DPRK Economy, trade and business06

Economy, trade and business

2007
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Articles on current developments, compiled by Tim Beal.
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Reports on economic policy and sessions of the Supreme People's Assembly
International training of DPRK officials
Railways, including N-S rail links (except when overshadowed by the political dimension), ROK rail developments and Trans Siberian Railway

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DECEMBER 2007

Achievements in Creation of Forests
Pyongyang, November 28 (KCNA) -- The DPRK is bending efforts for the creation of forests, registering noticeable results. @The working people serving in afforestation have planted trees in over 66,000 hectares this year. @Thus they have made it possible to increase the forest resources of the country under a far-reaching plan. @Industrial forest management stations in cities and counties across the country including Kanggye City, Tokchon City and Tongchang County have endeavored to nurse good species of saplings suitable to the local features. They planted lots of trees in spring and autumn, lifting their rooting rate to more than 80 percent. @Various units including Hoeryong City and Phangyo County industrial forest management stations nursed sturdy saplings by producing large quantities of organic fertilizers in keeping with their specific conditions, while actively introducing a scientific sapling-nursing method.
Market Economy for NK
Seoul's Program to Help Pyongyang Learn New System The South Korean government plans to launch an education program next year to help North Korean officials and scholars learn about the market economy. It is the first time that Seoul has organized such a program. The plan followed recent developments in improving inter-Korean relations after the second South-North summit held in Pyongyang from Oct. 2-4. According to the Ministry of Finance and Economy, a budget of 300 million won ($320,000) has been set aside for the 2008 program, which will include cross-border information sharing workshops and education on a transition to a market economy and how to adapt to the new system. The budget is only a small sum at this initial stage. But it could increase if the program produces tangible results. We welcome the education program as it is expected to encourage the stalwart socialist country to shake off its aversion to the market economy system. And furthermore, the program could create a favorable atmosphere for North Korean policymakers and economists to usher in reform and an open door policy. It's time for the North to realize that inter-Korean economic cooperation packages cannot succeed if it fails to introduce economic reform. [Training] [Economic refoirm]

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NOVEMBER 2007

The Economic Future of North Korea: Will the Market Rule?
by Georgy Toloraya
More than two decades ago, when the USSR still existed and the concept of the world socialist system presumed that all socialist countries were developing as one, I argued (still in the framework of what was permitted in terms of Communist lingo) that in the case of North Korea (Democratic People’s Republic of Korea, or DPRK) we have an example of how the civilizational specifics prevail over the general socialist principles of social-political formations. Country-specific factors behind that phenomenon at that time included: • Small and isolated territory, historic traditions of “hermitage,” and homogeneity of the population, which helped create a rigid system of control; • Confucian governance system, which in fact was to a greater degree the basis for the political guidance structure than so-called “socialist democratic centralism”; • Collectivist traditions accumulated over the centuries of rice growing, which helped limit the reappearance of individualistic aspirations after national liberation (which was also the case of other socialist countries); • Militarization of society and noneconomic leverage of mass mobilization under the pretext of external threats; • Korean nationalism, which promoted the primacy of the nation over the individual. [Economic reforms]
Recent DPRK market restrictions extended to mobility of the people
Posted Date : 2007-11-27 (NK Brief No. 07-11-27-1) Following Kim Jong Il’s August 26 announcement that, “Markets have become anti-Socialist Western-style markets,” measures to increase restrictions on markets across North Korea have also restricted individuals’ ability to migrate. The Central Committee of the (North) Korean Workers’ Party released a statement in October, revealing that Kim Jong Il had stated, “The current state of anti-socialism should not be moderately opposed. A strong and concentrated attack must be laid out in order to thoroughly eliminate [this anti-socialist behavior].” According to the Daily NK, an informant inside North Korea revealed that authorities are “contacting people who have applied for permission to travel to other regions at their trip destination and setting up interviews in order to verify that interviewees are conforming with their [stated] intentions,” and, “ultimately, long distance wholesalers are restricted in their movements, cause a reduction in the amount of goods circulating on the markets.” [Marketisation]
Inter-Korean Trains Will Debut Next Year
An image of a cabin of the newly planned inter-Korean Train. By Kang Shin-who Staff Reporter Korail, Korea’s national rail service, is looking to introduce two cross-border trains to carry South and North Korean supporters to the Beijing 2008 Olympic Games; one accommodating a maximum 78 passengers and the other, 144. The trains will consist of 10 cars equipped with seven cabins, two dining rooms and an event room. ``We will decorate the trains with an image of exclusiveness and traditional Korean style. After the Beijing Olympics, we will use the trains for domestic services,’’ a Korail spokesman said. [Railways]
N Korea reformer's return may bring change
By Anna Fifield in Seoul Friday Nov 23 2007 20:40 Interpreting changes in North Korea's opaque power structure - a pastime that is sometimes referred to as "Kim-inology" - is notoriously difficult.
Kims' Clear-Cutting of Korean Forests Risks Triggering Famine
By Bradley K. Martin and Hideko Takayama
Nov. 21 (Bloomberg) -- In some parts of the world, floods and famine are acts of God. In North Korea, they're acts of government. For decades, the late North Korean dictator Kim Il Sung mobilized vast work teams to fell trees and turn the mountainsides into farmland, allowing rainwater to wreck roads, power lines and agricultural fields. [Media]
Kaesong Promotion Needed in Developing Nations - Report
Some 70 percent of foreign buyers from developing nations are willing to purchase products made in the North Korean Kaesong Industrial Complex, but only 10 percent know that the goods are made by South Korean companies, according to a report by the Korea Trade-Investment Promotion Agency (KOTRA) released on Monday. To promote the complex, KOTRA said in the report that it is important to focus on developing markets rather than advanced markets like the U.S. and Japan, whose tariff barriers obstruct exports from the complex. But due to a lack of promotion, the complex is not well known in developing nations, it added.
Survey of Khasan-Rajin Railways and Rajin Port Made
Rason, November 22 (KCNA) -- The DPRK and Russia have conducted several negotiations and field survey of the Khasan-Rajin railways and the Rajin Port and agreed on ways of the operation of the railways and the port after it was agreed that the "Russian Railways" Company would take charge of the reconstruction of those projects to embody the spirit of the August 4, 2001 DPRK-Russia Moscow Declaration. The delegation of the "Russian Railways" Company is to conduct its final field survey of some sections of the above-said railways and port and round off the technical preparations for the start of the projects. The projects for the reconstruction of the Khasan-Rajin railways and the Rajin Port will be put into practice, in the near future. [SEZ] [Railways]
Internet to Open inside Gaeseong Site
President Roh Moo-hyun, right, shakes hands with North Korean Prime Minister Kim Yong-il before a lunch at Cheong Wa Dae, Friday. The North Korean delegates returned to Pyongyang at 5 p.m. The same day. / Korea Times By Yoon Won-sup Staff Reporter The prime ministers of the two Koreas have agreed to set up Internet, wire and mobile phone services including mobile phones in the Gaeseong Industrial Complex in North Korea. They also agreed to allow free movement of people and vehicles of the South in the complex starting next month in order to expand inter-Korean economic cooperation. The agreement was made between Prime Minister Han Duck-soo and his North Korean counterpart Kim Yong-il Friday. The rare talks between the prime ministers, the first in 15 years, went smoothly. The North Korean delegates were very favorable to suggestions made during the three-day talks in Seoul, according to sources. [Inter Korean business]
N. Korean graphite material to arrive in S. Korea on Saturday
North Korean graphite material made at an inter-Korean joint venture factory is being shipped to South Korea, the Commerce Ministry said Friday. The 200-ton shipment from the factory near the city of Haeju left the North Korean port of Nampo earlier in the day and is expected to reach Incheon on Saturday, the Ministry of Commerce, Industry and Energy said. "The shipment is significant because it is the first time that products made from minerals in the North have been shipped to the South after being manufactured at an inter-Korean joint venture company," a ministry official said. The graphite can be made into heat-resistant bricks, pencils, ceramic melting pots and car brake linings.
Daily South-North Freight Services to Open Dec. 11
The two Koreas will begin daily freight services across their heavily-armed border on Dec. 11 using the western link of the Munsan-Bongdong rail line. The project is part of a seven-point accord signed by South and North Korean working-level officials after two days of discussions in Kaesong on how to begin the new service. A special committee will work out details and logistics including what types of cargo will be transported. It will be the first time the two countries transport cargo across their border after the Munsan-Bongdong link was severed during the Korean War.
Two Koreas to re-start daily cross-border rail service Dec. 11
Cargo trains will be first to operate, with passenger service to follow
Fifth-six years after division, a cargo train will cross the border dividing South and North Korea every day beginning December 11. In the first round of working-level meetings of the South-North Rail Cooperation Committee, held in Gaeseong (Kaesong) on November 22, South and North Korea agreed to run the daily cargo train on a route linking Munsan in the South Korean city of Paju and Bongdong in the North Korean city of Gaeseong. [Railways]
For N. Koreans, China Imports Open Window To the World
Street Markets Flourish As State Economy Crumbles By Blaine Harden Washington Post Foreign Service Wednesday, November 21, 2007; Page A10 SEOUL -- Cheap Chinese television sets and video players, together with pirated videotapes and DVDs, are lifting the lid on information reaching the North Korean people, according to defectors and experts on Kim Jong Il's dictatorship. The unsealing process -- underway for nearly a decade and accelerating this year -- coincides with the crumbling of North Korea's centralized economy and the rise of street markets.
In those markets, doing business daily nearly everywhere in the North, are cut-rate electronics and knockoff videos that have acquainted a sizable number of North Koreans with the wealth and razzmatazz of the capitalist world. [Marketisation] [Media]
Postcard from...Pusan
John Feffer | November 20, 2007
Foreign Policy In Focus www.fpif.org With their new high-speed train system, South Koreans can travel the full length of their country, from Seoul in the north to Pusan on the southern coast, in under 3 hours. In the next phase of construction, new tracks will cut this travel time in half again. The KTX train (pictured to the left) puts the U.S. rail system to shame. And puts Korea on par with Japan for quality of train service.
In the not-too-distant future, it might be able to travel by high-speed train from London all the way to Pusan, the southern port of South Korea. And perhaps by that time, Korea and Japan will have built a tunnel between Pusan and Fukuoka to connect their two countries. Cooperation between Europe and Asia – facilitated by the Asia-Europe Meeting – will rest on a solid foundation. And the United States, so desperate to remain anchored economically in Asia that it pushed hard for the Asia-Pacific Economic Community in the 1990s, will find itself the odd continent out. [Railways] [TSR]
The Kaesong North-South Korea Industrial Complex and the Future of Northeast Asia
Congressional Research Service
Japan Focus Introduction John Feffer
The Kaesong Industrial Complex is a veritable Rorschach test for those who follow developments on the Korean peninsula. Everyone who looks at the special economic zone located in North Korea just north of the DMZ sees something very different. And these interpretations often reveal more about the viewer than the viewed. Unification advocates in the South see Kaesong as a concrete example of north-south cooperation. Their hopes for a rapid improvement in inter-Korean relations have transformed a rather modest initiative into the pivot of radical transformation. South Korean businesses, particularly small and medium-sized firms, look to Kaesong as a way to compete against Chinese or Southeast Asian production.
Sunshine In The Dmz
The Koreas are building a series of economic megaprojects. Peace may be a small step closer.
The notion that peace might break out between the Koreas suddenly looks less farfetched. The Bush administration's about-face on talks with Pyongyang has revived the effort to negotiate away the North's nuclear arsenal. Last week a U.S.-led team started disabling the Yongbyon nuclear reactor—a step toward the plant's dismantlement and a full inventory of the North's nuclear materials and equipment, to be disposed of later. Meanwhile the North is pursuing a charm offensive: in September it established diplomatic ties with the Dominican Republic, Guatemala and the United Arab Emirates; on a trip to Vietnam in October, North Korea's prime minister made surprisingly positive noises about Hanoi's Chinese-style reform program. Most concretely, the summit last month in Pyongyang between southern President Roh Moo Hyun and northern leader Kim Jong Il gave a boost to growing trade between the former blood rivals. The leaders agreed to a series of grand projects: expanded rail links across the demilitarized zone, port facilities in the northern city of Haeju, shipbuilding projects and the opening of direct flights between the South and Mount Paektu, by legend the original source of the Korean people.
These ties are creating a sense of Korean solidarity in the face of global competition, and help allay fears that South Korea is being "sandwiched" by low-wage China and high-tech Japan. [Inter-Korean business] [Sandwich]
South Mulling Direct Power Supply to N.Korean Shipyard
The South Korean government is apparently considering the direct supply of electricity to the Anbyon and Nampo regions of North Korea, where the two sides agreed during a summit in October to build a joint shipyard. A government source said Monday, "In North Korea, a stable supply of electricity sufficient to run a shipbuilding complex is impossible. We are looking into either building or repairing power generation plants in the areas or directly supplying electricity, but it seems direct power supply will be the choice." That would cost billions of won and may make it difficult to justify the project. So far, the South Korean government has invested W35 billion (US$1=W919) to build facilities in Paju, Gyeonggi Province, to supply 100,000 kilowatts of electricity to the inter-Korean Kaesong Industrial Complex 16 km away across the border
Seoul Prefers Czech Model for N.Korea to Germany's
Finance and Economy Minister Kwon O-kyu on Saturday said South Korea should benchmark the Czech model rather than Germany's for the unification of the two Koreas. He made the remarks at a weekend meeting of finance ministers from the Group of 20 industrialized and emerging market economic powers. Speaking at the meeting in Cape Town, South Africa, Kwon said, "The Czech Republic has set a success model for a market economic system on its own in the process of internal development." A Finance and Economy Ministry official said, "After unification, East Germany received huge aid from West Germany. The Czech Republic, however, was successful in adopting a market economic system on its own." It said Kwon prefers the Czech model given the advantage of lesser costs for unification. [Unification cost]
Selling to survive: ad hoc markets take root in North Koreaâ€™s parched soil
By Anna Fifield Published: November 19 2007 20:07 | Last updated: November 19 2007 20:07 Pak Hyun-yong was, by North Korean standards, an entrepreneur. Too much of an entrepreneur. During the famine that ravaged the country in the late 1990s, Mr Pak watched his family die of starvation â€" first his younger brother, then his older sisterâ€™s children. Then, eventually, his sister too. Somehow he pulled through this period, dubbed by the regime as â€œthe arduous marchâ€, and was spurred into taking some very non-communist, almost subversive action. He began selling noodles. [Marketisation]
Building a cornerstone for inter-Korean economic cooperation
[Editorial] The North-South prime ministers’ meeting held for three days in Seoul saw a better atmosphere than at any previous inter-Korean talks. The meeting was supposed to be about developing plans for implementing the 2007 North-South Summit Declaration, so there were no points of contention, and furthermore, the North assumed a flexible attitude. The result was that they were able to produce an agreement that has substance, with 49 points. Seoul and Pyongyang have entered the real implementation stage for the summit declaration.
Kim Jong Il Inspects Construction of Power Station Dam
Pyongyang, November 18 (KCNA) -- General Secretary Kim Jong Il commanded a bird's-eye view of the Wonsan Youth Power Station the construction of which has entered its finishing stage.
The Prospects for International Cooperation in Knowledge Sharing in the Service of Economic Development in the DPRK
a workshop on "The Prospects for International Cooperation in Knowledge Sharing in the Service of Economic Development in the DPRK", which was held in Seoul, ROK, 1 - 2 November 2007. The workshop was organized by the Korea Institute for International Economic Policy (KIEP) and the US-based Stanley Foundation.
- Ten Years of Knowledge Partnership with North Korea
  Prof. NAM Sung Wook (Korea Univ.) November 1 2007 (Presentation)
- Knowledge sharing with the DPRK: future possibilities and challenges
  Bradley O. Babson (Presentation)
- Knowledge sharing with the DPRK: future possibilities and challenges
  Bradley O. Babson October 5, 2007
  (Introductory paper) Introduction This paper is intended to set the stage for discussions among existing and potential partners in knowledge sharing activities with the DPRK. It explores the question why knowledge sharing with the DPRK is so critical at this time, evaluates the context and strategic considerations for engagement by the international community with the DPRK, assesses operational challenges in the DPRK context, and draws some general conclusions and principles to guide discussions of how to engage in knowledge sharing with the DPRK. Hopefully, this paper will motivate and animate expanded efforts and partnerships to realize the benefits that potentially could come from deeper engagement by the international community with the DPRK through the knowledge sharing approach.
- Korean Perspective of the Role of Knowledge-Sharing in ROK-DPRK Bilateral Relations after the Summit
  Young-Ho Park, KINU The 2007 North-South summit was a meeting to discuss more practical and specific issues on the basis of progress so far made in North-South relations. The summit meeting produced the eight-point Declaration on the Advancement of North-South Relations, Peace, and Prosperity." It includes the core issue of unification (Article 1), mutual trust (Article 2), easing tensions (Article 3), a peace regime (Article 4) and mutual prosperity (Article 5). It also deals with practical issues such as social and culture exchanges (Article 6), humanitarian projects (Article 7) and cooperation on the international stage (Article 8).
- 2007 South-North Korean Summit & Inter-Korean Economic Cooperation[IKEC]
- Knowledge sharing with North Korea
  Hyoungsoo Zang Hanyang University Seoul, Korea
Deepening China-North Korea Economic Ties: Trends, Characteristics and its interaction with the Future Inter-Korean Economic Community
Liu Ming Shanghai Academy of Social Sciences
North Korea nuclear issue and Six-party Talks indeed provide a platform for China to play a significant and provocative role to safeguard Korean Peninsula peace and stability and ensure China basic security interests in the Northeast Asia. While seeing the long stalemate of the Six-party Talks, we also observe a parallel avenue that China is actively playing role, i.e. promoting economic relations with North Korea. How are they developing? How should we read this trend and implications? Having taken these questions in mind, this brief paper will take a try to explore the causes, characteristics and the implications of the development. [China NK]
Broad aid to North includes rail service
November 17, 2007 The two Koreas ended three days of talks yesterday with a wide-ranging agreement to spur closer economic cooperation by reopening regular cross-border freight train service this year and launching several construction projects in the North. Under the agreement reached between the prime ministers of the two countries, freight trains will begin running between Munsan in South Korea and Kaesong on Dec. 11, the first scheduled service between the two countries since the Korean War. The cross-border train will be mainly used for the transportation of goods produced at the Kaesong Industrial Complex. Uncertainties remain, however, as the North’s delegation didn’t include any military officials. Military cooperation is crucial in gaining access for the railway. Seoul also agreed to start work building shipyards and repairing a highways in the North. Both sides also agreed that construction will begin on improved telecommunications infrastructure, including Internet access, inside the Kaesong complex within this year with the aim of finishing by the end of 2008.
New restrictions on DPRK market trading
Posted Date : 2007-11-15 (NK Brief No. 07-11-15-1) Recently, North Korean authorities have adopted a measure prohibiting women under the age of forty from selling goods in Pyongyang markets. According to DPRK media sources, as internet videos of footage shot in Pyongyang markets by hidden cameras have emerged, and have been viewed with great interest by many in South Korea, authorities have increased restrictions on the markets. Just since last month, three videos shot in Pyongyang’s Sungyo Market have been shown on Japanese news programs. While currently, North Korean authorities are carrying out a campaign preventing trading in markets by women under the age of forty, the age requirement for trading will be raised to forty five in North Hamkyung Province beginning this December. Women’s groups are said to be fiercely opposing the move. Pyongyang City’s People’s Committee recently passed down an order for women under the age of forty to return to work in offices, however businesses were in no position to take on new employees due to the small scale of work available and current overstaffing, and were unable to provide wages or rations, leading to the failure of the new policy. The authorities’ current restriction on market trading, aimed at pushing these women back to government-assigned work, will likely not last. Because almost all North Koreans, including the authorities, rely on the markets to sustain their lifestyles, market restrictions cannot be anything but temporary. According to a domestic publication by the DPRK Workers’ Party obtained through diplomatic channels, North Korean authorities are calling for “a crackdown on markets that have degraded into hotbeds of anti-socialism.” An article published last October in the name of the Workers’ Party Central Committee reported that the Kim Jong Ill had stated, “the current state of anti-socialism should not be moderately opposed. A strong and concentrated attack must be laid out in order to thoroughly eliminate [this anti-socialist behavior].”
Koreas Agree on Munsan-Kaesong Railway
The two Koreas reportedly agreed to start implementing some key economic cooperation projects in the agreement from the inter-Korean summit before the election day in South Korea. Prime Minister Han Duck-soo and his North Korean counterpart Kim Yong-il as good as agreed on the second day of talks in Seoul to open the railway line between Munsan in South Korea and Bongdong in the North to carry cargo to the Kaesong Industrial Complex before Dec. 19. They also agreed to set up in early December a new body that will establish a peace zone in the West Sea. The repair of railways and roads and the construction of shipbuilding complexes in the North -- matters the North Korean delegation showed the most interest in -- will also likely begin before the presidential election. The Chosun Shinbo, a Pyongyang mouthpiece published by the General Association of Korean Residents in Japan or Chongryon, reported, "The North suggested the repair and modernization of the Kaesong-Shinuiju Railway Line and the Kaesong-Pyongyang Highway as the top agenda items in the current talks."
Two Koreas agree to launch cross-border cargo railway service
South and North Korea agreed Friday to begin a cross-border cargo railway service next month and jointly repair the North's dilapidated roads and railways next year as a follow-up to reconciliation measures agreed upon at their recent summit. The agreement at the end of three-day inter-Korean prime ministerial talks is aimed at facilitating transportation of personnel and materials from the South to the joint industrial complex in the North's border city of Kaesong, where dozens of South Korean firms employ over 20,000 North Korean workers. The railway renovation and linkage agreement comes as South Korea, Russia and China have been discussing ambitious projects to connect the two Koreas' railway systems to the Trans-Siberian and Trans-China railways so products from South Korea, the world's 11th biggest economy, could be transported to Europe at lower costs and in less time.
Cross-Border Freight Railway to Open Within Year
South and North Korea are nearing agreement on the opening of a cross-border railway within the year, allowing mass transportation of goods produced in the joint industrial complex in the North's border town of Kaesong, a South Korean official said Thursday.
Inter-Korean Talks Focus on Expanding Economic Cooperation
By CHOE SANG-HUN Published: November 15, 2007 SEOUL, South Korea, Nov. 14 — In the first meeting of their prime ministers in 15 years, North and South Korea on Wednesday discussed turning their disputed western sea border, the site of naval skirmishes as recently as five years ago, into a "peace and cooperation zone" for fishing and manufacturing. [NLL]
N.K. needs technical help before joining int'l financial institutions: U.S. expert
WASHINGTON, Oct. 19 (Yonhap) -- North Korea must first receive technical assistance from international financial institutions before it can join them and begin receiving monetary aid, a U.S. expert said Friday. Pyongyang, viewed as one of the most secretive regimes in the world, has to provide certain economic data and follow standardized practices and procedures in order to be able to join financial institutions, Marcus Noland, a senior fellow at the Institute for International Economics, told Yonhap in an e-mail interview.
North Korea, China Will Start $10 Billion Fund, Yonhap Reports
By Bomi Lim
Nov. 13 (Bloomberg) -- North Korea's Daepung Investment Group will set up a $10 billion fund with China Development Bank to help Chinese firms operating in North Korea, Yonhap News reported, citing the company's vice president. The fund will be used to help Chinese companies build roads, railways and ports in North Korea, Daepung Vice President Bae Kyeong Hwan was quoted as saying. Bae didn't say how much each country will contribute the fund. Daepung also plans to set up a bank to attract investment from overseas, the report said. China is North Korea's biggest trading partner and an important provider of food and fuel. North Korea is isolated from most of the rest of the world and has received virtually no foreign investment. To contact the reporter on this story: Bomi Lim in Seoul at blim30@bloomberg.net . Last Updated: November 12, 2007 20:06 EST
Ignoring Buffett, Fabien Pictet Eyes North Korea Fund (Update1)
By Bradley K. Martin
Nov. 2 (Bloomberg) -- Fabien Pictet & Partners Ltd., a British money manager that specializes in emerging markets, plans to establish a fund focused on joint ventures in North Korea. Fabien Pictet has applied to North Korea's embassy in London for permission to visit Pyongyang to explore opportunities, Chief Executive Officer Richard Yarlott said in an interview. The closely held firm initially would buy into South Korean companies doing business in the north, he said. ``It would be very difficult to put more than $50 million directly into North Korea,'' said Yarlott, 47, who helps manage $750 million of bonds and equities. ``But it would be very easy to put $500 million into listed South Korean companies and then later, as we see specific private equity opportunities, go with them.'' He declined to give further details. [FDI] [Opening]
China mulls to set up US$10-billion fund for North Korea
International financial institution to attract investment via fund for road, rail and port projects BEIJING - China is pushing for the creation of US$10-billion fund for North Korea. China's state-funded bank has decided to create a fund amounting to US$10 billion to support Chinese companies doing business in North Korea. The bank signed a letter of intent with Daepung Group, a multi-national investment firm which was established under the North's leadership, according to Daepung Group on November 13. Bae Gyeong-hwan, a high-ranking Daepung official said that the two sides had officially signed an agreement to create the fund. He added that Chinese companies advancing into North Korea would receive assistance from the Chinese government in the form of social overhead capital projects in the North, such as roads, railways and ports. China has thus far supported the North Korean branches of Chinese businesses that export products to North Korea, but this is the first time that the nation will create an investment fund for the communist country. “Daepung Group is going to establish an international financial institution with the participation of various nations in order to ensure transparency and stability, with the ultimate goal of attracting foreign capital after the normalization of North-U.S. relations,” added Bae. Daepung Group was an international investment firm established by the North's Second Economic Committee and the Committee for the Promotion of External Economic Cooperation in Hong Kong. Daepung Group and Tangshan Iron & Steel, one of China's three biggest steel companies, reportedly signed a letter of intention on October 20 on the establishment of a 1.5-million-ton iron mill at Kim Chaek industrial district in North Korea. [FDI] [China NK]
DPRK-EU Economic Symposium Held
Pyongyang, October 24 (KCNA) -- The DPRK-EU economic symposium was held in Pyongyang on Oct. 23 and 24. Present at the symposium were officials of the Chamber of Commerce of the DPRK and other institutions concerned, a delegation of the European Commission and a delegation of the European Parliament and diplomats of several European countries and economic specialists. The symposium discussed the issues of developing the relations between the DPRK and the EU in agriculture, light industry, IT industry and finance.
Officials of Relevant Field Talk with Those Concerned of Hyundai Group
Pyongyang, November 1 (KCNA) -- Officials of the relevant field in the DPRK talked with those concerned of Hyundai Group of south Korea at the People's Palace of Culture Thursday. Present there from the north side were officials of the relevant field including the National Economic Cooperation Federation and the National Reconciliation Council and from the south side those concerned of Hyundai Group including its Chairwoman Hyon Jong Un. Both sides had general and inter-sector discussions on the cooperation in the work in the Kaesong Industrial Zone, tourism and social and cultural work and other issues of mutual concern. Earlier, the chairwoman and her party toured the area of Mt. Paektu.
Kim Jong Il Receives Chairwoman of Hyundai Group and President of Hyundai Asan of S. Korea
Pyongyang, November 3 (KCNA) -- General Secretary Kim Jong Il Friday received Hyon Jong Un, chairwoman of Hyundai Group, and Yun Man Jun, president of Hyundai Asan of south Korea, and their entourage on a visit to Pyongyang. Kim Jong Il conversed with them in a cordial atmosphere overflowing with compatriotism, recalling with deep emotion the predecessors of Hyundai Group and Hyundai Asan. He hosted a dinner in honor of Hyon Jong Un and Yun Man Jun and their entourage. Present there was Kim Yang Gon, department director of the Central Committee of the Workers' Party of Korea.
KEY STATISTICS FOR GAESEONG INDUSTRIAL COMPLEX
(As of September 30, 2007)
Kim Jong-il expresses intention to follow Vietnam's Doi Moi: report
HONG KONG, Oct. 28 (Yonhap) -- North Korean leader Kim Jong-il has expressed an intention to benchmark Vietnam's two decades-old reform and openness policy "Doi Moi", a local weekly magazine reported Sunday, as the North's economic plight continues, aggravated by economic sanctions imposed by Western countries over its nuclear weapons ambitions. Vietnam has pursued the reform and openness policy since 1986 to introduce a market economy, including liberalization of trade and finance with foreign countries to a certain degree, and is enjoying rapid economic growth. Kim made the remark while meeting with Nong Duc Manh, secretary-general of Vietnam's Communist Party, in Pyongyang last week, the weekly Yazhou Zhoukan said in its Sunday edition, citing an interview with Vietnamese Foreign Minister Pham Gia Khiem who accompanied the Vietnamese secretary general to the North Korean capital. "Chairman Kim Jong-il highly evaluated the achievements Vietnam's Doi Moi has made in the past 20 years while meeting with Secretary General Manh," Khiem said, adding Kim Jong-il has accepted Manh's proposal for Kim's visit to Hanoi. [Economic reform] [media]
Threatened N.Korea Cracks Down Female Merchants
North Korea has banned young women from working in street markets across the country to prevent the rapid spread of street markets, it was known on Thursday. According to a North Korea expert, authorities on Oct. 1 banned women in their 40s or younger from participating in street food market businesses in Pyongyang, and expanded the measure nationwide this month. According to Good Friends, a Seoul-based civic relief organization for North Korea, the measure will be applied to all women under 45 beginning Dec. 1. Authorities are also confiscating all wire telephones that have been installed at private houses for business purposes, except those for official use. The organization said that arguments and scuffles have broken out between women and police in major North Korean cities. The cities look as if martial law has been declared, with policemen frequently seen arresting women for resisting their authority, Good Friends said. [Marketisation]
Completion ceremony of Gaeseong Apartment-type Factory
(October 23, 2007) Name : letter Date : 2007- 10- 26 On October 23, Korea Industrial Complex Corporation held the completion ceremony of the Gaeseong Factory-type Apartment at the GIC. The project to construct Gaeseong Apartment-type Factory has been pursued for creating new business opportunities for small and medium enterprises heading to overseas locations and to provide “customized production space” to companies that do not have sufficient fund to invest in North Korea. [Kaesong]

