Economy, trade and business

2011
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Articles on current developments, compiled by Tim Beal.
This page also includes

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

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DECEMBER 2011

• Inter-Korean factory complex closes temporarily for Kim's funeral
  North Korea is closing an inter-Korean factory park for two days to mark the funeral of its late leader Kim Jong-il, a Seoul official said Wednesday. The industrial complex in the North Korean border city of Kaesong will halt operations Wednesday and Thursday during the last days of the 13-day mourning period for Kim, who died from heart failure on Dec. 17, according to the North's media. "I understand that (South Korean) firms operating there agreed with (North Korean authorities) to suspend work today and tomorrow for the funeral and memorial ceremony (respectively)," said the official at South Korea's Unification Ministry, which handles relations with the North. [Kaesong] [KJI_death]
• After Kim Jong Il: Will There Be Change or Continuity In North Korean Economic Policy?
  By Bradley O. Babson One of North Korea's huge challenges is how to feed its people. (Photo: BBC News) At the moment of his accession to power, Kim Jong Il inherited the devastating impact of the collapse of the Soviet Union, the subsequent trade shock to North Korea’s economic output, the onset of the worst famine in modern history, and a humanitarian crisis that required a direct appeal to the outside world for help. By the late 1990’s, he was forced to accept the realities of dependence on international aid, the rise of farmers markets as a grassroots response to the famine, and the introduction of capitalist notions such as “profits” in the Constitution itself. Kim even briefly entertained the notion of establishing relationships with the International Monetary Fund, World Bank, and Asian Development Bank, attracted by the prospects for international finance, but balking at requirements for transparency, conditionality, and rules-based relations. Throughout his leadership tenure he only half-heartedly and grudgingly accepted the growing role for markets in the North’s economy and maintained a deep ambivalence to the prospect of economic empowerment of the North Korean people. His desire to maintain highly centralized control over all aspects of North Korean society was sharply at odds with the decentralization of information and decision-making needed for a market economy to replace a failed socialist economic management system. As a result, economic policy in the Kim Jong Il era was more shaped by events and forces for change than used as a tool to guide a managed process for national development. Experiments in economic reforms were not accompanied by policies or the institution building that would have been needed for recreating the economic success stories of China and Vietnam. [Agency] [KJI_death]
• Can Kim Jong-un salvage N. Korea’s economy?
  By Kim Young-jin 12-23-2011 18:49 It’s no secret that Kim Jong-un, North Korea’s chosen successor after the death of his father, Kim Jong-il, is inheriting an economy in shambles. South Korea and China booming at its borders provide stark contrast to its outdated central planning. In this historical transition, the natural hope is that the young heir and his team attempt reforms following the model of China and improve the lot of the impoverished people. But prospects remain murky and the only certainty is that any new leadership faces enormous challenges ahead. [Agency] [Kim Jong Un]
• Business goes on as usual at the Kaesong Complex after Kim’s death
  The symbol of inter-Korean cooperation grows providing economic benefits to both Koreas and helping reduce tension » Trucks left the Kaesong Complex in North Korea pass the South Korean CIQ office in Paju, Gyeonggi Province, Dec. 20. (Photo by Park Jong-shik) By Park Hyun, Staff Writer The Kaesong Industrial Complex, a symbol of inter-Korean economic partnership, remains unfazed after the death of North Korean leader Kim Jong-il. Other than the halting of operations at some companies Monday afternoon due to agitation among North Korean workers following news of the death, normal operations have continued for the past three days. "North Korea is providing active assistance for us to carry out normal operations and to say nothing of the South Korean government," said Ok Sung-seok, vice chairman of the Corporate Association of Kaesong Industrial Complex, an organization of tenant businesses in the complex. [KJI_death] [Kaesong]
• Firms not sweating over North Korea yet
  By Kim Tong-hyung There are enough things to worry about as a CEO in South Korea. But it seems a new, young, third-generation despot emerging in North Korea isn’t one of them, at least not yet. It has been a dismal year for the South’s export-driven industrial giants, struggling to cope with subduing global demand amid heightened uncertainty surrounding European debt problems and sluggish recovery in the United States. [Dilemma] [KJI_death]
• North Korea to top $5 bil. in trade this year
  By Ko Tae-young North Korea is estimated to surpass a record high of $5 billion in its trade this year. Its trade with China totaled $4,665 million during the first 10 months of the year, a figure exceeding the nation’s trade of $4,170 million for the whole of last year, according to statistics released by the Ministry of Unification Monday. [Trade] [China NK]
• Economic Zone Law Enacted in DPRK
  Pyongyang, December 9 (KCNA) -- The DPRK adopted law on the economic zone on Hwanggumphyong and Wihwa islets in the River Amnok, according to a decree issued by the Presidium of the Supreme People's Assembly some days ago. Meanwhile, the law on the Rason economic and trade zone was amended and supplemented. [SEZ]
• Vitality at Kaesong Complex
  The inter-Korean industrial base in the North Korean border town of Kaesong was launched in the early 2000s by combining South Korean corporate capital and technology with North Korea’s cheap labor force. More than 47,000 North Koreans currently work at the complex. A delegation from South Korea’s Unification Ministry took the photo in September. (Yonhap News)
• Achievements in Economic Construction of DPRK: Delegation Head
  Pyongyang, December 5 (KCNA) -- The head of the DPRK delegation, addressing the 14th meeting of the General Conference of the United Nations Industrial Development Organization (UNIDO) on Nov. 30, said that the efforts and achievements made in the DPRK will make significant contributions to the efforts of the international community to make regional development, attain the UN millennium development goal and ensure sustainable development. The drive to build an economic power is being pushed forward in the DPRK, he noted, and went on: The DPRK government has put main emphasis on drastically improving the standard of people's living and maintaining Juche-orientation and independence in economic construction. It, therefore, has channeled efforts into increasing investment in the light industry and agriculture, building the industry relying on its own raw materials, fuel and technologies and speeding up the modernization of the national economy. The DPRK government is working hard to raise the quality of education and introduce latest technologies in the production in all fields of the national economy as required by the knowledge-based economic era. Thanks to the government's policy on attaching importance to science and technology, the DPRK has completed the production systems of Juche iron, Juche fiber and Juche fertilizer based on its own technologies and natural resources, practically contributing to developing economy and improving the standard of people's living.
• Anthracite Export to China Suspended Temporarily
  Date 2011.11.24 North Korea has reportedly stopped coal export temporarily to manage fuel shortage during the winter season. According to Chinese traders from Shenyang, their North Korean trade counterparts informed them that they recently received official orders from the government to stop exporting coal. Except for those orders previously received, coal from North Korea will not be leaving the country for the time being. The export volume of coal has continuously increased this year, consequently causing a domestic shortfall in the supply of coal. In fear of power and fuel shortages for the winter season, North Korea is believed to be taking precautionary measures to preserve energy supply, especially with hydroelectric power generators not in operation.
• N. Korea's mineral exports to China tripled from last year: study
  SEOUL, Nov. 6 (Yonhap) -- North Korea's mineral exports to China have tripled this year compared to a year ago, a study showed Sunday. A joint study of Chinese data by Yonhap News Agency and Seoul-based IBK Economic Research Institute showed that China imported 8.42 million tons of minerals from North Korea from January to September this year, worth US$852 million. [Exports] [China NK]
• Corruption index 2011 from Transparency International: find out how countries compare
  Which country is most corrupt? North Korea is now officially considered the world's most corrupt country, along with Somalia. But why has the US gone up one place and the UK's score improved? See how the annual corruption index has changed • Get the data • Interactive map of this data Corruption around the world remains a deeply entrenched, global concern according to Transparency International's 2011 Corruption Perceptions Index (CPI) - the world's most credible measure of of domestic, public sector corruption. This year, two thirds of countries covered by the index were given scores less than 5 - which means they are considered significantly corrupt. The CPI scores countries on a scale of zero to 10, with zero indicating high levels of corruption and 10, low levels. And the most corrupt places in the world are not the most surprising. Unstable governments, often with a legacy of conflict, continue to dominate the bottom rungs of the CPI. Afghanistan and Myanmar share second to last place with a score of 1.5, with Somalia and North Korea - measured for the first time - coming in last with a score of 1. [Corruption] [Media]
• 2011 – a crisis in governance: Protests that marked 2011 show anger at corruption in politics and public sector
  Berlin, 1 December 2011 – Corruption continues to plague too many countries around the world, according to Transparency International’s 2011 Corruption Perceptions Index released today. It shows some governments failing to protect citizens from corruption, be it abuse of public resources, bribery or secretive decision-making. Transparency International warned that protests around the world, often fuelled by corruption and economic instability, clearly show citizens feel their leaders and public institutions are neither transparent nor accountable enough. “This year we have seen corruption on protestors’ banners be they rich or poor. Whether in a Europe hit by debt crisis or an Arab world starting a new political era, leaders must heed the demands for better government,” said Huguette Labelle, Chair of Transparency International. Corruption Perceptions Index 2011: The results The index scores 183 countries and territories from 0 (highly corrupt) to 10 (very clean) based on perceived levels of public sector corruption. It uses data from 17 surveys that look at factors such as enforcement of anti-corruption laws, access to information and conflicts of interest. Two thirds of ranked countries score less than 5. New Zealand ranks first, followed by Finland and Denmark. Somalia and North Korea (included in the index for the first time), are last. [Corruption]
• Korea Overtakes U.K. as World's No. 7 Exporter
  Exports rose 20.5 percent so far this year compared to 2010, reaching $508.7 billion, while imports rose 24.3 percent to $478.9 billion, the Ministry of Knowledge Economy said Thursday. Korea is the eighth country in the world to see annual exports over $500 billion and ranks seventh as of September in terms of outbound shipments. In 1948, Korea's exports were 0.3 percent of the U.K.’s ($6.6 billion) and 2 percent of Italy's ($1.07 billion), but now it has overtaken both of them. Korea's total trade volume, which combines the amount of exports and imports, stood at $987.6 billion and is expected to exceed $1 trillion next week, making it the ninth country to achieve that feat.
• N.Korean Rice Prices Soar After Harvest
  The price of rice in North Korea is skyrocketing, contrary to received wisdom that it drops after the harvest season. According to a source on North Korea on Wednesday, the rice price has risen from 2,400 won a kg in early October to 5,000 won in late November.

