Economy, trade and business

2012
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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 2012

• North Korea Out of the Dark: The Story of the Pyongyang Business School
  By Felix Abt How a promising reform project brought good business practices to the world’s most isolated country. Felix Abt (right) welcomes graduate students to a seminar at the PBS (Pyongyang Business School) under the watchful eyes of the country’s leaders, Kim Jong Il and Kim Il Sung. The slight downward slant in their portraits creates an illusion that their eyes follow you everywhere in the room. (Photo: Felix Abt) Rumors in early 2002 of upcoming market reforms encouraged me to accept a job offer as the North Korea country director by the global engineering giant ABB. After settling down in Pyongyang and seeing problems such as poverty in the countryside and food shortages, I realized that business education could be a panacea to a massive black hole in North Korea’s development. With no end in sight, the North had, since the 1990s, been heavily dependent on foreign humanitarian aid. This problem motivated me to think up a cost-effective way to make food security more reliable and sustainable. I wanted to accomplish this by trying to reactivate the idle enterprises that were supposed to feed millions of employees and their families through the public distribution system (PDS).
• North Korea Out of the Dark: The Story of the Pyongyang Business School
  By Felix Abt How a promising reform project brought good business practices to the world’s most isolated country. Felix Abt (right) welcomes graduate students to a seminar at the PBS (Pyongyang Business School) under the watchful eyes of the country’s leaders, Kim Jong Il and Kim Il Sung. The slight downward slant in their portraits creates an illusion that their eyes follow you everywhere in the room. (Photo: Felix Abt) Rumors in early 2002 of upcoming market reforms encouraged me to accept a job offer as the North Korea country director by the global engineering giant ABB. After settling down in Pyongyang and seeing problems such as poverty in the countryside and food shortages, I realized that business education could be a panacea to a massive black hole in North Korea’s development. With no end in sight, the North had, since the 1990s, been heavily dependent on foreign humanitarian aid. This problem motivated me to think up a cost-effective way to make food security more reliable and sustainable. I wanted to accomplish this by trying to reactivate the idle enterprises that were supposed to feed millions of employees and their families through the public distribution system (PDS).
• Foundations of Energy Security for the DPRK: 1990-2009 Energy Balances, Engagement Options, and Future Paths for Energy and Economic Redevelopment
  By David von Hippel and Peter Hayes December 18, 2012 Energy demand and supply in general—and, arguably, demand for and supply of electricity in particular—have played a key role in many high-profile issues involving North Korea, and have played and will play a central role in the resolution of the ongoing confrontation between North Korea and much of the international community over the North’s nuclear weapons program. Energy sector issues will continue to be a key to the resolution of the crisis, as underscored by the formation of a Working Group under the Six-Party Talks that was (and nominally, still is) devoted to the issue of energy and economic assistance to the DPRK. The purpose of this report is to provide policy-makers and other interested parties with an overview of the demand for and supply of the various forms of energy used in the DPRK in six years during the last two decades: •1990, the year before much of the DPRK’s economic and technical support from the Soviet Union was withdrawn; •1996, thought by some to be one of the most meager years of the difficult economic 1990s in the DPRK; and •2000, a year that has been perceived by some observers as a period of modest economic “recovery” in the DPRK, as well as a marker of the period before the start, in late 2002, of a period of renewed political conflict between the DPRK, the United States, and it neighbors in Northeast Asia over the DPRK’s nuclear weapons development program; and •2005, also a year in which observers have again noted an upward trend in some aspects of the DPRK economy, as well as the most recent year for which any published estimates on the DPRK’s energy sector and economy are available. •2008, the last year in which the DPRK received heavy fuel oil from its negotiating partners in the Six-Party talks; and •2009, the most recent year for which we have analyzed the DPRK’s energy sector.
• Unification Church quits joint auto making venture with North Korea
  By Associated Press, Published: December 14 SEOUL, South Korea — An automaker owned by South Korea’s Unification Church says it’s quitting its joint venture with North Korea. Pyeonghwa Motors Corp. general manager Roh Byoung-chun said Friday that Pyeonghwa will sell its 70 percent stake in the 11-year-old joint venture to the North Korean government. He didn’t give a specific reason for the decision but said Pyeonghwa will also close a hotel it has in Pyongyang and try to enter a new business such as retailing. The auto-making venture is among a number of businesses that the Unification Church has in authoritarian North Korea where very few foreign companies operate. It makes and sells about 2,000 vehicles annually in the North. It became profitable in 2009 after registering losses for years. [Inter-Korean business] [IJV]
• How to think about market opportunities in the DPRK
  Geoffrey K. See | Friday, December 14th, 2012 | No Comments » I recently presented at an annual conference an emerging markets-focused hedge fund (>$1B AUM) held for their investors. They had some (small) exposure to North Korea in their portfolio and felt that it was necessary to learn more about the market, and educate their investors on the place. North Korea is probably ill-defined as an emerging or even frontier market, and until the word for such a market exists, I think it is better classified as a provocative thought exercise for investors. [FDI]

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NOVEMBER 2012

• Mobile banking in North Korea
  Geoffrey K. See | Saturday, November 24th, 2012 | No Comments » Last year, I blogged about testing Orascom’s 3G internet service in Pyongyang after meeting some of Orascom’s employees. The original plan was to roll out the internet service to the expat community in Pyongyang. As far as I can tell, that has yet to happen, although doing so would greatly reduce the costs of existing internet options (ursurious broadband/ satellite internet) with some security trade-offs for users. [Banking]
• Mongolia, DPRK pledge to boost cooperation
  English.news.cn 2012-11-19 22:02:58 ULAN BATOR, Nov. 19 (Xinhua) -- Mongolia and the Democratic People's Republic of Korea (DPRK) pledged here on Monday that they would boost bilateral cooperation in various fields. The two countries have been sharing traditional friendship since the establishment of diplomatic relations in 1948, Zandaakhuu Enkhbold, speaker of the Mongolian parliament said when meeting Choe Tae Bok, chairman of the DPRK Supreme People's Assembly. "I want to say that Mongolia is ready to cooperate with the new leader of the DPRK and continue the traditional friendly relationship," Enkhbold said, hoping the two countries can cooperate in trade, information technology, exchange of workforce and lease of ocean ports as Mongolia is a landlocked country without ocean ports.
• North Korea has been unusually active with Japan, Mongolia, Syria, Egypt and Iran
  Several interactions were likely mining-related but DPRK’s banking system access is tightly proscribed so funds transfers are likely problematic [Sanctions]
• DPRK Economic Delegation Visits Egypt
  17Nov DPRK Vice Minister of Foreign Trade Ri Myong San (2nd L) and DPRK Ambassador to Egypt Ri Hyok Chol (R) look at a scale model during a tour of Smart Village Egypt (Photo: Smart Village Egypt) DPRK state media reported on 15 November (Thursday) that DPRK Ministry of Foreign Trade and the Egyptian Ministry of Foreign Affairs signed a memorandum of understanding in Cairo on 14 November (Wednesday). Vice Ministry of Foreign Trade Ri Myong San and DPRK Ambassador to Egypt Ri Hyok Chol, joined by a DPRK economic delegation, attended the signing ceremony along with officials from the Egyptian Ministry of Foreign Affairs.
• Iran, North Korea determined to boost trade exchanges
  Tehran, Nov 17, IRNA – Minister of Industry, Mine and Trade Mehdi Ghazanfari and his North Korean counterpart Ri Ryong Nam stressed the need to find new ways to widen bilateral cooperation. Ghazanfari said Tehran and Pyongyang should develop the current level of trade exchanges. The Iranian minister then referred to long-lasting political relations between Iran and North Korea, adding the two should foster economic cooperation. For his part, the visiting North Korean minister said the two should set up joint economic commissions and exchange economic delegations to prepare the ground for further bilateral economic relations.
• Agricultural Reform Again—or Not?
  By Randall Ireson Beginning in early July, a variety of sources have reported possible changes in DPRK farm policy, especially with regard to the organization of work teams and the share of produce which farms can retain. Information is rather spotty and inconsistent so far, and even if the government has decided to implement policy changes on a large scale, it is uncertain if they would actually lead to improved food production. The central question is whether DPRK authorities are interested in creating conditions that genuinely support farm development, or whether they are just trying to manipulate a few select policy elements without addressing any of the fundamental institutional obstacles to economic growth. One of the earliest reports[1] outlined the main elements of what is being referred to as the “6.28 Policy,” or more formally as the “June 28 New Economic Management Measures.” These measures are: [Agriculture] [Agency]
• Is Spendthrift Korea Following Japan into a Long Slump?
  Korea ranked No. 1 last year in the consumption of premium whiskey aged more than 17 years, imbibing a staggering 698,000 cases of the tipple. Whiskey comes in bottles of different sizes according to brand, so 9 liters is considered to be one case. Korea has been the world's No. 1 consumer of premium whiskey since 2001, its population of 50 million outperforming the U.S.' 310 million (478,000 cases), China's 1.34 billion (234,000 cases), and Japan's 130 million (140,000 cases). According to consulting firm McKinsey, Korea's market for luxury goods has grown 12 percent each year on average since 2006 and is worth US$4.5 billion. Five percent of Korean household spending goes into luxury goods, compared to Japan's 4 percent.
• [Interview] Unification through an inter-Korean economic system
  Posted on : Nov.12,2012 14:59 KST Oh In-dong, Orthopedic surgeon Korean doctor returns from North Korea with optimistic vision for reunification By Han Seung-dong, senior staff writer “About 60 years have passed since the country was split in two and went though a horrible war, yet we have never seen a Korean win a Nobel Prize for literature. This is all due to separation. When I think about it, I burn with anger. This must be resolved [before I leave this earth]. This year must be the last year [of hostile separation between the North and the South]. As soon as possible, we have to build an economic community, ‘North-South confederation,’ in which the South and North’s economy, culture, and art are united.” [Unification]
• OECD Predicts Dismal Long-Term Growth for Korea
  Korea's economy is predicted to grow a mere one percent on average between 2031 and 2060, mainly due to the country's chronically low birthrate and aging population, which will lead to a decrease in the size of the economically active population. This will make the country one of the worst-performing economies among the 42 OECD members and non-members surveyed by the organization. In its report entitled "Looking to 2060: Long-term growth prospects for the world" on Sunday, the OECD forecast that Korea will see 1.6 percent growth between 2011 and 2060, on the basis of 2005 purchasing power parities. [Ageing society]
• North Korea’s Property Market
  Geoffrey K. See | Thursday, November 8th, 2012 | No Comments » Rason has opened up property development to foreign investors (see some of the pictures a colleague took). Some investors have asked me about the prospects for property investments elsewhere in North Korea. The short answer is that there are opportunities to invest in North Korea’s property market outside of Rason, although it will take some ingenuity to execute well on an investment strategy focused on this asset class. To understand the property market in North Korea, it is useful to think of this market as being made up of three sectors. There is the state-owned sector driven by the government, the legal private sector in which both joint-ventures and local companies are involved in, and an illegal but flourishing housing market.
• Debit card use increases in N. Korea By Kim Young-jin
  The “Narae” debit card issued by North Korea’s Foreign Trade Bank is seeing growing use in Pyongyang. / Yonhap With technology such as “electronic wallets” providing the world with alternatives to credit cards, North Korea is working to make sure that paying with plastic stays in vogue. Residents of the showcase capital Pyongyang are increasingly using electronic payment cards for purchases, analysts say. The regime may seek to expand this as it attempts to modernize its economy under Kim Jong-un. [Banking]
• North Korea’s Growing Trade Dependency on China: Mixed Strategic Implications
  by Scott A. Snyder June 15, 2012 North Korea’s trade dependency on China has skyrocketed in the past year, reaching US$5.63 billion in 2011, an increase of 62.5 percent from $3.46 billion in 2010. Meanwhile, trade with South Korea, which is North Korea’s second largest trading partner, dropped by ten percent in 2011 to $1.71 billion. As a result, North Korea’s trade dependency on China appears to have risen dramatically. Korea Trade-Investment Promotion Agency(KOTRA) figures suggest an increase from 42 percent in 2008 to over 70 percent in 2011. Noland and Haggard suggest a lower level of dependency, but even if the level of North Korea’s trade dependency (as reflected in the officially recorded numbers from China, which themselves do not reflect smuggling or barter transactions that according to some rumors exceeded officially recorded trade six years ago) is overstated, this trend represents a dramatic shift from a situation in which growth in Sino-DPRK and inter-Korean trade matched each other through 2008 to a situation in which China’s trade with North Korea more than triples the level of inter-Korean trade, generated almost exclusively via operations at the Kaesong Industrial Complex [China NK]
• An update on the Huichon and Ryesonggang Power Stations
  Huichon Power Station on Google Earth The Huichon Power Stations 1 & 2 (??1????, ??2????) are too new to appear on Google Earth satellite imagery. I have, however, mapped them out by hand on the old imagery to give a better idea of their locations. I have also tagged them on Wikimapia.
• Size Matters: Benchmarking Rason against other Port Cities SEZs
  Calvin Chua | Thursday, October 18th, 2012 In 2010, a promotional video of Rason’s urban masterplan was released. Focusing on the Rajin District, there were extensive computer generated images and fly-through, taking viewers through monumental avenues and attractive landscapes while elaborating on the importance of an urban development plan in order to create a well-functioning city. The plan divides the Rajin District into various areas: Central, Ansu, Changpyong, Sosang, Geokjeon, Dongmyong, which contain specific functions. Government buildings are located in the Central and Sosang area while exhibition halls are located in Changpyong and factories in Yeokjeon. [Rason] [SEZ]
• Foreign Guests Pay Respects to Kim Il Sung and Kim Jong Il
  Pyongyang, October 4 (KCNA) -- Foreign guests on Thursday visited the equestrian statues of President Kim Il Sung and leader Kim Jong Il at the Mansudae Art Studio to pay homage. They included the members of the delegation of the Ministry of Agriculture of China led by Vice-Minister Niu Dun, Chairman and CEO Naguib Sawiris of the Orascom Telecom Media and Technology Holdings SAE of Egypt and his party. They laid bouquets before the statues and paid tribute to the peerlessly great persons. Naguib Sawiris and his party arrived here on Thursday. [Orascom]
• Egyptian Guests Visit Pyongyang Children's Foodstuff Factory
  Pyongyang, October 5 (KCNA) -- Chairman and CEO Naguib Sawiris of the Orascom Telecom Media and Technology Holdings SAE of Egypt and his party visited the Pyongyang Children's Foodstuff Factory on Thursday. They looked round processes for the production of bean-flour drink, being briefed on the modern factory. Meanwhile, they toured the Rungna Dolphinarium. [Orascom]
• Gift to Kim Jong Un from Egyptian Company CEO
  Pyongyang, October 6 (KCNA) -- The dear respected Kim Jong Un received a gift from the chairman and CEO of the Orascom Telecom Media and Technology Holdings SAE of Egypt on a visit to the DPRK. The gift was handed to an official concerned by Chairman and CEO Naguib Sawiris on Friday. [Orascom]
• Foreign Guests Depart for Home
  Pyongyang, October 6 (KCNA) -- Departing here for home on Saturday were the delegation of the Ministry of Agriculture of China led by Vice-Minister Niu Dun, Chairman and CEO Naguib Sawiris of the Orascom Telecom Media and Technology Holdings SAE of Egypt and his party and Famoi Beavogui, general director of the Agronomics Research of the Ministry of Agriculture of Guinea. The first Dalian-Mt. Kumgang International Tourist Group by air left here on the same day after touring Mt. Paektu and various parts of Pyongyang and Kaesong Cities. [Orascom]
• Changes in North Korea: For Better or Worse?
  By Ruediger Frank A recent New York Times article on change in North Korea under Kim Jong Un emphasized a lack of progress for the majority. The facts cited in the article were most likely true, with the usual caveat concerning any information about that country. Many important observations were also made, such as spiking prices, the emergence of speculators, growing disappointment, efforts by the government to earn hard currency, bribery, disgust over inequality, and an increasingly realistic self-assessment (“I thought our country lived well,” she said, “but I was mistaken.”). But when it comes to interpreting these observations, we should be careful and avoid being one-sided. To begin with, I find it hypocritical to imply that Kim Jong Un even theoretically had the chance to significantly improve the lives of a large number of his people within just ten months, and after having inherited such a big mess. In fact, it is quite surprising that he has been able to do anything at all. Most experts expected that he would be busy consolidating his power for at least a year or more; some even wondered whether he would remain in charge at all. Furthermore, I find it difficult to understand why anybody would assume that with severely limited resources, Kim Jong Un would try to benefit everybody equally and simultaneously. Think about Deng Xiaoping’s “two speeds.” Faced with limited funds, politicians everywhere turn to their own constituencies first; I would have no difficulty coming up with a few examples from our Western democracies. To be sure, this is not fair; even less so in a country where the physical survival of the less favored groups is at stake. But my point is that this kind of asymmetrical attention is neither surprising, nor is it unique. Is self-righteousness justified here? I also find it questionable that a leading newspaper in a liberal democracy that has millions of opponents to universal healthcare seems to imply that elsewhere, reforms towards a market economy will and should benefit everybody equally. One does not need to be a Nobel laureate to understand that market-oriented reforms of a hitherto egalitarian society lead to inequality. I don’t even want to start talking about the levels of disparity in Western countries—the US would be rather high up on that list—but even here in highly egalitarian Austria we have the rich, the middle class, and the poor. Of course the level of poverty is not even remotely comparable, but criticizing inequality in North Korea per se is a weak argument. [Media] [Inequality] [Propaganda]
• Hwanggumpyong: Still Serene
  Andray Abrahamian | Thursday, November 1st, 2012 Rason is developing steadily, if not swiftly. Kaesong continues to bridge the economies of the two Koreas, recent tax issues notwithstanding. Meanwhile, over at Hwanggumpyong…crickets. Visitors to Hwanggumpyong in August described it as a dirt depository for displaced earth from construction projects elsewhere in Dandong. This, of course, is not what Pyongyang envisioned when it sent Jang Song Taek to the groundbreaking ceremony in 2011. So why is so little happening there? Does this reflect tension between China and North Korea? Do suspicions related to 2002’s Yang Bin affair still lurk? Is China withholding HGP development as leverage on other issues? The answer is a resounding ‘probably not”. Why not? This Yonhap News article from earlier this month offers some hints. The unnamed source in the article complains that demand from Chinese companies for low-cost, high-productivity North Korean labor is quite high, but when they go to try to make it happen, the red-tape in and other obstacles in China make it impossible.
• North Korean bootmakers want to score with Messi
  Reuters 2:15 a.m. CDT, October 30, 2012 DANDONG, China (Reuters) - Top football-boot maker Adidas probably shouldn't be worrying just yet but a rare venture that marries South Korean money with North Korean labour in the Chinese city of Dandong aims to make its mark on the world football scene. At a temporary factory in a village on the edge of a bustling city that serves as a bridge between China and impoverished, isolated North Korea, 20 North Koreans hand sew football boots and dream of taking on the world. The factory, overseen by managers sporting badges showing North Korea's founder Kim Il-sung, have sold almost 10,000 pairs of boots at $100 a piece since it started full-scale operations in July, half of them to South Korea. North Korea itself gets 100 pairs of boots a month from the factory as its share of payment, rather than being paid in cash. "Boots can be made by machines but hand-sewn ones can be made to match individual preferences and they're more comfortable," said Chung Nam-chul, a veteran shoemaker. "We play football in our boots to test them and pick good ones," added Chung as he nailed down soles on a pair he was working on. The visit by a Reuters news team was supervised by North Korean managers attached to the factory where workers sew under the slogan "Our Technology. Best Quality Soccer Boots". [Media][FDI]
• S.Korea 'Tried to Invest $500 Million in N.Korean Hotel'
  South Korea's intelligence agency apparently tried to invest US$500 million in a 105-story skyscraper hotel in Pyongyang during the Roh Moo-hyun administration in 2005. Reto Wittwer, the CEO of Kempinski Hotels & Resorts, during a seminar on Thursday said Ri Chol, North Korea's former ambassador to Switzerland, came to him and asked him to invest $500 million to help complete construction of the epically delayed Ryugyong Hotel in Pyongyang. Soon afterwards, a South Korean intelligence officer approached the CEO and offered to supply the $500 million provided Wittwer made it look as though he was investing the money, he added.

