DPRK Economy, trade and business15

Economy, economic policy, trade, and business

2015
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Articles on current developments, compiled by Tim Beal.
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DECEMBER 2015

NK TV, Internet filled with capitalistic ads
By Choi Sung-jin "From diet to diabetes." This is an advertising phrase that promotes "Unicolon," a North Korean drug that allegedly strengthens the immune system, on an Internet site of the communist country. The website, Today's Joseon, has recently opened a corner that introduces about 60 choice items reportedly developed through the North's technology. They range from "Sex Enhancer," the North Korean version of Viagra, made from natural herb medicine, to "Hwiparam" (Whistle), a passenger car made by Pyeonghwa Motors. The rather unusual fad of commercial advertisements in the socialist country seems to have some political purpose, North Korea watchers here said, suggesting Kim Jong-un's promise of "better lives for people" is being kept. "Four years have passed since the third-generation Kim took over," said Cho Bong-hyun, a fellow at the IBK Economic Research Institute. "And the rush of commercial ads appears aimed at demonstrating his economic accomplishments, as seen by what they view as high-quality and sophisticated consumer items." [Media] [Unique]
N. Korea's economic policy 'similar to China in 1980s'
By Choi Sung-jin North Korea's economic development policy since Kim Jong-un took over in 2011 is similar to the Chinese model of reform and openness in the 1980s, an expert said Monday. "North Korea has been adopting its own economic management method and economic development zone policy the past four years, which are similar to China's economic reforms and market-opening policy in the 1980s," said Kwon Young-kyung, a professor of Institute for Unification Education, at a workshop. Kwan cited the North's "vegetable garden assignment system" as an example. Under the system, the government makes people jointly cultivate an area, but allows the individuals to sell part of the produce to encourage production. China implemented a similar scheme, called the "agricultural production responsibility system," from 1978-1981. Kwon noted that unlike his father, Kim Jong-un was taking a step-by-step, experimental approach to advance economic management, like China's gradual reform process in the 1980s. The late Kim Jong-il conducted a sweeping reform measure, such as abolishing the rationing system, across the board. "The North has enacted an economic district development law, designating 26 special districts and development zones," Kwon said. "This seems to imitate China's special economic zones, which served as beachheads for expanding reforms and openness to the rest of the country." This notwithstanding, it is hard to say if all these steps reflected the young North Korean leader's will to reform and open up his closed country, Prof. Kwon said. North Korea's propaganda machine had said that these economic development districts were aimed at improving people's livelihoods, but had said nothing about reform and openness. Another expert called for the need to induce North Korea to open up more to outside world with guarantees that the allies would not seek unification through absorption. "Myanmar's recent rejoining of the international community is thanks in large part to the strong and consistent U.S. message that it would not pursue a regime change in the authoritarian country," said Professor Kim Tae-hyun of Chung Ang University. "In order for the U.S. and South Korea to induce North Korea's changes through engaging it, the allies must persuade the North's leadership that such changes would never lead to the collapse of their regime." [Economic reform] [China model]
Slow progress for North Korea’s cautious reforms
16 December 2015 Author: Andrei Lankov, Kookmin University What does the future hold for North Korea? Sometime ago, I had the relatively rare opportunity to have a free chat with a North Korean merchant. A woman in her forties, the wife of a mid-ranking official, is running an import business dealing in consumption goods. But, unlike the majority of people with the same background, she also has a keen interest in elite politics. When talking about the most desirable future for her country, she said: ‘we do not need reform and opening up like China, all we need is reform’.This undated picture released from North Korea's official Korean Central News Agency (KCNA) on December 4, 2015 shows North Korean leader Kim Jong-un inspecting the 122 tree nursery plant of the Korean People's Army (KPA) at an undisclosed location in North Korea. (Photo AFP/KCNA via KNS). It seems that the Supreme Leader, Marshall Kim Jong-un, shares this idea. Since 2012 North Korea has undergone cautious and slow reforms, without opening the country. The North Korean government is slowly changing how it manages the economy, shifting control away from the state to the market, but it is still maintaining (and, indeed, strengthening) its political control. [Economic reform] [China model]
North Korea holds first finance industry conference in 25 years
Posted on : Dec.15,2015 16:44 KST An unofficial market, called “jangmadang,” in Anju, South Pyongan Province. (provided by Cap Anamur) Conference a possible sign that amid economic recovery, North Korea trying to bolster its financial system North Korea hosted the first national conference of employees at financial institutions in 25 years. The last time such a conference was held was Sep. 1990, while Kim Il-sung was in power. Some analysts think this can be regarded as an effort to improve the financial system in the North to enable the unobstructed circulation of funds, given that the economy is recovering to some extent. This recovery has been achieved thanks to “unique North Korean methods of managing the economy” implemented under the Kim Jong-un regime, namely an increase of autonomy and incentives at factories that were included in the so-called May 30 Measures. Measures for improving the financial system may be announced at the 7th Congress of the Korean Workers‘ Party, which will be held for the first time in 36 years early in May 2016.
Investment Risks and Riddles: Zhejiang Businessmen and the DPRK
BY Matthew Bates | December 15, 2015 When official data from the DPRK grows scarce, Chinese sources on North Korean trade become alluring and vital. Directing our energies toward Chinese sources and narratives promises fresh information on Sino-North Korean economic relations. At the same time, such information can be problematic. Many Chinese writing about North Korean economics and trade suffer informational disadvantages relative to Western countries, which tend to have unfettered access to the internet and greater familiarity with English-speaking international institutions. Authors in China also have more exposure to, and incentives for, misinformation in representing their businesses. With these caveats in mind, what follows is a 2013 article which purports to report on the increasing importance of North Korean economic relations with the Chinese province of Zhejiang, which lies just south of Shanghai. Reporter Qian Hejin conveys the story of an ethnic Korean member of the Zhejiang Merchants National Business Council, Cui Dongyuan, who is understandably keen to emphasize the golden opportunity presented by economic relations with the DPRK. [China NK] [Trade]
North Korea’s Exploration for Oil and Gas
By Joseph S. Bermudez Jr. 14 December 2015 Despite almost 50 years of exploratory surveys, test drillings, foreign investment and assistance and tantalizing potential, North Korea has yet to definitively identify any proven commercially exploitable reserves of crude oil or natural gas. The reasons for this are somewhat complex, but they can be distilled into three broad elements: The failure to resolve competing maritime claims with China, and possibly with South Korea, Japan and Russia; The inability to acquire or produce modern drilling equipment and technology; and The financial and political risks that are associated with oil and gas exploration and development with North Korea. China has an ever increasing thirst for oil to fuel its growing economy and society. It has been aggressively securing and developing oil and gas reserves throughout its economic exclusion zones for many years. During the past ten years, it has become even more aggressive by extending these efforts into disputed areas such as the Senkaku Islands and the South China Sea. With regard to North Korea, Beijing has been in a dispute with Pyongyang over maritime borders since the 1950s. This dispute has become more focused since the 1980s with the belief that there are significant oil and gas reserves within the West Sea. North Korea has a critical requirement to acquire modern drilling rigs and technology in order to drill exploratory wells in a comprehensive and systematic manner, yet it is unable to either domestically produce or acquire overseas these same drilling rigs and associated technology. A key factor in this is that China has not permitted modern drilling equipment to be sold to North Korea, both as a means of keeping pressure on Pyongyang to resolve the existing maritime boundary dispute and in response to international sanctions on North Korea. [Oil] [Sanctions]
Will North Korea embrace market reform?
12 December 2015 Author: Khang Vu, Colby-Sawyer College Since Kim Jong-un inherited the throne from his father in 2011, there has been widespread debate over the possibility of North Korean economic reform. A 2015 report on the North Korean economy pointed to domestic markets expanding both in size and quantity, despite periods of government suppression. Black markets have long existed in North Korea, but the growth of formal markets signals progressive changes in the North Korean economy. So how far can these markets go? [Marketisation]
An economic “punching bag”? South Korea taking hits on all sides
Posted on : Dec.7,2015 17:18 KST Survey shows evidence of S. Korea losing technological edge over China and price advantage over Japan South Korean economy taking hits from China on technological edge and Japan on price advantage With South Korea losing its advantage over its trading rivals - China in the area of technological edge and Japan in the area of price competitiveness - there is increasing fear that the country is being reduced to a punching bag that is taking hits from both sides. On Dec. 6, the Federation of Korean Industries (FKI) released the results of a survey of 30 organizations and associations in leading domestic industries - including semiconductors, automobiles, machinery, steel, and petroleum - that compared the competitiveness of South Korea, China, and Japan. The survey showed that, in regard to the technological gap with China, seven out of 24 organizations said that South Korea had already been overtaken by China. The other organizations said that, while South Korea remains in the lead, it will soon lose its technological advantage over China, with five organizations predicting this will happen within five years and 12 within three years. In regard to price competitiveness with China, 21 organizations, or 87.5%, said that they were falling behind. Only one said it was on par with China, and only two said they retained an advantage. [Sandwich]
Korea lags behind Japan, China in prices, technology
By Choi Sung-jin Updated : 2015-12-07 12:05 Local analysts have long lamented that Korea Inc. is sandwiched between high-tech Japan and low-cost China. This still remains true but the two giant neighbors have switched positions. Made-in-China products, which used to challenge Korean goods with low prices, are now moving ahead of the latter in terms of technology. At the same time, Japanese exports, which have an edge on price competitiveness thanks to a weak yen, are threatening to crowd Korean competitors out of the market, according to a recent survey. According to a survey the Federation of Korean Industries conducted on 30 industry groups and business associations, 21 of the 30 responded that they are lagging behind in price competitiveness. Nineteen industry associations said Chinese competitors have already caught up with them in technology, too, or will do so in three years. [Sandwich]
Learning from Spain's senary industries
The wine cellar at Codorniu, the oldest cava-producing company in Barcelona, Spain / Courtesy of Codorniu Spain's wine, artichoke and jamon have successfully established their global reputation by combining tourism with primary production and secondary processing industries. This is the first of a two-part series on Spain's senary industries. — ED. By Yun Suh-young BARCELONA, Spain — Visiting farmland and production facilities of popular Spanish specialties such as cava, jamon and even artichokes have become sought-after tour programs for people in search of a unique experience in Spain. The programs were the idea of local producers who were seeking new ways of commercializing and promoting their products, and creating revenue streams. They decided to integrate their resources into a single package — combining the primary, secondary and tertiary sectors into the business. The relatively new term, "senary industry," or "sixth-level industry," although the concept has existed for years, defines the activities of these producers. It refers to the combination of primary production industries (agriculture and fisheries), the secondary processing industry and the tertiary service industry (1+2+3=6), which increases the competitiveness of the original agricultural products. [Senary]
Korean Businesses Drop Out of Global Top 500
Korean firms are dropping out of the Financial Times' annual Global 500 list of the world's largest companies as the economy remains in the doldrums. The latest showing is the slimmest since 2001. ? Chinese, U.S. Rivals Soar Ahead Only four Korean companies were included: Samsung Electronics, Hyundai, SK Hynix and KEPCO. The number peaked at nine in 2006 and 2009 but has been dwindling ever since. Over the same period, Chinese companies on the list have mushroomed, while U.S. businesses have rebounded markedly. In 2007, there were eight Chinese companies on the list, but this year there were 37, beating Japan to the No. 2 spot after the U.S. In 2005, U.S. companies accounted for half of the businesses on the list, falling to 160 in 2011 only to rebound to 209 this year. The main reason why Korean firms are dropping out is that they have been content with their achievements in the Korean market, while failing to cultivate new markets overseas.
Cab Driving Is Pyongyang's Most Lucrative Job
The best-paying job in Pyongyang's nascent capitalist economy is cab driving. Drivers working for state-run taxi firms submit half of their daily earnings to the company and take home the rest. Sources said taxi drivers who work two daily shifts make good money since there are a lot of customers. "There's usually a long line in front of Pyongyang Station and there aren't enough cabs," the source added. Yet there are more than 1,000 taxis in the North Korean capital. Some traders who have grown rich in open-air markets hire cab drivers for a month at a time to transport their products.