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NOVEMBER 2011

• Economic performance and legitimacy in North Korea
  November 26th, 2011 Authors: Geoffrey K. See and Andray Abrahamian, Chosun Exchange Intra-elite competition for investments in North Korea, with multiple channels backed by different individuals at the highest levels of the North Korean government, has significantly increased in the last two years. This competition appears to mark a shift towards increasing reliance on economic performance as a primary source of legitimacy for the North Korean government. This is a significant change as economic development has taken a back seat for the last two decades. [FDI]
• Whim Jong Il: North Korea’s Economic Irrationalities
  By Aidan Foster-Carter This article is based on a summary of a paper for Session II, “Social Control as an Obstacle to Economic Development” for a conference on “The Viability of the North Korean Regime” organized by the Asan Institute for Policy Studies in Seoul, South Korea, September 8-9, 2011. Used with permission. We know the North Korean economy is in shambles. But why and how, exactly, is less clear.
• S. Korea to give NK natural gas plant for pipeline: source
  NOVEMBER 04, 2011 03:34 South Korea plans to build a natural gas power plant in North Korea in return for the latter letting a gas pipeline linking the South and Russia pass through North Korean territory, a source said Thursday. According to the source from the ruling Grand National Party of South Korea, if the pipeline goes through the North, the South is considering building a power plant rather than offering cash that Pyongyang could misuse. "North Korea has no reason to reject this offer considering its dire power shortages," the source said. [Pipeline]
• Record Numbers of Workers at Kaesong Industrial Complex
  New data show that the number of North Korean workers at the joint-Korean Kaesong Industrial Complex has reached an all-time high. According to the Unification Ministry on Wednesday, the number of workers stood at over 48,000 as of the end of September, the highest since the industrial park began operating in December 2004. This year alone, nearly 2,000 more North Koreans began working there, and the total is up by more than 5,000 compared to May last year, after the South imposed new sanctions on the North following its sinking of the South Korean Navy corvette Cheonan. Meanwhile, the Kaesong Industrial Complex also recorded its largest ever monthly earnings, posting a total of some US$36 million as of the end of September. This figure is up by more than 4 percent from the previous month. Currently, 123 South Korean enterprises are operating in Kaesong. Following Unification Minister Yu Woo-ik's pledge to be more flexible over inter-Korean issues, the number of workers at the complex and monthly production are expected to rise further.
• N. Korea’s rare earths sold in South
  International Institute for Strategic Resources founder Kim Dong-hwan By Kim Tae-gyu North Korea cranks out hundreds of tons of rare earth elements every year and some of them have been traded in South Korea, according to a researcher at a local private think tank. International Institute for Strategic Resources founder Kim Dong-hwan made the remarks on the significant metals on Monday during a telephone interview with The Korea Times.
• The Three-Pronged Trident Strategy for Investing in Asia’s Massive Growth
  Posted on Monday, October 31, 2011 by 2point6billion.com Op-ed Commentary: Chris Devonshire-Ellis Oct. 31 – As Western businesses face sluggish economies, Eurozone debt, and an American election next year, beleaguered corporates need to find fast access to markets that can provide good returns for investors. Clearly, as the domestic United States recovers, and Europe continues to argue about its currency and democratic structure, the demand to develop sustainable growth in alternative arenas becomes more pressing. Wall Street remains a slavish animal, and those increasing yields need now to be gained from non-traditional markets. It’s been the case for some time now that many U.S. corporations, without their China subsidiaries contributing to bottom lines, would have otherwise been in serious trouble. However, China isn’t the only answer, although for many it may seem the most obvious.
• The United States: A New China Alternative?
  Posted on November 3, 2011 by China Briefing By Vivian Ni Nov. 3 – China is gradually shifting away from its position as the world’s default production base for manufacturers. In this country, factor costs are surging and government incentives for foreign investors are diminishing, forcing more and more companies to seek new and attractive destinations where they can relocate their factories. While emerging Asian countries boasting low overhead costs – such as India, Vietnam, Thailand and Indonesia – are undoubtedly attracting mounting attention, the United States is also growing back into an increasingly reasonable option for manufacturing, according to an intensive study conducted by the U.S.-based advisory firm The Boston Consulting Group (BCG).
• Why U.S. Manufacturing Is Poised for a Comeback
  June 22, 2011 by Harold L. Sirkin, Michael Zinser, and Doug Hohner Third-party presidential candidate H. Ross Perot coined one of politics’ most memorable sound bites in 1992 when he used the phrase “giant sucking sound” to describe the flight of U.S. manufacturing jobs to foreign shores. The trend had begun years earlier, as U.S. industrial firms—beset with high labor costs and inflexible work rules—sought competitive advantage by moving operations to low-cost countries, such as Mexico and China. And while Perot’s tunnel-vision analysis conveniently overlooked dramatic U.S. productivity gains that had enabled American factories to increase output while reducing payroll, the country’s manufacturing employment did take a nosedive in the years that followed. It plummeted from a peak of 19.6 million jobs in 1979 to 15.3 million in 2002, to 14 million in 2005, to roughly 12 million jobs today. That decline, however, appears to be coming to an end, and manufacturing employment may now be poised for a comeback. Last year, U.S. manufacturing jobs increased for the first time since 1997, rising approximately 1 percent. In the next five years, many more manufacturing jobs will likely return to U.S. shores, sparking a renaissance in certain production industries. The primary reason for this trend is that productivity-adjusted labor costs in China’s industrial heartland—the Yangtze River Delta region, which includes the provinces of Shanghai, Jiangsu, and Zhejiang—are rising fast and are expected to converge with those in the Sun Belt states of the U.S. by about 2015. [Offshoring] [Manufacturing] [Labour]
• South Korean Government Planning to Resume Construction of Factories and Relax Sanctions for Kaesong Industrial
  Complex Date 2011.10.20 Attach 111020_NK Brief.docx.doc According to South Korea’s Ministry of Unification (MOU), the “May 24 Sanctions” that went into effect after the sinking of the naval boatCheonan was relaxed and began to permit the resumption of construction of businesses in the Kaesong Industrial Complex (KIC). In addition, plans to build fire stations and emergency medical facilities in the area are also currently underway. [Kaesong] [Easing]
• North Korea Rents Out Its Resources to Stave Off Reform
  By CHOE SANG-HUN Published: October 25, 2011 SEOUL — In September, under the flags of North Korea and China, North Korean workers began digging at Haesan, a hilly town near the Chinese border, kicking off one of several joint mining ventures. On Oct. 13, a Russian train chugged across the border to celebrate the restoration of a dilapidated Soviet-era rail link between the Russian city of Khasan and the North Korean town of Rajin. [SEZ] [Opening] [China NK] [Russia NK] [Railways] [Media]

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OCTOBER 2011

• N.Korea Appears to Crackdown on Choco Pies in Kaesong
  The amount of Choco Pie snacks consumed by North Korean workers in the Kaesong Industrial Complex, an inter-Korean project located in the North, has dropped significantly, according to sources on Wednesday. [Media] [Kaesong]
• KCNA Detailed Report on Completion of First-phase Hungnam Gasification Project
  Pyongyang, October 17 (KCNA) -- KCNA Monday released a detailed report on the completion of the first-phase of the Hungnam gasification project. The report says: The first-phase gasification project was completed in a matter of two and half years at the Hungnam Fertilizer Complex, the nation's leading chemical industrial base, to start fertilizer production. The Herculean project requiring the use of the cutting-edge technology and modern equipment has been completed by Korean workers and technicians' efforts and with their own technology in a brief span of time. This is another miracle to be specially recorded in the history of construction. This means a new speed of the great onward march towards 2012.
  This miracle proved that no matter how desperately the imperialist reactionaries may try to block socialist construction, their moves will never work on the DPRK as its people are rallied around the leader in single mind and that no force on earth can bar the Korean people from carrying forward the revolutionary tradition of self-reliance. [Fertiliser] [Sanctions]
• Pyongyang high-rise
  Seen here is a skyscraper that is under construction in the Mansudae district of the North Korean capital, Pyongyang. The (North) Korean Central News Agency released the photo on Oct. 13. (Yonhap News)
• Rajin-Khasan Trial Train Service Made in DPRK
  Rason, October 13 (KCNA) -- A ceremony of running a trial train between Rajin and Khasan section took place outside the DPRK-Russia Friendship Pavilion in the area of Tumangang Station in Rason City. Present there from the DPRK side were Vice Minister of Railways Ju Jae Dok, Vice-Chairman of the Rason City People's Committee Hwang Chol Nam, officials in the field of the railways and working people in Rason. Present from the Russian side were Valery A. Reshetnikov, senior vice president of the "Russian Railways" Company, Igor A. Sagitov, minister-councilor of the Russian embassy here, Vyacheslav Tsupikov, Russian consul-general to Chongjin, those related to the railways and other guests. Valery A. Reshetnikov, addressing the ceremony, said the bilateral cooperation in the railway transport now in progress amid the care of the top leaders of the two countries is a significant event in opening a new service line for freight transport. The trial train service has greater significance as it is timed to coincide with the 63rd anniversary of the establishment of the DPRK-Russia diplomatic ties, he added. Ju Jae Dok in his speech at the ceremony said that the train service will be recorded in the history of development of railway transport of the two countries. The Rajin-Khasan freight transport will make contributions to the economic exchange not only between the DPRK and Russia but also Northeast Asia and Europe, he added. Then followed congratulatory speeches. The trial train departed for Khasan. A reception was given to celebrate the train service. [Railways] [TSR] [Russia NK]
• Unification Ministry Yields to Ruling-Party Demands Over Kaesong
  The Unification Ministry will allow companies in the inter-Korean Kaesong Industrial Complex to resume construction, which was halted as part of sanctions on North Korea on May 24 last year in response to the sinking of the Navy corvette Cheonan, the ministry said Tuesday. [Kaesong] [Sanctions] [SK NK policy] [Easing]
• Sukchon Jinsong Garment Factory Goes Operational
  Pyongyang, October 5 (KCNA) -- The Sukchon Jinsong Garment Factory went operational in South Phyongan Province. It was built thanks to the friendly and fraternal cooperation between the DPRK and China. All its processes including cutting, processing and finishing are equipped with latest facilities. Its inaugural ceremony took place Wednesday. [China NK]
• Foreign investors race to North Korean city of Rason
  In the northeastern tip of North Korea, Chinese and Russian construction crews are racing to build transportation lines to a long-neglected port city that might now become an oasis for foreign investment
  (photos)
  [FDI] [SEZ] [Tourism]
• Choe Yong Rim Visits Greenhouses under Construction in Pyongyang
  Pyongyang, October 6 (KCNA) -- DPRK Premier Choe Yong Rim inspected greenhouses under construction of the Pyongyang Vegetable Science Institute and the Pyongyang Floriculture Institute on Wednesday to learn about their situation. After going round those greenhouses being built on a modern basis under the plan of leader Kim Jong Il, the premier convened a consultative meeting of officials concerned. The meeting dealt with detailed measures to raise the quality of buildings and the speed of their construction and ensure smooth provision of supplies needed for construction by relevant units.

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SEPTEMBER 2011

• N.Korea's Underground Economy Booming
  /Xinhua-[North] Korean Central News Agency The underground economy in Stalinist North Korea is growing rapidly, spy agencies believe. A South Korean security official said, "It seems the planned economy remains in name only while in fact the capitalist underground economy prevails."
• China to Check Safety of N.Korean Border Bridge
  China will for the first time in 20 years conduct a safety inspection of a steel bridge connecting the North Korean city of Sinuiju with the Chinese city of Dandong across the Apnok (or Yalu) River. Over 70 percent of all North Korea-China trade goes across the bridge, which is also used by senior North Korean officials crossing into China. China's state-run Xinhua news agency on Tuesday said preparations for the inspection are underway. Inspections were normally carried out every 10 years, but this time it has taken 20 years. The inspection will be conducted by the Shenyang Railway Bureau in Liaoning Province and take until the end of the month. The road deck of the bridge, which is riddled with potholes, will be repaired. Cross-border trade will be suspended for the duration, local officials said. Construction of the 946-m bridge started in 1937, and it has been used for both trains and vehicles since 1943. Since early this year, North Korea and China have been building a new bridge about 14 km south of the existing one. "The existing bridge will continue to serve the railway connecting the two countries once the new bridge is completed," a local source said. "The current inspection seems aimed at securing railway safety." [Trade] [Railways]
• N. Korea turns to citizens for donations
  By Kim Young-jin North Korea is pressuring its residents to make donations as it struggles to meet a self-imposed deadline of becoming a “powerful state” by next year, angering some of its people, a source familiar with the matter said Thursday. According to the source, the impoverished regime has dispatched propaganda officials to cities and provinces, telling residents that funds were needed to help the country become a “strong and prosperous” state.
• A look at daily life in North Korea’s remote northeastern region of Rason
  By Associated Press, Updated: Thursday, September 15, 8:09 AM RASON, North Korea — Tucked into North Korea’s far northeast, the cities of Rajin and Sonbong have remained largely out of reach despite being designated a special economic zone 20 years ago. Now, as part of a national economic push, the region has a new name — Rason — and laborers are scrambling to build a road to China they hope will bring in tourists, investors and manufacturers. [Rason]
• Russian Railways to run a ‘demonstration’ train to North Korea
  By A. Samuel · September 13, 2011 · Projects, Rail News The project aims to reconstruct an existing section of the railway, the Port of Rajin cargo terminal, and the subsequent use of this infrastructure for transit, with access to the Trans-Siberian Railway. Russian Railways has said they are planning to run a ‘demonstration’ train between Hasan in Russia and Rajin in North Korea in October this year. The project aims to reconstruct an existing section of the railway, the Port of Rajin cargo terminal, and the subsequent use of this infrastructure for transit, with access to the Trans-Siberian Railway. The project aims not only to restore this section of railway, but also to make full use of the container port of Rajin. [Railways] [Rason]
• Case Study of Green Economy Policies: Korea
  By Sun-Jin Yun and Myungrae Cho September 13, 2011 Sun-Jin Yun, Professor at the Graduate School of Environmental Studies, Seoul National University and Myungrae Cho, Professor, Dankook University, write “The ROK’s green growth strategy, as currently formulated, includes some impressive targets and demonstration projects, but at its heart emphasizes economic growth and national industrial competitiveness rather than being a true plan for “greening” of the Korean economy. As such, the ROK’s current “green” policies are in effect mostly policies for further benefiting existing large ROK industries, including the nuclear and construction industries.” The Republic of Korea’s economy has been one of the economic marvels of the last few decades, growing rapidly and steadily, with few downturns. By 2010, the ROK had the world’s 12th largest GDP, and ranked 10th among nations in electricity consumption and production, 10th in gas imports, ninth in oil consumption, and fourth in oil imports. [1] The ROK has become an international force in several industries, including steel, automobiles, and electronics, and has seen a vast increase in the living standards of its people, as well as in urbanization. Like Japan, much of the ROK’s energy needs are supplied by imports, and like Japan, the ROK has embraced nuclear power as a key source of electricity. Unlike Japan, however, for the ROK the DPRK serves as a much more significant factor, albeit a quite uncertain one, in the development of energy systems and the drive toward energy security in the DPRK. [Green]
• Inter-Korean trade decreases 16% through July
  Trade volume between South and North Korea reached $958 million in the first seven months of the year, down 16 percent from a year earlier, Seoul's customs office said Monday. According to data provided by the Korea Customs Service (KCS), the South's exports to the North came to $447 million in the January-July period, down 14 percent a year earlier, and imports dropped 18 percent on-year to $511 million. [Sanctions] [Inter-Korean trade] [Kaesong]
• More Chatter on North Korea’s Markets
  By Evan Ramstad Reuters Business as usual in North Korea, where military might is more important than economic well-being: Kim Jong Il speaks to his son Kim Jong Eun during a military parade in Pyongyang on Friday. Image captured from TV broadcast in Seoul. Understanding what Kim Jong Il is doing with his country’s economy is the second-biggest mystery about North Korea, after where he is enriching uranium to make nuclear bombs. But there are many more hints and clues for outsiders to decipher about the economy. Just recently came word of Mr. Kim’s 2008 speech to government insiders warning against markets. And over the past couple of days, several dozen North Korean experts have been meeting at Asan Institute in Seoul to discuss the viability of Mr. Kim’s regime, mainly through the prism of economic pressures. [Media] [Marketisation]

