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Wednesday, 20 June, 2001, 06:46 GMT 07:46 UK
S Korea rescues joint tourism project
Children walk past a poster showing the historic meeting of South Korean President Kim Dae-jung and North Korean leader Kim Jong Il
The project is an opportunity to visit the North
By Caroline Gluck in Seoul

South Korea has announced it would bail out a money-losing tourism project with North Korea.

The state-run Korea National Tourism Organisation (KNTO) said it was forming a consortium with the current operator of the project, Hyundai Asan, to rescue the ground-breaking joint venture.

The landmark cruise tours to North Korea's scenic Diamond Mountains began three years ago and were seen as a breakthrough in relations between the two Koreas

The move has been strongly criticised by the opposition Grand National Party which said it was a waste of taxpayers' money.

The tours to North Korea's diamond mountain range began three years ago, but have been running at huge losses.

The venture is the only opportunity for most South Koreans to visit the North as the two countries still remain technically at war.

Rescue plan

The KNTO said it would join in the tourism project and would be involved in marketing, promotion and transport to North Korea as well as operating duty free shops and hotels.

North Korean border guard
Tourism has helped break down decades of mistrust
It also said it hoped to expand tourist ventures to other parts of North Korea in the future.

Hyundai Asan had asked the KNTO for around US$80m in funds to help make the tours profitable.

The government tourism body said it had not yet decided on the level of funding, nor where the funds would be drawn from.

Landmark venture

The landmark cruise tours to North Korea's scenic Diamond Mountains began three years ago and were seen as a breakthrough in relations between the two Koreas.

But the venture has lost Hyundai hundreds of millions of dollars, forcing the company to reduce the number of tourist cruises and warning that it may have to halt them altogether.

Under its deal with the North, Hyundai had agreed to pay US$12m a month in return for exclusive rights to operate the project. But the high tourist numbers never materialised.

Earlier this month the North finally agreed to lower the tourist fees and reopen an overland route between the two countries to the mountain resort - a move which would dramatically lower the cost of the tours.

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See also:

10 Apr 01 | Asia-Pacific
North Korea cruises cut back
08 Aug 00 | Asia-Pacific
Hyundai takes cattle to N Korea
07 Feb 00 | Asia-Pacific
North Korea opens up to tourists
13 Sep 99 | Asia-Pacific
Analysis: The trouble with North Korea
13 Oct 98 | Asia-Pacific
Tourism plan for North Korea
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