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NOVEMBER 2015

North Korea’s Special Economic Zones: Plans vs. Progress
By Andray Abrahamian and Curtis Melvin 23 November 2015 Since Kim Jong Un assumed power, he has prioritized economic development in a way his father never did. Indeed, much of his domestic brand is now linked to economic growth and quality of life issues. He has tinkered with the modus operandi of both farms and state owned enterprises, and set forth a very visible economic experiment: the creation of a dozen Special Economic Zones (SEZs) in 2013, followed by a second group in 2014, and two more zones in 2015. Four of these could be considered national priorities—Rason, Unjong, Wonsan and Sinuiju (with the extant Hwanggumpyong/Wiwha Islands)—while the rest are fairly minor in scope, size and potential. These zones, with a variety of intended functions and ostensibly foreign-friendly regulations, signal a willingness of the Kim regime to explore economic policy options. However, their slow progress and development also clearly illustrate the challenges North Korea faces to get these projects off the ground given the current business and investment environment. Despite making SEZ development a policy priority, difficulties in the political arena and a general lack of clear economic goals have meant that Unjong is still in the planning stages, Wonsan awaits international investors and Rason has seen little activity since 2013. Sinuiju/Hwanggumpyong has seen some development, though the unfinished Yalu Bridge is also a reminder of unfulfilled potential. This report takes a look at where these four major zones and a few of the smaller, newer zones stand to date. [SEZ]
Half of small firms want to invest in N. Korea
By Choi Sung-jin Up to half of all small- and medium-sized enterprises in South Korea are interested in doing business in North Korea if inter-Korean relationships and situations in the North allow for it, a survey showed. In the survey conducted by the Korea Federation of SMEs on 200 of its members, 44.5 percent of the respondents said they would examine the possibility of doing business in North Korea if circumstances allow, with 5 percent replying they would do so "positively." The remaining 30 percent said they would not do business in the North and the other 20.5 percent said they are not interested at all. Asked whether they know about the "private marketplaces" in the North where residents buy and sell products for private gains, only 22 percent said they had knowledge of them, indicating that the vast majority of SMEs are not familiar with developments in the isolationist regime. As to the products they want to sell in those markets, 22 percent cited food and beverages, followed by clothing (10.5 percent) and machinery and electronics (7.5 percent). [FDI] [SME]
The Siren Call of Deng: Following in China’s Footsteps?
By Kevin Gray | November 23, 2015 For many years, one of the key questions addressed by North Korea analysts has been why the country has failed to adopt Chinese style reforms. In answering this question, attention is frequently paid to the regime’s requirements of ideological continuity in the context of its system of hereditary succession. However, since coming to power in 2012, the Kim Jong-un government has reportedly initiated some bold attempts at reforming the economy through the restructuring of the country’s collective farms and state-owned enterprises (SOEs). The much discussed “June 28th” measures of 2012 and “May 30th” measures of 2014 are designed to overcome longstanding problems of inefficiency and poor incentives through increasing the scope for material rewards. [Economic reform] [China model] [Context]
Report: S. Korea’s division of labor with China and Japan breaking down
Posted on : Nov.20,2015 16:33 KST S. Korea and China’s trading relationship Export competiveness waning as China moves to increase self-sufficiency in key parts of major industries South Korea’s three-way “division of labor” with Japan and China is breaking down as China procures more and more key parts for its major industries on its own, leaving South Korea with fewer opportunities to export them, a recent analysis argues. The analysis, titled “Diagnosis and Prognosis for Domestic and International Economic Risks,” was presented by Hyundai Research Institute economic trend analysis chief Lee Jun-hyup at a Nov. 19 seminar on “boosting export competitiveness and establishing new growth engines” at the Federation of Korean Industries Conference Center in Seoul. “Since China began full-scale implementation of its ‘xinchangtai’ (new normal) policy, it has been increasing its self-sufficiency rate in major industries and reducing processing trade as part of a policy to improve industry structure,” explained Lee. The result, Lee argues, has been a breakdown in a three-way division of later in which Japan exports key materials to South Korea, which uses them to make parts that are then exported to China, which assembles finished products for export to world markets. First introduced in May 2014 by Chinese President Xi Jinping, the “new normal” policy is an economic approach by Beijing to help China make a stable transition from high growth levels of around 10% to more moderate-to-fast growth of 7-8%. [China competition] [Sandwich]
[Interview] In North Korea, “things have changed a lot”
Posted on : Nov.19,2015 16:55 KST Jin Chang-yi, director of China’s Yanbian University Center for Inter-Korean Studies Expert argues South Korea should move past “politics of fear” and encourage reform and openness in the North Jin Chang-yi, director of China’s Yanbian University Center for Inter-Korean Studies, said changes in North Korea have passed the early stages of reform and openness and that the time has come to change Seoul’s North Korea policy in response. Jin’s proposal at the eleventh Hankyoreh-Busan International Symposium this week was for cooperative measures that are more in line with the Sunshine Policy under previous President Kim Dae-jung (1998-2003), using a mixture of the proverbial carrot and stick. Hankyoreh (Hani): Are you saying that you sense meaningful change in North Korea? Jin Chang-yi (Jin): I think that in terms of social changes, things have already passed what China had in the early stages of its reforms and openness. In social character terms, the influence of the market has already grown. The question now is whether they can build a market economy through regime policies and state institutions. [Economic reform] [SK NK policy]
North Korea releases detailed plan for Free Trade Zone
Posted on : Nov.19,2015 17:01 KST Plan is exceptional in its practicability, and the freedom to manage and earn profits companies will have Rason Special Economic Zone development plan North Korea announced the adoption of a comprehensive plan to develop a free trade zone in Rason, which will focus on promoting the zone as a center of the MICE industry. MICE stands for meetings, incentives, conferences, and exhibitions. 24 years after the designation of the Rason Special Economic Zone, the North Korean government has agreed to permit North Korean companies that will operate in the zone to receive foreign investment, manage themselves, and make profits. Experts who think the plan is meaningful point to its level of detail and its feasibility, along with its aggressiveness. On Nov. 18, North Korea made public detailed plans in seven categories, including potential industrial complexes and tourist resorts, tax policies, investment policies, and corporate registration procedures. At the same time, it posted about 50 regulations related to investing in the Rason Special Economic Zone on Naenara, North Korea’s official web portal, which is available in English and eight other languages. [SEZ] [Tourism] [FDI]
Laudable? Lawdy, No! How South Korea’s Spurious Self-Effacement Messes Up North Korea’s Trade Data
By Aidan Foster-Carter 19 November 2015 Ruediger Frank is one of the very best authorities we have on the DPRK economy. As readers of 38 North well know, he is equally adept at incisive abstract analysis and informed first-hand observation in this vital area. His latest article, “North Korea’s Foreign Trade,” is no exception. Frank has done us all a service, especially those with few to no Korean language skills,[1] in summarizing and discussing key points and issues from KOTRA’s latest meaty (151 pages) report on this topic, published on September 30 and including a wealth of data through 2014. Overall, Frank’s article maintains his customary high standard. But I do have one bone to pick with him. Quite a long way into his article (after seven paragraphs and five graphs) he drops a rather important bombshell. As I would put it, everything he has talked about so far isn’t, in fact, everything. KOTRA’s purported study of DPRK trade actually leaves out one crucial country: its second largest trade partner (the ROK) and indeed the only one which really matters apart from the number #1 (China). This is because, toeing the official line of the ROK government, KOTRA excludes inter-Korean trade—on the ground that it is not ‘foreign.’ [Trade] [Statistics]
North Korea - Hydrocarbon Exploration and Potential
Mike Rego Despite a challenging political situation, the Democratic People’s Republic of Korea offers relatively low cost, low risk exploration opportunities, with nearby energy-hungry markets. This article appeared in Vol. 12, No. 4 - 2015 ? The Democratic People’s Republic of Korea (DPRK), commonly referred to in the western media as North Korea, remains one of the world’s most secretive and closed societies. The communist politics are headed by a family dynasty, founded in 1948 by the Great Leader, Kim Il-sung (Grandfather of the current leader, Kim Jong-un), whose politics and legacy still determine many of the country’s policies. [Oil] [Gas]
N. Korea unveils plans to develop Rason economic zone
North Korea unveiled detailed plans Wednesday to develop its special economic zone in the border city of Rason aimed at luring foreign investment amid an economic slowdown and a series of U.N. sanctions. The North said it has completed the comprehensive plan in what is seen as part of efforts to turn the area into a regional logistics hub close to both China and Russia. North Korea has sought to develop the zone since it designated Rason, formerly known as Rajin and Sonbong, as a special economic zone in 1991. But its ambitious plan has faced serious setbacks as foreign investment remains lackluster due to the North's provocations. The North has undergone difficulty in earning hard currency due to heavy sanctions imposed by the U.N. Security Council following the North's nuclear and missile tests. [Rason] [Sanctions]
North flaunts high rise apartment in Pyongyang
Updated : 2015-11-17 15:18 North Korean media are lauding a recently completed 53-story apartment block in Pyongyang, dubbing it the state's greatest building. The Workers' Party's Rodong Sinmun and the Korean Central News Agency said the building on Mirae Scientists' Street was "the symbol of the street and a source of pride in Pyongyang." Top officials visited the building's residents on Sunday and inspected facilities, state media reported. According to the reports, residents are mainly scientists, educators and government officials. Teachers and researchers get free housing. On each floor there are six houses and commercial and convenience facilities. Four high-speed elevators take residents to their homes. The apartments are equipped with "luxurious" furniture and other necessities. Before the building was finished on Nov. 3, a 45-story apartment block completed in June 2012 was the city's tallest building. Mirae Scientists' Street has a science and technology hall, an automation research lab, schools, several public buildings and a sports park. [Construction]
North Korea in transition
Vassily Usoltsev, first vice governor of Maritime Province in Russia, poses with Lee Se-ung, center, vice chairman of the National Unification Advisory Council, and Vladimir Kurilov, vice president of the Far Eastern Federal University, in a conference room at the school in Vladivostok, Nov. 3. / Courtesy of Seoul Cyber University By Jhoo Dong-chan VLADIVOSTOK, Russia ? North Korea is slowly showing signs of accepting a market economy, officials here said Wednesday. The government-driven economy, often illustrated as rationing and deprived of commodities, is subtly changing its attitude toward capitalist taboos under the Kim Jong-un regime. "I think North Korea has been slowly introducing a market economy since its leader Kim Jong-un came to power," said Vasily Usoltsev, first vice-governor of Russia's Primorsky Territory, during a meeting with the National Unification Advisory Council Vice Chairman Lee Se-ung, on the campus of the Far Eastern Federal University (FEFU) in Vladivostok, Russia, Nov. 3. "Most Westerners and South Koreans are familiar with dismal images of the county's famine and children suffering from malnutrition," said the vice-governor. "But I recently visited Pyongyang and Rajin in North Korea several times, and the areas were well supplied with food and commodities. People there buy things at a big store just like we do." [Marketisation] [Recovery] [Training] [Russia NK]
The 7th Congress of the Workers’ Party of Korea in 2016: Return to a “New Normal” or Risk a “Take-Off”?
By Ruediger Frank 11 November 2015 KJU at 2015 1010 70th WPK Anniversary Military ParadeOn October 30, 2015, North Korean media including the Korea Central News Agency (KCNA) announced that in early May 2016, the 7th Congress of the Workers’ Party of Korea (WPK, or simply the Party) will be convened.[1] For a socialist country, a Party Congress should be a routine event; decades ago it was, more or less, also for North Korea. The first Congress of the WPK was held in 1946. The next such meetings followed in 1948, 1956, 1961, and 1970. But the so far last 6th WPK Congress was convened in 1980—at a time when most of the currently active North Korea watchers were either teenagers or not yet even born. The announcement of the 7th WPK congress after a hiatus of more than three decades is therefore big news by itself. The question is: why, and why now? The North Korean state has been somewhat parsimonious with clear explanations. So far, it has only announced that the Party Congress would be convened next May upon decision by the WPK Politburo. We are therefore, again, left to speculate. But considering that North Korea is, directly or indirectly, one of the biggest security challenges in Northeast Asia, and having the UN’s devastating report on North Korean human rights in mind, it is important that we start thinking about the potential outcome of the 7th WPK Congress even without having all the clues we need. Generally speaking, there are two main options for how the Congress will turn out: 1) The Congress could signal nothing but a return to a new normal and a continuation of the half-hearted strategy of adjusting the old system as witnessed in the past years; or 2) a major policy change will be announced, comparable to the 12th Congress of the Chinese Communist Party in 1982, the 27th Congress of the Communist Party of the Soviet Union in 1986, or the 6th National Congress of the Communist Party of Vietnam in the same year, and marking the departure down a path of true reform that will change the face of North Korea and of the region. [WKP] [Reform]
Recent Developments on the SEZ Battlefront: Mubong and Kyongwon
By Théo Clément | November 09, 2015 Does North Korea’s approach to Special Economic Zones on its frontier with China represent real substance and momentum, or just smoke, mirrors and more stagnation? In part, the answer depends on which part of the border one is looking at. In a recent assessment of the Sinuiju-Dandong hub, for instance, Marcus Noland cautioned against overly-high expectations for the North Korean side’s ability to follow through — ever — on the promise and potential of the Hwanggeumpyeong SEZ. Elsewhere, Rason is said not to be doing terribly well in the wake of flooding and questions over genuine openness to Chinese investment. Since Sinuiju and Rason are big targets and already pegged as SEZs, foreign observers tend to focus there. That is, after all, where the North Korean state has for so long encouraged us to look. As he showed in his debut essay for Sino-NK in July this year, Théo Clément has a habit of looking around and beyond the obvious toward locations of real development. In a fascinating and strongly-contextualized essay, the PhD candidate at Sciences-Po Lyon describes how two areas on the North Korean side of the northeasternmost frontier of the DPRK may point to slim but strengthening strands of cooperation with Chinese partners. He now proceeds to widen the lens. — Adam Cathcart, Editor-in-Chief [SEZ]
What Satellite Imagery Can Tell Us About North Korea’s Markets
By Benjamin Katzeff Silberstein 30 October 2015 Tonghungsan Market in Hamhung North Korea is a well-known “black hole” with regard to quantitative data. Hard numbers from the country are virtually nonexistent, and statistical information about it is scattered and unreliable at best. Most other countries freely publish at least rudimentary statistics on demographics, health, economics, and other areas, but in the DPRK, such figures are either unavailable or of questionable quality. Yet quantitative research on North Korea is by no means impossible, and in fact, unconventional investigative strategies can yield interesting data about the country’s economic situation. In a new report, published by the US-Korea Institute at SAIS, I track the development of North Korea’s markets since the early 2000s by comparing commercial satellite imagery that shows key trading areas at various points in time. [Marketisation] [Intelligence]