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OCTOBER 2012

• Project of DPRK-China Office Building Starts in Rason
  Pyongyang, October 26 (KCNA) -- A ceremony took place in Rason City of the DPRK on Friday to start a project of office building for the Rason Economic and Trade Zone Management Committee Jointly Developed and Operated by the DPRK and China. Attending it were Jo Jong Ho, chairman of the Rason City People's Committee, officials concerned and people of the city from the DPRK side and Zhang Anshun, secretary of the Yanbian Autonomous Region, Jilin Province, Committee of the Communist Party of China, Tian Baozhen, consul-general to Chongjin, and other officials concerned from the Chinese side. Congratulatory speeches were made at the ground-breaking ceremony. Hwang Chol Nam, vice-chairman of the Rason City People's Committee, in his speech noted that the work for joint development and operation of the Rason Economic and Trade Zone is progressing apace thanks to the joint efforts of peoples of the DPRK and China. The ground-breaking ceremony is another progress in developing and activating the Zone, he said. The Zone Management Committee will play an engine role in further deepening the DPRK-China friendship and activating the Zone, Hwang stressed. Chen Weigen, vice-governor of the Jilin Provincial People's Government, said the ceremony shows that the China-DPRK cooperation in the Zone entered a new stage of development. The vice-governor stressed the need to concentrate efforts on accelerating the progress of major cooperation projects on the principles of government guidance, priority to enterprises, marketing rule, reciprocity and co-prosperity, developing the combined land and maritime transport route and building and perfecting basic establishments on a phased basis. Chen hoped that officials of the two countries would closely cooperate with each other, as befitting their posts fixed by the two sides, and pool efforts so as to successfully build and operate the Zone and thus register a new page in the history of bilateral cooperation. Then announced was the list of the management staffs of the two sides who will work at the Rason Economic and Trade Zone Management Committee. The participants laid a monument to the ground-breaking ceremony. [Rason]
• Rajin-Wonjong Road Opened to Traffic
  Pyongyang, October 26 (KCNA) -- A ceremony took place in Rason City of the DPRK on Friday to open to traffic the Rajin-Wonjon road in the Rason Economic and Trade Zone jointly developed and operated by the DPRK and China. Attending it from the DPRK side were Jo Jong Ho, chairman of the Rason City People's Committee, officials concerned and people of the city and from the Chinese side were Zhang Anshun, secretary of the Yanbian Autonomous Region, Jilin Province, Committee of the Communist Party of China, Chen Weigen, vice-governor of the Jilin Provincial People's Government, Tian Baozhen, consul-general to Chongjin, and other officials concerned. [Rason]
• Tablet of DPRK-China Economic and Trade Zone Management Committee Unveiled
  Pyongyang, October 26 (KCNA) -- A ceremony of unveiling the tablet of the Rason Economic and Trade Zone Management Committee Jointly Developed and Operated by the DPRK and China was held in Rason City Friday. Present at the ceremony were Jo Jong Ho, chairman of the Rason City People's Committee, officials concerned and people in Rason City from the DPRK side and Zhang Anshun, secretary of the Yanbian Autonomous Region, Jilin Province, Committee of the Communist Party of China, Chen Weigen, vice-governor of the Jilin Provincial People's Government, Tian Baozhen, consul general to Chongjin and officials concerned from the Chinese side [Rason]
• Greedy N.Korea Is Shooting Itself in the Foot
  North Korea revised tax regulations in August for South Korean businesses operating in the joint Kaesong Industrial Complex. The regime said that it will impose hefty fines on companies if caught dodging taxes, and that they would amount to 200 times the tax amount they attempt to evade. According to original regulations that were agreed in 2003 when both Koreas were working to open the complex, Pyongyang is required to negotiate with Seoul any changes to the relevant tax laws. But the North made the revisions arbitrarily without consulting the South. [Kaesong]
• Inter-Korean Economic Cooperation
  By 38 North A 38 North Interview of Dr. Yu Byounggyu with Mike Chinoy “[B]oth South and North Korea recognize that the Kaesong Industrial Complex is conducive to economic growth on both sides, and that the complex has great symbolic meaning in maintaining peace on the Korean peninsula. Also, citizens do not want the project to end.” ~ Yu Byounggyu In this 38 North video, Mike Chinoy, Senior Fellow at the US-China Institute at USC sat down with Dr. Yu Byounggyu, Executive Director, Economic Research Department of the Hyundai Research Institute, to discuss the status and future of inter-Korean economic cooperation, with special emphasis on the Kaesong Industrial Complex and Mt. Kumgang tourism. The interview is divided into three parts. [Inter-Korean business]
• N.Korea Turns to Selling Gold Reserves
  North Korea has exported more than 2 tons of gold to China over the past year to earn US$100 million. Even in tough times during the Kim Il-sung and Kim Jong-il regimes, North Korea refused to let go of its precious gold reserves. An agency known as Room 39, which manages Kim Jong-un's money, and the People's Armed Forces are spearheading exports of gold, said an informed source in China. "They are selling not only gold that was produced since December last year, when Kim Jong-un came to power, but also gold from the country's reserves and bought from its people." North Korea has been suffering a worsening cash crunch since South Korea severed economic ties following the sinking of the Navy corvette Cheonan in 2010, while its money reserves were depleted to fund lavish celebrations of nation founder Kim Il-sung's 100th birthday in April and the failed launch of a space rocket.
• N.Korea to Let Businesses Keep 70% of Profits
  North Korea will announce economic reforms in October that will allow state-run companies and shops to keep 70 percent of their profits, the Asahi Shimbun reported Tuesday. Most companies and shops in North Korea are run by the state and all profits go to the state, with overheads and wages reimbursed afterwards. But since the regime appoints workers and pays their wages regardless of the profits they generate, the system has failed to motivate workers to work harder, and productivity declined.