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AUGUST 2011

• Chinese Magazine Dismisses N.Korean Development Dreams
  An official Chinese magazine has dismissed North Korea's plan to lure Chinese investors and develop Wihwa and Hwanggumpyong islands at the mouth of the Apnok River as "wishful thinking." China is apparently not keen on the project, which North Korean leader Kim Jong-il wants Beijing to invest in. This is the first time the position was made public in a magazine published under the auspices of the Chinese Foreign Ministry. [SEZ]
• The Road to Rason
  By Andray Abrahamian A bus bumps and bruises its way along the unpaved road, carrying would-be investors to Rason’s First Rason International Trade Exhibition which ran from August 21-25, 2011, in Sonbong. The windows are open, until a crimson humvee barrels past, its powerful suspension dancing on the road, leaving behind a plume of beige dust. The bus windows snap shut, the still air quickly gets hot and more than one of the passengers wishes we were Chinese high-rollers, being whisked to the Emperor Casino and Hotel, which sits beautifully on Korea’s East Sea, overlooking Bipa Island and flanked by lush green mountains and crystal waters. Pictured above (Google Earth via NKeconwatch.com): Rason geographic border (in red) and security perimeter fence (in yellow). The passengers of the humvee—part of the casino’s fleet—will long be checked in and gambling their fortunes away by the time we complete our two and a half hour journey. However, it won’t always be this way. Rason’s 50km road to the border is finally being upgraded. Indeed, the 2.5 hour journey took 3.5 hours in June. Since then, the road has been widened, the first stage of the construction plan, allowing for traffic to flow both directions more easily and smaller passenger vehicles to overtake the more cumbersome truckers who ply the road. [SEZ] [Rason]
• Foreign Shareholding in Daedong Credit Bank Sold
  London UK/Pyongyang DPRK, 26 August 2011 The Board of Daedong Credit Bank is pleased to announce that the foreign shareholding in Daedong Credit Bank has been sold to a Chinese based corporate entity, the “Nice Group”. The foreign-appointed directors on the Board of Daedong Credit Bank have resigned with immediate effect, and have no further interests (financial or fiduciary) in the company. [IJV] [Banking] [Financial sanctions]
• Chinese Businesses Interested in Business Activities in Rason
  Pyongyang, August 24 (KCNA) -- Some 90 Chinese companies, mainly from Jilin and Shandong provinces, exhibit more than 110,000 items in 390 kinds at the 1st Rason International Trade Fair. They include vehicles, consumer goods, building materials and chemical products. The China FAW Group Import and Export Corporation and the Siping Fenjin Dedicated Auto Co., Ltd. display cars, buses, trucks and tractors, attracting interest of visitors. [Rason]
• Prospect of Rason Economic, Trade Zone
  Pyongyang, August 23 (KCNA) -- The 1st Rason International Trade Fair, which opened on Monday, has drawn many visitors. An estimated 110 companies of China, Russia, Italy, the United States, Australia, Taiwan and the DPRK exhibit machines, electric and electronic goods, vehicles and other products. The exhibits offer a glimpse of the bright prospect of international economic cooperation and trade through Rason. [Rason] [SEZ]
• Kaesong Firms Worry as N.Korea Seizes Mt. Kumgang Assets
  South Korean businesses at the joint-Korean Kaesong Industrial Complex are nervous after North Korea announced it will dispose of South Korean-owned properties in the scenic Mt. Kumgang resort.
• Foreigners Arrive to Participate in Rason International Trade Fair
  Pyongyang, August 21 (KCNA) -- Delegates and exhibitors of China, Russia, Australia, Italy, the U.S. and Taiwan of China arrived in Rason City Saturday to participate in the First International Trade Fair. [SEZ] [Trade]
• North Korea opens int’l trade show amid efforts to revive economy
  By Associated Press, Updated: Monday, August 22, 11:16 AM PYONGYANG, North Korea — North Korea has begun a four-day international trade fair in the country’s northeast, where it is building an economic development zone in cooperation with China. North Korea and China broke ground in June on the initial stage of the Rason economic zone amid the North’s efforts to revive its economy. [Rason] [SEZ] [Sanctions]
• The DPRK Energy Sector: Current Status and Future Engagement Options
  By Peter Hayes, David von Hippel, and Scott Bruce August 16, 2011 This paper was originally published as part of a special issue of the Korean Journal of Defense Analysis (Volume 23 Number 2 Summer 2011) on the DPRK Energy and Minerals Sectors. Peter Hayes, David von Hippel and Scott Bruce discuss changes in the DPRK energy sector (particularly since 1990) and look at the current supply and demand balance in North Korea, noting the vulnerabilities and critical needs of that sector. The authors also explore options for the rehabilitation of the DPRK energy grid that could be used in negotiations with North Korea as part of a “roadmap” to denuclearization. The report also considers the DPRK's legitimate energy needs if negotiations are not successful and the DPRK either collapses (due to an internal coup, succession crisis, or war) or continues to stagnate. The report concludes by identifying the robust strategies that are important in both engagement and non-engagement scenarios. [Energy]
• Lacking cash, North Korea turns to corn
  August 15, 2011 North Korea imported more corn and less rice from China in the first half of this year than in the same period a year ago, apparently due to a lack of foreign cash, a study showed yesterday. North Korea’s grain imports from the neighboring country in the six-month period consisted of 38.2 percent corn, 37.5 percent flour, 16.9 percent rice and 7.2 percent beans, according to an analysis of the two countries’ trade by Kwon Tae-jin, vice president of the Korea Rural Economic Institute. Last year, the figures stood at 34.2 percent flour, 28.8 percent corn, 19.3 percent rice and 16.4 percent beans, indicating an overall increase in imports of cheaper grains such as corn and flour this year, according to the study based on data from the Korea International Trade Association. Imports of rice and beans, meanwhile, fell from the same period last year. This year, imports of beans cost $661 per ton on average, while a ton of rice, flour and corn sold for $538, $395 and $304, respectively. The total amount of grain imports rose 5.5 percent to 149,173 tons, up from 141,395 tons in the first half of last year, apparently reflecting food shortages in the impoverished nation, the study said. Grain imports cost $404 per ton on average, up 8.6 percent from $372 last year, bringing the total cost to $60.3 million, or 14.4 percent more than last year. “The amount of grain imports last year was larger than in most years, but the fact that it imported even more this year seems to indicate a shortage of food,” Kwon said. [Sanctions]
• The DPRK Power Sector: Data and Interconnection Options
  By Jae-Young Yoon August 9, 2011 This paper was originally published as part of a special issue of the Korean Journal of Defense Analysis (Volume 23 Number 2 Summer 2011) on the DPRK Energy and Minerals Sectors. Jae-Young Yoon, Director of the Power System Research Group, Smart Grid Division, Korea Electrotechnology Research Institute (KERI), Seoul, provides an overview of the present status of the DPRK power sector, including newly analyzed data and future prospects of electricity supply and demand in North Korea. This report also establishes several basic inter-Korean energy cooperation plans and considers possible changes in inter-Korean relations as a result of electric power system interactions. The proposed plans included in this report are intended to be a starting point for interconnecting the power systems of the two Koreas and the fulfillment of longstanding grand plans for a Unified Korean Power System (UKPS).
• $4.6B in reported losses from hardline N.Korea policy
  Estimates suggest sanctions have been 5 times costlier to Seoul, with an estimated $834 M in losses for N.Korea By Park Byong-su, Senior Staff Writer A white paper on the status of inter-Korean economic cooperation obtained by the Hankyoreh on Monday puts the estimated direct economic losses to South Korea from the deterioration of inter-Korean relations in the three years between the inauguration of the Lee Myung-bak administration in 2008 and 2010 at a full $4.6 billion. This is five times the estimated $834 million lost by North Korea. Estimates also put the indirect losses to South Korea from the failure to see production inducement and added value effects at an even greater $12.5 billion. [Sanctions] [SK NK policy] [Dilemma]
• S.Korean businesses to sue for losses from sanctions
  This marks the first collective action from the businesses engaged in economic cooperation unable to operate By Kim Jong-cheol, Senior Staff Writer South Korean businesses engaged in economic cooperation with North Korea who have incurred major losses due to sanctions are showing signs of working together in response to their predicament, including suing the government for compensation. The South Korean government imposed the sanctions on North Korea in connection with the sinking of the Cheonan. Around 10 heads of businesses investing in tourism at Mt. Kumgang, businesses planning to move in to Kaesong Industrial Complex, and businesses trading with other parts of North Korea are known to have gathered in central Seoul on July 19 and agreed to embark jointly on responsive measures, including taking legal action against the government. “In a situation where there is no sign of an improvement in inter-Korean relations, businesses cooperating with North Korea are going beyond the limits of their tolerance,” said one official working in a field related to inter-Korean economic cooperation during a telephone interview with the Hankyoreh on July 20. “Those taking part in the meeting easily agreed to respond as a group, including by suing the Ministry of Unification for damages. They decided to meet once more some time around next week and decide upon a specific plan. Around ten businesses are currently preparing to sue.” The affected businesses have decided to demand that the government withdraw the Cheonan sanctions while urging it to provide systematic guarantees that North-South economic cooperation can continue in a stable manner regardless of the political situation. They are also known to be considering plans such as one-man protests, returning their business licenses and issuing a statement. Two materials processing companies, including CEO Kim Chan-ung’s NFN, have sued individually for damages, but this is the first time since the sanctions were imposed, on May 24 last year, that businesses dealing with North Korea have acted together against the government in an organized manner. [Sanctions] [SK NK policy] [Dilemma]
• N.Korean exports plummet with S.Korea, jump twofold with China
  N.Korea’s strengthening economic ties with China have shifted political influence away from S.Korea By Ryu Yi-geun North Korean exports to South Korea fell to one-fortieth their previous numbers in the wake of the government’s “May 24 measures,” while exports to China more than doubled over the same period, a Korea Development Institute analysis shows. [Sanctions] [SK NK policy] [China NK] [Trade] [Dilemma]
• Coca-Cola, KFC to Open in N.Korea
  In a symbolic move to welcome international capitalism, North Korea has reportedly agreed to let global corporations Coca-Cola and KFC begin operations in the capital Pyongyang. Citing sources close to North Korea, Seoul-based YTN reported Thursday that a group of 10 people representing the two brands visited the North last week, and that the first Pyongyang branch will likely open in September or October. VOA, meanwhile, says the idea of bringing in KFC is reported to have come up during a North Korean business delegation's trip to the U.S. in March. [FDI] [Inversion] [Overture]