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OCTOBER 2015

Korea perplexed by World Bank's 'Doing Business' ranking
By Park Si-soo A World Bank report that marked Korea as the fourth-best country to do business in out of 189 countries has left many businessmen and analysts perplexed. Korea climbed one notch from a year earlier, beating Hong Kong, the United States and the United Kingdom, only trailing Singapore, New Zealand and Denmark. Among the G20, Korea ranked first in the bank's "Doing Business" report. And it came in third among OECD members. It is good news for Korea, especially when the Park Geun-hye administration is seeking to attract foreign investment to revitalize the sagging economy. The report is expected to help the government's campaign as it will burnish the nation's image in the minds of the world's major investors who are searching for profitable investment targets. Yet the news had many businessmen and analysts scratching their heads, questioning: Is Korea really that attractive? They said the World Bank seems to have missed some critical blind spots lurking in the Korean economy. [Bizarre]
'Renewable energy not uncommon in NK'
By Kim Se-jeong Baerbel Hoehn A photo taken on Oct. 21 shows many small solar panels installed at balconies of an apartment building in Pyongyang. / Courtesy of Baerbel Hoehn Many households in Pyongyang, North Korea's capital, have solar panels installed, according to a member of the Green Party in Germany who visited the reclusive state last week. "It was great to see solar panels on balconies of homes," Baerbel Hoehn, a member of the Bundestag, the German parliament, said during a meeting with Korea's Green Party members in Seoul, Tuesday. She visited North Korea with fellow politicians and German business representatives, and flew to the South earlier this week. Acknowledging that the situation is worse in rural areas, Hoehn said, "I want to help people in rural areas and that must be the target. If we can start such sustainable projects in rural areas, people will be interested because I see daily problems." It has long been reported that North Korea's energy situation is deplorable ? and is much worse outside Pyongyang. There's almost no electricity in many rural areas, and that makes life harder for people who already suffer from hunger, Hoehn said. The amount of electricity North Korea generates annually is less than 10 percent of the amount produced in South Korea. [Green] [Electricity]
Markets Burgeon in N.Korea
North Korea now has 406 officially sanctioned open-air markets that represent the core of a nascent market economy there. Curtis Melvin, a researcher at Johns Hopkins University, told Radio Free Asia on Saturday that vendors can set up shop with a license from the Ministry of People's Security. In 2010 there were only 200 such markets, nervously monitored by the authorities and occasionally shut down, but now the number has nearly doubled. On top of that scores of unofficial markets have sprung up in the streets and back alleys, Melvin said. There are 148 counties in nine provinces and about 200 districts in large cities, so there is now on average more than one market for every county and city district in North Korea. [Marketisation]
North Korea’s Foreign Trade
By Ruediger Frank 22 October 2015 Foreign trade is, like elsewhere and for obvious reasons, one of the key indicators of North Korea’s economy. However, since the state is notoriously reluctant to provide related figures, we have to rely on external sources to obtain this data. The South Korean Trade-Investment Promotion Agency (KOTRA) is one institution that has for many years collected data on trade with North Korea from Pyongyang’s trading partners. Through this approach, called reverse statistics, KOTRA is able to produce one of the few macroeconomic datasets on North Korea that deserves at least a minimal degree of trust, even though there is still ample room for discussion regarding its completeness. At the end of September 2015, KOTRA published the latest of its reports on North Korea’s trade, including data for 2014.[1] [Foreign trade]
Dead on Arrival? Taking Trade Notes in Dandong
By Adam Cathcart and Christopher Green | October 20, 2015 For all the media buzz gathered around China-DPRK relations this autumn, there is a mystifying absence of stories in English about Dandong and the China-North Korea trade fair that just took place there. The one foreign journalist who did tackle the subject wrote an essentially credulous acceptance of China’s English-language releases, while the Straits Times in Singapore called it “an early positive sign” of renewed impetus in China-North Korea cooperation. In sum: If China says the opening of another new trade zone is going to help to make the region more prosperous then it will do exactly that, and the trade fair is thus part of a larger picture of successful Chinese opening to its ally. Yet Dandong is much more than this. It is the ideal place for testing hypotheses about how the bilateral relationship is trending on the ground, away from the capital-city diplomacy of September 3 and October 10. Hypothetically, if China were opening the investment spigots to North Korea in the twin lee of important trips — Choe Ryong-hae in Beijing and Liu Yunshan’s in Pyongyang — Dandong would be the prime location from which to sit and watch it happen. [SEZ] [Dandong] [China NK]
The JV might be dead, the showroom is lively.
The car: people in developing countries want them as they convey status. Countries want auto industries for the same reason. The DPRK, renowned for for its military hardware, began producing civilian cars in conjunction with South Korea's Unification Church in 2002. Visitors to Pyongyang are often struck by how the only billboards not advertising a combination of the fatherland/party/military/leadership are advertisements for Pyonghwa Motors. Since last year, visitors have also been able to stop by an attractive showroom that has been set up on Gwangbok Street in Pyongyang. It is replete with test-driveable models on display, a spare-parts store and even a cafe. They are also eminently visible on the streets of Pyongyang, though according to reports made public, they have never sold particularly well. The company began to see a small profit in 2009 though just a few years later - around 2012 - we started hearing that the the Unification Church wanted out. This was partly due to the weak sales, but also part of a broader strategy by the church to divest itself of some of its holdings. We heard that they were trying to sell their 70% share in the Joint Venture. Since then, however, news on the matter has been absent. (Calls to the Seoul number listed on their website go unanswered.) The staff in the Pyongyang showroom said that it was a 100% DPRK company now and had been for "some years", but didn't have much time to chat: they were busy working with a group of Koreans looking to buy. Meanwhile, another group were test driving a jeep-like model. [Auto] [IJV]
Private Banking Spreading in N.Korea
Private banks are sprouting up in North Korea, even offering automatic teller machines in Pyongyang, according to a source. The source, who travels frequently to and from Pyongyang, said money-lenders who have grown rich are opening small banks. The regime is persuading them to invest their fortunes by opening banks that will funnel the money into the legitimate economy. The money-lenders often grow very rich by monopolizing profitable businesses with the support of the regime. There are ATMs at five hotels in Pyongyang, the source added. But other North Koreans are still stuck in dire poverty due in part to endless extortion from officials, and discontent is growing as the gap between rich and poor widens. A source said on Sept. 22, the death anniversary of regime founder Kim Il-sung's wife Kim Jong-suk, wreaths laid at her tomb in the national cemetery were damaged and flowers were torn into pieces and scattered. The regime mobilized the State Security Department, the Ministry of People's Security, and the Guard Command, but reportedly failed to catch the perpetrators. [Banking]
Market Size and Geography in North Korea
By Darcie Draudt | October 09, 2015 North Korea-watchers, professional and amateur alike, are in a constant search for tangible evidence that the regime’s attitude toward the markets is changing. Yet, the understandable limits on data collection for North Korea — on any subject — is real and frustrating. Defector testimony has proven central to some research, especially in the humanities, as has fieldwork in areas of China adjacent to North Korea. However, questions of reliability and representativeness have led many social scientists to seek new avenues for better understanding of change in North Korea. [Marketisation]
Malaysia, Truly Impressive
Choson Exchange · October 2, 2015 CE recently took a group of North Koreans to Malaysia for a study trip. Malaysia is one of a handful of countries with reciprocal visa-free arrangements with the DPRK. This, combined with the recent strides Malaysia has made towards creating an environment that supports entrepreneurs makes us think it may not be our last such trip. Highlights included: 1. Visit to MaGIC This is Malaysia’s flagship initiative on entrepreneurship and startups, launched when Obama visited Malaysia. They kindly hosted us and told us how MaGIC is organized, the programs they did and how they supported startups. The Koreans had tons of questions. [Training] [Malaysia]
Cumulative production at Kaesong complex reaches US$3 billion
Posted on : Oct.5,2015 16:11 KST Representatives from Kaesong Industrial Complex tenant companies, along with Minister of Unification Hong Yong-pyo and Gyeonggi Province Governor Nam Kyung-pil at a ribbon-cutting ceremony at a sales and exhibition event at KINTEX in Goyang, Gyeonggi Province, Sep. 17. (Newsis) Since opening more than ten years ago, number of companies and workers has grown at inter-Korean complex The Kaesong Industrial Complex has reached US$3 billion, or around 3.5 trillion won, in cumulative production since its opening over ten years ago. The South Korean Ministry of Unification announced on its website on Oct. 4 that the complex had reached a total of US$2,996,160,000 in production as of July 2015 after entering full-scale operation in 2005. With monthly production averaging US$46 million this year, the total is almost certain to have passed the US$3 billion mark sometime in August. Yearly production at the complex stood at US$14.91 million in 2005. It passed the US$100 million mark for the first time in 2007, with a total of US$180 million. [Kaesong]

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SEPTEMBER 2015

Korea Business News September/October 2015
Survey of DPRK and international press from Korea Business Consultants, Beijing

