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North Korea’s road to riches

Feb 27. 2019
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By Agence france-Presse
Haiphong, Vietnam

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Vietnam firm ‘could show way for Pyongyang’

A North Korean delegation visited a Vietnamese car factory yesterday ahead of Kim Jong-un’s summit with US President Donald Trump, with analysts calling it a potential inspiration for Pyongyang – an indigenous plant that symbolises growth and prosperity.

A convoy carrying at least two of Kim’s top aides, both of them vice-chairmen of North Korea’s ruling Workers’ Party, visited the Vinfast complex in Vietnam’s coastal industrial hub of Haiphong.

The long motorcade rolled past lines of employees waving Vietnamese and North Korean flags. There was no indication Kim himself was part of the delegation.

The trip came after Trump, in a morning tweet, touted an “AWESOME” future for North Korea if it gives up its nuclear weapons, and held up rapidly growing Vietnam as an example. 

Vinfast is the Communist country’s first home-grown car manufacturer and part of its largest private conglomerate – owned by the country’s richest man, multibillionaire Pham Nhat Vuong.

The firm unveiled its first two models, a sedan and an SUV, at the Paris Auto Show in November with former footballer David Beckham brought in to promote the cars.

Using technology licensed from German giant BMW and designed by Italian firm Pininfarina – which counts Ferrari among its customers – they are projected to go on sale in September.

Production has yet to begin, but Vinfast has poured $1.5 billion into its sprawling new factory northeast of Hanoi. 

In contrast, North Korea’s main car company, Pyonghwa – originally set up by the Southern-based Unification Church – is said to rebadge vehicles made by Chinese firms such as Dongfeng Motors. 

‘Learn a lot’ 

Earlier, the North Korean delegation went to Halong Bay, whose towering rocky karsts are the crown jewels of Vietnam’s tourist sector.

The North has sought to develop its nascent tourism sector, with Kim overseeing the development of the giant Wonsan-Kalma resort project under construction on its east coast.

Like China, Vietnam’s Communist authorities have embraced market economics in recent decades and been rewarded by a glittering economic transformation.

Expansion has largely been buoyed by the low-cost manufacture and export of goods from Nike shoes to Intel processors, and today it is one of Asia’s fastest-growing economies with GDP rising 7.08 per cent last year.

Vuong, CEO of Vinfast’s parent company Vingroup, started out in business selling dried noodles in Ukraine, and has grown his empire to become Vietnam’s biggest conglomerate. 

It owns a string of holiday resorts, luxury condominiums, shopping malls, convenience stores, schools, hospitals and farms across the country, with Forbes estimating Vuong’s net worth at $7.8 billion.

Koh Yu-hwan, a professor of North Korean Studies at Dongguk University, explains that Vietnam is “an ideal country to benchmark for North Korea” as it was “also a socialist country that has achieved significant economic growth through reform”.

“But it will be hard for North Korea to adopt Vietnam’s model,” he adds.

Pyongyang has quietly been reforming its sanctions-hit economy for years, loosening the shackles on state-owned enterprises and turning a blind eye to private business activities, but the state retains a significant role.

And it has a mountain to climb – its infrastructure is ramshackle, electricity supplies are intermittent, and several past foreign investments have failed. 

The North would want a state-led development strategy controlled by the authorities, Koh said. But Vietnam’s growth has been fuelled by foreign investment from firms such as South Korean telecoms giant Samsung, which has poured in billions of dollars.

That “will not work for North Korea”, Koh says. But it could still “learn a lot from Vietnam”, which was achieving rapid growth “while maintaining its socialist system”. 

Going to one of Samsung’s plants in Vietnam was politically impossible for Kim, he says, but “visiting the Vinfast plant makes sense since it’s Vietnam’s success model through a traditional Vietnamese method.” 

“That is what North Korea wants – success through a North Korean model.”

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