Bloomberg News

North Korea Shops Close, Gambling Suspended as Nation Mourns Kim

January 04, 2012

Dec. 22 (Bloomberg) -- Hong Kong Billionaire Albert Yeung’s casino in North Korea suspended operations, while shops and diners in the communist state stopped taking customers as the nation mourns the death of their leader of 17 years.

Yeung’s Emperor Group, which invests in hotels and financial services, said yesterday it stopped its gambling operations in North Korea. Retailers temporarily closed and travel agencies specializing in North Korean tours stopped accepting bookings.

“Places like shops, restaurants, theaters, cinemas and supermarkets are all closed,” Gunter Unterbeck, a German national who’s lived in Pyongyang since 1996, said in a telephone interview from the North Korean capital. “Twice or three times, I saw elderly women fainting when they heard the news of the death of Kim Jong Il.”

The moves illustrate how business activity may be coming to a halt in the communist state while it’s in a mourning period until Dec. 29. North Korean state media, whose coverage was dominated all week with tributes to the late Kim Jong Il and scenes of weeping citizens nationwide, reported all institutions and businesses will be holding “mourning events.”

Beijing-based Koryo Tours, run by U.K. nationals, and DanDong China International Travel Service Co. said they’ve suspended group tour packages for Pyongyang, though they said the discontinued bookings were unrelated to Kim’s death.

DanDong plans to resume the tour packages from Jan. 15, said Zhang Yong Qiang, a sales and marketing executive at the travel agency. Simon Cockerell at Koryo Tours said the suspension started Dec. 15, which is routine for this time of year.

Casino Lure

“At the present time we do not know how the death of Kim Jong Il will affect tourism in the first part of 2012,” Koryo Tours said on its website. The company will “update everyone who has booked a tour at the earliest opportunity,” it said.

Pyongyang has been trying to entice Chinese tourists and casinos are one of the major attractions, Zhang said. North Korean casinos are closer to Chinese northeastern provinces -- such as Liaoning, Jilin and Heilongjiang -- than those in destinations such as Macau and Singapore.

Yeung’s group, which has run the five-star Emperor Hotel & Casino at the Rason Special Economic Zone in North Korea since 1999, suspended the gambling business this week, though its hotel is operating as usual, Sherman Wu, a spokeswoman at the group, said yesterday.

North Korean Casinos

Casino magnate Stanley Ho in 1998 opened the first casino in Pyongyang, North Korea’s capital, through his Sociedade de Turismo e Diversoes de Macau S.A.. He has invested $30 million in the casino. Sociedade de Turismo was not immediately available for comments.

Shares of Emperor International Holdings Ltd. and Shun Tak Holdings Ltd., which owns 11.5 percent of Sociedade de Turismo, fell in Hong Kong trading today. Adeline Law, a spokeswoman at Shun Tak, declined to comment.

While businesses wait to resume operations, government officials continued their efforts to deal with the prospect of a nuclear-armed North Korea run by the late Kim’s third son, Kim Jong Un, who’s in his late 20s.

South Korea sent Lim Sung Nam, its chief negotiator on the North’s nuclear program, to Beijing today and tomorrow to hold talks with his Chinese counterpart, Wu Dawei.

The two will “evaluate the situation on the Korean peninsula following Kim Jong Il’s death and discuss the direction of future plans for the North Korean nuclear issue,” South Korea’s foreign ministry said today.

Avoiding Hostility

Officials from South Korea, China, the U.S., Japan and Russia are assessing the impact of the leadership change in the regime following Kim’s death. Talks between the five countries and North Korea have stalled since December 2008 after the government in Pyongyang refused to allow inspectors to take samples from a nuclear reactor.

South Korea has been careful to ensure that its moves since the death of Kim do not look hostile to North Korea, President Lee Myung Bak said in a statement on his website today. South Korean army units near the border are on “low-level alert,” according to the statement.

China may provide a substantial amount of food aid to North Korea after Kim Jong Il’s funeral, Yonhap News reported today, citing an unidentified person in Beijing.

Next Generation

Among civilians, 48 percent of South Koreans expect Kim Jong Un to turn the North’s regime more open than his late father, compared with 42 percent saying they expect no change from Pyongyang, Gallup Korea said today, citing its telephone poll of 532 adults. The survey has a margin of error of 4.2 percentage points.

The late Kim stepped up his nuclear brinkmanship with the outside world in 2003, when he withdrew from the Nuclear Non- Proliferation Treaty, triggering a flurry of diplomatic activity that spawned the six-party talks involving the U.S., Japan, Russia, South Korea and China.

Negotiations intensified after a 2006 nuclear detonation, with North Korea agreeing to shut its nuclear reactor in exchange for shipments of fuel.

Tensions flared again in April 2009 after the United Nations denounced a ballistic missile test and North Korea said it would withdraw permanently from six-party negotiations and resume uranium enrichment. The regime detonated a second nuclear device the following month and fired 17 short-range missiles between May and July.

The UN Security Council on July 17 barred five North Korean officials from leaving their country and ordered their foreign assets frozen as punishment for working on nuclear weapons and missiles.

In November this year North Korea said it was making progress in building a light-water atomic reactor and producing low-enriched uranium.

--With assistance from Rose Kim and Shinhye Kang in Seoul. Editors: Young-Sam Cho, Brett Miller

To contact the reporters on this story: Vinicy Chan in Hong Kong at vchan91@bloomberg.net; Cheng Herng Shinn in Tokyo at hcheng52@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net


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