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AUGUST 2015

2 Koreas Agree 5% Wage Hike for Kaesong Workers
The two Koreas have agreed to hike the minimum wage for North Korean workers at the joint Kaesong Industrial Complex by five percent. Pyongyang 10 months ago unilaterally announced a wage hike for the industrial park. But in talks in Kaesong on Monday, the two sides "finally reached agreement on the hike of the minimum wage and the wage calculation," the Unification Ministry here said on Tuesday. The monthly wage for North Korean workers will increase from US$70.35 to $73.87. The regime pockets nearly all of the money, and many companies have resisted the wage hike because they have had to resort to paying workers in kind. [Kaesong] [Labour]
How Korea's Economy Has Flourished Since Liberation
Korea's economy grew 31,000-fold since 1953, and car ownership increased more than 10,000 times since independence from Japanese colonial rule. Statistics Korea released a report on Monday looking back over the last seven decades, which showed gross domestic product rising from a mere W47.7 billion amid the ashes of the Korean War in 1953 to W1,485 trillion today to become the world's 13-largest economy. Per-capita income rose from just $67 to $28,180 over the same period. Exports, which stood at just $100 million in 1964, rose to $572.7 billion last year, when Korea was the world's sixth-largest exporter. Living standards have also improved drastically. The number of passenger cars, of which there were just 1,000 in 1946, surged to 15.75 million last year. Mobile phones are a more recent invention, and in 2012 there were 52.35 million in use, more than one for every Korean. As more and more Koreans traveled abroad, travel spending neared $20 billion last year. [Colonialism]
Most S.Korean Businesses Would Expand to North
Nine out of 10 South Korean companies would be interested in doing business in North Korea after reunification. The Korea Chamber of Commerce and Industry on Monday said a survey on 500 companies here shows 30.8 percent very interested in doing business in the North, and 56.4 percent interested if the conditions are right. That makes a total of 87 percent. Left: A North Korean grabs a taxi in Pyongyang on Thursday.; Right: A double-decker bus is parked on a street in Pyongyang on Thursday.; These photos are provided by a photographer who accompanied ex-first lady Lee Hee-ho last week. /Newsis Left: A North Korean grabs a taxi in Pyongyang on Thursday.; Right: A double-decker bus is parked on a street in Pyongyang on Thursday.; These photos are provided by a photographer who accompanied ex-first lady Lee Hee-ho last week. /Newsis The most attractive parts of North Korea are Kaesong and the coastal city of Haeju near the South Korean border for 42 percent, followed by Pyongyang and Nampo (28 percent), Sinuiju and Hwanggumpyong Island near China (11.5 percent), the scenic resort of Mt. Kumgang (9.2 percent) and Rajin-Sonbong near Russia (5.3 percent). Among the industries in focus are mining (28 percent), infrastructure construction (22 percent), factory construction (22 percent), establishing of logistics networks with China (18 percent) and tapping into the North’s consumer market (eight percent). Jeon Su-bong at the KCCI said, "We need to boost North Korea's economic capacity through increased economic exchanges to lower the cost of reunification and grow closer to each other." [Unification]
An Updated Estimate of Energy Use in the Armed Forces of the Democratic People's Republic of Korea (DPRK)
by David F. von Hippel, Peter Hayes and Roger Cavazos 4 August 2015 I. Introduction North Korea’s large standing conventional force demands a surprisingly modest proportion of North Korea’s overall energy usage (though a much larger fraction of the DPRK’s limited petroleum fuels supplies) indicating a large, but not particularly active military. North Korean military energy usage seems more or less static over the years and is consistent with observations that North Korean rhetoric regarding potential military actions has increased, but that the actual actions of the DPRK’s conventional military remain muted. [DPRK military]
Korea Inc. losing luster
By Kim Jae-won Is Korea Inc. buckling on the threshold of joining advanced economies? A sense of crisis is creeping into major industries as they have difficulties finding a breakthrough. Many executives of major companies paint a bleak picture not only for their businesses but the economy as a whole. Shipbuilding, steel, automobiles, electronics and ICT sectors -- the locomotives that have powered the nation's economic growth -- are sputtering on fiercer competition from global rivals. "It's really worrying. Even Samsung Electronics and Hyundai Motor are losing market share and appear to be losing growth momentum," an executive of a top chaebol said. "Worse, the outlook is far from bright. Concern is growing that we will be stuck in this slump for years -- similar to Japan's lost decade." A recent OECD report said Korea's growth potential -- the maximum growth rate a country can attain without fanning inflation -- will continue to fall to as low as 1.29 percent in 2060 from 3.66 percent in 2015. [Sandwich]
NK urged to drop opposition to Seoul's joining of OSJD
By Yi Whan-woo The chief of an international body on railway cooperation has urged North Korea to drop its opposition to accepting South Korea as a new member, Yonhap News reported Thursday. Tadeusz Szozda, chairman of the Organization for Cooperation Railway Lines, an association of 28 countries, said Pyongyang may be kicked out of the association if it continues opposing Seoul's entry. The organization, known by its Russian acronym OSJD, is trying to revise rules on obtaining membership. Under the current rules, an applicant nation should get consent from all existing member countries to join the association. However, it wants to ease the requirement to three quarters of member countries. Currently, the OSJD also requires an approval from all member countries in overhauling its membership rules. Current members include Russia, North Korea, China, Cuba, Iran and Vietnam. East European countries and former Soviet Union states in Central Asia are also its members. [Railways]

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JULY 2015

N.Korean Economy 'Improving'
North Korea's economy and the standard of living of ordinary people seem to have improved, according to the U.S. Congressional Research Service. "Since early 2015, reports have trickled in about modest economic growth in North Korea," the CRS said in a recent report. "A series of tentative economic reforms announced in 2014 appear, according to some sources, to have lifted the living standard for a portion of ordinary North Koreans." "The reforms, which appear to apply market principles to some sectors of North Korean business and agriculture, have created opportunities for economic growth in the impoverished country," it adds. [CRS]
Microfinance in the DPRK - Observations by a Choson Exchange Volunteer
Choson Exchange · July 23, 2015 Recently, CE conducted a 2-day workshop with a dual purpose: firstly, to provide an introductory training program on micro and SME finance to 40-odd delegates; secondly, to assess the feasibility of establishing such a lending facility with the express purpose of supporting and growing small enterprises in the DPRK. Facilitating this was Mr. Hugh Sinclair, an economist, former investment banker and micro/SME finance practitioner since 2002. He is author of the controversial 2012 book, "Confessions of a Microfinance Heretic: How Microlending Lost its Way and Betrayed the Poor". Mr. Sinclair focused on 8 broad topics: 1. A brief description of debt versus equity, prompted in part by a suggestion from CE that the difference between leverage and ownership was not fully understood in the DPRK 2. Explaining what is micro/SME finance 3. Potential benefits of lending to micro and small enterprises 4. An interactive case study based around a fictional bakery seeking a loan to buy a new oven 5. A discussion of the main obstacles to effective lending 6. Discussing the requirements to offer micro/SME finance in DPRK 7. Conclusion, Q&A 8. Two digressions requested by the delegates during the second half of the second day: a. Detail on the success of micro/SME finance in Ecuador versus the failure in Nicaragua – two Latin American countries with socialist governments but very different experiences with such financial activities. b. A more detailed explanation of interest rates relating to loan schedules, including various calculation methods (based in Excel) [Microfinance] [Economic reforms]
How Not to Invest in a DPRK Special Economic Zone: The Case of Rason
By Théo Clément | July 15, 2015 | In 2010 and 2011, Kim Jong-il appeared to be making strides toward a more full economic integration with the region of northeast Asia. Travelling to China with a frequency which would be familiar to men like Henry Paulson, Kim Jong-il stimulated Chinese news media to report that North Korean Special Economic Zones would indeed create a “North Korean Shenzhen.” Five years later, Special Economic Zones and Economic Development Zones have indeed proliferated in the DPRK, but they still largely remain conceptual. A handful of investors and entrepreneurs, however, continue to participate in smaller events and trade fairs in and around North Korea, with seminars and international conferences about SEZ laws and norms taking place in Pyongyang and Rason. Théo Clément, having presented at one such symposium in Pyongyang and travelled to Rajin-Sonbong, brings several of the major issues into focus by looking at Rason, the North Korean SEZ currently subject to a great deal of analytic focus. — Adam Cathcart, Editor-in-Chief How Not to Invest in a DPRK Special Economic Zone: The Case of Rason by Théo Clément It has become topical, and maybe stereotypical, for researchers to introduce papers by stating that the DPRK is a “secretive” or “isolated” country. While this might be true to some extent, it certainly does not capture the current opening trend of the DPRK, and more particularly of its Special Economic Zones (SEZ), as narrated by the experienced Koreanist Rüdiger Frank. During a recent visit to the Rajin-Sonbong Special Economic Zone (the SEZ more commonly referred to as “Rason”) I could not but notice that North Korean diplomats and officials had indeed made substantial efforts to facilitate our visit to the Zone, including a 4-hour long ride in their personal car and a small welcoming speech in French. [Rason] [FDI]
Entrepreneurship Blossoms in N.Korea
Entrepreneurship is thriving in North Korea after the state rationing system has collapsed. Andray Abrahamian of Choson Exchange, a Singapore-based non-profit aid group, told Voice of America on Sunday that small businesses are a "new trend" in the North and is "expanding." Abrahamian said there are businesses in North Korea that manufacture snacks or instant noodles and even a small software company that develops smartphone apps. Some small businesses supply products to an online shopping mall that recently opened in the North. [Marketisation]
70 years on: Korean Reunification – Bonanza or Bust?
Tim McCready ?1 day ago Print This Post Print This Post This year marks the 70th anniversary of the end of World War II, and also the 70th anniversary of Korea’s division into North and South. Last month the World Journalists Conference was held throughout South Korea under the theme ‘the 70th anniversary of the division of Korea: Thinking about unification on the Korean Peninsula’. [Unification]
Is the Drought Over?
By Randall Ireson 15 July 2015 Will the recent rains be enough to save North Korea's crop yield this year? After a month of concern, DPRK farmers have received substantial rains in the last few days, which will at the very least break the current drought. Except for Sinuiju on the Chinese border, weather stations in the western farming region have reported between 3.5 and 7.5 inches of rain between July 10 and 14, with similar amounts falling in Kangwon province. This is very good news, and will provide adequate moisture for the main crops for the immediate future. The next week is expected to be dry, but another smaller weather system is expected over the weekend. If rainfall for the remainder of the year is at or near normal amounts, adverse effects of the recent dry months will be limited. But July rainfall is still less than half of normal, and crops will need substantial rain into August to insure normal development. Some damage is irreversible. The winter and spring crops (wheat, barley and spring potatoes) were adversely affected by the dry March and rainfall of around half of what is normal in May. The FAO has estimated a reduction of about 25 percent or around 68,000 Metric tons cereal equivalent for the spring harvest.[1] This affects food availability during the critical “lean season” leading up to the main harvest in September, but amounts to only just over 1 percent of the total annual production of approximately 5 million MT in recent years. [Drought]
Kim Jong Un Tours Pesticide Facility Capable of Producing Biological Weapons: A 38 North Special Report
By Melissa Hanham 09 July 2015 Executive Summary ?North Korea’s biological weapons program got a lot less secret on June 6, 2015. The same day that a defector reportedly fled the country carrying 15 GB of human testing data,[1] North Korea’s state media published photos of Kim Jong Un touring a facility ostensibly for the production of pesticides. However analysis of the images reveals that the facility—the Pyongyang Bio-technical Institute—can produce regular, military-sized batches of biological weapons, specifically anthrax.[2] ?The North Korean assertion that the plant is intended to produce insecticides is an old and well-used cover for a biological weapons program. In fact, it is not uncommon for biological weapons facilities to actually function as bio-insecticide plants. Iraq’s Al Hakam Factory produced both Bacillus anthracis—the causative agent of Anthrax—and Bacillus thuringiensis (Bt)—a bacteria used in Bt bio-insecticide.[3] The Soviet Union’s Progress Scientific and Production Association in Stepnogorsk, Kazakhstan, was tasked with producing bio-fertilizers in peacetime and biological weapons for war.[4] The same could be true for the Pyongyang facility where the scientists can convert between civilian and military strains of bacteria, by simply sterilizing and resetting the equipment in a matter of days. [bcw] [Dual use] [Media]
North Korea’s Ponghwa Chemical Factory
Print This Post | Email This Post | 10 July 2015 By Joseph S. Bermudez Jr. and Sun Young Ahn Summary Nearly every modern nation must obtain and refine oil to ensure its economic viability, and North Korea is no exception. However, the country’s lack of significant proven oil reserves has forced it to import all of its crude oil and many of its finished petroleum products, while relying largely on coal and hydropower for energy. As a result, North Korea’s petroleum infrastructure remains rudimentary in design and capability. North Korea presently runs only one of its two primary oil refineries, giving the single operational refinery a critical role in the nation’s economy and defense. That site, called the Ponghwa Chemical Factory, was built with Chinese support and reportedly uses imported crude to produce refined oil products for North Korea’s government, military, transportation, agricultural and fishing sectors. The factory is also one of the country’s leading petrochemical research institutions, a distinction that places it alongside the Namhung Youth Chemical Complex and the Hungnam Fertilizer Complex. The achievements of these facilities are reflected in published notifications of awards, academic papers and reports by its scientists and researchers. Such documentation indicates that the staff of the Ponghwa Chemical Factory is actively conducting practical studies of a wide range of petroleum products and production technologies, likely in cooperation with the Petrochemical and Methanol Institute of the State Academy of Science. [Oil]