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AUGUST 2012

• North Korea makes progress at Rason
  A Chinese-made wheel loader is exhibited at the 2nd Rason International Trade Fair in Rason, North Korea on Aug. 20. The North is accelerating development of the zone. / Yonhap By Kim Young-jin Development of North Korea’s special economic zone Rason is progressing with the construction of an international trade center and a heavier flow of traffic across the China border, reports and visitors said. Construction of the Rason International Commerce and Trade Center, a joint project with a Chinese firm, had begun in April, North Korean media reported Tuesday. A wholesale market and storage facilities will be finished by October. The complex is expected to add shops, restaurants and hotels by the same time next year as part of efforts to turn the zone into a manufacturing base and logistics hub. The center will comprise some 40,000 square meters, with a total floor space of 88,000 square meters. The developments highlight the North’s renewed interest in the zone as it seeks economic development under young leader Kim Jong-un. China covets access to a port there and is encouraging Pyongyang to follow its reform path. A source who visited the zone last week for an international trade fair said progress was apparent since the same time last year, but that hurdles still remained. The biggest achievement was the completion of a 48-kilometer road from the China border to Rajin, which is part of the zone, a sign that development is poised to accelerate. The construction of a railway from Russia is nearly complete. Chinese visitors are now given permits to drive their private cars into the zone, leading to “large lines of cars waiting at the border,” the source said. The road gives China’s landlocked Jilin and Heilongjiang access to Rajin, the region’s northern-most ice-free port. Consumption possibilities are also increasing, the source said, including new food stalls at Rajin’s central square. Even during the trade fair, however, so-called first-class hotels such as the Rajin Hotel did not see full electricity supply. Inflation is also a problem, with rice prices soaring and exchange rates poor. The reports came after Jang Song-thaek, the uncle of the North Korean leader and a senior policymaker, struck deals with Chinese President Hu Jintao earlier this month to accelerate joint development of Rason and Hwanggumpyong Island, a separate zone. Analysts said the trip demonstrated Beijing’s commitment to the new regime as well as its drive to push economic development as a stabilizing force in the impoverished country. The activity at Rason ? designated a special economic zone in 1991 ? is a departure from the past, when it stood somnolent as Pyongyang prioritized its military. Currently its laws offer local officials more autonomy. [Rason]
• North Korea trying to build trade, tourism hub
  [video] [Rason]
• Top ten chaebol now almost 80% of Korean economy
  Posted on : Aug.28,2012 12:15 KST Modified on : Aug.28,2012 15:50 KST Big conglomerates expanding their control of an array of business areas By Kwon Eun-jung, staff reporter The sales of Korea’s ten largest companies are equal to about 80% of Korea’s GDP, according to data posted by the website chaebul.com on August 27. This concentration is believed to be attributable to growth among chaebol and their encroachment on areas that traditionally belonged to small, neighborhood businesses. Last year’s total sales for Korea’s ten biggest companies, including Samsung and Hyundai Motor, was 946.1 trillion won (US$83.1 billion). This accounted for 76.5% of Korea’s GDP of nearly 1.24 quadrillion won (US$1.1 trillion). [Inequality]
• 2nd Rason International Trade Fair Draws Many Businesses
  Pyongyang, August 21 (KCNA) -- The 2nd International Trade Fair opened on Monday in Rason City, the Democratic People's Republic of Korea. Taking part in the fair are more than 110 entities from various countries and regions including the DPRK, Russia, the Czech Republic, Sweden, China and Chinese Taipei. 408 000 items in 36 000 varieties were on display at the fair, covering electric, electronic, light industry and foodstuff products and vehicles. The number of participants and varieties of exhibits is higher than the previous fair.
• Bikes in Kaesong
  Andray Abrahamian | Friday, August 17th, 2012 Daily NK reported this week that a 20 year old order forbidding the riding of bikes by women was repealed in August. No one seems to know exactly when the order was instituted, nor when it was repealed. North Koreans I talked to disagreed amongst themselves, with some saying the rule had actually been dead for three or four years, and others saying several months. Bikes are Revolutionizing How People Get Around Certainly, whatever they’d been, the rules seem to be another example of Pyongyang exceptionalism: to see a woman on a bicycle in the capital is rare, but elsewhere it is exceedingly common. Moreover, some have estimated that while a decade ago, 30-40% of households had a bike, now it is up to around 70%.
• Entrepreneurship in North Korea
  Geoffrey K. See | Thursday, August 16th, 2012 | No Comments » While giving a talk at the Wharton School in April, I stopped by the Knowledge@Wharton publication to chat about my work. The following are excerpts from the interview. Knowledge@Wharton High School: Geoffrey, thank you for joining us today. Why did you start this organization? Why did you focus on financial education as a way to support long-term economic development in North Korea? Geoffrey See: When I was a student at Penn in 2007, I [chose] to go to China for one of the summers to do research and to intern in China. I had some time during my internship, so I went to North Korea as a tourist. I was familiar with the usual stereotypes of North Korea as a communist country, but what really surprised me was [that] I met university students who were very interested in business and economics. They wanted to get access to books and topics, they wanted to find ways to learn about business, and they were very curious to hear about it, especially from someone who was studying business in a university setting. KWHS: Can you give us a snapshot of economic development today in North Korea? What does it look like? See: [Many] young people there are very interested in trying new things. They want to set up their own businesses. They want to implement the things that they’ve learned and heard from the rest of the world. The problem, though, is that it’s still a very restrictive economy and society, so [they can’t implement] a lot of the things that they want to do. We have discussions with younger people who are trying to implement some of these ideas.
• The DPRK Economy at a Glance
  A 38 North Interview of Dr. Yoon Deok-Ryong with Mike Chinoy “There are many people who are waiting for real policy changes in North Korea because the North Korean government or the leader has promised something bigger in the future. But we don’t see any concrete changes yet.” ~ Dr. Yoon Deok-Ryong In this 38 North video, Mike Chinoy, Senior Fellow at the US-China Institute at USC sat down with Dr. Yoon Deok-Ryong, Senior Fellow at the Korea Insitute for International Economic Policy (KIEP), to discuss North Korea’s economy both as it seems now, and its prospects for improving in the future [Economic reform] [Agency]
• North Korea: change of signs
  Charles K Armstrong , 13 August 2012 Pyongyang looks and feels different under Kim Jong Un's leadership, but how much do new buildings, markets and facades reveal about the direction of policy? Charles K Armstrong, fresh from a visit to North Korea in July 2012, reflects. North Korea’s capital Pyongyang is bereft of commercial advertising but covered with propaganda posters. In recent years, however, one company has been allowed to advertise its products on billboards: Pyonghwa Motors, which is 70% owned by the Reverend Sun Myung Moon’s South Korea-based Unification Church (also known as the "Moonies"). Pyongyhwa is a joint venture with North Korea’s Ryonbong Corporation, and a few signs promoting its "Whistle" sedan - essentially a Hyundai - can be seen in Pyongyang and surrounding areas. [Agency]
• North Korean leader, military waging ‘money war’
  North Korean leader Kim Jong-un speaks to officers during an inspection of Korean People’s Army unit 552 in this undated photo released by the Korean Central News Agency, Aug. 7. Analysts say Kim is working to control the military’s grip on foreign currency. / Yonhap By Kim Young-jin North Korean leader Kim Jong-un has set some lofty goals since taking power in December, calling for better living conditions for the hungry populace and issuing orders that may provide autonomy over agriculture and business. To deliver on these promises, analysts said Monday that Kim has some dirty work ahead of him: seizing control of the country’s shady foreign currency trade dominated by the powerful military and bolstering the influence of party bureaucrats. Some 70 percent of foreign currency business ? some of it illegal ? was reportedly carried out by the military elite under Kim’s late father Kim Jong-il, who led under a staunch “military-first” policy before his death late last year. The recalibration appears to be underway. Reports emerged earlier this month that the regime has shut down the Taepung International Investment Group, a military-controlled conduit for international investment, due to its poor performance.
• N.Korea Praises Vietnamese, Chinese Reforms
  North Korea has been paying lip service to reforms in China and Vietnam in recent days. The president of North Korea's rubberstamp parliament on Tuesday expressed hope that Vietnam will share its experience in socioeconomic construction and development. Kim Yong-nam was speaking in a meeting with Vietnamese Prime Minister Nguyen Tan Dung in Hanoi. The English-language Viet Nam News on Wednesday quoted Kim as saying, "The achievements the country had made in socioeconomic development and national construction were an encouragement to [North Korea] in its national construction and development process." [Context] [Agency]
• Economic reforms appear under way in North Korea
  Posted on : Aug.10,2012 12:07 KST New regime ending rationing and experimenting with self-pricing in specific provinces By Kim Kyu-won, staff reporter Briefings and test projects on economic reform are under way in parts of North Korea, Radio Free Asia (RFA) reported. South Korea’s Ministry of Unification confirmed these activities, but did not identify any specific measures or policies for economic development. RFA quoted a source in North Korea’s Ryanggang province on August 8 as saying that lectures for labor group organizations and factory enterprises had been taking place since Aug. 6 on a “new economic management system.” Speakers described the details and implementation process for the “new economy,” the source explained. [Agency] [Economic reform]
• Opening, Reform & Media Frenzies
  Andray Abrahamian | Friday, August 10th, 2012 There has been, as we noted on this blog last week, a frenzy of speculation on North Korean reform and opening, leading to a headline from yesterday claiming that North Korea has virtually ditched state planning. This news comes from RFA (which has its own particular concerns and standards) and has now been cycled into South Korean English language media. It will not unlikely pop up in some Western media outlets, also. Whatever the veracity of this latest and greatest claim about dramatic change – and there is good reason to be skeptical – it is clear that there has been a shift in media coverage of the DPRK. Why? There are the usual issues that relate specifically to reportage on North Korea. The opacity and unwillingness to abide by western norms essentially mean all bets are off regarding what can be said about the North. The normal journalistic rules don’t apply. Much of the rumor comes from South Korean media and outlets like RFA, who are more willing to quote unnamed sources, both official and otherwise, when constructing a story. But it can also be in large part explained by the Competitor-Colleague concept put forward by Jeremy Tunstell in his pathbreaking 1971 book, Journalists at Work. In this paradigm, a particular journalistic specialist receives regular, usually daily, acts of competitive (and co-operative) behavior from other specialists in his or her field. Asia correspondants are few in number, and Korea correspondants are fewer still. Their interactions are frequent, with offices often in the same buildings or neighborhoods and foreign correspondants’ clubs providing social and professional support. [Media]
• Rare earths bankroll North Korea's future
  By Leonid Petrov Those who travel to North Korea regularly might have noticed that the last couple of years have brought significant improvement in the country's economic situation. Newly built high-rise apartments, modern cars on the roads and improved infrastructure come as a surprise to visitors. It begs the question, where does Pyongyang get the money from? The ambitious rocket and nuclear programs, which North Korea continues to pursue despite international condemnation, are expensive and harmful to its economy. International sanctions continue to bite the Democratic People's Republic of Korea's foreign trade and investment prospects. Regular floods and droughts, animal epidemics and other natural disasters hit the fragile economy even harder. According to expert estimations, the DPRK should have ceased to exist in the mid-1990s, after the Communist Bloc collapsed and Kim Il-Sung died. But North Korea has fully recovered after the famine and even shows steady signs of economic growth. [Minerals]
• Six Out of 10 Households in Debt
  One in five households in Korea is in deficit because of crippling debt, according to a study by the Korea Development Institute released Sunday. "Analysis of a 2011 study on household finances by Statistics Korea showed that 33 percent of indebted households were in deficit, with liabilities surpassing assets at 7 percent," the KDI said.
• Kim Jong Un Visits Combined Stock Farm
  Pyongyang, August 6 (KCNA) -- Kim Jong Un, first secretary of the Workers' Party of Korea, first chairman of the National Defence Commission of the DPRK and supreme commander of the Korean People's Army, provided field guidance to the Combined Stock Farm in Ungok Area. He first visited the beef cattle breeding farm. He looked round all modern processes of the farm to acquaint himself with the production of calves of good stock needed by cattle farms. He said that it is necessary to breed more cattle of good stock high in viability and productivity in order to rapidly increase the production of beef and milk. Then he went round the pig breeding farm.
• N.Korea Shuts Down Military-Controlled Investment Firm
  North Korea's Taepung International Investment Group, established in December 2009 to woo foreign investors, has been shut down due to poor performance, it emerged on Saturday. Experts believe the closure of the military-controlled firm is related to the ouster of North Korean Army chief Ri Yong-ho, who was apparently mired in corruption. Taepung was tasked with implementing key economic development plans and became known to the outside world when the powerful National Defense Commission appointed it as the official conduit to lure foreign capital into the North's state development bank. "When it was launched in 2010, Taepung aimed to attract US$10 billion that year alone and a total of $120 billion in five years," said one government official here. "I believe it failed to achieve tangible results." A Korean-Chinese businessman, Pak Chol-su was first appointed to head the company but was later sacked, while the state development bank was also dismantled. Any mention of Taepung disappeared from the North Korean media at the end of last year. After its closure, a separate foreign-investment body run by the Cabinet is expected to become more influential. The developments are believed to be part of North Korean leader Kim Jong-un's attempts to loosen the grip of the powerful military and give more power to party technocrats. The Asahi Shimbun reported last Thursday that Kim ordered the military not to meddle in efforts to attract foreign capital, and also shut down an organization known as Room 39, which managed former North Korean leader Kim Jong-il's slush funds and directed businesses earning foreign currency through 17 overseas offices and 100 trade firms under its roof. [FDI]
• Troop deployment row halts China-N. Korean island project
  By KOICHIRO ISHIDA/ Correspondent SHENYANG, China—A much-hyped plan by China and North Korea to jointly develop two small islands in the Yalu river has been quietly put on hold because of disagreements about troop deployments. China was to have constructed an industrial complex on Hwanggumpyong and Wihwa islands but the project, which began last year, fell apart because China would not consent to allowing North Korean troops on the two islands. After repeated requests by North Korea to deploy the soldiers, Chinese officials informed their North Korean counterparts in June that they were suspending the development project, North Korean military sources said [SEZ]
• N.Korea's Island Dream Dead in the Water
  A joint project between North Korea and China to develop the North's Hwanggumpyong Island looks dead in the water. Japanese media already reported last month that the project has been stalled due to differences over details since a groundbreaking ceremony in June last year, and on Sunday the Asahi Shimbun said it was suspended last month. "Plans for the project have been announced since 2010, but nothing has come of them because China doesn't think it's economically viable," according to a diplomatic source here. The plan to develop the island was a pipe dream from the start. The biggest problem is that the area is inappropriate for an industrial complex. A child carries lumber along a farm road on Hwanggumpyong Island in North Korea on June 11. "The island was created from deposits by rivers, so the foundations are weak and susceptible to floods," Cho Bong-hyun of the IBK Economic Research Institute said. "You'd first have to build flood walls and raise the ground by 3-5 m. North Korea wants China to do that, but Chinese companies just aren't interested." Beijing reportedly asked Chinese businessmen several times to travel to the North and attend Pyongyang's investment presentations, but they said that unless the North takes care of the foundation work, the project has no business value, a government official here said. The island's proximity to Dandong is another reason for Beijing's lack of interest. China is already developing a new city and an industrial zone there and would rather focus investment on its own projects rather than across the border. [SEZ]
• Clouds of recession gathering over South Korean economy
  Posted on : Aug.2,2012 16:19 KST Government statistics paint a rosy and incomplete picture By Noh Hyun-woong and Choi Hyun-june, staff reporters Economic data issued separately on August 1 by the Ministry of Knowledge Economy (MKE) and Statistics Korea paint a fairly rosy picture of a positive trade balance and tapering inflation. But a closer look shows something much less encouraging. With external factors like the Eurozone crisis and China’s economic slump still very much in play, the shadow of recession hangs heavily over the South Korean economy. To start with, there are clear signs of a drop in the exports that are so important. On July 7, the MKE put total exports at US$44.6 billion. This was down 8.8% from the same month in 2011, the biggest slide since the 8.5% recorded in October 2009. Particularly troubling is the across the board contractions for the country’s export mainstays: ships, LCD displays, general machinery, petrochemicals, steel, and cars. Cumulative exports as of July were also down 0.8% from last year.
• Trade reliance makes Korea vulnerable
  By Kim Tong-hyung The government’s efforts to expand domestic demand have failed, letting its dependence on exports and imports surge over the past years. This may likely open the economy up to great shocks, if the current eurozone crisis gets worse and takes on global proportions. Recent data from the Bank of Korea (BOK) show that the country’s over-reliance on trade has rather strengthened in recent months.