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JULY 2011

• The Restaurant at Hana
  Phoenix Commercial Ventures Ltd is proud to announce that Hana Electronics JVC (a 50/50 joint venture based in the DPRK) completed and moved into its new headquarters based near the T’ongil Market in Pyongyang in Q1 2011. Having moved in and set up its production facilities, Hana has now opened a restaurant (“The Restaurant at Hana”) and related leisure facilities (swimming pool, sauna, hairdresser, bar, gym etc) in its headquarters. The restaurant (which comprises a main dining room and several private ones) and leisure facilities are open to locals and foreigners alike. Food for the restaurant is sourced from local markets.
• What is Wrong with the North Korean Economy
  By Nicholas Eberstadt Friday, July 1, 2011 The Democratic People's Republic of Korea (also known as the DPRK, and North Korea) is a special case in the annals of modern economic development, and not a good one: for it is an economy that once achieved a relatively advanced level of modernization, but then proceeded into prolonged, even catastrophic decline. Around the time of Mao Zedong's death (1976), North Korea was more educated, more productive and (by the measure of international trade per capita) much more open than China. Around that same time, in fact, per capita output in North Korea and South Korea may have been quite similar. Today, North Korea has the awful distinction of being the only literate and urbanized society in human history to suffer mass famine in peacetime. And North Korea's hunger problem continues to this day: Pyongyang has relied upon "emergency" international humanitarian relief for over a decade and a half. Earlier this year the DPRK lodged an urgent appeal to the United Nations World Food Program (WFP) for another round of food aid. North Korea is thus the world's first and only industrialized economy to lose the capacity to feed itself. Why have things gone so horribly wrong with the North Korean economy? In Pyongyang, a longstanding party line maintains that the country's post-Cold War woes were the fault of two factors: 1) the sudden cutoff of aid and (subsidized) trade from the Soviet Bloc upon its collapse, and 2) the "hostile policy" of the United States, with its many economic sanctions against trade and investment in the DPRK. Superficially plausible as these explanations might sound, neither actually stands up to scrutiny. [Sanctions] [MISCOM]

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JUNE 2011

• S.Korea approved N.Korea visits for some business people
  The South Korean government was found to have approved South Korean business people’s visit to North Korea for checks on their past investments there for the first time since its suspension of trade and exchange programs with the North on May 25 last year, two months after the North’s artillery attacks on Yeonpyeong Island. Officials of Taelim Industrial went to the Kaesong Industrial Complex and investigated their production facilities with North Korean officials from June 24 through 26, a Unification Ministry official said Tuesday. “Their visit to North Korea was permitted as a measure to protect their property right,” he add. “It is not connected with easing of the May 25 measure.” [Sanctions]
• NKorea Rushes to Build Apartments for 2012 Events
  By THE ASSOCIATED PRESS Published: June 24, 2011 at 3:59 AM ET . PYONGYANG, North Korea (AP) — The capital of North Korea is going through a construction boom and the biggest project in more than a decade started at the beginning of this month. Associated Press Television News in North Korea on Friday showed a large area in the center of the capital that has been turned into a huge construction site.
• N. Korea's deforestation proceeding rapidly: report
  SEOUL June 17 Deforestation in North Korea is taking place at a rapid pace as people cut down trees for fuel and turn forest into farmland, a report by a state think tank here said Friday. An average of 127,000 hectares of forest in North Korea have been destroyed on average every year for the past two decades, the Korea Forest Research Institute (KFRI) said in the report based on data by the United Nations Food and Agriculture Organization. Total forest area in North Korea stood at 5.66 million hectares as of 2010, which was less than the 6.22 million hectares tallied for South Korea. The institute under the farm ministry said that the pace of deforestation is even faster than that of rainforests around the world. "The size of forest lost every year is equal to 150 times the land area of Yeouido in Seoul," the KFRI said. Yeouido in central Seoul, an island-turned-business district, is home to many South Korean securities firms, the stock exchange and the National Assembly. The report said North Korean forests are probably being destroyed to provide wood for heating and cooking and to make new farmland to grow more food. The report, meanwhile, showed that North Korea's forest size decreased from slightly over 8.20 million hectares in 1990 to 6.99 million hectares 10 years later and 6.29 million in 2005. [Sanctions]
• N.Korea Downsizes Prestige Housing Project
  The North Korean regime's ambitious project to build 100,000 homes in Pyongyang, which started in 2009, has been drastically downsized due to a lack of money and building materials. The regime has now cut the target to about 20,000. That means plans to make 2012 the year when North Korea becomes a "powerful and prosperous nation" has hit a serious snag. A South Korean government source said the regime planned to build a total of 100,000 homes in the capital -- 35,000 homes by late last year; 30,000 homes this year, and another 35,000 by next April.
• Losses continue for businesses engaged in inter-Korean trade
  The Lee administration’s hardline N.Korea policy leaves no alternatives for businesses people caught in limbo » Former DD Trading Chairman Lee Dae-sik shows his old business card. (Photo by Lee Jung-a) By Park Byong-su, Senior Staff Writer Former DD Trading Chairman Lee Dae-sik, 74, still has trouble sleeping when he thinks about the events of the past few years. In that time, he has had to shut down an effort in the North Korea that was earning 4 to 5 billion won ($3.7 million to $4.6 million) in annual sales just a few years ago, as a result of the Lee Myung-bak administration’s hardline policy against North Korea. “At the time I was investing in North Korea, we had the Inter-Korean Exchange and Cooperation Act, and I never dreamed they would halt North Korea projects. Now the government will not let us do an effort it granted approval for, something we had been doing consistently. It is just...” During an interview with the Hankyoreh at a cafe in the Hawolgok neighborhood of Seoul’s Seongbuk District on Tuesday evening, the day before the eleventh anniversary of the June 15 Joint Declaration, Lee was too overcome with emotion to finish his sentence. He is one of the many South Korean businesspeople who have suffered as a result of the government’s restrictions on trade with North Korea. According to a January-February survey of companies engaged in North Korea efforts, the 104 companies that responded sustained an average loss of 3.9 billion won ($3.6 million) as a result of the May 24 measures restricting inter-Korean trade. Lee is a first-generation North Korea entrepreneur who has been engaged in trade with the country since the Kim Young-sam administration in 1994. Originally the operator of a shoe factory in Busan, Lee struggled with the competition of cheap labor in China and Northeast Asia and searched for a change before finally taking the leap into North Korea. At first, he imported Pyongyang soju and agricultural products like bracken, balloon flower roots, and pine mushrooms. “After the June 15 summit in 2000, the North Koreans grew more flexible in their attitude and became easier to deal with,” he recalled. Lee, who steadily expanded the range of his operations over the years, began an effort in 2005 with Pyongyang’s Kangso Yaksu. This mineral water, North Korean National Treasure No. 56, is naturally carbonated and contains minerals like calcium and iron. After securing exclusive sales rights from North Korean authorities, Lee began construction on a production plant the next year at an investment of 3 billion won. According to the conditions of the contract, Lee sent the cost of the water and the raw materials for the bottles, along with caps and labels, and the North Koreans operates the factory and sent the water produced. “We imported it to South Korea under the brand name of ‘Gangseo Cheongsan,’ and sales increased from an initial level of 100 thousand to 200 thousand bottles a month to 300 thousand to 400 thousand bottles a month,” he said. But stormy clouds appeared on the horizon when the Lee Myung-bak administration took office in 2008. As inter-Korean relations grew chilly due to the shooting death of a South Korean tourist at Mt. Kumkang in July of that year and North Korea’s missile launch and nuclear test in April and May of 2009, respectively, the Lee administration placed restrictions on contact with North Korea by civilians. [Inter-Korean business] [Sanctions] [Lee Myung-bak]
• The Year 2011 and Prospect of Korea's Building of a Thriving Nation
  by Naenara June 14, 2011 http://www.weeklyblitz.net/1512/the-year-2011-and-prospect-of-korea-building-of "Bring about a decisive turn in the improvement of the people's standard of living and the building of a great, prosperous and powerful country by accelerating the development of light industry once again this year!"-this is the slogan of the Korean people published in the New Year's joint editorial of Rodong Sinmun, Joson Inmingun and Chongnyon Jonwi, leading newspapers of the Democratic People's Republic of Korea. The joint editorial of the year 2011 is run through with a stronger faith and higher confidence than ever before. It is clearly evidenced by such expressions as "a year of new prosperity," "a year of general offensive, when a radical turn should be brought about in the building of a thriving nation," "Korea does what it is determined to do," and "The gates of final victory are in sight." [Green]