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JUNE 2015

The Wonsan–Mt. Kumgang International Tourist Zone
Tourism development and foreign investment
Paul Tjia, Netherlands
The Korean government is trying to attract a larger number of foreign tourists. The new airport terminal of Pyongyang is planned to open in July and is six times larger than the old terminal building. There are several investment opportunities in the field of tourism, and an example is the investment project for the WonsanKumgang International Tourist Zone. This zone includes areas of Wonsan, the Masikryong Ski Resort, Ullim Falls, Sokwang Temple, Thongchon and Mt. Kumgang. An overview of this project is presented below; it is based on presentations by Korean speakers to an audience of foreign investors earlier this year. [FDI] [Tourism]
North Korea’s changing climate of environmental cooperation
26 June 2015 Author: Benjamin Habib, La Trobe University The North Korean (Democratic People’s Republic of Korea, DPRK) government would appear to have a compelling prima facie self-interest in participating in the global climate change mitigation and adaptation project centred on the UN Framework Convention on Climate Change (UNFCCC). Capacity-building incentives that feed into the leadership perpetuation and state survival imperatives of the North Korean government represent the most likely explanation for North Korea’s interaction with the UNFCCC. Environmental vulnerabilities matter, because they could threaten the control of the Kim government. North Korea’s flirtation with state failure during the Arduous March period of the mid-1990s illustrates this relationship. This period’s energy shortages, food insecurity, vulnerability to natural disasters and withering export income is pivotal to understanding the ongoing weakness of the DPRK economy. It therefore stands to reason that greenhouse gas abatement, capacity-building in both the agricultural and energy sectors, and exploration of new sources for foreign currency revenue could be logical components of the North Korean government’s plans to mitigate against this weakness. [Green] [Elephant]
The N.Korean Firm That Dodges Int'l Sanctions
North Korea is engaged in clandestine business around the world through a company called KKG to avoid international sanctions, the Financial Times reported Thursday. A taxi in Pyongyang with the KKG logo /Financial Times A taxi in Pyongyang with the KKG logo /Financial Times The daily said North Korea's overseas businesses range from oil exploration to taxi firms, but they all have one thing in common -- the KKG corporate logo. The logo is also found on new taxis in Pyongyang and airport buses in the North. "KKG is one of several joint ventures in North Korea and it's one of the biggest ones," the paper quoted an Asian official as saying. A source said KKG is short for the Korean name that can be translated as Kumgang economic development corporation, which used to be run by the North Korean military politburo until it was transferred to the National Defense Commission headed by Kim Jong-il in the late 2000s. It is the biggest of the companies tasked with earning valuta for the regime and competes with a rival state business led by eminence grise Jang Song-taek until he was executed in 2013. The source said KKG president Hwang Yong-sik drives around in a BMW whose license plate bears the number 216, the birthday of former leader Kim Jong-il -- the mark of a very senior official. "The North Korean end of the KKG network leads to a shadowy organization called Office 39 of the Workers Party," the Financial Times cited Asian and U.S. officials as saying. The source said among KKG’s jobs are buying oil and luxury cars overseas to keep the elite loyal. "Hwang Yong-sik was able to survive last year's purge because he was not affiliated with Jang Song-taek," the source added.
N.Korea Embraces Commercial Advertising
North Korea drew global media attention by displaying ads for state-run businesses during a recent World Cup 2018 qualifier. It was a first for the communist state. Scenes from the match in Pyongyang against Uzbekistan were broadcast by the official [North] Korean Central TV and showed billboards at the stadium advertising around a dozen North Korean businesses, including a trading company. In this footage from the [North] Korean Central TV, advertisements for North Korean companies are shown during a qualifying match for the 2018 FIFA World Cup against Uzbekistan in Pyongyang on Tuesday. In this footage from the [North] Korean Central TV, advertisements for North Korean companies are shown during a qualifying match for the 2018 FIFA World Cup against Uzbekistan in Pyongyang on Tuesday. Billboards also advertised Chinese and other foreign businesses. Until now the North had featured no advertising in sports stadiums. But Pyongyang appears to have shifted its policy apparently due to difficulties attracting foreign investments amid international sanctions and slowed exports of mineral resources. [Marketisation]
Why North Korea’s Supposed Agricultural Reforms May Not Actually Be Working After All
By Benjamin Katzeff Silberstein 17 June 2015 DPRK Premiere Pak Pong Ju conducted a field survey of rice-transplating in South Hwanghae Province in May 2015. (Photo: KCNA) Outsiders are still struggling to decode what is really happening with the economic reforms that have supposedly been underway in North Korea since 2012. As is often the case with the country, no one knows exactly what is happening. Certain experts, for instance, claim that economic reforms have drastically changed conditions for agriculture in North Korea for the better. However, a look at the country’s food production trends gives cause for skepticism. From 2012 onward, a number of sources both outside and inside of North Korea have reported a gradual implementation of agricultural reforms not dissimilar to those adopted by China in the late 1970s. Supposedly, farmers now get to keep a larger share of their harvests—perhaps as much as 60 percent—and agricultural work teams have been reduced in size to increase their production incentives. Seasoned North Korea watcher Andrei Lankov buoyed the rumors last November, when he claimed that the country had not only implemented such reforms, but had done so with considerable success. He wrote that North Korea had increased its food production in 2013 to such an extent that could nearly “feed itself” that year without international assistance. It was not surprising that Lankov’s sunny pronouncements raised a lot of eyebrows; as with so much North Korea analysis, his findings did not reflect a clear consensus about what actually happened. It is tempting to take any good news from the country at face value, but there are several reasons to question Lankov’s claim that reforms have led to a better food situation. [Agriculture] [Context] [Agency]
ILO calls on Mongolia to protect North Korean workers
By Kim Hyo-jin The International Labor Organization (ILO) has urged the Mongolian government to improve substandard working conditions for North Korean laborers at local workplaces, according to the Voice of America, Wednesday. "North Korean workers at Monglian small-sized textile factories and construction sites are involved in forced labor under working conditions that reach far below the world labor market standard," Sophy Fisher, senior communications and public information officer at the ILO regional office for Asia and the Pacific was quoted as saying. North Korean workers in Mongolia are allegedly forced to stay at the workplace, suffer delayed payment of wages, and are forced to make contributions from their salaries to their supervisors, she said. "ILO has recommended Ulaanbaatar several times to correct the exploitative labor conditions," Fisher told VOA. The officer highlighted that Mongolia has obligations to stop such practices because the country is bound by the ILO's Forced Labor Convention, No. 29, which provides that all necessary measures shall be taken to prevent compulsory or forced labor. Currently, about 2,000 North Koreans work in the Mongolian textile and agriculture industries, a Mongolian diplomat said at a conference hosted by the CSIS in Washington D.C., December last year. This number is expected to rise to a maximum of 4,000 according to the treaty between Ulaanbaatar and Pyongyang, he added. North Korea exports workers and supervisors to earn much-needed foreign currency for the regime. Their number has soared since Kim Jong-un took power in 2011, now totaling about 50,000 to 60,000, according to recent data published by the Database Center for North Korean Human Rights. Human rights groups have expressed concerns over virtual-slave labor conditions for North Koreans sent overseas by Pyongyang. [Labour] [Blame] [Agency]
N.Korea Makes Knockoff Choco Pies
North Korea is producing a copycat version of the popular South Korean Choco Pie snacks. The sickly sweet knockoffs are being sold in Pyongyang and the inter-Korean Kaesong Industrial Complex, where the original has become something of an unofficial currency. A source on Tuesday said the knockoffs are made in a factory in Pyongyang, which also makes candy, cookies and jelly snacks. The South Korean Choco Pies, which cost around 700 North Korean won, have disappeared from markets in Pyongyang, and the copycat ones are being sold for 200 won. The factory stopped production in October last year as imports of Cuban sugar came to a grinding halt, but imports of Chinese sugar since March this year have allowed the assembly lines to start up again. North Korea is supplying the Choco Pies to workers at the Kaesong Industrial Complex in a bid to break the black-market trade of the South Korean product, which has been almost the only viable payment for workers since the regime pockets almost all their money. A South Korean staffer in the complex said the regime "pressured us to use North Korean products last year and supplies began in March and April." As a result, around 50 South Korean suppliers to the complex are in financial trouble. A Unification Ministry official said, "North Korea's intention is to limit contact with South Korean products and lifestyles."
Korea Needs a New Export Strategy
Korea's exports fell 10.9 percent on-year in May to US$42.4 billion, the largest monthly drop since August 2009 after the global financial crisis. Exports have declined for the fifth straight month, and the drop is getting steeper. The overall outlook is getting gloomier as private consumption and facilities investment remain weak. The main reason for lackluster exports is a slowdown in the U.S., Europe and China, and the hardest impact comes from slowing growth in China, which accounts for a quarter of Korea's exports. The weak Japanese yen compounds the problem by making Korean exports less competitive in key markets. Korea's exports to China grew sharply after the global financial crisis. As China boosted infrastructure investment, Korean manufacturers of petrochemical products, steel, ships and plants were the prime beneficiaries. Korean companies exported parts and semi-processed goods to China, which turned them into finished products for shipping to advanced countries. But it has become clear that this business model no longer works. A complete overhaul is needed. With the signing of the Korea-China FTA on Monday, Seoul needs to come up with steps to deal with an onslaught of cheap Chinese products. Korean companies need to tap into new products that transcend existing flagship exports -- namely smartphones, cars, computer chips, cosmetics and food. They must also look into the fields of finance, copyright, law, environmental engineering and entertainment and develop new products that can create demand in China. [China competition]
Feeling adventurous with your money? North Korea wants your investment.
By Anna Fifield June 2 at 3:19 AM ? TOKYO – When it comes to untapped markets, there are very few places left in the world that haven’t yet been touched by global capitalism. Newly-opened Myanmar is getting a KFC, and it's probably just a matter of time until you can order a skinny caramel frappuccino at Havana airport. But for Indiana Jones investors out there, never fear. There’s still the cash-strapped, heavily-sanctioned pariah state of North Korea. And the North Koreans want your money. As evidence, they've just released a promotional video touting for investment in their special economic zones — or, as the video’s translation puts it, “peculiar” economic zones. Released by the “Voice of Korea” – North Korea’s answer to “Voice of America” — the video features the electronic music, flashing lights and low-tech graphics of a Pyongyang karaoke room. The video, released at the weekend, is an edited version of an investment pitch first published in 2013. “The government of the Democratic People’s Republic of Korea makes efforts to establish and develop unique economic development zones so as to develop the economy of the country and improve the material and cultural life of the people,” the subtitles read, against a shot of a statue of Chollima, the mythical Korean Pegasus. Legend has it that Chollima was so fast it could cover hundreds of miles a day, leading Kim Il Sung, the founding president of North Korea, to purloin the idea to encourage his people to work hard — at “Chollima speed” — to rebuild the devastated country after the Korean war. The video goes on to mention all the usual considerations of foreign investors, like the legal framework — even showing a copy of the Constitution, something that seems to count for little in everyday North Korean life. [FDI] [Media] [Mockery]