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JULY 2012

• North Korea Economic Reform/Non-Reform
  Geoffrey K. See | Monday, July 30th, 2012 South Korea-based analysts and even the conservative media seem to have caught “reform” fever. Analysts and the media (both South Korean and international) are rushing to point to signs of “economic reform” under the Kim Jong Un government. Even government-affiliated entities appear to be leaking news of business discussions with North Korea in previous years, which only makes the Lee administration in Seoul look more of a lame duck. DailyNK’s Chris Green has written about how some of the those claims are based on rather shaky grounds. Knowing the people making those claims, I actually suspect that some of them are simply using bad data to paper over their true sources – contacts in North Korea that they have. [economic Reform]
• A Question of Interpretation: Economic Statistics From and About North Korea
  By Ruediger Frank Reading Aidan Foster-Carter’s “Budget Blanks and Blues,” I feel inspired to add my own slightly more optimistic thoughts on the analytical value of North Korean annual budget reports, in particular, if contrasted with statistics on its economy in general, a quagmire I have been dealing with for almost two decades now. For an economist, it may seem that there is not much to research in North Korea. True, there is an economy; but we have access to very little of what would usually form the basis of a serious analysis. The main problem is not the reliability of data; there is a lack of numbers in general, even manipulated ones. Some healthy skepticism is also warranted regarding outside reports on North Korean macroeconomics. Too often, such numbers produced by Seoul’s Bank of Korea or published in the CIA World Factbook seem to be a curious product of the market mechanism. Where there is a demand, eventually there will be a supply: if you keep asking for numbers, they will eventually be produced. But knowing how hard it is to come up with reliable statistics even in an advanced, transparent, Western-style economy, it remains a mystery to me how suspiciously precise data are collected on an economy that has no convertible currency and that treats even the smallest piece of information as a state secret. [Statistics] [Intelligence]
• South Korean intelligence agency reports changes to North Korea’s economy
  Posted on : Jul.27,2012 15:39 KST Kim Jong-un and his wife Ri Sol-ju at a resort area located on Rungna Islet on Pyongyang’s Botong river, July 25. (AP/Newsis) Kim Jong-un apparently spearheading moves to extend cabinet control, improve efficiency By Park Byong-su, staff reporter The head of the National Intelligence Service (NIS) reported on July 26 that North Korea is running a task force for changes to the country’s economy on the orders of new leader Kim Jong-un. The remarks were made by NIS chief Won Sei-hoon to the National Assembly Intelligence Committee and reported by the New Frontier Party’s representative on the committee, lawmaker Yoon Sang-hyun. Previous reports and observations indicated that the Kim Jong-un regime was moving to reform the country’s economy, but this marks the first time an intelligence authority has reported such changes. Won also reportedly said North Korea was working to put Workers’ Party of Korea and military economic efforts under the control of the Cabinet, reduce subunit staffing at cooperative farms, expand company autonomy, and raise wages for workers. [Economic reform] [Intelligence]
• A Question of Interpretation: Economic Statistics From and About North Korea
  By Ruediger Frank Reading Aidan Foster-Carter’s “Budget Blanks and Blues,” I feel inspired to add my own slightly more optimistic thoughts on the analytical value of North Korean annual budget reports, in particular, if contrasted with statistics on its economy in general, a quagmire I have been dealing with for almost two decades now. For an economist, it may seem that there is not much to research in North Korea. True, there is an economy; but we have access to very little of what would usually form the basis of a serious analysis. The main problem is not the reliability of data; there is a lack of numbers in general, even manipulated ones. Some healthy skepticism is also warranted regarding outside reports on North Korean macroeconomics. Too often, such numbers produced by Seoul’s Bank of Korea or published in the CIA World Factbook seem to be a curious product of the market mechanism. Where there is a demand, eventually there will be a supply: if you keep asking for numbers, they will eventually be produced. But knowing how hard it is to come up with reliable statistics even in an advanced, transparent, Western-style economy, it remains a mystery to me how suspiciously precise data are collected on an economy that has no convertible currency and that treats even the smallest piece of information as a state secret. A few years ago, a former member of the intelligence community told me on condition of anonymity that most of these numbers are computed out of a roughly estimated base value (a number with many zeros) plus consecutively applied annual estimated change rates. Let me illustrate this: the value of a given item (say, GDP) is estimated to be about 100 million US$ in year one. In year two, it is thought to have grown “a bit,” which some poor fellow under pressure from his superiors then defines as about 2.5%, and boom, in year two the value is 102.5 million. Next year, growth is thought to have been “slightly higher than last year,” which is translated into, say, 3%. The value then becomes 105.575 million. Continue this for a few more cycles, and you know where most of our macroeconomic data on North Korea comes from. Marcus Noland provides a very similar assessment in a recently published article. That said, we can use satellite imagery to determine the amount of arable land in North Korea, even to find out what crops are planted there. We can also use our weather data to estimate the size of any given harvest. Apply world market prices, and you get an estimated value for agricultural output (these prices are not valid on the ground, but who cares). We can also use satellites to estimate mineral resources, and thermal images to estimate an operation rate of major factories. Knowing the technological level of these factories, we can use our experience with factory output as a base, and deduct something due to a low operation rate and low input quality—as long as we do this for every single factory, knowing what is produced there, and hoping we do not overlook any facilities hidden in mountains or inside of larger factories. We can calculate North Korea’s trade through reverse statistics, i.e. asking every country in the world what their trade with North Korea was last year, and then use a little magic to turn cost insurance freight (CIF) into free on board (FOB) and vice versa (import prices and export prices are usually measured differently, including/excluding certain types of costs). Not that this would be impossible; but of course we must hope that all those trading partners of a pariah state subject to numerous sanctions are dumb enough to tell us the complete truth, including their trade in weapons and other illicit goods. Noland (op.cit.) points out additional sources of errors, such as the omission of trade with South Korea and with countries where for technical or political reasons, data on trade with North Korea cannot be obtained at all. [Statistics]
• Is Orascom Looking at Resources in North Korea?
  Geoffrey K. See | Monday, July 16th, 2012 While most reporters are scrambling to cover Ri Yong Ho’s sudden dismissal and analysts are busy giving us the 101 signs of where North Korea is going based on this single event, business people closer to the action in North Korea might be having a different consideration in mind. North Korea is supposedly rich in mineral resources, and there is no shortage of investors salivating at the opportunity to exploit these resources. Andray and I have argued that the “resource curse” can end up supporting marketization in North Korea, while not leading to sustained economic development or political reform, if the resource development process is uncontrolled and poorly parceled out to the various fiefdoms in North Korea. We are wondering whether a serious investor might be moving in big-time to exploit the resources sector in North Korea. [Minerals]
• Could North Korea Have Struck It Rich?
  Kim Jong Il promised that in 2012, North Koreans would witness a new dawn of prosperity. Here's how it could have been done. BY STEPHAN HAGGARD |APRIL 13, 2012 Whatever the opposite of the Midas touch is, North Korea's leaders seem to have it. Located in a region where all of its neighbors have experienced remarkable economic growth, the North Korean economy has stagnated for more than two decades. For the last several years, North Korea's leadership has promised a new dawn of prosperity by April 15, 2012, the 100th birthday of the country's founding leader Kim Il Sung. Instead, the country has bounced from an avoidable famine in the mid-1990s to a disastrous currency reform in 2009 to a costly -- and failed -- missile launch earlier this week. The country now has an annual per capita income of about $1,000, roughly the same as Pakistan. Did it have to be this way?
• Pyongyang Summer Institute in Survey Science & Quantitative Methodology
  Overview The Pyongyang Summer Institute in Survey Science and Quantitative Methodology (PSI) is an interdisciplinary, intensive teaching program of scientific survey methods at the Pyongyang University of Science and Technology (PUST). Beginning as a three-year pilot program from July 2012-July 2014, the Summer Institute is an international joint program administered by Statistics Without Borders, an outreach program of the American Statistical Association, and the 501(c)(3) International Strategy and Reconciliation Foundation devoted to humanitarian and educational programs in the DPRK, in partnership with PUST. The Mission of the Summer Institute •To offer instruction in sample survey methods and statistics to graduate students, college and university faculty, and research scientists from the public sector who may in turn become future generations of survey methodologists, statisticians and interdisciplinary researchers •To deliver pragmatic training for those who expect to use survey methods in their professions in business, international trade, public health, education, agriculture, natural resources, law, medicine, nursing, and other scientific professional domains •To promote creative and innovative ideas on the frontier of interdisciplinary research in partnership with international professional and research associations and institutions as well as preeminent scholars [Training]
• N.Korea Tries Out Agricultural Reforms
  North Korea has embarked on agricultural reforms, reducing some collective farming units and increasing cash crops the farmers can sell in the market. According to an informed source, basic farming units in some areas have been cut down from the present 10 to 25 people to family units of just four to six. These and other agricultural measures were apparently announced late last month. The source said a set amount of land, farming equipment and fertilizer have been distributed to family units, and they have been given greater rights to sell their crops in order to motivate them. Until now, the regime allowed farmers to sell only surplus crops raised on communal plots, but output always fell below targets. "The measures appear to allow North Korean farmers to hand over a set ratio of their crops to the state and dispose of the rest as they wish," said one high-ranking defector from the North. North Korea set up a collective farming system in 1958, but the structure virtually collapsed due to devastating famines during the mid-1990s. The regime now apparently allows some factories to sell surplus output as well. "Since last week, North Korean broadcasts have announced that leader Kim Jong-un has decided to undertake economic reforms to radically improve the lives of the people," the Daily NK, a website specializing in news about North Korea, reported quoting a source in Chongjin. The area, on the North's border with China, was one of the worst-affected areas during the famine. "Agricultural reforms are being carried out on a trial basis in three counties, and 30 percent of grain output will be allotted to individuals," the source said. Some see the measures as a precursor to full-fledged economic reforms by North Korea, but a South Korean intelligence source was more cautious. "To my knowledge, no other developments have been detected yet other than the agricultural reforms being implemented in certain areas," the source said. [Economic reforms]
• North Korean cabinet premier conducting economic inspections
  Posted on : Jul.25,2012 12:15 KST Choe Yong-lim, North Korean Cabinet premier Kim Jong-un regime may be assessing the situation ahead of reform and openness By Kim Kyu-won, staff reporter North Korean Cabinet premier Choe Yong-lim has been on a nonstop campaign this year visiting sites in his country and seeing the situation on the ground. Experts saw this as a sign of imminent reforms and openness, while the South Korean government said it was still too early to tell. The Korean Central News Agency reported on July 23 that Choe had visited the Namhung Youth Chemical Complex to examine the situation there. According to the report, Choe examined a construction pattern for the complex’s planned power supply and held a council meeting to address the matter of ensuring sufficient electricity there, as well as organizational efforts to finish the construction project as soon as possible. [Agency] [Economic reforms]
• Kaesong Firms Start Paying Tax to N.Korea
  South Korean firms in the Kaesong Industrial Complex in North Korea had to pay their first taxes there since it opened in 2004. Four companies paid a combined US$153,000 in corporate income tax on profits in fiscal 2011 this year, according to the Unification Ministry, and one of them was taxed $7,000 for fiscal 2010. The tax regulations were agreed during the Roh Moo-hyun administration on Sept. 18, 2003. Under the rules, firms are exempt from corporate income tax for the first five years after they start making a profit and are given a 50-percent reduction on the 14-percent rate for the following three years. That the four firms have started paying tax means that they have gotten into their stride. A ministry official said more firms are expected to pay income tax to the North from next year because most firms in the industrial park are now making profits. There are 123 South Korean companies in the industrial park employing 51,518 North Korean workers as of last April. Their annual output rose from $14.91 million in 2005 to $400 million last year. North Korean workers' average monthly wage is about $110, but most of that goes straight to the regime. The total amount of wages paid out from 2004 to November last year was $193.58 million. [Kaesong]
• North Korea’s new special economic zone going nowhere
  July 4th, 2012 Author: Leonid Petrov, University of Sydney On 7 June, North Korea announced that it would make two of its islands, Hwanggumphyong and Wihwado, a visa-free zone for foreigners, and subsequently passed a law to this effect. The new Special Economic Zone (SEZ) aims to attract foreign investors by giving them preferential treatment in the payment of tariffs, taxes and land use. But will this change in policy rescue the North from poverty and change things for the better? [SEZ] [Agency]
• South Korea tries to curb mounting household debt and avert a crisis
  By Chico Harlan, Published: July 9 SEOUL — At a time when much of the advanced world is unloading its debt, South Koreans are still borrowing at a feverish rate that economists say is unsustainable — and potentially dangerous. South Korean household debt stands at 155 percent of disposable income, according to the Organization for Economic Cooperation and Development. That’s higher than the rate in the United States at the start of the subprime mortgage crisis and well above the rates in Asia’s other major economies, China and Japan, which emphasize disciplined savings. For more than a decade, the country’s household debt has grown about 13 percent annually, twice the growth rate of the gross domestic product. [Debt]
• KCNA Gives Updates on Rason
  Andray Abrahamian | Tuesday, July 3rd, 2012 | No Comments » KCNA ran a story about Rason on Monday in both Korean and English. The story informs us that the paving of the Road to Rason, which was initially hoped to be completed before the onset of winter last year, is still not finished. It is expected to be completed within 2011. Reports from visitors this spring have indicated that it is “almost done”. One wonders if they plan to have a grand unveiling just before or during the 2nd (Annual?) Rason International Trade Exhibition, which runs from August 20th to the 23rd. The report also mentions that progress is being made on a mixed use railway line from Rason to the border at the Tumen River. It also mentions that plans for the three-nation Tumen triangle tours (to borrow a Koryo Tours phrase) are proceeding apace and that the self-drive Rason tours “are popular”. Following traditional DPRK style, specific numbers are lacking. [Rason]
• Brisk Development in Rason Economic, Trade Zone
  Pyongyang, July 2 (KCNA) -- The development of the Rason Economic and Trade Zone is making rapid progress in the Democratic People's Republic of Korea. The zone is a center of worldwide trade and investment as it links Northeast Asia with Europe and North America. The DPRK's Law on the Rason Economic and Trade Zone was amended and supplemented in December Juche 100 (2011 [SEZ] [Rason]
• Evaporating confidence
  The worsening global conditions appear to be eating into the sales of Korea’s major export items, such as ships, mobile-phones and semiconductors, clockwise from top. Korea Times file Companies paint bleak outlook for 2nd-half exports By Lee Hyo-sik Exports have become Korea’s prime growth engine over the past few years, with prolonged sluggish domestic demand compounded by a corporate reluctance to invest. But outbound shipments have begun losing steam in recent months on lackluster demand overseas for Korean-made products amid the worldwide economic downturn, casting a dark cloud on Asia’s fourth largest economy. Particularly, local exporters are facing great difficulty in selling goods in Europe, which has been grappling with the sovereign debt crisis. Consumers across the continent have tightened their purse strings to cope with rising unemployment and other unfavorable economic conditions. Exports to Europe declined at a double-digit rate over the past year. To make matters worse, the United States and China, two of Korea’s main export markets, are increasingly losing growth momentum, meaning the world’s No. 1 and No. 2 economies are demanding fewer made-in-Korea products. [Trade] [Exports]

