DPRK Economy, trade and business14

Economy, economic policy, trade, and business

2014
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Articles on current developments, compiled by Tim Beal.
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DECEMBER 2014

After three years of Kim Jong-un, skyscrapers popping up on Pyongyang’s skyline
Posted on : Dec.29,2014 12:31 KST Children clear snow from Mansu Hill Grand Monument, statues of deceased North Korean leaders Kim Il-sung and Kim Jong-il in Pyongyang. (Xinhua) Moving ahead, for sustained improvement in the economy, Pyongyang will need to show it’s serious about reforms Three years after Kim Jong-un came to power in North Korea, the streets of Pyongyang look much different. The streets of the city are lined with new 40-floor skyscrapers, and taxis drive down them. Before, they had been dark at night, but now they are illuminated by bright lights, while smartphone-toting women are dressed more smartly than before. The unanimous testimony of recent visitors to Pyongyang is that the North Korean city has doffed its drab garb in favor of a coat of many colors. “It was my first visit to North Korea in five years, and I was shocked by how much the atmosphere had changed,” Jang Yong-cheol, permanent director for the Isang Yun Peace Foundation, told the Hankyoreh on Dec. 16. Jang was in Pyongyang for five days in October. “I was surprised to see taxis of various colors not only in front of the Pothonggang Hotel where I was staying but also in every street,” Jang said. “The economy appears to be moving briskly in Pyongyang these days. What particularly stood out were the large apartment buildings being built in various parts of the city and the bustling activity at the markets. You can really feel how much it’s thriving,” said Jin Zhe, Director of Northeast Asia Studies for the Liaoning Academy of Social Science, who also visited North Korea recently. [Economy]
Miracle on the Han River Part II, or Regression to the Mean? South Korea’s Economy in Transition
By Yoon-shik Park DURING the two and a half centuries from 1700 to 1952, Asia’s economy shrank in relative terms from three times that of the combined Western economies to just one-third. The region then embarked on a race to catch up with the West during and after the Korean War of 1950-53, when Japan first blazed new trails in industrialization and launched a robust export drive. From the 1960s onward, the four Asian “tiger” economies — Hong Kong, Taiwan, Singapore and South Korea — followed. From the 1970s, they were joined by the so-called tiger cubs — Thailand, Malaysia, the Philippines and Indonesia. China, of course, soon joined in.
N.Korean Special Zones Leave Foreign Investors Cold
North Korean leader Kim Jong-un has sought to attract foreign investments in the North's economic zones, but the results have been disappointing. The North's ambitious 24 economic zones have attracted almost no foreign investment. The regime has difficulty earning foreign currency in other ways as it is isolated in the international community and its natural resources bring little money due to falling raw material prices. [SEZ] [FDI]
Rason Special Economic Zone: North Korea as It Could Be
By Ruediger Frank 16 December 2014 If you have ever been to North Korea, you might know that feeling: you are in the country, and at the same time, you are not. Foreign visitors usually stroll through the streets as if they are caught inside a huge transparent rubber sphere. They can see and hear, but most of the time there is this invisible but tangible wall between them and the world outside. Foreigners manage to break through that barrier only rarely, and if so, only for brief moments. This is what visitors then speak about with excitement: how they could raise a shy smile from a child, how one of the assigned guides after a long night of drinking finally opened up and provided a glimpse into his personal desires and worries, how they made brief eye contact with a stranger on the street. In the end, this is why most travelers go to North Korea—to look behind the scenes. In addition to the standard images of goose-stepping soldiers on Kim Il Sung square, rising rockets, leaders-looking-at-things, starving children, and nuclear threats, there must be more. But the country does not easily show its real face; xenophobia, nationalist pride and the state’s information policy stand in the way. My own experience during 23 years of researching and visiting North Korea has not been much different. I can count those few moments, when I did not feel like an isolated odd man out, on the fingers of my hands. But this changed dramatically in September 2014 when I travelled to the Northeast and visited the Special Economic Zone (SEZ) of Rason (formerly referred to as Rajin-Sonbong). To get straight to the point: Rason is simply mind-boggling. [Rason] [SEZ]
Income Gap Between North and South Korea Grows
North Korea's per capita gross national income was less than five percent of South Korea's last year, according to data. Statistics Korea on Tuesday said that the North's per capital GNI stood at W1.38 million (US$1=W1,088) in 2013, just 4.8 percent of South Korea's W28.7 million. The gap is even bigger than in 2012, when South Korea's per capita GNI was 18.7 times the North's. The North's trade volume reached a paltry US$7.3 billion, up $500 million on-year but still 146 times smaller than the South's $1.07 trillion. The South produced 55 times as much steel and seven times as much cement as the North, which are major indicators of the mining and manufacturing industries. The South also has 12 times as much electricity generation capacity. There are 19.4 million registered cars in the South, more than 71 times the 271,900 in the North. Statistics Korea for the first time published North Korea's import and export volumes [Comparison] [GDP]
More Abuses of N.Korean Laborers Come to Light
The international media have taken a special interest in the ill-treatment of North Korean laborers overseas since the EU submitted a draft resolution on the North's human rights abuses to the UN General Assembly in October. North Korean laborer sit in an empty lot in Al Zahra, Kuwait on Saturday, one of them holding a phone to take orders for moonshine, which is how overseas North Korean workers earn some pocket money. The Guardian in a feature last month said North Korean laborers are in "a modern form of slavery" racing against time to build the World Cup facilities in Qatar, and take home at best 10 percent of their salary while the rest goes straight into the regime's pockets. On Nov. 22, three miners were burned to death in a coal mine explosion in Sarawak, Malaysia, one of them a North Korean. There had been 46 North Korean miners at the mine, the largest proportion of foreign workers there. [Propaganda] [Media] [Labour]
Free Kaesong Park from Politics, Think Tank Says
A think tank has called for making the joint Korean Kaesong Industrial Complex a politically neutral place ahead of its 10th anniversary on Dec. 15. The Hyundai Research Institute said in a report on Monday that the Kaesong industrial zone should be made a politically neutral region under the principle of separation of politics and economics to minimize exo-economic anxiety risk factors. The Kaesong park started operations in December 2004, and eight years later was manufacturing products worth US$470 million annually, with some 54,000 South Korean staffers and North Korean workers [Kaesong]
Change is in the air in North Korea
Expect better living conditions, but little change in personal liberties, inter-Korean relations December 9th, 2014 Andrei Lankov Recent news leaves little room for doubt: the Kim Jong Un government is far more serious about reforms than I, or indeed most observers expected. According to recent reports, from next year, the North Korean government will implement a set of policies known as the “May 30th Measures.” In a nutshell, these policies presage the dramatic acceleration of reforms that began with the “June 28th Measures” of 2012. If current reports are to be believed, from next year North Korean farmers will be allowed to keep not 30 percent but 60 percent of their harvest for themselves. In addition, they will be allocated large kitchen plots, measuring 1,000 pyeong (or 3,300 m2), which is unprecedented by North Korean standards. It is assumed that the “small production team,” normally consisting of two households, will become the main production unit in agriculture. The “June 28th measures” were largely responsible for the record-breaking harvest of 2013, as well as North Korean farmers’ resilience in the face of drought this year, and the new agricultural policy is designed to make most of their success. However, these are not the only changes to set to be implemented in North Korea in the coming year. (Factory managers) are also to be given the right to manage their workforce as they like, hiring and firing at will Indeed, the “May 30th Measures” also include policies designed to transform industry. The “director responsibility system,” which has been tested in a few select factories and mines this year, is going to be made universal. Under the new system, North Korean factory managers will be given the right to buy spare parts and raw materials freely, from any suppliers that they deem fit, and sell finished products as they like. They are also to be given the right to manage their workforce as they like, hiring and firing at will. Members of two foreign delegations that recently visited the North have told the present author that their hosts emphasized that, under the new system, factory directors will be no different from a CEO in a market economy, and this seems to be the case. All this means that we have good reason to expect a significant improvement in the North Korean economy, even though one should not expect a major economic breakthrough comparable to what China experienced in the early 1980s. Of course, the North Korean government faces a number of difficult problems like, say, a grave shortage of investment capital and a highly unfavorable international situation. Nonetheless, there is little doubt that the new system will be very good for North Korea’s people and the country’s economy. [Economic reform]
Korea feared to follow Japan on deflation path
By Yoon Ja-young Concern over deflation is increasing after inflation fell to the lowest level in nine months. Economists warn that Korea's economy could suffer Japanese-style deflation, if the low level of inflation continues. According to Statistics Korea, consumer prices rose by 1 percent in November from a year ago, marking the lowest growth in 9 months. This is far below the central bank's target of an increase between 2.5- and 3.5-percent.
Will Kim Jong Un ever deliver economic success in North Korea?
December 1st, 2014 Chad O'Carroll Long regarded as the economic basket case of Northeast Asia, since Kim Jong Un’s accession to power there have been increasing signs that Pyongyang may now be serious about much needed economic reforms. From announcing the creation of 20 new special economic zones, reforming foreign investment rules, and improving rules and salaries for farmers and workers, numerous developments since early 2012 have indicated that North Korean policy-makers are increasingly eager to experiment with capitalist approaches. But despite the new policies, evidence also suggests that Kim Jong Un’s government often continues to prioritize politics over economic performance, with the closure of the Kaesong Industrial Complex in 2013 and recent ban of travel in light of the Ebola virus obvious examples of non-business friendly policies. Yet beyond the state level, observers agree that significant changes are afoot on the ground in North Korea, with the significant growth of markets and private enterprise cementing the failures of Pyongyang’s once socialist credentials. What then are the chances that Kim Jong Un will be able to implement major reforms and garner sustained economic growth in the medium to long term? And can rumors of significant forthcoming policy changes ever be expected to deliver given the particularities of the North Korean policy environment? In part seven of the NK News specialist opinion survey series, three economists debated the state of North Korea’s current economic policy, what the biggest economic development has been in the past five years, and what the biggest threat to sustained development in the DPRK economy is today. [Agency]

