And with its many needs, there might be opportunities for more bilateral cooperation between Singapore and North Korea, the minister added.

Mr Yeo arrived in North Korea's capital Pyongyang on Saturday for a five-day visit, the first by a Singapore foreign minister.

His North Korean counterpart, Mr Pak Ui Chun, hosted a banquet for him and his delegation of officials and nine businessmen on Saturday.

Yesterday, the delegation visited a church, subway stations and a port, as well as the Kumsusan Memorial Palace, which houses the body of the late leader Kim Il Sung.

Mr Yeo said he was impressed by some of the things he saw, such as the eight-lane road linking the capital city to the key Nampo Port, and the cleanliness of the streets.

'I've read many reports about the country, but there's nothing like seeing the place for yourself.'

North and South Korea split after the Korean War ended in 1953. While the South's economy flourished, the North has remained impoverished.

In recent years, the North's command economy was further hit by international sanctions over its nuclear programme.

Mr Yeo said: 'On the basis of what we've seen, this is a country which has made some progress, but which has obviously encountered certain difficulties (as well).'

But despite the tough circumstances, North Koreans have developed clear strengths in areas such as civil engineering, he said after taking a ride on the subway network yesterday.

The Soviet-style subway line, with stations 100m deep in the ground, showed that the North Koreans have 'great capabilities in civil engineering'.

'Digging tunnels, moving earth, building bridges, is not a problem for them... but the functioning of a market economy - that's problematic because of external political relations,' Mr Yeo said.

But there are still potential business opportunities, particularly in the Kaesong Industrial Complex, a four-year-old joint project between North and South Korea churning out clothes, watches and cosmetics, among other products.

Mr Yeo, noting that the North Korean government welcomed investments from Singapore, said: 'If there are better relations between North and South Korea, the potential for growth of Kaesong Industrial Complex is enormous.

'North Koreans are smart, hardworking and highly disciplined, and very competitive in terms of international wage rates, so if conditions are favourable, I believe Kaesong Industrial Complex will take off.'

Mr Yeo and the Singapore delegation will visit Kaesong tomorrow.

The minister will call on the country's No. 2 leader, Mr Kim Yong Nam, today.

simcy@sph.com.sg