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(3rd LD) S. Korea to ask foreign countries not to invest in Mt. Kumgang

All Headlines 22:08 September 06, 2011

(ATTN: CHANGES headline, lead; UPDATES with more details throughout)

SEOUL/BEIJING, Sept. 6 (Yonhap) -- South Korea will ask foreign countries not to invest or engage in tourism activities at North Korea's Mount Kumgang resort, saying that such actions violate its existing property rights.

The government said after a task force meeting of related ministries that it will use all diplomatic channels to prevent foreign companies from controlling operations at the resort, which was built and funded by South Korean companies and governmental agencies.

The announcement marks the first time that South Korea has outlined diplomatic and legal measures to prevent the North from unilaterally and unlawfully taking over the facilities built at the resort.

South Korea's Hyundai Asan was the main corporate investor in the resort project and had been guaranteed exclusive operating rights by Pyongyang. The state-run Korea Tourism Organization also invested in the resort.

The company, which is part of the Hyundai Group, reportedly invested US$196 million in building hotels, a restaurant and other facilities at the resort since 1998 when the North opened it for South Korean tourists.

Seoul suspended the joint tour program following the 2008 shooting death of a tourist by a North Korean soldier at the resort. It demanded Pyongyang make a formal apology for the incident and requested improved safety measures for tourists to prevent a repeat of the tragedy.

The North, however, rejected such demands and recently expelled South Korean workers from the resort. It vowed to legally dispose of all assets after it unsuccessfully tried to pressure Seoul to resume the tour program, which was once seen as a key symbol of reconciliation on the divided Korean Peninsula.

Officials from the unification, foreign affairs, finance, justice and culture ministries, meanwhile, said orders outlining Seoul's stance will be sent to diplomatic missions in places such as China, Japan and the United States.

"This is part of an ongoing effort to protect property rights held by South Korea," the Ministry of Unification said.

It added that Seoul plans to take further action in response to any moves that may be taken by North Korea on the Mount Kumgang resort issue.

Government sources said that the latest move may pave the way for Hyundai Asan to take the issue to an international mediator or court so the company can show the damage inflicted by the North's actions.

In addition to the diplomatic actions to be taken in regards to the resort, Seoul said it is monitoring the tourism projects being pursued by Pyongyang to link its development of the Rason industrial zone near the Russian and Chinese borders with Mount Kumgang.

Seoul plans to stress that tourism projects that use facilities built by South Korean firms are illegal.

The latest announcement comes after the head of a North Korean company responsible for attracting foreign capital proposed holding a meeting with Hyundai Asan to resolve the row over the assets at the scenic mountain resort.

Park Chol-su, head of Daepung International Investment Group, said earlier in the day in Beijing that he wants to meet with Hyundai Asan representatives to discuss outstanding issues.

The official said in an interview with Yonhap News Agency that it's up to Hyundai Asan whether it can directly run, lease or sell its assets at the resort. The South Korean company said it had not received any official proposal from Park's company.

Park's comment came days after North Korea made a trial run of a cruise from its northeastern port city of Rajin to the resort on its east coast, with a similar event to be arranged later this month, before tours for ordinary tourists start in late October.

yonngong@yna.co.kr
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