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NOVEMBER 2014

DPRK Premier Makes Field Survey of Various Factories in Kanggye City
Pyongyang, November 26 (KCNA) -- DPRK Premier Pak Pong Ju made a field survey of the Kanggye Winery, the Kanggye Wood Processing Factory and the Kanggye Pencil Factory in Jagang Province alive with the year end's drive. He went round various places of the winery which has been successfully remodeled under the care of Marshal Kim Jong Un and held a consultative meeting. The meeting discussed the issues of further glorifying the leadership feats of President Kim Il Sung and leader Kim Jong Il, stepping up the construction of raw material bases to keep the production going at a high rate, and improving the quality of goods packing. Learning the production at the wood processing factory and pencil factory which are associated with the loving care of the peerless great persons of Mt. Paektu for the people and the rising generation, the premier underlined the need to push forward with the work to put furniture, finishing building materials and pencil production processes on a modern basis. He stressed the need to boost the production of furniture which are in high demand and increase the production of quality pencils true to the intention of Kim Jong Un. Meanwhile, the premier called upon all officials of Jagang Province including the provincial people's committee to increase the production of cocoon suited to the specific conditions of the mountainous area and, at the same time, remarkably increase the production of meat and eggs at the existing stock-breeding bases and thus unconditionally carry out the behests of Kim Jong Il without fail. Earlier, he went round the Hwanghae Iron and Steel Complex and the Phyongsong Synthetic Leather Factory and took measures to continue directing big efforts to technological updating. He also called on the relevant units to satisfactorily supply electricity and raw materials needed for production. [Regional policy]
North Korea Seeks to Rent Russian Farmland
The Moscow Times Nov. 17 2014 17:56 Last edited 17:56 North Korea wants to rent and farm 10,000 hectares of agricultural land in Russia's far-eastern Khabarovsk region, news agency RIA Novosti quoted a North Korean agricultural official as saying. The reclusive communist country would use its own workers and machinery to produce grain and vegetables on the rented land, the report said, adding that in October, North Korean Foreign Minister Ri Su Yong announced that his state planned to invest $600 million in developing Russian agricultural projects. Russia welcomes collaboration with North Korea, particularly in the construction of greenhouses and livestock farms, RIA quoted Khabarovsk Agriculture Ministry head Alexander Yats as saying. North Korea, a Stalinist-style state whose nuclear ambitions have made it the target of stringent international sanctions, has long sent its workers to labor camps in Russia to earn much-needed hard currency. [Overseas farming] [Media]
Egyptian Telecom Earns $500 Million in N.Korea
Orascom Telecom Media and Technology of Egypt has earned more than US$500 million from its mobile phone business in North Korea. Orascom posted the figure in an audit report on its website. The cash balance of Koryolink, the North Korean cellular network operator in which Orascom owns a 75 percent stake, increased from $510 million in late June to $540 million in late September, according to analysis by accounting firm Deloitte on Sept. 30. But the blog North Korea Tech said due to currency controls imposed by the regime, "that cash isn't readily available" to Orascom to repatriate. The company has recently complained that North Korea is preventing it from sending the money to Egypt and is in negotiations with the regime. In May last year, Orascom said there were more than two million people in North Korea with mobile phones, but it published no official statistics this time. But North Korea Tech quoted an Orascom executive as estimating the number at 2.4 million. [Orascom] [FDI]
Pyongyang’s Perpetual Power Problems
By Curtis Melvin 25 November 2014 While foreign observers and media have fixated on Kim Jong Un’s buildup of entertainment facilities such as water parks, fun fairs and a ski resort, the DPRK leadership has also devoted considerable resources to important infrastructure projects such as energy production, port improvement, highways, railways and airports. However, while it appears the DPRK has placed a public emphasis on the promotion of renewable energy, recent developments indicate that coal power will remain an important piece of the North’s energy policy, particularly for Pyongyang. Estimating North Korea’s Energy Production Estimates of the DPRK’s electrical output vary, but the country’s energy problems have been widely documented.[1] GW GWh/yr Hours of production/year Percentage of yearly hours in production (100%=8,736) Bank of Korea 6.97 23,000 3,300 37.7% Nautilus 2.5 15,500 6,200 71% Data derived from estimates published by the Nautilus Institute. These numbers are difficult to verify since the DPRK has published only limited statistics on its electrical output, and access by foreigners is highly restricted. In documents submitted to the United Nations Framework Convention on Climate Change’s Clean Development Mechanism (UNFCCC CDM), however, the DPRK claimed that between 2005 and 2009, six thermal power plants and eight hydropower plants produced between 22,000 and 23,000 GWh per year.[2] The Bank of Korea’s energy estimates for the DPRK have not changed significantly from 2009, when they reported a 6.93 GW capacity producing 23,470 GWh. This estimate is not strikingly different from 1980, when the DPRK’s electric grid had a capacity of 5.4 GW and output of 25,000 GWh. Of course, the methods and models used to generate this data are unknown to the author. The DPRK’s policy response to power shortages has also been widely reported. It has implemented a rationing system that restricts supply to non-strategic sectors and geographic areas. Coupled with rolling black-outs, the North has tried to maintain large, old coal-power plants while developing new, “sustainable” hydro, solar and wind power (particularly at the local levels). [Energy] [Electricity]
N.Korea's Young Entrepreneurs Embrace Capitalism
North Korea is seeing the emergence of a class of young entrepreneurs who make hundreds of thousands of U.S. dollars from private businesses and spend them on bling much like their counterparts elsewhere. A source says North Koreans who were born in the 1980s and 90s are becoming more active making money as they were able to embrace a wave of changes caused by a nascent market-based economy there. They use smartphones and other gadgets to gather the information they need for their business and have formed nationwide sales networks. The source said in major cities like Pyongyang, Hamheung, Chongjin and Wonsan, these up-and-coming sell smartphones and real estate, run gas stations, lend money, and run coffee shops and retail stores -- a significant change from the pursuits of the older generation. Young property developers buy new apartments, kit them out with materials imported from China, and sell them for a hefty profit. They also set up gas filling stations in major cities or open rest-stops along highways. One recent North Korean defector said mobile phone sales are particularly popular among young North Koreans. A trader buys up to several hundred mobile phones to sell them at retail prices. Others lend money for interest, which has also proven to be a lucrative business. But another source said there are as yet few places where the nouveau riche can spend their money and the risk of getting stung by state security agents is always present.
THE ABCs OF NORTH KOREA'S SEZs
The US-Korea Institute at SAIS is pleased to announce the launch of: "The ABCs of North Korea's SEZs," a new report by Andray Abrahamian, Executive Director of Choson Exchange. In recent years, North Korea has put greater emphasis on economic growth, resuming economic experimentation and putting in place new measures to try to attract foreign investment. More and more, Pyongyang seems to be placing its bets on developing Special Economic Zones (SEZs) to serve as the main engine of that desired growth. While an SEZ strategy is hardly new for the North, the establishment of new SEZ laws and specialized zone development plans seem to indicate a better understanding of what it takes to attract foreign investors. Abrahamian examines the political and economic drivers of North Korea's SEZ development policy and its established zones, and spotlights SEZs with the greatest growth potential. Abrahamian also draws insight from site visits and discussions with North Korean officials, businesspersons and academics to further explore the limitations, challenges and opportunities for North Korea's new and planned SEZs. [SEZ] [Rason]
S.Korea to Import Russian Coal Via N.Korea
South Korea will import 30,000 tons of Russian coal late this month through North Korea's Rajin port. The deal is part of the Rajin-Hassan logistics partnership project between the three countries and involves a consortium of POSCO, Hyundai Merchant Marine and KORAIL. The project is at the core of President Park Geun-hye's so-called Eurasia Initiative, which aims to open trade routes with the mainland. According to the Unification Ministry here on Monday, the Russian coal worth W3.6 billion (US$1=W1,096) will be loaded on a ship at Rajin port and transported to Pohang for use in making steel at POSCO. The steelmaker currently imports around 2 million tons of coal a year from Vladivostok. If the project proves a success, the consortium will acquire half of the 70-percent stake Russia owns in a joint venture with North Korea called RasonConTrans. South Korea halted trade with North Korea after the sinking of the Navy corvette Cheonan in 2010 and cannot invest directly in a North Korean business. A government official said, "The import of Russian resources will boost efforts to link the trans-Korean railway and trans-Siberian railway to a line running all the way to Europe." [TSR] [Rason]
150,000 N.Koreans Sent to Slave Labor Abroad
The international media have put the spotlight on thousands of North Koreans sent to labor on building sites abroad in conditions of virtual slavery. Extensive reports in the Guardian and the Financial Times have found that the North Korean regime pockets practically all the money they earn racing against time to build the World Cup facilities in Qatar and elsewhere. They are involved in construction of the 86,000-seat main stadium for the 2022 World Cup, a top-class hotel complex and two golf courses in Lusail, a new planned city 20 km north of the Qatari capital of Doha. Most of their fellow workers from Vietnam, India and Nepal get off at dusk, but the North Koreans often labor on in the glare of fluorescent lamps until late at night. Some 2,800 North Korean workers in Qatar start at 6 a.m. and continue till after midnight, except for a break for food. But they have to give 90 percent of their salary to the regime. A North Korean official admitted to the Guardian that the workers are not paid directly but claimed the money is paid "to their families." In reality, the Qatari government stands accused of being driven by North Korea's "state-sponsored trafficking for forced labor." [Labour] [Propaganda] [Canard]
Reporters visit Pyongyang on PR junket
By Lee Min-hyung A group of European journalists recently visited North Korea to report on business potential in the country, Radio Free Asia (RFA) reported Tuesday. About 10 reporters visited the repressive state from Oct. 28 to Nov. 8 to report on "doing business in North Korea," according to Paul Tjia, CEO of Netherland-based GPI Consultancy, which organized the trip. He said in an interview with RFA that North Korean officials explained some of the benefits given to foreign business investing in the country, including tax breaks and low labor costs. North Korea is not a member of the International Labor Organization, the U.N agency that seeks to promote fair conditions and rights for workers around the world. Given that North Korea remains one of the poorest countries in the world, there has been speculation that the North is making efforts to attract more foreign investors to patch up its vast government deficit. According to RFA, a number of the reporters were impressed after seeing a number of taxis and newly-constructed buildings in Pyongyang. As the North is one of the most isolated nations in the world, foreigners who gain access to the state are often amazed to see skyscrapers or busy streets in Pyongyang. Reporters also visited clothing factories, animation production companies, software development companies and a number of warehouses, RFA reported. Tjia added that he was surprised to see a crowd of North Koreans at a horse-riding track. According to the media, the reporters interviewed North Korean citizens and videotaped them fairly freely in Pyongyang. Considering that North Korea has imposed a strict crackdown on information sharing by foreign media, this was surprising to the reporters on the junket. [Media]
N.Korea Eyes Transcontinental Railway
North Korea claims that a trans-Siberian railway project being pursued with Russia will link the isolated North with Europe over the long term. The project began late last month, first to connect the two stations in the Jaedong coalfields in South Pyongan Province and the country's western port of Nampo. Kim Chol-ho, a spokesman for the North's railway ministry, told the Tongil Sinbo weekly last week that the railway project is only the "first phase" of a transcontinental railway connecting the two Koreas, Russia and the rest of Europe. Kim said the 20-year project will modernize more than 3,000 km of the North's railroads and eventually realize the 2001 Moscow Declaration that called for a trans-Siberian railway from South Korea.
But experts hold out little hope. Cho Bong-hyun of the IBK Economic Research Institute in Seoul said, "Although North Korea and Russia agreed to modernize the North's railway system, the project still faces many variables and North Korea appears to think that South Korea's participation is vital." [Railways] [TSR] [Eurasian landbridge] [SK NK policy]
China, Russia Vie Over N.Korean Economic Zone
The Chinese town of Fangchuan at the mouth of the Duman (or Tumen) River that runs through the border with North Korea overlooks both the North's Rajin-Sonbong region and the Russian town of Khasan. The geography has made the North Korean economic zone a hotly contested piece of land between Beijing and Moscow. North Korea shocked China in 2008 by signing a contract with Russia loaning out a port in Rajin-Sonbong for 50 years, recalls Lee Jong-lim at Yanbian University. "That incident prompted China to take a more aggressive approach in developing the Tumen River region." Vehicles headed for the Rajin-Sonbong economic zone in North Korea wait in line for customs clearance in Hunchun, China on Monday. Vehicles headed for the Rajin-Sonbong economic zone in North Korea wait in line for customs clearance in Hunchun, China on Monday. In 2009, China produced a blueprint for development of the Changchun, Jilin and Tumen regions along the border with North Korea. "This plan shows that China was not going to wait for multilateral cooperation with South Korea and Russia but take the lead in investing in the region to gain an advantage." [SEZ] [Rason] [Triangular]
North Koreans working as ‘state-sponsored slaves’ in Qatar
Defectors claim Pyongyang regime pockets 90% or more of earnings made by migrants working on construction sites in Qatar, where preparations are under way for 2022 World Cup • Qatar’s ambitions driven on by North Korean ‘forced labour’ Pete Pattisson in Doha The Guardian, Friday 7 November 2014 12.43 GMT Thousands of migrant labourers from North Korea are toiling for years on construction sites in Qatar for virtually no pay – including on the vast new metropolis that is the centrepiece of the World Cup – in what may amount to “state-sponsored slavery”. According to testimonies from workers and defectors, labourers from the reclusive state said they receive almost no salaries in person while in the Gulf emirate during the three years they typically spend there. They work in the expectation they will collect their earnings when they return to North Korea, but according to a series of testimonies from defectors and experts, workers receive as little as 10% of their salaries when they go home, and some may receive nothing. One North Korean worker at a construction site in central Doha told the Guardian: “We are here to earn foreign currency for our nation.” [Labour] [Canard] [Diversion]
Kaesong Industrial Complex: One Year after Resuming Operations
The Kaesong Industrial Complex (KIC) was reactivated on September 16, 2013 after a five-month shutdown due to North Korea’s withdrawal of North Korean workers from the complex. One year has passed without interruption of operations. However, while most of production activities were resumed to pre-shutdown levels, previously discussed agreements between the two Koreas are not meeting expectations in terms of transportation, customs, communications, security for personnel and vehicles, upgrades to meet international standards, and normalization for development of the KIC. The tentative suspension of the KIC lasted from April 8 to September 16, 2013. During this period, all aspects of both production and export were frozen completely. After restarting operations, gradual progress was made, with production in October 2013 down only 32.7 percent compared to March of the same year (pre-suspension), totaling approximately 30.8 million USD. By May 2014, average monthly production totaled nearly 42.8 million USD, showing a strong recovery to a total of 93.5 percent of pre-suspension production capacity. After resuming operations, companies at the KIC experienced problems such as loss of capital, cancelled contracts by buyers, order quantity reduction, and other problems which caused uncertainty about the future of the complex. In spite of this, companies at the complex were quickly able to recover due to their own efforts and the support of various related organizations. [Kaesong] [Joint US military]
North Korea May Have Two-Thirds of World’s Rare Earths
A new estimate suggests that North Korea may have more than 6 times the amount of rare earths as China. By Zachary Keck January 22, 2014 A U.K.-based private equity firm has found the largest rare earth oxides deposits in the world in North Korea, according to statements by the company. The British firm, SRE Minerals Limited, announced the results of its assessment of North Korea’s deposits last month. Most notably, the company said that it estimates that the Jongju deposit holds 216 million tons of rare earth oxides, which includes light rare earth elements (REEs), heavy REEs, and rare earth minerals. According to Voice of America, this would more than double the current global stockpiles of rare earth oxides, which the U.S. Geographical Survey recently estimated at 110 million tons. Rare earth elements are used in many sophisticated technologies from cell phones to guided missiles. Although they are not especially rare, China controls upwards of 90 percent of the market due to its more lax regulations than Western countries in mining REEs. At times China has shown an inclination to use its near monopoly on REEs to exert leverage over other countries in political disputes. It has long been known that North Korea sits on top of significant REE reserves, among other minerals, however SRE Minerals’ estimate is significantly higher than previously thought. Theoretically, the discovery could break China’s stranglehold on the REE market, as North Korea would have over six times the amount of REEs as does Beijing. Moreover, environmental regulations and labor conditions would not be a factor in mining them in North Korea, as they are in many developed countries. [Rare earths] [Minerals] [FDI]
Largest known rare earth deposit discovered in North Korea
Frik Els | December 5, 2013 Largest known rare earth deposit discovered in North KoreaThere are REEs in them thar hills Privately-held SRE Minerals on Wednesday announced the discovery in North Korea of what is believed to be the largest deposit of rare earth elements anywhere in the world. SRE also signed a joint venture agreement with the Korea Natural Resources Trading Corporation for rights to develop REE deposits at Jongju in the Democratic People’s Republic of Korea for the next 25 years with a further renewal period of 25 years. The joint venture company known as Pacific Century Rare Earth Mineral Limited, based in the British Virgin Islands, has also been granted permission for a processing plant on site at Jongju, situated approximately 150 km north-northwest of the capital of Pyongyang. [Rare earths] [Minerals] [FDI]
N. Korea’s currency problems go deeper than money
Regime-watcher talks about the consequences of Pyongyang’s failing currency September 30th, 2014 Doyun Kim As of now, the highest denomination of currency in North Korea is 5,000 won, which in reality is only worth 70 cents. It isn’t practical or reliable, and its users have lost faith in their government’s ability to create an economically viable currency. None of this changed in August when state officials announced the replacement of the 5,000 won bill. In fact, the most memorable aspect of this replacement was the disappearance of state leader Kim Il Sung’s face from the bill. Although at least economically this change wasn’t as dramatic as the 2009 currency revaluation debacle which left many North Koreans devoid of their savings, it is a sign that the regime may be attempting to revitalize its currency. Chris Green, manager of international affairs at the Daily NK, spoke with Kurt Achin for the NK News podcast on this matter. Both locals and experts, he said, have speculated that the replacement of the 5,000 won bill signifies the issuing of a 10,000 won bill, but this is unlikely to be anything more than a minor improvement. LOSING FAITH Prior to the replacement of the 5,000 won notes, North Korean officials had openly discussed plans with the chairpersons of people’s units, informing the public that there will be unlimited 1:1 exchanges at local state banks, and the face of Kim Jong Il will be featured on the front of the bill. [Currency] [Canard]

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OCTOBER 2014

Business with North Korea (Beijing 27 October)
In the current financial and economic situation, European companies face many challenges. They must cut costs, develop new products and find new markets. In these fields, there are interesting business opportunities with North Korea. It is opening its doors to foreign enterprises and it has established free trade zones to attract investors. Most of the North Korean trade is currently taking place with China, which grew in 2013 by over 10% from that recorded in 2012. A growing number of European firms are exploring the country as well, for example companies whith production facilities in China, and where the wages are rising fast. There are several sectors, including garment production, agribusiness, fishing, shipbuilding, logistics, mining/rare metals, animation and Information Technology that can be considered for trade and investment. Doing business with North Korea has always been challenging, but it is now less complicated than it was in the past. And with the continuing tensions and the ‘Cold War’ climate around North Korea, it is important to find new ways for engagement and to create more trust and cooperation with this country, and improving trade relationships could help. Do you want to be informed about these new business opportunities? Then join our unique afternoon event in Beijing on 27 October. Three European speakers will address various aspects of doing business with North Korea, and will also share their own experiences.
Weiss Röhlig Launches Trans-Siberian Rail Service
31 March 2011 Weiss Röhlig, a global logistics provider, has launched a new Trans-Siberian container service from the Russian Far East into Russia and Central Asia. The service connects China, Korea, Japan, Taiwan and Southeast Asia with more than 2,000 railway stations in the emerging markets of Russia and CIS countries. The rail head is located close to the ports of Vladivostok and Vostochny providing an intermodal hub for intra-Asia carriers to connect into the Trans-Siberian rail network. The Trans-Siberian service connects through the Moscow hub and then cargo is moved on to Russia and Central Asia. “Demand is increasing to provide direct services from China to Russia and Central Asia via rail, rather than shipping to Northern Europe and then connecting to the European rail network,” said Franco Ravazzolo, manager project logistics and break bulk “Our customers are looking for more flexible options in terms of time to market and cost and rail freight allows us to deliver direct to customers in inland areas of Russia and the CIS taking out the ocean leg,” he added. Transit times from Vladivostok and Vostochny to Moscow are between nine and 10 days with one or two days clearance needed at port. Weiss Röhlig also operates its Trans-China route connecting the east of China to Central Asia including Kazakhstan, Uzbekistan, Turkmenistan and Tajikistan. [Eurasian landbridge] [Railways]
Via container trains from Europe to China and back
About three weeks of transport time and not less than a 10,000-kilometer journey: DB Schenker Develops Eurasian Land Bridge as an Alternative Transportation Route between China and Europe The first container train of 2012 departed from Chongqing Loading Yard in Sichuan Province on its return journey to Germany in the end of March. After temperatures as cold as minus 30 degrees Celsius brought the trains, which are loaded with temperature-sensitive freight, to a halt for the winter, one train now travels to Germany via Moscow every Friday. The weekly transport is commissioned by a customer in the electronics industry, which has production facilities in Chongqing, a city of some 30 million people. The company has relied on the Eurasian Land Bridge as an alternative route for the exchange of goods between Asia and Europe for some time. Last year, DB Schenker was contracted to operate eleven of these dedicated company trains. DB Schenker has operated trains from Germany to China since September 2011. [Eurasian landbridge] [Railways]

