SEOUL, Jan 17, 2000 (Reuters) - The automotive arm of South Korea's Unification Church will break ground this month on a $300 million car-making joint venture called Peace Motors in North Korea, an executive with the company said on Monday.
The church-owned Pyongwha Motors has formed a joint venture with North Korea's state-owned Ryonbong company to build a plant that would manufacture 100,000 Fiat cars under licence by the year 2006, Pyongwha Motors deputy director David Yoon said.
The joint venture would be the biggest manufacturing investment so far in the reclusive, communist country.
Yoon told Reuters in a telephone interview it was 70 percent owned by the South Korean firm and 30 percent by North Korea.
The plant is to be built in North Korea's southwestern port of Nampo, which has container facilities and is near a railway line to China, he said.
A ground-breaking ceremony is scheduled for January 29.
The company ultimately aims to export much of its production to China, Mongolia and Siberia, Yoon said.
It will have a far more modest start with an initial investment of $9 million to set up a maintenance and repair facility that would employ about 350 people, he said.
North Korea has only about 3,000 cars on the road, most of which come from Japan, Yoon said.
But next year the company expects to manufacture 10,000 Fiat Tempuras and Sienas with 600 cc, 1,300 cc and 2,000 cc engines.
North Korea, whose economy has contracted every year over the past decade and is only beginning to recover from near-famine conditions, has a brighter economic future, Yoon said.
``In the 1970s, North Korea had a bigger economy than the South,'' he said.
``I think this could be a profitable market in the future.''
The venture has already been approved by South Korea's Unification Ministry, which must clear all investment projects in North Korea, as well as the North Korean government, he said.
The Unification Church, whose followers across the world are sometimes called ``Moonies,'' was founded in 1954 by Reverend Sun Myung Moon. A fervent anti-communist, Moon went on to build a global business empire worth an estimated $200 million.