Rules that can change on a whim, bills that are never paid, and the threat of expropriation hang over foreigners who step into the wildest of wild east investment destinations.

For now, dozens of restrictions apply under the various sanctions regimes imposed on the North over its nuclear ambitions.

Joint ventures are banned by the UN Security Council, the European Union blocks financial transfers of more than 5,000 euros, and US regulations mean international banks are loath to enable transactions of any kind -- so much so that even humanitarian organisations struggle to fund their activities.

And even if they are lifted, there are major challenges to working in the North.

Infrastructure is poor, and analysts say corruption is widespread.

Crucially, said a diplomatic source in Pyongyang, “legal guarantees for business are very weak”. 

‘Huge cultural gaps’

During the Sunshine Policy, a previous period of warmer ties, South Korean conglomerate Hyundai poured hundreds of millions of dollars into a tourist resort for Southerners to visit the scenic Mount Kumgang.

But the trips came to an abrupt halt when a North Korean soldier shot dead a woman from the South who strayed into a forbidden zone.

Many South Korean firms set up operations in the joint-venture Kaesong Industrial Complex where they employed cheap labour from the North, but Seoul closed the project in 2016 over Pyongyang‘s weapons programmes.

Egyptian telecom firm Orascom poured hundreds of millions of dollars into setting up the North’s first mobile phone network, Koryolink, only for the government to set up a rival operator of its own.

The company was also unable to get its money out.

“I am taking all the hits,” Orascom‘s billionaire owner Naguib Sawiris told Bloomberg last month. “I am being paid in a currency that doesn’t get exchanged very easily, I have put a lot of money and built a hotel and did a lot of good stuff there.”

Construction giant LafargeHolcim last year disposed of its stake in a North Korean cement plant for an undisclosed sum, nursing significant losses.

“Governance is weak, information is lacking and there are huge cultural gaps with local partners,” said Geoffrey See, founder of Choson Exchange, a non-profit that trains entrepreneurs and economic policymakers in the North.

The most successful foreign firms in the North, he added, focus on trading activities to avoid having assets in the country that are vulnerable to seizure.

‘Filthy wind of bourgeois liberty’

Kim undoubtedly wants to make his country better off. He declared earlier this year that having completed the development of his nuclear arsenal, “socialist economic construction” was now his top priority.

State media‘s coverage of the Singapore summit included extensive pictures of the prosperous city-state, a port, and even Kim’s motorcade passing a Cartier advert -- images that would not have been shown in the past.

It was an indication of “permissible aspiration”, said an Asia-based diplomat.

The highly secretive North has been quietly bringing in reforms for several years, allowing private traders to operate in informal markets, giving state-owned enterprises some freedoms to operate, and turning a blind eye to private company operations.

The moves are reminiscent of China‘s “reform and opening” under Deng Xiaoping, which propelled the country from a basketcase to the world’s second-largest economy.

Foreign firms have also begun to make inquiries since Pyongyang‘s recent diplomatic thaw, says Michael Spavor of Paektu Consulting, who has been working with the country for 20 years.

“Our organisation has had much interest recently from investors interested in market research as well as face-to-face matchmaking with potential DPRK ministries and future partners,” he told AFP, using the official acronym for North Korea.

But the North has not officially embraced the market. At the last ruling party congress, Kim decried the “filthy wind of bourgeois liberty and ’reform‘ and ’openness‘ blowing in our neighbourhood”.

China has taken North Korean officials on study tours of Beijing, Shanghai and its coal-rich provinces to try to encourage them to follow its example, and diplomats say it is offering detailed development planning.

But they add that Pyongyang is wary of being too dependent on Beijing, and prefers to look to Vietnam for an example of how a smaller Communist country has been able to adopt capitalism while not weakening the authorities’ hold on power.

North Korea does have some advantages, says Gareth Leather, senior Asia economist for Capital Economics, pointing out natural resources including zinc, magnesite, iron and copper, low-cost labour, and an advantageous location.

But even if sanctions are lifted, he said, “it‘s basically a police state and you have a long way to go to North Korea becoming a normal economy”.

“It’s going to take a very brave investor to venture in again.”