N Korea in UK trade move

North Korea is slowly becoming less isolated

By Caroline Gluck in Pyongyang

A senior North Korean official has said his government wants to begin discussions on readjusting old debt owed to British companies.

It is part of efforts to improve bilateral ties and economic relations.

The deputy director-general at the Ministry of Foreign Trade, Ri Hyok, said the government was working on creating a legal framework, including ways of preventing double taxation to encourage greater investment from UK firms.

His comments were made during discussions with a trade delegation backed by the UK government, the first such to North Korea since the two countries normalised diplomatic ties last year.

Mr Ri said the government was working on a number of areas to create a favourable environment for British investors, and that he hoped bilateral trade could eventually expand to their former levels.

British companies began trading with North Korea in the late 1950s.

Two way trade was at its highest in the 1970s and 1980s.

Attracting investment

A finance official said the total level of debt owed to the UK was still being assessed, but early indications showed it already amounted to several million dollars.

The new measures are a sign that the government is serious about wanting to attract more foreign investment.

It has admitted that its economy, which suffered a huge blow with the collapse of the former Soviet Union and the US trade blockade, still faces a number of serious difficulties.

These include energy shortages and serious food problems as a result of years of natural disasters.

The British-backed trade delegation, which includes representatives from oil multinationals and those working in the transport, mineral and service sectors, is spending four days in Pyongyang to assess business opportunities.

'Reclusive'

It is an exploratory mission, but British firms have said they are keen to assess areas for potential development in a country which still remains one of the most reclusive nations in the world.

"At first sight, North Korea does not give the impression of being a good market... we are looking at it for the long term," Colin Adams, chief executive of BCB, the not-for-profit consultancy organising the trip, told the BBC's World Business Report.

"No one is going there to sign contracts tomorrow.

"There is never the perfect time, given the appallingly low level of income in the country, the poverty, the starvation.

"From one aspect this is a humanitarian action to see where we can help to enrich the country sufficiently to take the people out of abject poverty."

He stressed that the appetite for development among North Koreans.

"They want to see the country developing... there are longing looks being cast at development in China," Mr Adams said.