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SEPTEMBER 2014

DPRK Strives to Implement Int'l Maritime Instruments
Pyongyang, September 26 (KCNA) -- The Democratic People's Republic of Korea has striven to meet the demand of the International Maritime Organization (IMO) calling upon all its member states to creditably carry out international maritime instruments beneficial to the development of maritime affairs. Jon Ki Chol, deputy director-general of the DPRK's Maritime Administration, said this on World Maritime Day of 2014. From the point of view of the status and significance of marine transportation, the DPRK, surrounded by three seas, has made effort to discharge its international legal obligations and responsibility for ensuring the safety of shipping and preserving cleaner marine environment, he noted, adding: The country has adopted and implemented such national legislations as "Law of the DPRK on Maritime Superintendence", "Law of the DPRK on Ship Safety" and "Law of the DPRK on Seafarers".
Pyongyang International Airport nearing completion
Developments observed by multiple sources as workers attempt to complete project by October 10 September 24th, 2014 Hamish Macdonald The construction of the Pyongyang International Airport is entering its final stages, with work advancing on the main terminal and runways, sources within North Korea confirmed to NK News. The large scale infrastructure project is scheduled for completion on October 10, and while the exact date it is expected to open is unknown, steady progress is being made. “Part of the military construction units involved are on one side completing construction of the main terminal building and on the other side they are building a new runway,” a source based in Pyongyang, who requested anonymity, told NK News. It has also been observed that high quality concrete has been laid over what was previously described as “a pretty uneven” runway. The source said that with increased pressure to finish the airport by October 10 comes increasingly difficult conditions for the construction units tasked with its completion. “Everything at the airport must be ready by October 10, which once again leads to ‘Korean speed’ and slavery work of the soldier-construction workers,” the source said.
Tech Start PY - Can North Korea create a startup culture?
September 10, 2014 Korean participants play Angel Investors by investing fake money in ideas other participants created and pitched in a workshop Korean participants play Angel Investors by investing fake money in ideas other participants created and pitched in a workshop We just completed a two-week workshop in North Korea as part of our “Tech Start PY” program in August. Tech Start PY is focused on helping build an entrepreneurial culture and a supportive environment for startups in North Korea. Tech entrepreneurship in North Korea might seem to be an odd notion. This, after all, is an industry that requires Internet access and smartphone usage. Entrepreneurs also need to be plugged into a highly connected global network of venture capitalists, entrepreneurs, programmers and users to compete at the cutting edge. Despite the handicaps that they face, Korean researchers and businesspeople were keen to learn about the topic and especially how they can commercialize research. The researchers we interacted with admit that they lack entrepreneurial experience, and hope to gain exposure to entrepreneurs and venture capitalists to bridge the divide between research and industry. [Training]
N.Korea Woos Foreign Investments for 'Tourist Zone'
North Korea on Saturday held an investor blitz in Dalian, China that surprised participants by allowing potential investors to ask frank questions and receive answers on the spot. So far North Korean investment drives consisted of officials reading out scripted speeches and taking no questions. The seminar was led by O Wung-gil, who heads the development of a special tourist zone in Wonsan. Ri Sin-yol, his deputy, gave a power-point presentation at the Shangri-La Hotel in Dalian. He said, "There are around 40 cities near Wonsan and Mt. Kumgang that are less than three hours away by airplane and have more than a million residents." Ri said, "Our goal is to attract one million tourists annually." Around 200 ethnic Koreans from the U.S. and China attended the blitz. [FDI] [Sanctions] [Tourism]
Effects of Unification: Unification of Korea to Create US$200 Billion of Economic Effects for Surrounding Nations
19 September 2014 Minister of Unification Ryu Gil-jae delivered a congratulatory speech at the international seminar for “analyzing benefits and costs of Korean unification for four surrounding countries” hosted by the Korea Institute for International Economic Policy (KIEP) in the Conrad Hotel located in Yeouido, Seoul on Sept. 17. Professionals from the U.S., China, Japan, and Russia all claimed that unification of Korea would be a jackpot for all the surrounding countries. Over US$200 billion in economic benefits were calculated from analyses on various simulations. Marcus Noland, executive vice president at the Peterson Institute for International Economics, evaluated, “If Korea is unified upon the rapid breakdown of North Korea, and North Korea is absorbed into South Korea, economic sanctions on North Korea will be lifted immediately without any complicated legal and political problems. Then trading with the U.S. will increase at least US$960 million, and growth will reach US$20 billion after ten years.” Jin Jingyi, professor at Peking University, analyzed, “If Korea is unified peacefully, the GDP of three Northeast provinces in China – Liaoning, Jilin and Heilongjiang – which have been underdeveloped due to insufficient trading and foreign investment, will enhanced by more than US$162.6 billion.” - See more at: http://www.businesskorea.co.kr/article/6418/effects-unification-unification-korea-create-us200-billion-economic-effects-surrounding#sthash.6FvL8Ek5.dpuf [Unification benefit] [MISCOM]
N.Korea Struggles with Nascent Market Economy
A struggle is underway in North Korea between supporters of the free market and those who back a more planned development scheme, according to an expert in Dandong, China. The same thing happened in China in the mid-1980s as it attempted to embrace capitalism. The expert said there are 25 open-air markets in Pyongyang alone with 4,000 stalls. Two traders share each stall taking turns every other day, which means that 8,000 people are selling products in each market or 200,000 in Pyongyang. Assuming the average North Korean household consists of four people, that would mean some 800,000 people in Pyongyang rely for their income on the nascent market economy, or 40 percent of the capital's total population. "North Korea is crossing the point of no return," the expert said. But there are fears that the regime could some day pull the plug on these developments, just as it did following a botched currency reform in 2009, by cracking down on traders. Hyun Dong-il at Yanbian University said, "Major changes are taking place in North Korea, but the ruling elite says it is still intent on adhering to the planned, socialist economic model." North Korean academics studying at Yanbian University apparently say that the changes are "temporary" measures aimed at dealing with the problems in the state rationing system and that any signs of a free-market economy will be snuffed out once the system is up and running again. But other experts have a different take. Lee Jong-rim at Yanbian University said, "North Korean academics probably have to say that to sound loyal to the regime. When I meet them, I talk to them about the path China has taken." [Marketisation]
Economic Freedom Improves in N.Korea
North Korea is letting more private companies operate independently and tacitly tolerates individuals who set up their own business, with some improvements to living standards in the impoverished country. The main reason is that the North's state-run food ration system has collapsed after years of economic stagnation, and open-air markets have sprung up everywhere to fill the gaps. [Marketisation]
Gaeseong Industrial Complex to offer service for foreign investors
Posted : 2014-09-10 15:15 Updated : 2014-09-10 18:01 By Yi Whan-woo The management of Gaeseong Industrial Complex (GIC) will seek foreign investors, the Ministry of Unification said Wednesday. The ministry said the inter-Korean industrial park in the border city of Gaeseong in the North will open a help center for international investors from Friday. "Our help center will be convenient for foreign firms that are interested in launching businesses at the Gaeseong Industrial Complex," a ministry official said on condition of anonymity. "It will also be effective in attracting global investors who operate businesses in South Korea." Only 125 South Korean enterprises currently run plants at the industrial park, jointly run by the two Koreas since their agreement to build it in June 2000. The ministry said interpretation, including into English and Chinese, will be available to promote the GIC, which is 10 kilometers north of the Demilitarized Zone. According to the government, Seoul and Pyongyang reached a consensus in September last year to open the doors to non-Korean investors. The regime had temporarily shut down the complex from April last year in protest against an annual joint military exercise between South Korea and the United States. [Kaesong] [FDI] [US Joint military]
N.Korea-China Development Project Gathers Dust
Hwanggumpyong Island in the mouth of the Apnok River separating North Korea and China was once considered a new symbol of economic cooperation between the two countries. But now the area looks derelict. Last week there was still only farmland surrounded by barbed wire fences. The only structure was a small building that appeared to have been built to oversee the envisioned development project. In 2011, North Korea and China hatched ambitious plans to develop Hwanggumpyong into an economic zone for IT, light industry, agriculture and tourism. But the project died with the execution in December last year of former North Korean eminence grise Jang Song-taek, who was Pyongyang's point man in dealings with China. Jang, once considered the most powerful official in North Korea, had spearheaded the project. But China apparently still plans to complete construction of a bridge crossing the Apnok River in late October, so it remains to be seen if the project will be revived. [Hwanggumpyong] [SEZ]
[Special series - part II] South Korea’s sinking shipbuilding industry
Posted on : Sep.6,2014 10:21 KST Domestic shipbuilders retain a competitive advantage, but demand is still sagging after global financial crisis By Jeong Nam-ku, staff reporter On April 11, 2011, the stock price of Hyundai Heavy Industries - South Korea’s largest shipbuilder - was 554,000 won (US$541.20) per share. On July 14, about three years and three months later, it had fallen to 163,500 won, less than a third of its former value. This year, the stock prices of publicly traded shipbuilders have been trapped in a downward spiral. Through July 11, the shipbuilding index at the Korea Exchange had fallen by 31.1%, a bigger drop than any other business sector. Financial experts are even projecting that Hyundai Heavy Industries will post a loss for the year. Through May, the company had only managed to reach 30% (US$8.7 billion) of its new order goal for the year (US$29.4 billion). The situations at other shipbuilders are largely the same. South Korea’s shipbuilding industry, which has been battling China for the top spot in ship orders, is in big trouble. According to data released at the beginning of July by Clarksons, an English firm that analyzes the shipping and shipbuilding industries, the ship orders received by Korean shipbuilders in the first half of 2014 amounted to 5.55 million CGT (compensated gross tonnage, an adjusted figure that reflects the difficulty of construction). This was only 61% of the 9.09 million CGT in orders received by Chinese firms during the same period. In 2013, Korean companies received US$25 billion worth of orders for LNG carriers, which was US$4 billion ahead of China, but this year the value of orders is down to US$13.2 billion, US$1.3 billion behind China. China is effectively cornering orders for low-cost ships, such as bulk carriers and tankers. [China competition] [Sandwich]
Hard times for S. Korean steel makers
Posted on : Sep.5,2014 21:40 KST Modified on : Sep.5,2014 21:45 KST Steel giants plagued by excess supply from cheaper Chinese competitors and slipping global demand By Kim Jeong-pil, staff reporter The years that followed the 1997 Asian financial crisis were a blessed time, at least for those companies that managed to weather the crisis. These firms received a triple boon: the vast economic vistas opened up by a series of free trade agreements, numerous corporate tax cuts, and low interest rates. The weak value of the South Korean won also bolstered export firms. As a result, corporate earnings skyrocketed. But recently, these companies’ performances have been worsening. Companies in the electronics and automotive sectors are enjoying some stability, but those in most other business sectors are going downhill, and the slope is steep. The Hankyoreh will diagnose the precarious position of six key industries that are casting a shadow on the future of the Korean economy. [China competition]

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AUGUST 2014

Korea Slower Than Many in Catching Up with U.S.
Korea is slower than Asian rivals like China, Singapore and Taiwan as well as advanced countries such as Germany and Japan in catching up with the U.S., according to a survey. Korea ranked 23rd in the world with 26 points out of 100 in terms of economic growth speed in 2013 based on a joint survey by the Chosun Ilbo and Seoul National University led by Prof. Lee Keun. The survey evaluates how well countries can catch up with the world's economic superpower based on their income level -- purchasing power parity per capita -- and the scale of their economy in the global economy. Korea's GDP per capita based on PPP stood at US$28,644 last year, accounting for 1.7 percent of total global GDP. But tiny Singapore came fourth with $55,739, Japan fifth ($31,846), China sixth ($8,496), Hong Kong ninth ($45,502), and Taiwan 18th ($34,321). Outside Asia, Germany came seventh and France 13th. Korea fell behind because the growth of people's income at 24th in the world is slow compared to the scale of economy (15th). "Differences in the speed of growth are beginning to emerge among the so-called four Asian tigers Korea, Hong Kong, Singapore and Taiwan whose economy once grew at a similar speed," Lee said. Korea's per-capita income has remained stalled at around 90 percent of Japan's for years. It grew dramatically from 40.8 percent of Japan's in 1990 to 86.7 percent in 2010. But it was 89.1 percent in 2012 and 89.9 percent in 2013 and has obviously hit a ceiling. In contrast, Taiwanese people's income rose from 51 percent of Japan's in 1990 to 87.6 percent in 2005 and exceeded Japanese people's with 103.9 percent for the first time in 2010 and rose to 107 percent in 2012 and 2013. "Korea and Japan are in similar economic conditions, including an aging society," Lee added. "If Korea's economic growth remains stalled at the current level, it may never catch up with Japan." [GDP]
Is DPRK going to become the second China?
453453“I am dying to find a way to invest in both North Korea and Myanmar. Major changes in these two countries are among the most exciting things I see right now”.Says Rogers in his book;Street Smarts: Adventures on the Road and in the Markets One would find these words as a madman’s statement if they weren’t expressed by George Soros’s former associate, who helped him running Quantum Fund. The fund during its existence gained the astonishing return of 4.200% Despite the general opinion that foreign investors every now and then face various problems in North Korea and contracts don’t mean a lot, Jim Rogers claims that potential gains far exceed the risks involved. Rogers as an American cannot directly participate in the North Korean market, but he invests in Korean coins and stamps anyway. Foreign investors cannot invest in the stock exchange market because the post-Stalinist country abhors the speculators’ imperialistic tool as they call the stock exchange market. And even if not – it would be quite difficult to handle foreign transactions with perpetual lack of power supply. [FDI]
Economists Worry About Prolonged Recession in Korea
Experts are concerned that Korea's economy may fall into a Japanese-style prolonged recession. The Federation of Korean Industries polled 37 economists from private and state research institutes, universities and financial institutions, and half said they worry that continuing low growth in recent years may lead to the kind of prolonged slump Japan experienced in the 1990s. Many believe that Korea's economy is suffering from the loss of recovery momentum in the wake of the April 16 ferry disaster, although some said that consumption has now almost recovered.
Supplying Energy Needs for the DPRK’s Special Economic Zones and Special Administrative Regions: Electricity Infrastructure Requirements
by Roger Cavazos and David von Hippel The Center for Energy Governance & Security Seoul, Korea 19 August 2014 I. INTRODUCTION The Democratic Peoples’ Republic of Korea (DPRK) uses special economic zones as a mechanism for engaging in commercial activity with other nations without substantially converting its economy to a market model; earning hard currency while reducing some of the social and political risks associated with a broader opening of the DPRK economy. The DPRK recently announced its intent to increase the number of Special Designated Zones, including Special Economic Zones (SEZ) and Special Administrative Regions (SAR) in the country by fourteen.[1] In most cases, these Special Designated Zones (we will use “Special Zone”, or “SZ”,as the generic term in this Working Paper to apply to Special Designated Zones) will require energy supply (and demand) infrastructure that is now missing, or insufficient, at all existing and proposed Special Zone sites. Even though past is not prologue—and the mechanisms for supplying energy needs to new SZs may be different than those used in the past, this paper seeks to briefly describe already existing Special Zones in terms of their present energy requirements. Present requirements provide rough estimates of the energy requirements of the newly proposed zones. Specifically we examine: the Rason Special Economic Zone and Special Administrative Region, the Hwanggumphyong Special Economic Zone, the Wihwado Special Economic Zone, the Kumgang Mountain Tourist Area, and finally, the Kaesong Industrial Zone. These specially designated zones ideally contribute to economic development in North Korea as well as provide economic benefits to the Chinese and Russian provinces bordering North Korea. Chinese plans to resuscitate and/or invigorate the economies of their three Northeast provinces bordering North Korea would certainly be moved forward by trade with a richer North Korea and access to strategic North Korean ports just across the border. Although this paper does not cover Russian plans, the motivations for Russian investments in North Korean SZs are likely similar—the desire to boost the economies of the areas of the Russian Far East that adjoin the DPRK, and to improve access to markets in Asia. [SEZ] [Energy]
BOK’s Estimate of North Korean National Income
by Marcus Noland | July 2nd, 2014 | 05:07 am NK Real Econ Growth 1990 - 2013 Vice President Mondale once told me that anyone who described themselves as an expert on North Korea is a liar or a fool; my corollary is don’t trust any figure relating to the North Korean economy that comes with a decimal point attached. Yes, dear readers, its time for our annual review of the Bank of Korea’s estimates of North Korean national income. [Statistics] [GDP]
Energy Needs in the DPRK
Energy Needs in the DPRK, and Opportunities for Collaboration on Energy Sector Engagement and Redevelopment by David. Von Hippel and Peter Hayes The Center for Energy Governance & Security Seoul, Korea 12 August 2014 I. INTRODUCTION A series of events in the last few years and months have kept the Democratic People’s Republic of Korea (DPRK) in the news. Starting with the succession of Kim Jong Un to the leadership of the DPRK following the death of his father, Kim Jong Il, and including events such as a nuclear weapons test and satellite launch/missile tests, the closing and re-opening of the Kaesong Industrial complex, and, more recently the publication of a United Nations report on DPRK violations of human rights, relations between the DPRK and the international community, as well as with the ROK and its other neighbors in the region, have both rocky and variable. Recent months have also, however, seen some positive signs, with the ROK and DPRK entering into talks regarding reunions of separated families and other matters, and the DPRK periodically indicating willingness to rejoin international negotiations regarding its nuclear weapons program. One underlying aspect of the DPRK international situation, its “energy insecurity” or lack of reliable supplies of fuels to maintain and build its economy, has changed little in the past few years, and remains both an underlying driver of the DPRK’s behavior in discussions with other nations and a possible lever, if used correctly, for other nations to use to begin and sustain the process of engagement with the DPRK. The DPRK’s energy sector needs are huge. At the same time, the choices that are being and will be faced by the DPRK, and the potential partners that could, particularly if the current political impasse is surmounted, assist the DPRK in economic redevelopment, will have crucial ramifications for the energy future of the DPRK and, indeed, the Northeast Asia region. This Working Paper compiles Nautilus’ thoughts on the energy needs in the DPRK, and on opportunities for bilateral, international, and private sector collaboration on DPRK energy sector redevelopment. This Working Paper begins with a summary of key energy sector needs in the DPRK and how they might be addressed, and continues with a summary of key options for assistance by the international community, and particularly the ROK, to address key DPRK energy/environmental needs. Also provided are a discussion of key opportunities for bilateral and multilateral cooperation in redeveloping the DPRK energy sector, and of issues related to such cooperation with the DPRK. This Working Paper concludes with a discussion of the potential synergies and challenges in involving the DPRK is regional energy infrastructure and trading opportunities. [Energy]
N.Korea Drops Kim Il-sung from New Banknotes
North Korea's new 5,000 banknotes no longer feature a picture of nation founder and demigod Kim Il-sung. But the new note shows Kim's childhood home in Mangyongdae. The new bills feature the house prominently on the front and on the back a museum in Pyongyang that displays gifts Kim and his son Jong-il received from foreign leaders. During a botched currency reform in 2009, Kim Il-sung was also dropped from the 2,000 and 1,000 won bills. The 5,000 won note is North Korea's largest denomination and nominally worth around US$50, though its actual market value is nearer $1. Workers in the North Korean state economy are paid some W3,000 a month on average, making it vital for most to seek other forms of income. A North Korean source said when the new notes were officially announced on July 25, they sparked fears of yet another misguided currency reform, triggering a certain amount of chaos as food prices surged temporarily and some people began stockpiling food. North Korea watchers are busy speculating what the removal of Kim Il-sung from the banknotes can mean.
Brisbane-based geologist Louis Schurmann linked to huge North Korea rare earths mining project
By Mark Willacy Tue 5 Aug 2014, 11:39pm Louis Schurmann Photo: Brisbane-based geologist and businessman Dr Louis Schurmann (Chamoni.net) A leading Asian human rights activist has urged the Federal Government to investigate a Queensland-based resources company and a prominent Australian geologist over mining deals with North Korea that he believes may breach United Nations sanctions. One of the deals involves the mining of a potential deposit of 216 million tonnes of rare earths, which are minerals used in everyday items including smartphones, flatscreen televisions and computers, but also essential for sophisticated weapons such as guided missiles. [Rare earths] [Minerals] [Human rights] [Manipulation]
Activist wants North Korea exports termed 'blood minerals'
Defectors from North Korea tell of slaves forced to labor in mines to earn hard currency for the regime, but so far Pyongyang has evaded international sanctions because minerals are not covered by UN resolutions. South Korean prisoners of war in a North Korean camp in the 1950's. (Photo: dpa) A Japanese campaigner for human rights in North Korea has written to Michael Kirby, the chairman of the United Nations Commission of Inquiry looking into allegations of abuses perpetrated by Pyongyang against its own people, and called for strict controls to be imposed on the regime's exports of minerals. Ken Kato, director of Human Rights in Asia and a member of the International Coalition to Stop Crimes Against Humanity in North Korea, told Deutsche Welle that the world should monitor the sale of minerals from North Korea in the same way as conflict diamonds - or "blood diamonds" - from the warring states of Africa are traced. Cutting off exports of coal, magnesite and other minerals from the reclusive state would reduce the North Korean government's income - which is largely spent on its nuclear weapons and ballistic missile development programs, as well as luxury products for the social elite - as well as potentially halting the use of men, women and children as slave laborers. [Human rights] [Sanctions] [Manipulation]
N.Korea Prints New 5,000 Won Bills
North Korea has printed a new 5,000 won bill bearing the portraits of nation founder Kim Il-sung and his son Kim Jong-il. A source in China said the new banknotes went into circulation on Wednesday. The existing 5,000 won bill, which is the largest available denomination, bears only the portrait of Kim Il-sung. "The aim of the new bill is not to reform the currency but simply to add the portrait of Kim Jong-il," the source said.

