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(LEAD) S. Korean automaker in Pyongyang sends first business profit home

All Headlines 18:50 July 15, 2009

(ATTN: CORRECTS remittance value in quote in 5th para, ADDS N.K. share of the profit, details)
By Kim Hyun

SEOUL, July 15 (Yonhap) -- A South Korean automaker operating in North Korea said Wednesday it has posted its first net profit and remitted part of it home, the first southbound money transfer by an inter-Korean venture.

Pyeonghwa Motors Corp. made a net profit of US$700,000 for the fiscal year ending in February and sent $500,000 to its headquarters in Seoul via a bank account in Hong Kong, its spokesman Roh Byoung-chun said.

The automaker began production in 2002 as a joint venture between North Korea and the Unification Church of South Korean Rev. Moon Sun-myung, who was born in the North. Its plant in Pyongyang produces sedans and small buses with some 340 employees, and its customers are mostly local businesses.

Roh said it took a while for North Korea to approve the remittance, which was made through a South Korean lender, Woori Bank, in Hong Kong in late May.

"For North Korea, $500,000 is a large sum of money. It is not used to the capitalist idea of making investments and retrieving profits. We believe they pondered deeply before giving approval," he said.

Pyeonghwa sold 652 units last year, while North Korea took $200,000 for its 30 percent share in the venture, he said. The company says profits are picking up, with this year's sales already surpassing 740.

North Korea's own automaker, Sungri Motor, was established in 1958 and mostly produces cargo trucks.

Pyeonghwa's production is not influenced by political tensions or South Korea's ban on cross-border shipments, he said, as raw materials and parts are imported from Europe and China. The ban was enforced after North's rocket launch in April, with the exception of goods going to a joint industrial complex in the North's border town of Kaesong, where 109 South Korean small firms operate.

"The remittance is symbolic. They are having a hard time in Kaesong, and many went bankrupt in Mount Kumgang (the North Korean tourist resort)," Roh said. "We hope this can bring hope to people doing business in North Korea that anyone can go there and can bring back profits."

Officials from the South Korean Unification Ministry said inbound money transfers from North Korea are not restricted, although outbound remittances are strictly monitored and prohibited in some cases. It is the first time a South Korean company has sent profits from sales in North Korea, they said. Other businesses investing in North Korea, including those operating in the Kaesong park, sell their goods in South Korea and elsewhere.

South Korea has put three North Korean firms, including a bank, on its blacklist under a U.N. resolution that bans financial transactions with North Korean entities suspected of aiding the country's nuclear and missile development.


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