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OCTOBER 2007

Completion Ceremony of the First-Phase Development of Gaeseong Industrial Complex(GIC) is held
Date : 2007- 10- 19 On October 16, Korea Land Corporation held completion ceremony of the first-phase development of the GIC. The ceremony was organized by Korea Land Corporation and sponsored by the Ministry of Unification. About 340 South Korean representatives and 100 North Korean representatives participated in the ceremony. Participants to the ceremony included Lee Jae-jeong, the Minister of Unification; Kim Jae-hyeon, President of Korea Land Corporation; Hyun Jeong-eun, Chairman of Hyundai Asan and etc.. In his address, Lee Jae-jeong, the Minister of Unification, said the following: “The GIC has become the center for producing peace & co-prosperity on the Korean peninsula.” [Kaesong]
DPRK Government's Stand on Economic Cooperation and Exchange Clarified
Pyongyang, October 18 (KCNA) -- The DPRK government will develop multifaceted economic cooperation and exchange with all countries on the principles of independence, equality and reciprocity in the future, too. A delegate of the DPRK declared this, when addressing the meeting of the Second Committee of the 62nd UN General Assembly on Oct. 10. He said: The UN should hold a unified grip on economic growth, social development and environmental protection, the three pillars for sustainable development, and direct main efforts to creating an international environment favorable for achieving the millennium development goals of the developing countries. International economic cooperation should be orientated to substantially boosting the capabilities of developing countries with their strategies and policies for domestic development respected and the requirements and priorities of their development taken into consideration under any circumstances. It is necessary to step up the financing for the development projects in developing countries and, at the same time, take practical measures for resolving the issue of their foreign debts, a main challenge to development. [UNDP] [Development strategy]
Kwon to Seek International Financing for N. Korean Projects
Bank Presidents Look for Opportunities to Expand Global Operations
By Lee Hyo-sik Staff Reporter Finance and Economy Minister Kwon O-kyu plans to call on the global financial community to increase support for North Korea's economic projects when he attends the annual meetings of the International Monetary Fund (IMF) and the World Bank in Washington D.C on Oct.20-22. The country's top economic policymaker will also ask international financial institutions to allow the Stalinist state to become a member. [Financial sanctions]
Think Tank Moots New Tax for Inter-Korean Projects
The state-funded Korea Institute for National Unification has proposed creating an "object tax" as a source of funds for inter-Korean economic projects. The institute estimated the required cost at a maximum of W114 trillion (US$1=W918) from 2006 until 2020. This was disclosed by Grand National Party lawmakers Lee Hae-bong and Kwon Young-se during the National Assembly Unification, Foreign Affairs and Trade Committee's inspection of the Unification Ministry on Wednesday. The two lawmakers quoted a report on building a peace framework on the Korean Peninsula by KINU at the request of the Unification Ministry. KINU submitted the report to the ministry last December. In the confidential document, KINU proposes nine possible sources of funds for inter-Korean economic cooperation projects, including the object tax, the Inter-Korean Cooperation Fund, overseas funds, and the issuance of national and public bonds. To reduce public resistance to the creation of a new tax, the institute proposed dubbing it a "peace tax" and increasing it at an incremental rate of 1.5 percent every year
Kaesong production surpasses 200 million USD
Posted Date : 2007-10-16 (NK Brief No. 07-10-16-1) KAESONG PRODUCTION SURPASSES 200 MILLION USD The Kaesong Industrial District Management Committee reported on October 10 that after two years and nine months of operation, the total value of goods manufactured in the Kaesong Industrial Complex (KIC) surpassed 200,000,000 USD. In 2005, production by companies in the KIC totaled 15,000,000 USD; in 2006, 74,000,000 USD; and in the first 9 months of 2007, 124,000,000 USD, for a total since 2005 until last September of 213,000,000 USD. There are currently a total of 45 companies operating in the complex, employing 19,433 North Korean workers and 800 workers from South Korea, for a total of over twenty thousand employees.
Phase One Completion of Kaeseong Complex Set for Oct. 16
A ceremony will take place in North Korea on Tuesday to mark the end of phase one construction at the Kaeseong industrial park. Some 340 South Korean delegates will attend the milestone event. Heading them up will be Seoul's Unification Minister Lee Jae-joung joined by the heads of the Korea Land Corporation and Hyundai Asan, operator of tours to the North's Mount Geumgang region. First-phase construction began in mid-2003 and covered 3.3 million sq.m. Today 57 South Korean firms run factories there after much of the foundation work was finished in June this year. Phase two, to cover an even bigger footprint of over 8 million sq.m, will break ground next year with the land corporation taking the helm.
Kim Yong Il Meets Singaporean Delegation
Pyongyang, October 15 (KCNA) -- Kim Yong Il, premier of the DPRK Cabinet, met and had a conversation with the delegation of the S.E.A. International Investment Holdings PTE LTD. of Singapore headed by Lee Khoon Choy, chairman of the Eng Sing Lee Investment PTE LTD., at the Mansudae Assembly Hall on Monday. On hand were Rim Kyong Man, minister of Foreign Trade, and officials concerned.
`Peace Will Help Koreas Attain Economic Development'
Chung Dong-young, 54, standard-bearer of the United New Democratic Party, and his wife Min Hae-kyung pose for a photo. By Kim Sue-young Staff Reporter Presidential candidate Chung Dong-young of the United New Democratic Party (UNDP) has stressed economic development for the two Koreas by establishing peace on the Korean Peninsula, as his flagship campaign pledge. Under the catchphrase of ``Economic Boost Through Peace,'' Chung, 54, said the two Koreas could gain economic benefits from inter-Korean unity and cooperative projects
Balancing S-N Economic Agenda With Multilateral Engagement
By Bradley Babson
The Oct. 4 declaration is being touted as an important milestone for inter-Korean relations, while also enhancing prospects for transformational change in North Korea and improving North Korea's image in the international community as willing to move forward with progressive change. But can these desirable objectives be achieved by inter-Korean commitments and agendas for cooperation alone? Balancing a forwardlooking economic agenda for the two Koreas with a well-conceived multilateral economic engagement framework could offer the best hope for realizing peaceful managed transformations on the Korean Peninsula that can improve the welfare of all Koreans.
Haeju in N.K. seem playing bigger role
South Korean experts yesterday called on the government to develop Haeju, a North Korean port which South and North Korean leaders recently agreed to develop as a special zone, into a business hub covering a wide array of industries, from fisheries to manufacturing. Jeong Hyung-gon, an economist at the Korea Institute for International Economic Policy, recommended in a seminar yesterday that the special zone of Haeju should be transformed into a comprehensive economic zone so as to expand inter-Korean economic ties. He cited several Chinese free economic zones as good models for the joint-development project. "It should be developed like Shenzhen or Dongguan," Jeong said. These two coastal cities have been locomotives of China's red-hot economic growth since the Beijing administration opened them to the global economy in the late 1970s. Jeong's speech implies that North Korea should also substantially open Haeju to foreign investors, including South Korean companies. South Korean President Roh Moo-hyun and North Korean leader Kim Jong-il recently agreed to transform this harbor city into another joint industrial complex. A special peace zone will be set up along the coast of Haeju, with the purpose of developing joint fisheries and establishing a new economic zone. The city is geographically advantageous to South Korean manufacturers because it is close to Incheon Port, the nation's second-largest harbor. "The Haeju project and Gaeseong Industrial Complex should be complementary to each other," Jeong said. But he cautioned that Seoul and Pyongyang should settle their dispute over the Northern Limit Line in the West Sea, in order to effectively operate the Haeju special zone. The sea border was unilaterally drawn by the U.N. forces at the end of the 1950-53 Korean War, but there has been no legal agreement on the demarcation between the two Koreas. This has caused frequent military and diplomatic conflicts, including two deadly naval clashes in the West Sea, and has been a major obstacle to co-developing Haeju. By Ko Kyoung-tae [NLL] [Haeju] [Inter Korean business]
Singaporean Delegation Arrives
Pyongyang, October 13 (KCNA) -- A delegation of the S.E.A. International Investment Holdings PTE LTD. of Singapore headed by Lee Khoon Choy, chairman of the Eng Sing Lee Investment PTE LTD., arrived here today. [FDI] [Opening]
Smashing Fairy Tale of Free Trade
Professor Chang Ha-joon of University of Cambridge in this file photo dated August 2007. Korea Times By Sa Eun-young Staff Reporter Korean economist Chang Ha-joon presents a convincing argument in his book ``Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism.'' The idea that free trade benefits all is taken advantage of by rich and powerful countries with developing nations losing out in the deal. According to Noam Chomsky, the study dealt with in this book should be titled ``economics in the real world,'' which confirms the solid historical facts and cases the author has based his research and information on. He presents the research in an engaging way, unraveling the points to this issue in such a manner that anybody, even someone who knows absolutely nothing about economics, can understand his fresh and innovative argument. Chang goes back to the late 19th century, to the early cases of free trade. Even in the early stages of globalization, the choice for free trade was never made by the weaker side, but was a result of force, as was the case of Britain and China during the Opium War (1839-42).
Economic Implications of Summit Agreement
by Stephan Haggard, University of California, San Diego and Marcus Noland, Peterson Institute
Op-ed in the Korea Herald October 12, 2007
The success of economic cooperation projects depends on the intentions of North Koreans.
The Arabs have a proverb: “He who foretells the future lies.” The recent summit announcement may make many people liars, not the least its authors. The problem with the summit announcement is that its ultimate impact depends on three major unknowns: the attitude and commitment of the next South Korean president; the willingness of the North Koreans to embrace reforms; and progress—or lack thereof—on resolving the North Korean nuclear issue. [Victim]
S.Korea to Develop N.Korea's Najin Port for W150 Billion
South Korea will discuss developing Najin Port in North Korea with short- and medium-term investments of W150 billion, Minister of Maritime Affairs and Fisheries Kang Moo-hyun said Wednesday (US$1=W916). The two Koreas at their latest summit early this month only discussed developing Haeju Port. "South Korea needs the development of Najin Port very much,” Kang told a meeting sponsored by the Federation of Korean Industries. Since Najin is near the border with China and Russia, South Korea apparently wants to develop it as a logistics base for South Korean enterprises. [Rajin]
Price tag for inter-Korean cooperation low: official
October 11, 2007 Korea will need up to 730 billion won ($798 million) to repair a North Korean railroad and an expressway as agreed at the recent inter-Korean summit, the top economic policymaker said yesterday, adding that many inter-Korean economic projects can be handled without putting a huge burden on the state budget. At the three-day summit, ended last Thursday, Seoul and Pyongyang agreed to repair parts of the dilapidated Kaesong-Sinuiju railroad that cuts across the western section of the North Korean border, while repaving the Kaesong-Pyongyang expressway that runs between the North’s border town and its capital. “We expect the total cost to reach 730 billion won, 290 billion won for the railway repair and another 440 billion won for repaving the expressway,” Finance Minister Kwon O-kyu said in a forum in Seoul.
S Korean port eyes investment in North
By Anna Fifield in Busan, South Korea
Published: October 9 2007 22:08 | Last updated: October 9 2007 22:08 Busan Port Authority, South Korea’s biggest shipping terminal, is looking to invest in the North Korean port of Rajin amid hopes that last week’s historic Korean summit would help the group boost its efforts to become Asia’s largest trans-shipping base. “There is currently no direct channel between North and South, but now we are positively reviewing investing in North Korea,” Lee Gap-sook, Busan Port Authority president, told the Financial Times. “We have great interest in shipping containers through Rajin.” The owner of the port authority, based on the south-eastern tip of the Korean peninsula, is also in talks with officials in Tianjin, a big Chinese port near Beijing, about forming a strategic alliance. The moves come as the government steps up efforts to turn South Korea – home to the world’s largest air cargo carrier and its three largest shipbuilders, as well as the world’s fifth largest port – into a global logistics power. Roh Moo-hyun, South Korean president, and Kim Jong-il, North Korean leader, last week agreed to increase economic co-operation as part of efforts to reconcile the estranged neighbours. The plan included the development of both the Haeju port area, close to the maritime border with the south, and the Nampo river terminal near Pyongyang. But North Korea has long sought to develop Rajin, in the north-east corner of the country near the borders with China and Russia. It made a failed attempt to open a special economic zone there in the 1990s and a 50-50 Chinese-North Korean joint venture is now building a $77m road from China to the Rajin coast. While the North Korean port would not be a base for import and export business, Rajin could become a strategic part of Busan’s feeder network, Mr Lee said. [Inter Korean business]
Kim Yong Nam Meets Mongolian Government Economic Delegation
Pyongyang, October 9 (KCNA) -- Kim Yong Nam, president of the Presidium of the Supreme People's Assembly of the DPRK, met and had a friendly talk with the Mongolian government economic delegation headed by Ya. Sodbaatar, vice-minister of Industry and Trade, at the Mansudae Assembly Hall Tuesday. Present there were Ri Myong San, vice-minister of Foreign Trade, officials concerned and the Mongolian ambassador to the DPRK.
Is N.Korea Really Ready for Economic Cooperation?
"North Korea has a 99 percent literacy rate, a disciplined, hardworking society, and a US$900 per-capita GDP. Morocco has a 44 percent literary rate, a society that spends all day drinking coffee and pestering tourists to buy rugs and a $3,260 per-capita GDP." In the late 1980s, American economist P.J. O'Rourke pointed to North Korea and Morocco as evidence for his theory that a free market is the decisive element in determining a country's prosperity. A properly functioning market is more important than educational standards or the diligence of a people, he suggested.
Foreign Delegations Arrive
Pyongyang, October 6 (KCNA) -- A Mongolian government economic delegation led by Vice-Minister of Industry and Trade Ya. Sodbaatar and a delegation of the China Foreign Languages Press Publishing and Distribution Administration led by Deputy Director Qi Pingjing arrived here Saturday. Delegations and delegates of China, Germany, Mongolia, Australia, Italy, Canada, France and Taipei of China also arrived here today to participate in the 3rd Pyongyang Autumn International Trade Fair.
3rd Pyongyang Autumn International Trade Fair Opens
Pyongyang, October 8 (KCNA) -- The 3rd Pyongyang Autumn International Trade Fair was opened with due ceremony at the Three-Revolution Exhibition on Monday. Exhibited there were machine tools, electric and electronic equipment, vehicles, petrochemicals, medicines, daily necessities, foodstuffs, etc. from companies of the DPRK, China, Germany, Netherlands, Mongolia, Switzerland, Britain, Australia, Italy, the Czech Republic, Canada, France, Finland, Poland and Taipei of China. Present at the opening ceremony were Ro Tu Chol, vice-premier of the Cabinet, Rim Kyong Man, minister of Foreign Trade, and others and officials concerned.
Finance Exec. Sees Potential in N.Korea's Eyes
When Hana Financial Group Chairman Kim Seung-yu was in Pyongyang for the inter-Korean summit as a representative of the financial sector, he was most impressed by the faces of North Korea's women. "I was surprised to see how many North Korean women have had double eyelid cosmetic surgery," Kim said. "I commented on it to Hyundai Business Group Chairwoman Hyun Jeong-eun, and she said the surgery is booming among North Korean women." Kim paid keen attention to the appearance of the women of the North because he believes it's possible to divine the state of a nation's economy by how its women tend to their appearance. "The fact that women are interested in cosmetic surgery means they don't have to worry about bread-and-butter issues," he said. "Finance has to follow the real economy, so I saw a possibility for the South's finance industry to advance into the North." He has more evidence to back up his theory. "The waitresses and female staff at restaurants and hotels were all wearing makeup. And their makeup looked pretty good, so I guess this indicates they wear it regularly," he said.
LG to Outsource Digital TV Production
In an attempt to lower cost, LG Electronics decided to outsource significant portion of the digital TVs it has been producing at home. Except for domestic consumption, LG has been making most of its digital TVs overseas, where labor costs are much lower. Recently, however, even the small portion produced at home was apparently thought to be unnecessary. LG Electronics said on Sunday that it recently concluded a contract with a TV firm in Taiwan to produce 500,000 LCD TVs per year targeting the U.S. market. The TVs will be sold in the U.S. under the name Zenith, an American brand LG has bought a few years ago. "Zenith has a strong appeal to Americans in theirs 60s and 70s and the price will be at a very competitive range since we had it produced offshore," LG Electronics said. [Offshoring]
Cautious push to inter-Korean economic cooperation
Optimism exists, but N. Korean infrastructure and investment environment raise concerns among business leaders
After returning home from three days in North Korea with President Roh Moo-hyun for the second inter-Korean summit, Hyundai Motor Group Chairman Chung Mong-koo issued a press release in which he expressed his after-thoughts. "It was my first visit to the North in nine years and personally I think it was a cherished opportunity to take a first-hand look at various aspects of the country." Considering the significance of the summit talks held in Pyongyang, North Korea's capital, last week, the statement was extremely simple and brief. Hyundai Motor Group officials said that there were no comments from Chung regarding the conglomerate's future business plans in the North.
Seoul Ambiguous Over NK Financing
By Lee Hyo-sik Staff Reporter The Roh Moo-hyun administration began drawing up financial plans for a variety of inter-Korean economic projects after Roh and North Korean leader Kim Jong-il signed the accord in Pyongyang last week. Following the landmark signing of the Pyongyang accord, private institutes were quick to estimate costs for the proposed projects in North Korea but Deputy Prime Minister and Finance-Economy Minister Kwon O-kyu remains mum on the estimate. [Unification cost] [Dilemma]
Northern Women Changing
A North Korean clerk at a store greets South Korean delegates with a smile in North Hwanghae Province, Oct. 4, the last day of the inter-Korean summit. / Korea Times By Kim Yon-se Staff Reporter PYONGYANG _ Many Koreans say that while good-looking men are found in South Korea, it is the women who are good-looking in North Korea. When a group of South Korean men accompanying President Roh Moo-hyun for the inter-Korean summit took a break at rest-stop on their way to Pyongyang, a group of the North's women lined up to welcome them. The women wearing Korean traditional clothing offered glasses of pear juice to the delegation made up mostly of men. Though the moment was very short, it was very impressive. [Daily life]
Summit Reveals Fashionable Pyongyang
North Korean waitresses, dressed in bright colors, are ready to serve a luncheon for South Korean delegates at Pyongyang's Okryugwan Restaurant Wednesday. / Joint Press Corps By Kim Tong-hyung Staff Reporter It will be quite a long time before Pyongyang earns its stripes as a hip and happening city if it ever does. But, judging by the glimpses revealed during the three-day summit, it seems that not all is gray and grim in the North Korean capital. First lady Kwon Yang-suk and other South Korean officials ran into a room full of headsets Wednesday at Pyongyang's Grand People's Study Hall as students managed to keep a straight face scribbling down English conversations played on tape. [Daily life]
Strong showing of European companies at the 3rd Pyongyang Autumn International Trade Fair from 8 – 10 October 2007-09-25
18 European companies are participating at the European booth organized by the European Business Association (EBA) in Pyongyang. This has been the largest ever participation of European companies at a Trade Fair in Pyongyang. The 18 EBA-member companies come from 6 European countries and are engaged in banking, IT, pharmaceuticals, maritime transportation, railways, courier services, industry, mining, solar driven water pumps, energy saving technology, commodity inspection, cosmetics and other consumer goods and general trading. Some already operate in joint ventures with Korean partners or found other forms of close business cooperation, particularly in the fields of banking, mining, internet services, logistics, software development and pharmaceuticals.
Economic benefits of S-N projects put at $150b
By Lee Sun-young
Amid widely varying estimates of the economic impact of the second-ever summit between the two Koreas, a private think tank said yesterday that the inter-Korean business deals will generate up to $150 billion in long-term economic benefits. "The new joint economic projects will deliver North Korea a significant boost to its economy, while reducing the capital cost of unification for the South," said the Hyundai Research Institute, a Seoul-based private think tank, in the report.
Cost estimates vary greatly. The Korea Development Bank estimated back in 2005 that the second-stage development of Gaeseong industrial park would cost Seoul 13.66 trillion won ($14.9 billion). South Korea's Minister of Finance and Economy Kwon O-kyu said yesterday that the two Koreas will work on joint resource development projects, for example concerning natural gas and oil, although not included in the Oct. 4 joint declaration. "The construction of an expanded port facility in Haeju could be done, using the 2 trillion won overseas marine fund being set up by port authorities in the South," he said. [Unification benefit]
South Korea sends trade message north
By Anna Fifield in Seoul Published: October 5 2007 03:00 | Last updated: October 5 2007 03:00 President Roh Moo-hyun took the "who's who" of South Korean business with him to North Korea this week. In a line-up more usually seen at capitalist gatherings in the South, the delegation included the heads of Samsung Electronics, Asia's most valuable technology company; Hyundai Motor, the world's number six automaker; and Posco, a top steelmaker. For good mix, the president threw in oil refining with SK Energy, home appliances and chemicals with LG, and shipbuilding through Daewoo.
South Korea eyes North Korea's oil
Joint development projects could be hindered by lack of N. Korean interest and existing project with China
Seoul has a keen interest in joint development of North Korea's oil fields. With the prospect of rich oil reserves and increased inter-Korean cooperation, the South proposed to launch joint oil and gas development projects at the the second inter-Korean summit, which took place from October 2 to 4. The North, however, seems to have little enthusiasm for the idea and the prospect could be further hindered by China, which already has a development deal with the North. At a briefing on October 5, Deputy Prime Minister and Minister of Finance & Economy Kwon O-kyu said, "During the summit in Pyongyang, Chairman Kim Jong-il was the first to show a lot of interest in the oil field and gas development projects proposed by the South and we also expressed interest (in the development of North Korean oil fields)." He added, "As we have confirmed that both leaders have an interest in this, we will discuss the details at the Joint Committee for Inter-Korean Economic Cooperation, to be headed by deputy prime minister-level officials." Three continental shelves in Seohan Bay, Donghan Bay and Onju and Gilju near Pyongyang are presumed to be areas potentially having oil fields. Among the three areas, Seohan Bay is considered to be the most likely to have one. Lee Jae-ung, an official of the Korea National Oil Corporation, said, "The tuff layer and geological features of Seohan Bay are almost identical to those of Bohai Bay, in which China found an oil field with about 5-6 billion barrels of oil. It is possible that Seohan Bay and Bohai Bay are linked to each other."
Samsung Electronics to consider investment in N.Korea if preconditions are met
South Korean electronics giant Samsung Electronics Co. will consider investing in North Korea if the communist country provides better infrastructure and business-related regulations as promised in an agreement reached during the just-ended inter-Korean summit talks, the company's top executive said Friday.
$11 billion cost to implement summit projects
Steep price offset by expected profits, think tank believes October 06, 2007 The price tag for South Korea to implement the new agreement on inter-Korean economic cooperation reached at the summit of the two Koreas Thursday, will amount to $11.2 billion, according to a local think tank. The Hyundai Research Institute said in a report yesterday that the second-phase construction in the Kaesong Industrial Complex will cost the South $2.5 billion while the enlargement of Haeju Harbor will cost $300 million. The report said Seoul will also spend up to $1.5 billion on repairing the railway between Kaesong and Sinuiju, and $300 million for improvements on the Kaesong-Pyongyang highway.
Mini-Marshal Plan Burdensome for Taxpayers
By Lee Hyo-sik Staff Reporter South Korea is expected to face difficulties in securing funds to finance a range of large-scale economic cooperation projects agreed to between the leaders of the two Koreas on Thursday. The Roh Moo-hyun administration has said it will attract funds from the World Bank and other international financial institutions, as well as from the private sector, for the envisioned inter-Korean projects. But many bankers and analysts here say that most international financial organizations are reluctant to provide funds because of uncertainness associated with the Stalinist state, including its nuclear weapons development program. [Sanctions] [Dilemma]
CEOs Lukewarm on NK Investment
By Jane Han Staff Reporter Upon completing three days and two nights on a Pyongyang show-and-tell trip Thursday, attention was directed to the returning CEOs on the likeliness of an unprecedented big-scale investment in the economically backward state: Is it a go or not? Although positive words of possibilities were afloat, ``we'll see what happens'' _ as the Vice Chairman of Samsung Electronics Yun Jong-yong said _ was the prevailing answer among the top corporate heads. Yun told reporters, while re-entering the South, that NK business is not done in a snap, but takes due time to make preparations for the future.
S. Korean Shipbuilders Question Joint Complex in North
Daewoo Shipbuilding Unveils Plan to Build $150 Mil. Shipyard in Northern Coastal City By Kim Yoo-chul Staff Reporter South Korean shipbuilders and analysts questioned the economic viability of the proposed plan to build a joint shipbuilding complex in the wake of the inter-Korean summit. The agreement between the two Koreas calls for the two sides to construct a joint shipbuilding complex in the North's port city of Nampo, near Pyongyang. Most officials from major South Korean shipbuilders say that too many things are uncertain as of yet though Daewoo Shipbuilding & Marine Engineering (DSME) unveiled a bold plan to build a $150 million block plant in the North's city of Anbyeon.
Inter-Korean Declaration Focuses on Economic Projects
South Korean President Roh Moo-hyun and North Korean leader Kim Jong-il on Thursday signed a declaration for advancement of South-North Korean relations, peace and prosperity, wrapping up Roh's three-day visit to the North.
Business Community Welcomes Joint Declaration
South Korea's business community generally welcomed the joint declaration by the two Koreas on Thursday. The declaration shows that North Korea is taking a progressive stance on expanding its infrastructure and overhauling its systems, key points the South Korean business community has been urging, business leaders said. Small- and medium-sized enterprises commended the two leaders for agreeing to resolve three major issues -- travel, communications and customs clearance. But other businessmen are concerned, with some corporations saying the declaration isn't enough. There are still pressing issues that need to be addressed, they say, including the North's removal from the U.S. list of state sponsors of terrorism and the possibility that South Korean businesses will see their global reputations tarnished by trading with the North [Terrorism list]
Koreas Inch Toward One Economic Community
President Roh Moo-hyun, center, toasts with North Korean leader Kim Jong-il, right, at a luncheon meeting Kim held to bid farewell to the South Korean delegates at the Baekhwawon State Guesthouse in Pyongyang, Thursday. At left is First lady Kwon Yang-suk. / Joint Press Corps By Jane Han Staff Reporter The conclusion of the inter-Korean talks tossed more-than-expected economic cooperation projects on the table, but experts say the ambitious exchange calls for both Pyongyang and Seoul to each do its homework in turning words into reality. Creating a special peace zone in Haeju, opening a cross-border cargo railway, constructing a joint shipbuilding complex and developing the second-phase of the Gaeseong Industrial Complex are some of the highlights of the agreement signed Thursday by President Roh Moo-hyun and Kim Jong-il upon ending the three-day summit.
Pyonghwa Motor Has Exclusive Rights in NK
President Roh Moo-hyun shakes hands with a North Korean worker during his 20-minute visit to Pyonghwa Motor Plant in Nampo, North Korea, Thursday. / Joint Press Corps By Kim Yoo-chul Staff Reporter Expectations are high as car making projects in North Korea will gain additional momentum after President Roh Moo-hyun's visit to the Pyonghwa Motor Plant in Nampo near the North's capital of Pyongyang. In a 20-minute visit with heads of the South's conglomerates including Hyundai Group Chairman Chung Mong-koo, President Roh said the plant is equipped with all the facilities to assemble cars and hinted at further investments in the plant, according to pool reports from Pyongyang. ``(In the future) engines will be produced and I look forward to seeing more facilities that produce car components in the area around the plant,'' Roh was quoted as saying before he left to view a water lock in the North's port city of Nampo. Pyonghwa Motors Group, an automaker owned by the Unification Church of Rev. Moon Sun-myung, has exclusive rights to produce cars for the North Korean market. The group had teamed with a partner in the 70-30 percent joint venture with the North Korean state-owned trading firm, Ryonbong Corp., and completed its first assembly line in Nampo to produce a version of the small Fiat Siena, called the ``Hwiparam'' (Whistle) in Korean in April 2002. [Inter-Korean business] [FDI]
Hyundai Asan Welcomes Accord
Hyundai Asan CEO Yoon Man-joon By Ryu Jin Staff Reporter Hyundai Asan CEO Yoon Man-joon Thursday hailed the agreements reached in the 2007 South-North Korean Summit, raising hopes for what he called ``significant results'' and the ``first step toward an inter-Korean economic community.'' In an interview with The Korea Times, he said that Hyundai Group Chairwoman Hyun Jeong-eun would make a separate trip to Pyongyang later this month for consultations over ongoing and new businesses.
Inter-Korean Industrial Zone in North to Expand Speedily
The second-ever summit between the leaders of South and North Korea is expected to add momentum to the ambitious future plans for a joint industrial zone run by the two Koreas, analysts said Thursday. Wrapping up three days of summit talks in Pyongyang, South Korean President Roh Moo-hyun and North Korean leader Kim Jong-il signed a wide range of agreements on peace and co-prosperity, which includes the expansion of the industrial complex in the North Korean border city of Kaesong.
Korean Leaders Agree on Economic Projects
Pool photo, via Associated Press By NORIMITSU ONISHI Published: October 4, 2007 SEOUL, South Korea, Thursday, Oct. 4 - A day after engaging in direct talks for the first time in seven years, the leaders of South and North Korea agreed Thursday on economic projects intended to spur reform inside the North and to forge closer ties between the Koreas, and pledged to work toward a formal peace on the divided peninsula.
After meeting face-to-face in Pyongyang, the North's capital, where the three-day summit meeting was being held, President Roh Moo-hyun of South Korea and the North's leader, Kim Jong-il, signed a wide-ranging pact that did not break new ground but built on the path taken during the first summit meeting, in 2000.
International Trade Fair to Be Held
Pyongyang, October 2 (KCNA) -- The 3rd Pyongyang Autumn International Trade Fair will be held at the Three-Revolution Exhibition from October 8 to 11. It will bring together companies of the DPRK, China, Russia, Netherlands, Germany, Mongolia, Belgium, Switzerland, Australia, Britain, Italy, Vietnam, France, Finland, Poland and Taipei of China. Exhibited there will be machine tools, electric and electronic equipment, vehicles, petrochemicals, medicaments, daily necessities, foodstuffs and others. The fair will mark an occasion in boosting the economic cooperation and exchange among countries and regions.
NK Plans Logistics Center in Nampo
By Kim Tong-hyung Staff Reporter North Korea is planning to develop its seaport of Nampo into a logistics hub, Seoul officials said. North Korean urban planners have completed the design for a logistics complex that spreads over 9.7 million square meters and will also have a scrap metal processing site, they said. China and Canada will invest in the development of the logistics center, while Canada and Japan will finance the building of the processing site. Nampo, at the mouth of the Taedong River and 50 kilometers southwest of Pyongyang, is home to powerful heavy industry thanks to state investment. The port city is the center of the country's shipbuilding industry, with facilities for freight transportation, aquatic products, and fisheries. [FDI]
Sketchy Stats Hamper Cross-Border Trade - Experts
Every June the Bank of Korea struggles to estimate North Korea's economic growth rate. Since Pyongyang releases almost no official statistics, much of the data the central bank has to work with comes from South Korea's National Intelligence Service. The data often turns out to be unreliable and inconsistent, and the methods the spy agency uses to procure it can be laughable. For example, the NIS estimates manufacturing output in North Korea by counting from reconnaissance planes or satellite photos the number of days that smoke can be seen coming from factory smokestacks, and how many and how often workers come and go. The agency guesses at the country's grain production by measuring the size of farms from similar photos. To figure out cement or iron supplies, the NIS assesses how many kilometers of new road have been built that year. [Statistics] [Intelligence]
S.Korean Businesses Wary of Investing in North
North Korean workers perform group exercises at a South Korean-run clothing factory in Kaesong, North Korea, in this March 14, 2007, file photo. Capitalist managers from the South now supervise communist workers at the Kaesong Industrial Complex, a factory enclave just beyond the border in North Korea./AP Amid suggestions from all sides for what should be discussed at the inter-Korean summit that starts Tuesday, businesses have been short of ideas. They say it is too early to propose concrete measures for inter-Korean economic cooperation because North Korea lacks both the infrastructure and the institutional and legal framework to protect South Korean investment there. Some say putting any detailed economic projects on the table would be pointless since it is unclear what suggestions or demands North Korea will make. Some businesses are also wary of joining any inter-Korean economic collaboration since that could damage their global reputation. As a result, Korea's four leading conglomerates are taking a wait-and-see attitude.
S. Korean businesses mull inter-Korean projects
Large-scale business cooperation could emerge when 18 CEOs attend summit this week
With the second inter-Korean summit just one day away, the heads of South Korea's large conglomerates have been busy calculating what they could earn during the three-day visit to the North, when they accompany the president beginning on October 2. The summit talks, the first in seven years, are expected to focus on expanding economic cooperation between the two Koreas, which experts believe will open the gate for South Korean companies to launch profitable businesses in the North.[Inter Korean business]
NK-US Ties Crucial for Northern Economy
Unification Minister Lee Jae-joung speaks during an exclusive interview with The By Jung Sung-ki Staff Reporter Unification Minister Lee Jae-joung said South Korea will seek to expand inter-Korean economic cooperation through a package of investment plans to help rebuild North Korea's economy.

