the progress of the military transition here from U.S. to South Korea.

About 29,000 U.S. troops are still deployed in the South as a legacy of the Korean War, which ended in a cease-fire that has never been replaced by a peace treaty. Under the current military arrangements, the U.S. commander, currently U.S. Army Gen. B.B. Bell, would lead all allied forces under a joint command in the event of a renewed conflict.

Another likely topic for the defense officials is the continued deployment of South Korean troops in Iraq. There is a plan to cut the current number — 1,200 — in half and extend the deployment for another year. South Korean President Roh Moo-hyun has said the extension would boost his country's alliance with the U.S., but others in the country are opposed.