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JUNE 2012

• 1-Millionth S.Korean Crosses Inter-Korean Border
  Close to a decade after it opened, the inter-Korean customs office near the Gyeongui rail line north of Seoul processed the millionth South Korean this week. A small ceremony held Wednesday marked the millionth visitor to North Korea, who works for one of the businesses operating in the inter-Korean Kaesong Industrial Complex. The land border in Gyeonggi Province, which opened in March 2003, has mostly been used by government officials and business representatives. Despite strained inter-Korean relations, business continues at Kaesong, with some 400 daily visitors from the South Korean side [Kaesong]
• Printing Factory Jointly Established by DPRK, China
  Pyongyang, June 27 (KCNA) -- The Korea Printing Factory of Tongbaek Printing Joint Venture Company was commissioned with due ceremony here on Monday. The factory is a red camellia in full bloom in the flower garden of DPRK-China friendship, Choe Kyong Guk, director and editor-in-chief of the Foreign Languages Publishing House of the DPRK, said at the ceremony. The factory was jointly established by the Foreign Languages Publishing House of the DPRK and the Oriental Yongli Hong Kong Int'l Investment Co., Ltd. and Jiangsu Zhongcai Printing Co., Ltd. of China. The factory will produce and sell varieties of printed materials and trademarks in the DPRK. The factory will also receive orders from international market. [IJV]
• Budget Blanks and Blues
  Aidan Foster-Carter Last time I wrote in these pages, in late April, “Party Time in Pyongyang,” I promised a Part II. This is a bad habit of mine. To be honest, what happens is this: Enthused by the topic at hand, I write far too much and swiftly reach (or exceed) my word limit. I resolve in all sincerity to return to the topic and the parts I had to leave out. But then life intervenes, other stuff comes along, and before you know it, six weeks have passed. Apologies to one and all. I need discipline, DPRK-style. So it’s hardly hot news any more, but April really was—as we all knew it would be—a very eventful and politically significant month in North Korea. My last article dwelt on some of the political issues. This time I want to focus on policy, especially in the economic realm, and in particular, on the budget—one area where, regrettably, there is more continuity than change. Our starting point, and the bit I left out last time, is the Supreme People’s Assembly (SPA) meeting on April 13—or “Rocket Oops Day,” as it will forever not be known as in Pyongyang. Unlike the rare Workers’ Party of Korea (WPK) delegate meeting two days earlier, the SPA session is a regular annual event. Nominally, the SPA is the ultimate law-making authority in the DPRK; note that the chairman of its Presidium, which makes the decisions when the full SPA is not in session (i.e. 364 days of the year) is the DPRK’s titular head of state, the veteran Kim Yong Nam. It is he who (for instance) receives new foreign ambassadors’ credentials, rather than Kim Jong Il or now Kim Jong Un. In North Korea, the real leaders don’t have time or patience for boring diplomatic niceties. Kim Jong Il met only VIPs, while his son has yet to officially hold a meeting with foreigners of any kind. (Which, after nearly half a year already, is telling as to his priorities—or is he simply not yet ready for such exposure?)
• N. Korean overseas workers forfeit up to 90% of pay: report
  TOKYO (Yonhap) -- North Korean overseas workers are being severely exploited at the hands of the Pyongyang regime, a Japanese newspaper reported Sunday, saying the North's workers take home merely 10 to 20 percent of what they are paid by overseas employers. In a special report, the Asahi Shimbun said North Korean workers dispatched to a joint-venture sewing factory in the Czech Republic, for instance, are paid $150 a month but their actual net income amounts to only around $30, with the rest seized by the regime in Pyongyang. Kim Tae-san, a 60-year-old North Korean who ran the North Korea-Czech joint sewing factory for three years from 2000, told the Japanese paper North Korean workers were able to save only 10 percent of their salaries.
• Hyundai Overtakes Ford in U.S. Market
  Hyundai Motor has overtaken Ford in terms of retail sales in the U.S. market for the first time. Hyundai sold 221,070 vehicles there from January to May this year, compared to Ford's 205,396, according to Hyundai Motor America president John Krafcik on Tuesday. [Auto]
• Why People in N.Korea's 'Rice Bowl' Are Starving
  Thousands of people are starving to death in North Korea's South Hwanghae Province even though it is the country's rice bowl, according to a defector. "Villages in remote mountains can resort to slash-and-burn farming to survive, but in lowland areas where there are only cooperative farms, 30 to 40 people in each village starve to death every year," said Choi Myong-chol (not his real name), who used to handle crop harvests in Haeju, South Hwanghae Province. "The reason is that their entire harvest is confiscated," he told the activist website NK Reform. The Tokyo Shimbun reported in April that 20,000 North Koreans starved to death in South Hwanghae Province after Kim Jong-il's death. "The reality there is that farmers have no choice but to hide rice during the harvest to survive," Choi said. This has happened every year. "This year, authorities appear to have taken extra measures to seek out rice the farmers had hidden," he added.
• Keep Your Eye on the Duck
  By 38 North Once upon a time, there was a television show hosted by Groucho Marx called “You Bet Your Life.” Groucho would waggle his eyebrows and tell the contestants, “Say the magic woid (that’s how it came out) and the duck will come down and give you fifty dollars.” For the past six or seven weeks, the duck has worked overtime. The “magic word” in North Korea is “belt,” and since Kim Jong Un’s maiden speech on April 15th, “belt” has been popping up with unusual frequency in the media. As far as belts go, there seems to be a lot hanging on this one. The last time I checked in with you on these pages, I ventured that the political succession seemed on track in Pyongyang (see “The Paint Dries”). Now, a few weeks later, I’ll venture the same, with this addition: The plot has thickened. [Economic reform] [SK US policy]
• Can Korea halt bleeding in export?
  Operations at a Hyundai car factory in Asan, South Chungcheong Province are suspended in this undated photo. The prolonged eurozone crisis and downturn in China and the United States have triggered concerns over a decline in car exports. Korea Times By Kim Tae-jong The country’s exports, which have slowed in the past few months, are showing little sign of a turnaround in the second half of the year, due largely to the prolonged eurozone crisis and recession in China and the United States, countries Korea has a high dependency on for exports. According to the Korea Customs Service, a trade surplus has continued for four months but the volume of imports and exports has decreased for three months, triggering concerns over a downturn in the local economy.
• Korean firms, Jilin Province to engage in 3.9 tril. won investment projects
  Korean firms and China's Jilin Province agreed to engage in joint venture projects worth 3.9 trillion won (US$3.4 billion), a local business organization said Monday. Under the memorandum of understanding reached in Seoul, 48 South Korean companies and 48 Chinese regional government agencies and businesses will form partnerships to move forward on various business projects, the Korea Chamber of Commerce and Industry (KCCI) said. The two sides will engage in such areas as agriculture, construction, energy, distribution and tourism, South Korea's largest private economic organization said. Lotte Group, the Korea Software Enterprise Association and HS Machinery Co. have expressed interest in business tie-ups with Jilin, which is located in northwestern China and includes Yanbian Korean Autonomous Prefecture. The province also borders North Korea to the south. The KCCI said Jilin is one of China' main heavy industrial hubs with average annual growth in the past three years reaching 13 percent. Such growth promises considerable business opportunities for South Korean companies wanting to diversify into emerging markets. (Yonhap) [China SK] [Northeast]
• Pyongyang International Insurance Seminar Closes
  Pyongyang, June 13 (KCNA) -- The Pyongyang International Insurance Seminar was closed with due ceremony at Yanggakdo International Hotel on Wednesday. Present there were Ro Tu Chol, vice-premier of the Cabinet, So Tong Myong, chairman of the Executive Committee of Management of the Korea National Insurance Corporation who is chairman of the Organizing Committee of the seminar, insurers of the corporation and in local areas and officials concerned. Among those present were Hammam Badr, secretary general of the Federation of Afro-Asian Insurers and Reinsurers, delegates and delegations of companies of Russia, Sudan, Switzerland, Britain, Australia, India, China and Tanzania, and the delegation of the Kumgang Insurance Company of the General Association of Korean Residents in Japan.
• Not all inter-Korean economic projects are stalled
  Posted on : Jun.11,2012 15:44 KST Incheon mayor Song Young-gil and Hankyoreh Foundation for Reunification and Cu lture Chairperson Im Dong-won talk to North Korean workers at a North-South Korean industrial joint factory in Dandong, China, June 9. (by Ryu Woo-jong, staff photographer) Factory in China continues producing soccer shoes in spite of frosty relations By Kim Kyu-won, staff reporter in Dandong At a time when inter-Korean relations have broken down, a small experiment is under way in a small two-story building in the Chinese city of Dandong. The Ari Sports factory is a joint North and South Korean venture that produces handmade soccer shoes. Taking its name from the traditional song “Arirang,” Ari Sports was established in Nov. 2011 with a 500 million won investment from the city of Incheon and 23 workers from North Korea. It is managed not by a North or South Korean organization, but by China’s Yunnan Xiguang Trade. The company is a seed that has managed to sprout in the barren ground of inter-Korean economic cooperation since the May 24 measures went into effect. The May 24 measures were suspension of almost all inter-Korean trade, enacted by the South Korean government in the wake of the March 2010 sinking of the Cheonan warship. [Inter-Korean business]
• DPRK Premier Calls for Boosting Fertilizer Production
  Pyongyang, June 10 (KCNA) -- DPRK Premier Choe Yong Rim visited the Namhung Youth Chemical Complex associated with the leadership exploits of President Kim Il Sung and general secretary Kim Jong Il to learn in detail about the production there. Workers of the complex have increased the fertilizer production determined to make contribution to bringing about a decisive turn in this year's farming by sending more fertilizer to socialist farms true to the behests of Kim Jong Il.
• N.Korea Misses 1st Loan Repayment Deadline
  Deafening silence from North Korea greeted the first repayment date on Thursday for loans given by the Kim Dae-jung and Roh Moo-hyun administrations. The Export-Import Bank of Korea faxed a notice to North Korea's Foreign Trade Bank on behalf of the South Korean government on May 4 informing them of the date of maturity and amount, but Pyongyang ignored it. North Korea was supposed to repay US$5.83 million including principal and interest by Thursday. The amount is the first tranche of maturing loans extended in 2000 of $88.36 million in the form of 200,000 tons of corn and 300,000 tons of rice. Between 2000 to 2007, the South gave the North 2.6 million tons of food worth $720 million. North Korea must repay $875.3 million by 2037 at an annual interest rate of 1 percent. [Debt]
• Three-way cooperative economic zone envisioned in northeast China
  Posted on : Jun.9,2012 16:46 KST Forum in Dandong explores ways of meeting mutual economic goals in politically unfriendly neighborhood By Park Min-hee, Beijing Correspondent in Dandong 70 percent of China‘s trade with North Korea goes through Dandong, a city on the Yalu river. Trucks line up at customs houses to carry freight over the border into Sinuiju in North Korea. It has been one year since a groundbreaking ceremony was held to announce the co-development of the nearby North Korean island of Hwanggumpyong. The main topic of discussion at the Incheon-Dandong-Hankyoreh West Sea Cooperation Forum was the question of whether Dandong and Sinuiju can develop into a setting for three-way cooperation among North Korea, South Korea, and China. Jeon Byung-gon, a researcher at the Korea Institute for National Unification‘s Center for International Relations Studies, said the two cities offer optimal conditions for cooperative trade. The region is a major base for Beijing’s Liaoning coastal development strategy, a gateway for North Korean-Chinese Trade, and the site of a border development project called “One Bridge, Two Islands,” referring to the New Yalu River Bridge, Hwanggumpyong, and Wihua Island. Its proximity to Seoul makes it accessible to South Korean businesses, and its new harbor, IT industrial complex, and new city construction create advantages for drawing South Korean corporate investment. [SEZ] [China NK]
• Kim Jong-un speeches sing a subtly tune on economy
  Posted on : Jun.9,2012 16:35 KST Chinese Analyst points to hints of a turn away from isolationism and towards economic development By Kim Young-hwan, Incheon correspondent in Dandong Jin Zhe, chief secretary of the Korean Peninsula Research Centre at the Liaoning Academy of Social Sciences, argues that North Korea is moving toward openness and economic development in the early stages of the Kim Jong-un era. “We’re even hearing about prominent North Korean figures saying that First Secretary Kim Jong-un ‘must accept any and every idea’ that the people accept and support,” Jin said. “They‘re said to be very intent on developing the economy.” [Kim Jong Un] [Opening] [Agency]
• When it comes to trading with North Korea, it’s no longer business as usual
  Posted on : Jun.7,2012 15:00 KST Lee government severs commercial ties with the North, now businesspeople are being hounded for sending remittances By Kang Tae-ho, senior staff reporter Prosecutors carried out a large-scale investigation of companies involved in inter-Korean trade over the past year. They were seeking evidence of violations of the Inter-Korean Exchange and Cooperation Act (IKEC Act) in their remittances to North Korea. Around 200 such companies were found to have been fined. The fined companies argue that their penalties are attributable to differing interpretations and application of the law by the Lee Myung-bak administration. The same actions were not deemed problematic under the administrations of Kim Dae-jung and Roh Moo-hyun (1998-2008). Those governments took a softer line on North Korea; things changed significantly when the conservative Lee Myung-bak government took office in 2008. The Inter-Korean Economic Cooperation Promotion Committee, under chairman Jeong Yang-geun, estimated that as many as 200 companies involved in inter-Korean trade had been fined as of late May. A biggest change was the Lee government’s May 24 measures, put in place after the March 2010 sinking of the Cheonan warship. The measures suspended almost all transactions with North Korea. [SK NK policy] [Lee Myung-bak] [Kaesong]
• Interview: Bradley Babson on Foreign Investment in the DPRK
  By 38 North 38 North is pleased to announce the launch of a new video series featuring interviews with leading experts, officials, academics and newsmakers on a variety of issues related to North Korea. For many years North Korea has identified 2012 as the year it will demonstrate that it is both a strong and prosperous country. We have focused a lot in recent weeks on the nuclear and missile programs and the question of whether or not North Korea is, in fact, a strong country. But the question still looms whether North Korea can prove to be a “prosperous” country as well. [FDI] [Context]
• A Week of JVIC
  Andray Abrahamian | Monday, May 21st, 2012 | No Comments » Early last week, the Rason City Administration announced that their inaugural Rason International Trade Exhibition of 2011 was going to have a second incarnation this summer. The invitation has been helpfully uploaded on NKeconwatch. As with the video presentations last year, materials for the trade fair seem to be primarily in English, with Chinese as a distant second. This is indicative of a long term goal to have this trade fair (and Rason more generally) develop as something greater than just a two nation affair. Interestingly, The Rason Exhibition Corporation, founded specifically to organize the trade fair, only has advertised offices in two foreign countries: China and in Singapore. [Rason]
• A Question of Leadership
  Peter | Tuesday, April 24th, 2012 | No Comments » In March, Choson Exchange sent a delegation of financial and legal professionals to Pyongyang to conduct a series of workshops on the finance concepts of Asset Liability Management and Risk Management. The workshops took place over the course of two days, and generated good discussions about the approach to banking and finance both inside and outside the DPRK. The anonymous feedback from the attendees generally included comments to the effect of, “this was good, but we need more”. The other major purpose for the trip was to interview candidates for certain academic opportunities abroad. Prior to arriving in Pyongyang, we had created a shortlist of about 7 young North Korean professionals from a pool of 30 resumes. On arriving in Pyongyang, however, an official informed me that some of the unsuccessful candidates were quite disappointed about not making the shortlist. They very much wanted a chance to meet me in person and to be heard. It is important to be faithful to a process, but there are very few opportunities for North Koreans to study abroad. [Training]
• Kaesong Firms Still Suffer from N.Korea Sanctions
  South Korean firms in the joint Kaesong Industrial Complex in North Korea lost about W2 billion each due to sanctions on the North implemented in 2010 (US$1=W1,173). Some 61.8 percent of 200 firms said it has been hard to recover from losses, according to a survey published by the Korea Chamber of Commerce and Industry on Wednesday. Some 24.8 percent said they have recovered slightly and 13.4 percent they have fully recovered. The firms suffered average losses of W1.94 billion, about double the W970 million estimated in a survey right after Seoul imposed sanctions on the North on May 24, 2010. [Kaesong] [Sanctions] [Unintended consequences]

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MAY 2012

• [Editorial] Lift the May 24 measures and get down to business with the North
  Two years have passed since the government halted inter-Korean interchange and trade with its May 24 measures. In that time, we have gained only hostility and discord between North and South. The Korean peninsula has not become a more peaceful place. The social and cultural interchange that made up the bulk of the human exchanges has been completely shut off, as has humanitarian assistance with the small exception of infant aid. The May 24 measures were meant to influence North Korea through economic pressure. As it turns out, many of the South Korean companies that took part in economic cooperation trusted their government to do what was right and have suffered serious losses or gone out of business as a result. [SK NK policy] [Sanctions] [Lee Myung-bak]
• N. Korea's west coast affected by severe drought
  North Korea's western coast region is experiencing severe drought that could seriously affect food production this year, a report by the communist country's state-run media said Saturday. The (North) Korean Central News Agency (KCNA), picked up in Seoul, said that if there is no rainfall by the end of the month, the drought will be recorded as the worst since 1962.
• Iran sanctions could hit SMEs hard
  Import-export firms could have their hands tied by international sanctions on Tehran By Lee Seung-jun and Kwon O-sung, staff reporters An official at a mid-size metal exporting business is on pins and needles after news that Iranian crude oil imports could run into problems as early as the end of this month. Iran is one of the firm‘s main customers. Under the current won-denominated transaction system, in which crude import payments to Iran are received in turn as export proceeds, there is a possibility the company won’t be able to get its money. [Dilemma]
• External debt tops record $400 bil. mark in first quarter
  External debt rose to a record high in the first quarter mainly due to overseas investors buying local bonds and banks' foreign borrowing, the central bank said Tuesday. The country's external debt totaled $411.4 billion as of the end of March, up $13 billion from the previous quarter, according to a report by the Bank of Korea (BOK). The country held $275.1 billion in long-term foreign debt, with short term debt totaling 136.3 billion. [Debt]
• DPRK Premier Learns about Progress Made in Projects for Expanding Capacity of Green Houses
  Pyongyang, May 20 (KCNA) -- Premier Choe Yong Rim, member of the Presidium of the Political Bureau of the C.C., the Workers' Party of Korea, acquainted himself with the progress made in the projects for expanding the capacities of the water culture hot houses of the Pyongyang Vegetable Science Institute and the green houses of the Pyongyang Floricultural Institute Sunday on the spot.
• [Special feature] South Korean businesses frozen out of operation in North Korea
  “The government is choking off what South Korean businesses spent twenty years cultivating, and China’s making off with everything for a song.” By Jeong Eun-joo, Hankyoreh 21 reporter On Oct. 30, 2008, a ceremony was held marking the completion of construction for Pyongyang Hemp Textiles’ factory. Two hundred fifty people had taken a chartered flight in from Seoul to celebrate the event, which had been ten years in the making. The textile company was the first inter-Korean joint company in North Korea, formed through investment by South Korea’s Andong Hemp Textiles and the Saebyol General Company, a firm affiliated with North Korea’s National Economic Cooperation Federation. [Sanctions] [Unintended consequences] [Lee Myung-bak]
• 15th Pyongyang Spring International Trade Fair Opens
  Pyongyang, May 14 (KCNA) -- An opening ceremony of the 15th Pyongyang Spring International Trade Fair took place at the Three-Revolution Exhibition Monday. Present at the opening ceremony were Kang Sok Ju, vice-premier of the DPRK, Ri Ryong Nam, minister of Foreign Trade, and others, delegations of different countries and regions and diplomatic envoys of various countries and staff members of foreign embassies here. A congratulatory speech by O Ryong Chol, vice-minister of Foreign Trade, followed an inaugural speech made by Kim Mun Jong, president of the Korean International Exhibition Corporation. Speakers welcomed delegations of different countries and regions participating in the fair.
  At the end of the ceremony, the participants looked round 1 products from companies of the DPRK, Netherlands, Germany, Bulgaria, Switzerland, the UK, Austria, Italy, Finland, Poland, Australia, Malaysia, Mongolia, China and Taipei of China. [Trade]
• North Korea looking to Singapore and Indonesia for business know-how and investment
  By Associated Press, Published: May 12 SEOUL, South Korea — Less than two weeks after being punished with new U.N. sanctions, North Korea has sent its ceremonial head of state and two top economic officials to Singapore and Indonesia on a trip that appears aimed at drumming up outside investment. Kim Yong Nam, president of the Presidium of North Korea’s parliament, arrived in Singapore on Friday for his first reported trip overseas since late leader Kim Jong Il’s December death. He is to head Sunday to Indonesia with two senior economic officials, according to North Korean state media. Kim, no relation to Kim Jong Il and current leader Kim Jong Un, often represents North Korea abroad. [FDI]
• South Korea’s businesses pay the price for Lee’s tough policy toward the North
  David Guttenfelder/AP - Executives in Seoul vow to never again do business with the North, fearing vulnerability to South Korea’s policy changes. By Chico Harlan, Saturday, May 12, 1:36 AM SEOUL — For much of the previous decade, South Korean leaders encouraged private companies to do business with the authoritarian North, seeing the joint ventures as a chance for both profitmaking and peacemaking. But South Korean President Lee Myung-bak has used a series of increasingly aggressive measures to cut off those deals, in the process forcing South Korean companies into bankruptcy and leaving business executives bitter about Seoul’s policy U-turn. [SK NK policy] [Sanctions] [Dilemma]
• Kim Jong Un Speech 2.0
  Andray Abrahamian | Friday, May 11th, 2012 | No Comments » This week news of Kim Jong Un’s second major speech was disseminated in North Korea and required not one, two, but three pictures to commemorate it. The speech was on land management, with that term being used to cover topics as diverse as forestry, agriculture, road construction, urban renewal and mining. There were a number of interesting things about this speech, but a couple in particular stood out as relevant to Choson Exchange. In the English summary, this stands out: “The Ministry of Land and Environmental Conservation and relevant institutions should conduct brisk joint study, academic exchange and information exchange with scientific research institutions of other countries and take part in international meetings and symposiums to introduce advanced science and technology, he added.” [Training]
• Kim Jong Un's Work on Land Management Published
  Pyongyang, May 8 (KCNA) -- The dear respected Kim Jong Un had talk "On Effecting a Drastic Turn in Land Management to Meet the Requirements for Building a Thriving Socialist Nation" with leading officials of party and state economic bodies and working people's organizations on April 27, 2012. The work was delivered to the participants in a meeting of activists of the general mobilization movement for land management on Tuesday.
• North Korea’s Resource Headache
  By Andray Abrahamian & Geoffrey See May 1, 2012 North Korea’s moribund economy is one that most observers would like to see marketized and internationalized. This is often considered an end in itself, wherein such transformations would expose the country to irresistible forces of social and political reform. Indeed, there’s evidence that changes in economic management are taking place. Instead of heralding some great reform, however, the tapping of North Korea’s rich mineral and fossil fuel wealth can be seen as potentially retarding social change. The idea of the “resource curse,” long debated by development theorists, is helpful in understanding how this might be the case. Rather than spur change, a what we might call “resource-driven equilibrium” might develop in North Korea.
• Will North Korea’s Plans for Foreign Investment Make It a More Prosperous Nation?
  By Bradley O. Babson North Korea has been touting for some time that 2012 is the year it will demonstrate its credentials as a “strong and prosperous nation.” On March 17, 2012, the day after announcing its intention to launch a missile and place a satellite in orbit, the Korea Central News Agency (KCNA) published new foreign investment laws for the two special economic zones it is promoting on the Chinese border: Rason (formerly Rajin-Sonbong) in the far northwest and the Hwanggumpyong and Wihwa Island in the northeast. The juxtaposition of these announcements was most certainly intended to convey that North Korea not only is capable of flexing its high tech muscle, but also has a credible strategy to attract foreign investment and expand trade, and that real and sustained economic growth is just around the corner. The bar on economic expectations was also raised when Kim Jong Un, in his speech on April 15, declared: “It is the Party’s steadfast intention to ensure that the people will never have to tighten their belt again.” [FDI] [Inversion] [Kim Jong Un] [Elephant]
• Kaesong Complex could be given special status
  Negotiators hope industrial complex creates opportunities and incentives for cooperation » Kaesong Industrial Complex viewed from the Dora observation platform, near Panmunjom. (by Lee Jeong-ah, staff photographer) By Kim Gyu-won, staff writer South Korea and China have agreed to designate the Kaesong Industrial Complex an outward processing zone (OPZ). The agreement was made shortly before the two countries’ trade ministers declared the opening of negotiations for a South Korea-China free trade agreement (FTA). China has shown a forward-thinking approach on the issue, which had led observers to predict a positive impact on future OPZ negotiations with the European Union and United States. Such recognition would mean that items produced with raw materials or parts sent to Kaesong by South Korean businesses would be acknowledged as South Korean in origin. [Kaesong] [FTA] [China SK]
• N.Korean Reforms 'Would Be Good for Business in South'
  South Korea's credit rating would improve if North Korea implemented reforms and opened its doors to the world, overseas companies based in South Korea believe. The Korea Chamber of Commerce and Industry polled 300 foreign firms here and found that 65.3 percent of them predicted North Korean reforms would lead to a ratings upgrade for the South. Some 40.6 percent predicted South Korea's rating will improve by two notches, 38.1 percent one notch, 15.6 percent three notches, and 5.7 percent as much as four notches. Choi Kyu-jong at the KCCI said South Korea's rating, which currently stands at A+ on the Fitch ratings scale, could reach Japan's AA or even Hong Kong's AA+. One in three foreign companies said they would increase investment and hiring in South Korea if Pyongyang undertook reforms. Asked about the impact of the North's recent rocket launch on their investment in South Korea, 45.3 percent said they were not affected significantly and 40.4 percent they were daunted only psychologically. A mere 14.3 percent said the missile launch had a direct negative impact on their business here. But a significant 31 percent said they will scale down business plans if inter-Korean tensions heighten due to further provocations by the North. [SK NK policy] [Dilemma]

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APRIL 2012

• More N.Korean Workers to Earn Valuta for Kim Jong-un
  North Korean leader Kim Jong-un recently issued an order to send as many workers as possible abroad to earn hard currency, never mind the risk of defections, according to a South Korean government source. This is a relatively unconventional position given that the North Korean regime has tried to limit the number of workers abroad to prevent "contamination" by foreign influences. The source said North Korea has dispatched over 30,000 workers to some 40 countries around the world and plans to send out another 10,000 this year. "The reason is that sanctions by the international community have dried up North Korea's sources of cash," the source added. [Opening] [Spin] [Labour] [Personalisation]
• Top 1% Take Up Bigger Slice of National Income
  The top 1 percent of earners in Korea account for 16.6 percent of the national income in a stark indication that polarization is particularly marked here. The Korea Institute of Public Finance on Monday said taxation data show that in 2006, a person making W100 million (US$1=W1,141) a year would qualify for the top one percentile of the income bracket. [Inequality]
• Korea falls into low growth trap
  Aging population, declining exports dampen potential By Kim Tong-hyung Even as Korea has cemented its status as an export juggernaut in recent decades, there has always been a sense of uneasiness among businessmen and policymakers about the nation’s place in Asia’s economic future. Their concerns are justified by a glimpse of the map, which shows the country squeezed between two regional giants that move and shake the world economy. Above is China, one of the massive engines driving global capitalism, whose low wages allow it to compete ruthlessly on cost and is quickly earning its stripes as a provider of complex products. On the right is Japan, an old industrial power that continues to set the standards in technology and manufacturing savvy. [Sandwich]
• Pyongyang Personal Perspectives
  Korea Business Consultants (KBC) is pleased to announce the resumption of our ever-popular 'Pyongyang Personal Perspectives' (PYPP) series of networking events. PYPP's bring together speakers with a wide range of personal experience in the DPRK, who will share their personal observations and perspectives in an informal and friendly networking atmosphere.
• Kim Jong-un 'Keen on Economic Reform'
  Hints are emerging from the black box that is the North Korean regime that leader Kim Jong-un aims for some economic liberalization, the Mainichi Shimbun reported Tuesday. [Kim Jong Un] [Economic reform]
• Is N.Korea Abandoning Its Quest for Self-Reliance?
  This undated picture released on Thursday by the North Korean Workers Party newspaper is the first official portrait of leader Kim Jong-un in a suit rather than military uniform. /[North] Korean Central News Agency A congress of North Korea's ruling Workers Party on Wednesday revised regulations replacing many references to the "juche" or self-reliance ideology with "the principles of Kim Il-sung and Kim Jong-il." That suggests that the impoverished country is moving away from disastrous attempts to prosper in total isolation. The official Rodong Sinmun daily on Thursday said the preface to the new party regulations states that its ultimate purpose is to spread Kim Il-sung and Kim Jong-il's principles "to achieve full self-reliance." The preface previously said the purpose was to spread the juche ideology. [Juche] [Media]
• MODINT Sourcing and production countries seminar 19th of April 2012
  organised by MODINT Buying and Production and Modint Logistics. MODINT would like to invite you to join our next seminar on sourcing and production countries. At last edition (october 2011), more than 60 people attended the seminar. This edition, MODINT will focus on one hand on alternative production countries like North Korea and Myanmar. MODINT has found experienced speakers on these two countries. Mr Tjia has visited North Korea several times and also organised trade missions to North Korea (including garment companies) and Mr Vaandrager recently visited Myanmar, leading a multisectoral fact finding mission. Mrs Van der Pols has held various speeches at MODINT seminars in the past. This time she will focus on countries like Bangladesh and Pakistan. Together these speakers are able to share with you thoughts on how realistic these countries are as alternative to China. [RMG]
• Kim Jong-un Stays Out of Economic Affairs
  New North Korean leader Kim Jong-un is staying well away from the impoverished country's economic affairs and concentrating on the military. Out of 35 public appearances Kim made this year, only one -- a visit to the building site of a folk village in Pyongyang on Jan. 11 -- had nothing to do with the military. But even that, according to a Unification Ministry official, "should in fact be classified as a military-related activity as the aim was to boost the morale of soldiers who'd been commandeered to work on the building site." [Kim Jong Un]
• North Korea unveils biggest power station in 1st ceremony marking centenary of Kim Il Sung
  ( Kim Kwang Hyon / Associated Press ) - Clouds are reflected on a reservoir beneath the Huichon Power Station in Huichon City, some 250 kilometers (155 miles) north of the capital, Pyongyang, during an opening ceremony for the facility Thursday, April 5, 2012. The Huichon Power Station, under construction for more than three years, was a favored project of late leader Kim Jong Il, who visited the project five times before his death in December. The opening was the first big ceremony in a month of celebrations timed for the April centenary of the birth of late President Kim Il Sung. By Associated Press, Published: April 5AP HUICHON CITY, North Korea — North Korea on Thursday unveiled one of its biggest construction projects in recent years: a massive hydroelectric power station that is expected to provide the nation with much-needed electricity. The opening of the Huichon Power Station in Jagang Province, north of Pyongyang, was the first big ceremony in a month of celebrations timed for the April centenary of the birth of late President Kim Il Sung. The power station on the Chongchon River, which had been under construction for more than three years, was a favored project of late leader Kim Jong Il. Kim had visited the project at least five times before his December death. Son Kim Jong Un, North Korea’s new leader, visited the construction site with his father in August 2011. The power station is North Korea’s largest, with two dams and a network of underground tunnels. The dams harness water from the Jangja and Chongchon Rivers. A second power station further down the Chongchon River is due to begin soon, officials said. North Korea suffers from an acute power shortage. New economic goals announced in 2009 called for undertaking major construction projects such as the Huichon Power Station as well as modernizing farms and factories in time for the April 2012 festivities. North Korea will celebrate the 100th anniversary of Kim Il Sung’s birth on April 15. North Korea also has announced plans to launch a satellite on the back of a long-range rocket as part of the celebrations. The United States and other nations have urged Pyongyang to cancel the launch, warning that it would be seen as a violation of a ban on missile activity. [Energy]
• The DPRK: An Isolated Nuclear Armed Pariah State or Potential Co-Operative Economic ‘Tiger’
  By Colin McAskill Colin McAskill asserts that “to continue to link economic engagement with the nuclear issue [in the DPRK] proved to be not only counter-productive but foolhardy. Instead the US must continue the bi-lateral approach, announce publicly that the international banking system is open to the DPRK to use and encourage investors to participate directly in its economic development so they don’t have to do so indirectly or clandestinely through China.” [US NK policy] [Exhortation]
• North Koreans eager to learn int’l business norms
  North Korean participants listen during a business workshop organized by non-profit group Choson Exchange in this photo taken March 13 in Pyongyang. / Courtesy of Choson Exchange By Kim Young-jin If North Korea, as in the eyes of some casual observers, is totally sealed off from the outside world, it would follow that there would be little interest there in, say, the intricacies of the global economy. But according to Choson Exchange (CE), a Singapore-based non-profit group that runs business workshops in Pyongyang, interest in such international practices is surprisingly high among participants — allowing the group to explore new avenues of engagement when it comes to the North Korean economy. That interest was demonstrated during a two-day workshop in mid-March that focused on asset-liability and risk management, said CE executive director Andray Abrahamian. It also coincided with the North’s drive to attract more foreign investment into its economy. [Training] [Opening]

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MARCH 2012

• Commercial Lending Workshop – How We Choose Programs
  Geoffrey | Thursday, March 29th, 2012 Early last year, we asked a banker in Pyongyang what finance-related workshops we should implement in Pyongyang and she replied that “Exchange-Traded Funds” and “Private Equity” were topics of interest. We immediately considered these impractical and when we asked why she wanted to learn about the topics, she said that she had come across the words in the Financial Times and was “curious.”* While we encourage our participants to be curious, given limited resources, we had to pick issues where we believe we can make an impact that leads to positive outcomes. The way we do this is through a due diligence process where we identify key priorities of partners on the ground, see if this is in line with developments we would like to see, and decide what kind of workshops could help make it happen. This normally takes 3-4 trips and occasionally a pre-workshop (i.e. a workshop where the purpose is more to find out about a policy issue in North Korea and its associated challenges) before we can identify the opportunity. For our most recent workshop, which focused on systems supporting commercial lending, we started the due diligence phase as far back as 2010 through workshops and extended discussions over several trips. Our North Korean partners have identified aspects of banking knowledge needed for commercial lending, and we agreed that these were key priorities that can be implemented in a 2-3 year time frame. Currently, at least on paper, banks lack a lending system. We believe that for new enterprises to grow and develop, a true lending system needs to be in place to provide capital on a commercial basis. This was the basis for covering risk management and asset-liability matching in our most recent workshop in March 2012, which are systems needed to support commercial lending. *According to a friend who works for the Financial Times, one of the FT reporters had met the same person in Pyongyang and asked her what she thought about FT. Her reply was that FT focused too much on traditional equity coverage, and not enough on derivatives. [Training] [Opening]

