SEOUL (Reuters) - North Korean leader Kim Jong Un said South Korea’s “backward” and “shabby” facilities at the North’s Mt Kumgang resort must be removed and rebuilt in a modern way, state media reported on Wednesday, in the latest sign of cooling relations between the neighbors.

North Korean leader Kim Jong Un inspects the Mount Kumgang tourist resort, North Korea, in this undated picture released by North Korea's Central News Agency (KCNA) on October 23, 2019. KCNA via REUTERS

Mt Kumgang was one of two major inter-Korean economic projects, along with the Kaesong industrial zone, and an important token of cooperation between the two Koreas during decades of hostilities following the 1950-53 Korean War.

But Kim, while inspecting the tourist spot on North Korea’s east coast, issued rare criticism for the “very wrong, dependent policy of the predecessors” who relied on the South to develop “our land won at the cost of blood”.

“The buildings are just a hotchpotch with no national character at all,” Kim said, according to the official KCNA news agency, before likening them to “makeshift tents in a disaster-stricken area or isolation wards”.

“They are not only very backward in terms of architecture but look so shabby as they are not taken proper care of,” Kim said.

He called for the “unpleasant-looking facilities” to be removed through consultations with the South, and rebuilt to “meet our own sentiment and aesthetic taste” alongside other tourist zones, including the Wonsan-Kalma coastal area and Masikryong ski resort.

It was a “mistaken idea” that tours to Mt Kumgang would not be possible without the South’s help, Kim said.

Seoul’s Unification Ministry, in charge of inter-Korean affairs, said it was examining the North’s intentions.

“If there’s any request from the North, we’re always willing to hold discussions on the aspects of protecting our citizens’ property rights, the spirit of inter-Korean agreements and the resumption of tours to Mt. Kumgang,” ministry spokesman Lee Sang-min told a briefing on Wednesday.

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TOURS SUSPENDED

The tours to Mt Kumgang were launched in 1998 with the investment of South Korean firms such as Hyundai Asan Corp and Ananti Inc, providing a rare source of cash for Pyongyang worth millions of dollars a year.

The program was suspended in 2008 after a North Korean soldier shot dead a South Korean tourist who had wandered unknowingly into a military area.

Hyundai Asan said in a brief statement it was perturbed by the KCNA report, but it would “respond in a calm manner” to developments.

Shares of Hyundai Elevator 017800.KS, the majority shareholder of unlisted Hyundai Asan, fell 7.5%, while shares in Ananti 025980.KQ, which owns a golf and spa resort in Mt Kumgang, were down over 8%.

Kim and South Korea’s President Moon Jae-in agreed at a summit last year to restart the joint economic initiatives “as soon as the environment is created”.

Tourism is not directly subject to U.N. sanctions, though international sanctions aimed at curbing the North’s nuclear programs ban the transfer of bulk cash to Pyongyang. It has increasingly become an industry central to Kim’s policy of “self-reliant” economic growth.

But inter-Korean relations have grown frosty since then, amid lackluster progress on denuclearization talks between the North and the United States, in which the South offered to play a mediator role.

The North has stepped up criticism against the South in recent months for adopting high-tech weapons and continuing military drills with the United States.

“Kim is trying to remove the South’s traces and renovate Mt. Kumgang as he braces for the extended impact of sanctions and strained inter-Korean ties and seeks to draw Chinese tourists,” said Cheong Seong-chang, a senior fellow at South Korea’s Sejong Institute.

“Any thaw in inter-Korean relations seems far-fetched even if they restarted talking to discuss the Mt. Kumgang issue.”

U.S. President Donald Trump has touted the North’s tourism potential, saying in April that he would give “great support” for the resumption of tours to Mt. Kumgang when the time was “right.”

South Korea-funded facilities remaining there have only used been during infrequent inter-Korean events, such as reunions of families separated by the Korean War, last held in August 2018.