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JULY 2014

Rare earth elements boost NK income
By Kang Hyun-kyung North Korea has increased its rare earth exports to China amid worries within the international community that its mineral exports could weaken the effect of sanctions imposed on the reclusive state. The cash-strapped communist country exported goods to the value of $550,000 and $1.33 million in May and June, respectively, according to the Korea International Trade Association (KITA). Last January, the North exported elements worth nearly $25,000 to China for the first time and continued them this year. The country has an estimated 20 million tons of rare earth elements. [Rare earths] [Minerals] [Exports]
New DPRK economic zones to benefit investors
China Daily, July 25, 2014 Six new economic zones designated by the Democratic People's Republic of Korea mean opportunities for Chinese investors, but it is unclear whether entrepreneurs will be deterred by policies and poor infrastructure, experts said on Thursday. The new zones will "have great attraction to Chinese enterprise and bring good opportunities, in particular, for businesses with border trade and processing production", said Li Tianguo, a researcher from the National Institute of International Strategy at the Chinese Academy of Social Sciences. The DPRK decided on Wednesday to set up six more economic development zones, the Korean Central News Agency said in an English-language release. Pyongyang, the capital, will host the Unjong cutting-edge technological development zone, while export, industrial, agricultural, tourism and green model zones will be set up in other areas, the agency said. The move follows the announcement in November that the country will designate 13 special economic zones in areas including the Amnok River. Jin Qiangyi, a Korean studies professor at Yanbian University in Jilin province, said that the new zones are "obviously an attempt to boost the economy". "The country needs to build a lot of infrastructure if it plans to further open up and attract foreign investment," Jin said. He added that the DPRK's decision to set up more economic development zones partly aims to ease regional tension and international pressure placed on the country. "Many Chinese companies still feel daunted by doing business in the country because there is no clear policy to guarantee investors' interests," Jin said. Li said that Chinese businesses face risks of policy changes in the energy and mineral industries while investment in "catering and aquatic product processing may be much easier". China and the DPRK are discussing two special economic zones — one in the DPRK port of Rason near China's Jilin province, and the other on Hwanggumpyong and Wihwa islands near the Chinese city of Dandong, Liaoning province — that are the subject of an agreement struck in 2010. "There has been no big progress in the two zones between the countries," Li said. [SEZ]
N.Korea in Pie-in-the Sky Economic Zone Scheme
North Korea last year designated an ambitious 13 special economic zones in November in the provinces last year and another six in Pyongyang and North and South Pyongan Provinces. It also announced that the border city of Sinuiju and surrounding areas, which had previously been designated special economic zones, are now "international" economic zones. The state-run [North] Korean Central News Agency on Wednesday said a relevant decree was issued by the Presidium of the Supreme People's Assembly. The regime apparently made the announcement to show how committed it is to attracting foreign investment. But plans for the 13 zones announced last year have so far come to nothing, and it is highly doubtful whether the extra six will fare any better. Cho Bong-hyun at the IBK Economic Research Institute here said it seems North Korean leader Kim Jong-un is getting anxious and falling over himself with various plans, "because if he doesn't show visible economic achievement this year, in his third year in power, his position may come under threat." A South Korean government official said, "Without progress on denuclearization, North Korea will have hard time attracting any foreign investment at all." [SEZ]
Politics and Pollack: It Takes a Nation of Fishes
By Robert Winstanley-Chesters | July 24, 2014 >Kim Jong-un visits the “KPA’s 8 January Fishing Station” on January 8. Image: Rodong Sinmun Any good North Korean propaganda narrative has a solid grounding in Korean tradition, and as a nation bounded by water on three sides, fishing is a great one. In this series, Robert Winstanley-Chesters has investigated the history of aquaculture in North Korea, and established the means by which it is swept up in the contemporary imperative of charismatic politics. Here, as he concludes the series, Robert considers temporal locations alongside spatial ones, and ends on North Korea’s (false, occasionally catastrophic) notion of “charismatic time.” — Christopher Green, Co-editor. Politics and Pollack: It Take a Nation of Fishes by Robert Winstanley-Chesters It is hard to recall a year in North Korea’s presentational narrative (other than during the era of the Arduous March) that wasn’t somehow critical to developmental focus, important to resource strategy, vital to agendas of increasing productive capacity. Of course, this is because forward momentum is not only important in terms of approach; it is also primary to functionality. Without the perception of forward movement, Pyongyang’s developmental strategy might appear to degrade. Yet even by historical standards, 2013 and 2014 have been extraordinary in terms of commitment, focus, and the sectorial spread of projects and themes. I have already offered extensive comment on this year’s New Year’s Address, in particular in terms of renewing the contract between practical focus and authoritative narrative. This is represented in particular by the anniversary of the “Rural Theses on the Socialist Rural Question.” By restating the goals and structures of the Rural Theses, as well as their integration into the agenda of the current Kim government, agricultural capacity and focus serve as carrier signals through which legitimacy, authority and charisma are transferred between the various eras of North Korean governmentality. Here in this “Politics and Pollack” series I have focused on narratives of fishing and aquaculture in the history of North Korea. Fish, shellfish and other products of the sea are of traditional import for Korea, a nation bounded by water on three sides, and serve as important sources of protein. Their importance as a food resource is further extended by their availability irrespective of developmental successes or efficiency gains. Accordingly, fishing matters have been vital since North Korea’s creation as a sovereign entity. Extraction and utilization of piscine resources was of interest during the initial articulation of the Rural Theses, and nothing much changed thereafter: that interest continued in the developmental stasis of the 1980s and on into the institutional crisis of the 1990s. [Fishery]
Angola: North Korea Wants to Invest in Agricultural Sector in Malanje
18 July 2014 Cacuso — The Extraordinary and Plenipotentiary ambassador of Democratic People's Republic of North Korea in Angola, Kim Hyon Il, expressed his country's interest to invest in northern Malanje province in the field of agro-industry. The North Korean diplomat said so at the end of his visit to Pungo Andongo Farm, in the same municipality. Kim Hyon II acknowledged the economic and tourism potential of the province and said that Malanje is in good condition regarding the development of agro-industry and tourism. The Asian country ambassador also said that there are many interesting areas where the two countries can cooperate having mentioned the sectors of water, energy, public works, civil construction and information technology. [Agriculture] [Africa] [ODI]
A Tale of Two Kaesong Industrial Zones: Not All Foreign Investment is Created Equal
By J.R. Mailey 17 July 2014 Promoting foreign direct investment and enhancing commercial engagement is often touted as a potential catalyst for enticing isolated, authoritarian regimes to enact reforms and constructively engage with the international community. Promoting this sort of constructive commercial engagement with North Korea, however, is far easier said than done. China is often highlighted as the paramount success story for this sort of constructive engagement. Since opening up to foreign investment over three decades ago, China has enjoyed rapid improvements in living standards for the vast majority of its citizens and its leaders have shown far greater willingness to engage with the international community—although many analysts lament Beijing’s lack of progress on human rights issues. Most foreign investors in North Korea find the business environment to be enormously challenging. Many complain about widespread and routine bribery. The weakness of formal institutions means that disputes between foreign investors and their local partners must be resolved using informal networks and personal connections. Poor infrastructure, political risk and a strong stigma associated with investment in North Korea are frequently cited as major challenges to doing business. For many, these challenges serve as major disincentives to investment. For its part, South Korea has also made attempts to encourage investment in North Korea in hopes of creating space for dialogue, improving living standards, catalyzing reform and deterring military provocations from Pyongyang. The most prominent example of this effort is the Kaesong Industrial Complex (KIC), an 800-acre industrial park six miles north of the demilitarized zone. Although the KIC operates at only a fraction of its planned capacity, it is now home to over 120 South Korean factories that employ upwards of 50,000 North Korean laborers, and generates approximately US$100 million in wages per year. However, progress achieved with regard to KIC can be quickly negated during periods of heightened tension between Seoul and Pyongyang as was seen when the complex was shut down for six months in 2013. [FDI] [China NK] [Kaesong]

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JUNE 2014

N. Korean economic growth slows in 2013
The North Korean economy is estimated to have grown at a slower pace last year from the previous year as its languid construction sector weighed on the economy, the central bank here said Friday. The Bank of Korea (BOK) estimated that the country's economy expanded 1.1 percent in 2013, slowing from a 1.3 percent on-year expansion in the previous year. In 2012, the North Korean economy was estimated to have grown at the fastest pace in four years, after contracting 0.9 percent and 0.5 percent in 2009 and 2010, respectively. A BOK official explained that while the North's construction sector shrank last year, its agricultural output improved on favorable weather conditions. An expansion in production of coal and iron ore also lent support to growth, the official added.
Strategies for the Rehabilitation of the DPRK Energy Sector
by David F. von Hippel and Peter Hayes The Nautilus Institute for Security and Sustainability 24 June 2014 Prepared for the International Seminar on Political Prospects of Korean Peninsula and Strategies for North-South Korean Energy Cooperation on 7-8 November 2013, Yeoncheon, Republic of Korea. I. INTRODUCTION During the decade of the 1990s, and continuing into the second decade of the 21st century, a number of issues have focused international attention on the Democratic People’s Republic of Korea (DPRK). Most of these issues—including nuclear weapons proliferation, military transgressions, provocations, and posturing, economic collapse, transboundary air pollution, food shortages, floods, droughts, tidal waves, and, most recently the death of DPRK leader Kim Jong Il and the passing of the leadership mantle to the third generation of the Kim dynasty in Kim Jong Un—have their roots in a complex mixture of Korean and Northeast Asian history, global economic power shifts, environmental events, and internal structural dilemmas in the DPRK economy. Energy demand and supply in general—and, arguably, demand for and supply of electricity in particular—have played a key role in many of these high-profile issues involving the DPRK, and have played and will play (and are playing, as of November, 2013) a central role in the resolution of the ongoing confrontation between the DPRK and much of the international community over the DPRK’s nuclear weapons program. [Energy]
North Korea is open for Business
Aram Pan Published on 21 May 2014 The 17th Pyongyang Spring International Trade Fair. Businessmen from China and North Korea come here to exchange contacts and trade. [Video]
European trade & investment mission to North Korea (September 2014)
Rotterdam, 24 June 2014 The Democratic People’s Republic of Korea (DPRK, also known as North Korea) finds itself at a new era of international economic cooperation, and it especially welcomes business with Europe. The DPRK is offering various products and services to export markets, while the country is also in need for many foreign products and investments. In the current financial and economic situation, European companies face many challenges. They must cut costs, develop new products and find new markets. In these fields, North Korea is an interesting option. It established several free trade zones to attract foreign investors and there are several sectors, including renewable energy, garments, shipbuilding, agro business, fishing, horticulture, logistics, mining, stone processing, restaurants and Information Technology, that can be considered for trade and investment. DPRK is competing with other Asian countries by offering skilled labour at very low monthly wages. In particular firms with production facilities in China, where the wages are rising fast, are currently investigating alternative options in North Korea. [FDI] [Trade]
North Korea's Businesswomen Need Networks And Role Models
While the world regards North Korea (the Democratic People’s Republic of Korea, DPRK) as the last “hermit kingdom” that remains heavily controlled by a one-man Communist regime, women entrepreneurs, unlike their male counterparts who are bound by the Communist Party for certain job obligations, are quietly introducing entrepreneurship to the country. Choson Exchange, founded by a young social entrepreneur from Singapore, Geoffrey See, has been training North Korean entrepreneurs for years. They provide practical skills training workshops for select, market-minded North Korean business leaders and entrepreneurs in Pyongyang, Beijing, and Singapore. In the most recent program conducted in Singapore, North Korean businesswomen shared their experiences in starting business and accessing loans, their need for networking opportunities, and their interest in mentoring programs and having role models. [Training]
Severe Drought Blights N.Korea
North Korea is suffering such a serious drought that soldiers have been mobilized to irrigate fields and paddies. In North Pyongan Province alone, "hundreds of thousands of functionaries and workers are waging a battle in cooperation with soldiers to irrigate fields and paddies every day," the official Rodong Sinmun daily wrote Saturday. The state-run [North] Korean Central News Agency carried pictures of farmers at a cooperative farm in Pyongyang bringing water in buckets or plastic bottles and pouring it over parched paddies. KCNA called this year's drought the "worst one since 2001." The regime takes the recent drought all the more seriously because in his New Year's address leader Kim Jong-un cited agriculture as a "main target" of his economic projects and called for increasing agricultural production. [Agriculture] [drought]
Foreign Factories In North Korea's Kaesong Complex -- Great Idea Or Pie In The Sky?
In the realm of believe-it-not, the Kaesong Industrial Complex just above the line between North and South Korea is beginning to appear as perhaps the best hope for the western world to gain a significant toehold into the closed society of North Korea. So desperate is North Korea for cash that people are talking seriously about expanding the zone, about 40 miles north of Seoul next to the truce village of Panmunjom, to include foreign firms in addition to more than 120 South Korean companies that are already there employing about 50,000 North Korean workers in small-and-medium-sized enterprises. Whether any of them are making money is far from clear, but aides to South Korea’s President Park Geun-hye are sounding out contacts in Washington about opening the zone to all comers, foreign or Korean. [Kaesong]
N.Korea Establishes New Foreign Trade Ministry
North Korea has established a new ministry to take care of external trade affairs by combining two committees in charge of luring foreign investment and developing special economic zones established in 2010 and 2013. The [North] Korean Central News Agency on Wednesday reported the new ministry was established due to a decision by the Presidium of the Supreme People's Assembly. It did not name the specific duties of the new ministry or who leads it. Cho Bong-hyun of the IBK Economic Research Institute here said, "The new ministry merges committees which carried out nominally different functions but in fact mostly did the same things. The latest step seems to be aimed at streamlining the process and boosting economic development." Some experts speculated that the decision was also aimed at getting rid of some remaining followers of executed eminence grise Jang Song-taek in the committees. Others believe that the North Korean regime is taking disciplinary action against the committees for failing to produce tangible results. [Trade] [FDI]
Supplying Energy Needs for the DPRK's Special Economic Zones and Special Administrative Regions : Electricity Infrastructure Requirements
Author Roger Cavazos David Von Hippel Introduction The Democratic Peoples’ Republic of Korea (DPRK) uses special economic zones as a mechanism for engaging in commercial activity with other nations without substantially converting its economy to a market model; earning hard currency while reducing some of the social and political risks associated with a broader opening of the DPRK economy. The DPRK recently announced its intent to increase the number of Special Designated Zones, including Special Economic Zones (SEZ) and Special Administrative Regions (SAR) in the country by fourteen. In most cases, these Special Designated Zones (we will use “Special Zone”, or “SZ”,as the generic term in this Working Paper to apply to Special Designated Zones) will require energy supply (and demand) infrastructure that is now missing, or insufficient, at all existing and proposed Special Zone sites. Even though past is not prologue—and the mechanisms for supplying energy needs to new SZs may be different than those used in the past, this paper seeks to briefly describe already existing Special Zones in terms of their present energy requirements. Present requirements provide rough estimates of the energy requirements of the newly proposed zones. Specifically we examine: the Rason Special Economic Zone and Special Administrative Region, the Hwanggumphyong Special Economic Zone, the Wihwado Special Economic Zone, the Kumgang Mountain Tourist Area, and finally, the Kaesong Industrial Zone. These specially designated zones ideally contribute to economic development in North Korea as well as provide economic benefits to the Chinese and Russian provinces bordering North Korea. Chinese plans to resuscitate and/or invigorate the economies of their three Northeast provinces bordering North Korea would certainly be moved forward by trade with a richer North Korea and access to strategic North Korean ports just across the border. Although this paper does not cover Russian plans, the motivations for Russian investments in North Korean SZs are likely similar—the desire to boost the economies of the areas of the Russian Far East that adjoin the DPRK, and to improve access to markets in Asia. [SEZ] [Infrastructure] [Electricity]
North Korea's paradoxical upswing in trade
Never before has the North Korean economy been so totally dependent on the largesse of a single trade patron as it appears to be today. Nicholas Eberstadt | The American June 04, 2014 Article Highlights • North Korea's legal merchandise trade has grown significantly since the early 2000s. • Exports from North Korea have more than tripled and imports have doubled. • North Korea has become increasingly dependent on politically supported trade over the past decade. Exceedingly few hard facts are available in the outside world on the performance of the economy of the Democratic People's Republic of Korea (aka North Korea). Consequently, analyses of the North Korean economy often take place in a sort of data-free vacuum. There is, however, one relatively reliable independent source for an aspect of North Korean economic performance, and its data suggest that the DPRK is more totally dependent upon politically supported trade today than it has been for decades. The reliable source is so-called "mirror statistics" on trade, derived from DPRK trading partners' reports of what they sell to and buy from Pyongyang. (Of course, such statistics exclude the whole range of illicit commerce in which the DPRK famously traffics - what they offer is an aperture on the country's legitimate merchandise commerce.) [Trade]
Politics and Pollack: Fishing in the Age of the Six Goals
By Robert Winstanley-Chesters | June 17, 2014 In the previous essay in this series, we encountered a North Korea of construction, both in the immediate period following liberation from Japanese colonial rule and in the post-Korean War era. At that time, Pyongyang was faced with a mammoth institutional and technical task, mirroring the comprehensive nature of allied bombing campaigns and the dynamic fighting of the war’s first two years. Reconstruction was most imperative on land, especially as a remedy for the destruction of Pyongyang itself and the wider degradation of North Korea’s industrial infrastructure and capacity. [Fishery]
A new design for North Korea’s construction industry
14 June 2014 Author: Calvin Chua, Choson Exchange The recent collapse of a building in Pyongyang’s Phyongchon District has drawn attention to North Korea’s design and construction industry. The industry has undergone significant changes which may signal a long-term trend towards global norms. Two days after the building’s collapse, Ma Won Chun, a reputable North Korean architect with experience in finance, was appointed to lead the new ‘Designing Department’ housed within North Korea’s National Defence Commission (NDC). A handout photo provided by the official Korean Central news Agency (KCNA) via Yonhap News Agency (YNA) on 21 May 2014 shows North Korean leader Kim Jong-un (C) touring an apartment construction site in Pyongyang, North Korea. (Photo: AAP) While it remains to be seen who will be punished for the building’s collapse, Pyongyang’s media response surprised many outside observers — the admission of fault was unusual. The official Korean Central News Agency (KCNA) broadcast self-critical apologies by North Korean officials. With something of this magnitude, the authorities had to get ahead of the story domestically. Rumours can spread nationwide and failing to address the outrage of the most important constituency — Pyongyang — could have been risky. But the government’s response to the building’s collapse also seems to fit with a wider trend. Pyongyang appears to be strategically aligning its design and construction industry with global trends and norms. [Construction] [Training]
Korea 'to Catch up with' Japan and France by 2018
Credit ratings firm Moody's in a report Monday painted a rosy picture of Korea's economic future. Moody's said Korea's economic fundamentals remain strong and forecast the country's GDP growth at 3.8 percent this year and next year. In addition to classifying sovereign credit ratings, Moody's began last year to analyze issues affecting specific countries, and this is the first time it has focused on Korea. Thanks to improved export competitiveness, Moody's said Korea's economy entered a recovery phase in 2012. "Sustained rapid growth and economic success is a rare phenomenon in the post-World War II world order," it said. "With structural reform of the housing mortgage market, a prudent fiscal policy framework, and continued competitiveness and innovation in the private sector, Korea will likely continue on its 'breakout' growth trajectory."
After the Collapse: The Formalization of Market Structures in North Korea, 1998-2002
by Peter Ward People interested in contemporary North Korea need to read the work of Dr. Joung Eun-lee) of Gyeongsang National University). Despite being based in southerly Jinju, she is the writer of some of the best research on the country today. In the second piece in this series, I discuss her article published by KDI Review of the North Korean Economy in 2010 entitled “An Analysis of the Level Of North Korean Market Institutionalization on the Basis Of The Physical Development Of Public Markets In it,Dr. Joung attempts to construct a chronology of how North Korean markets have evolved over time.[1] [Marketisation]
Politics and Pollack: A Piscine Story
By Robert Winstanley-Chesters | May 30, 2014 Feeding North Korea is of course a major task. Even as the executive director of the World Food Program reviewed the somewhat dire recent data in Pyongyang, North Korean government institutions continued their persistent efforts to augment and develop the nation’s developmental and agricultural capacities. Whether it is the state’s efforts at mushroom production, or the attempts at tilling and rehabilitating the dry soil at Sepho, Robert Winstanley-Chesters, our Director of Research, has followed developments intently—and prolifically. In this essay trilogy, he delves into the mysterious depths of politics, institutional development, and narrative within the fisheries sector. Eventually arriving in the era of the January 8 fisheries project, Robert, in this first essay, begins with a focus on the aquatic aspirations of 1948. — Adam Cathcart, Editor in Chief Politics and Pollack: A Piscine Story by Robert Winstanley-Chesters It surely cannot have escaped the analyst’s eye that fishing and fishery matters appear to have moved several notches up Pyongyang’s list of priorities in 2014. In fact, ever since Rodong Sinmun’s announcement “The Party Requested, They Did It!” just before Christmas, a gush of piscine reportage has emanated from North Korea. Some observers might link this to the putative reasons advanced for Jang Sung-taek’s execution, namely, that Jang had gained some sort of control over fishery rights and resources in the West Sea that had previously been within the remit of the KPA. Those somewhat less dramatically inclined might remark that this emphasis on fishing might be expected, as it had been featured as a key element of this year’s New Year’s Message, along with the heavy steer towards the Rural Theses, so it should not have been anything of a surprise. [Fishery]