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MAY 2011

• Over 80 pct of N.Korea’s foreign trade with China
  KOTRA reports a 29 pct. increase to 3.5B in 2010, indicative of a closer economic cooperation » The graph indicates China’s relative proportion of North Korea’s total foreign trade By Hwangbo Yon China accounted for more than 80 percent of North Korea’s foreign trade in 2010. The Korea Trade-Investment Promotion Agency (KOTRA) announced Friday that North Korean trade with China increased by 29.3 percent from $2.68 billion in 2009 to $3.47 billion in 2010. The percentage of overall North Korean trade with China rose sharply from 78.5 percent to 83 percent over the same period, marking the first time China has accounted for more than 80 percent of North Korea’s trade. The total scale of North Korean external trade increased from $3.41 billion in 2009 to $4.17 billion in 2010. A KOTRA official said, “The increase in North Korea’s trade owes itself to an increase in exports of minerals, steel, and so forth in order to overcome a foreign currency shortage stemming from international sanctions.” “As sanctions against North Korea continue, the preponderance of trade with China will increase further,” the official predicted. [Sanctions]
• China-North Korea economic cooperation expected to pick up steam
  .BY DAISUKE NISHIMURA CORRESPONDENT 2011/05/25 When a groundbreaking ceremony for a China-North Korea project takes place May 28, one prominent person attending will be Chang Song-taek, the brother-in-law of North Korean leader Kim Jong Il. Chang, vice chairman of the National Defense Commission and the man believed in charge of foreign investment for North Korea, has increasingly been a focus of attention among observers of Beijing-Pyongyang relations. Chang's inclusion in the North Korean delegation for Kim's third visit to China since last May indicates that Pyongyang is increasingly serious about strengthening economic cooperation with its powerful neighbor and ally in the coming years.
• How Hyundai Rose from Laughing Stock to No. 3 in the U.S.
  Hyundai Motor suffered such a poor reputation for vehicle quality at an early stage of its advance into the U.S. market that it was often made a laughing stock. The Excel compact, the first Hyundai to be exported to the U.S. in 1986, became synonymous with quality problems. U.S. media satirized the Hyundai name by saying it stood for "Hope You Understand Nothing's Driveable And Inexpensive." Things have changed dramatically since then. [Quality] [IM]
• Kim Jong Il Gives Field Guidance to Fruit Farms
  Pyongyang, May 18 (KCNA) -- General Secretary Kim Jong Il gave field guidance to Ryongjon and Toksong fruit farms. The first leg of his guidance was the Ryongjon Fruit Farm. After being briefed on the farm before its master plan, Kim Jong Il went round the Ryongjon Revolutionary Museum, newly-created orchard and other places to learn in detail about the progress made in updating the farm and fruit production there
• Kim Jong Il Visited Nearly 80 Units in 2-odd Years
  Pyongyang, May 17 (KCNA) -- General Secretary Kim Jong Il provided the heyday of the development of light industry through the forced march of field guidance after kindling the torch of the new great revolutionary surge during his visit to the Chollima Steel Complex on December 24, Juche 97 (2008). Since then he visited nearly 80 units, an average of at least two units a month, for development of light industry. [Light industry]
• N.Korea Keeps Sending More Workers to Kaesong Complex
  The number of North Korean workers at the Kaesong Industrial Complex has been growing even as Seoul halted all other trade with the North after deadly attacks on the Navy corvette Cheonan and Yeonpyeong Island last year. There were 46,420 North Korean workers at the industrial park at the end of February, up 11 percent from 42,415 a year ago, according to the Unification Ministry on Sunday. This represents a monthly increase of 334. The industrial park's output rose from $256.47 million in 2009 to US$323.32 million last year. A ministry official described the rise as "strange." "Though the number of North Korean workers at the complex has steadily increased since it went into operation in 2005, that couldn't have been the case last year given the circumstances," he said [Kaesong] [Sanctions]
• Pyongyang Spring Int'l Trade Fair Opens
  Pyongyang, May 16 (KCNA) -- The 14th Pyongyang Spring International Trade Fair opened at the Three-Revolution Exhibition Monday with due ceremony. Present there were Vice-Premier Kang Sok Ju, Minister of Foreign Trade Ri Ryong Nam, officials in the field of foreign trade and delegations from several countries and regions.
• UN experts say North Korea is exporting ballistic missiles to Mideast and South Asia countries
  By Associated Press, Tuesday, May 17, 9:13 AM UNITED NATIONS — North Korea remains “actively engaged” in exporting ballistic missiles, components and technology to numerous customers in the Middle East and South Asia in violation of United Nations sanctions, a U.N. panel said in a new report. The seven-member panel said in a report to the U.N. Security Council obtained Monday by The Associated Press that North Korea has also completed — or is about to complete — construction of a second launch site for long-range rockets. 0 .The launch site on the country’s west coast is close to Tongchangdong and could be used for ballistic missiles in violation of U.N. sanctions, the report said. It said the installations appear “bigger and more sophisticated” than the original site on the east coast used for the 1998, 2006 and 2009 Taepodong missile launches. [Sanctions] [UNUS] [Double standards] [Arms sales] [Missiles]
• Ministry 'Confused' Over Firms Doing Business with N.Korea
  A panel of experts says the Unification Ministry has a cavalier attitude to South Korean companies doing business with North Korea. The panel, led by Kim Young-yoon of the Korea Institute for National Unification, tried to find out how many firms there are and what they do. Workers' bicycles are parked in front of a plant owned by a South Korean shoemaker in the Kaesong Industrial Complex. The plate on the basket reads "Kaesong." The experts say that according to ministry figures, 1,017 South Korean companies are doing business in the joint Korean Kaesong Industrial Complex, Mt. Kumgang, Pyongyang, as well as Nampo, Haeju, Rajin and Sinuiju. But the ministry does not even have contact numbers for 188 of those companies, and the phone numbers of 259 are wrong, meaning it only has accurate numbers for 570. [Inter-Korean business] [Sanctions]
• Kim Jong Il Provides Field Guidance to Kujang Fish Farm
  Pyongyang, May 12 (KCNA) -- General Secretary Kim Jong Il provided field guidance to the Kujang Fish Farm. After being briefed on the farm before a huge map showing its panoramic view, he went round various places of the fish farm including a hatching room to learn in detail about fish breeding there. Noting that the Kujang Fish Farm is the best place for fish breeding as it abounds in water resources and quality of water is good, he stressed that the fish farm ensuring profitability and equipped with cutting-edge facilities is the one desired by the WPK and capable of bringing the people substantial benefits. He set forth tasks to serve as guidelines for further developing the nation's fish farming. Fish breeding is a very economic production field as it ensures high profitability, while spending less money, and the shortest cut to providing people with fresh fish in all seasons, he said.
• Choe Yong Rim Learns about Mining Field in Ryanggang Province
  Pyongyang, May 9 (KCNA) -- Premier of the DPRK Choe Yong Rim learned about the work at the Hyesan Youth Mine in Ryanggang Province on May 4. Going round a dressing plant, he acquainted himself in detail with the preparations for reenergizing the production at the mine and held a consultative meeting. The meeting discussed the practical issues of implementing the important tasks advanced by General Secretary Kim Jong Il while providing field guidance to the mine and took relevant measures. The premier acquainted himself with the work at the Unhung Smeltery and the Unhung Mining Machine Plant on the spot on May 5 and took economic and practical measures.
• NK leader calls for more production of fertilizer
  North Korean leader Kim Jong-il called for more production of fertilizer, Pyongyang's state media said Saturday, in an apparent effort to help alleviate chronic food shortages in the communist country. Fertilizer is reportedly in short supply in North Korea, which experts say could further worsen the food situation in the country.
• NK's exports of mineral resources top $860 mil. last year
  North Korea's exports of mineral resources jumped 17-fold in a decade with its outbound shipment of coals and iron ores leading the growth, a U.S. report showed on Saturday. According to Radio Free Asia (RFA), the communist state's exports of mineral resources reached $860 million last year, compared with some $50 million in 2002. Citing data compiled by the Korea Trade-Investment Promotion Agency, the RFA said exports of such minerals as coal and iron ore accounted for 63 percent of its total exports to its strongest ally China. In the first quarter of the year, the North earned around $154 million by exporting coal to the neighboring country, compared with $9.68 million seen a year earlier. North Korea's mineral reserves are believed to be among the largest in the world, worth some 7,000 trillion won, based on 2008 prices, according to an earlier report by the Unification Ministry. (Yonhap) [Trade] [Minerals] [China NK]
• Choe Yong Rim Acquaints Himself with Fertilizer Production
  Pyongyang, April 29 (KCNA) -- Premier Choe Yong Rim acquainted himself with the production of fertilizers at the Namhung Youth Chemical Complex on the spot. He went round humic acid and moulding shops and other fertilizer production processes of the complex before having a consultative meeting.

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APRIL 2011

• DPRK Business Monthly
  Volume II, No. 2, March 2011
• N.Korean Shellfish Sold Openly Despite Ban
  Clams and other seafood from North Korea are openly being sold in the South despite a ban on all trade with the North after the sinking of the Navy corvette Cheonan last year. Insiders say that is because customers prize North Korean fisheries products. Some 30 vendors in the Garak Market and 20 in the Noryangjin Fisheries Wholesale Market sell shellfish from North Korea, including large clams and scallops. "We have openly labeled shellfish that come from North Korea because customers think they taste better," a vendor said. "They're between W1,000 to W3,000 cheaper than domestic ones but the quality is good" (US$1=W1,081). North Korean clams are for sale in the Garak Market in Songpa, Seoul on Sunday. North Korean shellfish have been brought into the South labeled as Chinese since the end of March. "Before the sinking of the Cheonan, North Korean shellfish was directly imported" labeled as North Korean, an official at the Seoul Agricultural and Marine Products Corporation said. "But since the ban on North Korean imports they've been imported through Chinese traders." According to the National Fisheries Research and Development Institute, demand for fish and shellfish from North Korea is rising in the South because customers shun Japanese seafood products due to concerns over radioactive contamination, while there are suspicions over the quality of Chinese products. englishnews@chosun.com / Apr. 25, 2011 12:10 KST [Quality] [Sanctions]
• Inter-Korean coal mine projects suspended during Lee administration
  S.Korea has turned to expensive imports to maintain its ultra hardline as the minerals have gone to China
  By Kim Kyung-rok “We invested a lot of money, and now we cannot even find out the present status.” Korea Resources Corporation (KORES) President Kim Shin-jong let out a deep sigh as he explained about the development status of the Hwangnam graphite mines in North Korea at a forum held by the corporation on Apr. 15. The event was organized amid a sense of profound concern, with a number of North Korean mineral resources development efforts running aground amid worsening inter-Korean relations. [Inter Korean] [Sanctions] [Lee Myung-bak] [China NK]
• Kim Jong Il Inspects Kim Chaek Iron and Steel Complex
  Pyongyang, April 20 (KCNA) -- General Secretary Kim Jong Il provided field guidance to the Kim Chaek Iron and Steel Complex dynamically advancing in the van of the drive for effecting a great surge. He went round a hot-rolling shop and various other production processes to learn in detail about the production and technological updating at the complex.
• Remittances from North Korean defectors
  April 21st, 2011 Author: Andrei Lankov, Kookmin University and ANU Until some 10 years ago, defection from North Korea implied that the person’s connections with his or her homeland would be broken for a long time, or perhaps even forever. North Korea was a huge black hole from where almost nothing could get out. But this is not the case anymore. The number of North Korean defectors in South Korea has increased tremendously. In 2000, there were merely 1,400 North Koreans residing in the ROK. Now, a decade later, their numbers exceed 21,000. These people are usually described as ‘defectors,’ but this name is misleading since almost none of them were driven by purely political considerations when they decided to leave North Korea. In most cases, they initially move to China, looking for food and better paying jobs. Only later do they usually find ways to move to South Korea, where, as they assume, their lives would be easier and more stable than in China. [Remittances] [Refugee encouragement]
• Report on Implementation of State Budget for 2010 and 2011
  Pyongyang, April 7 (KCNA) -- Deputy Pak Su Gil, vice-premier and minister of Finance, delivered a report on the results of the implementation of the DPRK state budget for last year and its state budget for this year at the Fourth Session of the 12th Supreme People's Assembly held on Thursday. According to the report, last year's state budgetary revenue was overfulfilled 1.3 percent and its plan for state budgetary expenditure was carried out at 99.9 percent.
• Developing Fruit Farming of DPRK
  Pyongyang, April 7 (KCNA) -- Fruit farming has made a signal progress in the DPRK in recent years. Large fruit producers have been built in all parts of the country and the material and technical foundations of the country's fruit farming consolidated. Several thousand hectares have been cultivated in orchards throughout the country to reap fruits one or two years after sampling planting.
• DPRK unveils “Narae” debit card
  (3/24/2011): Bernama (Malaysia) offers some more information on the DPRK’s electronic payment system: An electronic system for settlement with the use of debit cards has been for the first time introduced at the international communications center, in major department stores, hotels, and restaurants of North Korea.  
• DPRK (North Korean) Debit Card and March Travels
  Posted in March 28, 2011 Simon Cockerell from Koryo Tours comments on the happenings from the last tour: Our March Madness/Tax Abolition Day Tour to North Korea was the 100th time I have visited the DPRK, sadly there were no military parades in my honour but that didn’t stop the tour from being very memorable and with much to report.
  For me personally one of the most interesting things this time round was being able to buy and use North Korea’s new debit card. Known as ‘narae’ this card has only recently been introduced but can already be used in quite a number of establishments (shops, hotels, restaurants, etc) around Pyongyang. And in a place that foreigners often experience frustration with the lack of small change when using foreign currency to buy things this card could come in very useful
• N.Korean Delegation Inspect Google Headquarters
  A North Korean economic delegation that has been visiting the U.S. since March 21 toured the Google headquarters in Mountain View, California on Friday. Google, with its massively successful search engines, is one of the leading U.S. IT companies. The 12-member delegation arrived at Google's headquarters at around 10 a.m. The 1-hour-40-minute tour was not open to media coverage. Afterwards the North Koreans moved on to Stanford University, which has a cooperative relationship with Google, and apparently attended a lunch seminar with staffers from other IT companies in Silicon Valley [ICT] [FDI]
• Chinese Motorists to Tour N.Korean Investment Zones
  North Korea is reportedly allowing Chinese motorists to drive to the special economic zone of Rajin-Sonbong so they can look around for investment opportunities there. A spokesman for Sanjiang International Travel Agency in Hunchun, China on Friday said a group of Chinese motorists will tour Rajin-Sonbong and Duman near the North Korean-Chinese-Russian border under an initiative by the Tourism Bureau of Jilin Province on May 31-June 1. Sanjiang specializes in travels to the lower reaches of the Duman (Tumen) River in North Korea and Russia. [China NK] [FDI]
• US official says South Korea trade agreement will bar imports from NKorea
  By Associated Press, Thursday, March 31, 6:28 PM WASHINGTON — The top U.S. diplomat for east Asia said Thursday a proposed free trade agreement with South Korea is in America’s strategic interests, rejecting concerns it could provide a back door for imports from communist North Korea. In a testy exchange with a lawmaker, Assistant Secretary of State Kurt Campbell defended the pact, which was completed by the U.S. and South Korean governments in December but still requires congressional approval. Campbell told a House of Representatives Foreign Affairs subcommittee hearing on “Protecting American Interests in China and Asia” that it is long-standing U.S. policy to prohibit imports from North Korea, whose authoritarian regime has conducted nuclear and long-range missile tests in defiance of U.N. sanctions. [Kaesong] [FTA] [Sanctions]
• North Korean Women: Markets and Power
  By 38 North In recognition of International Women’s Day last week (March 8), we sought out a female perspective on the status of North Korean women. This article also marks the launch of a new 38 North series: one that will focus on cultivating the work of young North Korea watchers. This interview was conducted and translated by Janice Lee, a researcher at the Database Center for North Korean Human Rights in Seoul, and Benjamin Katzeff Silberstein, a Swedish economics and political science student at Stockholm University, and workshopped with 38 North editors and experts. We welcome these new voices to 38 North, and look forward to hearing from more up and coming analysts and scholars.