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SEPTEMBER 2007

Roh to Propose 2nd Industrial Complex
By Kim Yon-se Staff Reporter President Roh Moo-hyun is expected to propose the creation of a special economic zone for inter-Korean cooperation in North Korea during his meeting with Kim Jong-il, a senior presidential secretary said Thursday.
Life at the GIC
Date : 2007- 09- 28
The following story was written by Mr. Yong-jin, Gwon, an employee of Korea Land Corporation, who is residing in the Gaeseong Industrial Complex(GIC). He presents diverse aspects of the complex where South and North Korean employees work together. In this new series, South Koreans working in the complex will offer glimpses of the life in the complex.
I have to confess this. At first, cultural difference were considerable. Gaps caused by a half-century of division would not easily disappear. However, the south and the north are getting closer as we work together. Antagonisms, however, disappear when North Korean young ladies prepare delicious food for South Korean employees and when South Koreans host birthday parties for North Korean coworkers. Any hatred or bitterness disappears as we eat hot soups together in the cold winter. Because I have worked with North Koreans for one and a half year, I almost forgot that Korea is a divided country. A day here without North Korean workers would be strange to me. I meet them all the time, everywhere--in the workplace, cafeterias, the barber shop, and even at the hospital. When the day of unification will arrive is unknown. In the meanwhile, I believe, workers from the South and the North as “ambassadors” of peace and friendship will continue to do their best in their work places at the GIC. [Kaesong]
Kaesong Statistics
KEY STATISTICS FOR GAESEONG INDUSTRIAL COMPLEX (As of August.30, 2007)
Samsung, LG Likely to Expand TV Business in North Korea
By Kim Yoo-chul Staff Reporter
Samsung Electronics and LG Electronics are considering expanding investment in the TV business in North Korea, according to company sources Friday. Such expectations came after the government confirmed that Samsung Group Vice Chairman Yoon Jong-yong and LG Group Chairman Koo Bon-moo will join President Roh Moo-hyun’s entourage for the inter-Korean summit on Oct. 2-4. Expectations have arisen among business groups that the second inter-Korean summit will produce substantial results in creating more business opportunities in North Korea, though big firms responded less enthusiastically than they did seven years ago. ``As our vice chairman will go to North Korea, we will start reviewing the North Korean business,’’ a Samsung spokesman told The Korea Times. Asked about the possibility to expand production of cathode-ray TVs (CRT) in the North, the spokesman declined to elaborate. [FDI] [Inter Korean business]
DPRK TRADE OFFICIALS CRACK DOWN ON CORRUPTION
Posted Date : 2007-09-28 (NK Brief No. 07-9-28-1) Since early this year, North Korean authorities have been systematically implementing a double-entry accounting system to keep track of cross border trade with China, and as of late have been cracking down on private sales of goods imported under state requisitions. It has become common practice for most traders to keep two sets of books, a private accounting record, and a set of records for government use. As these traders exported state goods to China, they would conspire with Chinese counterparts and make huge profits by recording lower prices than goods were actually being sold for. In many cases, bribes are taken to turn officially imported and exported goods (minerals, seafood, etc.) over to private sellers. These facts came to light through Chinese traders in business with North Korea. [Corruption]
Korea Land Corp. in Huge N.Korea Development Plan
Updated Sep.28,2007 09:05 KST The Korea Land Corporation has drawn up a plan to develop several North Korean cities as special economic zones and industrial, trade and tourism bases, it emerged Thursday. Based on information from government agencies including the National Intelligence Service, the report looks to be used as a source for discussion on economic cooperation at the inter-Korean summit in early October. The report covers in-depth strategies to develop six North Korean cities. Last December, the KLC, using a geographic information system, also drew up a confidential report on industrial facilities and infrastructure in North Korea to pursue inter-Korean economic cooperation projects systematically
South, North businesses set to open private channel for economic projects
First private organization for inter-Korean business proposes to handle investment information and trade
A South Korean business organization is trying to open a private channel for inter-Korean economic cooperation, in partnership with a similar organization from North Korea. The Korea Chamber of Commerce and Industry said on September 27 that it is pushing to form the "South-North Economic Cooperation Forum," which would allow South Korean companies to exchange investment information on North Korea and work as a bridge for inter-Korean trade and cooperation. North Korea's potential partner is the Chosun Conference of Commerce. [Inter Korean business]
Two Korea's Could Build Heavy Industry Complexes
The government is thinking of setting up several more inter-Korean joint ventures in North Korea in addition to the existing industrial complex in Kaesong. Former president Kim Dae-jung told ABC News that South Korean President Roh Moo-hyun and North Korean leader Kim Jong-il would at their planned summit in early October agree to set up more such complexes. According to the Unification Ministry, the government is reviewing a proposal to jointly develop the North Korean cities of Nampo, Haeju, Najin, Sunbong, Wonsan and Shinuiju. A government official said North Korean wants the establishment of heavy industry like shipyards, steel works and oil refineries instead of light industry for its economic development, and the inter-Korean summit could discuss it [KR_Summit07]
Roh likely to propose second industrial park during summit
Three potential areas for new inter-Korean economic projects could involve links to Gaesong or Geumgang
South Korean President Roh Moo-hyun is likely to propose that North Korea build a second industrial park in the Haeju area of South Hwanghae province in the North during the second inter-Korean summit from October 2-4 in Pyongyang. If built, it would be the second such industrial zone after the Gaeseong Industrial Complex. The Haeju area includes the city of Haeju and the counties of Byeokseong, Gangnyung, Ongjin, Cheongdan, Yeonan and Baecheon. [KR_Summit07]
Soju Makers in Another Round of War
Major soju manufacturers have recently been engaged in a brawl over Jinro's preemptive marketing copy: "We do not add sugar to our products!" Doosan, the runner-up producer, has come up with its own comparative advertisement: "Who on earth adds sugar, then?" Seen above are, from left, the ads of Jinro, Doosan and Sunyang Soju. / Korea Times By Ryu Jin Staff Reporter ``We do not add sugar to our products!'' Jinro and Doosan Liquor BG, the country's No. 1 and No. 2 soju makers, are currently battling it out over this seemingly simple marketing copy. While Jinro, the front-runner enjoying a market share of over 50 percent with the famous ``Chamisul,'' is on the defensive this time, Doosan and even a couple of minor manufacturers such as Sunyang Soju have joined forces to escalate the ``soju war.''
Roh Vows to Create Jobs During Inter-Korean Summit
President Roh Moo-hyun speaks at a meeting with dignitaries of North Gyeongsang Province at the Gimcheon City Hall on Thursday. President Roh Moo-hyun on Thursday said during the second inter-Korean summit in Pyongyang on Oct. 2-4, the two sides will agree on developing an industrial complex and a port in the North. He made the remark at a ground-breaking ceremony for an "innovation city" in Gimcheon, North Gyeongsang Province on Thursday. "I'm visiting the North soon,' he said. "And I'm going to create many jobs for the Korea Land Corporation and the Korea Expressway Corporation. I think there'll also be a lot of jobs for the construction of a port."
Taesung Hata in the GIC(Gaeseong Industrial Complex) celebrated its second anniversary
Date : 2007- 09- 20 On September 13, Taesung Hata, a company operating in the GIC, celebrated its second anniversary. Major figures of the complex attended the commemorative ceremony held at 10:00. Participants include Bae Hae-dong, the CEO of Taesung Industries; Oh Seong-chang, the head of Taesung Hata in Gaeseong; Taesung executives and employees; Kim Dong-geun, chairman of Gaeseong Industrial Complex Management Committee; and Kim Cheol-sun, the head of Hyundai Asan headquarters in Gaeseong. In his speech, CEO Bae Hae-dong said: “We have faced many difficulties during the last two years. We, however, have overcome them and from now on we will focus on improving productivity and quality.” In September 2004, Taesung Hata was launched with 400 North Korean employees. Currently 28 South Korean workers and 694 North Korean employees working for the company. In June, Taesung Hata made 500th shipment. Thanks to the continued productivity and export increase, 8 million units are made every month on average. This amounts to 35% productivity increase from last year. CEO Bae explained that systematic training of North Korean employees helped the company to achieve world-class quality control.
Roh to Tour Factories in N.Korea
North Koreans work at the inter-Korean industrial complex in the North Korean border city of Kaesong. President Roh Moo-hyun wants to visit North Korean industrial facilities and the inter-Korean joint venture business complex in the border city of Kaesong during his visit to North Korea for a summit in early October. A government official said Roh expressed hope of making the visits since inter-Korean economic cooperation is the most important point on the agenda for his summit with North Korean leader Kim Jong-il. The Kim Jong-tae Electric Locomotive Factory is being cited as the most promising candidate among industrial facilities for the president to tour. North Korean leader Kim Jong-il visited the engine factory in Seosong district in Pyongyang in January 2002. The Choson Shinbo, mouthpiece of the pro-Pyongyang General Association of Korean Residents in Japan or Chongryon, reported last month that work has started to modernize the factory. Started as a train repair plant, the factory was renamed in honor of Kim Jong-tae, a South Korean who was executed in 1969 for his affiliation with the Unification Revolution Party, which was outlawed by the South Korean authoritarian government at the time. Roh is also considering visiting the Kaesong Industrial Complex on the way home. Some people expect him to tour the facility together with the North Korean leader, but Cheong Wa Dae dismissed the possibility. [KR_summit07]
Roh May Visit Gaeseong Complex With NK Leader
By Kim Yon-se Staff Reporter South Korea is pushing for President Roh Moo-hyun's visit to the Gaeseong Industrial Complex with North Korean leader Kim Jong-il on his way back to Seoul Oct. 4, government officials said Wednesday. A South Korean delegation dispatched to Pyongyang Tuesday began to discuss details for the inter-Korean summit slated for Oct. 2-4 with North Korean officials. [Kaesong] [KR_summit07]
S.Koreans to Subsidize Kaesong Power Supply
The government is seeking to incorporate the cost of electricity supply for the Kaesong Industrial Complex in North Korea into South Korea's own electricity fee system. Combining the two would allow losses from the Kaesong complex worth several billions of won a year since 2005 to be absorbed by the overall scheme. But that would mean the South Korean public has to shoulder the cost.
Hyundai Motor trying to erase poor image in U.S. with new ad blitz
South Korean automaker Hyundai Motor Co. is trying to shake off its "dirt-cheap" image among American drivers with new advertising campaigns in the world's largest auto market, according to company officials on Wednesday. After initial setbacks over poor styling and unreliable durability in the early 1980s, Hyundai vehicles have raised their profile in the U.S. with generous warranty conditions and major efforts to boost quality. For now, Hyundai's ambitious goal in the U.S. is to compete with Japanese rivals such as Toyota Motor Corp. and Honda Motor Co. in the tier of high-quality, moderately-priced performers. Driven by recent growth in sales of the Sonata sedan and Santa Fe sport-utility vehicle, Hyundai ranks as the world's sixth-largest automaker along with its affiliate Kia Motors Corp. To upgrade its brand awareness, Hyundai's U.S. affiliate, Hyundai Motor America, changed its advertising slogan this week to: "Think about it." Hyundai's previous ones included "Value for the money" and "Smart buy," considered a means of attracting mostly young buyers. [Brand] [Country image]
S. Korea, India agree to conclude talks on trade agreement within year
SEOUL, Sept. 17 (Yonhap) -- South Korean Foreign Minister Song Min-soon and his visiting Indian counterpart, Pranab Mukherjee, on Monday stated their goal of concluding negotiations for a trade agreement within the year, and called for enhanced relations between their countries, the Foreign Ministry said. "The two ministers noted with satisfaction that bilateral relations have gained new momentum following the establishment of a "Long-term Cooperative Partnership for Peace and Prosperity," the ministry said in a press release. [FTA]
Korea's Ranking in World Economy Tumbling
While the government has been arguing that the fundamentals of Korea's economy are strengthening, its status in the world economy has been deteriorating. In terms of major indicators such as gross domestic product, economic growth and international payments, Korea's global ranking has been falling. According to an analysis by the Chosun Ilbo of National Statistical Office information from the IMF and OECD, Korea's GDP for 2006 fell one notch to 13th in the world, overtaken by Russia. Korea's GDP is US$887.4 billion, up by 12 percent from the previous year.
DPRK-PRC friendship distribution center under construction in Sinuiju
Posted Date : 2007-09-13 (NK Brief No. 07-9-13-1) It has been reported that Chinese and North Korean governments are working in unison to push forward with a plan to jointly build a goods distribution center in the North Korean city of Sinuiju. According to Yonhap News, China proposed a plan for North Korea to build a ‘DPRK-PRC Friendship Distribution Center’ in Sinuiju, and the two countries are currently involved in negotiations over the idea. North Korea has already signed an investment agreement welcoming Chinese investment firms. [China NK] [FDI] [SEZ]
N.K. metals, minerals to be sold directly to South
Deal would see such shipments cross the DMZ for the first time
For the first time in the more than 50 years since the Korean War, minerals produced jointly by the two Koreas will be sold in South Korea. The two countries will also start to work on developing new mine projects and will launch drilling as early as next month, Lee Han-ho, head of the Korea Resources Corp. (KORES) told the Hankyoreh in a recent exclusive interview. Lee is one of the group of business leaders and government officials that will accompany President Roh Moo-hyun during the second-ever inter-Korean summit slated for Oct. 2-4. "On September 5, I met with Chung Un-up, North Korean head of the Inter-Korean Economic Cooperation Association in Pyongyang, and signed a deal to sell black lead products that two Koreas jointly produced at a mine in Hwanghae Province," Lee said. "We also agreed to work together in developing a limestone mine in Shinwon of the same province and start drilling for black lead in the Pungcheon region." So far, minerals produced in the North have been sold in South Korea through a third country, such as China [Inter-Korean business]
ROK goods now hot sellers in DPRK markets
Posted Date : 2007-09-05 (NK Brief No. 07-9-5-1) South Korean wares have become very popular with North Korean residents, and they are being openly sold in DPRK markets. According to a source inside North Korea, ROK goods with the ‘Made in Korea’ label are highly popular among those more wealthy shoppers in markets in Pyongyang, Shinuiju, Hamheung, Chunjin, and other large cities. However, these days, ROK goods must be labeled ‘Made in Korea’ to be recognized as having come from the South, and therefore can be sold for high prices.
Because the quality of Chinese goods is so poor, in recent times North Koreans with a little bit of money primarily used Japanese goods, despite their exorbitant prices. Now that Japanese goods are in short supply, that demand is being filled by goods from the South. [Inter-Korean business]
DPRK, China Cooperate in Economy
Pyongyang, September 11 (KCNA) -- The 3rd meeting of the DPRK-China Committee for Cooperation in Economy, Commerce, Science and Technology took place in Beijing on Sept. 4. Present there were members of the DPRK government economic and commercial delegation led by Ri Ryong Nam, vice-minister of Foreign Trade, and members of the Chinese government economic and commercial delegation led by Chen Jian, assistant to the minister of Commerce. At the meeting both sides reviewed the implementation of the agreements reached at the 2nd meeting and exchanged views on problems arising in the economic and commercial cooperation between the two countries. [China-NK relations]
Building of Economic Power Called for
Pyongyang, September 7 (KCNA) -- The work to lay a material and economic foundation of socialism is closely related to the work to consolidate the socialist system such as augmenting the political and ideological might, building up its military position and stepping up cultural construction, says Rodong Sinmun Friday in a signed article. Nothing is more important for the DPRK than building an economic power now that it has unbreakable single-minded unity and powerful national defence capacity, the article says, and goes on:
The GIC Products Exhibition at “Preview in Seoul 2007”
Date : 2007- 09- 07 “Preview In Seoul 2007”, a large-scale exhibition for textile trade, was held at Seoul COEX from Tuesday, September 4 to Thursday, September 6, 2007. The annual exhibition is organized by Korea Federation of Textile Industries (KOFOTI) since 2000 to promote development and competitiveness of the textile industry in the Republic of Korea. As in the case of last year, a special exhibition hall for textile and other goods produced by North Korean labor force and South Korean technology in the GIC was installed during the event. [Kaesong] [Inter-Korean business]
Teamsports Co. produced the first products of 1100 sportswear items from its factory at the GIC
(Gaeseong Industrial Complex)
Date : 2007- 09- 07 On August 30, Teamsports, a company operating in an apartment-type factory located in the GIC produced 1,100 sportswear items. Teamsports thus became the first company to produce the products for market in the apartment-type factory recently began housing companies. Teamsports, which had begun manufacturing on August 16, completed production in 15 days. Teamsports is a manufacturer of sportswear for cycling, mountaineering and marathon. Je Jeong-o, the president of Teamsports, said “I was pleased by the fact that the first production for the market could be completed in just 15 days. The time necessary for the first shipment was shortened because the technological skill of North Korean workers was much higher than expected.” [Kaesong] [Inter-Korean business]
Korea Caught in Middle of China-Japan Trade 'Sandwich'
The three-way Korea-Japan-China structure that has been the basis of Korea's trade is tottering as Korea becomes "sandwiched" between the other two nations, experts say. Korea's trade deficit with Japan is increasing and its trade surplus with China is decreasing. Thus, the principle that says Korea's losses with Japan can be recovered in China is heading towards obsolescence. [Sandwich]
N. Korea-Related Stocks Extend Gains
By Lee Hyo-sik Staff Reporter Shares of companies engaging in an array of inter-Korean economic cooperation projects have shot up this week, following the news on Sunday that North Korea agreed to dismantle its nuclear weapons development program by the end of the year. Most firms, which will take part in sending electricity to the Stalinist country in return for the dismantlement of its nuclear reactors, saw their stocks rise to their daily limit up over the past two trading sessions. Also, shares of those companies operating in the Gaesong Industrial Complex have rallied on expectations that easing of geo-political tensions associated with North Korea will further boost economic cooperation between the two Koreas.
The status of FTA dealing with the GIC
(Gaeseong Industrial Complex) Name : letter Date : 2007- 08- 31 Korea’s economic growth heavily depends on trade. Therefore, Korea has concluded many FTAs including Korea-Chile FTA, which was Korea’s first FTA. Free trade agreements were concluded with ASEAN, Singapore, and EFTA. This year, FTA was concluded with the United States, which occupies 20% of the world’s GDP. Except for Korea-Chile FTA, other three agreements have recognized special tariff benefits for the products manufactured in the GIC. The Korea-US FTA waiting for ratification includes the measures for the GIC including the establishment of “Outward Processing Zone Committee.” In the Korea-Singapore FTA, which became effective from March 2006, Annex 4B states that 4,625 product items manufactured in the Complex and exported to Singapore via South Korean territory are treated as South Korean products. [FTA] [Sanctions] [Kaesong]
Foreign Apparel Brands Target Korea's Middle Class
A rising tide of more affordable foreign clothing has been causing a stir in Korea. Luxury foreign brands have dominated the nation's high-end market and are now moving on to conquer the mass market. Korea's retailers feel that domestic brands, busy raising their prices in an attempt to upgrade their images, have been taken by surprise. If homemade brands lag behind in price and quality compared to brands from abroad, they could be in for a serious blow. [Brand]
'0313 Generation' Knows How to Spend
By Jane Han Staff Reporter Mid-30s homemaker Han Kyu-in says the biggest spender in her three-member household is neither her working husband nor herself, but their seven-year-old daughter Hyo-rim. ``From kindergarten tuition, art and piano lesson fees to buying toys, clothes and food _ the list goes on,'' said Han, adding that the total easily amounts to more than 1.5 million won a month. ``But I'm not complaining since my husband and I aren't expecting to have any more kids. We'll give her everything she needs.'' While Han and her husband may be pointed at as kid-spoiling parents in the past, they've become a common mom and dad figure of today, as parenting focuses on just one child due to the persistent low birth rate. Although the lavish upbringing may foster bratty girls and boys _ mostly between the ages of three and 13 _ the local children's goods-related businesses say the snobbier, the better.