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MAY 2015

North Korea’s changing climate of environmental cooperation
26 June 2015 Author: Benjamin Habib, La Trobe University The North Korean (Democratic People’s Republic of Korea, DPRK) government would appear to have a compelling prima facie self-interest in participating in the global climate change mitigation and adaptation project centred on the UN Framework Convention on Climate Change (UNFCCC). Capacity-building incentives that feed into the leadership perpetuation and state survival imperatives of the North Korean government represent the most likely explanation for North Korea’s interaction with the UNFCCC. Environmental vulnerabilities matter, because they could threaten the control of the Kim government. North Korea’s flirtation with state failure during the Arduous March period of the mid-1990s illustrates this relationship. This period’s energy shortages, food insecurity, vulnerability to natural disasters and withering export income is pivotal to understanding the ongoing weakness of the DPRK economy. It therefore stands to reason that greenhouse gas abatement, capacity-building in both the agricultural and energy sectors, and exploration of new sources for foreign currency revenue could be logical components of the North Korean government’s plans to mitigate against this weakness. [Green] [Elephant]
FKI plans new liaison branch in Pyongyang
Industry group’s move signals shift away from government initiatives
May 18,2015 The Federation of Korean Industries, the country’s most influential business organization, plans to establish an office in Pyongyang, North Korea. “The purpose of the FKI’s outpost in Pyongyang will be for South Korean private companies to act as a mediator for economic cooperation and unification,” a high-level FKI official on Sunday told the JoongAng Ilbo. Once the office is up and running in the North Korean capital, it will offer consulting services to South Korean companies on investments and economic cooperation. The FKI, through unofficial channels, recently asked the South Korean government to approve a visit to North Korea’s Masikryong Ski Resort, an ambitious entertainment project pushed by North Korea’s Kim Jong-un. “It is a message from the South Korean private business sector to both the South and North Korean governments that we are willing to participate in economic development plans with North Korea,” said the FKI official. The FKI last August established an economic unification committee and has been looking into various possibilities that could advance economic cooperation between the two Koreas. “This year marks the 70th anniversary of the division of the two Koreas, but conflict and mistrust between the two have deepened further,” said Kim Byung-yeon, an economics professor and deputy director at Seoul National University’s Institute for Peace and Unification Studies. “An outpost of change like the Kaesong Industrial Complex that not only stimulates but leads North Korea to open up is needed.” Until now, economic cooperation with North Korea has largely been led by the South Korean government. As a result, initiatives like Mount Kumgang tourism have been greatly affected by political and social tensions. Businesses see greater cooperation with North Korea as one way to help overcome four “lows” that have held back South Korea - low growth, low investment, low interest rates and low inflation. [Inter-Korean business]
Could the New Asian Infrastructure Investment Bank Change the Dynamics of Economic Engagement with North Korea?
By Bradley O. Babson 26 May 2015 The surprisingly robust emergence of the Asian Infrastructure Investment Bank (AIIB) through its recruitment of 57 founding member countries has transformed prospects for economic cooperation in Asia.[1] The AIIB promises to become a credible multilateral financial institution capable of funding significant infrastructure projects across the region. North Korea potentially stands to benefit if the bank’s forthcoming membership requirements allow Pyongyang a path to participation and if the government can someday clear transparency and other administrative hurdles. Officials and members of the China-led AIIB pose for a picture during the recent meeting held in Singapore. Photo: AIIB Officials and members of the China-led AIIB met in Singapore in May. Photo: AIIB Borrowers in Asia should welcome the AIIB as a new lending instrument. Private investors have proven unable to contend with the scale and diversity of infrastructure needs across countries where varying domestic conditions pose challenges. The World Bank and Asian Development Bank have prioritized poverty reduction and tailor country assistance programs to a variety of critical social, environmental and economic development needs, which limits their capacity to finance infrastructure projects. The AIIB appears poised to fill a crucial gap by focusing its multilateral heft exclusively on infrastructure needs in its member states. [Sanctions] [AIIB]
Kim Jong Un Gives Field Guidance to Taedonggang Terrapin Farm
Pyongyang, May 19 (KCNA) -- Kim Jong Un, first secretary of the Workers' Party of Korea (WPK), first chairman of the DPRK National Defence Commission and supreme commander of the Korean People's Army, gave field guidance to the Taedonggang Terrapin Farm. The Taedonggang Terrapin Farm is a big base for breeding terrapin built on the personal initiative of leader Kim Jong Il who exerted efforts to provide the people with tasty and nutritious terrapin widely known as precious tonic from olden times. Going round various places of the farm, he learnt in detail about its production and management and pointed to the serious shortcomings manifested in its work. "It is hard to understand that the farm visited by Kim Jong Il did not arrange even the room for the education in the revolutionary history and the employees who failed to bear deep in their minds his leadership exploits could hardly perform their role as masters in production", he noted, adding the atmosphere of the farm was completely different from those other farms he has visited. "Everything goes well, people substantially benefit from the results of the implementation of the party policies and hurrah for the WPK and socialism are heard from the units which consider it as the main line to uphold and glorify the leadership exploits of the great leaders and the party but only sighs of defeatists come from those units which failed to do so and they may get bogged down even if all conditions are provided", he said, stressing this is the lesson one can draw from their work style. Recalling that the party sent fries of freshwater lobsters to the farm so that it might breed them and took necessary measures for it but it failed to complete a breeding ground though two years have passed since then, he strongly criticized the shortcoming of its officials as a manifestation of incompetence, outmoded way of thinking and irresponsible work style. [Kim Jong Un] [Reproach]
Kim Jong Un inspects Sinchang fish farm
Xinhua, May 16, 2015 Photo provided by Korean Central News Agency (KCNA) on May 15, 2015 shows top leader of the Democratic People's Republic of Korea (DPRK) Kim Jong Un recently inspecting Sinchang fish farm under Unit 810 of the Korean People's Army (KPA). (Xinhua/KCNA) [Photos] [Military economy]
More N.Korean Workers Stand Up for Themselves
North Korean workers are reportedly beginning to emancipate themselves, staging strikes and other kinds of nascent industrial action if the regime fails to pay them. In early March, workers on a building site in Pyongsong, South Pyongan Province refused orders and went home because they had not been paid for two months, a source said on Tuesday. Embarrassed by their action, the regime started an investigation, which found that senior officials had embezzled corporate money and lost it on an investment. Some discharged soldiers who had been sent to collective farms and coal mines in Hwanghae Province after their 10-year mandatory military service also went on strike. They wrote a collective letter of appeal to the authorities, asking that they be sent home, another source said. North Korean workers abroad are also beginning to stand up to the regime, which keeps them under tight supervision and pockets most of their earnings. Since Kim Jong-un took power, an increasing number of workers overseas have reportedly engaged in go-slows or strikes over back wages and the regime's constant demands for hard currency. Workers in the Middle East and Africa have walked out and even assault their superiors. Meanwhile, the regime has launched a flurry of construction projects for the 70th anniversary of the Workers Party this year although it has no way of paying for them. [Labour]
18th Pyongyang Spring Int'l Trade Fair Opens
Pyongyang, May 11 (KCNA) -- The 18th Pyongyang Spring International Trade Fair opened with due ceremony at the Three-Revolution Exhibition House Monday. Displayed at the venue of the fair are products presented by companies of the DPRK, New Zealand, Germany, Russia, Malaysia, Mongolia, Switzerland, Singapore, China, Cambodia, France, Poland, Australia, Italy, Indonesia, Viet Nam and Taipei of China. Present at the ceremony were Vice-Premier Ro Tu Chol, Ri Ryong Nam, minister of External Economic Relations, officials concerned, delegations of different countries and regions, diplomatic envoys of different countries and embassy officials here. An opening address was made by Pak Ung Sik, director of the Korean International Exhibition Corporation, to be followed by a congratulatory speech by O Ryong Chol, vice-minister of External Economic Relations. The speakers said the fair is developing as an international economic event for boosting the economic and trade relations among different countries of the world and regions and promoting economic development. They noted that during the fair the participants would witness for themselves achievements made by the Korean people in building a economic power and conduct multilateral scientific and technical exchange in various fields. The participants will steadily boost cooperation in economy and trade on the principle of equality and mutual benefit in the days ahead, they noted. The fair will last till May 14. [Trade]
Korean Firms Trail World's Biggest Businesses
Chinese companies topped the Forbes' list of the World's Largest Companies in 2015. Industrial and Commercial Bank of China ranked first, followed by China Construction Bank, Agricultural Bank of China, and Bank of China. This is the first time Chinese firms grabbed all four top spots. Forbes selects the companies based on sales, assets, profits and market value. Fifth was Berkshire Hathaway owned by Warren Buffett, followed by JPMorgan Chase, Exxon Mobil, PetroChina, General Electric and Wells Fargo. Banks and petro firms dominated the top 10. From Korea, Samsung Electronics ranked 18th, up four notches from last year, while Hyundai Motor ranked 117th, KEPCO 171st, Shinhan Financial Group 279th, Hyundai Mobis 298th and Samsung Life 300th. American businesses accounted for 579 of the top 2,000 businesses, followed by Chinese (232) and Japanese companies (218). Korean firms ranked fifth after the U.K. with 66 companies on the list. Forbes said 200 companies entered the list for the first time this year, including Korean cosmetics company AmorePacific at 1,586th. [China rising]
Star US investor says he’d put his whole fortune in North Korea
Posted on : May.7,2015 16:37 KST Modified on : May.7,2015 16:37 KST Global investor Jim Rogers said he would invest his entire fortune in North Korea. The remarks from Rogers, 73, came during a May 5 interview on CNN Money. When asked if he would be willing to invest in North Korea, Rogers replied, “If I could put all of my money into North Korea, I would.” “I would not have invested in Kim Jong-un’s father or grandfather by any stretch of the imagination, but that’s like saying that in 1980 you shouldn’t invest in China because of Mao Zedong,” he added. “Mao was dead and Deng Xiaoping was making huge changes. They are making huge changes in North Korea. The kid [North Korean leader Kim Jong-un] is making astonishing changes,” Rogers concluded. Rogers is famed for realizing a 4200% rate of return over ten years after co-founding the Quantum Fund with George Soros in the 1970s. He is also highly interested in investing in Asia and agriculture. In 2007, he moved to Singapore from New York for what he described as the better investment opportunities in Asia; he has also taught Chinese to his daughter. Rogers sent a similar message in the interview. “I’m glad I live here in Asia,” he said. Rogers also said he was “very bullish” on the Chinese market and that Russia “is the most depressed stock market in the world.” “I’m buying Russian shares. I recently bought into agriculture,” he added. The remarks are not Rogers’s first expression of interest in North Korea. In his book “Street Smarts,” he describes a 2007 visit to Pyongyang and writes that North Korea, while similar to Myanmar in its lack of electricity and other infrastructure, offered more investment opportunities. [Bizarre] [FDI]
North Korea Building New Transport Corridor and Border Crossing
By Curtis Melvin 04 May 2015 North Korea Building New Transport Corridor and Border Crossing While observers have focused attention on road improvements along the DPRK’s east and west coasts in Rason and Sinuiju, since 2011, the DPRK has been constructing a new highway segment linking Huichon to Manpho, where a new border crossing is under construction. This new road and border crossing is important because, once completed, it will offer Pyongyang its first true international trade route on a paved highway.[1] This will open up trading opportunities between China and the DPRK, particularly in the reclusive Jagang Province, in tourism, consumer goods, minerals/mining and (potentially) military hardware. Figure 1. New road construction between Huichon and Manpho. Image © 2015 Google Earth. Background Planning for this new road and border crossing likely began in 2010 when Chinese-DPRK relations were at a high point. The Chinese government was interested in promoting economic development in its northeast provinces which would require numerous initiatives to achieve greater access to the DPRK’s ports, natural resources and consumers. At the same time, in North Korea, there appeared a desire to expand cooperation on economic projects with China. Additionally, in January 2011, the DPRK cabinet is reported to have adopted the “10-Year State Strategy Plan for Economic Development,” which, among other things, calls for an investment into programs for developing natural resources and the construction of 3,000 km of highways.[2] Road Construction Starting in Huichon and passing through the provincial capital of Kanggye (the only provincial capital that is still closed to western visitors[3]), the new road segment, which complements an existing railway line, is approximately 176 km long. Based on KCTV footage and KCNA reports, work on the highway segment probably began in early 2011. In addition to the road itself, new supporting infrastructure such as gas stations, cell phone towers, and possible security checkpoints have also been constructed. [Logistics] [Infrastructure]
Human Rights and North Korea's Overseas Laborers: Dilemmas and Policy Changes
Tuesday | May 12, 2015 2:00 pm - 5:30 pm KEI Conference Facility For more than 70 years, the North Korean state has been exporting its laborers overseas in an effort to secure ample amounts of foreign currency for its nuclear and missile development programs. As a result, thousands of North Korean laborers work excessive hours, in dangerous conditions, and only receive a fraction of their legal salaries. Therefore it is imperative that this issue is brought to the attention of the international community in order to bring more light to the issue by providing new facts and professional analysis. With this goal in mind, the Database Center for North Korean Human Rights (NKDB) and the Korea Economic Institute of America (KEI) are co-hosting a conference on the human rights conditions of North Korean laborers. NKDB researchers, KEI staff and other prominent North Korean and human rights specialists will gather together for presentation and discussion of the severe labor rights and basic human rights violations faced by North Korean laborers overseas. Additional information will be provided by a North Korean defector, who worked for about 2 years overseas, and will share his witness testimony with the audience. [Labour] [Double standards]
Inter-Korean Trade Hits Record Despite Sanctions
Inter-Korean trade reached a record high last year thanks to increased production at the Kaesong Industrial Complex and despite sanctions imposed by South Korea. According to the 2015 white paper on reunification by the Ministry of Unification on Thursday, cross-border trade amounted to US$2.34 billion in 2014, up 106.2 percent from a year earlier. The number of companies engaged in cross-border trade rose from 328 to 342, and so did the number of trade items from 674 to 718. The Unification Ministry said the Kaesong Industrial Complex is growing in size as well as traded amount. The manufacturing complex accounted for 99.8 percent of cross-border trade in 2014, since almost everything else is banned under the sanctions. Other trade between the two Koreas except Kaesong totaled only $178,000 last year, down 69.7 percent from $589,000 in 2013. [Kaesong] [Sanctions]

