South Korea

Gambling as usual up North for Emperor Group casino

PUBLISHED : Wednesday, 21 December, 2011, 12:00am
UPDATED : Wednesday, 21 December, 2011, 12:00am

What will happen to the Emperor - that is, the Emperor Hotel and Casino in Rason, North Korea?

Owned by Hong Kong businessman Albert Yeung Sau-shing's Emperor Group, in 2001 the hotel was one of the first foreign businesses to make inroads in the isolated nation.

Given the uncertainties after the death of Kim Jong-il at the weekend, the group is one of several Hong Kong companies that will be closely watching what happens in the secretive country.

'We're on normal operations,' Emperor Group spokesman Sherman Wu said. 'There are no plans at the moment and we aren't speculating as to what will happen. We'll just have to wait and see.'

Wu said the group had no contingency plans to withdraw staff from its hotel in the northeastern port, half of whom are foreigners and half North Koreans.

Hong Kong gambling mogul Stanley Ho's casino empire Sociedade de Turismo e Diversoes de Macau (STDM) also does business there, having operated a casino in the basement of the Yanggakdo International Hotel in Pyongyang since the mid-1990s.

Other outsiders doing business in North Korea include South Koreans, British bankers and tour operators.

In 2001, the Hong Kong General Chamber of Commerce took local businessmen to assess possibilities for investing in North Korea, but many came back saying the country was not ready. The chamber considered taking another trip last year, but decided against it as it saw few changes in the economic situation. 'Nothing functions in North Korea right now, in terms of the economy,' says John Park, senior programme officer for Northeast Asia and an analyst for the US Institute of Peace.

'It's almost like a black market,' Park said. 'Whenever anyone can make money or a quick buck, they do so, but it raises questions of sustainability as it really is a makeshift type of activity.'

Because of Hong Kong's relatively low level of investment in North Korea, the city will not suffer any direct impact in the event of internal strife, but should trouble spill over into South Korea it would be a different story.

While analysts like Park, and Scott Snyder of the US-based Council on Foreign Relations, say the likelihood of a full and rapid collapse in North Korea is low - with China looking to support the status quo - the burden on South Korea if it did would be substantial.

The North's GDP is about 5 per cent of the South's.

The South is Hong Kong's eighth-largest export partner and sixth largest import partner, the Hong Kong Trade Development Council says. Hong Kong's trade deficit with South Korea last year exceeded US$10 billion.

Hong Kong imported US$1.84 billion worth of semiconductors, electronic valves and tubes, US$519 million in petroleum oils (other than crude) and US$427 million in telecommunications equipment and parts.

This year alone, more than a million South Korean visitors came to Hong Kong, the Tourism Board says. (In contrast, there were barely 100 North Korean visitors to Hong Kong in 2008 and again in 2009 and only 69 last year, the city's Tourism Board says; two North Korean students are studying at the University of Hong Kong.)

'Sudden and dramatic collapse ... that's something South Korea would like to avoid,' Park said.

'If there's wobbling and weakness in the North Korean state, we're likely to see the South Koreans and US come to the rescue of the regime. This is where I think the role of China will be more active and robust.

'Unfortunately we're all in this wait-and-see mode. If there's any group out there, any country that's being proactive rather than reactive in monitoring this situation carefully, it's China.'


The amount in US dollars that the Emperor Group reportedly paid to lease the North Korean casino site for 50 years