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AUGUST 2007

S.Korean Fuel Companies Take Small Steps Into N.Korea
Major South Korean gas and oil companies are building or planning to build gas and refilling stations in North Korea. GS Caltex plans to supply fuel at a gas station on a 6,600-sq.m site just outside the Kaesong Industrial Complex. The refinery is partnering with Jiudau, a non-profit organization that specializes in inter-Korean cultural events which has secured the site. Until now, Hyundai Oilbank, in partnership with Hyundai Asan, was the only South Korean company operating a gas station in the North. SK Gas Co. is building the first liquified petroleum gas (LPG) refilling station near North Korea's Mt. Kumgang. Scheduled to open in November, it will sell LPG for heating and cooking to local companies. Korea LP Gas set up a facility to store and sell LPG and high-pressure gas at the Kaesong Industrial Complex last month. Suffering a slowdown at home, the South Korean companies are turning their eyes northward in the hopes that North Korea can provide new business opportunities. South Korea's LPG industry has been losing market share to liquefied natural gas (LNG). If North Korea's economy starts to pick up, the industry believes that demand for LPG will be strong before other alternatives are available. The firms appear to be setting a long-term strategy, establishing a foothold in the North Korean market and waiting for the right time to reap the rewards.
S. Korea's trade chief says an inter-Korean free trade deal isn't impossible
Forging a free trade agreement with North Korea would be a daunting task, but it's not impossible, South Korea's trade minister said Thursday, amid media reports the two Koreas may discuss a commercial pact in their second summit.
Hundreds of firms plan to open in Kaesong
Less than 10 percent of companies in Kaesong have stayed five years. August 29, 2007 Hundreds of companies are lining up to operate in North Korea’s Kaesong Industrial Complex, but an economist said in a seminar yesterday that the current economic cooperation with South Korea won’t bring any significant changes to the communist country. More than 200 companies have signed a contract with the Korea Land Corp. to join the 33 domestic companies currently operating in the industrial park, according to Kim Du-bok, an employee at the state-owned company. Korea Land Corp. is responsible for assigning space in the industrial complex. Among the new companies are a couple of firms with foreign connections that hope to open next year.
First Foreign Company Enters Kaesong Complex
Updated Aug.28,2007 10:49 KST Chinese company has become the first foreign firm to do business in the inter-Korean industrial complex in the North Korean city of Kaesong. The Korea Land Corporation on Monday said Dashing Diva, the South Korean branch of Chinese artificial nail manufacturer Tianjin Jci Cosmetic, signed a contract to purchase a 6,000 sq. m lot in the Kaesong Industrial Complex. This is the first time a foreign company has bought a site in the inter-Korean joint venture. The KLC designated a portion of land in the Kaesong complex for foreign businesses to boost the industrial complex’s international image and put the lots on sale in June. But there were no takers. The KLC is approaching foreign companies individually to sell the lots to them without a tender. In addition to Dashing Diva, multinational sanitary goods maker Kimberly-Clark has visited the Kaesong park to discuss investment there.
GS may build gas station near Gaesong
Collaboration with N. Korean non-profit may result in another inter-Korean project
GS Caltex Corp. is considering building a gas station near the Gaeseong Industrial Complex in North Korea. Though nothing has yet been confirmed, permission to use the land has been granted to a North Korean non-profit and talks between the two companies have begun.
GS Caltex to sell gas near Kaesong
Joong Ang Daily You Sang-won 8/27/2007 GS Caltex Corp., South Korea’s second-biggest oil refiner, plans to open a gas station near the Kaesong Industrial Complex as its first North Korea project. To that end, the company signed a memorandum of understanding with Jiudau, a South Korean firm that has received the right to use land in Kaesong from the North Korean government, Jiudau said.
Foreign companies to do business in Gaesong
Two Chinese companies and U.S.-based Kimberly Clark interested in the industrial complex
Two Chinese companies will start doing business in the industrial complex in North Korea's border city of Gaesong. It will be the first time foreign enterprises will be allowed to do business in the communist country. [Kaesong]
Chicken farmers look North for cheap labor
August 25, 2007 Maniker Co., South Korea's second-largest poultry processor, plans to build chicken farms in North Korea to take advantage of cheaper labor in the communist nation. Maniker officials will be traveling to the North in the middle of next month to finalize details on building several farms near the border of the two countries, the company said in a statement yesterday. The project will help Maniker lower costs while giving North Korean workers opportunities for increased income and high-protein food, the statement said. North Korea has shown "a positive reaction" to Maniker's plan, which has been under discussion since 2002, it added. During the visit, Maniker executives and North Korean officials will choose the location of the chicken farms between Sariwon, south of the North Korean capital of Pyongyang, and Samilpo, near Mount Geumgang on the east coast, the company said. Maniker, which trails Halim Co. in the domestic poultry market, plans to initially sell the chickens in South Korea and may eventually sell them in North Korea as well. The company reported a net loss of 3.4 billion won ($3.6 million) for the three months ended June 30, compared with a profit of 237 million won a year earlier. Bloomberg, Yonhap
Seoul entrepreneurs and the advisors for the trade negotiation at the Ministry of Foreign Affairs and Trade visit the GIC
On August 17, 130 visitors including Congressman Choi Jae-cheon, the advisors for the trade negotiation at the Ministry of Foreign Affairs and Trade and the businessmen from the small and medium sized enterprises in Seoul visited the GIC. At 10:40 a.m., the visitors crossed the Military Demarcation Line. In the lecture hall of the Gaeseong Industrial Complex Management Committee, the visitors were briefed about the current status of business at the complex. Greeting the visitors, Kim Dong-geun, the chairman of the committee, said, “About three years have passed since the full-scale development of the Complex. Although the development of the GIC is not finished, the business operations at the complex are generally stable.” On behalf of the visitors, Congressman Choi Jae-cheon said, “Whenever I visit the complex, I am deeply impressed by its continuous and remarkable development. It is truly remarkable that South and North Korea are working together in pursuit of common goals despite differences in cultural, economic and political systems.” [Kaesong]
The North Korean Glossary of Economic Terms
A glossary of terms on capitalist economics published in North Korea North Korea has published a dictionary of capitalist terminology to help its people grasp basic concepts like "principal", "interest", "insurance", "income", "labor force" and "rent." North Korea compiled 1,000 of the terms into a dictionary in June last year. Copies of the 220-page work were mostly given to economic officials or elite members of the regime. Former unification minister Chung Dong-young said while in office that he was embarrassed when North Korean people didn't understand what interest is. The dictionary defines "interest" as "extra money people receive if they have lent a sum of money."
National Exhibition of Consumer Goods Opens
Pyongyang, August 23 (KCNA) -- A national exhibition of consumer goods opened here on Thursday. On display there are at least 45,000 products of different kinds such as fabrics, garments, daily necessities, foodstuff and furniture. They are divided into the wings for daily necessities produced by the centrally-controlled light industry, local industry, ministries and national institutions and August 3 mass consumption goods made by different provinces. Also on display are more than 800 designs of daily necessities of different kinds created by industrial fine artists and designers of several art studios including the Mansudae Art Studio and amateur painters and designers. There will take place during the exhibition an essential foodstuff fair, an exhibition of designs of daily necessities and fairs and exhibitions of various fields, a workshop, the dissemination of new technology and other events.
Timely Book on NK Economic Sanctions
By Lee Hwan-hee Staff Reporter
A timely new book about economic sanctions against North Korea has just been published by the McFarland & Company in the U.S. The book, titled "Economic Sanctions Against a Nuclear North Korea," is edited by Chang Se-moon, a columnist for The Korea Times and a professor of economics at the University of South Alabama, and Kim Suk-hi, the editor of the North Korean Review and a professor of international finance at the University of Detroit Mercy.
The first two chapters by Kim and Chang, respectively, provide background information on the book's topic, as they examine the history and ideology of North Korea, the nation's history of nuclear weapons development, and a chronology of U.S. economic sanctions against North Korea since 1950. Chapter 3 by Chang examines the history of U.S. economic sanctions against Cuba, as a point of comparison. [Sanctions]
Record natural gas find in Burma
August 23, 2007 Three natural gas fields in Burma, in which Daewoo International Corp. has a 60-percent stake, hold as much as 219.2 billion cubic meters (7.7 trillion cubic feet) of exploitable gas, the Seoul-based trading company said. It is the biggest gas reserve that local companies have ever discovered. The amount is equal to Korea's gas consumption for about seven years. Daewoo International said it is now in talks with the Burmese government on how and to whom to sell the gas produced there. The Korean government wants the gas to be liquefied and delivered by ship to the country, which imports most of its oil and gas. The state-run Korea Gas Corp. has a 10-percent stake in the fields. The remaining 30-percent stake is held by two Indian companies ? Oil & Natural Gas and state-owned Gail India Ltd.
"Daewoo International is already talking with China, a potential purchaser, about gas prices from the Burma fields," said Jung Seok, a Ministry of Commerce, Industry and Energy official. "
Potential investors visit the GIC
(Gaeseong Industrial Complex) Name : letter Date : 2007- 08- 17 On July 26, about 100 businesspeople who are interested in investing at the GIC visited the complex. Visitors included such famous Korean businessman Im Hyeong-guk, the group head of Samsung Electronics.
The visitors crossed the Military Demarcation Line at 10:00 a.m. and were briefed about the complex at the auditorium of the Gaeseong Industrial District Management Committee. Kim Dong-geun, the committee chairman said, “In the second half of last year, the GIC faced many difficulties in promoting the development project due to the North Korea’s nuclear experiment. However, we could move ahead amidst the difficulties and lay the foundation for the success of the first-phase development of the complex.” [Kaesong]
Effects of Global Credit Crunch on Korean Economy
A global credit crunch in the aftermath of the subprime mortgage debacle originated from America might work in favor of the Korean economy, raising the won-dollar exchange rate and benefiting exporters in the short term. But if the U.S. and global businesses slow as a result, exports could dwindle and export-led economies like Korea's could suffer. Shin Yong-sang, a research fellow at the Korea Institute of Finance, said, "If the world economy slows down due to the growing global credit crunch and the Chinese economy is affected by this trend, the Korean economy will be hit hard given that it depends heavily on direct exports to the U.S. and roundabout exports through China." If the global credit crisis is not resolved quickly, the entire Korean economy, including real estate, finance and trade, may stagnate.
Korea finds a new way to exploit expertise
By Anna Fifield in Seoul Published: August 16 2007 09:10 | Last updated: August 16 2007 09:10 Doosan Infracore's $4.9bn takeover of Bobcat of the US, announced last week, is a landmark deal because it is the largest acquisition of a foreign target in Korean corporate history. But it is significant for a second reason. Unusually, Doosan said it would hold on to the management teams at Bobcat and the other two units it was buying from Ingersoll-Rand, the US conglomerate.
South Korea may discuss free trade deal with North in summit
South Korea is considering discussing a potential free trade agreement (FTA) with North Korea during the second summit of the leaders of the two Koreas late this month, the South's trade chief said Thursday. "I'm aware that a possible free trade deal between South and North Korea is under consideration as one of the agenda items for the summit," Trade Minister Kim Jong-hoon said in a luncheon with journalists in Seoul. [KR_summit07]
Korean market in record panic
Asia's markets and currencies all head lower August 17, 2007 The red line says it all for a Korea Exchange employee as her monitor's display heads south during the Kospi's nose dive yesterday in Seoul. The Kospi shed a record 125.91 points to end at 1,691.98. By Kim Hyung-soo Deepening panic over America's subprime mortgage woes spread on the local stock market yesterday sending the main index to its biggest one-day point drop in history. The Korean currency also fell to five-month lows against the dollar and the yen. Government officials tried to calm the market by assuring investors that subprime loan losses would have little effect on Korea and promising measures to pump money into the market, while warning against the potential fallout from yen-based loans. Similar assurances have done nothing to prevent sell-offs in recent days, and yesterday was no exception.
North Korean economy posted 2006 downturn
August 17, 2007 North Korea's economy shrank for the first time in eight years last year as agricultural production declined due to natural disasters and sluggish infrastructure development, according to estimates by South Korea's central bank. [Sanctions]
NK Economy Shrinks 1.1% in 2006
By Na Jeong-ju Staff Reporter
North Korea's economy posted negative growth in 2006 for the first time in eight years on decreased production of agricultural and fisheries goods, the Bank of Korea (BOK) said Thursday.
In its estimate for the North's economic growth, the central bank said the North's real gross domestic product (GDP) shrank 1.1 percent in 2006 from a year ago, a turnaround from a 3.8 percent expansion in 2005. Until 2006, the North's GDP had grown for seven years in a row since a 6.2 percent rise in 1999.
Samsung Chairman Likely to Accompany Roh on Summit
By Kim Yoo-chul Staff Reporter Samsung Group Chairman Lee Kun-hee is likely to accompany President Roh Moo-hyun for inter-Korean summit talks slated for Aug. 28-30 in Pyongyang. ``We don't rule out the possibility of Chairman Lee's North Korea trip,`` said a Samsung official, who asked not to be identified. The official, however, added nothing has been confirmed yet. The speculation has come as nearly 20 corporate leaders are expected to accompany Roh for the second inter-Korean summit, up from 11 seven years ago.
North Korea's economy said weaker than it was 18 years ago
Reuters, The Associated Press Published: August 16, 2007
SEOUL: North Korea's destitute economy sank further last year and is weaker than it was about 18 years ago, with one analyst warning on Thursday that if the Communist state did not change course, it would be trapped in poverty. Adding to its grim outlook, Pyongayng announced this week it has had severe flooding, damaging a harvest that even in the best years is not enough to feed its population. South Korea's central bank cited international sanctions after the North's first nuclear test last year, along with heavy the flooding, for the deepening economic troubles. "It is presumed that difficulties persisted throughout North Korea's economy in 2006 as its international ties worsened due to the nuclear issue and as its energy shortage was manifested," the Bank of Korea said in a report. It estimated that its reclusive neighbor's gross domestic product fell by 1.1 percent in 2006, ending seven years of growth. [Victim]
North Korea’s External Economic Relations
Stephan Haggard and Marcus Noland
Abstract North Korea’s international transactions have grown since the 1990s famine period. Illicit transactions appear to account for a declining share of trade. Direct investment is rising, but the county remains significantly dependent on aid to finance imports. Interdependence with South Korea and China is rising, but the nature of integration with these two partners is very different: China’s interaction with North Korea appears to be increasingly on market-oriented terms, while South Korea’s involvement has a growing noncommercial or aid component. These patterns have implications for North Korea’s development, the effectiveness of UN sanctions, and its bargaining behavior in nuclear negotiations.
North Korea Economy Shrinks for First Time in 8 Years
(Update1) By Heejin Koo Aug. 16 (Bloomberg) -- North Korea's economy contracted in 2006 for the first time in eight years, as the communist country agreed to begin dismantling its nuclear weapons program this year in return for energy assistance. The economy shrank 1.1 percent last year because of energy shortages and bad weather after expanding 3.8 percent in 2005, South Korea's central bank said in a report released in Seoul today. This is the first time the economy has shrunk since 1998. ``Adverse weather conditions caused a decline in agricultural and fisheries production,'' the Bank of Korea said in an e-mailed statement. ``The nuclear issue also led to worsened international relations and energy shortages and appears to have resulted in an overall worsening of its economy.'' North Korea agreed on Feb. 13 with the U.S., South Korea, Russia, China and Japan to close its nuclear reactor, which produces weapons-grade plutonium, in return for energy assistance. The communist country was hit last year by what its state-run media called the worst flood in history, which left as many as 54,700 North Koreans dead or missing. The country suffered more floods this year, with ``hundreds of persons dead or missing,'' the official Korea Central News Agency said earlier this week. Rains swept away more than 30,000 houses, displaced 63,300 families and cut off roads and railways in the capital, Pyongyang, and other parts of the country. Economic Mismanagement Natural disasters and economic mismanagement have left North Korea dependent on overseas aid to help feed its population of 23 million people. The communist country appealed to the United Nations for assistance after the latest floods. [Victim]
Gross Domestic Product of North Korea in 2006
Bank of Korea media release
North Korea's real annual GDP decreased 1.1% in 2006, turning negative after seven consecutive years of positive growth. This was mainly attributable to decreased production in the agriculture, forestry & fisheries, and construction sectors. North Korea's general economy faced difficult circumstances in 2006 due to the deterioration of its international relationships resulting from the nuclear weapons issue and to its lack of resources. [Victim]
The New Dramas of Korean Businesses
The vigorous efforts of businessmen can be highly dramatic. The late Hyundai founder Chung Ju-yung famously drove 500 heads of cattle to North Korea, and the former Daewoo Group chairman Kim Woo-choong traveled around the world, claiming in his book, "Every Street Is Paved with Gold." Their stories are more dramatic than anything on TV. But the dramas of Korean businessmen went flat. Maybe because of the devastating aftereffects of the financial crisis, businesspeople turned their backs on adventure and challenge. They avoided risk and busily deposited their money in the bank as soon as they earned it. It is difficult to be impressed by that. But lately, there have been some more dramatic developments. Doosan Group recently announced its takeover of an American enterprise -- three business divisions of Ingersoll Rand, to be precise -- to the tune of W4.5 trillion (US$1=W932), the largest of its kind by a Korean company. Eugene Group, a remicon manufacturer, has expanded its business to finance, logistics and the lottery through takeovers. It is also planning to start construction and insurance businesses. [Globalisation] [M&A]
Roh Sees NK's Economic Boom
By Kim Yon-se Staff Reporter With two weeks to go before a summit with North Korean leader Kim Jong-il, President Roh Moo-hyun said Wednesday that North Korea will have a chance to see its economy grow at a faster pace. In his nationally televised address at a ceremony to mark the 62nd Liberation Day, Roh wished for the era of a peace regime on the Korean Peninsula and better economic conditions in the North. ``When the armistice regime is transformed into a peace regime and when the South and North join hands to bring in a new economic era, the (Korean) Peninsula will certainly become the hub of the Northeast Asian economy,'' he said. The South will energetically expand into the Eurasian continent and place itself on the map as the hub of trade in logistics, financial services and business, he said. ``And the North will enjoy an opportunity to achieve epoch-making economic development.'' To attain the goal of a simultaneous boom, Roh emphasized that the summit slated for Aug. 28-30 in Pyongyang should be a stepping stone in which the two Koreas will confirm their determination to fulfill previous agreements.
Koreas Need Give-Take Economic Relations
[pyongyang] Chang Se-moon By Chang Se-moon Korea Times Columnist
The historic first inter-Korean summit between the then President Kim Dae-jung and North Korean leader Kim Jong-il was held in June 2000. At the end of the summit, the two leaders inked the North-South Joint Declaration, which eventually led to several exchanges of separated family members, joint economic development projects, and numerous exchanges and cooperation in various fields. The upcoming second inter-Korean summit between President Roh Moo-hyun and North Korean leader Kim Jong-il is a political game that requires skillful negotiations on both sides, with the U.S., China, and Japan playing the role of more than by-standers. If this assessment is accurate, the entire approach toward negotiating with North Korean leaders has to be restructured toward a more give-and-take attitude. There are two related issues that are the logical outcome of this new approach. To be specific, the new package of incentives considered for North Korea should be substantive, not symbolic. Up to this point, all concessions made to North Korea, which include the 1999 easing of sanctions by President Clinton, were symbolic, not substantive. Substantive concessions should include the MFN status on North Korea's exports to the U.S., removal of North Korea from the list of countries supporting international terrorism, easing of financial tightening, and a large amount of economic assistance.
New Cooperation Model
Summit to Test Roh's Idea of Inter-Korean Economic Community
President Roh Moo-hyun has floated his idea of an ``inter-Korean economic community'' to bring mutual prosperity to the two Koreas. Roh apparently plans to put top priority on economic cooperation during his Aug. 28-30 summit with North Korean leader Kim Jong-il. The idea is drawing positive public response as Roh intends to open a new economic era on the Korean Peninsula based on mutual trust and interaction.
DPRK Trade Capacity Project
The integration into the international economy is one of the ambitious goals of economic changes in the last years in the Democratic People’s Republic of Korea (DPRK). As a capacity building project for this endeavour, the Trade Capacity Project of Hanns Seidel Foundation (Munich, Germany) and Eukica (Brussels, Belgium) with the Pyongyang International Information Centre for new Technology and Economy (PIINTEC) has been working since March 2006
The Kaesong North-South Korean Industrial Complex
By Dick K. Nanto and Mark E. Manyin August 14th, 2007
Dick K. Nanto, Specialist in Industry and Trade in the Foreign Affairs, Defense, and Trade Division of the Congressional Research Service, and Mark E. Manyin, Analyst in Asian Affairs in the Foreign Affairs, Defense, and Trade Division of the Congressional Research Service, write, "The United States currently has a mixed policy with respect to the KIC. Since South Korea is a close ally of the United States, Washington has been supportive of efforts by South Korea to engage the North in inter-Korean projects that benefit South Korea. On the other hand, the United States has been firm in predicating any economic or other concessions on actions by the DPRK to curtail or eliminate its nuclear program." [Kaesong] [Sanctions]
Think Tanks Slams Solutions to N.Korea's Energy Crisis
Power line towers to supply electricity to North Korea stand in a row in Paju, Gyeonggi Province, near the inter-Korean Gyeongui railway line connecting Seoul and Shinuiju in the DMZ. The construction of light-water reactors or coal power plants or the direct provision of electricity will not be enough to help North Korea relieve its serious energy shortage, a state-run think tanks says. The Korea Energy Economics Institute (KEEI) said such proposals betray a lack of understanding of the reality in North Korea and are inappropriate to solve the energy crisis across the border. The institute offered the assessment in a report on energy aid to the North published late last year. The institute did not even analyze the effectiveness of a 2-million kw light-water reactor the North is demanding since any possible halt in the operation of the reactor caused by a temporary accident or maintenance could cripple the electricity grid and industries of North Korea. The KEEI also called the construction of power plants operated by coal, petroleum or gas “unrealistic.” Building a power plant operated on soft coal costs an enormous amount of money, since it requires the construction of facilities for the import and storage of the fuel resource, while building a power plant run by stone coal is the most expensive investment per kilowatt, it said. In the case of petroleum or gas power plants, the fuel resources are so expensive that even South Korea uses them only as a supplementary energy generator. According to the KEEI, the provision of electricity of 2 million kw across the border is not economically feasible, since it would cost W1.10 trillion (US$1=W926), and it is questionable whether the North will accept the measure, since that means relying on the South for half of its electricity consumption. The institute said upgrading the North’s current obsolete power facilities and reducing electricity losses in the process of supply there would be a better way to help North Korea resolve the energy crisis.
Roh aims to create unified Korean economic zone
President Roh Moo-hyun said Tuesday that the formation of a unified economic zone will be the eventual goal of his summit with North Korean leader Kim Jong-il slated for Aug. 28-30 in Pyongyang. "Preparations for a unified economic zone, as well as the formation of a common economic bloc, on the Korean Peninsula will be the most important factors for inter-Korean peace," Roh was quoted by his spokesman Cheon Ho-seon as saying at a Cabinet meeting. [KR_summit07]
3rd Pyongyang Autumn International Trade Fair 24 - 27 September 2007
The European Business Association (EBA) in Pyongyang issues this bulletin in order to inform you about special conditions for participation by European businesses in the upcoming international trade fair in Pyongyang.
EBA Pyongyang and DPRK Chamber of Commerce will co-organise a special collective booth to host European businesses.
European companies are invited to make use of this opportunity to introduce their business to the North Korean market.
European companies interested in taking advantage of this opportunity are invited to visit the EBA website www.eba-pyongyang.org – please click through to membership for the statutes.
Business Leaders to Accompany Roh to Pyongyang
Many business figures are expected to accompany President Roh Moo-hyun to North Korea for the second inter-Korean summit from Aug. 28- 30. The government has yet to decide on the size of Roh's entourage, but business insiders think that some dozen figures -- mainly the heads of business organizations and corporations doing business with North Korea -- will be among them. It is unclear whether the heads of the top four congliomerates will be included. They accompanied former president Kim Dae-jung when he visited Pyongyang for the historic first inter-Korean summit in 2000. [KR_summit07]
Seoul to Unveil Investment Plan in NK Infrastructure
By Ryu Jin Staff Reporter South Korea is expected to propose a large-scale investment plan in social overhead capital (SOC) in North Korea in the inter-Korean summit late this month to help the impoverished state revive its economy, according to officials on Thursday. Officials in Seoul said that the package proposal will likely include the provision of electricity, renovation of the Pyongyang-Gaeseong highway, improvement of facilities in Nampo port and establishment of a fertilizer factory. [KR_summit07]
Ex-Prime Minister Predicts Large-Scale Economic Cooperation Between Koreas
Former Prime Minister Lee Hae-chan By Kim Sue-young Staff Reporter Presidential hopeful Lee Hae-chan of the pro-government Uri Party said Thursday that the two Koreas may agree on large-scale economic cooperation during the second inter-Korean summit slated for Aug. 28-30 in Pyongyang. Lee, 55, who served as prime minister between 2004 and 2006, made a four-day trip to Pyongyang in March to discuss matters of mutual concern. ``The North wants to establish industrial complexes in its port cities, including Nampo and Wonsan, as well as develop tourism in its scenic mountains,'' Lee said. ``There is a high possibility that the two sides will agree on economic cooperation that can boost the North's economy.'' [KR_summit07]
Development kicks off in DPRK’s Shinuiju Special Economic Zone
Posted Date : 2007-08-07 (NK Brief No. 07-8-7-1) According to a recent report from a North Korean insider, the border city of Sinuiju, in North Pyongan Province, was redesignated as a ‘Special Economic Zone’ in the first part of this year, and accordingly, full-fledged city development has been underway since last June, including the relocation to the city of 3000 families from Pyongyang. [SEZ]
Korea's Service Account Deficit 3rd Largest in World
By Lee Hyo-sik Staff Reporter A widening deficit in the nation's services account is sounding the alarm in the education and tourism industries as the shortfall became the world's third largest last year on the back of a strong won and a record number of outbound travelers. According to the National Statistical Office (NSO) and the Organization for Economic Cooperation and Development (OECD) Monday, Korea's shortfall in the services account stood at $18.7 billion in 2006, up from $13.6 billion a year earlier. The account covers flows of travel, transport and other services items in and out of the country. Last year's figure is the third largest among the world's major economies after Germany and Japan. Germany, which topped the list as Europe's largest economy recorded a $48.7 billion shortfall in its services account, followed by Japan with $20.1 billion. In contrast, the United States registered the largest service account surplus last year at $79.7 billion as its financial and other business-related services sectors attracted record amounts of investment from overseas. Britain came in second with a $53.7 billion, followed by Spain, one of the world's most popular tourism destinations. [IM] [Services]
North Koreans to see wage increase at Gaeseong
Inter-Korean industrial complex leaders reach agreement in wage negotiations
The wages of North Korean workers employed by South Korean companies at Gaeseong(Kaesong) Industrial Complex in North Korea will be raised by 5 percent, the first such increase since the complex began operations in late 2004.
South, North agree on pay raise for Kaesong workers
August 04, 2007 South and North Korea agreed on a 5 percent pay raise for North Korean workers employed by South Korean companies in an industrial complex just north of the border, officials said yesterday. Last month, the North notified South Korea that North Korean workers will refuse to work extra hours or on weekends and holidays starting from August unless they get a 15 percent raise in their basic wages. In a new deal, North Korean workers working in the Kaesong industrial complex are to earn about $60.37 in basic pay, including insurance, which accounts for 5 percent of the total. This is the first time that North Korean workers have received a pay raise since the complex began operations in late 2004, in spite of such demands being made several times.
Introduction on "Special Credit Guarantee Program" for the tenant companies in the GIC
[Kaesong]
N.Korea Starts Clearing Special Economic Zone
North Korea early this year declared Shinuiju, a border town in North Pyongan Province, a special economic zone, North Korean officials said. Some 3,000 households in Pyongyang are to be relocated to Shinuiju under an urban development project launched there in June. During a recent visit to China, a North Korean official told an official from the Chinese border city of Dandong the North will relocate Pyongyang citizens to the Shinuiju Special Economic Zone since they are "ideologically prepared." Some will be assigned as workers to an industrial complex, who will be joined by officials from the Ministry of Public Security and the State Security Department, and police officers and their families. A Dandong official said, "I understand that housing prices in the Shinuiju area have skyrocketed due to rumors that Pyongyang citizens will move in." [SEZ] [Economic reform]
Pyeonghwa Motors to Manufacture Cars in North Korea
Pyeonghwa Motors, the first Korean automaker to establish a joint venture car company in North Korea, will be manufacturing trucks in the communist country starting this year. Pyeonghwa Motors plans to make trucks based on the demands of North Korean consumers. Farms, government organizations and factories in North Korea are reportedly in favor of vehicles with larger cargo space. Pyeonghwa Motors currently manufactures six types of cars including SUVs, pick-up trucks, sedans and mini-buses. Last year, the carmaker sold about 700 vehicles in the communist country. Sales are further expected to rise to a thousand units a year when the trucks hit the market. Arirang News
Korea's GDP Ranking Falls to 13th
By Yoon Ja-young Staff Reporter South Korea slipped in the global gross domestic product (GDP) rankings last year. It is now the 13th largest economy after Russia and India as of 2006, falling one notch from a year earlier.

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JULY 2007

North seeks pay raise for its Kaesong workers
July 28, 2007 North Korea has demanded a 15 percent pay raise for its workers at an inter-Korean industrial complex just north of the border, sources said yesterday. In a bid to press for their demand, the North notified South Korea that its North Korean workers will refuse to work extra hours or on weekends and holidays starting in August. In the Kaesong industrial complex, North Korean workers earn about $57 a month, including a $7 insurance payment, to work for the South Korean companies. Their basic wages would increase to $66 if the demand is accepted, according to officials.
No pay raises have been given since the complex began operations in late 2004, even though such demands have been made several times.
Samsung, Hyundai Motor, LG Most Powerful Korean Brands
By Cho Jin-seo Staff Reporter Samsung, Hyundai Motor and LG are the most powerful Korean brands, while Coca Cola retained the No. 1 position globally for the seventh consecutive year, according to a list of top 100 brands surveyed by Interbrand. Samsung Electronics led the Korean firms at 21st place with an estimated brand value of $16.8 billion. Hyundai Motor climbed by three notches from last year to 72nd place, and LG Electronics found itself at 97th place. Samsung, the largest company in South Korea by revenue and market capitalization, gained 4 percent in its brand value from last year. It was the third highest Asian company on the list after Toyota, 6th, and Honda, 19th. But the Interbrand researchers said that the outlook for the electronics giant may not be that bright.
National ICM Training Center Brisk in DPRK
Pyongyang, July 24 (KCNA) -- The National Integrated Coastal Management (ICM) Training Center is in full operation in the Democratic People's Republic of Korea. It is an education and research center to train the talents needed in implementing the national ICM projects in the DPRK and the East Asian region.
Carmakers Sandwiched Between Neighbors
By Ryu Jin Staff Reporter Concerns have been growing that South Korea is losing its momentum in the automobile industry, as it is ``sandwiched'' between its powerful neighbors Japan and China in recent years. Experts as well as industry sources say that the automobile industry, one of the major industries that have led the country's economic growth in the past decades, now seems to be standing at a crossroads due to the unfavorable business environment at home and abroad. [China competition]
The Investment related Environment of the GIC(Gaeseong Industrial Complex)
Date : 2007- 07- 13 1. Location The GIC is located 37.5 miles from Seoul and 31.25 miles from Incheon. So, it is possible to reduce the distribution costs from and to Seoul metropolitan area and utilize the area as a huge consumption market. In addition, it is possible to utilize Incheon International Airport and Incheon Harbor if the transportation on the road and railway from Seoul to Shinuiju will be provided in a regular manner. [Kaesong]
Russia, N. Korea to open JV to link railroads
18:50 | 19/ 07/ 2007 MOSCOW, July 19 (RIA Novosti) - The Russian technology watchdog said Thursday that Russia and North Korea will set up a joint venture to reconstruct a rail link between the Russian border town of Khasan and North Korea's Najin. Russian Railways has been negotiating the reconstruction of the eastern section of the Trans-Korean Railroad and its link to the Trans-Siberian Railroad for the past few years. The project, which Russian Railroads estimates will cost at least $2 billion, was first raised in August 2002, when President Vladimir Putin and North Korean leader Kim Jong-il discussed the idea of creating a non-stop rail line from Far Eastern ports to Western Europe.
Some Russian oil companies are interested in investing in the development of the railway network, given that the port of Najin houses a large inactive oil refinery with a capacity of up to 6 million metric tons a year (120,000 bbl/d). By expert estimates, up to 200,000 heavy containers could be delivered from South Korea to Western Europe each year if the project is implemented. The journey would take 10-12 days and would be the cheapest means of transporting freight from South Korea. [Railways]
Orascom pays $115m for a stake in N Korea's Sangwon
By Tom Griggs and Stephen Fidler in London Published: July 16 2007 03:00 | Last updated: July 16 2007 03:00 Orascom Construction Industries, the Egyptian cement producer and construction group, will today announce a $115m investment in a cement plant in North Korea. The deal with the state-owned Pyongyang Myongdang Trading Corporation will see OCI take a 50 per cent stake in Sangwon Cement. Sangwon owns and operates the closest cement plant to Pyongyang, the capital of North Korea.
The increased capital will be used to modernise, rehabilitate and upgrade the plant capacity to 3m tonnes a year.
OCI's investment will also be used to invest in ready-mix concrete, distribution, related mining operations and a dedicated hydro-electric power station near the plant.
Nassef Sawiris, OCI chief executive, said he saw significant growth potential in the country. "The deal has been structured with a Western-style governance agreement," he said. "North Korea is very keen to develop the infrastructure in the country and that would significantly drive up demand for cement." He added the group was discussing work on an industrial zone near the border with China and that, as part of the deal, OCI would be able to use North Korean labour on some projects in the Middle East. [FDI] [IJV]
S&P rating unmoved by Yongbyon closure
July 17, 2007 South Korea's credit rating is unlikely to be changed after North Korea closed its Yongbyon nuclear reactor, Standard & Poor's said.
DPRK and Egypt to Cooperate in Field of Cement
Pyongyang, July 16 (KCNA) -- The Pyongyang Myongdang Trading Corporation (PMTC) of the DPRK and the Orascom Construction Industries of Egypt (OCI) discussed the issue of collaboration and investment in the field of cement before making public a joint communique in Pyongyang on July 13. According to the joint communique, both sides discussed the above-said issue. Both sides signed Joint Venture Agreement for the purpose of establishing partnership to modernize, renovate, upgrade and operate the Sangwon Cement Complex. The Orascom Construction Industries expressed its willingness to further increase its investment in the field of cement and to promote cooperation in other economic areas on the basis of spirit of South-South Cooperation, principle of mutual benefits and its conviction of the solid foundation of economic development and the rich potentialities of the Democratic People's Republic of Korea. Orascom side affirmed that it, in the future, will boost the annual productive capacity of the Sangwon Cement Complex as well as its intention to make investment in Rason Economic and Trade Zone, mineral production, power plant, port and etc. [FDI] [IJV]
Gaesong & Industrial Park
By Tong Kim
Recently I visited Gaeseong with a South Korean humanitarian group that provides anthracite for fuel to underprivileged people in both Koreas. The group carries out a voluntary campaign in the name of ``sharing love and anthracite.’’ It so far has provided the poor with over ten million pieces of processed anthracite.
The buildings were impressively well maintained. On display inside the buildings were neatly arranged historical artifacts, which help visitors see what life was like in Korea a millennium ago. With other cultural assets, like the royal tombs and an old Buddhist temple, I thought Gaeseong would present itself as an excellent tourist attraction.
Perhaps the future of the expanding industrial park depends very much on the exportability of its products to overseas markets including the United States[Kaesong]
Speculation on Kim Jong-il's visit to Kaesong grows
Many high-ranking NK officials and aides present amid North's ban of South's visit
A group of ranking North Korean officials are reportedly visiting the industrial complex in the border city of Kaesong, or Gaeseong, leading some observers to speculate that Kim Jong-il, the leader of the communist country, may also eventually join. On July 7, Choe Seung-chul, a high ranking North Korean official involved in inter-Korean relations, toured the complex.
NK requests S. Korea to put off all visits to Kaesong complex this week
North Korea on Monday called for the South Korean government to put off all South Korean visits to the Kaesong industrial complex for this week, South Korean officials said. The request came amid rumors that North Korean leader Kim Jong-il might soon visit the inter-Korean complex in the North Korean border town of Kaesong where South Korean companies produce goods using low-cost, skilled North Korean workers.
100 S. Koreans Cancel Visit to Gaeseong Complex
Some 100 South Korean officials and reporters Tuesdsay canceled their scheduled visit to the industrial complex in the North's border town as North Korea requested Monday that the South postpone the visits there this week, the Unification Ministry said. "Without specifying reasons, the North on Monday requested the postponement of this week's visit to the Gaeseong industrial complex, but company executives and workers continue to commute to the complex freely as usual," said Kim Nam-sik, spokesman for the Unification Ministry. The ban of outsiders from visiting the complex in Gaeseong has been made amid reports that North Korean leader Kim Jong-il might soon make a rare visit to the industrial complex. The complex is being operated as usual, the Unification Ministry said. [Kaesong]
Koreas Agree to Cooperate in Light Industry
By Yoon Won-sup Staff Reporter The two Koreas agreed Saturday on light industry cooperation, in which the South offers raw materials to the North in return for natural resources. They settled unanimously on the price of raw materials during the second working-level meeting in Gaeseong, North Korea, Thursday. The light industry cooperation will begin late this month. Out of 94 items of raw materials, 62 items such as clothing, shoes and soaps, equivalent to $80 million, were agreed. The two sides will discuss again for the further 32 items.
KEY STATISTICS FOR GAESEONG INDUSTRIAL COMPLEX
(As of May 30, 2007)
Korea second in fakes to Japan
July 05, 2007 After China, Korea is the second-biggest exporter of counterfeit goods to Japan, the Korea Trade-Investment Promotion Agency reported yesterday. Almost 40 percent of the 380,000 counterfeit imports into Japan were manufactured in Korea, according to the report. Korea accounted for 8,700 attempts, or 44.5 percent of the total cases detected by the Japanese customs authorities, while 9,400 cases came from China. Since 2002, the number of cases from Korea has increased from 5,334 to 8,720 last year. However, the number of items has been on a steady decline since 2005, the report showed. [Counterfeiting]
Kim Yun-kyu Resumes N. Korean Business
By Yoon Won-sup Staff Reporter Kim Yun-kyu, who stepped down as vice president of Hyundai Asan, South Korea's operator of inter-Korean business and tourism, due to illegal use of corporate funds in October 2005, is resuming work with North Korea. Kim set up his own company for North Korean business last year, dubbed Acheon Global Corp., which imported 531 kilograms of caviar from North Korea via the East Coast train on June 21, and entered the Gaeseong Industrial Complex, according to the Unification Ministry. The importing of the caviar is Acheon's first business transaction with North Korea, which was finalized by Kim's aide Yuk Jae-hee, vice president of Acheon and former executive of Hyundai, during Yuk's visit to Mt. Geumgang in North Korea June 18 to 20.
Fish Breeding in Paddy Fields Encouraged
Pyongyang, July 2 (KCNA) -- Fish breeding in paddy fields is being encouraged in co-op farms of the Democratic People's Republic of Korea. Various farms in Pyongyang have recently released more than 500,000 fries in paddies. The farms are taking necessary measures in conformity with technical requirements in fish culture. Co-op farms in Taedong County, South Phyongan Province are dynamically culturing fish in paddy fields in close connection with the Fish Breeding Guidance Bureau. They are making puddles and fishways in the selected paddies to breed various species of fish including carps and crucian.
Five years into N. Korea's market-friendly economy
[Analysis] On July 1, North Korea marks the fifth anniversary of its effort to develop a market economy. Five years ago, North Korea introduced a set of measures, dubbed the ''July 1 Economic Management Improvement Measures,'' mainly by readjusting wages and consumer prices, largely based on the market system, while promoting its incentive system. Overall, some observers have estimated that such measures have helped North Koreans to increase their individual incomes by converting their unofficial, underground markets into official ones. However, this has resulted in a number of side effects, as the pace of normalization in North Korean plants has been slow, despite the growth of its overly developing retail markets. Another unwelcome issue for the North Korean authorities is their growing reliance on China.
With North Korea failing to meet the demand for goods, Chinese consumer goods account for 70 to 80 percent of the North's market. That means North Korea is unlikely to set up a more normalized national economy, with production and consumption in harmony, without a massive influx of foreign capital raised through the normalization of diplomatic ties with the United States and Japan. [Economic reforms] [NK China relations] [Inequality] [Class formation]

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JUNE 2007

2006 Summaries of Research Reports
Korea Institute for International Economic Policy
N. Korea begins collecting real estate usage fees
PYONGYANG, June 27 KYODO North Korea has begun collecting usage fees on real estate in some areas of the country, and is working on the details for implementing the system throughout the nation, senior officials of a North Korean think tank said Wednesday. Yun Jae Chang and O Tae Ho, both professors at the Academy of Social Sciences, also indicated in an interview with Kyodo News that the banking dispute with the United States that had stalled the six-way process for denuclearization also impacted North Korea's trade. [Economic reforms] [Financial sanctions]
The Entrepreneurs of North Korea
When I climbed Sangpaldam Pools (Eight Upper Pools) in Mt. Kumgang, so called after the eight ponds in the region, along the steep iron-railed stairs in the scorching sun, two North Korean women dozing in the shade of a tree raised their heads, sensing approaching people. They had little stalls selling bread, candy, apples and biscuits and ice boxes. The women knew what they should do. "Sir, we've ices and juice. We also have Mt. Baekdu ogalpi sap, from which you can get the spirit of Mt. Baekdu. To enjoy the good scenery, you have to feed yourselves first." [Economic reforms] [EWA]
DPRK LOOKING TO IMPROVE INDUSTRIAL PROPERTY RIGHTS
posted June 18, 2007 (NK Brief No. 07-6-18-1)
North Korea has shown interest recently in international discussions regarding trademark applications, design registration and other means of protecting industrial property rights.
DPRK RICE, CORN PRICES SKYROCKETED IN MAY
posted June 15, 2007 (NK Brief No. 07-6-15-1) According to the May 30 edition of “North Korea Today,” a newsletter published by the human rights group Good Friends, the cost of rice sold in markets in the North was gradually on the rise in May, and has skyrocketed recently.
DPRK MARKETS CLOSE FOR RICE PLANTING MOBILIZATION
posted June 7, 2007 (NK Brief No. 07-6-7-1) In order to meet the requirements of the ‘rice planting mobilization period’ beginning in early May, traditional North Korean markets have been shut down. According to an informed source contacted on May 30, this has struck a huge blow to those living in the cities. Authorities have not only shut down markets, but also cracked down on vendors setting up street stalls and selling out of baskets on the sides of the road. In line with the ‘battle’ to support agricultural communities, markets across North Korea are only open from 5:00 p.m. until sunset each day, meaning that traders can work, at best, three hours per day. Because North Korea shuts down markets each year during this mobilization period, many residents stock up on rice and corn in advance; however, there are still untold numbers that are having difficulty making ends meet during the one-month period. According to North Korean residents, because rations have been made available since April, no one really talks of relocation these days. Still, people are just surviving, and they only hope that the cost of rice and corn doesn’t rise. At the beginning of May, rice sold for 850 won, but has risen 50 won, while corn has remained at 300 won per kilogram. Since the beginning of March, North Korea has been in its ‘lean spring’ season. Many North Koreans live off of nothing more than leftovers and scraps from the end of May to the middle of June. Usually, as North Koreans enter March, they begin to exhaust grain supplies stored up throughout the year. As May arrives, may residents begin to tap resources such as kimchi and other food prepared for June, while most begin to harvest grasses and herbs from mountains and fields. As barley begins to grow from the middle of June, this lean season eases off. Those living inland suffer more hardships than those living in other regions during these times.
In recent times, as markets have become more commonplace, most North Koreans have not faced starvation. Previously, North Koreans believed that even though they faced starvation, economic embargos by the United States caused their hardship. These days, more and more North Koreans are coming to the realization that their own government is the culprit. [Sanctions]
IMPACT OF UN SANCTIONS ON DPRK DOMESTIC ECONOMY
posted October 26, 2006 (NK Brief No. 06-10-26-1) As the United Nations Security Council announced Resolution 1718 and levies sanctions against North Korea, Pyongyang is preparing for 'The Second Arduous March'. To this end, government- controlled media outlets in the North are strengthening calls for an 'arduous' and 'independent spirit'.
Now, if the second 'Arduous March' is to come, trade with China will be paramount. Last March, Jilin University North East Asian Research Institute Professor Shei Won Ji visited North Korea, and upon his return stated that, "Chinese products in North Korea's markets make up around 70 percent of the goods, DPRK products make up about 20 percent, and Japanese and Russian goods account for around 10 percent." In North Korean markets, goods from toothbrushes, toothpaste, soap, and other toiletries to welding rods, car tires, vinyl rap, etc. are all made in China. If the import of these types of goods were to be cut off, North Korea would face a serious crisis.
How China decides to interpret and enforce UN sanctions is a decidedly weighty issue. If trade between China and North Korea was blocked and limited to independent black-market and smuggling operations, North Korea would face serious shortages of necessary goods. In addition, recent news that China is stringing barbed wire along the border will have no small impact on smuggling across the Yalu River. With sanctions restricting legitimate cross border trade, a crackdown on illegal smuggling will further worsen the livelihoods of North Korean citizens. [Sanctions] [NK-China relations]
KEY STATISTICS FOR GAESEONG INDUSTRIAL COMPLEX
(As of Apr.30, 2007)
Korea Suffers in U.S.-China-Japan 'Currency Wars'
The Korean economy is in trouble due to strategies by the Unites States, China and Japan to keep their currencies weak. Ever sandwiched between the Great Powers, Korea is suffering since their battles strengthen the won and hurt its export-dependent economy.
Construction of Mushroom Production Centers Brisk under Way
Pyongyang, June 12 (KCNA) -- Mushroom production centers are being built in different parts of the Democratic People's Republic of Korea. Many mushroom farms with big production capacities have been constructed in Sinuiju City, Rason City and various other parts to start picking up mushrooms. The newly-built mushroom farm in Sinuiju City is equipped with all necessary facilities including ozonizer and autoclave. People in Chongjin City are building a unique mushroom farm with tunnel mushroom-growing ground and accessory buildings. The farm will turn out more mushrooms in a limited area with less materials and manpower compared with the existing ones. Also projects for renovating or building mushroom farms are being pushed ahead positively in many provinces, cities and counties including Sinpho City, Uiju County, Kosan County.
WIPO Delegation and Widow of Choe Hong Hui Here
Pyongyang, June 12 (KCNA) -- A delegation of the World Intellectual Property Organization (WIPO) led by Mpazi Sinjela, dean of the WIPO Worldwide Academy, arrived here today to participate in a national workshop on brand, industrial design and name of origin of product. Also arriving here today were widow of Choe Hong Hui, ex-president of the International Taekwon-Do Federation, and her party to participate in the events to commemorate the 5th anniversary of his death.
The North Korean Economy: Overview and Policy Analysis
By the Congressional Research Service
June 7th, 2007 Dick K. Nanto, Specialist in Industry and Trade Foreign Affairs, Defense at the Congressional Research Service, and Trade Division, and Emma Chanlett-Avery, Analyst in Asian Affairs Foreign Affairs, Defense, and Trade Division at the Congressional Research Service, write, “U.S.-led financial sanctions on North Korea have disrupted that country’s trade. In the six-party talks, economic assistance (including fuel oil) is a major bargaining chip. Economic policy options include increasing or easing economic sanctions, preventing shipments of illicit cargo, normalizing relations with Pyongyang, negotiating a trade agreement, allowing the DPRK to join international financial institutions, and removing the country from the terrorism list.” [Sanctions] [Toolkit]
Koreas hold talks on cooperation in light industry sector
South and North Korea on Thursday started a new round of working-level talks to discuss ways to cooperate in light industry and natural resource exploration, the Unification Ministry said. "The key agenda items are the list and prices of raw material items," Vice Unification Minister Shin Un-sang said in a press briefing. Later in the day, the ministry said the two sides would meet again on Friday to thrash out remaining differences. The two-day talks in the North Korean border city of Kaesong come about a week after the latest round of inter-Korean ministerial talks ended without tangible results.
The Inter-Korean Commercial Trade for the Past Four Months Increased by 43percent
Name : uni4101Date : 2007-05-10 May 10, 2007 The inter-Korean commercial trade from January to April 2007 increased by 43percent from the same period a year earlier, recording 346.99million dollars. Significant rise was found in the field of general trade centering on sand and marine products and taking in products from Gaeseong Industrial Complex such as footwear and clothes. On the other hand, non-commercial trade including public and private support toward North Korea decreased by 24 percent.
Study Reveals N.Korea’s Grim Economic Realities
While all North Korean children are in principle entitled to free education, parents are often called on to give financial support to schools under various pretexts. Parents’ economic power is considered in the process of selecting new students or recommending students for college entrance, a shift from the earlier emphasis on class and ideological loyalty. Another conspicuous change in North Korean education is the emergence of private tutoring: even active teachers work as private tutors. That emerges from a study by Rhee Kee-choon and Rha Jong-youn of the College of Human Ecology at Seoul National University. The two professors said the income level of parents is becoming an ever more decisive factor determining the quality of a child’s education in North Korea after the regime unveiled economic reform measures incorporating market economy principles on July 1, 2002. [Economic reforms]
North Korean Propaganda Festival May Signal Shift in Policy
By Bradley K. Martin
May 10 (Bloomberg) -- Since 2002, North Korea has invited visitors every few years to a festival featuring 60,000 dancers, gymnasts, acrobats and musicians, along with card-flippers who create vast pictorial mosaics covering one entire side of the 150,000-seat May Day stadium in the capital, Pyongyang. The previous performance, in 2005, included noisy and bloody tableaux of North Korean soldiers making mincemeat of enemy soldiers. Last week's Arirang production -- named for a famous Korean love song -- was different. Battlefield carnage was replaced with scenes of people seeking higher living standards by rebuilding factories and growing crops. While North Korea is hardly going pacifist seven months after testing an atomic device, the propaganda shift may signal a significant change in policy, according to expatriate businessmen living in the isolated country. Now that it is a nuclear power, North Korea appears to be directing more resources to improving an economy on its knees after decades of sanctions and isolation, they say. Korean officials ``are now confident they can defend their country,'' said Felix Abt, the Swiss president of PyongSu Pharma Joint Venture Co. Ltd., which recently started manufacturing painkillers and antibiotics in Pyongyang. ``Their next priority is economic development.'' [Economic reform]

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MAY 2007

U.S.-North Korea trade dips to lowest mark in over 15 years
U.S.-North Korea trade last year dipped to $3,000, the lowest mark since 1990 when the U.S.Commerce Department began keeping track of the amount, according to the latest figures, Yonhap News Agency reported. It was the first time for there to be only several thousand dollars worth of bilateral trade. At its peak in the year 2002, the trade totaled just short of $25 million.
Figures provided by the Commerce Department showed the U.S. exported $3,000 worth of books and newspapers to the North in 2006. There were no imports from the communist state that year. Tallies indicated wide fluctuations each year since 1990, when bilateral trade amounted to $32,000, all of which were U.S.exports.
KEY STATISTICS FOR GAESEONG INDUSTRIAL COMPLEX
(As of Mar.31, 2007)
N. Korea's premier sacked due to his capitalist move: newspaper
TOKYO, May 13 (Yonhap) -- North Korea fired its prime minister last week holding him responsible for making a suggestion that the reclusive communist country introduce an incentive-based capitalistic wage system, a Japanese newspaper said Sunday. North Korea replaced Premier Pak Pong-ju with Transport Minister Kim Yong-il in April in a sudden reshuffle. The North gave no reasons for the change. Citing unidentified diplomatic sources, Japan's Mainichi Shimbun newspaper reported that Pak came under attack from party officials in January after suggesting the introduction of an incentive-based wage system to spur labor productivity. The row apparently discouraged Pak to stay in his job, the paper said. Mainichi said Pak was already at odds with the military over the North's coal export policy. Pak banned coal exports to China, citing the shortage of fuel for households, but the military wanted coal exports to resume in an apparent bid to earn hard currency to boost the country's defense capability, it said. [Economic reforms]
Here come North Korean minerals
South Korea and North Korea held working-level talks to cooperate on light manufacturing and development of underground resources on May 2-4 in the Northern city of Kaesong (Gaeseong) During the talks, the two sides agreed to conduct a joint study on three mines in the North - Komdok (Geomdeok), Ryongyang (Yongyang) and Taehung (Daeheung) - from June 26 to July 6. This was in response to South Korea 's June 27 decision to provide 500 tons of polyester fiber to North Korea, essentially taking the first step to utilizing each other 's resources. The move came 22 months after the two Koreas agreed on the concept at their 10th meeting on economic cooperation in July 2005. North Korean mines are believed to hold about 360 varieties of minerals, according to the Korea Resources Corp. In particular, some 40 mineral resources, including coal, iron ore, zinc and magnesite, are estimated to be economically competitive. As of 2005, North Korea generated 24 percent of its total exports, or US$243.67 million, from mineral resources. Despite its reserves, North Korea's natural resources have barely been developed. Production at North Korean mines is believed to be between 50 to 20 percent of what it was in the 1980s due to a lack of electricity and fuels, aged production facilities and equipment, and difficulty in buying new equipment because of a shortage in foreign-currency reserves. The difficulty prompted North Korea to propose the United States to invest into a mine in Tanchon (Dancheon) in 1994, back when the two sides were negotiating the "agreed framework" on denuclearization. [FDI] [NK US policy]
Bohai Oil and North Korea
[Column] Yoo Gang-mun, Beijing Correspondent BEIJING-Follow along the east coast of China and you will see a sea enclosed by the Liaodong Peninsula from above and the Shandong Peninsula protruding up from below.
Nonetheless, the bay has become known as a "golden sea." Oil fields large and small were first discovered on the continental shelf there in 2002, exciting a China starved for oil. Recently a billion ton oil field was discovered; enough to power Korea for close to a decade. A recent Chinese government report estimates there is 20.5 billion tons of oil in Bohai Bay, enough for China to use for close to 80 years. The same continental shelf extends to the West Korea Bay, off the North Korean city of Nampo. China calls this area the North Yellow Sea Basin. For some time now experts have said it is highly likely there is oil buried there. The Energy Information Administration, a body under the United States Department of Energy, once estimated there is hydrocarbon buried in the area in the floor of the West Korea Bay, which is geographically linked to the Bohai Bay. Hydrocarbon is the chemical name for oil and gas. North Korea has reportedly discovered an oil field there. They say it explored the area in 1965 and is extracting 30 to 50 tons of crude a day from two offshore drills. If true, North Korea is a full-fledged oil producing nation. When late Hyundai group founder Chung Joo-young met North Korea's National Defence Commission chairman Kim Jong-il in 1998, Kim boasted that he could supply oil to South Korea with a pipeline coming from the North's oil field. However, the West Korea Bay oil field has never really been developed, because American economic sanctions have prevented the oil industry's big players from access. [Sanctions] [China NK relations]
Int'l Trade Fair to Open in Pyongyang
Pyongyang, May 7 (KCNA) -- The 10th Pyongyang Spring International Trade Fair will be held at the Three-Revolution Exhibition from May 14 to 17. Participating in it will be companies from the DPRK, China, Russia, Syria, the Netherlands, Germany, Bangladesh, Switzerland, Singapore, Australia, Italy, Indonesia, Pakistan, Poland and Taipei of China. Machine tools, electric and electronic equipment, vehicles, medicaments, daily necessities, foodstuffs and so forth are to be on display in the fair. [Opening]
NK Wants to Join IMF, World Bank
By Kim Yon-se Staff Reporter South Korea has expressed its willingness to back North Korea's move to join the International Monetary Fund (IMF) and the World Bank. At a news briefing in Seoul Sunday, five lawmakers from the Uri Party, who visited Pyongyang for four days from May 2, said the North is considering applying for membership of the Washington-based World Bank and the IMF. ``We've promised to help North Korea become a member of international organizations,'' said Rep. Kim Jong-yull who met North Korean leaders, including Kim Yong-nam, chairman of the Presidium of the Supreme People's Assembly. The United States and several developed countries have shown a lukewarm attitude over North Korea's entry into international organizations, including the Asian Development Bank (ADB). According to South Korean government officials, the U.S. _ a major shareholder in the IMF, World Bank and ADB _ has played a major role in rejecting Pyongyang's repeated applications for admission, demanding the disposal of nuclear facilities.
European firms in N. Korea running business association: chairman
SEOUL, May 5 (Yonhap) -- European companies operating in North Korea have been running a business coalition to better coordinate trade ties with the reclusive nation, a businessman said Saturday.
"Our purpose is to build bridges between Europe and North Korea," Felix Abt, chairman of the European Business Association (EBA), said in an interview with Washington-based radio station Radio Free Asia. The association was founded in April 2005.
The businessman, who is also president of the joint venture PyongSu Pharma Co., said European firms need to do more business with Pyongyang, whose business ties are heavily dependent on Northeast Asia.
The association comprises 11 companies, mostly European or joint ventures between European and North Korean state-run firms. DHL, the logistics arm of Germany's Deutsche Post AG, is also a member.
North Korea's trade with the European Union accounted for less than 10 percent of its total volume in 2004, while trade with China surged by 35.4 percent, according to the EBA's Web site.
Koreas to Discuss Safe Passage of Trains
Unification Minister Lee Jae-joung By Lee Jin-woo Staff Reporter South Korea's point man on inter-Korean affairs said Friday he is confidant that North Korea will show a sincere attitude during the inter-Korean military talks to be held by generals next week. ``I judge the North's military has acknowledged the importance of the train test runs,'' Unification Minister Lee Jae-joung said in a weekly press briefing. ``I hope for a positive outcome in the three-day talks.'' The talks will be held from May 8 at Tongil-gak, a pavilion at the truce village of Panmunjom, to discuss ways of ensuring safe operations of the long-delayed test runs of inter-Korean railways slated for May 17.
Koreas Begin Talks on Light Industry
By Lee Jin-woo Staff Reporter South and North Korea began working-level talks on Wednesday to discuss Seoul's provision of raw materials to the North on the condition that Pyongyang carries out the scheduled inter-Korean railways test run, the Ministry of Unification said. The three-day talks opened at the inter-Korean industrial complex in Kaesong, North Korea, after the 13th inter-Korean economic cooperation meeting in Pyongyang in mid-April. The North agreed then to conduct the long-delayed train test runs on May 17 and to cooperate with the South in jointly developing underground mineral resources in the Stalinist state.
The Working-level Consultation on the Inter-Korean Cooperation on the Light Industry and Mineral Resources
The working-level consultation on the inter-Korean cooperation on the light industry and joint development of North Korea's mineral resources is planned to be held in Gaeseong from May 2 to 4. At the meeting, the two sides will discuss the practical matters regarding the cooperation on the light industry and joint development of mineral resources.
Kaesong Site Expedites S-N Economic Integration
By Ryu Jin Korea Times Correspondent
KAESONG, North Korea _ At a quarter to 7 a.m. on a normal weekday, a rush to work opens the morning of a North Korean town seated just minutes away from the heavily fortified border with South Korea. Several blue commuter buses, just like ones that can be seen in downtown Seoul, stop in front of a sign reading, ``Kaesong Industrial Zone'' and spew out hundreds of North Korean workers. As the working time draws near, they hasten their steps toward their respective workplaces, owned and managed by people from across the border. Some 13,000 North Korean workers, mostly women in their 20s and 30s, spend most of the daytime in the small capitalist enclave in the southwestern part of their Stalinist nation. ``Welcome!'' ``Good Morning!'' Several South Koreans say as they greet their North Korean colleagues in front of the main gate of Shinwon Ebenezer. Hwang Woo-seung, director of the apparel company's Kaesong branch, says that they have never skipped a day _ regardless of rain or snow _ without such greetings since the factory went into operation in 2004. Closing hours are by and large around 5 p.m. But almost half of the 13,000 laborers work overtime until 7 p.m. in order to return home early on Saturdays. By the first half of 2008, the number of North Koreans working in the joint industrial park is expected to reach 100,000, according to South Korean officials.

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APRIL 2007

The 13th Working-level Contact for Railway and Road Connection
The 13th working-level contact for railway and road connection is scheduled to be held in Gaeseong from April 27 to 28. At the contact, the two sides will consult each other the practical matters regarding the test run of trains on May 17. Spokesperson Ministry of Unification Republic of Korea
Bumpy ride expected leading up test of joint Korean train lines
[Analysis] After last year's abrupt cancellation, no one expects smooth going
At a meeting of a related committee on April 18-22, the two Koreas agreed to test-run the Gyeongui and Donghae railway lines connecting the divided countries. However, observers do not anticipate things to go smoothly leading up to the test date, as the test run scheduled for May 25 last year was cancelled a day prior because Pyongyang said the North Korean military would not guarantee the safety of the train. The test-run was then further delayed due to deteriorating inter-Korean relations following the North's missile tests in July and nuclear test in October. The Gyeongui railway cuts across the western part of the demarcation line between the two Koreas and the Donghae line runs along the East Sea. The trains would pass through the heavily fortified zone separating the two Koreas, so it is thus necessary for both militaries to guarantee the safety of the trains' passage. But the North Korean military reportedly worries that the railway could be a passage for a South-U.S. attack, and other reports say the North's military is also concerned that the railway cooperation project could move the inter-Korean relationship forward such that the North's conservative military cannot control matters between the two nations any longer. Thus, these reports say, it has not given its agreement to Pyongyang to help.
North-South Committee for Promotion of Economic Cooperation Meets
Pyongyang, April 22 (KCNA) -- The 13th meeting of the North-South Committee for the Promotion of Economic Cooperation was held here from April 18 to 22 according to the agreement reached at the 20th North-South Ministerial Talks. It was attended by members of the north side headed by Ju Tong Chan, vice-chairman of the Committee for National Economic Cooperation who is chairman of the north side to the above-said inter-Korean committee, and its suite members and members of the south side with Jin Tong Su, vice-minister of Finance and Economy who is chairman of the south side to the same committee, as its chief delegate and its suite members. The meeting adopted an agreement after discussing measures for boosting the inter-Korean economic cooperation in the common interests of the nation to achieve its co-prosperity. According to the agreement, the north and the south agreed to take necessary measures for investment and cooperation to develop the national economy in a balanced way and boost inter-Korean economic cooperation undertakings. They also agreed to have a trial operation of trains in the sections of railway links along the eastern and western coasts in the north and the south on May 17, make a working contact in Kaesong in this regard and cooperate with each other in the efforts to open the railways on those coasts to traffic at the earliest possible date.
'Gaeseong to be exempt from labor laws'
South Korea and the United States have agreed not to apply International Labor Organization regulations to an inter-Korean industrial park in North Korea's border city of Gaeseong, a South Korean lawmaker claimed yesterday. Kim Won-woong, head of the National Assembly's unification, foreign affairs and trade committee, said the Gaeseong industrial park is certain to remain an exception to the ILO's labor rules, paving the ground for Seoul and Washington to designate Gaeseong as an "outward processing zone" (OPZ) on the Korean peninsula. [Kaesong]
2 Koreas Agree to Test-Run Railway in May
South and North Korea on Sunday agreed to conduct test runs of cross-border railways in May and make efforts to ensure a military guarantee for their safe operations. The South also agreed to provide 400,000 tons of rice to the impoverished North in late May, but the accord reached by the two sides did not include a commitment by North Korea to take steps toward dismantlement of its nuclear programs, said pool reports from Pyongyang, the venue of the talks.
'Korea Sandwiched in Four Areas'
By Lee Hyo-sik Staff Reporter
South Korea needs to find ways to generate sustainable growth as the world's 11th largest economy is increasingly sandwiched between developed and developing economies.
Hisashi Ohno, head of the Nomura Research Institute's Seoul branch, said yesterday that Korea has recently been cornered by other major economies, particularly by China and Japan, in areas of technology, corporate earnings, market share and the competitiveness of the high-tech industry. ``The majority of Korean companies have not been able to catch up with their counterparts with developed economies in world-class technology. And Korean manufacturers are losing their price competitiveness to those based in developing countries, which have also narrowed the technological gap with them,'' Ohno said at a seminar hosted by the Korea Chamber of Commerce and Industry (KCCI). [China competition] [Technology gap]
Inter-Korean economic talks get off to shaky start
South and North Korea on Thursday discussed a range of economic issues, including food aid, at a belated session of talks after the North withdrew preconditions for the formal opening, pool reports said. But the plenary session, which took place about eight hours later than scheduled, did not appear to go smoothly as Chu Dong-chan, chief of the North Korean delegation, left the conference room, slamming the door shut behind him, just half an hour after the start of the meeting.
Emerging Central Asia and the Korean Countermeasures
Author : Jae-Young Lee, Sang-Nam Park eds. Series : KIEP working papers on regional studies 07-01 Language : Korean Date : 2007-04-10 * Click on the name of the writer or research work to read the related document. Central Asia, located near the emerging markets such as Russia, China and India, is gaining attention with its abundant energy and mineral resources. The market size in Central Asia is rapidly enlarging due to its high economic development, and the increase of population, showing high potentials of economic cooperation. The world is eager to enter into this value-rising region. In these circumstances, it is important for Korea to plan a systematic entry strategy.
Global Imbalance and its Implications on East Asian Economies
Author : Doo Yong Yang ed. Series : Policy Analysis 06-02 Language : English Date : 2006-12-29 * Click on the name of the writer or research work to read the related document. The first paper, written by Professor Yung Chul Park and Barry Eichengreen, focuses on the impact on emerging markets of a disorderly adjustment in global imbalance. In the conclusion, they argue that commencing this adjustment process while global economic and financial conditions are still favorable will ease the adjustment process. They also state that the adjustment process will be eased if there is cooperation on exchange rate and other policies, and that it would be nice if the United States participated in this process of cooperative policy adjustment by addressing the domestic roots of its twin deficits. The second paper, co-authored by Professor Jong-Wha Lee and Warwick J. McKibbin, analyzes global imbalance, focusing on the investments and savings of East Asia and the United States. This paper demonstrates that since the 1997?98 crisis, many East Asian economies have been experiencing permanent declines of domestic investment and output growth, mainly resulting from increases in financial risk and decreases in the return on investment. According to the paper, the investment decline in East Asia, outside of China, combined with the fall in public and private savings in the United States, has contributed to the recent level of global current account imbalance.
Vice-Minister Shin Outlined the BDA Issue and the 8th Inter-Korean Red Cross Talks, etc.
Name : uni4101 Date : 2007-04-06 Vice-Minister Shin Outlined the BDA Issue and the 8th Inter-Korean Red Cross Talks, etc. Regular Briefing by the Vice-Minister of Unification (April 5, 2007) Vice-Minister of Unification Shin Eonsang gave a regular briefing on April 5 and outlined the BDA issue, the 8th Inter-Korean Red Cross Talks, the conclusion of KORUS FTA, and the trend of the inter-Korean trade during the first quarter. Shin Eonsang, Vice-minister of Unification Current Status and Outlook of the BDA Issue Vice-Minister Shin said the BDA issue was being delayed because of some technical problem regarding remittance. However, as the six nations have strong will to implement the February 13 agreement, it would be possible to advance the implementation of the agreement, based on the efforts by each nation, Vice-Minister Shin said.
The Inter-Korean Trade Volume during the First Quarter Increased by 40 percent. Vice-Minister Shin said the inter-Korean trade volume during the first quarter recorded 260.94 million dollars, rose by 40percent than the same period of the previous year. He also said this increasing trend would be maintained during the second quarter thanks to the recovery of the inter-Korean relations. The increase would be affected by the rise of domestic demand for North Korean steel and mineral products, increase in the number of enterprises operated in Gaeseong, and public and private aid toward the North, he said. [BDA] [Dilemma] [Trade]
N.Korean Demands Threaten Kaesong Complex
The inter-Korean Kaesong Industrial Complex in North Korea, now in its second year, is in trouble due to "unreasonable" demands from Pyongyang, South Korean companies there say. North Korea late last year suggested that South Korea pay North Korean workers according to their academic background. "North Korea demanded that we pay four-year college graduates 30 percent more and two-year college graduates 10 percent more than high school graduates, depending on their type of work," a businessman said. As of last year, North Korean workers in the industrial complex got an average monthly salary of US$67, including overtime. But businesspeople in the complex said the demand ignores realities. "Most of the workers at the Kaesong Industrial Complex are doing menial jobs, so staff with a higher academic background are not necessarily more productive," one said. "Moreover, if we should introduce the system, the North Korean authorities would inevitably intervene in the hiring process. Our autonomy in personnel management and governance structure could suffer." Some 13,000 North Koreans work at the Kaesong complex.
At Gaeseong, bonds form between Koreans from North and South
[Feature] The Gaeseong (Kaesong) Industrial Complex is a gauge of conditions on the Korean peninsula. Operations there were nearly stopped outright in the wake of the North Korean nuclear and missile tests. Yet now, thanks to the February 13 agreement on the North's denuclearization forged at the six-party talks as well as the South Korea-U.S. free trade agreement (FTA), operations have picked up at the industrial park. [Kaesong]
The presentation on the Gaeseong Industrial Complex was held for the South Korean small and medium sized companies
Date : 2007- 04- 13 On March 27, the presentation on the Gaeseong Industrial Complex was held for the South Korean small and medium sized companies at the International Conference Center by Small and Medium Business Administration with the support from the Ministry of Unification. The event was to explain the status of the tenant companies in the GIC and the investment-related procedures and regulations.
Many participants from the small and medium sized companies gathered at the presentation and asked many questions on the prospect of finding new markets for the GIC. In addition, they also showed keen interests on the prospect of labor supply in the GIC. The Small and Medium Business Administration hosted presentations for the small and medium sized companies in Incheon(March 30), Busan(April 3), Daegu(April 4), Kwangju(April 6) and Daejeon(April 10). [Kaesong]
South Korean GIC Management Committee members and North Korean officials jointly visited the Chinese special economic zones
Date : 2007- 04- 13 From March 10 to March 17, the South Korean members of the Gaeseong Industrial Complex(GIC) Management Committee and the North Korean officials at the GIC visited the Chinese special economic zones in Soju, Chongdo and Daelyon. The purpose of this trip is to examine the successful management methods at the Chinese special economic zones. On the first day, the group departed Incheon and Pyongyang separately and met in Beijing. On the following day, they traveled to Shanghai by airplane. After a brief tour at the Podong Industrial Complex, they headed for Soju. The group visited Soju Industrial Complex Management Committee, Samsung Electronics and the convenience facilities for the factory workers. In Chongdo, they visited the tenant companies such as Hyosung Steel Cord factory. For 7 nights and 8 days, the participating South Korean staffs and the North Korean officials had many opportunities to exchange their opinions on how to develop the competitive edge of the GIC in the global market. [Kaesong] [China model]
Kaeseong's N.K. workers have warmed up to S.K. bosses
At first reclusive, North's workers are smiling, eating together with Southern counterparts
GAESEONG - Two years after the Gaeseong (Kaesong) Industrial Complex began operations, the attitude of North Korean workers toward their South Korean employers has significantly changed for the better, according to heads of South Korean plants located in the joint Korean industrial park. Ra Sang-jin, 66, the plant chief of Daehwa Fuel Pump, which started operations at Gaeseong in June 2005, said North Korean workers' attitude toward their South Korean employers has changed. When Ra came to Gaeseong, North Koreans disliked South Korean employees coming to restaurants for the Northern workers, for at Gaeseong, the restaurants are divided along the lines of 'North' and 'South,' as the North Korean workers were at first reluctant to dine with Southerners. Currently, however, Ra frequently visits North Korean restaurants and is asked by North Korean workers to join in a a meal. [Kaesong]
Spring Tree-Planting Campaign at Full Swing
Pyongyang, March 26 (KCNA) -- A nation-wide campaign for planting trees in the spring season is at its zenith in the Democratic People's Republic of Korea. Good species of trees have been planted in the revolutionary sites, recreation grounds, parks and streets in Pyongyang, to add beauty. Working people from all walks of life and school youth and children have transplanted rare trees and flower roots in the arboretum of the Kumsusan Memorial Palace to make the sacred temple of the sun more sublime.
Seoul to Expedite NK Resources Development
By Lee Jin-woo Staff Reporter Unification Minister Lee Jae-joung said yesterday his ministry plans to set up a joint committee with North Korea next month to expedite the long-delayed development of the North's mineral deposits. ``We've felt the need to establish the panel to prepare and gather enough information in advance for the quite complicated large-scale project,'' Lee told a press briefing in Seoul. He hinted that the committee would be launched before the two Koreas hold the 13th inter-Korean economic cooperation talks slated for April 18-21 in Pyongyang. South Korea has long been eager to expand the scope of joint inter-Korean business projects, especially natural resources development projects. [FDI]
N.K. drug company urges aid donors to 'buy local'
"Its not just about making money, at least not from our perspective as a producer," declared Felix Abt, president of the Pyongyang-based pharmaceutical company PyongSu Pharma. "The profit margins are very small. It is more about supplying a necessary and quality product at a price people can afford." Abt was in Seoul earlier this week meeting with South Korean pharmaceutical companies and aid organizations. On the table was a unique opportunity that would allow them to expand their existing humanitarian work, while at the same time helping to lay a solid foundation for the future of the pharmaceutical sector in North Korea. [FDI] [Economic reform]
Imported cars from North Korea?
March 24, 2007 Automobile statistics from the Korea Customs Service show that South Korea imported 778 cars from North Korea from 2003-2006. Is it true that the North exports its cars to the South? Not entirely. Under related regulations, when South Korean cars are shipped to the North for use in inter-Korean business, including commerce at Mount Kumgang and the Kaesong Industrial Complex, the cars are classified as "exports" to the North. For the same reason, when passenger cars, commercial vehicles, and trucks from South Korea break down or wear out in the North, they return to the South in the form of "imports." North Korea has a handful of car manufacturing factories, but there is only one still in operation, Pyeonghwa Motors. The plant is run by the 70-30 joint venture between South and North Koreas and started mass production in April 2002. It has churned out an annual average of 600 vehicles in all segments, except for trucks and large buses, for exclusive supply to North Korea. According to a Pyeonghwa Motors spokesman, the carmaker accounts for the majority of vehicle demand, with some used cars unofficially imported from Japan. Special-purpose vehicles, including dump trucks, account for most of the vehicles sent back from North Korea to the South. Other vehicles crossing the border are multi-purpose cars, trucks and vans. By Seo Ji-eun Staff Writer [spring@joongang.co.kr]

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MARCH 2007

Amid summit talk, a visit to Kaesong
March 24, 2007 Three former presidential special envoys to Pyongyang are scheduled to visit Kaesong Wednesday, a move that attracted attention amid speculation of an inter-Korean summit sometime this year. The visitors are Chung Dong-young, former Uri Party chairman, Lim Dong-won, the former chief of the National Intelligence Service and Park Jae-kyu, the former unification minister. All three have met North Korean leader Kim Jong-il face-to-face during visits to the North. Next Wednesday, they are going to Kaesong to tour the inter-Korean industrial complex and the city's downtown.
Energy is critical power source within North Korea
By Anna Fifield, FT.com site Published: Feb 12, 2007
In the depths of the North Korean winter, where temperatures regularly plumb -10ºC, government offices and even hospital wards in Pyongyang are so cold that people can see their breath indoors. Lights – not to mention medical equipment – constantly flicker on and off. In the industrial areas along the east coast, the vast majority of factories and mines simply lie idle. The time devoted to energy, rather than nuclear weapons, during the past five days of North Korean denuclearisation talks highlights the critical challenge that power shortages present to Kim Jong-il's regime. [Energy]
Visitors to Gaeseong, including former U.S. Defense Secretary, now turn to praise
Initially cautious over workers’ rights, wages, foreign visitors now look to future of joint Korean complex
In 2006, 18 groups of foreigners, including journalists, paid a visit to the Gaesong Industrial Complex just north of the border between the two Koreas. For the first five months of last year, six groups visited the joint Korean industrial park. But in June of last year alone, as many as seven teams, one including the U.S. Ambassador to Seoul Alexander Vershbow, paid a visit. Then, for the second half of last year, Gaesong received just five groups of foreign visitors due to North Korea’s missile and nuclear tests. However, with the February 13 breakthrough in the six-party talks on the North Korean nuclear issue, foreigners have started to visit Gaeseong again - seven groups have already visited the city this year. [Kaesong] [In denial]
N.Korea Asks S.Korean Firms in Kaesong to Pay Up
North Korea is demanding unpaid residence fees from South Koreans working in the inter-Korean Kaesong Industrial Complex in the border city of Kaesong. A South Korean government official on Sunday said North and South failed to settle their differences over the demand. According to an agreement between the two Koreas, South Koreans have to register and pay fees to North Korea whenever they extend their stay or change their residence. But no South Korean workers in the industrial park have paid since no specific rules were set. Details of the amount the North wants or the length of the permitted stay have not been revealed. A South Korean official merely said there was "a big gap" between the two sides. One South Korean company said it could not operate a factory in the industrial complex if it paid what the North is demanding.
N.Korean Party 'Takes 60 Percent of Kaesong Wages'
More than half the salaries paid to North Koreans working at the inter-Korean Kaesong Industrial Park go to the North Korean Workers’ Party, a document written by a team in charge of inter-Korean economic cooperation at the Ministry of Commerce, Industry and Energy shows. The team reported to the unification minister.
Inter-Korean Economic Cooperation Promotion Committee
The Working-level Contact of Inter-Korean Economic Cooperation Promotion Committee in Gaeseong from March 14 to 15 Name : uni4101 Date : 2007-03-14 The Working-level Contact of Inter-Korean Economic Cooperation Promotion Committee in Gaeseong from March 14 to 15 The working-level contact of Inter-Korean Economic Cooperation Promotion Committee is held in Gaeseong from March 14 to 15, 2007. At this contact, which is the result of the agreement of the 20th Inter-Korean Ministerial Meeting, the North and the South consult test run of trains and security problems related to it. [Kaesong]
Two Koreas again discuss a test-run of railroad
March 15, 2007 For the sixth time, the two Koreas sat down across from each other yesterday to talk about clearing obstacles to hold a test run of trains that would rumble across the Korean border along both coasts of the peninsula. The question of how that will happen was unresolved yesterday, however. The two Koreas held working-level talks in Kaesong, North Korea, about holding test runs by the end of June.
A delegation of South Korean consuls general from the Ministry of Foreign Affairs and Trade visited the G.I.C
Name : letter Date : 2007- 03- 13 A delegation of around fifty consuls general including Moon Bong-joo New York consul general paid a visit to the GIC on March 10, 2007. The delegation passed the Military Demarcation Line(MDL) at 9 a.m. and entered into Gaeseong Area. After the status briefing on the GIC, they toured the factories of two tenant companies, ShinWon Ebenezer and Bucheon Industries Co. [Kaesong]
Korea's Exports to the U.S. Lagging Rivals
Korean products sold in the U.S. are not as competitive as those from China and Japan, and in some categories Korea has a lower U.S. market share than Malaysia, a study has revealed. According to a report released Sunday by the Korea Trade-Investment Promotion Agency (KOTRA), Korea's exports to the U.S. decreased 5.2 percent in 2005, making it the only one of 20 top exporters to America to show negative growth that year. [China competition]
Nuke Accords Breathe Life into N.Korean Bonds
Insolvent North Korean bonds worth W400 billion (US$1=W946) are finding favor with international traders. Denominated in Swiss francs and German marks, the 13-year bonds maturing March 12, 2010 are being traded on major international financial markets like New York and London. North Korean bonds were valued at less than 10 cents per dollar five or six years ago, but since the six-way nuclear deal was reached in Beijing last month they have surged on expectations that the North Korean economy will gather steam. According to a London finance insider, some investors are purchasing the North Korean bonds with the expectation that the South Korean government will repay them in the end. Another London financier said that possessors of North Korean bonds are mostly medium or large-sized funds pursuing long-term investments. International investors share the view that South Korea, whose foreign reserves are 10 times larger than North Korea's foreign debts, will repay them when the bonds mature, he added. [Debt]
Samsung Chief Warns of Economic Chaos
Samsung Group chairman Lee Kun-hee on Friday called on his conglomerate and for that matter the entire country to wake up or face economic "chaos" in five to six years. Lee made the remarks during a meeting of business and political leaders at the Kim Koo Museum and Library in Seoul on Friday. In January, Lee warned Korea was "sandwiched in the middle" between business leader Japan and China which is fast catching up. "If we can’t overcome this situation, the Korean Peninsula is in for a lot of trouble," he said [China competition]
Seoul to Revise Law to Spur Inter-Korean Business
By Lee Jin-woo Staff Reporter The government plans to submit a revision bill to the National Assembly to help ease restrictions on South Korean businesses involved in inter-Korean projects, the Ministry of Unification said Thursday. The bill for the inter-Korean exchange promotion act authorizes the government to set up new committees to help promote both commercial and non-commercial inter-Korean projects. The ministry has pushed ahead with its two flagship inter-Korean joint ventures _ the Kaesong Industrial Complex and the tourism project at Mount Kumgang, a scenic resort run by South Korean company, Hyundai Asan, in the North, since June 2000.
However, those who wished to launch other projects including humanitarian aid programs in other parts of the reclusive North have faced much difficulty, especially a lack of information and strict regulations.
High cost of wine has consumers whining
Korea's distribution structure, high profit margins keep prices sky-high
Kim Seong-su and his wife have enjoyed winding down with a glass of wine every weekend. However, Kim was shocked when he recently visited a wine shop in Japan: the same wine he and his wife liked to drink - France's Mascaron Medoc Red - was selling for US$13; Kim had been buying it at a large discount mart in Korea for $32. [IM}
Law on Metro Adopted in DPRK
Pyongyang, March 7 (KCNA) -- The Presidium of the DPRK Supreme Peoplefs Assembly issued a decree on the adoption of a law on metro. The law is aimed at better serving the conveniences of the people in communications by establishing a strict system and order in the building and management of the metro. Stipulated in the law are principles and basic demands in metro building and management and detailed procedural methods of their implementation. The adoption of the law provides a solid legal guarantee to reinforce the material and technical foundation of the metro and actively introduce achievements of modern science and technology as required by the developing reality and thus constantly develop metro transportation
Korea Moving Toward Branding Powerhouse
By Jane Han Staff Reporter Through the eyes of Danish brand strategist Martin Roll, Korea is an unpolished diamond _ it just needs the sparkle and glitter of power branding. ``Korea used to be a manufacturing powerhouse, but it now needs to move into branding,'' he said in a Korea Times interview yesterday. Roll, the CEO of the strategic advisory firm VentureRepublic, is an international brand advisor for Fortune 500 companies. Based in Singapore, Roll has worked with a wide-range of Asian and global companies for more than a decade. He started working with Korean companies two years ago. Roll named Samsung, LG and Hyundai as the most representative companies leading the field in branding, but noted that further developments should be made by the companies to tap into ``emotional branding.'' [IM]
Agricultural Encyclopedia Off Press
Pyongyang, March 6 (KCNA) -- The Agricultural Publishing House has published the agricultural encyclopedia (7 Volumes.) It contains more than 21,000 scientific and technical terms and local and foreign materials.
Bullets and Trains: Exporting Japan’s Shinkansen to China and Taiwan
By Christopher P. Hood
It is over forty years since the Shinkansen (‘bullet train’) began operating between Tokyo and Osaka. Since then the network has expanded, but other countries, most notably France and Germany, have been developing their own high speed railways, too. As other countries, mainly in Asia, look to develop high speed railways, the battle over which country will win the lucrative contracts for them is on. It is not only a matter of railway technology. Political, economic & cultural influences are also at stake. This paper will look at these various aspects in relation to the export of the Shinkansen to China in light of previous Japanese attempts to export the Shinkansen and the situation in Taiwan. [Railways]
Finnish YLE Reporters photograph the sights and sounds of the Gaeseong Industrial Complex(GIC)
Date : 2007- 02- 28 On February 8, 2007, three Finnish reporters from YLE, the Finnish public broadcasting station, including Mica Matilda(a photo journalist) visited the GIC and interviewed the GIC management committee President, factory staffs and workers at the company event of Shinwon Inc. and other production sites. [Kaesong]
Highly-Efficient Machine-tools Produced in DPRK
Pyongyang, February 27 (KCNA) -- The Huichon Machine-tool Plant in the DPRK is manufacturing highly-efficient machine-tools. The plant has completed a flexible machining system for producing boxes which is of great significance in the development of the machine-building industry so as to lay its solid material and technical foundation.

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FEBRUARY 2007

Korea Maranatha Sinyong Ltd Commissioned
Pyongyang, February 23 (KCNA) --A ceremony of commissioning Korea Maranatha Sinyong Ltd was held here on Thursday. It will contribute to creating funds necessary for business activities at different factories and enterprises and keeping production going at a high rate there. Present there were Paek Hyon Bong, chairman of the DPRK Committee for Promotion of External Economic Cooperation, officials concerned and diplomatic envoys of different countries here. Also on hand was a delegation of Maranatha Trust, Australia led by its President David Thomas Bussau. Speeches were made there. [Finance] [IJV]
UK Embassy to Host Seminar on Competition in the Service Sector
UK Ambassador to Seoul Warwick Morris The British Embassy and Ministry of Finance and Economy (MOFE) are holding a half day seminar on "Competition in the Service Sector" in a Seoul hotel on Feb. 28, 2007. South Korea's service sector is developing fast. In 2005, the sector accounted for 56.3% of GDP and 65.5% of employment. This is not far behind the OECD average and catching up quickly. The Ministry of Finance and Economy is keen to restructure the service sector and promote competition. It is aiming to improve the business environment and the sector's productivity [IM]
Under shadow of 'superstores,' mom and pop suffer
But laws to protect small businesses would violate trade regulations, gov't says
Less than ten years after South Korea opened its retail market to foreign competition in 1996, nearly 140,000 traditional marketplaces and mom-and-pop stores have closed, while the number of large discount 'superstores' has increased tenfold. [Globalisation] [IM]
Wage payment to N. Korean workers in Kaesong complex surges 48 pct. since missile tests
Wages paid for North Korean labor in an industrial complex in the North's western border town of Kaesong surged nearly 50 percent in the second half of last year, despite the communist country's missile and nuclear tests, government data showed Sunday. According to a report submitted by the Unification Ministry to the National Assembly, North Korean employees' wages in the Kaesong industrial complex amounted to US$4.23 million in the second half of last year, up 48 percent from the first half's $2.87 million. "Even after the North's missile tests and nuclear test (in October), the hard currency, which the international community takes issue with, continues to end up in the hands of the communist regime while the payment for the Kaesong workers also is expanding," said Chin Young, a lawmaker of the main opposition Grand National Party, who released the report.
Local-Industry Factories Boom
Pyongyang, February 23 (KCNA) -- The local-industry factories in Jagang Province of the DPRK are exerting great efforts to the production of consumer goods. In particular the local-industry factories in Huichon City are increasing the production of consumer goods by tapping the latent raw materials to the maximum.
The Production at the GIC Exceeded US$100 million
Name : uni4101 Date : 2007-02-05 February 2, 2007
The Production at the GIC Exceeded US$100 million The total production at the Gaeseong Industrial Complex (GIC) exceeded US$100 million as of January 2007. The production of enterprises at the GIC recorded about US$15 million in 2005 and US$74 million in 2006, reaching about US$89 million in total at the end of last year. As the production recorded US$12 million in January 2007, the total figure passed US$100 million in total. The Gaeseong Industrial Complex, where 21 enterprises are being operated currently, has shown steady increase in production. For example, the production in 2006 was five times larger than that of the previous year. [Kaesong]
Gaesong Industrial Complex
39 Articles on Kaesong from ROK Ministry of Unification
All the Salary Goes to the North Korean Workers
Name : uni4101 Date : 2007- 01- 31 Never mind, all the salary goes to the workers, not to the Great Leaders; All the Salary Goes to the North Korean Workers at the Gaeseong Industrial Complex (GIC) Jay Lefkowitz, President Bush's Special Envoy for Human Rights in North Korea, wrote on the Wall Street Journal(Jan. 10. 2007), "it is more likely that the hard currency these countries are sending to North Korea will end up funding the regime's nuclear aspirations instead of improving living conditions for the people of North Korea." If the pay goes directly into the Korean regime, how can we account for the North Korean workers' strong will to work? Considering the Gaeseong Industrial Complex's characteristics as a combination of the South's capital and the North's human resources, businesses in the Complex attach importance to whether the workers' pay goes directly to them or not. This is because if the pay does not go to the workers directly, they would not have any motive to work in the Complex. At the beginning, the labor productivity of the GIC North Korean workers was merely 20 to 30 percent of that of South Korean workers. Nowadays, however, it reaches 70 to 80 percent, and the North Korean workers are willing to work at night or on holidays when they are asked to. All the salary goes to the North Korean workers largely in kind. [Diversion] [Toolkit]
North Korea Investibility Index
NKII is one of the new projects that East Asia Peace Investment Program (EAPIP) is launching. EAPIP is a NPO/NGO headquartered in Seoul, Korea. As for what we are and what we aim at, please visit our website (www.eapip.org).
NKII is being developed with a view to provide an objective, scientific framework of reference to gauge the feasibility of investment in North Korea. The notion of investing in North Korea would sound irrelevant given the current conditions and circumstances. NKII is not made to promote investment in North Korea. From the neutral stand point, EAPIP intends to build NKII as an intellectual tool with which the individuals, corporations and organizations may approach the issue of investing in North Korea as a matter of rational, normal business in the future. [FDI]
Perry Praises Kaesong Complex
By Lee Jin-woo Staff Reporter Former U.S. Secretary of Defense William James Perry on Thursday called an inter-Korean industrial complex in Kaesong, North Korea, as the ``future of the Korean Peninsula.'' He made the remarks after a half-day visit to the joint venture. Perry described the Kaesong complex as a very positive and impressive project to promote peace and prosperity on the Korean Peninsula, an official of the Ministry of Unification who accompanied Perry on the visit, said. He also praised North Korean officials, calling them ``frontiersmen,'' the official said. He led a five-member delegation including Stephen Warren Bosworth, former U.S. ambassador to Seoul, Kim Jeong-hun, a Korean-American businessman, and Ashton Baldwin Carter, a professor at Harvard University.
Land for S. Korean companies in Kaesong complex on sale next month
South Korea's Unification Ministry said Tuesday that it plans to parcel out a 530,000-pyeong lot for South Korean manufacturers in the inter-Korean industrial complex in Kaesong late next month. One pyeong is 3.3 square meters. The land is the remainder of the 1-million-pyeong lot which the South and North Korean governments have been jointly developing in the western North Korean border town in the first phase of the inter-Korean project which is to construct a 20-million-pyeong industrial base for South Korean companies by 2012. The complex, if completed, is expected to employ as many as half a million North Korean workers for some 2,000-3,000 South Korean manufacturers.
Expansion of Kaesong Site to Resume by April
By Lee Jin-woo Staff Reporter Unification Minister Lee Jae-joung said Tuesday the ministry would resume the halted expansion of a joint industrial complex in the North Korean city of Kaesong no later than mid-April.
North Korea's Gold Mines
Wealth has attracted foreign interest over three millennia
Robert Neff (neff) Published 2007-02-21 14:11 (KST) Many people's impression of North Korea is that of a poor country unable to feed its own people and desperate for cash. Other than selling weapons, printing counterfeit money, and engaging in the production of illegal drugs, it is thought that it has very little means of obtaining hard currency. Yet, recently, it has received a great deal of the media's attention for its sale of gold to Thailand. Many people forget that North Korea has always had an abundance of mineral wealth -- including gold.
Impact of Nuclear Accord Marginal on Local Economy'
By Na Jeong-ju Staff Reporter The six-party nuclear agreement last week represents the first tentative step toward a comprehensive settlement of the conflict, but the impact the agreement will have on the country's politics and economy will be limited, says a report from HSBC, one of the world's largest banking groups. In a report on the implications of the nuclear agreement, the bank said an inter-Korean summit might occur before year-end, which should provide a boost to President Roh Moo-hyun and his allies, if progress is made in the nuke talks. However, even such a summit whould have only a marginal impact on the presidential elections due in December, it said. ``Actual differences between rival political factions in South Korea over North Korean policy remain fairly limited so that further reconciliation, and even a summit, are unlikely to swing the vote decisively,'' the report said.
Nuclear Pact Gives Big Boost to Hyundai
By Kim Yon-se Staff Reporter The latest six-party agreement to dismantle North Korea's nuclear programs is expected to help normalize inter-Korean businesses now being undertaken by Hyundai Group. Hyundai Asan, the tourism unit of Hyundai Group, predicted that the landmark accord will enable the group's inter-Korean projects, including Mount Kumgang tours and the Kaesong Industrial Complex, to get revitalized. ``Many people say that the Mount Kumgang tours was a project intended to fund North Korea,'' a Hyundai Asan official said. ``But the agreement will give a favorable image to us and the North.'' The United States had speculated that payments to North Korean employees under the Kaesong project were diverted into military funds to produce weapons. But the allegations proved groundless according to the Ministry of Unification, which made public relevant documents. The official expects the number of South Korean tourists to Mount Kumgang to reach 400,000 this year, compared with 234,446 in 2006. [Diversion]
Nuke Accord Raises Hopes for Upgrade of Sovereign Ratings
By Na Jeong-ju Staff Reporter Moody’s Investors Service said Thursday the latest six-party agreement to dismantle North Korea’s nuclear programs will help ease geopolitical risks surrounding the Korean Peninsula and will be a positive factor for the country’s sovereign ratings.
Energy Developed under Long-term Plan
Pyongyang, February 5 (KCNA) -- Energy is being developed under a long-term plan in the Democratic People's Republic of Korea. Kim Kyong Bong, director of the Natural Energy Development and Utilization Center under the State Academy of Sciences, told KCNA that the energy development has been conducted in a far-sighted way according to the actual conditions, and its vista is bright. Successes are being made in researches into and the work of prospecting more energy resources rich in the country. A nation-wide effort has been bent to making best use of hydraulic power. In recent years, dams of the Samsu Power Station and Nyongwon Power Station have been built and large hydro-power stations are under construction in various parts of the country, the prospect of which is also good. Brisk is the construction of minor power stations are built in Jongphyong and Yonsa Counties and other areas with streams. Priority is being given to geological prospecting and tunneling for securing more coal fields, so as to decisively ease the strain on power. Solar hothouses built in institutions, industrial establishments and rural areas are paying off. Bio-methane has found its way to rural dwelling houses in the Migok Co-op Farm in Sariwon City, North Hwanghae Province and other areas. Wind-driven generators of various capacities are being manufactured and introduced to houses in rural and mountainous areas and efforts are being exerted to make an effective use of low-calorie coal and fly-ash. Meanwhile, scientific research has been pushed ahead to widely use natural energies including solar, biological and tidal powers.
Brisk Geological Prospecting
Pyongyang, February 6 (KCNA) -- Great efforts are being directed to the geological prospecting in the Democratic People's Republic of Korea. The State Bureau for Direction of Natural Resources Development has recently dispatched geological experts, IT technicians and prospectors to the areas of Komdok and Kapsan to find out more nonferrous metal ore resources.
With Strong Planning, Dubai's Economy Outshines Korea's
Sheikh Mohammed Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, unveils a strategic growth plan for Dubai on Saturday. Dubai has experienced exceptional economic progress over the past few years, accomplishing the goals of 10-year development plan in just five years. On Saturday, Dubai's leader unveiled a new plan to further continue the success. The Dubai Strategic Plan 2015 laid out by Sheikh Mohammed Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, would triple the country's GDP from US$37 billion in 2005 to $108 billion in 2015, and at the same time boost per capita income from $33,000 to $44,000. Economic growth would average at 11 percent per year and 882,000 new jobs would be created. Dubai's spectacular success of achieving 10 years of planned growth in just five years lies in contrast to Korea's current economic malaise [IM]
North Korea sets about peeling South’s garlic Joint project has begun at Gaesong industrial park
On February 6 in the North Korean border city of Gaeseong (Kaesong), about 1,500 North Korean workers were busily peeling garlic. Every day, South Korean farmers send garlic to Gaeseong, and the peeled product returns to South Korea. [Kaesong]
Foreign Rating Agency Executives Visit Kaesong
By Lee Jin-woo Staff Reporter A group of 17 people including high-level executives from Moody's Investors Service and Goldman Sachs made a half-day visit to the joint industrial complex in the North Korean border city of Kaesong on Friday, the Ministry of Unification said.
Moody's upgraded South Korea's rating to A3 in March 2002, its seventh-highest investment grade. Officials, however, were cautious about the chances for a higher sovereign rating. ``It remains to be seen whether Moody's will upgrade South Korea's credit rating, but it's true that they react quite sensitively to geopolitical issues related to North Korea,'' said a ranking official of the finance ministry. [Dilemma]
Can Economic Theory Demystify North Korea?
By Ruediger Frank The starting point of this paper is the assumption that North Korea is de facto a well-defined nation-state, home to a national economy and inhabited by individuals that bear the same basic economic and social characteristics as individuals elsewhere. Despite the obvious specifics of the economic system and institutional structure of the country, standard economic theory should be applicable to the question of North Korean economic development. The article seeks to prove this as broadly as possible, showing that economic theory as diverse as classical and neoclassical, Marxist, Keynesian, institutional, developmentalist, neo-liberal or structuralist, dependency analysis-based and many others, including regionally centered approaches, can be utilized to explain the North Korean case with useful results, although the latter will inevitably vary depending on the chosen framework. Without arguing against or in favor of any of the available theoretical methods, this article advocates further research on North Korea as another case of development in East Asia, rather than as a mystical exception to the rule. This is particularly important in light of the tendency to describe North Korea as unpredictable, bizarre, and incomprehensible. This is clearly not the case.
Russia and China Vie for Najin Port
Russia is trying to strengthen ties with North Korea, citing a "China threat" in Korea and the Far East. The Gudok, the daily newspaper of Russian Railways, said in an article Tuesday, "If China takes control of Najin port in North Korea, Russia may suffer huge losses in the project to link the TKR (Trans-Korea Railway) and the TSR (Trans-Siberian Railway)." Gudok is published by Vladimir Yakunin, the president and CEO of Russian Railways and one of the closest allies of Russian president Vladimir Putin. Sources say the report can be viewed as Russia's official position as it tries to expand its influence with Pyongyang. "China has completed feasibility studies for Najin port and is now doing repairs and upgrades to wharfs and container unloading facilities," the article said. It said that because the port lies at the start of the Najin-Hasan Railway and does not freeze throughout a year, Russia must take hold of it. "China has already requested that the UNDP, or UN Development Program, give the Chinese the right of free passage in the UNDP-initiated Tumen river development project. What China aims to achieve is to establish its own port in North Korea as a foothold to advance into the Pacific Ocean," the article said. The newspaper urged the Russian government to respond aggressively. [Railways] [SEZ] [Rajin]
North Korea Jacks Up Sand Prices, Switches Currency
A sand supplier under virtual control of the North Korean army has notified its South Korean customers that the price of sand exported to South Korea would be going up by 60 percent. On Thursday, the Korea International Trade Association, the Korean Aggregates Association and importers of North Korean sand said that the North recently sent an unexpected notice that it would raise the price of sand next month by W900 (US$1=W937) from US$1.6 (W1,500) to 2 euros (W2,400) per cubic meter. Exports of North Korea's sand, which is extracted mainly from seaside areas around Haeju, Hwanghae Province, are virtually controlled by the Ministry of People's Armed Forces, the command authority of the North Korean People's Army. Chun Seong-whun, a senior research fellow with the Korean Institute for National Unification, said, "It would seem cash-strapped North Korea is trying to obtain foreign currency by raising the price of sand, which is quite flexible." Last year around 9.09 million cubic meters of sand were imported from the North. If the same amount of sand is imported this year, the North will see an additional W8.2 billion. In addition, experts believe that the North wants to change to euros because it is under suspicion of counterfeiting dollars. An increase in sand prices could seriously undermine profits for around 20 aggregates firms in South Korea. [Counterfeiting] [Realignment]
Korea's Logistics Hub Dream in Ruins
The government on Friday said Korean ports will form strategic alliances with the Chinese ports of Yantai, Weihai and Nanjing and smaller Japanese ports including Niigata to lure to Busan and Gwanyang ports two million containers headed for the U.S. and Europe by 2011. The plan aims to boost traffic at Korean ports, which lag behind China’s Shanghai and Shenzen in emerging as the logistics hub of Northeast Asia. Last year, container traffic at Busan Port was 12.03 million, behind Singapore (24.8 million), Hong Kong (23.74 million), Shanghai (21.71 million), and Shenzen (18.26 million). Container traffic at Shanghai rose 20.1 percent between 2005 and 2006, while Shenzen saw a 12.8 percent rise. But Busan saw only a 1.6 percent rise over the same period. The gap is growing wider every year. Around 36 percent of the containers processed through Korean ports are in transit through China and Japan. But as China expanded port facilities in Shanghai, Shenzen, Qingdao, Ningbo and elsewhere, Busan’s transit container traffic growth dropped to the single digits. This administration’s dream of turning Korea into the logistics hub of Northeast Asia is in tatters. [IM]

