Inter-Korean economic cooperation: Have no illusion about it

Inter-Korean economic cooperation: Have no illusion about it
After the government announced that the leaders of South and North Koreas would hold a meeting in June, much ink has been spilt on the subject, most of it predicting in rosy tones how the thawing relationship will produce an immediate bonanza.


Of course, the way the two nations interact in economic terms will be changed fundamentally by the summit talks. It's not going to be a simple extension of cooperation that has been done in the past. It will surely go beyond consignment manufacturing in electric, electronic and apparel businesses. The likely areas of cooperation may include finance and social infrastructure construction.


That is why the business community welcomes the announcement and is excited about the prospect of making big profits in the "last capitalist frontier" of the globe.


What we need most at the moment, however, is not more hype that will fade within a few months, but to devise carefully how to proceed with this opportunity step by step.


We have been disappointed too many times already by false expectations of quick bucks. Anyone in their thirties or older may recall that in the late 1970s the government made public the news of discovering offshore oil reserves. The announced discovery later turned out to be misleading.


It is we in South Korea that should lead all the aspects of development projects, ranging from provision of capital and skilled manpower to overall design of the projects. In order to come up with successful plans that would not disappoint anyone, an internal consensus has to be made, deriving opinions from civic organizations and experts in respective fields, as well as from the government.


General agreement is necessary, not only because Korean reunification is what everyone has wanted so desperately for the past five decades, but also because the success of such economic cooperation critically hinges on how much the people of South Korea are willing to pay for the bill.


Currently, it is reported that North Korea is suffering from a chronic shortage of electricity and other energy sources, not to mention critical infrastructure of roads, railroads and ports for further development of industrial sectors. We all know it takes time to build such basic underpinning of the economy.


While pouring a huge amount of money into infrastructure projects for several years with little or no return, South Korean businesses might run out of patience. It would be tragic to make such a start and then abandon their development efforts altogether, even before taking a nickel out of the expensive ventures.


Inter-Korean economic cooperation should not be viewed as a short-term gold rush. One should not have any illusion about it, buoyed by unrealistic hype. South Korea's businesses have to consider carefully their involvement in projects with a long gestation period. They may want to actively pursue cooperation with foreign companies interested in North Korean business.


One good strategy may be setting up as many free trade zones as possible, similar to the Rajin-Sunbong area. That way, firms that move in are guaranteed economic freedom and modest profits while, at the same time, stimulating economic development of the nation to the North.