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MARCH 2011

• Garment Maker Sings Praises of Kaesong Industrial Complex
  The joint Korean Kaesong Industrial Complex is the only such facility in the world where a worker can produce "zero defect products" for US$90 per month, one of the business operators there says. Park Sung-chul of Sinwon, a medium-sized maker of casual wear, was talking to reporters in Beijing on Monday. Park was there for the China International Clothing and Accessories Fair 2011, or CHIC for short, Asia's largest fashion show. He added it is a great pity that business at the industrial park is stagnating due to strained inter-Korean relations. "The 1,250 North Korean workers at the Sinwon factory at Kaesong are very quickly acquiring technical know-how because all of them have worked there for six years," Park said. The workers, 80 percent of whom are women in their 20s and 30s, "are so skilled that they could produce clothes every bit as good as Italian designer brand clothing," he claimed. They are also parsimonious. With material intended for 1,000 suits of clothes, they will make 1,005. And they also have a high sense of responsibility, to the point where they will cut their lunch breaks if they think they would otherwise fail to reach their production targets, according to Park. Now bonuses have been introduced at the industrial park. "In the early years, we were banned from giving them bonuses, but now a system of bonuses for excess production has taken root there," he said. [Kaesong] [Inter-Korean business]
• Ex-FM's Son Heads N.Korean Central Bank
  Paek Ryong-chon (file photo) The son of former North Korean foreign minister Paek Nam-sun, who died in 2007, has been appointed president of the North's Central Bank, it has emerged. The official KCNA news agency described Paek Ryong-chon (49), as "president of the Central Bank" on a list of participants in a national meeting of commercial workers in Pyongyang on Monday.
• Kim Jong-il Is Losing the War with Open-Air Markets
  Park Doo-shik North Korea's Sinuiju area on the border with China is turning into a virtual battlefield, sources in the Stalinist country say. Around Feb. 15, members of a border guard unit were caught by a security patrol in the act of trying to cross the Apnok (or Yalu) River with stolen copper, and fired back at the patrol and fled. Sinuiju is the main gateway to China. And on Feb. 18, vendors in the market mobbed a policeman, who hit a vendor while trying to crack down on private trade, and staged a protest that soon attracted others. Following the two incidents, the State Security Department and troops were apparently deployed to the area, harassing people and watching their every move.
• S. Korean firms reeling from inter-Korean trade ban
  Hundreds of South Korean companies doing business with North Korea are teetering on the edge of bankruptcy due to a prolonged cross-border trade ban, the head of the first inter-Korean joint venture said Sunday. Inter-Korean trade flourished following a summit between the divided countries in 2000, but has been banned by South Korea since last May in response to the sinking of the Cheonan corvette two months prior, which Seoul says a North Korean submarine torpedoed. According to the South's unification ministry, about 860 South Korean companies are operating in North Korea. "South Korean companies, which invested about 200 billion won ($179 million) in Pyongyang and Nampo, North Korea, are on the brink of bankruptcy because of the suspension of the inter-Korean trade," Kim Jung-tae, head of Pyongyang Andong Hemp Textiles, said in an interview with Yonhap News Agency. Pyongyang Andong Hemp Textiles is the first inter-Korean 50-50 joint venture between the South's Andong Hemp Textiles and the North's Saebyol General Trading Co., which was established in October 2008. Kim said the companies posted a combined $150 million in operating loss due to Seoul's ban on inter-Korean trade. In June, Kim formed a body consisting of about 200 South Korean businessmen to seek solutions to the prolonged inter-Korean trade suspension. In its opening ceremony, the body called for the government to implement measures to resume inter-Korean trade. [Kaesong] [Sanctions]
• Business mission to North Korea May 2011
  In these fields, North-Korea might be an interesting option. 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. Although the Cold War is not ended, a growing number of European firms are exploring the country - for example companies currently producing in China, and where the wages are rising fast. And despite the deteriorating relations with South-Korea, the output of the South-Korean factories in North-Korea rose last year with 26%. The Chinese exports to North-Korea grew with 50% and an Egyptian provider launched a successful mobile phone service.
  Do you want to explore new business opportunities for your company? Then join us from 14 - 21 May on our trade & investment mission to North-Korea [IJV] [FDI] [Opening]
• DPRK adopts decision on strategic development plan
  English.news.cn 2011-01-15 13:51:12 PYONGYANG, Jan. 15 (Xinhua) -- The Democratic People's Republic of Korea (DPRK) has adopted a decision on a 10-year economic development plan and will establish a special government body charged with overseeing implementation of strategic projects, state media reported Saturday. According to the official KCNA news agency, the "10-Year State Strategic Plan for Economic Development" stresses the significance of infrastructure construction, developing agriculture and basic industries including power, coal, oil and metal industries, as well as regional development [Development]

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FEBRUARY 2011

• North Korea’s minerals sector: China’s gain, South Korea’s loss
  February 18th, 2011 Author: Aidan Foster-Carter, Leeds University As they say about London buses: you wait for ages, and then two come along at once. Hard on the heels of Drew Thompson’s comprehensive report on Chinese investments in North Korea, we are now privileged to a fascinating account of the Democratic People’s Republic of Korea (DPRK) minerals sector by Edward Yoon. Yoon notes that: ‘exploitation of the DPRK’s mineral resources through linkages with South Korean and overseas consumer markets is likely to be the most profitable way for the DPRK to develop its minerals sector.’ In theory, maybe. But in practice the current Republic of Korea (ROK) government has perversely thrown away that opportunity for partnership. As the conservative daily JoongAng Ilbo noted in a recent mournful article, this chance may now be lost forever — and Seoul’s loss is Beijing’s gain. [FDI] [China NK] [Minerals] [Sanctions]
• N.Korean Workforce at Kaesong Increases by Nearly 1,000 in December
  The number of North Korean laborers at the joint-Korean Kaesong Industrial Complex increased by nearly a thousand in December last year. Seoul's Unification Ministry said there were over 46,000 North Koreans working at the complex as of the end of December, up by 952 from a month earlier. The expansion rate of workers from the North has remained steady despite Pyongyang's military attacks on the South last year [Kaesong]
• N.Korea Revives Agency Earning Money for Kim Jong-il
  North Korea has restored a special department in the Workers Party codenamed Room 38 that manages leader Kim Jong-il's private coffers, the Unification Ministry said Monday in a report on the organizational chart of the North Korean power structure for 2011. "It seems the North in 2009 merged Room 38 with Room 39, another special department that handles a network of business operations, but separated them again in mid-2010," a ministry official said.
• Will Kim Jong-Il gift his countrymen Fucci, Fauxlex, and Garmani?
  By Melissa Bell In this photo released by Korean Central News Agency via Korea News Service Kim Jong Il looks at the gifts brought by visiting Chinese Minister of Public Security Meng Jianzhu. (AP PHOTO / HO / KCNA via KNS) Every year on the anniversary of his birth, Kim Jong-Il plays North Korean Santa Claus and passes out gifts to every child in North Korea. He also rewards his troops and officials with gifts that are said to be as lavish as Mercedes-Benzes and Rolex watches. [Bizarre] [Media]
• NKorea's Kim Jong Il turning to designer fakes?
  By FOSTER KLUG and KIM KWANG-TAE The Associated Press Tuesday, February 15, 2011; 9:05 AM SEOUL, South Korea -- It's a North Korean version of Christmas, with Kim Jong Il playing Santa Claus. In past years, the authoritarian leader has celebrated his birthday by handing out gifts to his people ranging from rice to Rolexes, an annual attempt to buy loyalty and stability. But this year, there are signs that gift baskets may be lighter and knockoff Gucci could replace the real thing as Kim celebrates his 69th birthday on Wednesday. [Media]
• The North Korean economy: Between myths and facts
  February 8th, 2011 Author: Andrei Lankov, Kookmin University During the Cold War the Soviet media informed its readers every year that the economic conditions of the capitalist West had deteriorated even further. If the Soviet media was to be believed the capitalist world was in continuous decline since at least 1900, so by the 1980s it was purported to have living standards similar to the Dark Ages. This was not the case, of course. Unfortunately, when I read recent reports about the economic situation in North Korea I cannot help but think about my Soviet experience. Every year major media outlets run stories about diminishing food supplies, growing prices and declining living standards in North Korea.
  The problem with these reports is that on balance they are not true. There have been ups and downs, to be sure, but over the last ten years the economic situation in North Korea has been improving steadily. [Media]
• The Markets of Pyongyang
  by Ambassador John V. Everard UK Ambassador to the DPRK (2006-2008) Pyongyang has two kinds of markets: “official” markets and “frog” markets (unofficial and unregulated markets in which the traders would jump up like frogs and run off with their wares at the first sign of trouble). However, there is no place for either market in DPRK ideology and their continued existence presents the regime with a political challenge. The frog markets in particular have been seen as acts of mass disobedience and threaten to play an increasing role in the exchange of news and ideas should the regime stumble. [MISCOM] [Marketisation]
• Status and Future of the North Korean Minerals Sector
  By Edward Yoon February 9, 2011 Edward Yoon, an accountant and expert in the North Korean resource development sector, writes, "The mining subsector of the DPRK’s industry accounted 8.3% of the North Korean GDP and about 15.9% of total export revenues in 2005. The minerals production sector in North Korea has, however, been struggling because of poor central planning and a lack of modern technology and equipment, as well as a shortage of electricity ... Based on a study conducted by Chung, Woo Jin, exploitation of the DPRK’s mineral resources through linkages with South Korean and overseas consumer markets is likely to be the most profitable way for the DPRK to develop its minerals sector. Strong markets for the DPRK’s gold, silver, lead, iron ore, zinc, Tungsten, copper, and other metallic minerals are likely. In additions, among the DPRK’s non-metallic minerals, magnetite, flaky graphite, and limestone are valuable products." The minerals industry is of great importance to the economy of the Democratic People’s Republic of Korea (DPRK), accounting for about 15.2% of its exports in 2005. (Chung, Woo Jin 2007, p. 3). In particular, the iron and coal mining industries have been priority industries for DPRK economic development since the 1970s (Korea Mining Promotional Corporation report, 2005). Minerals industries in the DPRK have been played prominent roles in North Korean National exports as shown in Table 1 (available at: ). The DPRK holds the great bulk of the total known minerals deposits on the Korean peninsula. It is estimated that some 200 of the minerals found in the DPRK have economic values. The value of North Korea’s known minerals deposits was estimated to be nearly thirty times of that of South Korea's as of 2005 (Kim, Young Yoon, 2007, p. 13). [Trade] [Minerals]
• Silent Partners: Chinese Joint Ventures in North Korea
  China is considered North Korea’s economic lifeline. Chinese aid, trade and investment is critical to North Korea’s social stability and economic productivity and a key source of technology and hard currency. Presumably, without this trade and investment, Kim Jong-il would lack the means to secure the allegiance of elites that support his rule, making trade and investment with China particularly important for ensuring the regime’s survival. Joint ventures with China are an important aspect of the bilateral relationship, because in addition to propping up the regime in Pyongyang, they contribute to economic development in China’s northeastern “rust belt.” These Chinese financial investments in the DPRK are geopolitically significant not only in terms of Chinese strategic interests but also for South Korean aspirations to unify the peninsula. Efforts by the international community to isolate North Korea and to impose sanctions in response to its efforts to develop nuclear weapons and its other provocative behaviors are complicated by the economic relationship between China and North Korea. [China NK] [IJV]
• Most N.Koreans Survive Through Black Economy
  Some 20 million North Koreans now rely on the black market as the regime's rationing system deteriorates, the South Korean government believes. Seoul has apparently decided to stick to its North Korea policy in the future, which it believes is slowly bringing about change inside the North. "We estimate that only about 4 million of the North's total population of 24 million live on government rations but most of the remaining 20 million people rely on the black market," a senior South Korean government official told the Chosun Ilbo Monday. "North Koreans who don't get rations regularly are surviving through the booming underground economy. The regime has no choice but to leave it intact for fear of riots and complete loss of control." The two previous administrations gave the North 500,000 tons of food and 300,000 tons of fertilizer every year, but the Lee Myung-bak administration has suspended aid because the North continued provocations. "All this has contributed to breaking down the North's rationing system and a collapse of the middle class," he added. [Collapse][Marketisation]
• DPRK Termed World's Major Seaweeds Cultivator
  Pyongyang, February 1 (KCNA) -- The UN Food and Agriculture Organization (FAO) has put the DPRK on the list of the world's major seaweeds cultivation nations. In the "white paper on world seafood breeding" issued on Monday, FAO said the DPRK produced about 440,000 tons of seaweeds including laver, brown seaweed and tangle in 2008, ranking sixth in the world. The DPRK has cultivated seaweeds in an extensive way, while concentrating its effort on the improvement of the people's living standard.
• Rice Prices in N.Korea Plunge 40%
  The price of rice and foreign currency exchange rate in North Korea have both dropped drastically in a matter of a week, according to Radio Free Asia. The radio station reported Saturday that rice in Hyesan, Yanggang Province was selling for 2,000 won per kg as of Friday, down from 3,300 won or nearly 40 percent from six days earlier. The Chinese yuan was trading for 400 North Korean won, down from 520. A local source said that various rumors had prompted merchants to stockpile rice and then suddenly release it. The source also added that the rice requisitioned for the military, a key cause of recent price increases, is being siphoned off and sold, bringing the price down.