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APRIL 2015

The Lion & the Gazelle
Choson Exchange · April 21, 2015 Last month, two weeks after the Ebola quarantine measures were lifted in North Korea, we entered Pyongyang to run a workshop on ‘partnering with foreign businesspeople.’ Participants were particularly appreciative of one particular talk – a professor who spoke about Singapore’s efforts to attract foreign investment. The professor ended his talk with the story of “the Lion and the Gazelle”, apparently a favorite story of Singapore’s bureaucrats. This is how it goes (paraphrased): In the morning, the gazelle wakes up thinking “if I run too slowly, I will be devoured by the lion.” The same morning, the lion wakes up thinking “if I run too slowly, I will not catch the gazelle and will starve to death.” The moral of the story? Investment attraction is a competition, and every country needs to be continually improving its business environment to attract investors. We hope that the message gets through to the businesspeople, academics and policymakers in attendance, that there is A LOT more North Korea can do to make the country minimally hospitable to foreign businesspeople. [FDI]
North Koreans learn entrepreneurship in Singapore
Choson Exchange · April 14, 2015 “Yes, but what is innovation?” “What percentage of newly planted trees survive in Singapore?” “Why can’t I log in to this website?” When you have 12 North Koreans spending two weeks on a Choson Exchange study trip on tech entrepreneurship to Singapore, the questions range wildly. In early March, we organised such a two-week programme. The goal was to introduce to these budding entrepreneurs, scientists and policymakers the roles of a host of actors in the startup ecosystem. Given their familiarity with a heavy governmental role, we tackled the role of policy early. Volunteer workshop leaders emphasised the need for government bodies to incentivise a tech-business ecosystem, and in funding R&D and commercialisation in instances of market dislocation. One of the workshop leaders actually drew up a couple of potential action plans for the DPRK to consider: a dedicated government-sponsored plot to host high-tech startups similar to Singapore’s own Block 71, and overseas internships or study exchanges for North Korean university students in countries such as Sweden or China. These were pretty well received on the whole and the feasibility of these plans was debated for the better portion of an hour before the group turned its attention to the more philosophical topic of what exactly the term “innovation” defines. [Training]
N.Korea Gives Up on Big Collective Farms
The North Korean regime started to distribute the land of collective farms to households across the reclusive nation. Household farming already started in selected regions several years ago. A source on Monday said all farms in the country, excluding Sukchon and Nampo in South Pyongan Province were ordered to implement a household farming system in the middle of this month. Land and livestock are being distributed to households. The new system involves two or three households, or six to seven people, being given a plot of farmland, whereas the collective farming system had 20 to 30 people farming a plot. "Under the household farming system, families get to keep 50 percent of the harvested crops and hand over 30 percent to the central government and 20 percent to the provincial authorities," the source said. "This has led to increased zeal among farmers." The regime is buying produce at market rates, which apparently gives farmers some autonomy to sell their crops. The measures signal the first steps of a transformation from a collective to private farming system that is linked to a market economy. [Economic reform] [Agriculture]
Solar energy lights the way in North Korea
By John – Patrick Gerard Thackeray North Koreans are literally seeing the light as they turn to solar as a reliable source of energy for basic functions in their homes and to power a growing number electronic devices and household goods. With the ever-increasing need for a constant power supply that the government prioritizes for factories or areas loyal to the Kim regime, regular North Koreans are relying less on the national grid and moving to supplying themselves to improve their standard of living. Apartment blocks in Pyongyang and other cities in the repressive state are bristling with solar power panels that have been bought in the Chinese city of Dandong, an area where traders in the North come and shop. An array of large red signs fills the streets in Dandong, advertising everything from smartphones and washing machines to rice cookers, all of which are becoming common household goods in North Korea. "North Koreans never really purchased solar panels from us until two years ago," Yang Yanmeng, a trader in China's Shandong province, who begun selling solar panels in 2012, told Reuters. "Now, up to 80 to 90 percent of our company's products are sold to North Koreans." With the increase in demand for solar panels, North Korea has started making them. State propaganda supports the move, saying it is a "good form of renewable energy" and an "effective use of the sun". One of a barrage of slogans seen on billboards in the country reads: "Develop and make effective use of wind, tidal, geothermal and solar energy!," As North Koreans become more switched on with technology and household goods, the need for sustainable power is key. With a lack of infrastructure and a dated power grid, North Koreans are waking up to the idea of becoming self-sufficient. "We can heat our homes with a heater powered by a solar panel," said Kim Yeong-mi, a North Korean defector who came to the South in 2012. [Solar power] [Green] [Media]
The North Korean Budget Report 2015: Ten Observations
By Ruediger Frank 15 April 2015 Parsing the North Korean State Budget 2015On April 9, 2015, the Supreme People’s Assembly (SPA), North Korea’s parliament, met for its annual spring session. As usual, the Prime Minister gave an overview of the major economic achievements of the past year and the tasks ahead,[1] and the Minister of Finance reported on the state budget for the previous and current years.[2] Given the lack of official information about the economy, these publications, particularly the budget report, deserve our attention. This is one of the rare cases when the North Korean state provides quantitative information regularly, although the reports are rather short and do not always follow the exact same structure from year to year. If we contrast the 2015 budget report with the reports of the last few years, we find a number of noteworthy points. [Economic policy]
Report: S. Korea could be headed for Japan-style long-term economic downturn
Posted on : Apr.14,2015 17:32 KST Modified on : Apr.14,2015 17:32 KST The decline in the populations of South Korea (left) and Japan (right). The blue line represents total population and the red line represents the productive population. Source: “Examining the Possibility of a Japanese-Style Long-Term Downturn for the South Korean Economy,” by Kang Doo-yong, a senior researcher at the Korea Institute for Industrial Economics and Trade A decline in the productive population and high rates of household debt may leave the South Korean economy suffering a long-term slump like Japan’s, according to a report by a state-run think tank. The report, titled “Examining the Possibility of a Japanese-Style Long-Term Downturn for the South Korean Economy,” was published on Apr. 13 by Kang Doo-yong, a senior researcher at the Korea Institute for Industrial Economics and Trade (KIET). Kang notes that similar changes in population and economic structure between South Korea and Japan mean the former could be in for the same kind of protracted slump the latter has experienced over past decades.
North Korean real estate market: sustained boom, or bubble?
Posted on : Apr.11,2015 08:02 KST Modified on : Apr.11,2015 08:02 KST The site where housing for scientists is being constructed in Pyongyang, Feb. 15. Nowadays in Pyongyang, many apartment complexes are under construction. Gyeongsang National University research professor Jung Eun-yi recently traveled to Dandong, China and did research on the North Korean real estate market. Jung found that an apartment in Pyongyang now costs as much as US$200,000. (KCNA/Yonhap News) “They say there are apartments in Pyongyang selling for US$200,000.” Jung Eun-yi, a research professor at Gyeongsang National University, was talking about how rapidly housing prices in North Korea have been rising. Jung had just returned from spending January and February in Dandong, China, where she had been tracking trends in the North Korean housing market. In July 2014, the highest price for an apartment in Pyongyang that heard about in Dandong had been US$100,000. Needless to say, this doesn’t mean that an apartment worth US$100,000 had doubled in value to US$200,000 in the past six months. Nevertheless, the appearance of apartments worth US$200,000 indicates just how quickly Pyongyang apartments are increasing in quality, size, and value. Jung is one of the foremost experts in South Korea on prices in the North Korean housing market. She received considerable interest from the media because of a paper that she presented at the World Conference on North Korean Studies at the end of Oct. 2014 in which she reported that some apartments in Pyongyang were selling for US$100,000. In 2013, she had gained attention in the academic community by publishing a paper that included a detailed breakdown of housing prices in the North Korean city of Musan, North Hamgyong Province, down to the neighborhood.
Kim Jong-un Tests 'N.Korean' Light Airplane
North Korean leader Kim Jong-un has tested a "homegrown" civilian light aircraft, the official [North] Korean Central News Agency claimed Wednesday. "The plane is easy to operate. Its engine sounds very good," it quoted Kim as saying after safely landing the plane. North Korean leader Kim Jong-un sits in the cockpit of a light aircraft on Wednesday in this photo released by the Rodong Sinmun. North Korean leader Kim Jong-un sits in the cockpit of a light aircraft on Wednesday in this photo released by the Rodong Sinmun. Kim's visit to a plane factory was apparently aimed at giving the impression that the North is teeming with homegrown advanced technology and no longer totally dependent on China. "Whether the North has actually succeeded in domestically producing a light airplane hasn't been confirmed," a Unification Ministry official here said. [Aerospace]
N.Korea Experiments with Capitalism
North Korea is experimenting with capitalism, a far more explosive business than missiles, German weekly Stern reported recently. The magazine said the North is tinkering with an antiquated form of capitalism under a political system that it described as "stone-age communism." Car ads have appeared in Pyongyang and smartphone app stores have popped up, according to German businessman Nils Weisensee, who teaches capitalism to North Koreans. The adverts for the North's Pyonghwa Motors cars, smartphone shops, nail bars and high-end restaurants all indicate a drift toward capitalism. App stores are offline in the North, where Internet access is strictly controlled by the state, and customers download apps via cables. In the streets of Pyongyang, brighter colors and more varied styles can be seen as well. Stern said the people driving the trends are the "first generation of industrialists." Weisensee, who runs two coffee shops in Shanghai, has been working for the North Korean education agency Chosun Exchange based in Singapore since 2013. It was launched in 2007 to teach young North Koreans about politics, economics and law as well as boost exchanges. Earlier this month a coffee chain selling cappuccinos and Irish coffee opened in Pyongyang. Weisensee has taught some 800 young North Koreans how to open their own start-ups and about capitalism. He teaches elementary market principles, explains what customers want, why brands are necessary and why staff must be motivated -- all ideas that were unheard of in the North so far. The self-described "collaborator" said North Korea needs a lot of new products and the regime now gives more freedom to businessmen. But Stern said no North Korea government official has mentioned reforms or market opening so far. [Media] [Bizarre]

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MARCH 2015

Overheard: Digging North Korea
Anonymous. Wall Street Journal (Online) [New York, N.Y] 26 Mar 2015: n/a. [...]Mr. Barrett predicted "significant overtures for peace next year." Roger Barrett's Korea Business Consultants sounds like another firm to help investors navigate South Korea. But for anyone who stumbled into Mr. Barrett's presentation at the annual Mines and Money conference in Hong Kong this week, it turned out the attraction was North Korea. Mr. Barrett, a Briton, insists on calling the North by its official name, the Democratic People's Republic of Korea, and speaks of its natural-resources opportunities. He is executive director of a gold-mining firm there. Beside the prospect of gold in them North Korean hills, what of the inconveniences of dealing with a country variously described as a Stalinist state and hermit kingdom? Mr. Barrett says there are now lots of "markets, motors, money," in the North. "Occasionally sanctions get in the way, but not generally," he said. Anyway, Mr. Barrett predicted "significant overtures for peace next year." Plus, he said, "There's no significant starvation anymore." Displaying a photo of brightly lit buildings, he said foreigners who live there now call Pyongyang "Dubai." What more could an investor ask for? [Media] [Mining]
Seoul reduces water supply to N. Korea
By Yi Whan-woo South Korea has reduced its free supply of water to Gaesong Industrial Complex (GIC) since December, according to the government, Sunday. The Ministry of Unification said the amount of water provided to the inter-Korean industrial park in North Korea's border city of Gaesong has dropped to 5,000 tons a day, down from 7,000 tons. It added that Seoul has reduced its free water supply to Gaesong for civic purposes by 5,000 tons a day to 10,000 tons a day since December. This supply of water comes through a water purification and sewage treatment facility near a reservoir at the GIC, the unification ministry said. The Gaeseong Industrial District Foundation in Seoul has decided to reduce the supply to cope with a drought that hit North Korea last year, according to the government. [Kaesong]
North Korea’s growing economy — and America’s misconceptions about it
Trucks cross from North Korea to China at a steady rate in Dandong, China, which is the commercial gateway to North Korea. (Anna Fifield/The Washington Post) By Anna Fifield March 13 at 7:37 PM ? DANDONG, China — The textile factories producing “made in China” goods from compounds just across the Yalu River from North Korea offer a glimpse into a hidden world that is helping North Korea’s economy to thrive. Operated by North Koreans, the factories produce clothes and other goods that are exported under foreign-company labels, making it impossible to tell that they have been made with North Korean hands and have contributed to North Korean profits. [China NK]
N.Korea to Mark Exports 'Made in Korea'
The North Korean regime has decided to mark export goods "made in Korea," Radio Free Asia reported Monday. Officials were on Jan. 8 instructed to label light industrial products intended for export "made in Korea," the broadcaster quoted a source in Jagang Province as saying. The idea is presumably to fool at least some customers that the products are South Korean and to piggyback on their reputation for quality. So far North Korean exports have been marked "DPRK," the official acronym for Democratic People's Republic of Korea, or "DPR of KOREA." The regime also told manufacturers to avoid using any prominent North Korean geographic names like Pyongyang and Nampo on the label. Even leaving aside the bizarre graphite-based synthetic fiber Vinalon, North Korean exports are even less sought after in the global market than products from the old Warsaw Pact states used to be.
NK workers abroad get only 10% of their earnings
loading ???? North Korean workers have a rest at a railway construction site in Russia's Far East city of Vladivostok. / Korea Times file Book depicts harsh conditions for NK workers abroad By Kim Se-jeong North Koreans working abroad earn $1,000 per month on average, but up to 90 percent of their wages is intercepted by authorities, according to a book about human rights on their experiences, released Tuesday. The Database Center for North Korean Human Rights (NKDB), a private research institute, authored the book after interviewing 20 North Koreans with experience of working abroad. They worked in nine countries, including Russia, China, Kuwait, Malaysia, Qatar, Singapore and the United Arab Emirates. Their names were not disclosed. Most interviewees said their wages were paid in the local currency. [Labour]
North Korea digging ever deeper to keep its economy afloat
The global commodity price crash has hit Kim Jong-un’s hermit kingdom hard, but Chinese investment is keeping its mining sector going The North Korean economy is heavily reliant on anthracite, coal and iron-ore exports. Photograph: Mark Ralston/Getty Anna Fifield for the Washington Post Monday 9 March 2015 23.00 GMT The sharp fall in global commodity prices is starting to have an impact on North Korea, economists say, hurting a state that relies heavily on exports of minerals to keep its economy afloat – and its gargantuan military funded. Combined with China’s economy coming off the boil, the recent slump in coal prices in particular could hurt Kim Jong-un’s byungjin policy: his stated desire to simultaneously develop North Korea’s economy and its nuclear weapons programme. “Commodity prices are dropping, so it’s becoming more and more difficult for North Korea to earn foreign currency,” said Choi Kyung-soo, president of the North Korea Resources Institute in Seoul. “I think last year, minerals trade decreased by about 10% by volume and about 15% by price.” [Exports] [Coal] [China NK] [FDI]
S. Korea-China FTA could change the game for Kaesong Industrial Complex
Posted on : Feb.26,2015 16:34 KST Agreement would recognize products made in Kaesong as South Korean, allowing for a wider range of exports The most salient differences between the South Korea-China free trade agreement deal reached in November and the agreement initialed this week are in the sweeping recognitions of items produced at the Kaesong Industrial Complex as South Korean-made, and a major increase in the number of items. Companies working out of the complex now have a bigger pathway to export their items as South Korean, which is a boon to price competitiveness. The new status is also expected to have favorable effects on Seoul’s negotiations with the US and European Union on the complex as an outward processing zone. According to the agreement text released by the Ministry of Trade, Industry and Energy (MTIE) on Feb. 25, products from the Kaesong Complex are to be recognized as South Korean as a rule once the agreement takes effect, with the terms applying to a list of 310 items. That number may be amended through yearly agreements, and includes not only items that are currently being produced but also some that are expected to be produced later. In contrast, South Korea’s FTA with the European Union, which took effect in 2011, recognized place-of-origin status for 276 items from the complex. Other agreements with India, ASEAN, and Peru recognized 108, 100, and 100 items, respectively. [Kaesong] [FTA] [China SK]
N.Korea Demands More Money for Kaesong Workers
North Korea on Tuesday told South Korea it is raising the minimum wage for North Korean workers at the joint Korean Kaesong Industrial Complex to US$74 in March. "The North told the joint management committee on Tuesday afternoon that it would implement some revised labor regulations for the industrial park of which it unilaterally notified the South in December," a Unification Ministry official said Thursday. "It said it will raise the minimum wage by 5.18 percent from $70.35 to $74 from March 1 under revised Article 25 of the regulations." [Kaesong] [Labour]

