South Korean Shipbuilders Question Joint Shipbuilding Complex

South Korean shipbuilders and analysts questioned the economic viability of the proposed plan to build a joint shipbuilding complex in the wake of the inter-Korean summit. The agreement between the two Koreas calls for the two sides to construct a joint shipbuilding complex in the North’s port city of Nampo, near Pyongyang. Most officials from major South Korean shipbuilders say that too many things are uncertain as of yet though Daewoo Shipbuilding & Marine Engineering (DSME) unveiled a bold plan to build a $150m block plant in the North’s city of Anbyeon. DSME President Nam Sang-tae told reporters that a block plant in the North Korean city with production capacity of 200,000 tons a year would be built when issues of transportation, communication, customs, and capital see some improvement. He indicated that the company hopes to begin production in early 2009. Unlike Daewoo Shipbuilding, Hyundai Heavy Industries, the world’s No.1 shipbuilding company, showed reservations focused mainly on credibility and geopolitical uncertainties. The production capacity in the North’s shipbuilding industry was 258,000 tons in 2004, about 3.1 percent that of the South’s 8.24 million tons in the same year, according to a report from the Korea Development Bank. There are eight shipyards in North Korea, including Wonsan and Najin. Total employees in the industry were 25,000, the report shows. Analysts also said the announcement is not `fresh material’ to boost share prices in shipbuilders. He expects the scale of investments by the South Korean shipbuilder in joint projects to be small in the near future as shipbuilding-related facilities require large amounts of capital and time. [Source: http://www.koreatimes.co.kr]