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JANUARY 2011

• Kim Jong Il Receives Egyptian Businessman
  Pyongyang, January 24 (KCNA) -- General Secretary Kim Jong Il on Sunday received Naguib Sawiris, chairman and CEO of the Orascom Telecom Holding of Egypt, on a visit to the DPRK. Present there was Jang Song Thaek, alternate member of the Political Bureau of the C.C., the WPK and vice-chairman of the NDC. Kim Jong Il received a gift from him. He thanked him for the gift and warmly welcomed his DPRK visit taking place at a time when Orascom's investment is making successful progress in different fields of the DPRK, including tele-communications. He had a cordial talk with him. After receiving him, Kim Jong Il hosted a dinner for him. [ICT] [FDI]
• Chinese Firm 'to Invest $2 Billion in N.Korea'
  A Chinese firm says it wants to invest US$2 billion in North Korea's Rajin-Sonbong region, which the North has been trying to develop as a special economic zone. Shangdi Guanqun, a Beijing-based investment firm, signed a letter of intent with North Korea's Investment and Development Group on Dec. 20 last year, the Wall Street Journal reported Wednesday. A letter of intent is not binding. "The plan is to develop infrastructure, including docks, a power plant and roads over the next two to three years, followed by various industrial projects, including an oil refinery, over the next five to 10 years," an executive of the Chinese company told the daily. The company is "waiting for a response from the North Korean government before applying for approval from China's Ministry of Commerce." [China NK] [ODI]
• Chinese Firm to Invest in North Korea
  Company's $2 Billion Pledge Would Mark One of Largest Deals With Neighbor; Pact Was Signed After Yeonpyeong Shelling
  By JAY SOLOMON And JEREMY PAGE A Chinese firm has signed a letter of intent to invest $2 billion in a North Korean industrial zone, representing one of the largest potential investments in Kim Jong Il's authoritarian state and a challenge to U.S. policy in the region. The agreement was signed with little fanfare in Pyongyang on Dec. 20—a day otherwise marked by pitched tension on the Korean peninsula following the North's shelling of a South Korean island—according to documents viewed by the Wall Street Journal. Confirmation of the deal comes as Chinese President Hu Jintao visits Washington this week in a bid to forge closer security and economic ties with the U.S. U.S. officials said the administration is aware of the possible Chinese investment, but noted that previous projects haven't gone anywhere. "No investment project will enable North Korea to meet the needs of its people as long as its government continues its destabilizing behavior," said a senior administration official. .The letter of intent involves China's Shangdi Guanqun Investment Co. and North Korea's Investment and Development Group. An assistant to the managing director of Shangdi Guanqun, who identified himself only by his surname, Han, said his company's planned investment is focused on the Rason special economic zone, situated near North Korea's border with Russia. The zone was called Rajin-Sonbong when it was established in 1991, but failed to attract sufficient investment. It was revived, and re-named Rason, following a visit there in 2009 by Mr. Kim. Mr. Han said the plan is to develop infrastructure, including docks, a power plant and roads over the next two to three years, followed by various industrial projects, including an oil refinery, over the next five to 10 years. He said the company was waiting for a response from the North Korean government before applying for approval from China's Ministry of Commerce. "It's all pending at this stage, and it's really up to the Korean side to make the decision," Mr. Han said. He added that the $2 billion figure was what the North Korean side had hoped for, not necessarily what his company could deliver. Associated Press North Korean leader Kim Jong Il endorsing a bottle . The company's Web site says the company was "under the administration" of a state-owned enterprise, Shangdi Purchase-Estate Corporation. Mr. Han, however, said his company was "100 percent private." For the Obama administration, securing China's cooperation in restraining North Korea's military and nuclear-proliferation activities is a cornerstone of a warmer bilateral relationship. But the potential investment is a reminder of possible limits of Chinese cooperation. The U.S. wants to step up sanctions to force Kim Jong Il to give up his nuclear-weapons arsenal and military activities. China, meanwhile, is increasingly promoting business projects and direct investment to influence the North, say Chinese and American analysts, arguing financial pressure hasn't worked. China is North Korea's biggest trading partner and aid donor, but the scale of this deal raises concerns in Seoul that Beijing is running its own version of the "Sunshine" policy under which the South boosted investment in the North from 1998 to 2008. This policy disconnect is expected to be one of the issues Chinese and U.S. officials discuss this week. "These types of deals pursued by China generally present a real challenge to the sanctions" being effective, said Victor Cha, a North Korea expert who helped oversee Asia policy in George W. Bush's National Security Council. "The net effect is that it does make it more difficult for these sanctions to have the desired effect." Such deals have emerged in the past and have come to nothing, analysts said, and it is possible this one, too, could peter out. A number of similar North Korean economic zones have failed to live up to their billing because of poor infrastructure and corruption, and a lack of economic reform. News of the deal was first reported in the Korean-language press, including the Voice of America's Korean service. It is unclear how long the agreement has been in the works. But its Dec. 20 signing came on the day South Korea conducted a closely watched artillery test from Yeonpyeong Island near North Korea. The test marked a high point in tensions after North Korea's surprise late November shelling of Yeonpyeong, which killed four South Koreans. Pyongyang had threatened a swift military response should Seoul carry out an announced artillery test on Dec. 20. But the day's drill came and went amid high security in the South, with the North saying in a statement it "did not feel any need to retaliate." Top administration officials have recently both praised and chided the Chinese over the North. On a trip to China last week, Defense Secretary Robert Gates commended the Chinese for their "constructive" role in reducing tensions on the peninsula after Pyongyang's recent shelling of a South Korean island. Secretary of State Hillary Clinton in a Friday speech pressed China to be more aggressive in helping tamp down the North's nuclear program. The proposed investment is among the strongest evidence yet of China's strategy of using direct investment rather political pressure to push for change in North Korea. Chinese experts say that after North Korea's first nuclear test in 2006, China tried to make improved bilateral relations dependent on Pyongyang dismantling its nuclear program. But after a second test in 2009, China changed tack. Beijing now believes, according to Chinese experts, that the North Korean regime won't respond to political pressure and could collapse completely if China cuts off aid and investment, triggering a flood of refugees into northeastern China, and bringing U.S. troops right up to the Chinese border. The investment strategy was cemented when China's Premier Wen Jiabao visited North Korea in October 2009 and signed a slew of economic and trade agreements. One of those agreements was for China to fund construction of a $250 million bridge across the Yalu River that separates the two countries. Construction of the bridge, which would link China with another North Korean special economic zone, had been slated to start in August. Local officials said in November it appeared to have been put on hold indefinitely. Now they say a ground-breaking ceremony was held Dec. 31. U.S. officials are particularly concerned about how China's financial links to North Korea may be facilitating Pyongyang's weapons programs. In November, Pyongyang showed a visiting American scientist 2,000 centrifuges stationed at a cover site, drastically raising fears about the North's ability to expand its nuclear-weapons arsenal. "China's increased economic support undercuts the rest of the region's efforts to convince Pyongyang that there will be consequences for further belligerence, nuclear weapons development or transfer of nuclear capabilities," said Michael Green, who also served as a senior official on Asia during the Bush administration. Write to Jay Solomon at jay.solomon@wsj.com [ODI] [RASON] [SEZ] [China NK]
• Kaesong companies on the brink as sanctions continue
  The companies have been caught between past government support and current government restrictions » The left graph shows the number of South Korean tenant companies operating at Kaesong Industrial Complex. 122 companies are operating normally, 77 companies are not currently operating, and 16 have halted operations. The right graph shows the total number of workers: above, the number of North Korean workers and below, the number of South Korean workers. Jung Eun-joo “Are they trying to bleed the Kaesong Industrial Complex tenant companies to death?” As the Lee Myung-bak administration’s sanctions against North Korea draw out into the long term, tenant companies in the Kaesong Industrial Complex are lurching toward the edge of a cliff. Eight presidents of the tenant companies, who asked that their names not be disclosed, agreed to a series of interviews with the Hankyoreh. They complained that they have lost hundreds of millions of Won (hundreds of thousands of dollars) with the suspension of factory construction due to administration measures forbidding new investment. They also said that the situation is growing bleaker by the day, with veteran employees quitting as the numbers of resident personnel at the complex drops due to concerns about personal safety. Despite all of this, they suffer without a word of formal complaint out of fears that they might draw the anger of North Korean and South Korean authorities. [Kaesong] [Sanctions] [SN NK policy]
• Leisure Facilities at Kaesong Close Down
  Six of nine commercial facilities in the joint Korean Kaesong Industrial Complex have closed, it emerged on Tuesday. According to the Unification Ministry, a supermarket, a beer hall, a karaoke and a billiard hall in the Songak Plaza, the industrial park hotel operated by Hyundai Asan, closed on Dec. 1, right after North Korea's shelling of Yeonpyeong Island. Already in February a massage parlor closed, and in August a Japanese restaurant. [Kaesong] [SK NK policy]
• N.Korea to Develop Special Economic Zone on Chinese Border
  North Korea is developing an islet in the Apnok or Yalu River delta linking Sinuiju with the Chinese city of Dandong as a special economic zone. A North Korean source in northeastern China on Monday said the North Korean Cabinet has already approved a law on the development of a special zone on Hwanggumpyong, which will be announced in March or April. [SEZ] [China NK]
• Chinese Troops Stationed in N.Korean Special Zone
  Chinese troops have been stationed in the special economic zone of Rajin-Sonbong in North Korea, sources said Friday. This would be the first time since Chinese troops withdrew from the Military Armistice Commission in the truce village of Panmunjom in December 1994 that they have been stationed in the North. "Pyongyang and Beijing have reportedly discussed the matter of stationing a small number of Chinese troops in the Rajin-Sonbong region to guard port facilities China has invested in," a Cheong Wa Dae official said. "If it's true, they're apparently there to protect either facilities or Chinese residents rather than for political or military reasons." [China NK] [Rason]
• N.Korea Backtracks Over Development Plans
  North Korea is apparently backtracking over implausible plans to become a "powerful and prosperous nation" by 2012 and is now eyeing the year 2020 as the finishing line to join the world's advanced countries. This suggests the regime has realized that no great leap forward is likely by next year and it has quietly moved the goalposts. The North's official Korea Central News Agency on Saturday said the regime adopted a "10-year national economic development plan." "It helps lay the foundation for the country to emerge as a thriving nation in 2012 and opens bright prospect for it to proudly rank among advanced countries in 2020," it said. [Development]
• Deal or no deal in N.Korea