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FEBRUARY 2015

European trade & investment mission to North Korea (May 2015)
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. Under the new leader Kim Jong-un, there has been a greater emphasis on the economy, and several economic reforms are being enacted. State-owned farms and factories are having greater autonomy, and there is a growth in the number of special economic zones in order to attract foreign investors.
Social Change and Business Opportunities in North Korea International Conference
20 March 2015 11.00 – 16.00 Social Change and Business Opportunities in North Korea International Conference 20 March 2015 11.00 – 16.00
Chinese journal says North Korean economy improving
Posted on : Feb.9,2015 16:34 KST World Affairs, a Chinese foreign affairs journal World Affairs argues that the introduction of market economy elements under Kim Jong-un, including “vigorous” agricultural trade A Chinese foreign affairs journal is reporting that the North Korean economy has improved under the Kim Jong-un administration. World Affairs, a journal published by the Chinese Foreign Ministry, writes in its most recent edition that North Korea “has introduced various market economy elements under the Kim Jong-un regime.” “Economic conditions have actually improved even under international sanctions following its third nuclear test,” the article notes. The text goes on to note that the market for agricultural trade is “vigorous” and that various domestic daily essentials are being produced. “However, no signs of increased foreign capital, outside aid, or external trade are being detected amid North Korea’s sanctions by the international community,” it adds. “The improvements in the economy should be understood as the result of new driving forces having emerged internally,” it concludes. [Economic reform] [Sanctions] [Agency]

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JANUARY 2015

North Koreans do MBAs in Singapore
At the last minute, scholarship funding for two North Koreans to study abroad in Singapore has sadly fallen through. We’re writing to ask for your help. Donating to this scholarship fund is a direct way join Choson Exchange’s mission - expand the horizons of North Koreans who can create better policies and outcomes in the DPRK. The candidates will study and live in Singapore for a full year. In 2014, we successfully placed two students on scholarships at Singapore’s Nanyang Technological University to study MBAs. The students have performed well, actively engaged in class discussions, written analyses of economic policies, and plan to train a new generation of managers, entrepreneurs and economist when they return to North Korea to teach at a university [Training] [MBA]
DPRK Agricultural Policy: Chinese-Style Reform or Muddling Towards Autonomy?
By Randall Ireson 27 January 2015 Has farming policies in North Korea really improved the system? For DPRK economy watchers, the last year has been relatively quiet regarding the agricultural sector. Aside from a landmark conference for sub work team leaders in February, and the annual weather crisis (low rainfall in April and midsummer), there was little news. Yet it appears that policy modifications announced in previous years, and received with skepticism in many quarters, have gradually been implemented nationwide. To the question whether they are actually making any difference for farm production, one can answer with a guarded ‘yes.’ But to date, they do not constitute a Chinese- or Vietnamese-style economic reform. We should continue to observe these developments cautiously since the history of DPRK farm policy has been characterized by grand pronouncements followed by grudging implementation and eventual rescission when it seemed like central control was being weakened. [Agriculture] [Economic reform] [Cliché]
North Korea’s Expansion of Molybdenum Production
By Joseph S. Bermudez Jr. 23 January 2015 Summary North Korea’s expansion of the March 5 Youth Mine—a showcase facility intended to produce non-ferrous metals encompassing almost 2,500 acres near the Chinese border—began in 2008 and culminated in summer 2014 with the completion of a molybdenum production facility. The factory represents a notable expansion in Pyongyang’s production infrastructure and a significant new tool for earning foreign capital. Besides the financial implications of molybdenum production, domestic uses have both direct and indirect applications within North Korea’s weapons of mass destruction, ballistic missile, armor and artillery programs. There is also the notable fact that the overwhelming majority of North Korea’s molybdenum production is exported to China, allowing China to maintain a dominant role in influencing the price of molybdenum on the world market. [Minerals] [Exports] [China NK]
How Has the Commodity Bust Affected North Korea’s Trade Balance? (Part 1)
by Kevin Stahler | January 20th, 2015 | 07:00 am While the plunge in the price of crude oil has grabbed headlines for months, it overshadows the longer running, albeit interrelated, deterioration in global commodities prices more broadly. Everything from metals and ores, coal, and even food has been steadily declining in value for years. North Korea is heavily reliant on commodities such as anthracite and iron ore for its export revenues, and just as it rode the resource boom to its apex in 2011, it is now the victim of a steady and steep decline in world prices. Today we examine the global price effect on North Korea’s major exported commodities and to what extent this may hamper the country’s economic outlook; tomorrow we ask whether or not North Korea can make marginal consumption gains in its imports of food and fuel. [Trade] [Terms of trade]
How Has the Commodity Bust Affected North Korea’s Trade Balance? (Part 2)
by Kevin Stahler | January 21st, 2015 | 07:00 am Yesterday, I presented a simple exercise to measure to what degree deteriorating global market prices for iron ore and anthracite have affected North Korea’s trade balance, given about half of the country’s exports come from these commodities. My rough guess is that North Korea will forego upwards of half a billion dollars in export revenue for 2014, a sizable sum given its total exports in 2013 were about $3.5 billion. And with recent reports that the North Korean coal trade has come to a standstill in January and the Musan mine may lay off 10,000 workers, commodity exports in 2015 could really take a nosedive. But the multi-year broad decline in global commodities could also be a boon for North Korea as it needs to import crude oil and grains such as rice and maize. While foregone export revenues have been sizable, does North Korea gain from its ability to import more goods for less money? [Trade] [Terms of trade]
The DPRK as a Participant in Northeast Asia Regional Energy Cooperation: Benefits and Challenges
By David Von Hippel and Peter Hayes 20 January, 2015 This paper was originally published with support from the Hanyang University’s Energy, Governance and Security (EGS) Center, available in Global Energy Monitor Vol. 2, No.10. I. Introduction In this policy forum, the authors argue, “Resolution of the DPRK nuclear weapons and related issues would open opportunities for regional cooperation on energy issues that heretofore have been stymied, at least in part, by the difficulties in including the DPRK in regional projects. There remain, however, many different opportunities for developing regional energy infrastructure and for energy cooperation activities—many of which could involve the DPRK—that would potential benefit a number of regional parties on many levels.” David von Hippel is a Nautilus Institute Senior Associate working on energy and environmental issues in Asia, as well as on analysis of the DPRK energy sector. Peter Hayes is Honorary Professor, Center for International Security Studies, Sydney University, Australia and Director, Nautilus Institute in Berkeley, California. II. Policy Forum by David von Hippel and Peter Hayes The robust industrial economy of the Republic of Korea (ROK) is almost entirely fueled with oil, natural gas (in the form of liquefied natural gas, or LNG), coal, and fuel for nuclear reactors imported by sea, much of it from distant regions. The Russian Far East (RFE) and adjoining Siberia have a wealth of oil, gas, coal, and hydraulic resources available for development, but very low regional energy demand because of a small and dispersed population. As such, Russian and Korean officials and researchers have for many years explored infrastructure projects—including powerlines and pipelines—that would allow RFE energy resources to be provided to the ROK, thus lessening the ROK’s reliance on fuel from outside the region. Geographically between the ROK and RFE, however, lies the Democratic People’s Republic of Korea (DPRK). Most RFE-to-ROK infrastructure proposed would transit the DPRK, requiring bilateral and multilateral arrangements for powerlines and pipelines to do so. Resolution of the DPRK nuclear weapons and related issues would open opportunities for regional cooperation on energy issues that heretofore have been stymied, at least in part, by the difficulties in including the DPRK in regional projects. There remain, however, many different opportunities for developing regional energy infrastructure and for energy cooperation activities—many of which could involve the DPRK—that would potential benefit a number of regional parties on many levels. [Energy]
Doing Business in North Korea: Opportunities and Challenges
From a global perspective, North Korea is the most closed and isolated country in the world. However, despite the constraints, some foreign enterprises do engage in commercial activities in North Korea. What can be learned from those enterprises that have succeeded? What is North Korea doing to improve the climate for investment, and attract more? What are the possibilities, perils, and prospects as we continue to look for meaningful ways to engage with the country and promote peace? With this in mind, the Institute for Far Eastern Studies (IFES) of Kyungnam University in Seoul, with the sponsorship of Kyongnam Bank, will be holding the international conference: "Doing Business in North Korea: Opportunities and Challenges" . This half-day conference brings together international businesspersons, consultants, lawyers, and NGO personnel, along with academics, to discuss the dynamics of conducting business in this unique, challenging, and changing environment. The program of the conference has been attached and we cordially invite your participation in what we hope will be an enlightening and productive conference. At the conference, I will give a presentation about business opportunities in the garment and the ICT-sector of North Korea. Note: from 10 to 16 May 2015, our general trade & investment mission to Pyongyang will take place in order to investigate business opportunities. This tour is open for participants from all European countries, from various business sectors. Details will be available soon. An impression of our trade-related mission for journalists in October 2014 can be found at: www.gpic.nl/NKimpression2014.pdf.
Impression of a press tour of North Korea (business related)
Paul Tjia October 2014
N.Korea to Push Ahead with 13 Economic Zones
North Korea is forging ahead with the development of no fewer than 13 economic zones in the provinces this year, the regime's official Korean Central News Agency said Wednesday. "The Presidium of the Supreme People's Assembly proposed establishing 13 economic zones in some of the eight provinces in accordance with the economic development zone regulations adopted in 2013," KCNA quoted Yun Yong-sok of the North's Economic Development Association as saying. "The people's committees of the concerned provinces drew up the total development plans, including the construction of buildings, roads, and electronics and communication networks," he added. Free economic zones are planned for Chongjin, Manpo, and Hyesan, industrial zones for Hungnam, Hyondong, and Wiwon, tourist zones in Onsongsom and Sinpyong, export processing zones in Songlim and Waudo, and agricultural zones in Orang and Bukchong, he said. "We're going to give investment presentations on the development blueprint at expos in foreign countries as well as in Pyongyang and the Rajin-Sonbong zone," he added. But whether any investors will bite remains to be seen given the capricious nature of the regime. Cho Bong-hyun of the IBK Institute here said, "It seems that Kim Jong-un is trying to achieve tangible economic development goals with the project." [SEZ]
DPRK Works out Master Plans for Economic Zones
Pyongyang, January 14 (KCNA) -- Master plans have been worked out for the development of 13 economic parks in the DPRK. In this regard, Yun Yong Sok, vice-chairman of the Korea Economic Development Association, told KCNA: The Presidium of the DPRK Supreme People's Assembly adopted the "DPRK Law on Economic Development Parks" in Juche 102 (2013) and decided to set up 13 economic parks in eight provinces (municipalities). The master plans for their development, worked out by people's committees of relevant provinces, contain the construction of structures and roads and power and communication networks on the principle of giving priority to infrastructure construction. Under the plans, works will be conducted to develop Chongjin, