DPRK Economy, trade and business10

Economy, trade and business

2010
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Articles on current developments, compiled by Tim Beal.
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DECEMBER 2010

Inter-Korean Trade Through Gaesong Industrial Park Increases in 2010
Despite the friction between the two Koreas, inter-Korean trade through the Gaeseong industrial park has increased this year. The Korea Customs Service said on Wednesday that the volume of inter-Korean transactions through the industrial park surged by 62 percent from a year earlier to 1.3 billion * US dollars during the January to November period. Furthermore, the number of South Korean companies operating at the complex grew by 30 percent to 121 compared to 93 in 2009. Officials at the service say the increase comes as the economic recovery helped boost production. However, excluding the Gaeseong transactions, overall inter-Korean trade dropped by 30 percent to 464 million dollars.
* original had million. It has been confirmed by email that this was a mistake (Tim Beal) [Kaesong] [Inter-Korean business] [Trade] [Sanctions]
N.Korean Dollar Earners 'Absconding'
An increasing number of North Korean officials engaged in earning hard currency abroad have absconded with the dollars following financial sanctions against the North, observers say. "The North is suffering difficulties settling its overseas bank accounts as the financial sanctions continue," a senior South Korean government source said Thursday. "Many North Korean officials carry dollars in bags as stopgap solutions, but some of the dollars vanish in the process." Many North Korean officials abroad carry dollars in cash to strike deals, because it is difficult for them to settle bills the normal way. They earn the money from arms deals or through bogus companies. But some of them abscond with the cash. The source added many North Korean arms deals have been uncovered in recent days in accordance with UN Security Council resolutions sanctioning the North.
"Some people may doubt the effectiveness of the UN sanctions, but in fact they're causing the North a great deal of pain," another South Korean government official said. "That's why the North is trying to attract the international community's attention with provocations like the shelling of Yeonpyeong Island." [Sanctions]
Why N.Korea Values Its Restaurants Abroad
The Okryugwan chain of North Korean restaurants opened its first China branch in Beijing in 2003. Located in the Wangjing district, which has large numbers of Korean residents, it apparently makes more than W7 million (US$1=W1,141) a day in revenues. The chain is most famous for naengmyeon or cold noodles, but its beef rib stew and kimchi are also popular, and customers can buy them to take home. Seasonal North Korean delicacies such as steamed crabs from the East Sea or wild mushrooms are also served. So popular are the restaurants that a knockoff has popped up in Shanghai employing Korean Chinese instead of North Koreans. North Korean restaurants are also famous for the performances put on by their staff, who sing not only their country's folk and pop songs but also South Korean pop songs. Staff at the Shanghai Okryugwan reportedly sing even American pop songs like the "Titanic" theme. Most of the North Korean staff are graduates of Jang Chol Gu University of Commerce or attended professional culinary school in Pyongyang. Earlier this year, a beautiful waitress at a North Korean restaurant in Siem Reap, Cambodia gained near-celebrity status in South Korea after a picture of her was posted on the Internet. North Korean restaurants began opening overseas branches during the 1990s. Okryugwan has outlets in China, Vietnam, Thailand, Cambodia, Laos, Mongolia, Russia, Nepal and Dubai. North Korean provincial governments, their affiliated agencies and other organizations raced to open restaurants abroad, and now there are more than 100.
Kim Jong Il Inspects Taedonggang Eel Breeding Farm
Pyongyang, December 15 (KCNA) -- General Secretary Kim Jong Il gave field guidance to the Taedonggang Eel Breeding Farm of KPA Unit 522. After being briefed on the farm before a huge map showing its panoramic view, he looked round various places of the farm including a combined control room, an analysis and experiment room and indoor fish ponds to learn in detail about its technical equipment and eel breeding and management. The farm has put all its production processes on a high level of scientific and modern basis, thus getting the examination of water temperature and its quality and all other processes computerized, he said, adding that the farm is capable of substantially benefiting people as it is fitted with cutting-edge equipment and was built on the principle of profitability.
DPRK prices, exchange rate skyrocket after shelling
Posted Date : 2010-12-15 (NK Brief No. 10-12-15) After North Korea rained artillery onto Yeonpyeong Island, military tensions have continued to grow, impacting the price of rice and the currency exchange rate in the North''s traditional markets. On December 13, NK Intellectual Solidarity reported that this has shaken the livelihoods on North Korean people. According to the group, rice has shot up 77 percent, from 900 won to 1600 won per kilogram, since the November 23 attack. The price of corn has also gone up by 50 percent, to 600 won per kilogram. At the same time, the exchange rate for Chinese yuan has risen, at least in the market in Hyeryong, from 220 to 350 won per yuan, a 59 percent increase. [Clash]
N.Korean Crackdown on S.Korean Goods Failing
North Korea has been cracking down on South Korean-made goods since a halt to inter-Korean trade following the sinking of South Korean Navy corvette Cheonan in March. But the measure has been apparently ineffective. A photo taken in October and obtained Friday by the Chosun Ilbo shows a North Korean Workers Party official’s home in the city of Rajin-Sonbong with a LG TV. Another LG TV is featured in a photo released in September by the [North] Korean Central News Agency of Kim Jong-il visiting the March 5 Youth Mine in Jakang. [Trade] [Inversion]
'Yeonpyeong shelling causes inflation in Pyongyang'
By Kim Young-jin North Korean merchants are exchanging their local currency en masse as war jitters in the wake of Pyongyang’s attack on Yeonpyeong Island have stoked fears that the won may lose its value in the case of war, a report said. According to North Korea Intellectuals Solidarity (NKIS), a Seoul-based NGO comprised of defectors with lines into the North, currency exchange rates have skyrocketed since the Nov. 23 incident. One hundred yuan, which before the shelling went for 2,000 won, is now worth 35,000 won, NKIS said in a report released Sunday. [Clash]
China Leases Rajin Port from North Korea
Mar. 9 – China has gained a directly controlled foothold in the Sea of Japan for the first time in over a century as North Korea has agreed to lease its Rajin Port for the next ten years. The port, which is on North Korea’s east coast next to the city of Rason, gives China easier access to South Korean and Japanese markets, and opens up Jilin Province to easier Northeast Asian exports. [SEZ]
North Korea looks to spur free-trade zone
Published: Dec. 17, 2009 at 9:34 AM By LEE JONG-HEON, UPI Correspondent SEOUL, Dec. 17 (UPI) -- North Korea's reclusive leader Kim Jong Il made a visit to the country's sputtering free-trade zone for the first time since its foundation two decades ago in an apparent bid to woo much-needed foreign capital. [SEZ]
North Korea Renews Film Industry Trade Alliance with Russia and China
The region is becoming known locally as the “North East Asian Economic Co-Prosperity Co-Operative Sphere”, or the Eastern Alliance. The trade deals were actually signed some time ago and the North Korean leader is a frequent visitor to our region. In return for Russian timber and Chinese steel the North Koreans have been given a high profile window into the international free market for a range of North Korean produce and business opportunities, including ethnic arts and crafts, tourism opportunities, education, entertainment, construction, heavy industry, expensive toys and special equipment. [SEZ]
Coal Output on Increase
Pyongyang, December 8 (KCNA) -- Coal output is on a steady increase in the Democratic People's Republic of Korea. Collieries belonging to the Anju Area Coal Mining Complex have enlarged pits to increase the proportion of mining by machines and fulfill their daily assignments at 120 percent. Those belonging to the Sunchon Area Youth Coal Mining Complex, including the Chonsong, February 8 Jikdong and Sinchang youth coal mines are giving priority to tunnelling to sharply boost the output. The Ungok Coal Mine has developed a large coalfield to double its output, while the Namdok Coal Mine has been topping its daily target. Coal mines in Tokchon area, with detailed plans for the winter time, have raised the output through continuous drilling and blasts and full operation of vehicles. Increased production has also been reported from the Kangdong, Kyongwon, Onsong, Chonnae and Myongchon area coal mining complexes.
DPRK-PRC trade up 26.7 percent
Posted Date : 2010-12-03 (NK Brief No.10-12-3-2) North Korean trade with China has jumped 26.7 percent during the first eight months of the year, with the bulk of its imports made up of crude oil, and its largest export being coal. Despite the increasingly severe food shortages in the North, food imports from China were actually down 7.5 percent, while on the other hand, fertilizer imports shot up by 162 percent. [Trade]
NEW PYONGYANG MANAGEMENT LAW AIMS AT MODERNIZATION
Posted Date : 2010-11-30 (NK Brief No. 10-11-30) North Korea has recently revised the Pyongyang City Management Law in order to support ongoing modernization efforts by increasing the management and operational authority of the Cabinet and of the State Planning Committee. On October 21, the Cabinet newspaper ‘Minju Chosun’ ran an article emphasizing the need to ensure that necessary capital and supplies were guaranteed for the construction of 100,000 new residences in Pyongyang and now it appears the North is backing up this modernization drive with the law. [Economic reform]

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NOVEMBER 2010

In Chinese border town, trade with North Korea can be lucrative but problematic
DANDONG, CHINA: Here on the Korean border, memories of the Korean War -- known as the "War To Resist U.S. Aggression and Aid Korea" -- live strong. A bridge bombed by U.S. planes is a major tourist attraction. And at the Songtaoyuan restaurant, serving traditional North Korean delicacies like dog meat hot pot, singers in traditional North Korean costumes at night bring customers on stage to help sing a Chinese martial song popular during the war, the Chinese People's Volunteer Battle Song. (Keith B. Richburg - The Washington Post) DANDONG, CHINA - Trucks rumble over the "China-Korea Friendship Bridge" coming back from North Korea. Cross-border trade between the two countries reached $2.79 billion in 2008. China provides most of North Korea's food, fuel, weapons and consumer goods. North Korea provides minerals to China, and also seafood, like shrimp, frozen fish and rare sea cucumber, which is highly prized and believed to have some medicinal properties. (Keith B. Richburg - (Photo by Keith B. Richburg/The Washington Post)) A Chinese boat sails past office and residential buildings at the sunset on the Yalu River, the China-North Korea border river, near North Korea's town of Sinuiju, opposite the Chinese border city of Dandong. (Andy Wong - (AP Photo/Andy Wong)) DANDONG, CHINA: China and North Korea have been allies since the Korean War, known here as the "War To Resist U.S. Aggression and Aid Korea. During the war, American bombers destroyed the iron bridge across the Yalu River connecting Dandong, in China, with Sinuiju in North Korea. The remains of the bridge, on the Chinese side, have become a tourist site, known as the Yalu River Broken Bridge, a remembrance of the war. A new "Sino-Korean Friendship Bridge," constructed next to the Broken Bridge, now carries trucks to and from North Korea, a sign of the two countries' growing trade ties. Pictured, a lone tourist wanders across the Broken Bridge. (Keith B. Richburg - (Photo by Keith B. Richburg/The Washington Post)) Visitors use binoculars to look at the North Korea side on a bridge destroyed during Korean War on the Yalu River, the China-North Korea border river, near North Korea's town of Sinuiju, opposite the Chinese border city of Dandong. China's premier called on all sides to exert "maximum restraint" over renewed tension on the Korean peninsula, adding that Beijing opposes military provocations in any form. (Andy Wong - (AP Photo/Andy Wong)) Chinese people performs a morning exercise at a public park along the bank of the Yalu River, the China-North Korea border river, in Dandong, Friday, Nov. 26, 2010. (Andy Wong - (AP Photo/Andy Wong)) Network NewsX Profile By Keith B. Richburg Friday, November 26, 2010; 9:40 PM DANDONG, CHINA - Just across the Yalu River from North Korea, this sleepy border town in China's Rust Belt is booming. Towering apartment blocks are going up on the city's western edge near the new Friendship Road Bridge, which will soon be the second bridge connecting Dandong to the North Korean city of Sinuiju. Offices for trade and export-import companies dot the main road along the riverfront. A new airport is being built. Shops sell North Korean liquor, blueberry wine, ginseng, stamps and music CDs. And North Korean restaurants offer popular Korean dishes such as stewed dog leg and spicy deep-fried dog. Dandong - like other parts of northeastern China along the 870-mile border - aims to profit from China and North Korea's growing cross-border trade, now close to $3 billion a year. Even as the United States and its allies are looking to isolate the Pyongyang regime for its nuclear program and erratic behavior, including this week's artillery attack on a South Korean island, this hardscrabble part of China is finding that being North Korea's back door to the world can be a lucrative business. [China NK] [Trade]
N.Korea Reverts to Hardline State Control
The North Korean regime is enacting sweeping changes to the law to bolster state control. A source familiar with North Korean affairs on Tuesday said four North Korean laws covering economic planning were revised in April and laws governing management of Pyongyang were revised in March. z
DPRK cabinet discusses 4th quarter projects as Chinese participation grows in the Pyongyang International Trade Fair
Posted Date : 2010-11-08 (NK Brief No. 10-11-8-1) North Korea held an extended meeting of the entire Cabinet in order to discuss the types of projects to be pursued in the last quarter of the year, and to strategize on how these projects should be implemented. On October 28, the CHOSUN SHINBO reported on an article in the MINJU CHOSUN, which is under the control of the North Korean Cabinet. According to the article, efforts are being made to strongly construct the foundation upon which exemplars of the ‘military-first’ era will be erected. Production lines and facilities in all realms of the People’s Economy need to come into alignment with CNC, and efforts need to be made toward modernization, environmental protection, and reforestation. In particular, the Cabinet has pledged to decisively improve city management and restore socialism in cities and agricultural villages. Efforts will be focused on restoring socialist principles to economic management and ensuring that the centrally planned national economy is implemented. [China NK]
DPRK restricts private car use, rattles markets
Posted Date : 2010-11-01 (NK Brief No. 10-11-01-1) The North Korean Ministry of People’s Security (MPS) recently issued an order restricting the use of automobiles and warning that any car or truck used to earn private income would be confiscated by the State. There were a few cases of authorities cracking down on the use of private buses in the mid-2000s, but this is the first time there has been a widespread crackdown on the private use of all vehicles. According to a report from the Daily NK, a source from North Hamgyeong Province has revealed that “on an order from the MPS, a crackdown on privately-owned cars, buses, and 1.5-2 ton small trucks began last month,” and, “all traffic police were mobilized and are checking all registrations, car-use permits, and driving licenses.” According to the source, each regional transportation authority is filing comprehensive situation reports, which show that with the exception of cars used by the elite, all illegally-used cars are being confiscated. Even cars used by military-run foreign capital organizations are subject to inspection by police.
N.Korea Pursues Dream of Int'l Business Hub
North Korea is pushing the implausible dream of turning the city of Rajin-Sonbong in North Hamgyong Province into an international freight brokerage, export processing and finance hub. A 3D video elaborating on a blueprint for the development of the city was made right after leader Kim Jong-il visited China in May. The video, obtained by the Chosun Ilbo from a North Korean source in China, says the North worked out a plan in June to develop the city by giving distinctive roles to each of its six districts. "The video was made as material for reporting to Kim Jong-il," the source said. "Discussion on the blueprint started right after Kim's visit to the city in December last year and it was then hastily completed when people were talking about possible Chinese aid to the North after Kim's visit to China in May." In December, Kim reportedly reprimanded senior officials there for making no progress in two decades since it was designated a development zone. The regime upgraded Rajin-Sonbong to a special city in January. Rumor has it that Kim's brother-in-law Jang Song-taek, the influential director of the Workers Party's Administration Department, is pushing for development there. [SEZ]
NK leases islands to Beijing: report
Source: Global Times [03:11 October 29 2010] Comments By Wang Zhaokun South Korea's Hankook Ilbo daily newspaper reported Thursday that North Korea has decided to extend the lease terms of two islands to Chinese companies for the establishment of a free trade zone. However, analysts say the zone will more likely be developed as a trade area to facilitate business with China. Both islands are located on the Yalu River, which constitutes the northwestern boundary between North Korea and the northeast region of China. Hankook Ilbo reported that North Korean leader Kim Jong-il agreed to establish a free trade zone of 50 square kilometers on the two islands during his visit to China in May, and foreigners won't need a visa to visit the islands. The extension of the lease term by 100 years - starting this past May - to Chinese companies is unusual because Pyongyang generally leases land to foreign companies for 50 years, the report said. [SEZ] [China NK]

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OCTOBER 2010

Can North Korea embrace Chinese-style reforms?
China Economic Review September 23, 2010: Will North Korea follow China's lead and open up its economy? The view from inside the Kimchi curtain By Malcolm Moore Could North Korea be saved by Chinese-style reforms? In return for its continued support, China is pushing the rogue state to liberalise its economy, and Chinese firms are making inroads into various sectors, especially infrastructure and mining. Earlier this week, I interviewed Felix Abt, a Swiss business consultant who was appointed managing director of a pharmaceutical joint venture in Pyongyang with a brief to turn around the loss-making company, about his experiences over the last eight years. [Opening] [Context] [Agency] [FDI] [China model]
Markets Booming in N.Korea
About 300 markets are doing lively business throughout North Korea despite the regime's attempt to suppress them, according to data an intelligence agency submitted to Grand National Party lawmaker Yoon Sang-hyun of the National Assembly's Foreign Affairs, Trade and Unification Committee on Wednesday. "Markets in the North are places where goods are transacted and information is exchanged at the same time, Yoon said. "They pose a threat to a regime that is hostile to markets." The regime has tacitly allowed markets to expand to make up for the shortage of daily necessities in the wake of a botched currency [Marketisation]
Asahi: NK-China Tax-Free Market Opens in Tumen City
Write 2010-10-20 07:06:18 Update 2010-10-20 08:49:55 A Japanese daily says a “free market” operated by North Korean and Chinese citizens has opened near the Tumen River, which flows between China and North Korea. The Asahi Shimbun said Wednesday that the market was established in the city of Tumen in China’s Jilin Province a week ago. The paper said the ten-thousand-square-meter market allows Chinese people to buy up to eight-thousand yuan worth of North Korean goods tax-free each day for resell in China. The paper said that on the day the market opened last Wednesday, some 150 Chinese purchased tax-exempt frozen squid from North Koreans at the market for resell. The Asahi said North Korea and China are apparently expanding bilateral economic exchanges following North Korean leader Kim Jong-il’s visit to China in August, citing Chinese firms’ recent move to employ North Korean workers. [SEZ] [China NK]
Investors in DPRK take huge hits; interest in FDI plummets
Posted Date : 2010-10-18 (NK Brief No. 10-10-18-1) The majority of joint ventures investing in North Korea have suffered significant losses since the South Korean government began to enforce sanctions as a result of the sinking of the ROKS Cheonan. On average, companies have incurred losses of almost one billion won, and most companies are no longer interested in investing in the North. According to the Korea Chamber of Commerce and Industry, a survey of 500 companies (200 inter-Korean economic cooperative schemes and 300 other companies involved in business with the North) showed that 93.9 percent of respondents said they had suffered losses due to trade restrictions put in place due to the Cheonan incident, while 66.5 percent responded that they faced “financial difficulty” due to the sanctions. The companies have suffered an average of 974 million won in losses. [Sanctions] [FDI] [SK NK policy]
China Guodian Plans Investment In North Korea
Tuesday 2010-10-19 15:59 October 19 -- China Guodian Corporation intends to invest in North Korea, reports yicai.com, citing information on the company’s website. Guodian’s vice general manager commissioned an investigation into North Korea’s infrastructure, namely expressways, ports, as well as chemical and power generation facilities during a visit to North Korea from October 11-13. The company did not disclose further information regarding those plans. Shares of GD Power Development (600795) closed at 3.67 yuan, down 0.81 percent. [FDI] [China NK]
Route to DPRK for European companies
This Guidebook on DPRK is part of a series of guides that are funded under the Asia Investment Facility, an instrument of the Asia-Invest Programme - a European Union initiative. The Facility is used to highlight investment opportunities in selected emerging and developing countries in Asia where there is relatively little information on the market.
N.Korea Makes Overtures to S.Korean Firms in China
North Korean state-run companies are covertly hustling South Korean firms in China for business after Seoul halted all inter-Korean trade on May 24 over the North's sinking of the Navy corvette Cheonan, Radio Free Asia said Wednesday [Overtures] [Sanctions]
INTER-KOREAN TRADE UP 51.3% IN FIRST HALF OF 2010
Posted Date : 2010-10-04 (NK Brief No. 10-10-4-1) Trade between the two Koreas in the first half of 2010 totaled 980 million USD, 51.3 percent more than the 650 million dollars-worth of trade last year. North Korea’s trade with China was also up, by 16.4 percent, to 1.28 billion USD. Kim Jong Il has made two trips to China and the North has taken other steps to boost cross-border trade with the Chinese. According to a recent report comparing inter-Korean trade to that between North Korea and China, North-South trade in 2007 equaled 91 percent of Pyongyang’s trade with Beijing, but as inter-Korean relations chilled, that number fell to 65 percent in 2008. This year, that number climbed back up to 77 percent, largely because the Kaesong Industrial Complex, which has avoided political entanglement, has grown 96 percent since last year. Textiles and home electronics top the list of goods in inter-Korean trade, while minerals are the top item traded across the DPRK-PRC border. [Trade] [Sanctions]
Western Businesses Bet on Future N.Korean Reform
North Korea is believed to have potential as an outsourcing hub for western companies, CNN reported on Wednesday. "A few western entrepreneurs with businesses in the capital city, Pyongyang, are betting the future of the 'Hermit Kingdom' will bring profit," it said. Just as many entrepreneurs who had opened business in China just before Beijing fully opened itself to the capitalist economy reaped huge windfalls, so these businessmen hope that having a business foothold in North Korea will give them an advantage when the North eventually opens up. European businesspeople especially believe that North Korea to be "one of the last frontiers." Because the United States bans business with North Korea, Europeans are more active in doing business in the reclusive country. "Foreigners running joint ventures with state-run businesses are staking a claim on the economic prospects for the country, equivalent to opening a shop in Beijing before economic reforms took root, or starting an enterprise in East Germany before the Berlin Wall fell," CNN said. Despite sanctions against North Korea by the UN Security Council, there are about 100 western businesspeople in Pyongyang, it said, citing a European entrepreneur there. What makes Pyongyang currently attractive is dirt-cheap but quality labor, which costs only half of China's, especially in making games for computer and mobile phones. Volker Eloesser, a German who set up a game manufacturing business in Pyongyang, told CNN that "it was fairly easy to find English-speaking, IT-trained workers" as many of his 45 employees had experience of working for foreign companies in China, and a partnership with North Korea's General Federation of Science and Technology helps secure recruitment. However there are increasing difficulties in taking North Korean employees overseas for training as visas are frequently denied amid sanctions imposed on the regime over its nuclear and missile developments, according to CNN. [Opening] [Offshoring]
North Korea -- outsourcing hub?
By Pauline Chiou and Kevin Voigt, CNN September 29, 2010 -- Updated 0320 GMT (1120 HKT) * A handful of western businessmen -- mostly European -- operate in North Korea * Nosotek, a joint venture with a German businessman, makes mobile video games * Nosotek founder Volker Eloesser: "(North Korea) is one of the last frontiers" * Company employs 45 and provides outsource game development services (CNN) -- As North Korea's ruling elite gather for a rare conference of the country's ruling Korean Worker's Party, the world is watching for clues on the future of this secretive country. But a few western entrepreneurs with businesses in the capital city, Pyongyang, are betting the future of the "Hermit Kingdom" will bring profits. "It's one of the last frontiers," said Volker Eloesser, a German national who set up a game manufacturing business in North Korea three years ago. Foreigners running joint ventures with state-run businesses are staking a claim on the economic prospects for the country, equivalent to opening a shop in Beijing before economic reforms took root or starting an enterprise in East Germany before the Berlin Wall fell. North Korea: Winds of change? "I needed to have something which is, let's say, very interesting and challenging," said Eloesser, who sold his previous IT business in Germany before starting Nosotek in 2007. "So North Korea is one of the last wide spots on the map, so I traveled there and I found some good opportunities." Eloesser estimates there are about 100 Westerners living and working in Pyongyang -- mostly Europeans since the U.S. forbids economic ties with the country. [Offshoring] [IT] [IJV] [Sanctions] [Inversion]

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SEPTEMBER 2010

Most S.Koreans Worry About Reunification Cost
The majority of South Koreans are concerned that the cost of reunification of the two Koreas will outweigh the benefits, even though they believe it is necessary. They are apparently worried about having to bear a heavy financial burden immediately, which they fear could overshadow the long-term development benefits. Lee Kark-bum, the chairman of the Presidential Committee on National Intelligence Strategy, in a seminar hosted by the Hansun Foundation on Wednesday cited a nationwide telephone survey of 1,000 adults where 79.3 percent of respondents said reunification is necessary, far outdistancing the 20.7 percent who said it is not. [Unification cost]
At Kaesong, S.Korean workforce nears regular levels
Observers speculate a connection with President Lee's 'second Kaesong' remark By Son Won-je, Staff writer The number of South Korean workers staying at the Kaesong Industrial Complex will increase to around 900 starting some time around Sept. 20. Following the Lee Myung-bak administration’s May 24 measures after the sinking of the Cheonan, the number was halved to about 500 from its weekday level of around 1,000 people. As this follows the first increase in workers since the mid-July increase to around 600, the size of the workforce at the complex has recovered nearly 90 percent of its pre-May 24 levels. “With the reduction in the workforce to date, tenant companies have been complaining about production and quality management and fatigue among employees,” said a Unification Ministry official Tuesday. “In consideration of the difficulties experienced by tenant companies, we have decided to increase the number of workers staying at the complex.” [Kaesong]
Pyongyang Int'l Exhibition Opens
Pyongyang, September 13 (KCNA) -- The 7th Pyongyang Int'l Scientific and Technological Book Exhibition was opened with due ceremony at the Pyongyang Centre for Cultural Exchange with Foreign Countries on Monday. Displayed in the venue of the exhibition are latest scientific and technological books and data contributed by organizations from at least 50 countries including the DPRK, China, Russia, Nigeria, New Zealand, Germany, Singapore, UK, Italy, Spain, Egypt, Thailand, France and Poland and an organization of overseas compatriots and international organizations including the International Union for Conservation of Nature and Natural Resources. Present at the opening ceremony were Choe Thae Bok, secretary of the Central Committee of the Workers' Party of Korea, Kim Jong Suk, chairwoman of the Korean Committee for Cultural Relations with Foreign Countries who doubles as chairperson of the organizing committee of the exhibition, and others, officials in the fields of education and media and scientists and technicians.
N.Korea 'Will Take 30 Years to Catch Up with South'
Yet another estimate puts the cost of Korean reunification at W3,500 trillion after President Lee Myung-bak called for a unification tax on Aug. 15 (US$1=W1,162). The latest estimate is the result of a survey of 20 experts with economic think tanks and securities firms published by the Federation of Korean Industries on Tuesday. A dozen respondents predicted reunification will cost more than W3,500 trillion, exceeding even the W3,000 trillion Germany spent on bringing east and west together over 20 years. A handful even said the cost will surpass W7,000 trillion. Crisis management (sic) is estimated to account for 19.1 percent, costs for political, military, economic and social integration 34.4 percent, and spending to close the gap in living standards and incomes 46.5 percent, according to the experts. [Unification cost]
How Reunification Cost Is Calculated
The Unification Ministry on Monday explained how the government estimates the cost of reunification, saying the estimates factor in "all expenses needed in the process, from unifying two different political systems to integration and stabilization." The announcement follows President Lee Myung-bak's proposal of a "unification tax" on Sunday to prepare for what could be an astronomical outlay. The total includes the estimated cost of crisis management in the initial stage of reunification for emergency food and medical supplies for North Korea. For example, if all North Koreans are to be provided with grain for two months, that would require 13,000 tons of grain per day for 23 million people to take in at least 1,600 calories a day. The cost would be about US$500 million, including transportation and incidental expenses, to supply North Koreans with 700,000 tons of corn at $420 per ton for two months. An additional $250 million would be needed supposing that medical expenses and costs for daily necessities account for 50 percent of the minimum food expenses. [Unification cost]
Sudden Reunification 'Would Cost $2.1 Trillion'
President Lee Myung-bak's call for a "unification tax" comes after the Presidential Council for Future and Vision estimated the total cost of the reunification of the two Koreas at a staggering US$2.14 trillion by 2040 if the North Korean regime collapses suddenly. That is equivalent to W51.8 million (US$1=W1,180) for every South Korean based on a population of 48.74 million as of last year. But if the two Koreas are unified after the North gradually opens up, Seoul estimates the cost at $322 billion (about W379.96 trillion), or W7.79 million per person, a mere one-seventh. [Unification cost]
N.Korean Party Congress 'to Announce Economic Reforms'
North Korea is expected to announce economic reforms at the upcoming Workers Party congress including the revival of the Sinuiju special economic zone. Chinese experts said the plan is among several measures on the agenda of the extraordinary congress aimed at overcoming the country's economic hardship. N.Korean Party Congress 'to Announce Economic Reforms' North Korea is expected to announce economic reforms at the upcoming Workers Party congress including the revival of the Sinuiju special economic zone. Chinese experts said the plan is among several measures on the agenda of the extraordinary congress aimed at overcoming the country's economic hardship. The border town of Sinuiju was designated a special administrative region for 50 years in 2002 and given autonomous legislative and administrative powers to create a large-scale industrial complex and commercial district. Chinese entrepreneur Yang Bin was appointed its first administrator. But the plans collapsed when North Korea was found to be constructing a casino along the Apnok (Yalu) River and Chinese authorities arrested Yang for tax evasion. [China NK] [SEZ] [Economic reforms]
Kim Jong Il Inspects Manpho Unhwa Factory
Pyongyang, September 12 (KCNA) -- General Secretary Kim Jong Il provided field guidance to the Manpho Unhwa Factory alive with the dynamic drive for pushing back the frontiers of latest science and technology. After being briefed on the factory in front of a huge map showing its panoramic view, he went round the exterior and interior of the rebuilt factory to acquaint himself in detail with the technological updating and production there.
Lee administration open to second inter-Korean industrial complex
South Korean President Lee Myung-bak said Friday that his administration plans to found another inter-Korean industrial complex, but only if North Korea takes “future-oriented” measures. “Currently, the Kaesong Industrial Complex is perhaps the last channel for cooperation between North Korea and South Korea,” President Lee said during an interview with Russian state broadcaster Russia 24-TV at his office in the Cheong Wa Dae (the presidential office in South Korea or Blue House). “Thus, the South Korean government wants to maintain and develop it, but it is entirely up to North Korea.” Lee went on to say, “I think North Korea should apologize for the Cheonan incident and inter-Korean relations should be normalized,” said Lee during the interview, according to a transcript released by Cheong Wa Dae. [Lee Myung-bak] [Inter Korean business] [Spin]
Int'l Workshop on Wind Energy Technology Held
Pyongyang, September 10 (KCNA) -- The international wind energy technology workshop was held at the People's Palace of Culture between Sep. 6 and 10 under the sponsorship of the Pyongyang International New Technological and Economic Information Centre. Among the participants were officials of ministries and national institutions and those in the field of scientific researches and wind energy experts. Also attending it were Stefan Gsanger, secretary-general of the World Wind Energy Association, and wind energy experts of Germany and China. [Energy]
NKorea forges trade docs to dodge sanction: report
By KWANG-TAE KIM The Associated Press Wednesday, September 1, 2010; 6:50 AM SEOUL, South Korea -- North Korea has changed the names of its trading companies and falsified trade documents to avoid international sanctions and continue exporting weapons, a news report and an intelligence official said Wednesday. [Sanctions] [Spin]

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AUGUST 2010

Kaesong businesses request pre-Cheonan personnel levels
Cheonan sanctions halved the number of South Korean personnel at the complex
By Kim Seong-hwan Representatives of businesses at the Kaesong Industrial Complex have appealed to the government to expand the number of South Koreans in Kaesong to levels prior to the sinking of the Cheonan. Bae Hae-dong, head of an umbrella association representing 110 businesses operating in Kaesong, and five other association members made the appeal during a meeting with the Korea Federation of Small and Medium-sized Businesses (Kbiz) Chairman Kim Ki-mun at the Kbiz headquarters in Yeouido on Wednesday afternoon. [Cheonan] [Sanctions] [Kaesong]
N.Korea expert says Kim Jong-un could lead reform in N.Korea
Park Han-shik says N.Korea seems focused on economic growth, and did not witness concerns about political stability
By Lee Je-hoon “Kim Jong-un could become a figure like China’s Deng Xiaoping.” These words reflected the sentiment of Park Han-shik, professor of the University of Georgia, during a visit to South Korea that followed a trip to North Korea from July 3 to 8. Park predicts that like Deng, the architect of China’s reform and openness policy, Kim Jong-un, third son and reported successor of Kim Jong-il, could be someone to lead changes in North Korea. During an interview with the Hankyoreh at the Lotte Hotel in Seoul’s Sogong neighborhood, Park said that Kim Jong-un is expected to assume a major party role at the Party Representatives’ Assembly. “He seems likely to emphasize building ‘economic power,’” Park said. “North Korea’s domestic policy of late seems to be rather tilted toward economic development [Agency]
North Korea active in promoting trade in Northeast Asia
Source: Global Times [14:02 August 28 2010] Comments Yi Bok-il, Committee Head of Kimchuk Municipal People's Committee of North Korea,is being interviewed by the Global Times. Photo:Chen Rui Yi Bok-il(middle), Committee Head of Kimchuk Municipal People's Committee of North Korea,attends the opening ceremony of the 6th China Yanji Tumen River Area International Fair for Investment & Trade 2010, held Saturday in Yanji, Jilin Province. Photo:Chen Rui By Chen Rui The government of Kimchuk, North Korea may plan a trade fair next year and all the countries will be welcomed to participate, said Yi Bok-il, the committee head of Kimchuk Municipal People's Committee of North Korea, after the opening ceremony of the 6th China Yanji Tumen River Area International Fair for Investment & Trade 2010, held Saturday in Yanji, Jilin Province. Yi told the Global Times that it is the first time that Kimchuk took part in such economic activities and via the trade fair, the city aims to promote economic communication and trade cooperation with China and other countries in Northeast Asia. The investment and trade fair will last for three days and delegates and enterprises from over 26 countries and regions participated in the event. However, experts show some reservations on the depth of North Korea's involvement in the economic development of Northeast Asia. "Given the uncertainties of North Korea's domestic political and economic orientation in the future, it is still hard to project an over-optimistic estimate of the country's contribution to the economic cooperation to the pan-Northeast Asian area," Yu Xiao, deputy director of Center for Northeast Asia Studies of Jilin University, told the Global Times. "It will be a long process and be subject to further observation," he added. [Trade]
RUSSIAN COMPANIES SCALE DOWN REQUESTS FOR LOW-SKILLED NKOREAN LABOR
Itar-Tass ( Khabarovsk, 2010/08/24) reported that Russian companies have 956 DPRK personnel working at timber companies of the Amur region, regional authorities said on Tuesday. Deputy chairman of the regional government Nikolai Savelyev said at the Tuesday conference over cooperation with the DPRK in the timber sector that "Amur region companies have been scaling down their requests for labor force from North Korea." Timber industry experts said the main reasons behind the low demand for DPRK workers are their low skills and insufficient experience. Also, there is a shortage of personnel in much needed specialties. Ze Park, the director of Wondon Rimob, an affiliate of the DPRK's main department for timber industry, assured that they "will take into account the Russian partners' recommendations" and that the DPRK henceforth will pay more attention to selecting and training the personnel sent to work in Russia."
'Forestation will be No. 1 priority after unification'
Chung Kwang-soo Korea Forest Service Minister By Kim Tae-gyu Planting trees and preserving the forests of North Korea is expected to become the first crucial project when the two Koreas reunify, according to a senior bureaucrat of the South. Korea Forest Service (KFS) Minister Chung Kwang-soo made this point during an interview earlier this week held on the sidelines of the International Union of Forest Research Organizations (IUFRO) World Congress. [Takeover] [Bizarre]
North Korea learns from Seoul's development
By Lee Jong-Heon UPI Correspondent Published: January 22, 2010
Seoul, South Korea — When the Korean peninsula was divided in 1945, the U.S.-backed capitalist South, which has few natural resources, adopted exports as its main economic development engine. The country began shipping out everything it could make, from wigs to shoes.
"The appointment of Kim Yang Gon as the chief of the group indicates its capital-winning activities would be focused on South Korea and China," said Hong Ik-pyo, a researcher at the Korea Institute for International Economic Policy, a government-run think tank in Seoul. [Opening] [Agency] [Context] [Development strategy]
Sustainable Security in the Korean Peninsula: Envisioning a Northeast Asian Biodiversity Corridor
By Peter Hayes August 24th, 2010 This article by Peter Hayes, Executive Director of the Nautilus Institute, was delivered at the 2010 DMZ Peace Congress in Seoul on August 12-14, 2010. The paper reflects on how indirect and incremental social and political engagement may be a necessary attribute of strategies that build ecological security in a conflict zone. It concludes by contrasting this approach to the characteristics of what the author terms “nuclear insecurity” and suggests that a Northeast Asian Nuclear Weapon Free Zone may be a form of nuclear insecurity that relies less on balances of terror, and thereby is more conducive to the creation of sustainable security in this region.
INTER-KOREAN TRADE RECOVERS IN JULY
Yonhap (Seoul, 2010/08/23) reported that inter-Korean trade increased last month after falling over the previous two months in the wake of the sinking of the Cheonan, government data showed yesterday. The monthly volume of goods and services exchanged between the ROK and the DPRK bounced back to $161.93 million in July, up 32 percent from the previous month. The growth, however, seemed to be a one-off instance, as it comes from the Unification Ministry's temporary policy to clear a backlog of pre-ordered raw materials that did not reach the DPRK due to its trade restrictions issued in late May. [Inter-Korean business] [Sanctions] [SK NK policy]
N.Korean Economic Reformer Rehabilitated
Former North Korean Premier Pak Pong-ju, who was fired for spearheading timid economic liberalization, has been reinstated following the disastrous failure of hardline economic policies late last year. Pak Pong-ju (left) and Pak Nam-gi North Korean Central Broadcasting Station last Saturday reported the 50th birthday of the famous Okryu Restaurant in Pyongyang was attended by officials "including Pak Pong-ju, the first deputy director of the Workers Party's Central Committee." Pak (71) came back to Pyongyang three years and four months after he was demoted from premier to manager of the Sunchon Vinalon Complex in South Pyongan Province in April 2007, a factory making an outdated synthetic fiber.
North Korea Reinstates Market-Oriented Official
By CHOE SANG-HUN Published: August 23, 2010 SEOUL, South Korea — A former North Korean prime minister who was banished three years ago for pushing market-oriented reforms too far has returned to the center of economic policy, leading to speculation that the nation’s leader, Kim Jong-il, might give such proposals a second chance.
Footage Shows N.Korean Markets Bustling Again
North Korea's markets appear to be coming to life again after a botched currency reform late last year laid waste to them. Footage obtained by the Chosun Ilbo's Northeast Asia Research Institute from a North Korean source on Wednesday shows the Chaeha market in the border town of Sinuiju early this month bustling with trade. "The sprawling Chaeha market was set up in 2003 and is located in a wealthy neighborhood along the trade route with China," the source said. Images taken in March of a market in Onsong released by the Chosun Ilbo in April showed most of the stalls empty, but the market in Sinuiju is now overflowing with sundries, clothes, hardware, fruits and food. [Economic reforms] [Marketisation]
Chinese city launches trade program with North Korea
August 20, 2010 A city in northeastern China has launched a trial program, allowing exporters to use the yuan to settle transactions with its isolated neighbor North Korea, local authorities said. The scheme in Dandong will “reduce exchange rate risks and the costs of doing business” and allow registered exporters to claim tax rebates, the city government said in a statement on its Web site Wednesday. Beijing said in June that it would expand a trial program for cross-border yuan trade settlements to 20 Chinese provinces, including Liaoning, where Dandong is located. The program covers all foreign countries, the statement said.
The country’s trade with North Korea was $2.7 billion last year and totaled $612.7 million in the first three months of this year, according to data from Chinese customs. [Trade] [China NK]
Kim Jong Il Inspects 2.8 Vinalon Complex
Pyongyang, August 2 (KCNA) -- General Secretary Kim Jong Il provided field guidance to the February 8 Vinalon Complex making a steady boost in production. The party members and other working people of the complex completed in a brief span of time the construction of major objects including the project for the construction of a 75 ton circulating fluidized bed boiler and intensified the mass technical innovation movement, remarkably improving the quality of vinalon cotton.
The Rocky Road for Modernizing the North Korean Economy
By Bradley O. Babson
Recent reports of efforts to attract foreign investment in mining from China and Europe, explore joint projects with South Korean companies, and pursue military sales abroad despite UN sanctions reinforce the view that North Korea seeks to strengthen the economic power of the military and governing elite through both licit and illicit centrally managed foreign exchange–earning activities.
Future engagement in the context of the six-party-talks process will need to address some practical questions of how to approach the economic issues: • Timing and triggers for removal of economic sanctions; • Agreements on the scale, modalities, timing, and sources of economic assistance linked to the denuclearization process; and • Setting new rules of the game for providing development assistance and foreign investment in the context of a more general peace agreement.
The potential entry of the IFIs into this equation is another factor that needs consideration. These institutions could play a critical role in assessing North Korea’s recent policy choices and experience in implementing them. They can also provide politically neutral advice and technical assistance in charting a new path forward that can help North Korea move toward modernization of the economy in a way that can work both internally and be supported internationally. [Economic reform] [Agency] [Sanctions]
HOW AVAILABLE ARE DPRK STATISTICS?
By Lee Suk Introduction A common problem facing students of the economy of the Democratic People’s Republic of Korea (DPRK) is the shortage of available statistics. It is extremely challenging to procure DPRK data, and even the few available statistics are in many cases fragmented, discontinuous, and seemingly unreliable. In consequence, economics literature tends to assume that there are few DPRK statistics available, and followers of events in the DPRK have become accustomed to understanding the DPRK economy without statistics or using secondary sources of estimated data. For the past two decades, however, DPRK economic situations and environments have fundamentally changed, which casts doubt on whether available DPRK data are as scarce as generally conceived. [Statistics]
Internal developments in North Korea: the economy
august20,2010 specialreport5 Internal Developments in North Korea: The Economy 38 NORTH Informed analysis of events in and around the DPRK. on domestic issues. If it makes sense we should look at the economy, domestic politics, and social issues separately. But if you’d like to connect those issues please feel free to do so. To get started, my first question is related to the economy. I’d like to know what you think the main issues are regarding North Korea’s economy at the moment. Is it agriculture? Is it industry? Is it trade? Is it monetary issues and the financial system? Is it the reorganization of property rights? Or is it really the organization of the bureaucracy? SOUTH KOREAN EXPERT: This morning I read in the paper about North Korea giving rights to fish (squid) to the Chinese. That, I think, signifies a kind of desperation on the North Korean side. Let’s start with the currency reform, which took place November last year. From this, we can detect various implications. The first is that the real intention of the regime is not to reform the economy, but to manage the economy within the boundaries of socialist ideology. That’s why I think they implemented this reform. The second is On July 15, 38 North held a workshop in Seoul, South Korea, hosted by 38 North partner institution, the East Asia Institute. The workshop gathered together experts from the U.S., South Korea, Europe, China and Japan, to discuss the latest developments regarding North Korea, both internal and external, with the goal of identifying future research priorities. 38 North is pleased to provide excerpts of this dialogue to our readers. This is the first of two installments on domestic developments in North Korea, which focuses on the economy. Part II of the internal developments dialogue will deal with the issue of succession and will be released next week at www.38north.org.
FOOTAGE SHOWS N.KOREAN MARKETS BUSTLING AGAIN
Chosun Ilbo (Seoul, 2010/08/19) reported that footage obtained by the Chosun Ilbo's Northeast Asia Research Institute from a DPRK source on Wednesday shows the Chaeha market in the border town of Sinuiju early this month bustling with trade. Images taken in March of a market in Onsong released by the Chosun Ilbo in April showed most of the stalls empty, but the market in Sinuiju is now overflowing with sundries, clothes, hardware, fruits and food. Sources say the authorities have virtually stopped trying to control the markets after former premier Kim Yong-il apologized for the failed currency reform and Park Nam-gi, the former director of the Workers Party's Planning and Finance Department, was executed. [Marketisation]
Sanctions to Target Secret N.Korean Bank Accounts
U.S. Secretary of State Hillary Clinton talks to the press in Hanoi, Vietnam on Thursday ahead of the ASEAN Regional Forum. /AFP-Yonhap The U.S. government is tracking 200 North Korean accounts in foreign banks suspected of being linked to illicit activities such as nuclear weapons development, drug trafficking and counterfeiting. "Even before the Cheonan incident, the U.S. was tracking around 200 North Korean bank accounts in banks in China, Russia and even Eastern Europe and Africa that are believed to be involved in the development of weapons of mass destruction and the export of drugs, counterfeit money, fake cigarettes and weapons," a diplomatic source said Thursday. [Sanctions] [US NK policy] [Sanctions]
INTER-KOREAN TRADE HITS RECORD HIGH IN H1: REPORT
Yonhap (Seoul, 2010/08/12) reported that inter-Korean trade soared to a record high in the first half of this year, a government report said Thursday. Two-way trade jumped 52.4 percent on-year to US$983.2 million in the January-June period, according to report by the Korea Customs Service (KCS). It also represents a six-fold increase from the $161.6 million tallied in the same period in 1999. Outbound shipments spiked 66 percent on-year to $430.5 million, with imports from the DPRK surging 44 percent to $552.7 million for a deficit of slightly more than $122.2 million. The report, however, said that with most cross-border exchanges being cut off by Seoul in retaliation for the sinking of the Cheonan inter-Korean trade is expected to drop about 30 percent on-year in the second half. [Inter-Korean business] [Sanctions]
North Korea offers ginseng to pay Czech debt
By Christian Oliver in Seoul and Jan Cienski in Warsaw Published: August 10 2010 09:32 | Last updated: August 10 2010 09:32 Pyongyang’s cash-strapped totalitarian regime has offered to settle part of its debt to the Czech Republic with a large consignment of ginseng rather than eat into its limited funds. With the domestic economy crumbling, North Korea is also feeling the pinch of tighter international sanctions imposed over its nuclear and missile programmes and the sinking of a South Korean warship. Its access to global markets is further hindered by outstanding international debts of about $12bn, two-thirds to former communist states. [Sanctions] [Trade] [Debt]
Sanctions Expected to Harm North Korean Economy
Steve Herman | Seoul 23 July 2010 Economists say new sanctions imposed by South Korea against North Korea are likely to worsen the country's fragile economy. The United States has also announced a new round of financial sanctions, in part to attempt to further restrict funding and proliferation of North Korea's weapons programs. [Sanctions] [Media] [Arms sales] [Double standards]
An East Asian development fund for North Korea?
July 25th, 2010 Author: Geoffrey K. See, Yale University During my last visit to Kim Il Sung University in Pyongyang, a student told me that she wanted to be a business leader. I asked her why. She said that she wants to show that ‘women can be good business leaders’. I later quizzed her on politics and she responded by asking me if I was interested in such issues. When I said ‘Yes’, she said ‘Politics are for men only.’
A North Korea development fund (NKDF) should be created to invest in infrastructure and technical training in North Korea, as long as these projects facilitate regional trade. Such a fund can exist alongside current measures to contain North Korea’s nuclear proliferation, but should remain free of political entanglement. The idea is that a North Korea that trades with its neighbours is a country that can be re-integrated into the regional and international system. The fund’s architecture should involve South Korea, China and Japan. The question may be asked—why these three countries? The answer is because such a fund would bring profound benefits to each of them. The benefits to South Korea of a cooperative and secure North Korea are so obvious as to need little further explanation. [Sanctions] [Inversion] [FDI] [US NK policy] [Collapse] [Naiveté]
Spotlight on Sinuiju
By 38 North
Introduction and Brief History Sinuiju City (????), the capital of North P’yongan province, sits on the Amnok (Yalu) River directly across from the Chinese city of Dandong. One of only two rail crossing points between the DPRK and China, Sinuiju is the North’s major gateway for rail and truck traffic. Much of Dandong’s foreign trade (estimates run as high as 80%) passes through Sinuiju. [SEZ]
North Korea food crisis prompts lifting of restrictions on private markets
To battle the problem of starvation in North Korea, the government is allowing local markets to stay open longer and sell food without restrictions. By Donald Kirk, Correspondent / July 1, 2010 North Korea appears to be allowing private enterprise in local markets in a desperate search for an antidote to rising hunger and potential unrest. .South Korean analysts, with contacts inside North Korea, report a loosening of state restrictions on the private sales of goods as North Korea’s leader Kim Jong-il smooths the way for the takeover of his youngest son, Kim Jong-un. The lifting of state restrictions on the operation of local markets selling food and other goods comes amid reports of an economy that is now descending to the level of the 1990s, when aid experts estimate two million people died of disease and starvation. Several years ago, markets were opened briefly – for similar reasons – before authorities again clamped down. The most definitive report on free-market opening comes from Good Friends, a non-governmental organization in Seoul that has long attempted to provide food and other aid to North Koreans and receives information by a network of informants inside the North. Food rations have also been suspended, according to the group. [Marketisation] ]Media] [Inversion]

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JULY 2010

North Korea faces new economic crisis
KDI says South trade ban will cause problems July 07, 2010 The North Korean economy is expected to contract this year due to trade sanctions imposed by South Korea in the wake of the North Korean sinking of the Cheonan warship, the Korea Development Institute said yesterday. “The North is very likely to see its economy shrink this year,” said the state-run think tank, without offering an estimate on how much the economy would contract. The Bank of Korea recently estimated that the North Korean economy contracted by 0.9 percent in 2009 after it expanded by 3.1 percent in 2008. But the KDI noted that the BOK estimated that the North Korean economy had also contracted by 1.1 percent in 2006 and 2.3 percent in 2007, indicating that the North’s economy was on a downward trend. The KDI said that the North’s economic growth rate was correlated with the growth rate in trade. It suggested that the North would consequently suffer due to the South’s trade ban since the North had a $333 million trade surplus with the South last year. However, customs data released by China yesterday indicated the South Korean trade ban may prove to be less effective than estimated by the KDI. Trade volume between North Korea and China expanded 18.1 percent to $983 million between January and May this year compared to a year ago. Chinese imports to North Korea rose 29 percent to $727 million, while North Korean exports to China fell by 4.9 percent to $256 million. [Cheonan] [Sanctions] [China NK]
N. Korea runs risk of economic crisis again
By Kang Seung-woo Staff reporter The North Korean economy is forecast to contract this year due largely to South Korea's decision to suspend inter-Korean trade in retaliation for the North's surprise attack on a navy vessel, a state-run research organization said on Tuesday. The Korea Development Institute (KDI) said that North Korea's economy would continue to plummet in 2010, following a 0.9 percent contraction in 2009, but it did not disclose a specific estimate for this year. However, the think tank predicted the possible repetition of the level seen in the 1990s, if this downward trend continues. "The North is very likely to see its economy shrink this year," the KDI said. "Our outlook is based on a forecast that its external trade will likely suffer a setback." [Cheonan] [Sanctions]
A Capitalist Enclave in North Korea Survives
By MARTIN FACKLER Published: July 6, 2010 DORASAN, South Korea — Every day, hundreds of South Korean managers and engineers gather here at the steel and glass bus terminal to make an unusual commute, through the minefields and tank traps of the demilitarized zone and into an industrial park that sits just across the border in North Korea. And while tensions on the Korean Peninsula are at their highest point in years over the sinking of a South Korean warship, the North continues to allow the Southerners to enter the park, the Kaesong Industrial Complex, where 121 mostly South Korean companies employ 44,000 North Korean workers. At a time when the Koreas have traded threats of military confrontation and cut most economic and diplomatic ties, the Kaesong complex has remained a conspicuous exception.
Experts and business leaders with dealings in the North say China’s economic rise also makes the park important for the two Koreas. South Korean businesses hope North Korea can become a source of low-wage labor to help them compete with China’s export machine, while the North appears anxious about its excessive economic reliance on China, its closest political ally [Kaesong] [Dilemma]
Facing Reality: Will North Korea Adopt a More Rational Economic Policy?
By Bradley O. Babson The extraordinary meeting of the Supreme People’s Assembly on June 7 ratified a package of personnel decisions that appear to have resolved some of the uncertainties about the management of the leadership transition in North Korea, at least temporarily. The elevation of Jang Song Taek to Vice Chairman of the National Defense Commission, places the inner circle of Kim Jong Il’s family firmly in command of the defense forces as well as the Worker’s Party apparatus, where Jang has been serving as the Director of the Administrative Department, overseeing the national security services, police and courts. The appointment of 80-year-old Cho Yong Rim as Premier and other elderly experienced officials among the eight vice premier positions indicates that proven Party loyalists have been given explicit control over the Cabinet and the People’s Economy, reflecting a trend of increasing Party influence in the economic sphere over the past few years. It also signals that the days of experimentation with younger technocrats in leading Cabinet positions are over for now. This closing of ranks around the inner circle and Party elders signifies the priority attached to Kim Il Sung’s legacy as well as the dominant role of the founding family in the country’s future leadership and in managing the succession while dealing with external and internal challenges. It can be expected that the meeting to appoint new Party leaders scheduled for September will consolidate support for this succession process and potentially reinvigorate the role of the Party in the governance framework. [Economic reform] [Agency] [Context]
Collapse or reform? North Korean approaches to the economy and leadership succession
July 8th, 2010 Author: Ruediger Frank, University of Vienna The North Korean leadership has, for reasons that we do not yet fully understand, made a crucial mistake around the beginning of the 21st century. After the severe shock of the famine from 1995-1997, the regime had the economy back under control. The country could have returned to the pre-crisis economic model, which was essentially a de-monetised economy where the state distributed almost all goods directly to most of its citizens. However, the new leader Kim Jong-il decided otherwise. Rather than eliminating or limiting the market elements that had gained strength during the famine, he embraced the market in public statements. Economists followed suit and in 2002 declared, in the country’s only economic journal Kyongje Yon’gu, that markets had always been part of a socialist system. [Economic reform] [Agency]
Bigwigs in North vie for power over investments
O and Jang’s competition could affect Kim’s succession July 05, 2010 Jang Song-thaek / O Kuk-ryol Two men near the top of the North Korean power structure are competing against each other to become foreign investment czar for the cash-strapped country, according to sources with knowledge of North Korea. North Korea experts say the contest could influence who eventually succeeds Kim Jong-il. The sources told JoongAng Ilbo yesterday that Jang Song-thaek and O Kuk-ryol, both vice chiefs of North Korea’s National Defense Commission, are competing over who can attract more foreign investment to the North. The National Defense Commission, the country’s top state organization, is chaired by Kim. [FDI] [Media]
Business mission to North Korea
In the current financial and economic situation, companies face many challenges. They must cut costs, develop new products and find new markets. In these fields, North-Korea might be an interesting option. Since a few years, it is opening its doors to foreign enterprises. The labor costs are the lowest of Asia, and its skilled labor is of high quality. It established free trade zones to attract foreign investors and there are several sectors, including textile industry, agro business, fishing, shipbuilding, logistics, mining and Information Technology that can be considered for trade and investment.
Do you want to explore new business opportunities for your company? Then join us from 11-18 September on our trade & investment mission to North-Korea.
KCNA Releases Report on Completion of Taegyedo Tideland
Pyongyang, June 30 (KCNA) -- A detailed report of the Korean Central News Agency on the completion of the Taegyedo Tideland Reclamation Project was released Wednesday. According to it, the project for reclaiming 8 800 hectares of land, the largest ever in the history of tideland reclamation in Korea, was completed to connect Taedasa Islet, Kacha Islet, Soyondong Islet and Taegye Islet in the West Sea with dykes extending several kilometers. This sharply reduced the indentation of the shoreline of Yomju County and Cholsan County of North Phyongan Province.

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JUNE 2010

Six decades later, the North-South gap grows
June 26, 2010 First, an economic snapshot from the past. Before and even after the Korean War, the economy of North Korea was almost twice the size of the South’s. Japanese colonizers concentrated heavy industry in the northern part of the peninsula; the southern part was agrarian. In 1959, the North’s per capita income reached $100, while the South’s was only $81. Yesterday, to mark the 60th anniversary of the start of the war, the Ministry of Strategy and Finance and Statistics Korea produced figures fast-forwarding to the present to compare how the two countries fared in the ensuing six decades. ? South Korea’s gross national income (GNI) for 2009 was 1,680 trillion won - 37.3 times more than the North’s 28 trillion won. (GNI is the total value produced within a country, its gross domestic product, together with income received from other countries.) ? South Korea’s per-capita GNI was 21.92 million won last year, 17.9 times more than the North’s 1.22 million won. ? Total trade volume for the South reached $686.6 billion last year. North Korea’s total trade was $3.41 billion. “Compared to now, the economic conditions of the two countries was totally reversed, until the 1960s,” said a finance ministry official. “Over the years, however, the South’s economy developed and is today one of the world’s top 10 economies.” Meanwhile, based on data released by the Bank of Korea on Thursday, North Korea’s gross domestic product decreased 0.9 percent last year, “mainly due to a production drop in agriculture such as corn and a slump in manufacturing due to lack of electricity and raw materials.” According to the BOK data, South-North trade decreased 7.8 percent in 2009 from the previous year, to $1.68 billion. Exports of textile, chemicals, and electronics products from North to South, however, increased by 0.2 percent. By Lee Eun-joo [angie@joongang.co.kr] [Sanctions]
N.Korea’s economy returns to negative growth
The Bank of Korea cited decreased crop production, sanctions, discontinued humanitarian aid and controls on market activity as contributors to the decline » North Koreans visit booths displaying goods manufactured by North Korean companies at the New Technology Exhibition Hall in Pyongyang, May 2009. North Korea’s economy reverted to negative growth in 2009. North Korea’s economy has returned to negative growth after just one year, suffering from the aftereffects of a poor annual harvest and sanctions. In a report released on June 24 entitled “Gross Domestic Product of North Korea in 2009,” the Bank of Korea (BOK) stated that North Korea’s real annual GDP in 2009 had fallen by 0.9 percent from that of the previous year. This was largely due to decreased production of agricultural commodities such as maize due to cold weather, and sluggish manufacturing owing to a lack of electricity and raw materials. [Sanctions]
Kim Jong Il visits Sinuiju, successor Kim Jong Eun takes up on-site guidance
Posted Date : 2010-06-23 (NK Brief No. 10-6-23-2) Kim Jong Il visited Sinuiju on June 17, spending three days inspecting industrial facilities with third son and possible successor Kim Jong Eun. One visit was to a shoe factory, at which Kim Jong Il observed technology and production equipment. On another stop, at the Sinuiju Cosmetics Factory, Kim Jong Il met with the factory manager and foremen, providing them and the laborers with encouragement. Kim Jong Eun also made an appearance at the meeting, indicating that the effort to install him as the next North Korean leader has progressed to the point at which he is being directly introduced to the people. [SEZ] [Succession]
Analysis: Kim Jong Il, the reformer?
North Korea is where Vietnam and China were before they started major market overhauls.
By Bradley K. Martin — Special to GlobalPost Published: June 24, 2010 06:47 ET in Worldview ATLANTA — Now that food shortages reportedly have forced North Korea to reverse its crackdown on capitalist-style markets, more systematic reforms for its collapsed economy may not be far behind. The markets policy reversal came May 26 in directives issued by the cabinet and the ruling Workers’ Party to subordinate organizations, according to a report by the Seoul-based newsletter North Korea Today, which gets its information from officials and ordinary citizens inside the North. “The government cannot take any immediate measures” to relieve a food shortage that is “worse than expected,” the newsletter quoted one of the directives as saying in explanation for the policy change.
This could all turn out to be the big event that finally pushes the very reluctant leadership into a multi-year campaign of serious reforms of the sort that began decades ago in Vietnam and China, according to Felix Abt, a Swiss involved in North Korean joint ventures in pharmaceutical manufacturing and computer software. “Given an industrial stock and an infrastructure beyond repair, and the impossible task of maintaining a huge army, economic reforms appear unavoidable in the very near future,” Abt, a former president of Pyongyang’s European Business Association, wrote in an email exchange. “It looks intriguing and it reminds me of Vietnam’s history of reforms,” said Abt, who did business for years in Vietnam before going to Pyongyang and recently has moved back to Vietnam while maintaining his involvement in North Korea. [Economic reform] [Agency] [Cliché]
Number of N.Korean Workers at Kaesong Increases Despite Inter-Korean Tensions
The number of North Korean workers at the joint Kaesong industrial complex has seen a steady increase despite strained relations between the two Koreas. According to a report by the Ministry of Unification submitted to the National Assembly, there are about 120 companies operating at the complex employing over 44,000 North Koreans. The number of workers continues to grow from 42,000 in January to 43,000 in April to 44,000 this month, the report said. [Kaesong]
Bank of Korea: NKorean economy shrank in 2009
By KELLY OLSEN The Associated Press Thursday, June 24, 2010; 2:58 AM SEOUL, South Korea -- North Korea's state-controlled economy, already just a fraction of its southern rival, shrank last year as a severe winter decimated crops and shortages of raw materials and electricity hindered manufacturing. South Korea's central bank in a report released Thursday estimated that North Korea's economy contracted 0.9 percent - the third time in the past four years the impoverished economy has gotten smaller. It grew 3.1 percent in 2008. The bank said the North's economy faced "many difficulties" amid strengthened sanctions and reduced assistance. North Korea is under heavy international sanctions related to its nuclear and missile programs. [Sanctions]
Firms involved in cross-border trade can get loan
Firms, which were involved in inter-Korean trade and suffered from soaring losses after the government imposed sanctions on North Korea after the sinking of the warship Cheonan, can receive emergency relief funds. The measure came after the owners of the businesses requested the Ministry of Unification lend money from inter-Korean cooperation funds so that they can manage their businesses. [Sanctions]
Kim Jong-il Restores Special Department to Swell Coffers
North Korea in March restored a special department in the Workers Party codenamed Room 38 which manages leader Kim Jong-il's coffers and personal slush funds, it emerged Monday. The North last fall merged Room 38 with Room 39, which manages party slush funds. "Rooms 38 and 39 were merged to simplify Kim Jong-il's slush funds," said a North Korean source. "But when it became difficult to secure hard currency due to international sanctions, Room 38 seems to have been restored because there was a feeling that Room 39 alone can't meet the need." Room 38 is reportedly led by Kim Tong-il, who heads three regional departments in charge of earning hard currency. Room 39 tries to maximize earnings from gold and zinc mining and farming and fisheries. It also manages stores and hotels exclusively for foreigners in Pyongyang. Room 39 seems to have suffered badly due to the recent suspension of inter-Korean trade. "Taesong Bank and Zokwang Trading, which received remittances from Mt. Kumgang tourism, are both controlled by Room 39, and is also in charge of the exports of agricultural and fisheries products," said a government source. [Personalisation]
DPRK abandons food rations, orders self-sufficiency
Posted Date : 2010-06-17 (NK Brief No. 10-06-17-1) As North Korea’s food shortages worsen and reports of starvation continue to grow, the Workers’ Party of Korea have acknowledged the failure of the central food ration program. Since the end of May, the Party has permitted the operation of 24-hour markets, and the regime has ordered the people of the North to provide for themselves. The human rights organization Good Friends reported this move on June 14. According to Good Friends, the Workers’ Party organization and guidance bureau handed down an order on May 26 titled ‘Relating to Korea’s Current Food Situation’ that allowed markets to stay open and ordered North Koreans to purchase their own food. This order, recognizing that the food shortages in the North have continued to worsen over the last six months, since the failed attempts at currency reform, acknowledged the difficulty of providing government food rations. It calls on those who were receiving rations to now feed themselves, while also calling on the Party, Cabinet, security forces and other relevant government agencies to come up with necessary countermeasures. Now, authorities officially allow the 24-hour operation of markets, something that most had already tacitly permitted, and encourage individuals – even those not working in trading companies – to actively import goods from China. It has been reported that government food rations to all regions and all classes of society, even to those in Pyongyang, were suspended in April. [Sanctions]
Kim Jong Il Inspects Rakwon Machine Complex
Pyongyang, June 18 (KCNA) -- General Secretary Kim Jong Il provided field guidance to the Rakwon Machine Complex alive with a high-pitched drive for effecting a great surge. He saw a five cubic meter "Jangbaek" excavator newly manufactured by the complex. Watching the excavator at work, he expressed great satisfaction over the fact that the officials, workers and technicians of the complex successfully contrived and manufactured the large-size excavator in a brief span of time.
N. Korea lifts restrictions on private markets as last resort in food crisis
By Chico Harlan Washington Post Foreign Service Friday, June 18, 2010; 4:27 PM SEOUL -- Bowing to reality, the North Korean government has lifted all restrictions on private markets -- a last-resort option for a leadership desperate to prevent its people from starving. In recent weeks, according to North Korea observers and defector groups with sources in the country, Kim Jong Il's government admitted its inability to solve the current food shortage and encouraged its people to rely on private markets for the purchase of goods. Though the policy reversal will not alter daily patterns -- North Koreans have depended on such markets for more than 15 years -- the latest order from Pyongyang abandons a key pillar of a central, planned economy. [Sanctions] [Defector reports]
Trade suspension to cost N. Korea US$280 mln annually: report
SEOUL, June 11 (Yonhap) -- A suspension of inter-Korean trade is expected to cost North Korea about US$280 million annually, a report said Friday, pointing to more pressure on the North's cash-strapped regime in governing its country. [Cheonan] [Sanctions]
Daily Ordeal of S.Koreans at Kaesong Industrial Park
A South Korean who works at the Kaesong Industrial Complex in North Korea has recounted recent unwelcome encounters at the joint-Korean industrial park after Seoul cut all other trade ties with the North amid escalating tensions. "At around 8 p.m., a dark figure appeared in front of me as I was bicycling and I thought it was a North Korean worker, but it was an armed soldier inside the complex," the man said in an e-mail. "I was so scared that I couldn't even look at him."
North Korean foreign trade down 10.5% in 2009
Posted Date : 2010-06-07 (NK Brief No. 10-06-07-1) In 2009, North Korea’s foreign trade (not including inter-Korean trade) amounted to 3.41 billion dollars, 10.5 percent less than 2008, which saw the largest amount of DPRK overseas commerce since 1991. Exports were down 5.97 percent (1.06 billion USD), while imports were down 12.45 percent (2.35 billion USD), recording a 1.29 billion USD trade deficit. These figures come from a KOTRA analysis of the Korea Business Center (KBC)’s statistics of trade with North Korea by foreign countries. Because North Korea does not reveal trade statistics, this ‘mirror analysis’ method of analyzing the statistics of its trading partners is the only method available. [Trade ] [Statistics]
Pyongyang International Insurance Seminar Closes
Pyongyang, June 8 (KCNA) -- The Pyongyang International Insurance Seminar closed with due ceremony at Yanggakdo International Hotel on Tuesday. Present there were Pak Su Gil, vice-premier and minister of Finance, So Tong Myong, general manager of the Korean National General Insurance Company who is chairman of the Organizing Committee of the Pyongyang International Insurance Seminar, and officials of the company, insurance workers in local areas and officials concerned, the delegation of the Kumgang Insurance Company of the General Association of Korean Residents in Japan, Ezzat Abdel-Bary, secretary general of the Federation of Afro-Asian Insurers and Reinsures, and his party, Roberto Quinto Martinez, permanent secretariat of the Association of Insurance and Reinsurance in Developing Countries, and representatives of companies of China, Morocco, Sudan, Switzerland, Britain, India and Egypt. Prior to its closing ceremony the seminar heard papers on marine cargo insurance, marine cargo claims and adjustment - an overview, the art of adjusting catastrophe claims, new trends in the reinsurance market and other papers. Then followed speeches. The participants discussed the issues of marine insurance and its related field and exchanged experience gained in the field. [Opening]
Unification Ministry bans payments for received imports from Kaesong
One business official said he felt the ministry’s request was no different from asking firms to engage in a form of fraud It was confirmed Sunday that the Ministry of Unification has issued a statement to firms engaged in trade with North Korea through Kaesong Industrial Complex saying, “Even if you receive finished products as commissioned in Kaesong, do not send your remittance payments to North Korea.” Many officials from the firms, who have since demanded that their names not be revealed for fear of incurring disadvantages to their companies, said the Unification Ministry has demanded that they sign and submit a document entitled, “Memorandum Regarding Payments for Imported Items.” They said the memorandum sent by the ministry stated that in cases where the import of completed goods is permitted, the companies promise to suspend sending processing fees. They also said the ministry is demanding that firms sign and submit an agreement to the memorandum. “The administration’s request that we should not pay processing fees to north Korea even if we accept finished goods makes me extremely uncomfortable, as their request seems to be no different than asking firms to engage in a form of fraud,” said another firm official. [SK NK policy] [Kaesong]
North Korea Profits From Brazil World Cup Game With Jersey Deal
June 02, 2010, 11:37 AM EDT By Alex Duff and Makiko Kitamura June 3 (Bloomberg) -- North Korea is returning to the World Cup after 44 years, and venturing into the sports marketing industry that evolved in its absence. Ahead of the June 11 start of the tournament, the soccer team of Kim Jong Il’s regime has snared a 4 million-euro ($4.9 million) jersey contract over four years, according to Daniele Nastro, marketing director of Pompeii, Italy-based sports apparel maker Legea s.r.l. North Korean soccer association assistant general secretary Ri Kang Hong confirmed the deal with Legea, without giving financial details. “Perhaps it’s a sign of incipient capitalism,” Jim Hoare, a retired British diplomat who served in Pyongyang, said from London. Although western sports leagues aren’t covered by the media in North Korea, officials “would be aware of the value of sports sponsorship,” Hoare said. [Trade] [Media]
Oil firm says N.Korea exploration to start in a year
By Bernice Han (AFP) – 1 day ago SINGAPORE — The head of a London-based energy firm that signed a deal to search for oil off North Korea said on Thursday he hoped to start exploring in a year but was closely monitoring tensions on the peninsula. Aminex PLC executive chairman Brian Hall told AFP he expected "field work in about a year" off the communist nation's east coast and aimed to "find substantial reserves". [Oil] [FDI]
Brazil, North Korea: Brothers in trade
By Bertil Lintner BANGKOK - For more than a decade, the world around North Korea has been shrinking. In the wake of its missile and nuclear tests and recent accusations that it torpedoed a South Korean naval vessel, the list of internationally imposed sanctions and trade restrictions aimed at isolating the reclusive state has grown ever longer. But the North Koreans, who have been in a state of war for more than half a century, have often found ingenious ways around those restrictions and added pressures from the United States, Japan and other countries, most visibly seen in the string of front companies and bank accounts it maintains across Asia. Recent indications are that Pyongyang has sought willing trade partners outside of Asia and its new closest commercial ally appears to be Brazil. Relations between the two countries have warmed considerably since leftist Luiz Inacio Lula da Silva became president in January 2003. [Trade] [Media] [Sanctions]
Anglo-Irish group seeks North Korean oil
By Christian Oliver in Seoul and Kevin Brown in Singapore Published: June 1 2010 01:30 | Last updated: June 1 2010 01:30 Aminex, an Anglo-Irish oil exploration company, has signed a production-sharing agreement to explore an area of the seabed larger than Switzerland off the coast of North Korea. Despite a furore over Pyongyang’s alleged torpedoing of a South Korean warship, the deal shows North Korea is still committed to a foreign investment drive aimed at transforming the impoverished state into a “mighty and prosperous nation” by 2012. Aminex, listed in London and Dublin, has formed a company, Korex, to pursue the project jointly with Chosun Energy, a Singapore-listed company that identifies James Passin as one of its directors, according to a filing with Singapore’s Accounting and Corporate Regulatory Authority. Mr Passin is a New York-based fund manager. His Firebird Global Master Fund II half owns Chosun Energy and targets resource deals in frontier markets. Officials from North Korea’s state oil company travelled to London two weeks ago to conclude the 10-year contract. Lord Alton, chairman of Britain’s parliamentary North Korea group, says he showed the officials around parliament. Brian Hall, chairman of Aminex, acknowledged the contract had been concluded at a sensitive time given the rising tensions between Seoul and Pyongyang, but stressed he had opened ties with energy-starved North Korea in 1998. Since then, securing output rights from an exploration block had been “stop-go”. [FDI] [IJV] [Oil]
S.Korea Accepts Processed Goods from the North
The South Korean government has accepted the first imports of finished products manufactured in North Korea since it banned trade and commerce with the communist state in response to the sinking of the Navy corvette Cheonan. The Unification Ministry said it allowed shipments of four processed products on commission from the North. They include some 20 tons of garlic, US$17,000 worth of clothing and $250,000 worth of terminal plates. With the approval, experts speculate that more shipping of processed goods from the North may make their way to the South. North Korea earlier expressed its willingness to continue operations at the joint Kaesong Industrial Complex while banning South Korean companies from taking factory equipment out, saying that they can only be removed after going through a tax office in the industrial zone. Experts say Pyongyang's move, which contradicts its initial threat to shut down the cross-border route leading to Kaesong, is prompted by fear of losing its key source of hard currency and jobs of some 43,000 North Korean workers there.
Foreign Investors Agents of Change
DPRK monthly 1, No. 4, June 2010 [The following is an edited version by Paul White of an article which appeared in Time magazine.]
Few investors can boast the one-of-a-kind global pedigree of Felix Abt. Since 2002, the Swiss businessman has found his calling as a point man for Western investments in - of all places - North Korea, where he helped found the Pyongyang Business School in 2004. He also presided over the European Business Association in Pyongyang, a group in the capital that acts as a de facto chamber of commerce. A few years ago, that position led him to help set up the first "European Booth" featuring around 20 European companies each year at the Pyongyang Spring International Trade Fair! [FDI]
N.Korea Trying Hard to Keep Kaesong Complex Open
The North Korean agency supervising the joint Kaesong Industrial Complex seems determined to maintain the industrial park although tensions on the peninsula are running high. The General Bureau for Central Guidance to the Development of the Special Zone was quoted by the Unification Ministry on Monday as saying it will "continue efforts to build the Kaesong complex" and is banning South Korean firms from removing registered equipment. According to the ministry, an official with the bureau on Sunday told a staffer of South Korea's Kaesong Industrial Complex Management Committee about this. The agency set tough conditions for the removal of equipment, saying it can be moved only after a review by the tax office in the industrial park. All debts including wages must be paid off, rental equipment can be removed after relevant documents are verified, and no North Korean workers can be laid off temporarily due to the removal of equipment. The bureau said it is Seoul that by curtailing South Korean staff at the Kaesong Complex last week is preparing to close it and should take the responsibility if it shuts. A South Korean security official speculated that the bureau, which is responsible for the livelihood of about 43,000 North Korean workers at the industrial park, is trying to maintain the industrial park by making it difficult to remove equipment. But he added it is difficult to predict what fate awaits the industrial park "because leaders in Pyongyang and North Korean military brass may think differently."[Sanctions]
N.Korea announces stringent equipment withdraw regulations for Kaesong
Analysts say this is a preparatory move to shift blame to S.Korea in the event that the Kaesong Industrial Complex closes The General Bureau for Central Guidance to the Development of the Special Zone, the North Korean institution in charge of administration for the Kaesong Industrial Complex, sent notification to South Korea on Sunday that it would be continuing efforts to develop the complex and prohibiting the removal of facilities registered as company property within the complex. An official with the Unification Ministry said Monday that this message was delivered verbally to the Kaesong Industrial District Management Committee by an official with the bureau. The General Bureau announced that all facilities and goods within the complex could only be removed after passing through the North Korean revenue office located within the complex. The announcement also stated that the removal of facilities registered as company property would be prohibited as a rule, that companies with financial obligations such as wages would only be able to remove items after first settling their obligations, and that it would be prohibited to idle North Korean employees by removing facilities, raw materials or subsidiary materials.
N. Korea says it wants to keep Gaeseong park
2010-05-31 22:30 Text Dictionary Samsung plans 26tr won investment in chip, display $665,000 jackpot winner donates it all to KAIST Debt workout likely for Hyundai Seoul prepares to brief partners on probe Pressure growing for rate hike Lee rejects builders’ appeal for public housing delay Korea urged to improve freedom of expression American soldiers to cooperate on organ donation Huh narrows Korea team down to 26 Top prosecutors face bribery investigation The North Korean military has threatened to shut a cross-border route leading to its border town of Gaeseong, but that doesn’t mean the country is willing to give up the lucrative business there with South Korea. North Koreans involved in the factory park are reportedly worrying over a possible shutdown after the South halved the number of its citizens stationed in Gaeseong after announcing that the North torpedoed its warship in late March. A North Korean official told a South Korean staffer in Gaeseong on Sunday that his country will continue efforts to develop the joint factory park, but that it will be more difficult for South Korean companies to take their equipment out of Gaeseong, according to an official at Seoul’s Unification Ministry. Pointing to Seoul’s recent measure to reduce the number of South Koreans in the complex, the North Korean official accused the South of taking preparatory steps to close the factory park, the ministry official said on customary condition [Kaesong] [Cheonan]
Hope for Kaesong Complex Amid Mixed Messages from N.Korea
North Korea seems unlikely to close the joint Korean Kaesong Industrial Complex anytime soon, with the agency supervising the industrial park telling some South Korean businesses there not to worry. An official with North Korea's General Bureau for Central Guidance to the Development of the Special Zone also reportedly tried to dissuade South Korean firms from removing equipment and facilities to the South amid escalating cross-border tensions since the sinking of the South Korean Navy corvette Cheonan. [Cheonan]

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MAY 2010

Impact of the ROK’S May 24 economic sanctions against the DPRK
Posted Date : 2010-05-27 (NK Brief No. 10-05-27-1) On May 24, the South Korean government announced, in response to the Cheonan incident, the cessation of inter-Korean exchanges and other sanctions against Pyongyang. These measures will directly impact the North, costing it 250~300 million USD. According to the Ministry of Unification, North Korea earned 245.19 million USD from inter-Korean cooperative schemes not related to the Kaesong Industrial Complex. This does not include additions monies for customs fees, transportation costs, mediation fees and other incidentals. About 254 million USD worth of goods were produced on commission in the North after raw materials or partially manufactured products were sent from the South. 10~15 percent of this (25-38 million USD) covers labor and other costs. Therefore, by halting all exchanges and cooperative schemes other than the Kaesong Industrial Complex, North Korea stands to lose at least 200 million USD. [Cheonan] [Sanctions]
Korean Won, Stocks Slump on Report North Readying for Combat
May 25, 2010, 2:51 AM EDT By Bob Chen and Frances Yoon May 25 (Bloomberg) -- South Korea’s won fell the most in more than a year and the nation’s stocks slumped following a report by a defector group that North Korean leader Kim Jong Il ordered the military to prepare for conflict. [Cheonan] [Unintended consequences]
Beer Popular among Koreans
Pyongyang, May 27 (KCNA) -- The technological updating of the Taedonggang Beer Factory here has made rapid progress, doubling its production capacity as compared with that at its outset. As a result, both draft beer and bottled beer are now being supplied to the capital city and various provinces on a regular basis. The factory built in Juche 91 (2002) set up several more fermentation and storing tanks and the process for the production of hop granules as required by the new century. It is also fitted with nitrogen generation and barley sorting and other equipment. It developed new varieties of beer and built a new intermediary process to improve its quality. Best quality beer of new varieties such as peculiar rice beer and black beer have been developed and production and management are fully controlled by computers. Taedonggang beer has reached the world standard in terms of more than 10 universally recognized quality indices and storage including hygienic security, alcohol, color and purity.
It received a certificate of ISO 9001 in 2008.
Taedonggang beer is popular among Koreans for making the drinkers cool and refreshing and for its high degree of fermentation and mildness and pure and peculiar taste. More than 150 beer parlors in different parts of Pyongyang are alive with customers everyday.
Inter-Korean Tensions Affecting ROK's Stock and Foreign Exchange Markets
On May 25, it was reported that North Korea raised the readiness level of its armed forces in response to South Korea’s actions regarding the sinking of the Cheonan. This news reverberated through the Republic of Korea’s stock market and foreign exchange markets, prompting South Korea to expend an estimated $2.5 billion from its foreign exchange reserves to defend the won. This is not the first time that events in North Korea have affected the South in this way. For your reference, KEI has compiled the following charts that detail the fluctuations in both the KOSPI and foreign exchange markets from North Korea’s first nuclear test on October 9, 2006, second nuclear test on May 25, 2009, and the current crisis on the Korean peninsula: [Unintended consequences]
In Korea, a semi-hopeful sign
By Blaine Harden Washington Post Foreign Service Thursday, May 27, 2010 SEOUL -- Despite North Korea's vow this week to cut all economic and political ties with South Korea, an important symbol of cross-border economic cooperation appeared to remain intact and open for business Wednesday. Production continued at the Kaesong industrial complex, a six-year-old factory park just north of the heavily armed border that separates North and South Korea. About 45,000 North Koreans went to work as usual for 121 South Korean companies in the complex, the sole remaining symbol of economic cooperation between the neighbors.
Cut trade causes crisis for businesses in S.Korea
Following an indefinite trade cut with N.Korea without a grace period, the government has not proposed any compensation to assist the hundreds of businesses affected “I do not know if these sanctions are targeting North Korea or South Korean businesses. They are strangling the small and medium-sized companies.” Businesses commissioned for inter-Korean processing and trade were up in arms Tuesday following President Lee Myung-bak’s announcement of plans to halt inter-Korean trade in response to the sinking of the Cheonan. The companies charged that the government’s measures “are killing South Korean businesses, not North Korea.” With the government’s focus lying solely on punishing North Korea, the abrupt announcement gave no time for small and mid-sized companies to prepare a retreat, and despite what is effectively a compulsory measure, almost no government compensation plan has been put in place. [SK NK policy] [Sanctions] [Unintended consequences]
Financial markets unstable in S.Korea following Cheonan sinking
Analysts predict continuing market instability since three issues affecting the market cannot be solved in the short-term The “Korean Risk” has once again reared its head in the Korean financial market, already experiencing rising instability due to the European financial crisis, in the aftermath of the aftereffects of the sinking of the Cheonan. “Korean Risk,” also known as the “Korean Discount,” is a phenomenon in which the rating of the Korean economy falls due to the geopolitical dangers of inter-Korean confrontation, and has not been easy to find in the local financial market since the June 15 Joint Declaration of 2000. [Cheonan] [Unintended consequences]
What Will Be the Impact of S.Korean Sanctions on N.Korea?
North Korea is expected to sustain a considerable economic blow from sanctions imposed by the South Korean government on Monday. Immediate annual loss in cash revenue is estimated to exceed US$300 million, or about 10 percent of the North's 2008 income of $3.47 billion. Inter-Korean trade last year excluding the joint Kaesong Industrial Complex was estimated at $740 million, or 14.5 percent of Pyongyang's external trade. By comparison, the impact on the South would be negligible because trade with the North accounts for only 0.1 percent of its external trade. [Cheonan] [Sanctions]
Tensions, debt turmoil slam FX, stock markets
May 26, 2010 A double whammy of rising inter-Korean tensions and fears over European debt problems yesterday sent the Korean won plunging to a nine-month low and the main Kospi stock index to its lowest level since early February. [Cheonan] [Unintended consequences]
S Korea freezes trade with North over warship sinking
Page last updated at 2:58 GMT, Monday, 24 May 2010 3:58 UK South Korea has suspended trade with the North and demanded an apology, after a report blamed Pyongyang for sinking a Southern warship. President Lee Myung-bak said those who carried out the attack on the Cheonan, which killed 46 sailors, must be punished. He also announced that Northern ships would be banned from Southern waters. [Cheonan] [Evidence]
Kaesong Closure 'Would Cost $500 Million'
It would cost about US$500 million to shut the joint-Korean Kaesong Industrial Complex in the North, the government estimates. A government official on Sunday said the estimate includes insurance payouts from the Inter-Korean Economic Cooperation Fund for South Korean businesses operating at the industrial park if the North decides to shut the industrial park or if Seoul decides to pull out South Korean staff for safety reasons. The North has earned more than $96.81 million in cash from wages from 2004 to March this year. It expects to earn another $40 million this year. [Kaesong] [SK NK policy] [Cheonan]
Inter-Korean trade to be suspended: President Lee
President Lee Myung-bak Monday called on North Korea to apologize for the sinking of the Korean navy warship and to punish those involved in the attack. Lee also said that his government will halt inter-Korean trade and other exchanges in retaliation for the torpedo attack to the patrol ship Cheonan on the waters near the border in the West Sea last March. “North Korean merchant ships will also be banned from passing the South waters, including the South Sea,” President Lee said in a statement aired nationwide live in the morning. “The South will invoke self-defense measures immediately in case of further provocation of the communist North,” he said in a resolute tone. President Lee also made it clear that his government will bring the case to the United Nations Security Council for stern punishment. [Cheonan] [SK NK policy]
Chinese enterprises shine at Pyongyang trade fair
19:54, May 20, 2010 Chinese enterprises did plenty of business at the 13th Pyongyang Spring International Trader Fair, which ended Thursday. More than 130 Chinese enterprises were represented at the fair, including Aucma of Qingdao, Frestech of Henan, and carmaker Yuan Group of Chongqing. The Chinese products, especially those of the industrial machine and home appliances, attracted great attention from clients in the Democratic People's Republic of Korea. Chinese enterprises signed up 240 new clients at the fair, including 123 potential clients, with deals totalling 4.46 million U.S. dollars, according to Luo Lei, deputy director of the Exhibition Department of the China Council for the Promotion of International Trade. The fair was a good opportunity to promote trade and cooperation between the two countries, Luo said. The 13th Pyongyang Spring International Trader Fair opened Monday, attacting 278 firms from 15 countries, including the DPRK, China, Russia, Vietnam and Thailand. The spring fair and the Autumn International Trader Fair are held each year in Pyongyang. Source: Xinhua [China NK]
Can North Korea Be Safe for Business?
By Geoffrey Cain / Seoul Thursday, May. 20, 2010 Foreign investors survey North Korean workers at a South Korean factory in the in the inter-Korean industrial park in Kaesong, North Korea in 2006 Few investors can boast the one-of-a-kind global pedigree of Felix Abt. Since 2002, the Swiss businessman has found his calling as a point man for Western investments in — of all places — North Korea, where he helped found the Pyongyang Business School in 2004. He also presided over the European Business Association in Pyongyang, a group in the capital that acts as a de facto chamber of commerce. A few years ago, that position led him to help set up the first "European Booth" featuring around 20 European companies each year at the Pyongyang Spring International Trade Fair, an annual gathering of 270 foreign and North Korean companies currently underway in the hermit kingdom until Thursday. Yet Abt, 55, who lives in Vietnam and therefore won't be attending the trade fair this year, laments the giant cloud hanging over the country: in recent years, political turmoil on the peninsula has raised the stakes even further for doing business in North Korea — even for the country's main patron, China. [Sanctions]
North Korea's Other Crisis: An Economy in Tatters
By Michael Schuman / Hong Kong Tuesday, Jun. 30, 2009 I had the rare opportunity in 2002 to take a road trip through North Korea. I had been invited into the country by Pyongyang along with several other foreign correspondents, and even though we rode in a modern bus, the journey itself was like going back in time. From the capital, we drove down narrow country roads for nearly six hours, through small farming hamlets of white homes in neat rows. Men in army-green clothing worked the fields by hand; there were few tractors or animals in sight. Trucks with sacks of U.S. food aid passed by. Our final stop was the town of Sinuiju, across the Yalu River from China. Officials took us on a tour of the local hospital, a disturbing den of dank hallways and archaic equipment, and a department store offering a sparse selection of packaged food and clothing that looked like 1950s leftovers. After dark, students gathered at the foot of Sinuiju's giant statue of Kim Il Sung, the country's founding father, to finish their homework. With little electricity in the town, the spotlights pointed at the statue were one of the few sources of light. The North Koreans escorting us were so out of touch with the outside world that they showed us their city to boast of their prosperity, not expose their poverty. [Media] [Sanctions] [Inversion]
S. Korea halts sand imports from N. Korea amid tension
By Sam Kim SEOUL, May 18 (Yonhap) -- South Korean companies have suspended their sand imports from North Korea, one of the longest-running economic cooperation projects between the countries, as tension mounted over the March sinking of a South Korean warship, a Seoul official said Tuesday. Seven South Korean companies have stopped sending cargo vessels to North Korea since Monday, Unification Ministry spokesman Chun Hae-sung said. [Cheonan] [Sanctions]
N. Korea to suffer dearly from halt in inter-Korean trade: civic group
SEOUL, May 16 (Yonhap) -- North Korea's moribund economy is projected to lose about US$370 million a year and about 80,000 jobs if inter-Korean trade is entirely suspended, a Seoul-based civic group said Sunday. The estimate by the South-North Forum, which specializes in inter-Korean economic cooperation, comes as South Korea considers taking stronger economic measures against the North over the March 26 sinking of a South Korean naval ship. Officials in Seoul have declined to openly blame Pyongyang for the sinking that killed 46 sailors, but suspicions are growing that a North Korean torpedo attack was the cause of the explosion that ripped the vessel in half. With tensions deteriorating over the sinking of the 1,200-ton Cheonan, the future of inter-Korean business projects -- including an industrial complex in the North's border city of Kaesong where more than 100 South Korean firms employ about 42,000 North Koreans -- appears to be in jeopardy. "If inter-Korean trade is fully halted, North Korea will lose $230 million a year in trade of agricultural goods," the civic group said in a statement. There would be also a loss of $49 million for the North if the Kaesong complex is shut down, the group said. Other losses came from already-suspended tourism between the two Koreas. [Cheonan] [Sanctions]
N. Korea opens int'l trade fair, 260 companies attending
Reported by Kyodo on Monday, 17 May 2010 (2 days ago) Kyodo North Korea opened a four-day international trade fair in Pyongyang on Monday, bringing together about 60 domestic firms and 200 companies from abroad. Participants were seen looking at medical products, foodstuffs and electronic products, and holding business talks at the site. Computer-controlled numerical machine tools that North Korea manufactured for the first time last year drew particular attention. [Trade]
Kim Jong Il Inspects Potato Farm
Pyongyang, May 17 (KCNA) -- General Secretary Kim Jong Il provided field guidance to a large potato farm now under construction in the area of Tokpho in Paekam County. After being briefed before a huge map showing the long-term plan for potato production in the county, he looked round the farm under construction to learn about the progress made in the project. The potato farm is of weighty importance in turning Paekam County into a centre for potato production, he noted, setting forth important tasks for building the farm.
Pyongyang Spring Int'l Trade Fair Opens
Pyongyang, May 17 (KCNA) -- An opening ceremony of the 13th Pyongyang Spring International Trade Fair took place at the Three-Revolution Exhibition Monday. On display are products from companies and organizations of the DPRK, China, Germany, Russia, Mongolia, Switzerland, Singapore, Australia, Austria, Italy, Indonesia, Cuba, Poland and Taipei of China.
Kaesong Firms Look at Dim Prospects
South Korean firms in the joint Kaesong Industrial Complex are worried as relations between the two Koreas approach a new ice age in the wake of the sinking of the Navy corvette Cheonan on March 26. Their orders have plummeted as rumor spread that the Kaesong industrial park will be the next target for Pyongyang to freeze or confiscate South Korean assets, as it did at the Mt. Kumgang tourism resort last month.
How Korean and Japanese Consumers Differ in Choosing Cars
Comparisons of sales of foreign cars in Japan and Korea reveal significant differences in preferences, but experts predict the two markets might soon resemble each other more closely. In Japan, compact vehicles produced by both mass-market and premium brands are popular while Koreans prefer mid-size or large cars of premium brands, reflecting the fact that many Koreans still view foreign cars as status symbols. But the popularity of small foreign cars is rising in Korea, so compacts may come to dominate the imported car market [Auto] [IM]
Economic cooperation emphasized during NK leader’s China trip
By Kim Young-jin Staff reporter North Korean leader Kim Jong-il, on his China trip that wrapped up Thursday, placed emphasis on economic cooperation, in addition to efforts to resume the six-party denuclearization talks. Along his route to Beijing, Kim stopped Wednesday in the economically vibrant port city of Tianjin, home of a special economic zone. It was his second stop at such a location after touring Dalian Monday and Tuesday. Experts here believe the stops, both at cities enjoying booming success after economic reform, point to the North's willingness to open up its Rajin-Sonbong Economic Zone, located near the town of Rason. ``He visited (the port cities) to give a sign of his willingness to develop the Rason port and seek investment from China and Russia,'' Zang Hyoung-soo, an economics expert at Seoul's Hanyang University, told The Korea Times. It was speculated Kim discussed matters of economic cooperation with Chinese Premier Wen Jiabao during his trip, which experts say was a bid to win support for the North's economy, struggling after being hit with U.N. sanctions a year ago. Though the North established the zone to promote economic development through foreign investment, efforts by China and Russia to convince Kim to open it fully have been thwarted by Kim's reluctance. But this time may have been different, Zang said. ``The U.N. sanctions have put Kim in a desperate position,'' he said. ``This time I think he will allow (the opening), making the concession in exchange for economic cooperation.'' The meeting between Kim and Wen was their first since 2006, when the latter visited Pyongyang. Kim arrived in Beijing Wednesday and held a meeting with President Hu Jintao in the evening, during which he reportedly agreed to bring Pyongyang back to the six-party talks on its denuclearization. His visit began Monday, when his 17-carriage train crossed into China in the early hours.
China Eyeing Development of N. Korean Port
MAY 05, 2010 06:57 North Korean leader Kim Jong Il’s visit Tuesday to Dalian, China, is known to reflect Beijing’s interest in resolving the port city’s saturation through the development of the North Korean port of Rajin. An informed source on the North said Tuesday that Kim’s trip to Dalian was also aimed at benchmarking the city as a model for the North’s development of Rajin. On the second day of his China visit, the reclusive leader toured a pier at Dalian Economic & Technological Development Zone. A South Korean government official said Kim’s visit to Dalian is related to China’s economic interests as well as aiming to benchmark the port city and attract foreign capital, adding Seoul is watching the situation. Dalian is a venue for the transport of grain, coal and timber from three northeastern Chinese provinces to southern areas or overseas. Goods are transported on the ground from the provinces to Dalian, from which they are taken elsewhere by ship. The source said Dalian’s capacity is saturated and the port can no longer handle logistical transportation from the northeastern provinces. China’s economic benefits from the development of Rajin will be enormous given the expected increase in exports, the source added. [FDI]
North Korea: Changing but Stable
By Alexandre Mansourov
In this March 29, 2010 image taken from a footage of Associated Press Television News (APTN), Ri Ki Song, Professor of Institute of Economy at North Korea's Academy of Social Sciences, speaks during an interview with the APTN in Pyongyang, North Korea. Ri was provided by the North's government in response to a request to talk to an official who could explain its economic situation. It is very rare for North Korean officials to discuss such policies with foreign media. (AP Photo/APTN) North Korea is not static and inflexible. Indeed, there tends to be a very dynamic picture once you look below the surface. Change is a constant but, as in almost any state or society, it brings about tension. However, there is little or no sign that current tensions, caused by changes in the distribution of power within the leaderships’ core cadre, positioning for succession, or economic reforms are eroding the overall strength of the regime. While such tensions may spill over into society, there have been no signs that they have risen to a level that significantly weakens the regime or have made it feel that drastic action is needed.
In spite of recent speculation in the New York Times and other Western media about North Korea’s growing economic desperation and political instability, Pyongyang is, in fact, on a path of economic stabilization [Economic reform] [Development strategy] [Media] [Defector reports][Collapse]
Chaebol powered industrial transformation
By Ahn Choong-yong South Korea's industrial conglomerates, which operate many business lines simultaneously and are often controlled by a single owner or family and commonly known as "chaebol," have been the most important driving force behind Korea's modern ``compressed'' growth and industrial transformation. It is widely agreed that Korea's modern economic development has occurred within a unique paradigm of an export-based, but government- and chaebol-led industrialization strategy with varying degrees of government intervention. Over time, the respective role of chaebol and their relationship with the government have constantly evolved to adjust to the changing international and domestic environment toward performance-based criteria. [Chaebol] [Development strategy]
Talk of N.Korean Collapse Rekindled by Currency Reform Fallout
For the first time in years, international experts say North Korea's isolated government is increasingly frail, and potentially unstable. Part of the reason, they say, is Pyongyang's attempt at currency reform last year. Flash back to North Korea, early 1995. The Soviet Union and its eastern bloc allies were gone, along with the economic aid that flowed from them. Kim Il-sung, the leader North Koreans worship like a god, had died the year before. And the country was entering a severe famine that would kill an estimated million people. Predictions abounded that North Korea would collapse. But it persevered, and by 2005 predictions of a North Korean collapse were dismissed and even ridiculed. Now, however, in 2010, that is changing, as Mansfield Foundation Executive Director Gordon Flake said recently. "I think there's some increasing views in Seoul that after 20 years of wrongly predicting the demise of North Korea, there's something going on in Pyongyang," said Gordon Flake. "There are a growing number of people in South Korea who say that we're getting close to the end game here." [Collapse] [Takeover] [MISCOM] [Economic reform]
N. Korea’s GNI is one one-hundreths of that of S. Korea
BOK errors led to inflated estimate, Sejong Institute fellow says
A former unification minister and senior fellow at the Sejong Institute claims that the central bank’s August estimate of North Korea’s gross national income, or GNI, was overblown and that it actually stood at just one one-hundredths of that of South Korea. In the March issue of the Sejong Institute’s monthly magazine, Lee Jong-suk estimated the North’s nominal GNI at US$8.4 billion to $8.9 billion, only one one-hundredth of South Korea’s GNI, while projecting the per capita GNI of the communist country to be around $369 to $389, one fiftieth of that of South Korea. Lee’s estimates contrast with projections made by the Bank of Korea last August, when the central bank said that the North’s GNI stood at one thirty-fifth of that of South Korea. At the time, the BOK put the North’s gross GNI and per capita GNI at $25.6 billion and $1,108, respectively. Lee said, “Though the BOK’s statistics are used broadly and taken as being trustworthy, the way it estimated the North’s GNI is outside of universally-accepted calculation methods.” He claimed that the central bank was mistaken when it used South Korea’s price level and value-added tax rates in calculating the North’s income. He also claimed that the BOK’s estimation of defense costs for the North should have been $2.1 billion to $2.6 billion, not $5 billion. Lee said that the Lee Myung-bak administration’s pledge to help the North raise its per capita GNI to $3,000 if it dismantles its nuclear programs was also based on mistaken calculations, under which it put the income of the communist nation at $1,000. “If it had put the income estimate at around $300 to $400, the plan could not have been proposed, even as rhetoric,” he said. [Economic comparison] [Military balance] [Statistics]

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APRIL 2010

Beyond manufacturing
South Korea: Finding its place on the world stage Richard Dobbs and Roland Villinger In the minds of many South Koreans, the ideas of job growth and manufacturing are as tightly welded as the hull of a South Korean–made supertanker. And little wonder. South Korea’s economic miracle was wrought by manufacturers—giant enterprises that consumed labor, fuel, and materials and cranked out tangible objects: steel, ships, buildings, cars, bridges, appliances, memory chips, TVs, and mobile phones. Alas, this manufacturing-centered growth model is less durable than the products it has created. If South Korea is to generate new jobs and continue raising its living standards in the decades to come, it must stop relying so much on manufacturing and place a greater emphasis on developing its service sector. South Korea must embrace the notion that its future prosperity will depend less on the production of physical things and more on intangibles such as skills, knowledge, and information. [Services]
Inter-Korean trade nearly doubles to $200 mln in March
SEOUL, April 28 (Yonhap) -- Trade between South and North Korea nearly doubled last month compared with a year ago amid a nascent economic recovery in the South, a government report showed Wednesday. Inter-Korean trade jumped 88.5 percent from a year ago to US$204.03 million in March, according to the report by the Korea Customs Service. Compared with two years ago, before the South Korean economy was hit by the global financial crisis, trade between the two Koreas rose 29.7 percent in the reported month. South Korea imports a range of labor-intensive goods such as clothes and watches from the joint Kaesong industrial complex in North Korea, as well as seafood and some agricultural produce. North Korea imports textiles such as cotton and other staple fabrics, along with electronics products including computers and machinery. South Korea's outbound shipments to the North came to $84.36 million while its imports from the communist country amounted to $119.67 million. This marked the highest trade deficit for the South in 17 months at $35.31 million, the report said. The surge came on the back of an economic turnaround in the South. Inter-Korean trade did not seem to be affected by ongoing political tensions on the Korean Peninsula. During the first quarter of this year, two-way trade soared 64.3 percent from a year earlier to $526.72 million, it said. Bilateral trade has increased steadily over the past decade from $328.65 million in 1999 to $651.68 million in 2002 and surpassing the $1 billion mark for the first time in 2005. Inter-Korean trade reached $1.79 billion in 2007 and peaked at $1.82 billion the following year before falling slightly to $1.66 billion last year.
Seoul may cut trade with N. Korea
2010-04-25 21:28 rumors he could coach Mao Asada Seoul may cut trade with N. Korea Seoul is weighing its options of how to respond to North Korea’s planned seizure of South Korean facilities within the mountain resort just north of the inter-Korean border. Among them is restricting inter-Korean trade of agricultural and marine products such as garlic, mushrooms, prawns and clams. North Korea has said that it will seize the South Korean assets and deport all South Korean staff from the Mount Geumgang resort this week. Unification Ministry spokesperson Lee Jong-joo said Seoul will take firm measures against the North’s infringement on property rights. “The decision on what kind of measures to be taken will be made shortly,” Lee said. Seoul, however, doesn‘t have many options left. The government is reportedly considering limiting the volume of agricultural and marine products from North Korea or tightening regulation of imports in other ways. Certain North Korean items, such as sand, hard coal and mushrooms, already require the unification minister’s approval each time someone wants to bring them into the South. Seoul could expand the number of such items, making the import process more troublesome. [Sanctions]
North Korea farmers shun new won-former aid worker
By Ben Blanchard BEIJING, April 20 (Reuters) - Farmers in North Korea are resisting accepting the new won currency after a botched attempt at monetary reform last year, a former German aid worker said on Tuesday, threatening already precarious food supplies. Isolated North Korea late last year abruptly announced a revaluation of its currency, where old won notes were to be exchanged for new ones at a rate of 100 to one. It then also banned payments in foreign currencies, a moved it has since relaxed. The currency controls aimed at stamping out merchants who operate outside the centrally planned economy, which experts said sparked inflation and made it more difficult for the public to buy food. Karin Janz, who until Feb. 1 was North Korea country director for German NGO Welthungerhilfe, told the Foreign Correspondents Club of China in Beijing that the reforms were a 'disaster'. [Economic reforms] [media] [Mismanagement] [Context]
N. Korea's inflation, exchange rate stabilizing after currency reform shock: Seoul
By Tony Chang SEOUL, April 13 (Yonhap) -- North Korea's market prices and currency exchange rate appear to be stabilizing after severe fluctuations from an abrupt government-led currency reform last year, the Seoul government said Tuesday. North Korea carried out a currency revaluation last November, a measure it said was to curb inflation. Analysts here linked it to a power transition from North Korean leader Kim Jong-il to his third and youngest son, Jong-un. The currency redenomination is said to have fueled inflation and severe food shortages, causing social unrest in the tightly controlled nation. In its latest North Korea report submitted to parliament's foreign affairs committee, the Unification Ministry said that market prices in the country were on a "downward path" following recent measures by the North Korean authorities. A kilogram of rice, which cost around 20 North Korean won immediately after the revaluation, soared to 1,000 won in mid-March but dropped to the 500-600 won range in early April, the ministry said. The value of the North Korean won against the U.S. dollar, which nosedived to the 2,000-won range in mid-March from the 30-won range, also rose to the 600-700 won level in early April, according the ministry. On Kim Jong-il, the ministry said the reclusive leader has made 43 public appearances this year as of Monday, about the same as last year during the same period, and added he is "actively continuing public outings." Kim is believed to have suffered a stroke in 2008, which spawned speculation of an imminent power transfer. [Economic reform] [Succession] [Health]
N.Korea Distributes Rice from Military Storage
Food prices in North Korea have stabilized because the regime took the emergency measure of distributing rice stored for the military, a high-ranking South Korean government official said Thursday. The Unification Ministry told the National Assembly on April 13 that the price of rice in North Korea was around 20 won per kilogram right after the botched currency reform late last year but soared to 1,000 won in mid-March. In early April, the price dropped to 500-600 won
The regime distributed 5 kg of rice, 2-3 kg of meat, and 1 liter of cooking oil in celebration of the birthday of nation founder Kim Il-sung on April 15. An inside source said North Koreans "are keeping up their morale." [Sanctions] [Economic reform]
Sokcho Sees Trade with N.Korea Continue Despite Tensions
Amidst escalating tensions between the two Koreas after the sinking of the Navy corvette Cheonan and the arrest of two North Korean would-be assassins, North Korean ships continue to frequent Sokcho Port on the east coast almost daily. Fishery products imported from North Korea amount to a monthly average of 700 tons. North Korean ships began to come to Sokcho Port in June 2009. Until then, North Korean fishery goods arrived in the South on Chinese boats. Last year alone, 9,271 tons of fishery products worth W16.7 billion (US$1=W1,108) came into Sokcho from North Korea. From January to March this year, it was 2,520 tons worth W5.3 billion. [Cheonan]
DPRK authorities slash all prices by 99 percent
Posted Date : 2010-04-12 (NK Brief No. 10-04-12-1) As inflation and food worries continue to grow in North Korea, social unrest is palpable. According to the group ‘Good Friends’, North Korean officials slashed prices on all goods to 1/100th of their going rate in an effort to ease the public. Considering the fact that North Korea revalued its currency by the same ratio on November 30, it appears that Pyongyang is effectively acknowledging the reform’s failure. [Economic reform]
Pyongyang Tipping Point
by Marcus Noland, Peterson Institute for International Economics Op-ed in the Wall Street Journal April 12, 2010 © Wall Street Journal North Korea likes to project an image of strength to the world. But back home, there is a serious economic crisis playing out that could have long-term repercussions. Historians may look back and see this as a tipping point. [Takeover] [Agency]
D P R Korea 2008 Population Census National Report
Central Bureau of Statistics Pyongyang, DPR Korea 2009
The government of the DPR Korea has set a far-reaching target to open the gate to a great, prosperous and powerful socialist nation until 2012 that falls on the centennial birth anniversary of the great leader Comrade Kim Il Sung and is waging a vigorous campaign to realize it. Pursuant to such vibrant reality, the 2nd census of population was carried out in the Democratic People’s Republic of Korea (DPRK) with October 1, 2008 as the reference point of time. The census aimed to collect more detailed demographic and socio-economic information, which is absolutely necessary for formulation of the government’s policy, state administration and management of the society and the economy. This nationwide census included, in addition to demographic and economic indicators, more topics such as housing, disability, education, migration, economic activity and maternal mortality, which were not collected in the 1st census undertaken 15 years before in 1993. 2008 census of population is a success in terms of enumeration coverage and quality of the data. [Statistics] [Demographics]
North Korea's census
Posted By Christina Larson Monday, February 22, 2010 - 1:14 PM Share While it's famously difficult to obtain information from within North Korea, author B.R. Myers has written a fascinating account based on DPRK propaganda, "North Korea's Race Problem," for the current print issue of FP. Hermit Kingdom poster art, it turns out, is chock full of such pastoral images as plump, happy cherubic children and leaders. Meanwhile, as The Wall Street Journal reports, the reclusive government has recently released the results of a national census conducted in 2008. The picture that emerges is bleak. By the government's own admission, the population is considerably older and sicker than at the time of North Korea's last census in 1993. Some highlights: North Korea's census said the country's population has proportionately fewer children and more middle-aged people than it did in 1993. It also reported that people are less healthy. Babies are more likely to die: The infant mortality rate climbed to 19.3 per 1,000 children in 2008 from 14.1 in 1993 ... North Koreans are living shorter lives—average life expectancy has fallen to 69.3 years from 72.7 in 1993. [Census] [MISCOM] [Inversion]
European Business Mission to Pyongyang: May 2010
In order to explore these business opportunities, we will organize again a business mission to North-Korea (15-22 May). We will also visit the annual Pyongyang Spring International Trade Fair (see photo). This fair can be used by European companies to come in contact with potential buyers and suppliers in North-Korea. Information abouth both events has been attached. In case this date is not convenient for you, individual business trips are possible as well. Later this year, another trade mission will visit Pyongyang from 11-18 September.
Kiwi Fruit Trees Propagated
Pyongyang, March 31 (KCNA) -- A brisk campaign for propagating kiwi fruit trees (Actinidia deliciosa) with a high edible and medicinal value has been under way in the Democratic People's Republic of Korea. A research team of the Central Botanical Garden has studied the physiological characteristics of the tree in a scientific way and founded out a rational open-air grafting method to easily multiply it in any place of the country. The method has already been applied to various parts of the country and recently even to Kanggye City, Jagang Province and other northern inlands with low temperature and unfavorable conditions of growth. It ensures a high rate of rooting and a good harvest of fruits.
Overtures to China may signal opening of North Korea's economy
By Blaine Harden Friday, April 2, 2010 SEOUL -- Squeezed by food shortages and financial sanctions, North Korean leader Kim Jong Il appears to be reaching out to China and Chinese investors in a way that could mark an extraordinary opening in the insular nation's shuttered economy. [China NK] [Opening] [Media]
NKorea says no chaos followed currency reform
The Associated Press Thursday, April 1, 2010; 11:38 AM PYONGYANG, North Korea -- North Korea's private markets closed temporarily due to a delay in setting prices after a currency redenomination, but the economy has stabilized and markets reopened, a senior economist said in a rare interview broadcast Thursday. The researcher denied reports of social upheaval because of the abrupt change in December, which analysts saw as an effort to cool inflation and reassert the communist government's control over a growing market economy. The measure reportedly sparked anger among many citizens stuck with piles of worthless bills. "In the early days immediately after the currency change, market prices were not fixed, so markets were closed for some days," Ri Ki Song, a professor at the Institute of Economy at North Korea's Academy of Social Sciences, told APTN. "But now all markets are open, and people are buying daily necessities in the markets." [Economic reform] [Media]
Kim Il-sung's 'Awful' Advice Blamed for N.Korea's Economic Malaise
The international press have been discussing the prospects of regime collapse in North Korea. Most recently Aidan Foster-Carter, a Korea expert at Leeds University, said that North Korean leader Kim Jong-il's economic incompetence is driving the North to a "dead end." In article for the Financial Times on Tuesday, Foster-Carter said, "In a speech in 1996, when famine was starting to bite, [Kim Jong-il] whined defensively that his late father, Kim Il-sung, had told him 'not to get involved in economic work, but just concentrate on the military and the party.'" [Inversion] [Agency]
Hermit economics hobbles Pyongyang
By Aidan Foster-Carter
Published: March 31 2010 03:00 | Last updated: March 31 2010 03:00 Great Leader? Pyongyang's fawning hagiography not only grates, but is singularly unearned. Even by its own dim lights, North Korea's decision-making is going from bad to worse. Last year saw two spectacular own goals. Missile and nuclear tests were a weird way to greet a new US president ready to reach out to old foes. The predictable outcome was condemnation by the United Nations Security Council, plus sanctions on arms exports that are biting. Domestic policy is just as disastrous. December's currency "reform" beggars belief. Did Kim Jong-il really fail to grasp that redenomination would not cure inflation, but worsen it? Or that brazenly stealing people's savings - beyond a paltry minimum, citizens only got 10 per cent of their money back - would finally goad his long-suffering subjects into rioting? Forced to retreat, officials even apologised. One scapegoat was sacked - and possibly shot. [Agency] [Inversion] [Sanctions]

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MARCH 2010

Some N. Korean Officials Take on 2 Jobs
By Kang Hyun-kyung Staff Reporter In the wake of North Korea allowing its people to buy and sell products at markets again in February, some money-smart workers in the public sector are working day and night to make more cash, according to a news outlet. This signals the resurgence of wholesalers there, said the Daily NK, run by a group of North Korean refugees in South Korea. North Korea watchers observed that the new merchant class was the major target the authorities attempted to control through the currency reform last November. The Daily NK reported Friday that some government officials work in the office during daytime, but become small wholesalers at night.
Kim Jong Il Inspects Industrial Establishments
Pyongyang, March 25 (KCNA) -- General Secretary Kim Jong Il gave field guidance to the Chonma Electrical Machine Plant and the Tahungsan Machine Plant alive with a high-pitched drive for pushing back the frontiers of science. The first leg of his guidance was the Chonma Electrical Machine Plant.
Economy stabilitzes before Supreme People’s Assembly meeting
Posted Date : 2010-03-24 (NK Brief No. 10-03-24-1) It has been reported that food prices in North Korea have leveled out in the latter half of March. An informant from North Hamgyeong Province told Daily NK on March 21 that “nonglutinous rice is 950 Won (per kilogram), corn is 220 Won (per kilogram), and pork is 1,800 Won (per kilogram).” The same source stated that prices in the Onseong town market, Namyang Market, prices were similar. It appears that the prices have dropped because of the increase in overseas food assistance to the North and the fact that emergency rations are now being sold on markets. [Economic reforms]
Foreign exchange and smuggling again prevalent in North Korea
Posted Date : 2010-03-22 (NK Brief No. 10-03-22-1) Foreign currency swaps and illegal trade are again prevalent in North Korea, despite recent currency reforms and bans on money exchanges. Following last November’s currency reform, there has been a significant crackdown on the use of foreign currency and cross-border trade by individuals. However, reports indicate that North Korean traders continue to conduct business with outside entities, despite new regulations requiring them to remit profits through the Korean ‘Kwangson’ Bank. There has been a crack-down on unauthorized transactions, but it appears to have been ineffective. [Economic reforms]
S. Korea cuts import quotas for N. Korean farm products
SEOUL, March 21 (Yonhap) -- South Korea has significantly reduced import quotas for eight North Korean agricultural goods, government officials said Sunday, amid the enforcement of strong U.N. economic sanctions on the communist nation. According to a public notice posted by the Unification Ministry, the amounts of six North Korean goods allowed to be shipped to the country, including crab, shrimp and peanut products, have been reduced to half from those of last year while the import quota for sesame seed has been reduced from 300 tons to 100 tons. [Sanctions]
N. Korea may surpass South in terms of economically active adults: think tank
SEOUL, March 21 (Yonhap) -- The ratio of economically-active population aged between 15 and 64 to total population in North Korea is likely to surpass that of South Korea in 2020, a private research showed Sunday. The ratio of North Korea may stand at 71.3 percent in 2020, compared with an estimated ratio of 71.2 percent in South Korea for the year, Hyundai Economic Research Institute said in a report. As the ROK's birthrate drops to one of the world's lowest in a fast-aging society, the ROK's economy could face a slowdown by then, it said. "To cope with an economic slowdown, the South needs to actively use the North's laborers," said Lee Hae-jeong, a researcher at the institute. This year, the ratio of economically-active population to total population in South Korea was 72.8 percent, compared with 69 percent of the North, according to the report. The report said the South's population may peak at 49.52 million in 2023, while that of the North may peak at 25.32 million in 2032 [Unification benefit]
Ishavsbanen
Finnish/Russian railway gauge between the Atlantic and Pacific Oceans [Railways] [Iron silk road]
N.Korea Tries to Lure Foreigners to 'Investment Zones'
In the wake of a disastrous currency reform, North Korea seems desperate to draw international investments in efforts to resolve its deteriorating economy and food shortage. There are moves to open the Rajin-Sonbong Economic Special Zone to the outside again and develop Wihwa and Bidan islands near Sinuiju jointly with China. The North has been increasingly frantic in calls on South Korea to resume package tours to the Mt. Kumgang resort and increase wages for North Korean workers at the joint Korean Kaesong Industrial Complex. There are four so-called "special economic zones" -- Rajin-Sonbong, Sinuiju, Mt. Kumgang, and Kaesong -- which the North either tried to develop in the past or is currently operating. They are on the eastern, western, southern, and northern tips of the North Korean territory [SEZ} [FDI]
Unification of Koreas Tagged at $1.7 Tril.
By Lee Tae-hoon Staff Reporter A U.S. economist has estimated that the costs of the unification of the two Koreas would be $1.7 trillion, nearly twice South Korea's gross domestic product (GDP). The South's nominal GDP for 2009 stood at $930 billion. In a Forbes commentary posted Monday, Charles Wolf, a senior economic adviser at the RAND Corporation, projected the astronomical figure based on the assumption that the goal of unification was equalization of per capita GDP between the two Koreas. [Unification cost]
Seoul cuts North Korean lifeline
By Christian Oliver and Song Jung-a in Seoul Published: March 18 2010 15:36 | Last updated: March 18 2010 15:36 South Korea is phasing out sand imports from North Korea, delivering a heavy blow to the impoverished regime which is already reeling economically because of confiscated arms shipments and bungled currency reforms. Sand was the biggest export to South Korea from the north in 2008, earning Pyongyang $73m. This represents about twice as much as it gains annually from wages at factories in Kaesong, a cross-border industrial zone for South Korean companies. Arms exports and counterfeit cigarettes are reckoned to be worth hundreds of millions of dollars to the Communist dictatorship of the north, led by Kim Jong-il South Korean officials told the Financial Times that Seoul would phase out sand exports when existing contracts with its northern neighbour expired. “Once those companies receive their sand, for which they have already paid, that will be the end,” a senior South Korean security official said. [Sanctions] [SK NK policy] [Inter-Korean business] [Media]
Inter-Korean trade jumps 52 percent in Feb.
2010/03/17 10:53 KST SEOUL, March 17 (Yonhap) -- Trade between South and North Korea rose sharply last month on the back of an economic turnaround, a government report showed Wednesday. Inter-Korean trade soared 52.1 percent from a year ago to US$153.49 million in February, according to the report by the Korea Customs Service. South Korea's outbound shipments came to $77.14 million while its imports from the communist country amounted to $76.35 million for the South's trade surplus with the North reaching $792,000, the report said. The surge came as the global economy is on the road to recovery. Inter-Korean trade is expected to soar this year thanks to rising demand amid an economic turnaround, the customs office said. Nearly half of the companies participating in inter-Korean trade responded that two-way trade will increase this year, according to a survey by the Korea International Trade Association. In January, the country ran a deficit of $9.55 million from its trade with the North after posting a surplus of $23.91 million in December 2009 for the first time in 16 months. Bilateral trade has increased steadily over the past decade from $328.65 million in 1999 to $651.68 million in 2002 and surpassing the $1 billion mark for the first time in 2005. Inter-Korean trade reached $1.79 billion in 2007 and peaked at $1.82 billion the following year. But it fell slightly last year to $1.66 billion. [Inter-Korean business]
Spring Sowing of Wheat and Barley Seeds Finished
Pyongyang, March 17 (KCNA) -- Spring sowing of wheat and barley seeds has been wound up on the farms in different parts of the DPRK. Officials and working people in the agricultural field in South Hwanghae Province sowed wheat and barley seeds in over 300 more hectares than planned. Farms in North Phyongan Province and on the outskirts of Pyongyang finished the sowing earlier than scheduled while those in North Hwanghae and South Phyongan provinces and Nampho City completed the sowing in right season. Having finished the sowing, the agricultural workers are now busy making thorough preparations for immediate farming.
Report: North Korean executed over currency reform
The Associated Press Thursday, March 18, 2010; 1:38 AM SEOUL, South Korea -- North Korea executed a former senior official last week as punishment for the country's botched currency reform, a news report said Thursday. In November, North Korea redenominated its currency as part of efforts to lower inflation and reassert control over the country's nascent market economy. However, the measure reportedly worsened the country's food situation by forcing the closure of markets and sparked anger among many North Koreans left with piles of worthless bills. Pak Nam Gi, the ruling Workers' Party finance and planning department chief who spearheaded the currency reform, was executed by a firing squad in Pyongyang last week, South Korea's Yonhap news agency reported, citing unidentified sources. [Media] [Economic reform]
[North Korea Census 2008] Census figures reveal N.Korea is also an aging society
According to North Korea’s 2008 census, 8.8 percent of the population is over the age of 65 A copy of North Korea’s 2008 censes was obtained Tuesday by the Hankyoreh. Census figures show that on average, North Korean men are age 29.0 years and women 25.5 years at the time of their first marriage. According to the census figures, both men and women in North Korea generally enter their first marriages in their mid to late twenties. Conversely, the average age at the time of their first marriage of individuals in South Korea is 31.38 years for men and 28.32 years for women as of 2008. These figures indicate that men and women marry 2.38 years and 2.82 years earlier in North Korea, respectively. [Statistics] [Ageing society]
[North Korea Census 2008] Census data gives concrete picture of N.Korean living environment
The plurality of N.Koreans lives in row houses and use coal or wood for fuel In what kind of living environment does the average North Korean reside? Until now, we’ve only been able to guess roughly; there was no way to know concretely. The result of North Korea’s 2008 population census, carried out with assistance from the United Nations Population Fund (UNFPA), however, gives a concrete picture. A brief answer says that the average North Korean lives in a row house or detached house slightly over 20 pyeong in area with two rooms and a bathroom and uses coal or wood for fuel. [Statistics]
Rason Taehung Trading Company
Pyongyang, March 15 (KCNA) -- The Rason Taehung Trading Company on the east coast of Korea has gained great achievements in the efforts for implementing the tasks set forth by this year's joint editorial issued by leading newspapers of the Democratic People's Republic of Korea. The company is furnished with pumps for filtering and sterilizing seawater with ultraviolet rays, air-cooling drier capable of keeping goods fresh and disinfected, equipment of making pieces of ice with sterilized seawater, etc. Aquatic products from a fish culture ground are classified, cleaned and examined in the aquiculture tanks equipped with a thermostat and exhauster.
Free-trade talks turn to the Pacific
Tim Colebatch and Ben Schneiders March 15, 2010 WITH the Doha trade negotiations becalmed, negotiations will begin today on what Australia hopes will be the next best thing - a free-trade agreement covering eight Pacific nations. Negotiators from the United States, Australia, New Zealand, Chile, Peru, Singapore, Brunei and Vietnam will sit down in Melbourne for the first round of talks aimed at merging and extending their existing free-trade agreements. Trade Minister Simon Crean said the start of negotiations on the ''Trans-Pacific Partnership'' is a milestone on the way to free trade in Asia and the Pacific. [FTA]
North Korea’s renewed push for foreign investment at Rajin-Sonbong
March 12th, 2010 Author: Scott A. Snyder, CFR I’ve been watching North Korea ramp up efforts to attract foreign investment since Jack Pritchard and I heard last November in Pyongyang from the chairman of Pyongyang’s Foreign Investment Advisory Board a presentation of new laws that provide for repatriation of investments, tax benefits, and wages of 30 Euros/month that undercut the $57/month wage rate at the Kaesong Industrial Zone. [FDI]
N.Korea Revises Rules for Free Economic Zone
North Korea has revised a law on the Rajin-Sonbong Economic Special Zone, making it possible for overseas residents to do business there, it emerged Sunday. The law was changed on Jan. 27 as part of efforts by the cash-strapped dictatorship to lure investment from overseas. Article 8 of the revised law makes it possible for "Koreans" living outside North Korea to do business in the special zone, apparently with a view to attracting South Korean investors. [FDI] [Opening]
North hard at work on Cup stadiums
March 15, 2010 When North Korean national football players take the field against the Ivory Coast in their final Group G match in the 2010 International Football Association’s World Cup in South Africa, they will be playing at a stadium their compatriots helped build. South Korean sources said yesterday North Korean laborers are helping to put the finishing touch on stadiums across South Africa ahead of the World Cup, which will kick off in June. “North Koreans have been put to work on four to five stadiums that require renovation, including Soccer City stadium in Johannesburg, where the opening and closing ceremonies, plus the final will be staged,” a source said. “There are an estimated 1,000 North Koreans there.”
N.K. workers to renovate S. Africa soccer stadiums
North Korea is sending workers to renovate soccer stadiums in South Africa and lumberjacks to Mongolia as part of efforts to earn foreign currency. North Koreans took part in the construction work to upgrade the Soccer City stadium in Johannesburg and the newly-built Mbombela Stadium in Nelspruit, South Africa, to be used for the FIFA World Cup in June, said a source close to North Korean issues yesterday. North Korean workers were also involved in logging in Mongolia, he said. "North Korea has sent large numbers of workers to construction sites in the Middle East and lumberjacks to Russia although we do not have any exact figures on how many," Seoul's Unification Ministry spokeswoman Lee Jong-joo said.
N. Korea to Attract S. Korean Investment in Rason
By Jung Sung-ki Staff Reporter North Korea changed a law regarding its northeastern Rason special economic zone last January in an apparent move to attract more foreign investment, including from South Korea, a government official said Sunday. The Seoul government has confirmed the revision, which includes a clause that says the North will allow "Korean compatriots living outside the Democratic People's Republic of Korea (DPRK)" to be engaged in economic and trade activities in the communist state's first free trade zone, set up in 1991, the official said on condition of anonymity. The DPRK is North Korea's official name. The North had banned South Korean investors from Rason in a 1999 revision. [FDI] [Opening]
How N.Korea's Double Dealing Ruined a S.Korean Businessman
Roh Jeong-ho "I blew $500,000 on Rajin-Sonbong 15 years ago," recalls Roh Jeong-ho, who headed the first South Korean business to set up operations in North Korea's Rajin-Sonbong Economic Special Zone in 1995. [SEZ] [FDI] [media]
N.Korea in Ambitious 10-Year Development Plan
North Korea will implement a 10-year economic infrastructure plan through its official investment agency, the Taepung International Investment Group, and a state development bank to be established soon. The announcement was made by Korean-Chinese businessman Pak Chol-su, the president of Taepung Group, in an interview with a Japanese mouthpiece for Pyongyang on Tuesday. [FDI] [Opening] [Development]
N.Korea in Fresh Attempt to Lure Foreign Investment
Even as North Korea struggles under UN sanctions and is in the midst of a controversial currency reform aimed at breaking the back of a nascent free market, the reclusive country is apparently in the process of changing laws in order to attract more foreign investment, an expert said Wednesday. It is even offering foreign companies wages cheaper than those paid to North Korean workers at the joint-Korean Kaesong Industrial Complex, according to Jack Pritchard, president of the Korea Economic Institute in Washington D.C. [FDI] [Opening] [Sanctions]
Kim Jong Il Inspects Industrial Establishments
Pyongyang, March 10 (KCNA) -- General Secretary Kim Jong Il gave field guidance to industrial establishments in Huichon City seething with the drive for a great revolutionary surge. The first leg of his guidance was the Chilsong Electric Appliances Factory put on modern lines. Going round the pipe shop and other places of the factory, he acquainted himself in detail with the technological updating and production there.
1st Board Meeting of Development Bank
Pyongyang, March 10 (KCNA) -- The first meeting of the Board of Directors of the State Development Bank took place at Yanggakdo International Hotel on Wednesday. It was attended by directors of the board of the bank and officials concerned as observers. Conveyed there was a decision of the DPRK National Defence Commission "On establishing the State Development Bank." The board of directors is made up of representatives of the NDC of the DPRK, the Korea Asia-Pacific Peace Committee, an office concerned of the DPRK, the Ministry of Finance, the Korea Taepung International Investment Group and two independent directors. At the meeting Jon Il Chun, representative of the DPRK NDC, was elected director-general of the board of the bank and Pak Chol Su, a Korean resident in China, deputy director-general of the board of the bank. The meeting discussed and decided the draft statute of the State Development Bank, the proposal for operating the bank and its draft financial budget for Juche 99 (2010), the statute of its experts committee and the proposal for its management structure. Having advanced banking rules and system for transactions with international monetary organizations and commercial banks, the State Development Bank will operate as a comprehensive financial institution making investment in major projects, pursuant to the state policy, and performing the function as a commercial bank. [FDI] [Opening]
Diplomats: North Korea Seeks Hike in Embassy Rent
By THE ASSOCIATED PRESS Published: March 12, 2010 SEOUL, South Korea (AP) -- North Korea has demanded a hike in rental fees for embassies and international organizations in Pyongyang, diplomats said Friday, in what could be a move to raise foreign currency amid tightened international sanctions. The United Nations slapped new restrictions on North Korea following its second nuclear test last year. They ban the country from exporting arms and call on international financial institutions to halt grants, aid or loans except for humanitarian, development and denuclearization programs. North Korea informed embassies and international organizations last year that it would raise rental fees for their offices and living accommodation by 20 percent beginning in January, a diplomat, who has knowledge of the matter, told The Associated Press. The rent increases were being opposed by the missions. ''It's under dispute at the moment,'' the diplomat said, speaking on condition of anonymity due to the sensitivity of the issue and because it remains unresolved. Another diplomat, in Pyongyang, said the North cited rising oil prices as the reason for the increase, but all diplomatic missions and international organizations protested the hike, the first in about 20 years (sic). [Media]
Korea Must Slash Red Tape in Professional Services
The OECD in its annual Goring for Growth report says Korea "implemented 558 regulatory reforms in the non-manufacturing sector during 2004-2007," but recommends "promoting greater competition in services, especially in professional services." First of all, there is a shortage of professionals such as lawyers and doctors in Korea's service industry. There is only one lawyer for every 5,891 people, compared to 268 in the U.S. 394 in the U.K. and 560 in Germany. There is one accountant for every 3,950 people in Korea, compared to 895 in the U.S., 545 in the U.K. and 1,586 in Japan. The doctor-patient ratio is 1 to 580, the second highest among OECD member countries after Turkey. [Services]
Wealthy N.Koreans Hoard S.Korean Goods
Well-to-do North Koreans have been hoarding South Korean goods since a disastrous currency reform, Open Radio for North Korea said Wednesday. "Wealthy people in Pyongyang prefer goods to cash as they have lost confidence in the North Korean currency since the reform," it said. "Demand for South Korean goods, which are considered best quality, has more than doubled."
North Korea: It’s The Economy, Stupid
By Aidan Foster-Carter March 4th, 2010 This report is available online at: This article appears by kind permission of NewNations.com, for whom it was written as March's monthly update on North Korea. Aidan Foster-Carter, Honorary Senior Research Fellow in Sociology & Modern Korea at Leeds University, writes, “This is an astonishing episode, which history may record as pivotal. If the leadership learns its lesson and finally accepts that the market economy is as ineluctable as gravity, then the DPRK might conceivably survive on a reconstituted economic base and social contract, like today’s China or Vietnam. But if Kim Jong-il (or whoever) keeps trying to square the circle, under the delusion that correct politics is a substitute for sound economics, there is no hope.” [Context] [Agency]
Reform or retrenchment in North Korea?
February 26th, 2010 Author: Bradley O. Babson, NCNK Politics and economics are deeply entwined in North Korea. Thus, interpretation of the intentions and implications of North Korean actions must be assessed through both lenses. As it tries to address economic development and security challenges, North Korea has to find a way to make internal changes that will yield results while maintaining political control and regime legitimacy. At the same time, Pyongyang has to improve its external relations in ways that enhance its economy and security, but this will require more openness and commitment to compliance with international norms (sic). [Economic reforms] [Context] [Agency]
Automaker Campaigns for Inter-Korean Ties
By Kim Sue-young Staff Reporter South Korea's automobile brands Hyundai and Kia are gaining popularity globally with their advanced technology and sleek design. But when it comes to North Korea, it is not easy to find any vehicles made by those companies. Instead, Pyeonghwa Motors, the only inter-Korean venture in Pyongyang, is attracting North Koreans with affordable prices, high fuel-efficiency and nifty exteriors. Park Sang-kwon, president and CEO, said that the firm's car sales are related not only to profit but also to the unification of the Korean Peninsula in the future. "Increasing car sales there means that the North Korean economy is getting better. Once it improves, we, in my understanding, can talk about unification as equal partners," he said in an interview with The Korea Times in Seoul, Wednesday. [Inter-Korean business] [Unification] [Economic reforms] [Auto]

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FEBRUARY 2010

South Korea’s trade with North Korea falls into the red
Posted Date : 2010-02-25 (Nk Brief No. 10-2-25-2) Inter-Korean trade, in which South Korea recorded surpluses throughout the Kim Dae Jung and Roh Moo Hyun administrations, has now fallen into the red under the current government. According to customs statistics released on February 25, Seoul ran a trade deficit with North Korea under the Kim Young Sam administration until 1997, and then ran trade surpluses through the Kim Dae Jung and Roh Moo Hyun administrations, almost until the end of 2007. Seoul has fallen back into the red, however, during the last two years of the current government. In other words, the People’s Government (under Kim Dae Jung) and the Participatory Government (under Roh Moo Hyun) exported more to the North than they imported, while this trend has now been reversed under Lee Myung-bak. [SK NK policy] [Trade]
DPRK reopens markets, authorizes food sales
Posted Date : 2010-02-24 (NK Brief No. 10-2-24-1) Suffering from severe food shortages, North Korean authorities ordered that markets be opened unconditionally, and that there be absolutely no crack-down on the sale of foodstuffs within the markets. This is according to a report issued on February 18 by the North Korean human rights organization ‘Good Friends’. Good Friends’ newsletter revealed, “After examining a report on food shortages and the conditions of residents in each region throughout the country by the Office of Economic Policy Review, the Central Committee of the Korean Workers’ Party issued an ‘Order for Absolutely No Regulation Regarding Foodstuffs’ to each law enforcement office.” The order stated that until central distribution is running smoothly, all markets are to be reopened as they were prior to recent government crack-downs, and that under no circumstances were authorities to try to regulate food sales.
Economic Engagement with North Korea: Exploring Appropriate Method of Engagement by the International Community
Posted Date : 2010-02-24 (IFES Forum No. 10-2-24-1) by Myung-chul Cho (Director, Korea Institute for international Economic Policy)
1.Evaluation of the Current North Korean Economic Policy North Korea’s implementation of currency reform was announced on November 30, 2009. In the recent currency reform process, North Korea was in a state of disarray that has never experienced before in the history of its currency reforms. At first, exchange rates were not even decided, creating great confusion. After some time later, improved version was announced with better organized and clarified information but it is still faced with instability. The current economic situation of North Korea is markedly serious that have become unpredictable and unforeseeable even to the North Korean authorities. [Economic reform]
North Korea earns breather with currency curbs
By Ruediger Frank The Foreign Trade Bank of the DPRK (North Korea) issued document No DC033 10-004, dated January 29, 2010, to diplomatic missions and international organizations present in North Korea. They were informed that the use of foreign currency was to be stopped, payments were to be made in the form of non-cash checks, and that the official exchange rate of the euro to the North Korean won (KPW) was changed from 188.2 KPW to 140 KPW, effective January 2, 2010. [Economic reform]
Coal Miners Sent to Germany: Forgotten Chapter of Korea's Nation Building
By Park Si-soo Staff Reporter Thirty-six years ago, Kim Tae-woo, then a young man, was saying his farewells to his parents and girlfriend at Gimpo International Airport. What Kim was also leaving behind was a war-ravaged country with few jobs but what he was looking forward to finding at his destination in West Germany was a new life with a well-paying job as a member of Korea's miners' brigade. [Labour]
N.Korea's Investment Agency Under the Microscope
North Korea's official investment agency, the Taepung International Investment Group led by Korean-Chinese businessman Pak Chol-su, consists of six departments, including international finance, infrastructure investment, and exports and imports. Lee Jo-won, a professor of North Korean studies at Chungang University, said the structure is reminiscent of a general trading company in South Korea during the 1970s. According to an organizational chart of the group obtained by the Chosun Ilbo from a North Korean source, it seems that the group is giving weight to infrastructure development through foreign investment, rather than to export or import of consumer goods. [FDI]
Money in Socialist Economies: The Case of North Korea
Ruediger Frank
Introduction Dated January 29, 2010, the Foreign Trade Bank of the DPRK (North Korea) issued document No. DC033 10-004 to diplomatic missions and international organizations present in North Korea. They were informed that the use of foreign currency was to be stopped, payments were to be made in the form of non-cash cheques, and that the official exchange rate of the Euro to the North Korean Won was changed from 188.2 KPW to 140 KPW, effective January 2, 2010. [Economic reform]
China arranging foreign investment deal for N.Korea: report
(AFP) – 6 days ago SEOUL — China is arranging a huge foreign investment deal to revive North Korea's faltering economy amid an international drive to coax Pyongyang back to nuclear disarmament talks, a report said Monday. Beijing is helping the communist state obtain more than 10 billion dollars in investment from Chinese banks and multinational firms, the South's Yonhap news agency said. The deal was discussed a week ago when North Korean leader Kim Jong-Il met China's senior communist party official Wang Jiarui, it said. A North Korean body known as the Korea Taepung International Investment Group plans to conclude the deal in March, Yonhap said, adding that Chinese capital would account for 60 percent of total investments. [FDI] [Media] [China NK]
North Korea's Failed Currency Reform
by Marcus Noland, Peterson Institute for International Economics Op-ed for BBC Online February 5, 2010 © BBC Online On November 30, 2009, North Korea launched a surprise confiscatory currency reform aimed at cracking down on burgeoning private markets and reviving socialism. The move predictably set off chaos, and now it appears that the government is in retreat, acquiescing in the reopening of markets. The open question is what impact this episode may have for North Korea's looming leadership transition. [Economic reform] [thinktank]
North Korea’s failing currency
By The World · February 4, 2010 The North Korean government recently knocked two zeros off its currency, the won. And it ordered citizens to turn in their old cash savings. The move caused panic and riots among North Koreans. There were food shortages as well, as people scrambled to buy whatever they could before their money became worthless. Now the North Korean government has apparently fired the official who led the currency revaluation program. Katy Clark talks with Marcus Noland who is an expert on North Korea’s economy at the Peterson Institute for International Economics. [Media] [Context]
The Korea Business Interview Series: The North Korean Economy & Its Impact on South Korea
with Marcus Noland, author of Avoiding the Apocalypse: The Future of the Two Koreas. Click the button below to hear our exclusive interview (approx. 29 minutes length): [Economic reform] [thinktank]
North moving to halt currency reform fallout
February 13, 2010 North Koreans applaud Tuesday at a celebration in Pyongyang, as leaders reportedly soothed people who were affected by the currency revaluation. [YONHAP] With North Korea reeling from the botched currency reform of last year, a powerful government figure has reportedly started leading efforts to clean up the mess. Quoting an anonymous source in Washington, Radio Free Asia said yesterday that Jang Song-thaek, brother-in-law of Kim Jong-il and a senior Workers’ Party official, recently had extensive discussions with economic experts. During the sessions, which reportedly went on for several days, participants analyzed the causes of the reform’s disastrous failure and brainstormed ways to revive the economy. [Economic reform]
N.Korean Premier 'Apologizes Over Currency Debacle'
North Korean Premier Kim Yong-il has apologized for inflation and confusion in the aftermath of the shock currency reform, a South Korean activist group said in its newsletter Tuesday. "During a meeting of senior members of the Pyongyang municipal people's committee a few days ago, Kim Yong-il apologized for confusion and instability in the daily lives of people caused by wrongly fixed prices at state-run shops from the time of the currency reform to early this year," Good Friends said in the newsletter. North Korean leader Kim Jong-il recently dismissed the head of the planning and fiscal affairs department of the Workers' Party, Pak Nam-gi, over the currency reform failure. With food shortages worsening, the North's Ministry of Foreign Trade has ordered trading companies to "import food unconditionally," the newsletter said. "Officials at the North Korean Cabinet and Trade Ministry held a meeting about the food situation on Jan. 27. After the meeting, they instructed all trading companies to import food under any circumstances." [Economic reform] [Trade]
North Korea Appears to Ease Markets Crackdown
By Choe Sang-Hun Published: February 4, 2010 SEOUL, South Korea — Facing food shortages, severe price increases and social unrest, North Korea appears to have relaxed, at least temporarily, its broad crackdown on private markets, news reports and officials in Seoul said Thursday. If confirmed, the move to allow the buying and selling of goods outside the country’s tightly controlled state distribution system could signal a political setback for the government of Kim Jong-il. North Korea had recently introduced a new currency and closed private markets in an effort to restore a purer form of central economic planning. [Economic reform]
Discontent in N.Korea Turns to Anger After Currency Debacle
The fallout from North Korea's disastrous currency reform is mounting, with public discontent at skyrocketing prices reportedly growing into serious unrest in places. Radio Free Asia reported Wednesday that an anti-regime mood is growing among people who are prevented from earning a living by a crackdown on the use of foreign currency and closure of open-air markets. Quoting sources in North Korea, the exile radio station said North Koreans now call leader Kim Jong-il simply by his name without using any honorific, which is unprecedented in the North. [Economic reform]
North economic official is out of view
February 04, 2010 With reports of starvation and unrest in North Korea following its recent currency revaluation, a key economic bureaucrat has remained out of sight for a month, possibly after being dismissed for his role in the action. Pak Nam-gi, head of planning and economy at the ruling Workers’ Party, was last seen accompanying leader Kim Jong-il in early January. As an influential economic figure, Pak had often joined Kim on his field inspections of industrial sites. In 2009, Pak followed Kim on 77 occasions, the third-highest total among government officials. Kim has continued to visit industrial bases, a move analysts here have said is designed to show his commitment to reviving the nation’s downtrodden economy. But Pak has been missing from Kim’s side.
Discontent in N.Korea Turns to Anger After Currency Debacle
The fallout from North Korea's disastrous currency reform is mounting, with public discontent at skyrocketing prices reportedly growing into serious unrest in places. Radio Free Asia reported Wednesday that an anti-regime mood is growing among people who are prevented from earning a living by a crackdown on the use of foreign currency and closure of open-air markets. Quoting sources in North Korea, the exile radio station said North Koreans now call leader Kim Jong-il simply by his name without using any honorific, which is unprecedented in the North. [Economic reform] [Takeover]
North economic official is out of view
February 04, 2010 With reports of starvation and unrest in North Korea following its recent currency revaluation, a key economic bureaucrat has remained out of sight for a month, possibly after being dismissed for his role in the action. Pak Nam-gi, head of planning and economy at the ruling Workers’ Party, was last seen accompanying leader Kim Jong-il in early January. As an influential economic figure, Pak had often joined Kim on his field inspections of industrial sites. In 2009, Pak followed Kim on 77 occasions, the third-highest total among government officials. Kim has continued to visit industrial bases, a move analysts here have said is designed to show his commitment to reviving the nation’s downtrodden economy. But Pak has been missing from Kim’s side.
N.Korean Finance Chief Sacked Over Currency Debacle
Pak Nam-gi, director of the planning and fiscal affairs department of the North Korean Workers' Party The North Korean regime apparently sacked the Workers' Party's Finance Director Pak Nam-gi, letting him take the fall for the failed currency reform late last year. Pak was appointed finance director in July 2007 to oversee North Korea's economic policies and has spent the past few years trying to root out a nascent market economy. [Economic reform] [Media]
Models show the first strawberries grown with seedlings cultivated in North Korea at a store in Seoul on Monday.
Today's Photo: February 2, 2010
N.Korea May Demand Over $100 in Kaesong Wages
North Korea is expected to demand in talks on Monday that the current minimum wage of US$57.88 per North Korean worker at the Kaesong Industrial Complex should double to some $100. An informed source said the North will demand the wage raise to more than $100 per worker based on the results of a joint fact-finding trip to industrial parks in China and Vietnam in December. A Unification Ministry official said that the agenda for the talks does not include the wage issue but easier travel, customs and communications and construction of a dormitory at the industrial park. [SEZ] [Labour]
Two Koreas Begin Talks on Industrial Park
South and North Korea Monday began talks on ways to improve their joint factory park in the North amid rising tension triggered by North Korea's artillery fire last week in the West Sea. The South Korean delegation, led by Kim Young-tak, met with its North Korean counterpart at an inter-Korean office for economic cooperation in the border town of Gaeseong, the Unification Ministry said.

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JANUARY 2010

Asia Becomes Land of Opportunities for Korean Businesses
Korean businesses are stepping up their marketing efforts in Asia as the region's markets are emerging as the next land of opportunities in the global economy. They are targeting the Asian middle class, which is seen as a lucrative new consumer group in the wake of the global financial crisis. The number of middle class consumers in Asian countries has grown more than six-fold from 140 million people in 1990 to 880 million in 2008, according to a study by the Japanese trade ministry. Each Asian middle class household has between US$5,000 to $35,000 in annual disposable income. [Domestic demand]
NK Reeling From Hyperinflation, Reduced Economic Activity
January 27, 2010 07:45 North Korea is suffering from hyperinflation and rapid weakening of economic activities in the wake of its currency revaluation in November last year, a South Korean civic organization said yesterday.
Can a Korean Chinese Save N.Korea's Moribund Economy?
North Korea recently announced it wants to create a bank to finance national development projects and appointed a Korean-Chinese businessman named Pak Chol-su to head what is to be called the [North] Korea Taepung International Investment Group, which is to attract foreign capital for the bank. The seven-member board of directors at the investment company include usual suspects like Kim Yang-gon, the director of the Workers' Party's United Front Department, Jang Song-taek, Kim Jong-il's brother-in-law, and other key players. But analysts say Pak, a foreigner, is the only one with the ability to attract overseas capital, leading to a sense among South Korean intelligence analysts that Pak was brought in to save what he can of the North Korean economy. It is not the first time. In 2002, the hermit country appointed Chinese-Dutch entrepreneur Yang Bin governor of the Sinuiju Special Administrative Region, though the plan belly-flopped when the Chinese arrested Yang on corruption charges. [China NK] [Opening] [FDI]
New N.Korean Currency's Value 'Anyone's Guess'
North Korea is struggling to apply its new official foreign exchange rate, revised on Jan. 1, to hotels and shops in Pyongyang, according to a source. A foreign diplomat stationed in Pyongyang said that the exchange rate is still "fuzzy," citing hotel exchange rates in the capital dropping to W40 to one euro and rising to W51 a few days later. This is even after the North's Central Bank initially set the rate at W138 to one euro earlier this month. The source also said that shops near railway stations had stacks of goods unsold due to uneven prices.
N.Korea Flunks Global Economic Freedom Test
North Korea ranks at the bottom in a worldwide index of economic freedom for the 16th year running. In the 2010 Economic Freedom Index by the Wall Street Journal and the conservative Heritage Foundation issued on Wednesday, North Korea came last among 179 countries surveyed with a score of 1 out of a possible 100 points.[Spin] [Inversion]
NK Proposes Talks on S-N Industrial Cooperation
By Kim Se-jeong Staff Reporter North Korea proposed military talks with South Korea to discuss the ``three main problems'' at the inter-Korean industrial park in Gaeseong, the Unification Ministry said Friday. The three issues in question are related to free communication, the passage of people and customs clearance. ``The North requested the talks be held Tuesday,'' ministry spokesman Chun Hae-sung said.
Koreas to Meet Again on Gaeseong Operation
By Kim Sue-young Staff Reporter South and North Korea have agreed to continue talks on the operation of a joint industrial complex in Gaeseong, on Feb. 1, an official of Seoul's unification ministry said Thursday. The agreement was made at the end of a two-day meeting at the complex to assess a joint inspection of industrial parks in China and Vietnam last month. [Kaesong]
- Bad Korea moves
  Nicholas Eberstadt
  Published 21 January 2010 In the mid-1990s, North Korea became the only urban, literate society ever to suffer famine in peacetime: up to a million died. Like all famines in our age, it was politically determined. And there is an awful sense that history may soon repeat itself. [Victim] [Economic reform]
- Response from Peter Wilson
  Letter to Editor of New Statesman in response to article by Nicholas Eberstadt
  Dear Sir, It was disappointing to read the piece 'Bad Korea moves' written by Nicholas Eberstadt for a right-wing America think tank, uncritically reprinted in the New Statesman as if it was an objective report.
  As an agriculturalist who has worked on food production issues throughout the Asian region with UN agencies for 40 years, I (unlike Eberstadt) have travelled extensively through the North Korean countryside in the course of my duties visiting farm cooperatives and country food markets, freely talking with people at all levels of society. What this has taught me does not accord with Eberstadt's claims.
N.Korea to Establish State Development Bank
North Korea will establish a state development bank which will deal with international financial organizations and commercial banks and invest according to state policies, the official [North] Korean Central News Agency reported Wednesday. The decision was made by the powerful National Defense Commission, which is headed by leader Kim Jong-il. It will also set up an international cooperation agency called the Joson Daepung International Investment Group to take charge of attracting investment for the bank, KCNA said. KCNA claimed the bank has "modern financial rules." Kim Yang-gon, the director of the Workers' Party's United Front Department, has been named chairman of the Joson Daepung Investment Group, and Pak Chol-su vice chairman. A North Korean source said Pak is a Korean-Chinese businessman who maintains relations with South Korean officials and businessmen. He apparently once arranged a secret inter-Korean meeting. Pak is also believed to have been involved in a secret meeting held between Labor Minister Yim Tae-hee and Kim Yang-gon in Singapore last October. Rumor has it that Jang Song-taek, Kim Jong-il's brother-in-law and the director of the Administrative Department of the Workers' Party, is also on the board of directors. [FDI]
2009 Inter-Korean trade tops 1.6 billion USD
Posted Date : 2010-01-19 (NK Brief No.10-01-19-1) Last year, despite the impact of the economic recession, North Korea’s second nuclear test and other issues hindering inter-Korean exchanges, the previously sharply shrinking value of North-South Korean trade appeared to steady. According to a report from the South Korean Customs Administration released on January 18, inter-Korean trade last year was down 8.5 percent from the previous year, amounting to 1.66608 billion USD. Exports to North Korea were worth 732.62 million USD, while 933.46 million USD worth of goods were brought into South Korea, giving Seoul a 200 million dollar trade deficit. Inter-Korean trade hit its lowest point last year in February (100.89 million USD), but since then showed slow-but-steady growth, hitting 173.18 in September.
The import of North Korean sand, mushrooms, and smokeless charcoal briquettes in October 2009 required the permission of the South Korean government. This reflects Seoul’s more strict controls over management and oversight of inter-Korean trade following the sanctions and heightened concerns over cash deliveries to Pyongyang after its second nuclear test on May 25, 2009. Since the nuclear test, the South Korean government has limited the import of North Korean goods to only those that could ease losses being suffered by South Korean manufacturers. [Sanctions]
1st Meeting of Korea Taepung I IG Held
Pyongyang, January 20 (KCNA) -- The first meeting of the Board of Directors of the Korea Taepung International Investment Group took place at Yanggakdo International Hotel on Wednesday. It was attended by directors of the board of the group and officials concerned as observers. Conveyed there were an order of the chairman of the DPRK National Defence Commission "On ensuring the activities of the Korea Taepung International Investment Group" and decisions of the DPRK NDC "On establishing the State Development Bank" and "On setting up the Coordinating Committee of the Korea Taepung International Investment Group". At the meeting Kim Yang Gon, chairman of the Korea Asia-Pacific Peace Committee, was elected director-general of the board of the group and Pak Chol Su, a Korean resident in China, permanent deputy director-general and president of the group. The board of directors is made up of seven persons including representatives of the National Defence Commission, the Cabinet, the Ministry of Finance and an office concerned of the DPRK, the Korea Asia-Pacific Peace Committee and the Korea Taepung International Investment Group. The meeting decided to set up a secretariat of the board of directors and named its members. It deliberated and decided on the draft rules of the Korea Taepung International Investment Group, its action program and financial budget bill for 2010, a resolution on starting the operation of a preparatory committee for establishment of the State Development Bank and other agenda items related to the work of the group. Kim Yang Gon made a keynote report and Pak Chol Su an address on the work of the group at the meeting. The group, an external economic cooperation body, will play the role of an economic complex ensuring the induction of investment and finances for the State Development Bank, and it will be headquartered in Pyongyang. The State Development Bank is to provide investment on major projects to be carried out according to the state policy after being equipped with advanced banking rules and system needed for transactions with international monetary organizations and commercial banks. [FDI]
Rival Koreas fail to agree over factory park
By Jack Kim and Jon Herskovitz Reuters Thursday, January 21, 2010; 1:15 AM SEOUL (Reuters) - Talks between North and South Korea over the operations of a lucrative joint industrial project have ended without agreement, compounding Pyongyang's economic woes and increasing tension on the troubled peninsula. The talks that ended late on Wednesday were a rare point of contact and came as the destitute North has turned up its heated rhetoric (sic) toward its neighbor, while also signaling it could end its year-long boycott of international nuclear disarmament talks. [Takeover] [Media] [Inversion]
N Korea set up corporation for attracting foreign investment
PYONGYANG January 20 A large state corporation for supervising foreign economic activity and attracting foreign investment has been set up in North Korea. The board of directors of the Taephung International Investment Group held its first meeting in Pyongyang Wednesday, the Korean Central News Agency /KCNA/ said. It was founded by a resolution of the North Korean State Defense Council chaired by Kim Jong Il. Pyongyang-based media say Taephung will take up the issues related to the search for foreign investors and sources of financing for the State Development Bank, which is in the process of formation now. The bank is supposed to have an up-to-date charter of incorporation and will abide by an advanced system of operations, which will help it communicate smoothly with international financial organizations and foreign commercial banks. Taephung's board of directors is chaired by Kim Yang Gon, a member of North Korea's political elite who stands at the head of the United Front Department of the ruling Korean Workers Party, which supervises relations between Pyongyang and Seoul. Also, Kim Yang Gon presides over the Korean Committee for Peace in Asia and the Pacific that oversees the North-South joint economic projects. All in all, Taephung's board has seven directors -- representatives of the State Defense Committee, the cabinet of ministers, the Finance Ministry and the and above said Asia-Pacific committee. According to the KCNA, the directors endorsed the corporation's charter Wednesday, as well as the work plan and a draft budget for this year. At this moment, the inflow of foreign investment in North Korea is limited by the UN Security Council's sanctions that were imposed on this country last May after it had conducted a second nuclear test. Monday, the North Korean Foreign Ministry published a statement where it spoke of a need to lift the sanctions. January 20, 2010 [FDI] [Sanctions]
Seoul to support U.N project to train North Korean technicians
SEOUL Jan 19 South Korea plans to contribute 1.88 billion won (US$1.67 million) this year to a U.N. project to help train North Korean officials and technicians, a government source said Sunday. The project, to be undertaken by the Economic and Social Commission for Asia and the Pacific (ESCAP), will invite an unspecified number of North Korean bureaucrats, involved in energy, environment, transportation and regional cooperation, to overseas training programs, the source said. Established in 1947 with its headquarters in Bangkok, ESCAP is the regional development arm of the United Nations, with 62 member countries. The Seoul government will use its inter-Korean cooperation fund for the contribution, the source said, requesting anonymity. The training program for this year is scheduled to start late this month in India, the source said. [Training]
N.Korean and S.Korean delegates meet to discuss joint inspections of industrial complexes
Observers say this may mean North Korea plans to continue active economic cooperation with South Korea in spite of strong statements recently issued by the NDC Delegates of North Korea and South Korea discussed the results of their joint inspections of industrial complexes in China and Vietnam (which took place from Dec. 12 to Dec. 22) at Kaesung on Jan. 19. Both groups plan to continue discussions through Jan. 20. According to Unification Ministy spokesman Chun Hae-sung, the delegates from both countries discussed the issue for 3 hours and 40 minutes starting at 2:10 p.m. Cheon said, “The mood of discussion was sincere, and there was no mention of the North Korean National Defense Commission’s (NDC) statement during the speeches of North Korean delegates.”
Light Industry Factories Operated to Boost Goods Output
Pyongyang, January 18 (KCNA) -- The joint New Year editorial published by leading newspapers of the Democratic People's Republic of Korea calls for launching an all-Party, nationwide effort to improve the people's living standard considerably this year that marks the 65th anniversary of the Workers' Party of Korea. In response to the call, light industry factories throughout the country have sharply increased production with plans worked out in a concrete form from the beginning of the year. Deeply aware that light industry is a major front for the improvement of the people's living, their officials have actively organized and directed the production activities, giving precedence to the supply of raw materials to keep production on a high level.
North Korea tightens grip on rare natural resources
Friday, 15 Jan 2010 PTI reported that North Korea, known for its rare metals and globally demanded for household electric appliances and industrial machinery, is curbing their exports and tightening grip on such precious resources. A source well versed in Chinese and North Korean affairs said that North Korea is initiating such measures as Chinese enterprises, which are trying to secure natural resources are going to exterminate them root and branch. At an international conference held in Yanjiin in October, Director of the Economy Institute at the North Korean Academy of Social Sciences Mr Kim Chol Jun had revealed that his country is restricting exports of unprocessed resources. He added that "Mineral resources are exported at high prices by processing them. Exports of cheap unprocessed goods are a loss to the state." South Korea's Unification Ministry estimates that underground mineral resources in North Korea are valued at about JPY 540 and the amount of deposits of magnetite used to trim the weight of automobile parts is the world's largest at 3 billion tonnes to 4 billion tonnes. In addition to iron ore, North Korea is said to be rich in such rare metals as molybdenum and rare earth. [Minerals] [Development strategy] [China NK] [Media]
2 Koreas Meet to Discuss Fact-Finding Trip
Officials from the two Koreas meet at the joint Korean Kaesong Industrial Complex on Tuesday to review a fact-finding trip of industrial parks abroad last year. It had been unclear whether the meeting would materialize since North Korea's National Defense Commission in a statement on Jan. 15 threatened a "sacred retaliatory battle" against South Korea. [SEZ]
N.Koreans 'Curious About Wages' at Foreign Industrial Parks
When an inter-Korean team toured industrial parks abroad from Dec. 12-22, North Korean officials took an especially keen interest in the wages workers are paid there, South Korean delegates said on Wednesday. The group went on the trip to seek inspiration for the joint-Korean Kaesong Industrial Complex. Kim Young-tak of the Unification Ministry, who led the South Korean team, told reporters, "The North Korean officials took great interest in the wages, operating systems, and insurance and accounting systems at foreign industrial complexes." They asked company executives many questions about these matters, saying South Korean employers were sometimes late in paying North Korean workers at the Kaesong complex, Kim added. [SEZ]
Officials from Both Koreas to Tour Industrial Parks Abroad
A joint-Korean fact-finding team will visit industrial parks in China and Vietnam to look for inspiration for the floundering Kaesong Industrial Complex in the North. In a press briefing on Thursday, Unification Ministry spokesman Chun Hae-sung said, "The government has recently agreed with North Korea to conduct a 10-day joint-Korean survey of industrial complexes in China and Vietnam in mid-December. The team will consist of 10 members from each side." [SEZ]
N.Korea to Permit Only Farmers Markets
North Korea will close down all general open-air markets in major cities and permit only farmers markets by a strict definition of the term, which will open every 10 days, an activist group reported last week. "The North Korean Cabinet has told agencies under each ministry and provincial and municipal chapters of the Workers Party that it will replace urban marketplaces with farmers markets that will open every 10 days starting Jan. 14," the Group Good Friends said in a newsletter. "The cabinet also released market operating rules and a list of items that can be sold, adding that market traders will be permitted to sell only agricultural produce and indigenous local products but not Chinese goods or domestically produced industrial products."
Inter-Korean Trade Drops in 2009
Trade between South and North Korea plummeted 8.5 percent in 2009 compared to the year before, recent data show. The Korea Customs Service (KCS) said inter-Korean trade totaled around US$1.7 billion last year, down from $1.8 billion in 2008. Outbound shipments were valued at $733 million and imports at $933 million amounting to a $200 million trade deficit, the highest since inter-Korean trade began in 1999. The primary reason for the drop was last year's global economic crisis, KCS said.
Electronic dictionary makers tapping older consumers to gain competitive edge
An electronic dictionary from Sharp, equipped with 100 learning videos.As students prepare for a new school year this spring and new graduates look to start work, Japan's electronic dictionary manufacturers have been vying with each other to churn out new models. The latest electronic dictionaries are a step up from early models -- in addition to English and kanji dictionaries, encyclopedias and other learning resources, new models come with touch panels and video functions on par with those of personal computers. Manufacturers hope that these models will lure not only students, but also elderly customers and people in the work force. As a result of diversification of electronic dictionaries and the introduction of such features as handwriting recognition and mobile television, the number of units shipped in Japan in 2007 topped 2.8 million. However, as a result of the declining birth rate, the market targeting junior high and high school students faces sluggish growth, and stimulating demand among elderly consumers and people in the workforce has remained an issue for manufacturers. [Ageing society]
How Diversity Took 2 Asian Universities to the Top
Lee Hang-su There was a rumor recently circulating among South Korean students at the University of Hong Kong that some North Korean students were studying there as well. Hearing the rumor, I contacted the university and confirmed that it was true. Three North Koreans started there in the 2009-2010 academic year, two of them giving North Korea as their country of origin on their application forms and the third being a dependent of a North Korean official stationed in Hong Kong. It is the first time in the university's 99-year history that North Korean students have been admitted, a university spokesman said. [Training]
Business events North-Korea (northern spring 2010)
Paul Tjia writes from the Netherlands In the current financial and economic situation, companies face many challenges. They must cut costs, develop new products and find new markets. In these fields, North-Korea might be an interesting option. Since a few years, it is opening its doors to foreign enterprises. The labor costs are the lowest of Asia, and its skilled labor is of a high quality. It established free trade zones to attract foreign investors and there are several sectors, including textile industry, shipbuilding, agro business, logistics, mining and Information Technology that can be considered for trade and investment.
European Business Mission (May 2010) & Pyongyang Spring International Trade Fair In order to explore these business opportunities, we are organizing again a business mission to North-Korea (15 - 22 May). We will also visit the annual Pyongyang Spring International Trade Fair. This fair can be used by European companies to come in contact with potential buyers and suppliers in North-Korea. Information abouth both events has been attached.
North-Korean investment mission to visit The Netherlands (February) There are investment opportunities in several areas, such as textiles; agro business (e.g. export of vegetables, fruit and flowers to South-Korea); mining (e.g. zinc, mica, tungsten, rare metals); real estate (e.g. office buildings); renewable energy (e.g. windenergy, batteries); Information Technology; electronics; chemicals and tourism. A high-ranking delegation from North-Korea will visit The Netherlands at the end of February, in order to discuss these opportunities in detail and to present specific investment projects. We can be contacted for further details.
New book on European - North Korean relations This spring, the Hanns Seidel Foundation (Germany) will publish a new book about the relations between Europe and North-Korea. The publication: "Europe - North Korea: Between Humanitarianism and Business?" also contains two chapters about trade development and business issues - including my article on IT-cooperation. Its Table Of Contents has been attached.
China to renew border rail link with N.K.
China will mend a rail link between one of its border cities and a North Korean port, a source familiar with North Korean affairs said Sunday, a move that indicates stronger economic ties between the two allies, according to Yonhap News. North Korea and the municipal government of the Chinese city of Tumen, which borders the North, have recently agreed to repair the railway linking the city with North Korea's northeastern port of Chongjin, the source said. The source, requesting not to be named due to the sensitivity of the issue, added Tumen will lend Pyongyang $10 million, which will partly fund the restoration of the 170-kilometer-long railroad. Construction is due to begin in April this year, he said. "The agreement on repairing the railway indicates North Korea has also agreed on letting China use the Chongjin Port, which will give it better access to the East Sea," another source said. China -- which views North Korea as underdeveloped in terms of technology, but a convenient source of minerals and natural resources -- has been increasing its North Korea investment in recent years, reaching deals on mines, railways and leasing a North Korean port to a Chinese company. Pyongyang has also been optimistic on forging economic pacts with China, apparently hoping more investment will help enhance its underdeveloped heavy industries sector. Border trade in consumer items, from televisions to beer, has been booming between the two countries since the 1990s, but industrial ties have been formed only recently. [Railways] [SEZ] [China NK]
Asia Becomes Land of Opportunities for Korean Businesses
Korean businesses are stepping up their marketing efforts in Asia as the region's markets are emerging as the next land of opportunities in the global economy. They are targeting the Asian middle class, which is seen as a lucrative new consumer group in the wake of the global financial crisis. The number of middle class consumers in Asian countries has grown more than six-fold from 140 million people in 1990 to 880 million in 2008, according to a study by the Japanese trade ministry. Each Asian middle class household has between US$5,000 to $35,000 in annual disposable income. [Domestic demand]
'Sandwich Effect' to Weigh on Economy
By Lee Hyo-sik Staff Reporter Korea is engaged in a fierce competition with rapidly-growing emerging economies, including China, and it is expected to be squeezed between advanced and developing economies, one of the nation's leading private think tanks said Wednesday. It warned that the ascent of emerging economies will intensify the "sandwich effect," forcing many developed countries to put up stricter trade barriers against locally produced goods. [Sandwich]
North Korea begins closing wholesale markets
Posted Date : 2010-01-08 (NK Brief No.10-01-08-1) North Korean authorities appear to be closing regional, large-scale wholesale markets, one after another. According to the latest newsletter from the North Korean human rights group Good Friends (January 6), “Based on a Cabinet measure passed on December 30 of last year, North Korean authorities will suspend operations management of the Sunam Market in Cheongjin from the end of this March, effectively deciding to close [the market].”
DPRK focuses on economy in 2010: aims to improve the standard of living by boosting agricultural and light industry output
Posted Date : 2010-01-06 (NK Brief No.10-01-06-1) On January 1, North Korea published its annual New Year’s Joint Editorial in the Rodong Sinmun (official newspaper of the Central Committee of the Workers’ Party of Korea), Josonimmingun (newspaper of the Korean People’s Army), and the Chongnyonjonwi (newspaper of the Central Committee of the Kim Il Sung Socialist Youth League). The editorial introduces North Korea’s general policy direction for 2010. In the international realm, the editorial highlights the establishment of a peace regime between Pyongyang and Washington, as well as improving inter-Korean relations. Domestically, the editorial focused on improving the standard of living for the people by improving agriculture and light industries. It appears that the North has decided to focus on domestic and international stability.
Kim Jong Il Inspects Newly-built Pig Farm
Pyongyang, January 12 (KCNA) -- General Secretary Kim Jong Il provided field guidance to the pig farm built by Large Combined Unit 313 of the KPA. This farm, in which all processes from feed making to supply of feed and water and control of temperature and humidity at pigpens are run by computer, is now turning out a large quantity of meat and processed meat, greatly contributing to the improvement of servicepersons' diet. [Military economy]
Choco Pie Rules Black Market in N.Korea
The South Korean snack Choco Pie is a sought-after delicacy in North Korea, selling for US$9.50 a piece in the black market. Japan's Sankei Shimbun newspaper on Sunday said North Korean workers in the joint-Korean Kaesong Industrial Complex are given two or three Choco Pies a day by South Korean factory owners and sell them in the black market for extra cash.
Delegation from North headed to the United States
January 07, 2010 A delegation from a North Korean university involved in an exchange program with its American counterpart plans to fly to the United States later this month, Korea Society President Evans Revere said yesterday. Revere told Radio Free Asia that representatives from the Kim Chaek University of Technology in Pyongyang will be led by the school president Hong So-hon. [Training]
N.Korea Cracks Down on Money Changers
North Korean authorities have been rounding up money changers in major cities since Jan. 4, it emerged Friday. Sources in North Korea said an average of 20 money changers were arrested in each major city, including 17 in Pyongyang and 23 in Sinuiju since Jan. 4. After a shock currency reform in early December, authorities banned the use of foreign currency. In the past, residents had used U.S. dollars in hotels or markets without having to change them into North Korean won.
Joint New Year Editorial
Pyongyang, January 1 (KCNA) -- Rodong Sinmun, Josoninmingun and Chongnyonjonwi Friday published a joint editorial titled "Bring about a radical turn in the people's standard of living by accelerating the development of light industry and agriculture once again this year that marks the 65th anniversary of the founding of the Workers' Party of Korea" on the occasion of the New Year. The following is the excerpt from it: Today our service personnel and people greet the New Year Juche 99 (2010) with the pride of being victors, who wrote a new history of great revolutionary upsurge. A heyday unprecedented in the history of the nation lies ahead of them, who are courageously rushing towards the world by tapping the inexhaustible potentials of Songun Korea.
S. Korea gave Pyongyang officials market economy training in 2009: source
SEOUL, Jan. 8 (Yonhap) -- South Korea helped North Korean officials and trade experts receive up-to-date market economy training last year, a government source said Friday. The source at the Ministry of Strategy and Finance said 40 North Korean officials were taught about the stock market, supply of consumer goods, light industrial policies, international trade and intellectual property right protection at China's Dalian University in October and November. A research institute under the state-run Seoul National University provided the education program, which cost the South 220 million won (US$194,000). The official, who declined to be identified, said that the research institute selected training courses with input given by North Korean officials and a similar amount of money has been reserved in the 2010 budget to conduct similar programs this year. The ministry, however, said that South Korean officials were not directly involved in the training program. Despite the cooling off in bilateral relations after President Lee Myung-bak took power in early 2008, Seoul has provided assistance to help train North Korean computer experts, medical personnel and government officials as part of its effort to expand cross-border exchange and contacts. [Marketisation] [Training]
Seoul Funds Capitalism 101 for Leading N.Koreans
Forty-eight senior North Korean officials and experts were given a crash course in capitalism at Dalian University of China with money from the South Korean government. Some 23 officials from central government agencies like the State Planning Commission, the Trade Ministry and the Foreign Ministry, 15 businesspeople and eight lawyers and academics from Kim Il-sung University and other institutions were on the program. The course was given to four groups of 12 in four sessions each in October and November last year. [Training] [Marketisation] [Spin] [Media]
Restyling Hyundai For the Luxury Market
After getting a boost from a smart marketing campaign and low prices, the Korean automaker wants its fleet to be fashionable By Alan Ohnsman and Seonjin Cha (Bloomberg) — Hyundai Motor broke into the U.S. market in 1986 with a $4,995 compact car, the Excel. Now the Korean automaker wants customers to buy its models less for their cheap price and more for their stylish looks. After boosting its market share to a record this year, Hyundai aims to build on the gains with more eye-catching designs. The new focus, kicking off with the 2011 Sonata sedan and revamped Tucson crossover, is also aimed at helping South Korea's biggest carmaker command prices on a par with larger Toyota Motor (TM) and Honda Motor (HMC). [Auto]
Hard Currency and Socialism: The Ban on Foreign Exchange in North Korea
By Rudiger Frank January 6th, 2010 Rudiger Frank, Professor of East Asian Economy and Society, University of Vienna, writes, “The ban on the use of foreign currencies in North Korea is not only a return to pre-reform orthodoxy, but also to normality as it exists in most countries of the world. It marks one step in the multi-staged strategy of the North Korean state to regain control over its society and economy… In any case, a system of multiple exchange rates will help the North Korean state to follow the developmental path of its neighbors in the hope of becoming part of the East Asian miracle – or, as North Korean media put it, to open the gate to a new era.” [Economic reform]
The Winter of Their Discontent: Pyongyang Attacks the Market
Ste phan Ha g g a rd and Ma rc u s No l and On November 30, 2009, North Korea announced a reform to replace all currency in circulation with new bills and coins. North Korean officials have made no bones about their motivations: The “reform” constitutes a direct attack on the emerging market economy and the independence from state control that it represents. In an interview following the conversion, an official of the North Korean central bank noted that the reform was aimed at curbing private trade and underlined that North Korea is “not moving toward a free market economy but will further strengthen the principle and order of socialist economic management.” Without doubt the currency reform will reduce the wellbeing of the North Korean population at a time when the country is already struggling with economic stagnation, spiraling prices, and a return of chronic food shortages. [Economic reform]
Currency “Reform” in North Korea
by James Lister (jml@keia.org) “It’s the economy, stupid!” (attributed to James Carville, 1992 presidential campaign) Free elections are not part of North Korea’s political fabric, but Kim Jong-Il and his advisors are undoubtedly aware that the regime’s legitimacy will be challenged if it fails to meet its promise of achieving a strong and prosperous nation by 2012, particularly if it faces a leadership transition. The November 30 announcement of currency reform, entailing redenomination of the North Korean won such that 100 old won = 1 new won, appears to be a gamble that it can achieve that objective in an ideologically acceptable manner. It is a huge bet. [Economic reform]

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