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JANUARY 2007

Inter-Korean Economic Cooperation at a Crossroads
by Wonhyuk Lim January 30th, 2007 The original draft of this paper was presented at the Seventeenth U.S.-Korea Academic Symposium Dynamic Forces on the Korean Peninsula: Strategic & Economic Implications, sponsored by Korea Economic Institute (KEI), Korea Institute for International Economic Policy (KIEP), and Preventive Defense Project, Harvard University, September 25-27, 2006, Harvard University, John F. Kennedy School of Government, Cambridge, Massachusetts.
Wonhyuk Lim, Fellow at the Korea Development Institute (www.kdi.re.kr) and Korea National Strategy Institute (www.knsi.org), writes, “Just as it is not appeasement to talk to North Korea or any other potential adversary, it is not appeasement to hire North Korean workers and pay their wages. Instead of blaming economic engagement that promotes internal changes in North Korea, it would be far better to contain and reduce potential military threats through arms control negotiations and re-establish the policy synergy the United States and South Korea enjoyed in dealing with North Korea.”
Global Brands Now Designing Products Just for Koreans
The German kitchen appliance maker Krups recently introduced a "Korean-style" toaster. After watching impatient Koreans try to remove slices of toast before they were finished, Krups designers installed an LCD monitor on a toaster to depict how well the bread is baked. The display also shows how long you have to wait until the bread is completely toasted. The product comes with a lid to keep out dust, an accessory unnecessary in Western markets where bread-hungry consumers use their toasters almost daily.
Takeover Fears as Arcelor Mittal Eyes POSCO
A senior executive with the world's biggest steelmaker Arcelor Mittal arrives in Korea on Monday for highly confidential meetings with POSCO executives including chairman Lee Ku-taek. POSCO and the Korean government will be listening carefully to what the executive has to say after Arcelor Mittal started looking into taking over Korea’s no. 1 steelmaker, whose stocks it believes are undervalued.
Neighboring 'Whales' Threaten Korean Exports
There are fears for Korean exports as the country’s trade balance with its two nearest neighbors China and Japan turns increasingly in their favor. The trade surplus with the country’s largest export destination China declined for the first time in five years last year while the trade deficit with Japan hit a record.
Samsung Group chairman Lee Kun-hee recently warned Korea could be in trouble as Japan is charging ahead again while China is fast catching up [China competition]
Every Effort for Building Economic Power Called for
Pyongyang, January 24 (KCNA) -- It is an urgent requirement for building a great prosperous powerful socialist country at present to vigorously accelerate the building of an economic power. Rodong Sinmun today observes this in a by-lined article. It goes on: Building an economic power is an important work to augment the national power in every way, above all, and thus turn the country into an invincible power. Economy serves as a material basis of political independence and the political independence of the country would be unthinkable without its powerful economic potential
‘N. Korea Bans Domestic Use of Foreign Currency’
By Lee Jin-woo Staff Reporter North Korea recently banned the domestic use of all foreign currency in a desperate effort to get hold of U.S. dollars possessed by individuals amid strict financial sanctions imposed by the outside world, reports said. South Korea's Ministry of Unification that deals with inter-Korean affairs said it is trying to clarify whether the report is based on the truth or not. According to the Dong-a Ilbo, a vernacular daily, the Stalinist state Wednesday announced a ban on its people from paying with foreign currency without getting prior approval. The decision will be applied to all kinds of foreign currency including the greenback and euro as well as the Chinese yuan, it said. [Financial sanctions] [Sanctions effect]
Coal Production Ups in DPRK
Pyongyang, January 23 (KCNA) -- Greater efforts are being directed to increasing coal production in the coal-mining industry in the DPRK. Officials of the Ministry of Coal Industry go deep among workers to concentrate efforts on coal production, each taking in charge of big coal mines including the Anju Area Coal Complex. In particular they are launching the mass technical innovation drive, intensifying creative cooperation with technicians and colliers.
Classical Socialism in North Korea and its Transformation: The Role and the Future of Agriculture
by Ruediger Frank January 23rd, 2007 Ruediger Frank, Professor of East Asian Political Economy at the University of Vienna, writes, "the neglected agricultural sector experienced serious difficulties that led to a severe famine in the mid 1990s. These events were so threatening that they convinced the leadership to embark on perfection measures that go well beyond earlier attempts without, so far, violating Kornai's combined principles of Communist party power monopoly and state ownership of means of production. However, the development of North Korea is an ongoing process. Turning back a decade from now, we might find that agriculture provided the momentum to lead North Korea into a post-socialist future." [Economic reforms]
Kim Jong Il looks to London to circumvent sanctions
Andrew Salmon in Seoul and David Robertson The Times December 29, 2006
Selling gold could be his source of cash Foreign firms are eager to invest
Kim Jong Il, the North Korean dictator, is planning to use the London gold market to circumvent financial sanctions imposed by the international community. Mr Kim’s cash-strapped regime relisted its central bank with the London Bullion Market Association this year and is preparing to sell gold through London.
Gold traders said yesterday that they had seen no sign of the North Koreans disposing of gold in London since the Chosun Central Bank regained its status as a “good delivery supplier” this year. However, North Korea is thought to be preparing to sell gold through London once it gets a regular supply from its outdated mines. The development of the mines is expected to be assisted by foreign investment, The Times has learnt. One of the funds seeking to buy into the North Korean gold market is the London-based Chosun Development & Investment Fund.
2 Whiskey Makers Enter Into War of Wine
By Park Hyong-ki Staff Reporter Diageo Korea and Jinro Ballantines, two foreign-invested whiskey giants, are about step into a second round of competition, this time over wine.
In the meantime, Jinro Ballantines, a joint venture between the French company Pernod Ricard Group and Korea’s largest soju firm Jinro, is preparing to introduce a new wine brand of its own _ Montana from New Zealand _ in the first half of this year. Jinro Ballantines, Korea’s No.1 whiskey maker with flagships of Imperial and Ballantine’s, already has two lucrative wine sources _ Jacob’s Creek and Wyndham Estate, both from Australia. The wine market has been growing about 30 percent annually from 2001-2006. Last year, it reached some 300 billion won, and the market is expected to grow to 450 billion won this year, industry sources say. [IM]
Possible World Bank assistance to North Korea: Issues and Challenges
Daniel Morrow (pp. 37 - 67)
Accepting the DPRK as a member of the World Bank would require the political support of most of the Bank's member governments, and this would become possible only if there is a successful resolution of the Six-Party Talks. The amount of financial assistance from the Bank would then depend on how seriously the DPRK pursues a transition to a more open and market-oriented economy, but in any case the Bank's financial assistance would be small compared to the DPRK's needs and to the potential assistance from bilateral sources. Nevertheless, the World Bank's policy advice and its potential role in coordinating and catalyzing other assistance could be important for North Korean economic development. The prospects for quickly launching a constructive relationship between the DPRK and the World Bank following a successful conclusion of the Six-Party Talks would be enhanced by advanced preparation on both sides. In particular, the DPRK should begin to articulate its own strategy for economic transition. (Key words: North Korea, development assistance in East Asia, international financial institutions)
SEZS and Foreign Investment in China: Experience and Lessons for North Korean Development
Hongyi Harry Lai
This article analyzes how China succeeded in creating special economic zones (SEZs) and "opening to the outside world." Prudent choice over zone location and leadership, institutional arrangements, and local initiatives combined to produce the success of SEZs. China's SEZs, especially the largest and earliest Shenzhen SEZ, have taken off because of their proximity to and easy connections with neighboring advanced economies, liberal initiatives by able local leadership, administrative and economic arrangements for reform, and a progressive national-opening strategy. In addition, economic freedom at home and peaceful external relations were also necessary for smooth marketization and opening. This lesson may be enlightening for North Korea should it promote SEZs and open up its economy. (Key words: China, economic development in Asia, SEZ, North Korea)
11 Lawmakers Visit Kaesong Complex
A group of 11 lawmakers of the governing Uri Party on Wednesday made a one-day visit to the joint inter-Korean business site in Kaesong, North Korea, in an effort to convince the United States to include goods made in the industrial complex in the free trade agreement (FTA) currently being negotiated. [Sanctions]
PYONGYANG INTERNATIONAL EXHIBITION FOR SCIENCE, TECHNOLOGY AND BOOK PUBLISHING
(3-5 June 2006) Exhibition Profile
Dates: 3-5 June 2006 Venue: New Technology and Innovation Hall, Pyongyang, D.P.R. of Korea. Organizers: DPRK Committee for Cultural Relations with Foreign Countries. Special Cultural Delegation (3-6 June 2006): Everyone interested in this event, including professional journalists and US citizens, is welcome to join a Special Cultural
Delegation organised by L&J Development & Consultancy.
Increase in Agricultural Production Called for
Sariwon, January 15 (KCNA) -- A meeting of agricultural workers of the Migok Co-op Farm in Sariwon, North Hwanghae Province took place on the spot on Jan. 15 to challenge all organizations of the Union of Agricultural Workers of Korea and other agricultural workers across the country to a socialist emulation for a significant increase in agricultural production this year. An appeal read out at the meeting said that the joint New Year editorial clarifies the tasks to be undertaken to make a signal advance in solving the food problem for the people by holding fast to the farming as the great foundation of the country in this significant year and ways to do so. It called on all the UAWK organizations and agricultural workers to turn out as one in the drive to implement the policy of the Workers' Party of Korea to carry out a revolution in farming. Then followed speeches. Kang Chang Uk, chairman of the Central Committee of the UAWK, was among those present there.
Electricity Production Goes Up
Pyongyang, January 15 (KCNA) -- Officials of the Ministry of Power Industry, with a sense of responsibility for a pilot in the building of an economic power, are working hard to make an epochal turn in the power production from the outset of the year. Pak Nam Chil, minister of the Power Industry, told KCNA: The ministry is concentrating all the forces on operating the already repaired generating equipment at full capacity, while considerably raising the existing capacities of the thermal- and hydro-power stations across the country. In particular, it is gearing up preparations for the general overhaul of facilities at the power stations with main emphasis on putting production of the Pukchang Thermal-power Complex and the Pyongyang Thermal-power Complex on normal track. The workers of the hydropower stations are successfully carrying on the repair of hydraulic power structures, managing water well and operating them in a scientific and technical way. Great efforts are channeled to manufacturing highly efficient turbines so as to boost the turbine efficiency. Along with this, they are taking various measures to make best use of the produced electricity. They are readjusting the power transmission system to reduce the line loss and distributing electricity in a rational way. Officials, workers and technicians of power stations in different parts of the country including the Chongjin Thermal-power Plant have turned out in the increased production of electricity, solving the needed materials and equipment components with their own efforts.
Light Industrial Workers Respond to Call of Joint Editorial
Pyongyang, January 15 (KCNA) - Working people of the light industrial factories of the DPRK are striving hard to increase the variety and quality of products in response to the joint New Year editorial's call for decisively improving the production of consumer goods. The Ministry of the Light Industry makes each factory push ahead with the work of putting production process on the latest science and technology to suit its actual conditions, following the example of the Pyongyang Textile Machine Plant in successfully building the technical processes for the streamlined production of a new kind of weaving machine. The workers of the Sariwon Textile Machine Plant have set about the work of renovating the metal needle band production process and those of the Pyongyang Textile Mill the technological updating of dyeing and weaving preparatory processes. The knitting factories throughout the country have taken thoroughgoing measures to provide raw materials to the production of more knitted goods and fabrics and the Songyo and Kanggye Knitting Factories have already woven a large amount of various quality goods. The workers of the Wonsan Shoes Factory and the Sinuiju and Chongjin Footwear Factories are striving hard to produce various kinds of footwear that please the people's tastes. A drive for increased production of better velvet, polychromatic and other silk fabrics is taking place at the Nyongbyon and Pakchon Silk Mills. The fulfillment of daily silk thread production assignments have been reported from the silk-reeling mills in Hamhung, Huichon and Pyongyang. Production has been put on a normal track at the essential foodstuff factories in Pyongyang, Kanggye, Sinuiju and other parts of the country through technical updating of production processes.
Trouble at Home, Hyundai to Boost U.S. Production
Twenty years after first exporting cars to North America, Hyundai Motor is witnessing a deep sales crisis there. Although the company has managed to stake out a 3 percent share of the U.S. auto market, the brand's once-competitive prices are rising as the won continues to appreciate against the dollar. The yen, meanwhile, has fallen to a 13-month low, allowing Japanese rivals like Honda and Toyota to drop their prices. Hyundai's ongoing labor strife in Korea, which flared back into the news last week, only serves to worsen the situation. In an effort to deal with both problems, Hyundai is turning to its U.S. workers, ratcheting up production at its Alabama plant. "The Alabama factory is just more reliable than our Korean plants," a Hyundai official said. [FDI]
Hopes of Economic Build-Up Spread Following DPRK Nuclear Test
by the Institute for Far Eastern Studies
January 3rd, 2007
This report, published by the Institute for Far Eastern Studies at Kyungnam University, notes, "It is being stressed that the amount of effort concentrated on making North Korea a nuclear power will now be focused on improving the lives of its citizens, and efforts previously reserved for strengthening military might will now be used not only to improve the military but also to prepare the framework for an economically powerful country."
General Offensive for Building Socialist Economic Power Called for
Pyongyang, January 7 (KCNA) -- Rodong Sinmun Sunday in a signed article calls for waging a vigorous general offensive for building a socialist economic power, holding aloft the slogan of self-reliance. Self-reliance has been a source of strength that helped build a strong self-supporting national economy on this land and remains an invariable mode of struggle in socialist economic construction, the article says, and continues: It, first of all, is a steadfast revolutionary stand to settle all issues arising in the socialist economic construction by one's own efforts in a responsible manner under any circumstances. It is necessary to independently solve any problem with one's own technology and resources, believing in one's own people on the principle of self-reliance. This is a sure guarantee for success in building a socialist economic power. [Juche]
Pyongyang Law Office Opens
Pyongyang, January 11 (KCNA) -- The Pyongyang Law Office, an independent corporate body, has started its operation to provide services for the solution of legal matters arising in various sectors. Ho Yong Ho, chief of the office, told KCNA that his office provides legal services upon application and assignment by foreign-invested businesses (equity or contractual joint ventures and wholly-foreign owned enterprises) and Koreans in overseas as well as by the institutions, establishments, organizations and citizens at home. As for the categories of services, he said: It introduces the laws and regulations of the DPRK on foreign-related matters, Kaesong Industrial Zone, Kumgangsan Tourist Zone and others. It also holds legal consultations concerning the selection of the investment project, establishment and operation of foreign businesses, dissolution and bankruptcy of businesses, concerning documents of legal nature including feasibility study reports and memorandum of association, concerning trade, transport, finance, insurance, intellectual property, real property and concerning civil law relations between corporate bodies, corporate body and individual and so on. Legal services are offered on the principle of fairness, promptness and legality and on the basis of the facts, laws and contracts, while the service performer is held accountable before the party concerned and the law for the service offered. Application for the legal service may be made in person or written form, or by means of communications device. Foreign investors are well advised to consult the office prior to their investment in the DPRK, which will prove a wise choice for the guarantee of their investment security. [Economic reforms]
Rodong Sinmun Calls for Establishing New International Economic Order
Pyongyang, January 12 (KCNA) -- It is one of the important guarantees for the prosperity and development of countries and nations to establish a new international economic order. Rodong Sinmun today says this in a by-lined article. It goes on: The existing international economic order is an outdated order dating back to the colonial era and this is a main factor of creating an unstable situation. It is impossible for developing countries to develop economy and to be free from the imperialists' economic subjugation and exploitation as long as this order remains in force. It is one of the principled issues arising in establishing the new international economic order to respect sovereignty. No country should be allowed to meddle in other's internal affairs or impose its economic mode upon other countries. At present the imperialists claim that their economic mode serves as a model for the world and all countries should follow it. This is nothing but an unreasonable economic pressure and infringement upon their sovereignty. Any attempt to permit this would only worsen the inequality in the field of economy and, consequently, encourage the imperialists to intensify the exploitation and plunder of developing countries by dint of the outdated international economic order. It is an important requirement for establishing a new fair international economic order to categorically oppose and reject the moves of the imperialists for "globalization."
Korea, ASEAN Agree to Sign Service-Investment FTA
Korea and the 10-member Association of Southeast Asian Nations (ASEAN) have agreed to sign a service-investment free trade agreement (FTA) by November to expand economic ties, the Ministry of Foreign Affairs and Trade said Friday. South Korean Foreign Minister Song Min-soon and his ASEAN counterparts agreed to sign a statement on the FTA by November in a meeting of economic ministers in Cebu, the Philippines, Thursday. [IM] [FTA]
Leading Economic Officials All Out to Attaining New Year Tasks
Pyongyang, January 5 (KCNA) -- The joint New Year editorial calls upon the leading economic officials to become true patriots who take charge of things good for the development of the national economy of their own accord. In an interview with KCNA, Vice-premier of the Cabinet Kwak Pom Gi said that the duty of the Cabinet is very important in implementing the tasks put forward by the joint New Year editorial. He remarked: We will pay deep attention to achieving a balanced development of the national economy and making a proper use of economic levers and will make everybody strive harder for the prosperity of the nation at his post.
Goh Mulls Korea-Japan Undersea Tunnel
By Jung Sung-ki Staff Reporter Former Prime Minister Goh Kun is considering making the construction of an undersea tunnel linking South Korea and Japan as a key campaign pledge for the Dec. 19 presidential election, Goh's aides said on Sunday. The plan is construed as part of the presidential hopeful's atempt to counter campaign pledges ranging from economic development to large-scale construction projects offered by other high-profile contenders such as former Seoul Mayor Lee Myung-bak and Rep. Park Geun-hye, former chairwoman of the main opposition Grand National Party (GNP).
Under the proposal, both an undersea railroad and a highway would connect Koje Island in South Kyongsang Province to Kyushu in Japan, he said. ``Once completed, the undersea tunnel is expected to boost the nation's economic development and also help build a regional economic community,'' the spokesman said. He said the project could produce about 54 trillion won in annual economic benefits and a 10-fold increase in visits between the two countries. The construction cost is estimated at a maximum of about 200 trillion won, he said. The undersea tunnel would also link the Kyongui inter-Korean railway connecting Munsan in the South with Kaesong in the North and the Trans-Siberian Railway (TSR) that links Moscow to the Russian Far East. If these connections are realized, they would facilitate exports between the countries involved, he said. [Railways]
Business owner calls Kaesong ‘needed for peace’
Joint Korean industrial park should continue despite current political climate, he says Amid an international standoff in the fallout of North Korea’s October 9 nuclear test, ShinWon Corporation Chairman Park Sung-Chul expressed his optimism about the future of the Kaesong (Gaeseong) Industrial Complex, a joint Korean project located just north of the border between the two Koreas. "A bud of hope is in flush at Kaesong," Park said in an interview with the Hankyoreh. ShinWon, which makes clothing, is cited as one of the most successful companies operating in Kaesong. Park said that he believed Kaesong would see no further crises like the ripples of uncertainly and criticism felt after the North’s detonation of a nuclear device. But even right after North Korea tested its nuclear device, Park said, workers at the ShinWon plant in Kaesong were busy at work, with no signs of tension. Park said the negative effects from a political rift between Seoul and Pyongyang are temporary. "At the Kaesong Industrial Complex, the sons and daughters from the two Koreas are working. Even if a war breaks out, the Kaesong complex will be the last place of shelter, because no side will level a gun at their own children," he said.
S. Korea's exports reach record high of US$325.9 bln in 2006
South Korea's exports gained 14.6 percent from a year earlier reaching a record US$325.9 billion in 2006 a government report said Monday. The sharp rise in growth numbers marks the fourth straight year that the country's exports have grown by double digits, the Ministry of Commerce, Industry and Energy said. The preliminary tally showed the country's imports rising 18.4 percent to $309.3 billion on a customs clearance basis, resulting in a trade surplus of $16.6 billion.

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