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MAY 2014

Kim Jong Un Provides Field Guidance to Ryongmun Liquor Factory
Pyongyang, May 28 (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 Ryongmun Liquor Factory. Commanding a bird's-eye view of the production buildings and compound nestled in a valley surrounded by high mountains with a broad smile on his face, Kim Jong Un said the longer he watched them, the more clean and neat they looked. He added he might rest assured of the quality of foodstuff when he looked at them only from outside as the face is the index of the heart. Recalling the Ryongmun Liquor Factory was built on the personal initiative of leader Kim Jong Il who instructed the KPA to build and operate a modern liquor factory conducive to the development of the nation's food industry, he proposed erecting in the compound of the factory a mosaic depicting Kim Jong Il looking at foodstuff and personally chose its site. Kim Jong Un went round various places of the factory including the process for filtering water, liquor production and packing processes and a depot to learn in detail about production and modernization.
'Obama wrong about Korean education'
Yong Zhao, an education professor at the University of Oregon, speaks during an interview with The Korea Times Friday at Chadwick International School in Songdo, Incheon. / Courtesy of Chadwick International US professor Zhao believes Korean education must change By Jung Min-ho President Barack Obama lauded Korean education during his State of the Union speech in 2011, likening the teachers to "nation builders. " But Yong Zhao, an education professor at the University of Oregon, thinks the president was wrong. The eminent educator believes Korean teachers need to break the "illusion" that they are doing well just because their students get high scores in the Program for International Student Assessment (PISA), which he thinks only hinders the nation's necessary education reform. "Obama is absolutely wrong," Zhao said in a recent interview with The Korea Times. "For Korea and China to grow more, their (education) system needs to change." Zhao visited Chadwick International School in Songdo, Incheon, last week to give a special lecture about how the education system should meet challenges in the era of globalization. He met with Incheon city education officials to share his insights and expertise. It was his first visit to Chadwick. In the 2009 PISA, Korea's 15-year-olds ranked fourth in science (excluding Shanghai and Hong Kong), second in mathematics and first in reading. He thinks the rankings only "create illusory models of excellence, romanticize misery and glorify educational authoritarianism." [Education]
Barren NK mountains pose environmental threat
By Kim Se-jeong North Korea has become a major greenhouse gas-emitter because many mountains there are left "treeless," a study showed Tuesday. Chronic poverty is the primary reason for rampant logging in the North Korean mountains. Poverty-stricken people and the military have cut trees to create land for cultivation, or to use wood for heating and cooking. And many treeless mountains are left abandoned without new trees being planted. According to Professor Lee Woo-kyun of Korea University, since 2000 North Korea has emitted 0.04 tons of carbon per hectare annually because forests there could not absorb carbon. Up until then, carbon was completely absorbed by the forests ? 0.83 tons in the 1980s and 0.23 tons in the 1990s. [Environment]
Yongusil 36: Tumen Triangle Symposium
By Sino-NK | May 28, 2014 Hosted within the Division of Social Anthropology at Cambridge University, the Beyond the Korean War project is a multi-national research project funded by the Academy of Korean Studies and headed by Professor Heonik Kwon. It navigates an analytic space replete with fluidities and diffusion. Geographically, the landscapes of the Korean Peninsula and its surroundings, while echoing topographically this liminality, are determinedly and categorically bordered. Rivers such as the Yalu and the Tumen have served as chasms across which passage is restricted and prohibited and through which exchange and transaction is impossible. As the Cold War status quo began to crumble along with the Soviet Union (whose territory abutted the Tumen for only a few miles), possibilities and projects aiming to break these prohibitions and rehabilitate connections across the river began to develop. More recently, changes in geo-politics and the economic rise of both China and South Korea coupled with the ambitions of the Putin government in the Russian Federation have conspired to radically increase the potential importance of the Tumen region and the river’s place as a vector or route for economic and capacity development. [Tumen]
Before the Collapse: The Micro-foundations of Marketization in North Korea
By Peter Ward | May 27, 2014 It is unfortunate that English-language research into North Korean economic matters remains limited in scope, despite the fact that nigh on twenty years have now passed since the death of Kim Il-sung on July 8, 1994. The passing of the nation’s founding father, one of a number of grave economic and political shocks administered to North Korea in the late 1980s and early 1990s, triggered rapid growth in the country’s (heavily distorted) free market. This was the public’s primary response to skyrocketing food insecurity and the encroaching stench of famine, and is a vital element in understanding the country as we see it today. While South Korea also suffers from a major deficit of research into North Korean affairs, the situation is not comparable to that in major Western centers of academic inquiry. A number of research institutions, mostly in and around Seoul, place moderate budgets and personnel at the service of understanding the troublesome North Korean Other, and the fruits of this effort are consistently worthy of review and citation. That this does not happen with sufficient frequency is, of course, a function of linguistic limitations as much as anything else. Fortunate, then, that one key rationale behind the existence of Sino-NK is to provide a solution to this problem: rather than leveraging linguistic skill sets so as to be gatekeepers of data and knowledge, we seek to share it. Here, Peter Ward, research assistant to Andrei Lankov and student of Korean history, takes up the mantle. In a new series, he reviews the key published Korean-language research dealing with the North Korean economy and its markets (???). In his first such review article, Ward discusses the work of two Korean sociologists at Kyungnam University and their reassessment of the role of Farmers’ Markets in the Kim Il-sung period. — Christopher Green, Co-editor. Before the Collapse: The Micro-foundations of Marketization in North Korea by Peter Ward In 2003, Choi Bong-dae (???) and Koo Kab-woo (???) published “Farmers’ Markets in Sinuiju, Chungjin and Hyesan in North Korea, 1950-1980” [???? ‘????’ ???????????: 1950-1980?????, ??, ??????????] in Contemporary North Korean Research (??????), the premier academic publication on North Korea.[1] The authors, using defector interviews as their primary mode of investigation, produced a primer on the early structural changes to North Korea’s socialist economy. In hindsight, these changes marked the nascent period in the country’s marketization. [Marketisation]
Spring International Trade Fair doubles in size
The 17th annual Pyongyang’s Spring International Trade Fair was held last week and attracted around 300 companies, according to domestic media reports. The 2014 fair appears to have significantly grown in size from 140 companies in 2013 and for the first time occupied two halls at the Three-Revolution Exhibition House: the New Technology Innovation Hall and the Heavy Industry Hall. [Trade]
The Mineral Industry of North Korea
By Lin Shi The economy of North Korea (the Democratic People's Republic of Korea) continued to grow in 2012. According to the Bank of Korea, North Korea's real annual gross domestic product (GDP) increased by 1.3% in 2012 compared with that of the previous year. This growth was attributed mainly to growth in the agriculture, forestry, and fishing sector, for which output increased by 3.9%; growth in the manufacturing sector, for which production increased by 1.6%; and a 1.6% increase in power generation in the energy sector (Bank of Korea, 2013). [Minerals]
North Korea’s external trade reaches record high – Report
But trickle-down effects likely to be small, according to expert May 22nd, 2014 Ole Jakob Skåtun North Korea’s external trade volume reached a record high of U.S. $7.34 billion dollars in 2013, Business Korea reported on Thursday, citing a report published on Wednesday by the Korea Trade-Investment Promotion Agency (KOTRA). The figure amounts to an increase of 7.8 percent from the previous year, and is attributed to increased exports of coal, iron ore, copper and aluminium, as well as textile and clothing goods. Imports of electricity, transportation machinery and grains make up the bulk of import increases, the report added. North Korean exports increased 11.7 percent to 3,22 billion dollars, while imports increased 5 percent to 4.12 billion dollars, slightly decreasing the trade deficit from U.S. $1.05 billion dollars (2012) to U.S. $980 million dollars. [Trade]
What night-time satellite imagery says about N. Korea – and what it doesn’t
Can be useful source of information, if applied correctly May 16th, 2014 Ole Jakob Skåtun 0 Night-time satellite images of the Korean peninsula – showing North Korea as a black hole surrounded by the gleaming lights of economic powerhouses like China, Japan and South Korea – have become a click-winning favorite among online media outlets. Most recently, footage captured from the International Space Station made headlines worldwide with a raw display
Customer Loyalty Cards and Bottled Makkoli - More Marketing Tools Appearing
April 07, 2014 Pyongyang's Haemachi (Sunrise) restaurant and retail complex now has a new beer bar, serving Paulaner beers, almost certainly brewed at one of China's many Paulaner brewpubs. (Though it was claimed by staff that this was not a joint venture - "ha ha, everybody asks that!") [Daily life] [Marketisation]
Doom and Gloom or Economic Boom? The Myth of the "North Korean Collapse"
The Asia-Pacific Journal, Vol. 12, Issue 18, No. 3, May 5, 2014. Henri Feron Abstract: The DPRK is said to be an economist's nightmare. There are almost no reliable statistics available, making any analysis speculative at best. The few useable figures that we have, though, fly in the face of the media's curious insistence on a looming collapse. Food production and trade volumes indicate that the DPRK has largely recovered from the economic catastrophe of the 1990s. Indeed, Pyongyang's reported rising budget figures appear more plausible than Seoul's pessimistic politicized estimates. Obviously, sanctions, while damaging, have failed to nail the country down. There are signs that it is now beginning to open up and prepare to exploit its substantial mineral wealth. Could we soon be witnessing the rise of Asia's next economic tiger? [Collapse] [Development] [Recovery] [Statistics]
Bullet Trains and Wood-Burning Trucks
By Sino-NK | May 01, 2014 Travellers to Northeast China quickly understand why those familiar with the region call it the 21st century “Western Frontier” or “Wild Wild West.” Not unlike the great transportation and infrastructure development projects of mid-19th century America, China is attempting to bring the three provinces of its northeast frontier “up to speed” with the more developed coastal regions. In the hinterlands between and around major cities of the region, one gets a sense of the vital role infrastructure plays in connecting the nation and spurring economic development. The Chinese government, unlike its North Korean counterpart, appears to understands this process acutely. In addition to the building development projects transforming the region’s cityscapes, a high-speed rail network is being developed with the end goal of connecting regions of the northeast together and to the rest of the country. Just across the Tumen River lies a vision of a possible North Korean future. However, the likelihood that DPRK visionaries, whoever they may be, are able to realize such a future remains slim. In this cross-posting from Daily NK, we recall what we saw whilst traversing the region. — Steven Denney, Managing Editor Adam Cathcart and Steven Denney, “Bullet Trains and Wood-Burning Trucks,” Daily NK, April 28, 2014* A Tale of Two Countries | Eastern Manchuria, for decades a cold and industrially declining region, is now a site of huge infrastructure development. Time and space between the three northeastern provinces of Liaoning, Jilin, and Heilongjiang provinces are shrinking. Meanwhile, North Hamkyung is whittling away with dysfunctional infrastructure and marginal growth at Rason. A recent trip to the border region reveals two things. One, North Korean business in the northeastern provinces has hardly atrophied since the fall of Jang Song-taek. There is plenty of business activity taking place: North Korean run restaurants and joint venture hotels remain busy collecting valuable foreign currency and are poised for potential growth. Two, China is flexing its infrastructural muscles, radically altering the status quo of development in the region. [Railways] [Northeast strategy]

