April 27, 2024

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[THE INVESTOR] Kaeseong Industrial Complex, a symbol of inter-Korean relations, was not necessarily associated with innovation or startups in its heydays.

Before closure of the industrial park in the border town of North Korea in 2016 -- following a deterioration of inter-Korean relations -- 125 South Korean companies were engaged in manufacturing businesses ranging from apparel, auto and electronics parts to kitchenware.

“There were certain restrictions which allowed only traditional manufacturing businesses there,” said Kim Jin-hyang, chairman of the Kaeseong Industrial District Foundation, a government-backed agency that handles administrative affairs, at a forum titled “Symposium on promoting startups through Kaesong Industrial Complex.”

“North Korea has been talking about attracting 3,000-5,000 businesses to the country for a long time and once inter-Korean relations improve, anything can be possible.” 

Experts participate in a discussion on how to build a startup ecosystem in North Korea on Dec. 17 in Seoul. Park Ga-young

Expectations that the firms which had to shutter their businesses in the industrial park will resume operations are bright following the two recent summits between leaders of both countries.

In September, when South Korean President Moon Jae-in visited North Korea’s capital Pyeongyang, the two sides agreed to pursue substantial measures “to normalize the Kaeseong Industrial Complex and Mt. Keumgang Tourism Project.”

Instead of resuming the old businesses, authorities are hoping for something more innovative and cutting edge.

“We are going back to Kaeseong in spring. When we do, we will realize our dream of building a Silicon Valley there,” Kim said.

At the forum hosted by Small and Medium Business Corporation and Korea Business Angels Association earlier this week, experts gathered to brainstorm on ways to transform the industrial park.

Efforts to build a startup ecosystem in the communist nation are already underway, according to Ian Bennetts, associate program leader of Choson Exchange.

The firm runs education programs such as startup bootcamps and mini-MBA programs for North Koreans, by gathering business experts around the world.

North Korea’s UnJong Park, a special economic zone, for instance, shows the country’s entrepreneurial spirit, Bennetts said. The region, 30 kilometers away from Pyongyang where Choson Exchange runs entrepreneurship programs and monitors 17 startups, has a number of research institutes and a top-tier university.

Experts at the forum noted that North Korea has high quality IT talent.

“Even though North Korea’s IT sector is not as sophisticated as South Korea, because of that there are many opportunities and people have to be more creative and work harder to get the same results,” Bennetts said.

“One of North Korea’s educational goals is to make every citizen a science talent,” said Kang Ho-je, director of Research Center for North Korean Science and Technology said. “As you may know the most important thing for a startup is human resources.”

“North Korea is not a market economy but the authorities can select and focus on their goals with high-quality talent and collective efforts,” said Choi Se-yul, a professor at Pyongyang University of Science and Technology, co-founded by the two Koreas in 2010, adding that Kaeseong should transform into a digital city where companies can test cutting-edge technologies.

Participants agreed that it may take some time to see any tangible changes, but efforts to transform Kaeseong should start now.

“Innovation takes time and that is why we need to start this discussion now. We have to get ready to draw up a fresh blueprint for Kaeseong,” said Choi Hyun-kyoo, director of Korea Institute of Science and Technology Information.

By Park Ga-young (gypark@heraldcorp.com)