North Korea has proposed talks with South Korea about resuming tourism projects in a bid to rebuild the cash-strapped country’s once-lucrative tourism economy.

The reclusive North has lost out on tens of millions of dollars a year it once earned through inbound tourism from its neighbour.

South Korea suspended the tours after the North’s army shot dead a Seoul housewife at Mount Kumgang resort in July 2008. She had strayed into a poorly marked closed military zone while on a stroll.

“It is very regrettable that tours of Mt. Kumgang and the area of Kaesong have been suspended for one and a half years,” KCNA said, adding the North proposed talks for January 26 and 27 at the Mount Kumgang resort.

The proposal, disclosed in a dispatch by the North’s official KCNA news agency, also came on the same day as the divided nations agreed to hold separate talks on a joint industrial project.

Pyongyang first offered an olive branch last August, after months of intense hostility between the two nations. A new conservative South Korean government came to power in February 2008 and linked major aid to progress in denuclearisation.

The Mount Kumgang tours have earned some US$487 million in fees for the North since they began in 1998. Cross-border visitors could also previously take day trips to the historic city of Kaesong just across the frontier.

All the cross-border projects are run by South Korea’s Hyundai Asan company, which has lost millions of dollars since the tours were suspended.

This week North Korea also signalled a move to open its tourism from the United States. American will now be allowed to visit year-round instead of only during the Arirang Festival from August to October, according to Beijing operator Koryo Tours.

Founder Nick Bonner told the AFP he had received an email Wednesday from the state-run Korea International Travel Company notifying him of the change.

North Korea opened to Western tourists in 1987-88 but excluded US citizens soon afterwards. In 2002 it allowed a small number of Americans to visit for Arirang.