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APRIL 2014

S. Korea's railway chief wraps up rare visit to N. Korea
The head of South Korea's state rail company headed home on Monday after making a rare week-long visit to North Korea where she attended an international conference concerning transportation between Europe and Asia. Choi Yeon-hye, president and CEO of the Korea Railroad Corp. (KORAIL), and other officials arrived at the Beijing Capital International Airport earlier in the day from Pyongyang en route to South Korea, a KORAIL official who accompanied Choi said by telephone. The KORAIL official, who asked not to be named, declined to give details, including what topics Choi discussed during the Pyongyang meeting of the Organization for Co-Operation between Railways (OSJD). Before departing for North Korea on April 21, Choi told reporters in Beijing that she would ask the OSJD to allow South Korea to win a formal membership. In March this year, South Korea became an associate member of the international rail body. North Korea, China and Russia are formal members of the organization. [Railways] [Eurasian landbridge]
Vanadium and Socialism: Rare Earth Prospecting, Politics, and History in North Korea
by Robert Winstanley-Chesters When the faintly mysterious private equity vehicle SRE Minerals Ltd announced the creation of Pacific Century Rare Earth Mineral Limited, a joint venture with the DPRK’s Korea Natural Resources Trading Corporation, in December 2013, it set the analytic cat amongst the speculative pigeons in a fashion not unfamiliar in the world of North Korean reportage. From Yongju to Jang | The discovery and analysis of the “Yongju Deposit” accordingly to SRE, Pacific Century and other analysts could mean that North Korea sits astride some 216 million tonnes of Rare Earths (and some 5.7 million tonnes of what the report excitedly branded “the more valuable heavy rare earth elements”) worth trillions in both dollars and geo-strategic import. If realized, the deposit would make North Korea one of the richest nations in the neighborhood, radically alter the market for Rare Earths, impacting enormously on its key players (namely the United States and China), and serve as a massive financial reserve for the North Korean government, one that could conceivably underpin its ideological and social system without reform in perpetuity. [Rare earths] [Minerals]
N.Korea Foiled in Attempt to Make Emmental Cheese
North Korea has asked a top French cheese-making school to take on three apparatchiks so they can satisfy the tastes of leader Kim Jong-un, but the school declined. The North Korean ambassador in Paris made an inquiry with the École nationale d'Industrie laitière, a national school for the dairy industry, in Mamirolle near Besancon on the French-Swiss border early last month. They were interested in taking a course on making Emmental cheese. However, the school was unable to help as all places were full, according to AFP. The motivation was to satisfy the expensive tastes of the North Korean leader, who went to boarding school in Switzerland, AFP added. Kim is "unhappy with the quality of the cheese produced in North Korea," the Independent reported. [Training] [Sanctions]
Meet Mr. X: One of the North’s new capitalist class
By providing kickbacks, foreign currency to the state, money-making enterprises thrive in ‘Stalinist’ state April 24th, 2014 Andrei Lankov I would like to introduce you to Mr. X, a successful North Korean businessman. Of course, the vast majority of newspaper readers worldwide assume that in an allegedly “Stalinist country” (like North Korea), businessmen are not supposed to exist. But they do exist, and prosper – largely because North Korea is not a Stalinist country any more. Mr. X runs a coal mining company. It is a medium-sized company producing coal for the domestic and export market. For all practical purposes he is the owner of this profitable enterprise. Frankly speaking, I do not know how much money he actually takes home every month, but I would suspect that it is measured in many thousands (of U.S. dollars). Since we are talking about the money that Mr. X takes home for his individual consumption, this makes him seriously rich by North Korean standards. Like all private enterprises of Mr. X’s company’s size, this enterprise does not formally exist, or to be more precise, it exists as a state-owned enterprise, in which Mr. X is merely a CEO. However, this fiction does not fool anybody, including Mr. X’s superiors. [Capitalism]
KORAIL Chief Takes Train Trip to N.Korea
KORAIL president Choi Yeon-hye is appropriately on her way to North Korea by train. Choi left for Pyongyang on a train from Beijing on Monday afternoon to attend a meeting of the Organization for Co-Operation between Railways (OSJD), KORAIL said Monday. The OSJD is an organization of 27 former and current communist countries, including Russia, China and North Korea. The government approved Choi's request to visit to the North on Sunday after the North sent her a letter of invitation. She got a visa from the North Korean Embassy in Beijing the same day. The train runs from Beijing to the North Korean border city of Sinuiju in 24 hours, where she switches trains for the 225 km stretch to Pyongyang. A KORAIL executive said, "Choi's visit is the North's first approval of a South Korean official's visit" since the South imposed sanctions against North Korea in 2010. She is the first senior South Korean figure to visit Pyongyang since the inter-Korean summit in 2007. President Park Geun-hye is keen to connect South Korea to Eurasia by railway, which requires cooperation from the OSJD. [Eurasian landbridge] [Railways]
KORAIL Executives to Visit Pyongyang
The government on Sunday gave five executives of the state rail operator KORAIL permission to visit North Korea. A delegation led by president Choi Yeon-hye had applied for approval to attend a meeting of the Organization for Co-Operation between Railways (OSJD) in Pyongyang from April 24 to 28. The OSJD is an international organization of railway operators in 27 former and current communist countries including China, North Korea, and ex-Soviet states. Cooperation from the OSJD is essential if President Park Geun-hye's plans for a railway connecting Eurasia with South Korea through North Korea is to come to fruition. South Korea has tried to become a full member of the OSJD for a long time but was thwarted every time by North Korea. Choi was invited to the meeting when KORAIL finally became an affiliate member last month. A Unification Ministry spokesman said Choi's visit to Pyongyang "can enhance cooperation between KORAIL and the member states of OSJD." Choi is the first head of South Korean public body to visit Pyongyang since Park was sworn in. It remains to be seen whether this will lead to more talks with North Korea over cross-border exchanges. [Railways] [inter Korean] [Sanctions]
'Choco pie is our lifeline,' say Gaeseong workers
Gaeseong Industrial Complex workers asked that the South Korean government pay them with Choco Pie, according to Free North Korea Radio (FNKR). FNKR quoted a source as saying the workers are getting angry as they have to pay more than a 50 percent tax. Choco Pies are given as snacks for the workers, but most of the workers save them and sell it in Jangmadang (North Korean public market) at 2,000 North Korean won. Considering that one kilogram of white rice costs 5,100 won, the popularity of a 35-gram pie is proven,” the source was quoted as saying. “Choco Pie is not a snack. It’s our lifeline. Literally,” added the source. “We are left with 8,700 North Korean won. But the average workers here are paid 6,800 to 7,000 won a month, so the authorities are saying that we should consider ourselves lucky. That is just how typical they react to our needs,” the source added. North Korea makes an annual profit of $800 million (880 billion won), from the Gaeseong Industrial Complex. They also demanded for the workers’ pay to raised by 30 percent in March. [Kaesong]
An Updated Summary of Energy Supply and Demand in the Democratic People's Republic Of Korea (DPRK)
by David F. von Hippel and Peter Hayes 15 April 2014 This Special Report was originally published as a Working Paper 2014-2 by the Center for Energy, Governance and Security at Hanyang University, Seoul. I. INTRODUCTION During the decade of the 1990s, and continuing into the second decade of the 21st century, a number of issues have focused international attention on the Democratic Peoples’ Republic of Korea (DPRK). Most of these issues—including nuclear weapons proliferation, military transgressions, provocations, and posturing, economic collapse, transboundary air pollution, food shortages, floods, droughts, tidal waves, and, most recently the death of DPRK leader Kim Jong Il and the passing of the leadership mantle to the third generation of the Kim dynasty in Kim Jong Un—have their roots in a complex mixture of Korean and Northeast Asian history, global economic power shifts, environmental events, and internal structural dilemmas in the DPRK economy. Energy demand and supply in general—and, arguably, demand for and supply of electricity in particular—have played a key role in many of these high-profile issues involving the DPRK, and have played and will play (and are playing, as of June, 2013) a central role in the resolution of the ongoing confrontation between the North and much of the international community over the DPRK’s nuclear weapons program. [Energy]
Seeing is believing–an exclusive look inside North Korea’s cities
15 March 2014 Richard Forster Featured, Governance, Urban Development Not much is known about Pyongyang other than it has attracted visits from famous US basketball players, the chairman of Google and former US President Bill Clinton. Richard Forster visited the North Korean capital to speak with city administrators about urban development and their desire to forge links with other cities.
North Korea’s Namhung Youth Chemical Complex: Seven Years of Construction Pays Off
By Joseph S. Bermudez Jr. 10 April 2014 Summary Built during the 1970s with equipment purchased from abroad and foreign financing, the Namhung Youth Chemical Complex has developed into the nation’s “premier petrochemical processing complex.”[1][2] The facility is a major producer of chemical fertilizers, herbicides, insecticides and polyethylene sheeting—all critical to the agricultural sector—as well as a range of synthetic textiles and chemical products important to the nation’s industrial sectors. All three North Korean leaders have regularly visited the complex, committed significant financial resources to its maintenance and expansion, and emphasized its importance to the economy. North Korea has engaged in a major effort to modernize and expand the chemical complex as well as the Namhung Industrial Area (see insert) since 2006 despite international concerns—and sanctions—resulting from its nuclear and long-range missile programs. The announced increases in annual food production in 2014 are likely to have been influenced by the completion of a comprehensive and expensive seven-year project to establish, and then expand an anthracite coal gasification plant and undertake general rehabilitation of the complex.[3] [Fertiliser] [cbw]
Moscow says NATO inventing Russian threat over Ukraine
By Gabriela Baczynska and Jason Hovet MOSCOW/PRAGUE Thu Apr 10, 2014 1:00pm EDT (Reuters) - Russia accused NATO on Thursday of using the Ukraine crisis to justify its existence by creating an imaginary threat, while the alliance's head urged Moscow to pull its troops back from the Ukrainian border. NATO published satellite pictures it said showed Russia's military buildup, but Moscow immediately dismissed them, saying they were from last August. NATO Secretary General Anders Fogh Rasmussen, who accuses Moscow of amassing 40,000 combat-ready troops near Ukraine's border, said: "We have seen the satellite images day after day. "Russia is stirring up ethnic tensions in eastern Ukraine and provoking unrest. And Russia is using its military might to dictate that Ukraine should become a federal, neutral state. That is a decision which only Ukraine as a sovereign state can make," Rasmussen told a news conference in Prague. Moscow dismissed the Western concerns as "groundless". It said Rasmussen was being confrontational and not offering "any constructive agenda" for Ukraine. "The constant accusations against us by the secretary general convince us that the alliance is trying to use the crisis in Ukraine to rally its ranks in the face of an imaginary external threat to NATO members and to strengthen demand for the alliance ... in the 21st century," the Russian Foreign Ministry said in a statement. Moscow has proposed that Ukraine's neutrality should be enshrined in law, meaning it would not be able to join NATO or the European Union, a motion unacceptable for the new pro-Western authorities in Kiev. [Ukraine] [NATO] [MISCOM] [Russia confrontation]
The December 7 Factory: Producer of Maxi Pads and Naval Stealth Technology
By Curtis Melvin and Joseph S. Bermudez Jr. 09 April 2014 What has been identified as the “December 7 Factory” in North Korean media is located on the south bank of the Taedong-gang (Taedong River) in the Rangnang-guyok (Rakrang or Rangnang District) section of Pyongyang. Since its inception, the factory has been involved in the production of specialized naval vessels and military equipment. During the 2000s, in an effort to develop a non-military revenue stream, it launched product lines for civilian goods including boat renovations, playground equipment and feminine hygiene products. Civilian Economic Activities On December 10, 2010, Kim Jong Il visited the newly-built “Sanitary Goods Branch Factory at the December 7 Factory.”[1] It was the first stop in a day of guidance visits that were intended to demonstrate the leader’s attention to the needs of women. Official accounts of the visit allowed for the identification of the new branch factory in Rangnang-guyok on commercial satellite imagery. Figure 1. The December 7 Factory (October 6, 2010). Image ©2010 Google Earth. Though little information on the factory is available publicly, Kim Jong Il’s visit revealed that one of the purposes of this large factory complex is to manufacture maxi pads. The brand name, Taedonggang, is one of three known brands of maxi pads that are sold domestically. [Military economy]
Korail CEO waiting for approval to visit North Korea
Posted on : Apr.7,2014 11:47 KST News of N. Korean-Chinese plans for railway and highway raising questions of possible S. Korean involvement By Song In-geol, Daejeon correspondent and Choi Hyun-june, staff reporter News of a recent agreement between North Korea and China to build an international high-speed railroad and highway between Sinuiju (a city on the Chinese border) and Kaesong is raising questions about the fate of a scheduled North Korea visit on Apr. 24 by Korail CEO Choi Yeon-hye. If Korail does participate in the project, it would bring South Korea one step closer to the Asian continent via the North Korea-China high-speed rail project, which comes on the heels on North Korea‘s Rajin-Hasan development project with Russia. [Railways] [China NK]
EU rep says North Korea felt stable
Mar 20,2014 Glyn Ford Glyn Ford, a former member of the European Parliament who is a specialist on North Korean affairs, said the Communist regime is surprisingly enthusiastic about training officials to open up its economy to the outside world, and 20 or 30 bureaucrats are currently staying in Europe, including two at Cambridge University in Britain. After visiting North Korea last week, the 64-year-old politician was invited to the South by the East Asia Foundation and sat down with the JoongAng Ilbo on March 12 to give his perspective on the current affairs of the world’s most secretive state. Along with five other former European officials, Ford stayed in Pyongyang from March 3 to 7 and met with a series of high-ranking North Korean officials, including Kang Sok-ju, the vice prime minister, Kim Yong-il, the director of the ruling Workers’ Party’s International Department, and Ri Jong-hyok, the deputy head of the Asia-Pacific Peace Committee. Since his first official visit as a representative of the EU Parliament, Ford has visited North Korea more than 30 times so far, which he ascribed to his “long-establish connections” with officials in Pyongyang. “The main topics in our discussions [with North Korea] are probably the economy and foreign relations with Europe,” he said. “One of the key issues is modernization. We could give them very practical training in terms of economic development in new business zones and financial management.” When it comes to the atmosphere in Pyongyang in the aftermath of the brutal execution of Jang Song-thaek, the once-powerful uncle of North Korean leader Kim Jong-un, Ford said it was “calm and more relaxed” than he expected. [Jang Song Thaek] [FDI] [Training]

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MARCH 2014

Teach at PUST
Our Mission YPF is committed to supporting the Yanbian University of Science and Technology (YUST) in China, and the Pyongyang University of Science and Technology (PUST) in North Korea, through Christian-based spiritual, academic, and financial resources in North America. YPF serves as a hub to connect the two universities to organizations and individuals in North America who share common values and vision. Our Vision YPF seeks to become an organization that supports YUST and PUST to fulfill their objectives, where dedicated Christian educators and professionals train local students and help them become key members of their societies. To accomplish this goal, YPF shall: [Religion] [Education]
N. Korea's fertilizer imports from China soar in Feb.
North Korea continued to buy fertilizer from China in bulk last month, data showed Friday, as the impoverished nation has revved up efforts to increase food production. The North brought in 13,769 tons of Chinese fertilizer in February, a whopping 13 times more than some 1,064 tons from a year earlier, according to the data compiled by the Korean Rural Economic Institute (KREI). In the first two months of the year, Pyongyang imported 48,882 tons of Chinese fertilizer, which is far higher than 1,066 tons from the same period a year earlier, the data showed. "The 2013 figure is unprecedented, as the North used to buy a limited amount in the winter season. It seems to be very proactive in securing fertilizer long ahead of its usual schedule, and that indicates farm output improvement is its top priority," said KREI researcher Kwon Tae-jin. In his New Year's message, the North's young leader Kim Jong-un stressed boosting food production, saying all efforts "should go for agriculture ... in order to build a strong economy and to improve the people's livelihoods." Last year, Pyongyang bought a total of 207,334 tons of fertilizer from China, down by 18 percent from the previous year. [Agriculture] [Fertiliser]
Korea may follow Greek path
Experts call for stronger steps to lower debts This is the first of a three-part series analyzing the seriousness of Korea's debt problem and suggesting recommendations to address the issue ? ED. By Kim Rahn Korea acts as if it were an indebted man who uses multiple credit cards to cover his maturing bills. It should start to fight this vicious cycle now or risk facing the level of indebtedness that pushed Greece to the brink of bankruptcy in 2010, 20 years from now according to analysts. Even if the government’s repeated pledge of diligently addressing the problem is to be believed, the numbers look chilling and the thought of the next generation being left with a mountain of debt could be even chillier. Debts at households, the government and businesses snowballed to 3.78 quadrillion won ($3.51 trillion) in 2013, almost three times the nation’s gross domestic product (GDP). Economists are therefore calling for prompt action to prevent a potential explosion in the future. A Standard & Poor’s report, titled “Global Aging 2013: Rising to the Challenge,” showed that Korea’s government debt compared to GDP, which was 20 percent in 2010, could grow to 42 percent by 2030, 136 percent by 2040 and 313 percent by 2050. It cites Korea’s rapidly aging population and increasing social spending as the main factors. The hypothetical figure for 2040 is near the level of Greece’s 143 percent in 2010. [Ageing society] [Debt]
Jim Rogers Wants To Put All His Money Into This Country. Is It The Next China?
Forget diversification. Jim Rogers has identified the world’s next great investment opportunity, and in a recent interview the famed guru said he is willing to put all his considerable fortune there. So where is the planet’s best place to commit cash? According to Rogers, it’s the Democratic People’s Republic of Korea. Yes, that’s the formal name of what the world knows more simply as North Korea. Rogers has also been talking about farming as a terrific investment in recent days. As he said at the end of last month to Simon Jack on BBC Radio 4’s “Today” show, “If you want to make a lot of money in the future—which many people do—you should learn to drive a tractor.” [FDI]
Jim Rogers: The man who wants to put all his money into North Korea
American millionaire investor says he would put his entire fortune into North Korea if he could February 27th, 2014 Hamish Macdonald A Wall Street legend and former partner of George Soros says he is willing to invest his entire wealth into North Korea and is on the look out for potential investment opportunities through China. The Quantum Fund co-founder and prolific commodities trader Jim Rogers made headlines last year by suggesting North Korea would become a profitable emerging market and purchasing 20 one-ounce gold coins from the state owned Korea Pugang Coins Corporation to make the point. Now, just a year on, Rogers is eyeing up new opportunities to move into one of the world’s last frontier markets, telling NK News that by investing in the DPRK “the returns would outweigh the risks”. THE JACKPOT AND THE COMPETITION In January, South Korean President Park Geun-hye described reunification as “daeback” (a jackpot), saying that she believed “reunification would be a chance for the economy to make a huge leap”. Rogers, it seems, would agree. “What you’ll have is a country of 70 odd million people with cheap, educated, disciplined labor in the North, vast natural resources…with a big capital pool and management capability in the South. It will be a powerhouse”, Rogers says. “Once Korea’s united again its going to be a dynamic and exciting country.” [Unification]
N. Korean water infrastructure needs repairs – engineer
Practicing Christian offers his take on Pyongyang's version of Catholic mass March 20th, 2014 Gianluca Spezza What can a water engineer tell us about North Korean society? Well, after spending two years there, Dualta Roughneen of Ireland can say that North Korea has the vestiges of a good water supply system, though it was clearly damaged, and quite severely, by the famine and economic crisis of the mid-1990s. “From what I could see, it looked like prior to the challenges brought by the economic collapse the country would have had a reasonably good standard of community infrastructure, but it is all in need of repair now,” said Roughneen, author of the recently released North Korea: On the Inside, Looking In. And Roughneen, as a devout Christian, has other insights. For one, North Korea’s Catholic church, often accused of being for show in a nation notorious for persecuting Christians, has services but it’s difficult to gauge the sincerity of those taking part. Also, since it has no priest, the church’s services don’t really count as “mass,” as they are led by a layperson not qualified to perform all of a priest’s duties. Furthermore, Roughneen, who knew little about the North before his stay, misses many of the people he got to know during his stay, but concluded that life in a diplomatic compound, with its limited social interactions, was not normal. [Infrastructure] [Religion]
North Korea to benefit from Lincoln expertise
Posted on March 24, 2014 Professor Jon Hampton gives instruction to visiting North Korean Ministry of Agriculture officials, Mr Im Tae Yong (left) and Mr Jon Jong Nam (right).Two representatives of the Ministry of Agriculture from the Democratic People’s Republic of Korea (North Korea) were at Lincoln University for two weeks to take part in a training course in pasture development and seed production. Director in the Department of Pasture Reclamation and Utilisation, Mr Im Tae Yong, and senior officer of the External Cooperation Department, Mr Jon Jong Nam, were here on the invitation of Lincoln University’s professor of seed technology, John Hampton, who arranged the visit and the two-week course through the United Nations Food and Agriculture Organisation (FAO). The North Korean government has decided to convert around 50,000 hectares of native vegetation into pasture for feeding sheep, goats, cattle and rabbits. Part of this development includes a pilot programme supported by the FAO. “Current knowledge of pastures and pasture seed production is quite low in North Korea,” says Professor Hampton. “New Zealand, on the other hand, is internationally recognised for the quality of its pasture-based primary industries. As such, the representatives from the North Korean Ministry of Agriculture are here to gain a better understanding of how we do things, with an eye to ascertaining what species and methods would be appropriate for their environment.” As well as Professor Hampton, the course was taught by Dr Phil Rolston of AgResearch, Keith Armstrong of Global Oats Ltd, and Dr John Stevens of Flexiseeder Ltd. [Training] [Agriculture] [Pasture]
Korea Inches Closer to Railway Link with Europe
Korea has taken the first step toward connecting its railways to the Eurasian continent. The Korea Railroad Corporation on Sunday said it became an associate member of the Organization for Cooperation Between Railways (OSJD) in Warsaw, Poland. In order to connect Korean railways from Busan to Europe, it is essential for KORAIL to register to the OSJD, which makes the rules on the Eurasian continent and overseas treaties amongst member states. This makes a more realistic prospect of a planned "Silk Road" railway connecting the Korean Peninsula to Europe that lies at the core of President Park Geun-hye's "Eurasia Initiative." The initiative, which was announced in October last year, aims to strengthen Eurasian economic cooperation and prompt an opening of North Korea to lay the groundwork for reunification with the South. The OSJD invited KORAIL to a meeting of the heads of member states' railways in Pyongyang next month. [Railways] [Eurasian landbridge] [Unification]
N.Korean Regime 'Leaves Kaesong Workers with Pittance'
The North Korean regime skims a massive portion off the wages of workers at the joint Korean Kaesong Industrial Complex, leaving them with less than US$2 per month, a report says. Marcus Noland of the Peterson Institute for International Economics made the claim in a report titled "Labor Standards and South Korean Employment Practices in North Korea" released on Tuesday. "At the time of its closure in April 2013, the minimum wage at the [complex] was $67.05 per month, and once all payments and bonuses were accounted for, the average wage was $130," Noland said. "The North Korean government was thought to retain roughly 30 to 40 percent of this payment, ostensibly to cover social security payments, transportation, and other in-kind benefits." "While South Korean firms pay in US dollars, North Korea pays the workers in North Korean won converted at the widely overvalued official exchange rate," he added. "Evaluated at the more realistic black-market rate, North Korean workers may have been netting less than $2 per month," Noland said. "Monthly after tax wages might purchase roughly 2-3 kg of rice." A Unification Ministry official said the claim is exaggerated. "It's true that North Korean authorities take $50 from each worker's monthly wage of $130 and pay them 8,000 North Korean won after converting the remaining $80 at the official exchange rate of 100 won per dollar. But Kaesong workers are guaranteed a real purchasing power of $80 because they can buy daily necessities and home appliances at the official exchange rate in a goods supply center instead of the black market." [Kaesong][Disinformation] [MISCOM]

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FEBRUARY 2014

Game-Changing Agricultural Policies for North Korea?
By Randall Ireson 26 February 2014 While there has been periodic speculation since Kim Jong Un took power about his appetite for reform, a recent development may foretell substantial changes for North Korea’s agricultural sector. On February 6-7, 2014, North Korea held its first national conference of farm sub-work team leaders in Pyongyang.[1] The conference was reported by KCNA six times, including the full text of Kim Jong Un’s instructions to the group in three languages and the publication of commemorative photographs of thousands of attendees with the Supreme Leader.[2] Kim’s personal attention and the presence of other high ranking officials[3] strongly indicates that the policies previewed at the meeting represent the direction of agricultural development for at least the immediate future. Implementation remains uncertain, but Kim’s letter suggests game-changing modifications to farm policy. [Agriculture]
The Demise of Jang Song Thaek and the Future of North Korea’s Financial System
By Bradley O. Babson 24 February 2014 The demise of Jang Song Thaek and those loyal to him just may be good news for the prospects of reforming the North Korean financial system. This system is perhaps the most perverse on the planet, having evolved in a context defined by North Korea’s isolation and inward orientation, its dogged adherence to the ideals of a State-directed economy, its inevitable need for mobilizing foreign exchange to meet unavoidable foreign expenses, its requirement for financing imports deemed essential for survival, and the international sanctions that have motivated Pyongyang to find all kinds of creative ways to get around the obstacles. Jang’s long history of operating at the epicenter of this system as an influential money manager for the Kim family and his apparent manipulation of the system for his own ends, suggests that his demise is likely to have repercussions on the future of the financial system itself. [Jang Song Thaek] [Finance] [Agency]
Pop-Up Pyongyang: Training Locals through Small-Scale Projects
Calvin Chua | Wednesday, February 19th, 2014 (This is part 2 of a two part series by Calvin Chua. The first part can be found here.) Apart from delivering basic infrastructure, such as smooth roads, constant electricity and water supply, leaders in the DPRK need to rethink whether large-scale physical projects, especially for the tourism and service sector, are the only way to achieve their grand visions. Instead of looking at fulfilling big quantitative targets, perhaps it is time they look towards small-scale quality interventions within the existing city as a possible alternative. These small projects could include short-term pop-up spaces that could host restaurants, cafes and exhibitions, common elements within the developed world but currently absent in North Korea. [Training]
CE 2013 Annual Report:
Despite being a turbulent year, 2013 saw a number of firsts for Choson Exchange as we continue to scale up our activities and impact. We launched our “Women in Business” program (WIB), focusing on female managers and entrepreneurs in North Korea. Despite “war mobilization” in March and April, we continued to deliver opportunities for young professionals in Korea. About 260 Koreans took part in our workshops in 2013, with a majority being female participants. We also started to look at how we can more systemically bring knowledge and exposure to the provinces. In November, we launched our first ever workshop outside Pyongyang. 5 provinces sent representatives to attend this event.
Teaching at Pyongyang University of Science and Technology
A video by Helen Kibby from Taranaki who has taught at PUST.. [Education] [EWA] [PUST]
Journey to the East: Strange Encounters with Shower Villas
Calvin Chua | Thursday, February 13th, 2014 | No Comments » (This is part 1 of a 2-part report. The concluding portion will be published next week) The final months of 2013 in North Korea saw a strange concoction of visionary economic targets and political purges. Although such major events do have an impact on the feasibility of projects, but they do not reveal the problems in the way projects are carried out by local leaders, mainly the lack of a technical and qualitative understanding in delivering a project. These issues became evident during a workshop on developing tourism zones in Wonsan last November. Our site visits to a beach resort in Wonsan and Sinphyong Kumgang Scenic Beauty Resort; and interaction with various participants provided some insights into their obsession with big projects and the difficulties in achieving them. [Training]
240,000 N.Koreans Have More Than US$50,000
As North Korea's trade with the outside world and market size grow, more North Koreans have assets worth over US$50,000. The government here estimates that some 240,000 North Koreans have assets between $50,000 and $100,000. A government source on Monday said analysis of data about North Korea reveals the emergence of a new meritocracy which transcends the previous focus on ideological background. The source said many high-ranking Workers Party officials, diplomats and traders are part of this new class. Meanwhile, North Korea is apparently permitting the circulation of dollars, euros, yuan and other foreign currencies in 14 new economic development zones created last year as well as financial transactions using them. Pundits expect the measure to stimulate the development of a nascent market-based economy in the reclusive country. The laws on economic development zones enacted last year stipulate that designated currencies other than the North Korean won can be used in the zones and can flow freely in and out of the country. Yoo Wook, an attorney specializing in North Korean law, said, "This means it has become legal to circulate foreign currency on a nationwide level." Although foreign currencies are used habitually in the black and grey market, dollars, euros and yuan are only permitted in certain designated areas like the Kaesong Industrial Complex and Rajin-Sonbong economic zone. Experts were skeptical whether the latest changes will lead to any great boost in foreign investment in the North. Kim Byung-yeon at Seoul National University said, "If foreign currency is liberalized, the investment climate will improve, but risks like constant capricious policy changes mean few businesses are willing to invest their money there." [Middle class]
Kaesong Complex to Get Internet Access
The inter-Korean Kaesong Industrial Complex will finally get access to the Internet under a new agreement between the two sides. The Unification Ministry said on Sunday the two sides in a meeting on Friday discussed how and when to set up the connection and guarantee confidentiality. North Korea in principle agreed to permit Internet access last year but kept dragging its heels till now. The ministry will leave it to provider KT and the [North] Korea Posts and Telecommunications Co. to work out the details. [Kaesong] [Internet]
South Korea a veritable tax break paradise for chaebol
Posted on : Feb.11,2014 16:11 KST Modified on : Feb.11,2014 16:46 KST Despite South Korea’s progressive tax rates, large corporations privy to most favorable tax situations By Ryu Yi-geun, staff reporter In May 2013, Apple CEO Tim Cook testified before Congress. Apple, the largest company in the US, was suspected of tax evasion. The Senate’s Permanent Subcommittee on Investigations (PSI) accused Cook of hardly paying any taxes on the US$74 billion that Apple earned overseas in the four years since 2009. For example, Apple subsidiary Apple Operations International - based in Ireland, a tax shelter - earned US$30 billion during this period, but it did not pay a penny in corporate taxes. Cook responded to the senators’ questions by insisting that Apple had paid taxes in accordance with the laws in the US and other countries. In fact, Cook turned the tables by making a request to Congress. Suggesting that the maximum corporate tax rate of 35% (39.2% including local taxes) is too high, he asked lawmakers to lower the tax rate to the mid-20% range. He also stressed that Apple had paid US$6 billion in taxes on the US$19.7 billion in profits on sales of the iPhone and other products in the US in 2012 alone. Apple’s effective tax rate is 30.5%. Effective tax rate, which refers to tax as a percentage of a company’s profits, is calculated by dividing taxes paid by taxable income. The lower the effective tax rate, the less tax a company pays. What Cook wants is already a reality in South Korea. The maximum corporate tax rate in South Korea is 22% (24.2% including local taxes), even lower than what Cook asked US Congress for. The rival of Apple, the world’s number-one company in terms of total stock value, is Samsung Electronics, the largest company in South Korea. So just how much of its profits is Samsung Electronics paying in tax? In 2012, Samsung had 20.75 trillion won in profits and paid 3.35 trillion won in taxes (figures taken from reports from auditors and individual businesses). The effective tax rate disclosed by Samsung is only 16.1%. [Chaebol] [Tax]
Rajin-Hasan Project going ahead as a “special case”
Posted on : Feb.11,2014 16:27 KST North Korean Rajin port S. Korean officials say ban on exchange with North Korea will remain in place until Pyongyang shows remorse for 2010 Cheonan sinking By Choi Hyun-june, staff reporter Explaining that the Rajin-Hasan Project is a “special case” that is going ahead despite the May 24 measures, Unification Minister Ryoo Kihl-jae said that North Korea would have to take meaningful steps before the May 24 measures could be revoked. During a plenary session at the National Assembly on Feb. 10 on issues related to diplomacy, unification, and national defense, the minister said that the May 24 punitive measures against North Korea would not be lifted until the North took action showing its remorse for the sinking of the Cheonan warship. The May 24 measures, instituted after the Cheonan was sunk in 2010, constitute a complete ban on economic activity, exchange, and cooperation with North Korea. [Rason] [Sanctions] [Cheonan] [Continuity]
Surfing in on the Russian Gravy Train
By Christopher Green | February 10, 2014 Start talking about economic development and one can discern two main camps of North Korea analyst. There are those who think that economic development is perennially possible in Northeast Asia’s contemporary basket case, and so keep eyes and ears open wide for any sign whatsoever that change might be coming. This group often over-reads relatively minor shifts. The other group is absurdly over-confident that the regime in Pyongyang is so fearful of an economically empowered populace that it wouldn’t dream of threatening its iron-fisted grip on power by embracing any meaningful policy alterations. This group tends to dismiss signs of change as irrelevant fluff. Get into the nitty gritty of on-the-ground economic reality, however, and the waters start to muddy awfully quickly. What did these two seemingly divergent camps make of the recently completed railway between Russia and North Korea? What of the MoU on joint rail-freight development that was signed between Russia and South Korea in November last year? And, finally, what about the fact that, on February 10, South Korea’s main state broadcaster KBS broadcasted an exclusive interview with the executive director of POSCO Corporate Strategic Planning Dept. I, Jeon Woo-sik, wherein he explained when, where, why, who, and how an onsite inspection team made up of 18 staff from three major Korean firms is poised, literally and figuratively, to descend upon Rajin for a bit of a look around? [Railways] [SEZ] [Rason]
Choson Exchange 2013 Annual Report - Women In Business
Despite being a turbulent year, 2013 saw a number of firsts for Choson Exchange as we continue to scale up our activities and impact. We launched our “Women in Business” program (WIB), focusing on female managers and entrepreneurs in North Korea. Despite “war mobilization” in March and April, we continued to deliver opportunities for young professionals in Korea. About 260 Koreans took part in our workshops in 2013, with a majority being female participants. [Training]
Case Study: Business Training for North Korean Women
By Geoffrey K. See 05 February 2014 In the fall of 2012, Choson Exchange inaugurated a Women in Business (WIB) program in North Korea. The program was meant to encourage the participation of females in business and entrepreneurship training among our target demographic of 20-40 year old young professionals. Participants would attend a workshop in North Korea, from which, we would interview and select the best participants to take part in a follow-up overseas study trip. For the past five years, our programs have been focused on economics, business and legal training for young professionals in North Korea. But doing a program targeted toward this oft neglected and underrepresented demographic made us excited and nervous at the same time. We have always wanted to do something for the female managers that underpin the emerging small and medium-sized business sector. However, there is little precedent or state sanction for this type of work. On occasion, our North Korean partners tried to steer us instead towards training on Special Economic Zones, a high priority issue with significant state encouragement. And the few professional training initiatives that exist for North Koreans have predominantly male participants. Initial reactions to this program from North Koreans were mixed. Some North Korean participants from past programs were bemused but supportive of the idea. Our partners were initially unsure where to even find enough female participants, much less how to ensure they could attend the overseas component of the program. Some male participants in our in-country program jokingly accused us of sexism, and one male participant even admonished, “You have to interview us for the overseas program… men make all the important decisions!” Obviously, he failed to grasp what we were trying to do. [Training]
Businessmen seek a ‘second Kaesong Complex’ in N. Korea
Posted on : Feb.5,2014 15:50 KST Current restrictions on inter-Korean trade and investment would prevent any such new investment projects in the North By Lee Chun-jae and Choi Hyun-june, staff reporters The Korea Federation of SMEs (Kbiz) announced plans on Feb. 4 to push for a “second Kaesong Industrial Complex” in North Korea. Chairman Kim Ki-mun met with reporters that day to discuss the plan. “North and South Korea have long been in agreement on the need for a second Kaesong,” he said. “We plan to push for the second complex this year as a way of developing models of the kind of inter-Korean economic cooperation we need for reunification.” Kim went on to mention the North Korean city of Nampo as a strong candidate. “North Korea wants to build a complex in the Rason Special Economic Zone, but it’s not really a suitable location because of the bad electricity and distribution conditions,” Kim explained. “To produce the kind of results that Kaesong has gotten, two good candidates would be Haeju and Nampo on the West [Yellow] Sea coast, which have good electricity and distribution infrastructure,” he continued. “And Nampo would be more suitable than Haeju, which has a heavy naval presence.” [SEZ] [Inter-Korean business] [Kaesong]
N.Korea's Potemkin Village
Kim Sung-min Kim Sung-min An ethnic Korean in the Chinese border city of Dandong had nothing but praise about life in the North Korean capital of Pyongyang. A businessman who shuttles between China and the North trading goods, he was talking to the Chosun Ilbo in a restaurant in Dandong last month and showed photos on his phone of a two-story home with a picturesque view and an imported car parked next to it. "Whenever I go to North Korea every three to four months, the North Koreans roll out the red carpet and provide me with this accommodation," he said. "They say North Korea is a poor country, but not Pyongyang."
Internationalizing the Kaesong Industrial Complex and the Troubles of Orascom
Posted on 03 February 2014. Tags: economics, Kaesong Industrial Complex, trade By Troy Stangarone In the aftermath of last spring’s shutdown of the Kaesong Industrial Complex, the Park administration has sought international investment to serve as a bulwark against future actions by North Korea that would endanger Kaesong’s operations. While finding ways to raise the cost of a future shutdown for North Korea is a sensible approach, the challenge is how do you convince foreign firms who are driven more by considerations of costs, profit potential, and stability rather than national aspirations to invest in a project with high levels of political risk driven by national concerns? In a piece in Global Asia and at a conference in Seoul last November co-hosted by the Institute for Far Eastern Studies and the Export-Import Bank of Korea, I argued that attracting international investment to Kaesong would require a series of steps. These include the return of normal operations, the allowance of basic international standards for communications and transit, new South Korean investment [Kaesong] [Orascom] [FDI]
Claims that OTMT is freezing its investment in North Korea are entirely inaccurate.
Cairo, December 8th, 2013, Orascom Telecom Media and Technology Holding S.A.E. (“OTMT”) announced today that recent reports in some media sources claiming that OTMT is freezing its investment in North Korea are entirely inaccurate. Where OTMT currently has no plans for new investments in North Korea, the company is open for new opportunities in this market, in which it has been investing for six years. The company has not announced any intentions to freeze investments in the North Korean market. -END- About Orascom Telecom Media and Technology OTMT is a holding company that has investments in companies with operations mainly in Egypt, North Korea, Pakistan, Lebanon and other North African and Middle-Eastern countries. The activities of OTMT are mainly divided into its GSM, media and technology and cable businesses. The GSM activities include mobile telecommunications operations in Egypt, North Korea and Lebanon. The media and technology division consists of OT Ventures/Intouch Communications Service and the OT Ventures Internet portals and other ventures in Egypt, including LINK Development, ARPU+ and LINKonLINE. The cable business focuses on the management of cable networks. OTMT is traded on the Egyptian Exchange under the symbol (OTMT.CA, OTMT EY). [Orascom] [FDI] [ICT]
In search for miracles and substitutes: reform in the DPRK
Masik Pass, the latest in a long line of quick fix solutions. by Tatiana Gabroussenko , January 27, 2014 The course of the current North Korean leader Kim Jong Un is often referred to as being radically different from his father and grandfather. One of the oft cited examples is the construction of Masik Pass Ski Resort—a project which is expected to shame Switzerland and Thailand, and make foreign tourists flock to North Korea with heaps of coveted foreign currency (that is sure to end up in the DPRK’s treasury). In the view of many foreign observers, this idea sounds rather different to the allegedly less ambitious projects exposed by Kim’s predecessors, such as the development of nuclear weapons. In actual fact, the Masik Pass project fits quite well into an established practice of the North Korean leadership. They have always had a weak spot for ‘miracle’ technical solutions to complex structural problems. From time to time, the North Korean people find themselves mobilized for grand projects; which are endorsed by the Leader, but are not backed up by proper technical expertise, and either produce little of what is hoped for or make matters worse. The North Korean countryside has been a popular arena for experiments of this kind. Agriculture in the DPRK was collectivized in 1953, and has never been able to fully satisfy the dietary needs of North Koreans. To eliminate the shortfall without fundamentally changing who owns the land or who controls it, the DPRK’s leadership has tried a number of schemes.

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JANUARY 2014

Assessment of Energy Policy Options for the DPRK Using a Comprehensive Energy Security Framework
by David von Hippel and Peter Hayes 30 January 2014 This Special Report was originally published as a Working Paper 2013-4 by the Center for Energy, Governance and Security at Hanyang university, Seoul. I. Introduction The term “energy security” has typically meant little more than securing access to sufficient quantities of fossil fuels at reasonable prices. A broader concept of energy security is needed to adequately consider the full costs and benefits of potential energy policies designed to cope with not only fuel sufficiency and price, but also complex challenges ranging from climate change, to local energy-related pollution, to the social, political, and radiological fallout of the Fukushima nuclear power plant accident in 2011, to cite just a few examples. This paper updates the authors’ concept of a comprehensive energy security assessment framework that includes not only energy supply and economic considerations, but also technological, environmental, social/political/cultural, and international/military security dimensions of energy security. We apply this concept to an assessment of selected energy sector redevelopment “paths”—essentially, quantitative descriptions of energy futures—for North Korea, comparing the relative quantitative and qualitative costs and benefits from each of these energy security dimensions from both the perspective of the DPRK and from the perspective of the broader Northeast Asia (and interested parties) region. We conclude with an exploration of the energy policies that our energy security assessment identifies as “robust”, that is, useful across the full range of energy security dimensions. [Energy]
Framing Epistemic Communities in North Korea: From Fungus to Botanical Gardens
By Robert Winstanley-Chesters | January 30, 2014 | No Comments >Foreign epistemic communities visit Pyongyang Botanical Gardens. AAAS Center for Science Diplomacy Visit 2012 | Image: Jonguo Liu/AAAS It is perhaps readily forgotten in the fevered clamour to see the hidden hand of centralized dictat behind all North Korea’s governing decisions that running an entire state from brutalist marble edifices in the nation’s capital doesn’t actually work particularly well. Moreover, propaganda and narrative formation is not a simple act of high political creativity, though it is also that. In other words, it is easier to write a story based on facts, however minimal they may be, than to create the entire tale from scratch. Thus, while most are under-resourced, many are demonstrably ineffective and perhaps all are primarily engaged in the business of fiddling while Rome burns, North Korea has its state research institutions, and they actually do things. Though everything of meaning still starts with a Kim.- Christopher Green, Co-editor
Korea Among Slowest-Growing Asian Economies
Korea's economy grew 2.8 percent in 2013, rebounding for the first time in three years but still ranking among the slowest economies in Asia, the Bank of Korea said Thursday. GDP grew 6.3 percent in 2010, but that fell to 3.7 percent in 2011 and even further to two percent in 2012.
Electricity At Last For Rason?
Andray Abrahamian | Wednesday, January 22nd, 2014 A crappy snapshot of electricity-generating home turbines, taken from a moving bus. Is the last piece of Rason’s infrastructure puzzle about to slide into place? This week reports emerged that on the Chinese side “land requisition, house demolishing and relocation, and erection of power line” was “by and large completed” to provide power to Rason Special Economic Zone from Jilin province. The plan to import electricity into Rason from the Chinese grid has been rumored for at least five years but if this week’s news holds, it appears things really will start moving in June. Still, until I actually see pylons straddling the Tumen river… [Rason] [Electricity]
Egyptian Telecom's Investment Frozen in N.Korea
Egyptian telecom service provider Orascom, which provides mobile services in North Korea, is unable to send back around US$400 million of its investments, Voice of America reported Wednesday. An audit report by Deloitte posted on the Orascom website recently says, "North Korea has implemented currency control restrictions and, in particular, rules surrounding the repatriation of dividends to foreign investors." Orascom started offering 3G mobile services in North Korea in a joint venture with North Korea's postal service in 2008. Koryo Link is 75-percent owned by Orascom and 25 percent by the North. It has managed to attract 2 million subscribers. According to the audit report, Koryo Link's gross profit during the first nine months of last year rose 40 percent from the same period of 2012 to $230 million thanks to a rise in the number of subscribers. But red tape is preventing it from sending back the profits. Orascom chief Naguib Onsi Sawiris was quoted by U.K. website Middle East Online late last year as saying he would make no more investment in North Korea until the company sees some returns. [Orascom] [FDI] [Mobile]
The End of the Era of Huge Profits: Mainland Businessmen Talk Sino-DPRK Border Trade
By Matthew Bates | January 23, 2014 | As the influence of Jang Sung-taek recedes from Pyongyang and the borderlands trade between China and North Korea attempts to find a new footing, Chinese views of the business environment in the DPRK are more important than ever. Thus we return to an extensive article originally published in the Chongqing Morning News (????) in April 2013. The article has been widely reproduced in Chinese online, and we can now bring you the full English translation, having done some excavation of its contents back when the piece was originally published. What seems of note in the article is the picture it gives of the historical development of Chinese private trading and investment in the DPRK from the 1990s to today, and also the sense it gives of the outlooks of the Chinese businessmen featured (under pseudonyms). Their experiences remind us of some familiar economic lessons, including that: 1. Imperfect markets can lead to extraordinary profits; 2. this may be particularly true amidst circumstances of extreme human desperation; 3. planned economies, especially where controlled by fear, are slow to acknowledge and adapt to new conditions, especially conditions beyond their dictate (this article suggests 11 years from when Chinese private traders first entered the DPRK to when North Korean representatives began to bypass them effectively; but 4. following formal acknowledgement of the problem, can be highly systematic in their response. [China NK] [Trade]
Reviewing economic policy in 2012-2013
Geoffrey K. See | Monday, January 13th, 2014 | No Comments » Picture: One of the new tourism zones we visited with the local administrators last November while running economics and business workshops in the provinces In 2012, reports emerged that North Korea was preparing for changes to its agricultural policy. While the exact details were disputed, the basic outline was that the State would share agricultural outputs with farmers, and farmers would be allow to sell their share of the output. In addition, the size of the collective would be reduced, potentially to the size of a household. Alongside these rumors were many others regarding changes to the management of state-owned enterprises and to the financial system, mostly under the rubric of what was termed a “new economic management system in our style.” In April last year, Pak Pong Ju, who initiated economic policy changes in 2002-2006, was brought back for his second-term as Premier after a long absence from the political scene dating to 2010. [Agriculture] [Economic reforms]
North Korea’s ‘New Economic Management System’: Main Features and Problems
Park Hyeong-jung Senior Research Fellow Korea Institute for National Unification I. Introduction Since the installation of Kim Jong-un as its supreme leader two years ago, North Korea (Democratic People`s Republic of Korea) has been rearranging its state and party systems. One important change is the way its economy is handled. Officially called the “Economic Management System in Our Style,” the new approach is often called the “June 28 Measures” among South Korean observers in reference to the policy adoption in June 2012. This study describes the basic concept of the New Economic Management System and looks into how it is being implemented. Chapter II identifies the new system from the viewpoint of socialist economic reform. Chapter III introduces the core practices of the new system as explained in North Korea`s official documents. Chapter IV observes how the new system has been applied as suggested by Radio Free Asia reports. Chapter V summarizes the above contents and offers an assessment of the situation. [Agriculture] [Economic reform]
7 Foreign Businesspeople to Visit N.Korea Next Month
Seven European and Asian businesspeople are expected to visit North Korea in mid-February to look into investment opportunities there. Organized by the Korean Friendship Association, a pro-Pyongyang organization in Spain, the seven from Australia, Italy, Spain, Taiwan, Thailand and the U.K. will meet with North Korean officials and find out where to invest, Radio Free Asia reported Tuesday. The North wants them to put money into development of mineral resources like titanium, banks for the development of the mining and other industries, production of "coal engines" developed by North Korean scientists, and ginseng and other medicinal plants. The required minimum investment is 1 million euros for underground resources, 500,000 euros for coal engines, 20,000 euros for herbal medicines, and 33,000 euros for bank stocks. [FDI]
How Capitalist Is N.Korea?
A nascent market economy began to develop across North Korea after the famine of the mid- to late 1990s, which prompted many to seek other ways to make a living rather than relying on the state. Now more North Koreans are believed to rely on the informal market economy than in East Germany, the Soviet Union and China when they opened to the outside world. More than 80 percent of North Koreans are apparently buying and selling goods in the black market or engaging in other commercial activities to make ends meet, learning about free market economics. Experts say the trend is wide-spread and mature enough to dispel concerns that North Koreans, once reliant on state handouts, would have a hard time adjusting to capitalism if the two Koreas are reunited. [Marketisation] [Takeover]
Think Tanks See Hope in N.Korean Capitalism
Most North Koreans now rely on open-air markets or other forms of commerce to make a living, which would allow the impoverished nation to merge with South Korea's free market economy five years after reunification, think tanks say. No longer dependent on unreliable food rations, some 90 percent of North Koreans now derive a certain proportion of their income from market activity, the Korea Institute for International Economic Policy estimates. The institute based its analysis on 2008 UN census data on the North. "Dependency on open-air markets probably increased due to a shortage of rations stemming from international sanctions and [North Korean leader] Kim Jong-un's reforms," Jeong Hyung-gon at the institute said. And Kim Byung-yeon of the Institute for Peace and Unification Studies at Seoul National University said, "No former socialist country, including East Germany and China, were as developed as North Korea in terms of these markets." A study of North Korean defectors by Kim's institute showed that more than 74 percent had experience selling goods in open-air markets. They derived 70 to 80 percent of their income from unofficial economic activity and spent 80 to 90 percent of their incomes buying goods in informal markets rather than state-run stores. Cho Bong-hyun of the IBK Economic Research Institute said the emerging market economy in North Korea is now an "irreversible trend." [Marketisation]
N.Korean Officials Learn Capitalism in Singapore
Around 260 North Korean bureaucrats and other officials took part in an economic training program last year arranged by a non-profit group in Singapore called the Choson Exchange, the group said on its website on Monday. The North Koreans listened to lectures on economics and entrepreneurial topics. Most of the training took place in Pyongyang, but some was offered in Singapore and other foreign countries. More than half of the participants were women, and 90 percent of those who took part in the overseas portion. Geoffrey See, the founder of the group, visited North Korea on Dec. 24 to check if the training program would continue in 2014 after the execution of former eminence grise Jang Song-taek. He stayed in Pyongyang until the end of 2013 and interviewed nine fresh candidates. North Korean officials are apparently pleased with the program and hope to see it continue. [Training]

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