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FEBRUARY 2012

• N. Korea's per capita GDP grows 4.7% in 2011: report
  North Korea's per-capita gross domestic product probably expanded more than 4 percent in 2011 from a year earlier on an improved grain harvest and intensified state efforts, a report said Sunday. The North's per-capita GDP for last year is estimated at $720, up 4.7 percent from $688 a year earlier, Hyundai Research Institute said in the report based on the communist country's infant mortality rate and grain production. The North's 2011 per-capita GDP amounts to a mere 3 percent of that for archrival South Korea. "The increase stemmed from better grain crops," the think tank said. "Pyongyang also stepped up its efforts to meet its goal of building a strong and prosperous nation in 2012." According to data by the U.N. Food and Agriculture Organization, North Korea's grain production reached 4.74 million tons last year, up 7.2 percent from a year earlier. Other positive factors were North Korea's expanded trade with China, its staunchest ally and largest benefactor, the existence of an inter-Korean industrial complex in the border city of Kaesong and aid from the international community, according to the report. Pyongyang's trade with China surged 62.4 percent on-year to $5.63 billion last year, the report said. (Yonhap)
• New fish market opens in P'yang
  This is part of a 3,940-square-meter fish market that opened beside the Botong River in the North Korean capital of Pyongyang on Feb. 21, 2012. The (North) Korea Central News Agency posted the photo on its Web site.
• Popular but secretive NK restaurant keeps 'North' part low-key
  PHNOM PEHN (Yonhap) -- The red wooden gates of 400 Monivong Boulevard are difficult to find if you are not looking for them. Only a sun-bleached sign overhead marks them as the entrance to the compound of Pyeongyang Restaurant, a North Korean chain and one of Phnom Pehn's most famous dining destinations. It's also the place that Lee Un-Yong and her fellow waitresses call home.
• Made in North Korea: Business in a 'communist monarchy'
  By Lucy Williamson BBC News, Seoul Continue reading the main story In today's MagazineHow Germany lost the WWI arms race History's shocking fashion trends Quiz of the week's news Glaciers in the heart of Africa As North Korea marks the birthday of its former leader, the late Kim Jong-il, there is still great uncertainty about the direction in which his son and heir, Kim Jong-un, intends to take the country - but if he aims to breathe new life into the economy, he will find foreign businesses keen to exploit any opportunities. A few years ago, a young Swedish man crossed the border into North Korea. In his bags were packed spools of sewing thread and large amounts of cash. Such is the nature of doing business in the world's most closed economy. Tor Rauden Kallstigen was the fresh faced co-founder of Noko Jeans - the first Western clothing label to brand itself Made in North Korea. "In North Korea, they don't produce any materials," says Kallstigen. "Any buttons, any threads, any anything - you have to send everything into the country." And even then, there were still some things that couldn't just be sent in. "Since it was such a small project, we brought the cash for the production with us because it was too complicated to do it the ordinary bank way," he explains. {Media] [FDI] [Bizarre]
• FM denies $3 billion NK investment deal
  Global Times | February 17, 2012 01:18 By Liu Linlin The foreign ministry Thursday denied a South Korean report that Beijing had agreed to invest $3 billion in North Korea's northeastern Rason special economic zone (SEZ) in exchange for leasing three piers for 50 years. "The report was not true," the ministry said in a fax to the Global Times, but added that the two countries had agreed on how to co-develop the SEZ, without elaborating. Citing unnamed sources in Seoul and Beijing, the Yonhap News Agency reported Wednesday that China and North Korea reached the $3 billion investment deal late last year. Under the agreement, China would apparently build an airfield and a thermal power plant in Rason, as well as a 55-kilometer railway track between China's northeastern city of Tumen and Rason, Yonhap said. The two sides broke ground for a joint economic zone in June on North Korea's west coast, on an island in the estuary of the Yalu River. Also on Wednesday, the Tokyo Shimbun newspaper reported that in January, the North Korean government sent a 1,000-strong delegation of trade officials and technicians to China, but did not explain the purpose of the visit. [FDI] [China NK]
• China to Invest $3 Billion in N.Korea's Special Economic Zone
  North Korea and China finally reached an agreement at the end of last year to jointly develop the Rajin-Sonbong special economic zone in the far northeastern edge of the isolated country, it emerged on Wednesday. The zone is seven times larger than the Kaesong Industrial Complex (65.7 sq.km), the site of inter-Korean economic cooperation. [Rason] [SEZ] [China NK]
• Lawmakers visit Gaeseong site amid lingering tensions
  A group of eight South Korean lawmakers crossed the heavily fortified border into Korea on Friday for a rare tour of a joint inter-Korean industrial complex. The parliamentary delegation is scheduled to meet with South Korean company officials in the complex in the North Korean border city of Kaesong and tour the area before returning home later Friday, according to the Unification Ministry. The ministry, which handles inter-Korean affairs, said the parliamentary members, who handle either inter-Korean relations or foreign affairs, have no plan to meet with North Korean officials. [Kaesong] [SK NK policy]
• NK workers at Kaesong park soften stance toward South: official
  North Korean workers at the industrial park jointly operated by the two Koreas have softened their views on the South, a Seoul official said, indicating growing social exchanges despite lingering political tensions on the divided peninsula. More than 50,000 North Koreans work at the complex located in the North's border city of Kaesong, producing clothes, utensils and other goods at 123 South Korean companies operating there. The factory park opened in 2004 amid efforts toward reconciliation following the first inter-Korean summit in 2000. The Kaesong park was kept intact even through recent years of inter-Korean hostility stemming from Seoul's toughened policy on Pyongyang's nuclear weapons program and the North's two deadly attacks on the South in 2010. Speaking to a civic group in Seoul earlier this week, Suh Ho, a Unification Ministry official handling inter-Korean cooperation, said North Koreans at the Kaesong park now exchange nods and share snacks with their South Korean co-workers. In the past, it was common for the North Koreans to avoid eye contact and look away, he said. [Kaesong]
• South Korea to ease ban on heavy equipment at jointly run factory park in North Korea
  By Associated Press, Wednesday, February 15, 4:52 PM SEOUL, South Korea — South Korea says it will ease some restrictions on bringing heavy equipment into an industrial park in North Korea that’s run by both Koreas. Seoul set up the restrictions last year after blaming North Korea for the deadly sinking of a warship. Pyongyang denies any role. South Korean Unification Ministry spokeswoman Park Soo-jin told reporters Wednesday that the restrictions will be eased on a case-by-case basis. The announcement comes after South Korean lawmakers visited the factory park in the North Korean border city of Kaesong last week and relayed South Korean companies’ complaints about the restrictions to the government. The park employs more than 50,000 North Korean workers despite frayed ties between the Koreas. [Kaesong] [Easing]
• Developing the DPRK Through Agriculture
  By Randall Ireson Despite continuing food shortages in the DPRK, the 2012 New Year’s Joint Editorial and other statements related to the succession of Kim Jong Un suggest there will be no new approaches to revitalizing North Korean agriculture. The editorial labeled the food problem “a burning issue in building a thriving country,” [1] but allocated fewer than 150 words (of 5500) to that issue, only exhorting the masses to increase yields, implement crop rotations, and increase production of farm machinery and farm inputs. [Agriculture]
• Lawmakers to Visit Kaesong Industrial Complex
  A group of South Korean lawmakers will cross the inter-Korean border on Friday to visit the joint Kaesong Industrial Complex in the North. Seoul's Unification Ministry said on Monday that Pyongyang has given its consent to the trip. The eight-member delegation will tour the joint park and have talks with representatives from South Korean companies operating there. But the group will not meet with North Korean officials during their visit. The ministry also said that although North Korea looks stable from the outside, it is still struggling with a poor economy under new leader Kim Jong-un. [Transition] [Spin] [Kaesong] [SK NK policy]
• NK restaurant opens in Netherlands
  AMSTERDAM (Yonhap) ? A North Korean restaurant has opened in the Dutch capital of Amsterdam in what could be the communist nation's latest attempt to earn hard currency and foster closer ties with Europe. The "Pyongyang Restaurant" was launched late last month under a joint venture between North Korea and two Dutch businessmen.
• N.Korean Business Zones to Be Included in FTA with China
  The government apparently wants to include the Rajin-Sonbong and Hwanggumpyong special economic zones as external manufacturing regions in free trade talks with China, it emerged on Thursday. Seoul would give the same tariff benefits to products manufactured in the two areas that were given to goods made in the Kaesong Industrial Complex in the South Korea-ASEAN FTA that went into effect in 2007. That would allow three-way trade between South Korea, China and certain regions of North Korea. [FTA] [SEZ]
• Food Distribution to Resume for the First Time in Seven Years
  Date 2012.01.25 Attach 120125_NK Brief.doc Amonth into Kim Jong-un’s ascension to power, it is reported that food distribution is likely to resume nationwide in North Korea. Many experts evaluate this as a symbolic measure to propagate the construction of a powerful economy and improve the lives of the people. For the North Koreans, the most apparent and obvious economic accomplishment is the improvement of the food situation. Thus, North Korea is most likely to take action to normalize food rations as its top priority. According to a statement made by a South Korean government official on January 20, “Kim Jong-un and his leadership will begin the food distribution as a way to prove to its people about changes forthcoming in the new regime.”He also added, “After years of propagation for the building of a strong and prosperous nation, they must demonstrate it to the people with noticeable results.”
• S. Korean lawmakers to visit Kaesong park to hear grievances
  Posted 01/30/2012 12:26 AM ET SEOUL, Jan 30, 2012 (Xinhua via COMTEX) -- A group of South Korean lawmakers plan to visit an industrial park in the Democratic People's Republic of Korea (DPRK) next week to hear grievances of South Korean business operators there, the government said Monday. Eight ruling and opposition lawmakers, all members of the parliamentary committees on inter-Korean relations and foreign affairs, will visit the joint industrial complex in the border town of Kaesong on Feb. 10 to meet with business owners hit by frozen cross-border ties. The lawmakers do not have plans yet to meet with DPRK officials, the unification ministry, which oversees inter-Korean relations, said. [Kaesong] [Sanctions][SK NK policy]
• Business is booming at Kaesong complex
  But challenges remain for North and South Korea in improving their only joint economic project
• Egyptian Businessman Here
  Pyongyang, February 1 (KCNA) -- Naguib Sawiris, executive chairman of the Orascom Telecom Media and Technology Holdings SAE, and his companion arrived here on Wednesday.
• How Failed is North Korea?
  By James Pearson January 31, 2012 In recent years, North Korea has collected an impressive array of very unflattering superlatives. Whether it be the most “failed”, “corrupt” or “undemocratic” state in the world, it manages to frequently top (or bottom) such rankings and indexes. It’s a pattern that emerges frequently, and often places North Korea just a few places below Somalia which, in the case of last year’s Failed States Index (FSI) seemed to confusingly suggest that the two states were almost as “failed” as each other. (A strange comparison to make when the absolute power Pyongyang manages to project across North Korea is the total antithesis of the complete anarchy that exists in Mogadishu). [Corruption]

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JANUARY 2012

• Food rations to N. Koreans on steady rise since October
  01-29-2012 10:42 North Korea has steadily increased its food rations to citizens from October last year, a South Korean relief group activist said Sunday, citing an official from a U.N. organization. "We heard from an official at the Pyongyang office of the World Food Program (WFP) that the amount of food rations increased to 395 grams per person this month," the activist who recently returned from a trip to the North said. According to the WFP, the North's food rations decreased from 400 grams per head in April last year to 190 grams in May and to 150 grams in June. But after the fall harvest, the amount began to rise to 355 grams in October, 365 grams in November and 375 grams in December. This month's amount was up 20 grams from the previous month and also 15 grams more than 380 grams that the North Korean authorities unveiled in a plan delivered to the WFP at the end of last year. The rise in the North's fall harvest last year by 300,000 to 400,000 tons than the previous year seems to be the main reason behind the increased food distribution. Pyongyang is known to have made efforts to increase crop yields by importing an unprecedented amount of fertilizer from China last year. [Fertiliser]
• Ken Frost in Finals of Accountancy Personality of The Year
  He has worked for; KPMG, Philips Electronics, De Beers and in addition to being on the board of Phoenix and Hana Electronics JVC he runs his own internet company.
  About Phoenix Commercial Ventures Ltd
  Phoenix Commercial Ventures Ltd offers investors business and investment opportunities in the Democratic People's Republic of Korea (DPRK), enabling them to take advantage of the economic reforms that are taking place there. [IJV]
• Kaesong Industrial Complex Thrives Despite Cross-Border Chill
  Production at the joint Korean Kaesong Industrial Complex increased more than 14 percent last year. According to the Unification Ministry on Monday, production in the industrial park stood at US$369.86 million between January and November, up 14.4 percent from $323.32 million for the whole year of 2010. The total growth rate will further increase once statistics for December are compiled, the ministry predicted. Except for February's $25.35 million, average monthly production hovered above $30 million. A South Korean government official said the growth “has to do with the increase in the number of North Korean workers, since the industrial park houses labor-intensive companies." [Kaesong]
• NK to provide 400 new workers to S. Korean firms in Gaeseong: sources
  North Korea will soon provide about 400 more North Korean laborers to South Korean companies operating in the joint industrial complex South Korea runs in the North's border town, sources said Tuesday. It is the first time since the death of North Korean leader Kim Jong-il late last month that Pyongyang will send fresh laborers to South Korean firms in the Gaeseong Industrial Park. The provision of new laborers is seen as a signal of the new North Korean leadership attempting to maintain the joint industrial complex, the symbol of inter-Korean economic cooperation, despite the North's repeated denunciations of the Lee Myung-bak administration for allowing only a former South Korean first lady and a businesswoman to visit Pyongyang to mourn Kim's death. [Kaesong]
• Production at industrial Kaesong park expands 14.4% in 2011
  The joint South-North Korean industrial complex in the North's border city of Kaesong saw its production expand 14.4 percent in 2011 from a year earlier, Seoul's unification ministry said Monday. The total production at the Kaesong Industrial Complex reached US$369.9 million during the January-November period last year, up from $323.3 million worth of production for all of 2010, according to the Ministry of Unification. The output during the last month of 2011 has not been tallied yet, the ministry said, adding the on-year growth rate may be far greater. [Kaesong]
• NK’s economic reform
  Replacement of armistice by peace treaty needed It is naive to think that North Korea will soon adopt economic reform. But South Korea and its allies can provide carrots so that the communist country can open its economy to the outside world. Economic reform is the only way of nudging the starving North out of hunger. Yang Hyong-sop, the 86-year-old vice chairman of the Supreme People’s Assembly, has reportedly told the Associated Press (AP) that Kim Jung-un was reviewing the possibility of economic reform. He purportedly said Kim is focusing on creating a knowledge-based economy and is studying cases of economic reform in other countries, including China.
• N.Korea Struggling Under Mountains of Foreign Debt
  North Korea is struggling to free itself from a mountain of debt the economic basket case incurred mainly from friendly communist countries during the Cold War. Seoul estimates North Korea's external debt at about US$20 billion as of this year, borrowed chiefly from the Soviet Union and East European countries before the fall of the Berlin Wall in 1989. [Debt]
• S.Korea Risks Losing W3.5 Trillion in Loans to N.Korea
  North Korea owes South Korea more than W1 trillion in loans provided in the form of food aid and other support, according to government data on Wednesday (US$1=W1,142). If the W2.3 trillion South Korea provided indirectly to North Korea through the Korean Peninsula Energy Development Organization (KEDO) between 1998 and 2006 for the abortive construction of a light-water reactor is included, the total amount of loans swells to around W3.5 trillion. According to the Unification Ministry, the Kim Dae-jung and Roh Moo-hyun administrations gave North Korea 2.4 million tons of rice and 200,000 tons of corn in the form of loans between 2000 to 2007 that the North has to repay over 20 years at an annual interest of 1 percent. [Debt] [Dilemma]
• Rocky economic road predicted for 2012
  Stagflation possible due to high crude oil prices and falling exports By Kwon Eun-jung, Staff Writer In the first month of the New Year, major economic indices are getting worse faster than expected. The situation is bad enough that some have voiced concerns that there may be no way out. ?? Above all, figures for exports, the backbone of the Korean economy, are not good. January exports are expected to be lower than the same month last year, the first negative growth for 23 months. Rising international oil prices affect Korean prices and are emerging as a conundrum. Crude prices have been fluctuating since the beginning of the year due to friction between the United States and Iran. It may become difficult to reach the government’s targets of 3.7% economic and consumer price rises below 3.3%. The grim prospect of stagflation, with low growth and high inflation, is raising its head [Tribute]
• Inter-Korean economic gap remains wide
  North Korean employees sell liquor, tobacco and other products at a foreigner-only shop in Pyongyang in this undated file photo. / Korea Times By Kim Tong-hyung The economic disparity between South and North Korea continues to be as lopsided as a Pyongyang election, official figures show. South Korea’s gross national income (GNI) of $1.015 trillion measured at the end of 2010 was about 39 times larger than the $26 billion managed by the North, according to data from South Korea’s Statistics Korea. The average South Korean took home $20,759 for the year, while his North Korean counterpart earned only $1,074.
• North Korea Enacted the First “Corporate Law”
  Date 2012.01.12 Attach 120112_NK Brief.docx The adoption of Act No. 1194 by the Supreme People’s Assembly of the DPRK was recently confirmed. “The Democratic People’s Republic of Korea’s Corporate Law” or the “Corporate Law” was reported to have passed more than a year ago in November 11, 2010. The “Corporate Law” is evaluated as an important indication of the direction of the economic policy of North Korea since Kim Jong-un was appointed as the next successor at the Third Party Conference held on September 28, 2010. [Economic reform]
• Law on Management of Seed Crops Adopted
  Pyongyang, January 17 (KCNA) -- Law on management of seed crops was adopted in the DPRK by a decree of the Presidium of the Supreme People's Assembly on December 14, Juche 100 (2011). The law consists of five chapters -- introduction of the law, registration of seed crops, production of seed crops, safekeeping and use of seed crops and guidance and supervision over management of seed crops -- and 43 articles. The adoption of the law will help improve the management of seed crops in the country.
• Economic gap between Koreas remains wide
  The economic gap between South and North Korea remains wide with Seoul outperforming its northern neighbor in income level, trade and many other areas, data showed Tuesday.
• Inter-Korean trade drops 10% last year
  Trade between South and North Korea reached $1.71 billion last year, down 10 percent from 2010, government data showed Saturday. The data was posted on the Web site of the Korean International Trade Association. The decline comes as South Korea banned most of new investment in North Korea under its sanctions imposed over the North's sinking of a South Korean warship in March 2010. Despite lingering tensions, the two divided Koreas continue to maintain their joint industrial complex in the North's western border city of Kaesong, which serves as a key legitimate cash cow for the North. (Yonhap) [Kaesong] [Inversion] [Sanctions]
• China-N.Korea Trade Reaches All-time High
  China-North Korea trade reached an all-time high this year with total turnover standing at US$4.6 billion in the January to October period. The Korea Trade-Investment Promotion Agency said Thursday that two-way trade in 2011 jumped nearly 74 percent from the year before. China's imports from the North increased roughly 125 percent, while its exports to the country rose by 47 percent, resulting in a smaller trade surplus for Beijing. Pyongyang's trade dependence on Beijing has steadily increased every year, reaching 83-percent in 2010. The agency forecasts that the Stalinist country's dependence on China will deepen in the post Kim Jong-il era. [China NK] [Trade]

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