  President of Shangdi Guanqun Investment Co., Ltd, a Chinese state-run company, Mi Chang, center, inspects a factory of Seungli Chemistry in North Korea’s Rason free trade zone, North Hamgyong Province, Dec. 2010. Shangdi Guanqun Investment agreed to invest $2 billion in North Korea’s Rason free trade zone and Musan Iron Ore mines, estimated to hold reserves of more than seven billion tonnes, and signed a memorandum of understanding with Pyongyang’s Investment and Development Group on Dec. 20 in Beijing. An official of the company told the Hankyoreh that the company’s president Mi would visit Pyongyang to make a contract to invest and build development facilities and coal-fire power plant to produce three million tons of iron ore per year. Although South Korea’s steel conglomerate Posco also agreed to develop Musan Iron Ore mines and bring in iron ore from the mine with North Korea in 2009, the project has been adjourned by South Korean government’s ban on economic cooperation and contacts with North Korea on May 25, 2010 as a countermeasure against North Korea after the sinking of the Cheonan. Lots of South Korean companies have worried that Chinese companies could sweep ample natural resources of North Korea while they have been prohibited from contact with North Korean partners. [Sanctions] [SEZ] [Rason] [China NK]
• Kim Jong Il Inspects Industrial Establishments
  Pyongyang, January 14 (KCNA) -- General Secretary Kim Jong Il gave field guidance to three factories in North Phyongan Province alive with a new year drive to bring about a boost in production. The first leg of his guidance was the Amnokgang Gauge and Instrument General Factory.
• NK draws up a 10-year economic development plan: state media
  North Korea has drawn up a decade-long development plan and will establish a new government body to implement and execute projects, in a move analysts here said is designed to revive the stalled economy. The North's state-run Korean Central News Agency (KCNA) said Saturday the North Korean Cabinet decided to adopt a "10-Year State Strategy Plan for Economic Development" and to set up a new agency called the State General Bureau for Economic Development. "This governmental body will handle all issues arising in implementing state strategy projects for economic development," the KCNA's English-language report read. "The above-said plan set a state strategic goal for economic development. It puts main emphasis on building infrastructure and developing agriculture and basic industries including electric power, coal, oil and metal industries and regional development." [Development]
• Korean Officials Vow to Improve People's Living
  Pyongyang, January 11 (KCNA) -- The joint New Year editorial issued by leading newspapers of the DPRK calls for giving priority to the improvement of the people's living standard in the effort for the building of a thriving nation. Light Industry Minister An Jong Su told KCNA that light industry was a major sector in attaining this year's target. It is the plan of the Workers' Party of Korea to press ahead with the upgrading of light industry, not partially but in an all-round way, not on an ordinary standard but on a standard of cutting edge, and with a sight set far ahead into the future. He expressed his determination to work hard to implement the WPK's plan.
• DPRK Business Monthly December 2010
  The New Year has started with The New Joint Editorial for the year 2011 published on 1st January. The three leading newspapers of the Democratic People's Republic of Korea (DPRK) issued a joint New Year editorial on Saturday 1st January entitled: "Bring about a Decisive Turn in the Improvement of the People's Standard of Living and the Building of a Great, Prosperous and Powerful Country by Accelerating the Development of Light Industry Once Again This Year", calling for the country's willingness to denuclearize the Korean Peninsula and focus on light industry as key factor to improve people's living. The Joint New Year Editorial underlines essential progress in twelve strategic areas to build "picture of a prosperous tomorrow", including electricity generation, coal and iron & steel production, and areas of food production and other areas of light industry. The 'Joint Editorial further states; the DPRK is "consistent in its stand and will to achieve peace in Northeast Asia and the denuclearization of the whole of the Korean peninsula". This is a clear message that DPRK wants peace and denuclearization on the Korean peninsula. We will be going to more details in next edition of the DPRK Business Monthly.
• 'China to invest $2 bil. in NK economic zone'
  By Jung Sung-ki A Chinese state-owned company recently agreed to invest $2 billion in North Korea’s Rason special economic zone, a local newspaper said Friday. According to the JoongAng Ilbo, Shangdi Guanqun Investment Co., Ltd. signed a 10-point memorandum of understanding (MOU) with Pyongyang’s Investment and Development Group Dec. 20 in Beijing. Under the agreement, Rason, a northeastern city of North Korea bordering both China and Russia, is to be developed into the “biggest industrial zone in Northeast Asia” in about 10 years, it said. [SEZ] [China NK]
• N.Korea Diverts Military Budget to Light Industry
  The North Korean regime wants to divert some of budget for the all-powerful military to the civilian sector and increase exports of mineral resources to China in its Quixotic quest to become "a powerful and prosperous nation" by 2012. A senior member of the Workers Party who attended a meeting held in Chongjin, North Hamgyong Province on Monday was quoted by Radio Free Asia as saying, "This year, the party decided to divert some of the budget earmarked for the munitions industry to the people's economy to develop the light industry." "People will undergo a sea change in their lives next year when we reach the goal to become an economic power," the U.S.-funded broadcaster quoted a senior party official from North Pyongan Province as saying. "There'll be big investments." The North did not even reduce military spending even during the famine of the mid to late 1990s, when more than a million people starved to death, telling people to "tighten belts until the peninsula is reunited." The regime's annual military spending is estimated at about US$1.7 billion. [Military balance]
• Economic Gap Between 2 Korea Remains Huge
  South Korea's economy is 37.4 times larger than North Korea's, according to the latest data. Statistics Korea said Wednesday that as of 2009 South Korea's nominal gross national income stood at US$837.2 billion as against North Korea's GNI of $22.4 billion. The figure is slightly lower than the 37.7-fold gap seen in 2008 but marked a significant increase from the 34.7-fold difference seen in 2006. Per-capita GNI was $17,175 in the South, 17.9 times larger than North Korea's $960, and South Korea's total trade volume of $686.6 billion was 201.9 times greater than North Korea's $3.4 billion. [Economic comparison]
• In limited N.Korean market, furor for S.Korean products
  A report suggests that N.Koreans are becoming more exposed to S.Korea through movies and products » Members of civic organizations hold signboards of South Korean and U.S. key policymakers during a demonstration calling on the two governments to resume dialogue with North Korea in front of the Government Complex in Seoul, Jan. 5. (Photo by Kim Myoung-jin) A report on major North Korean indicators released by Statistics Korea on Wednesday revealed that South Korean products are becoming increasingly popular in North Korea, and that there are hardly any North Korean urban youth who do not watch South Korean TV dramas or movies. In the report, Statistics Korea said it is becoming a fad for young people in major North Korean cities like Pyongyang and along the border with China to watch South Korean television dramas and films using MP3 players or laptop computers. Statistics Korea said MP3 players with 1G of memory cost 60,000 North Korean Won (estimated $419), while a used laptop costs about 2 million North Korean Won. A memory chip with two or three movies costs 10,000 North Korean Won if it is an original, and 5,000 North Korean Won if its a copy. [Economic comparison] [ICT] [Culture war]
• South Korean economy 37 times bigger than NK’s
  By Oh Young-jin Excluding its big guns and weapons of mass destruction, North Korea is not a functioning country and has long lost its competition with South Korea, as a recent economic comparison released by Statistics Korea indicates. The comparison shows that South Korea's per-capita gross national income (GNI) amounted to $17,175 at the end of 2009, about 18 times larger than the $960 tallied for the North. The South’s population is about twice as large as that of the North. The South's nominal GNI totaled $837.2 billion, which is 37.4 times larger than the North’s $22.4 billion. [Economic comparison]
• N.Korea encourages small-scale border trade
  By Kim Se-jeong The North Korean military and ruling party are known to encourage small-scale border trade with China in what appears to be an effort to secure foreign currency. Quoting an anonymous North Korean trade source, Radio Free Asia reported Wednesday that the number of trading companies near the border with China has rapidly increased. "Since last November, I was told to open up a trading company. After the currency reform last year, the companies that had ceased to operate, were again allowed to trade independently with China," the anonymous source was quoted as saying. International economic sanctions imposed on North Korea have shrunk its international trade activities. With China, North Korea's closet ally and an economic partner, however, the sanctions haven't had much impact on trade volume. Trade companies in Korea are born and vanish under the control of the military and the party. The exact number of trading companies in operation is unknown, but it's believed to be several. People, who work for trading companies, are allowed to travel freely outside the nation, a privilege in a society where even traveling inside the country requires a permit. [Economic reform] [Sanctions] [China NK]
• Chinese Shipping Through N.Korean Port in Full Swing
  In official confirmation that closer China-North Korea business ties have come to fruition, the state-run Xinhua news agency and local media in Jilin on Monday said China has transported 20,000 tons of coal from a mine in Jilin to Shanghai and Ningbo through North Korea's Rajin-Sonbong Port since Dec. 7. The coal produced in Hunchun was carried by some 570 35-ton trucks across the Duman (or Tumen) River and transported to the port along a 60 km unpaved road between Hunchun and Rajin-Sonbong. A source in Hunchun said, "Since a month ago, dozens of trucks a day have been going to the North" through Quanhe Customs Office. The abundant coal deposits in the northeastern China are mainly used for heating homes in southern China in winter, but with no access to the East Sea, China had to transport it overland to Yingkou Port in the Bohai Bay, some 800 km to the west, incurring logistical costs. China has long tried to get the right to use Rajin-Sonbong and Chongjin ports in North Hamgyong Province in North Korea in a bid to secure an East Sea route. In 2009, Chuangli Group, an environmental facilities manufacturer in Dalian, obtained the right to use a pier in the Rajin-Songbong port for 10 years in collaboration with a North Korean trading company. Another Chinese firm in Tumen is also reportedly seeking the right to use Chongjin Port. Prof. Yoon Seung-hyun of Yanbian University said Chongjin Port, has better facilities than Rajin-Sonbong. "The North is more open and aggressive" because it is groaning under international sanctions and aid from South Korea has dried up, he added. [China NK] [Sanctions]
• How N.Korea Hopes to Turn Its Fortunes Around
  North Korea is expected to double political, economic and diplomatic efforts to achieve the target of becoming "a powerful and prosperous nation" by 2012, government officials and pundits here say. "Given the health of North Korean leader Kim Jong-il and the young age of his heir apparent Kim Jong-un, there is a risk of North Korea making some irrational moves next year," a Unification Ministry official warned. Pyongyang's deadline to achieve power and prosperity is April 15, 2012, the centenary of nation founder Kim Il-sung. The North claims it is already strong ideologically due to the juche or self-reliance ideology and militarily due to its nuclear weapons, and that all that remains is to achieve economic strength.
• N.Korean New Year's Message Puts Stress on Economy
  The regular New Year's editorial in the official North Korean media outlets on Jan. 1 was easy on martial rhetoric but strong on the impoverished country's economic well-being. The words "light industry" appeared 21 times and "people's livelihood" 19 times, much more than the "songun" or military-first doctrine, which appeared 14 times, and even the name of leader Kim Jong-il, which occurred eight times.

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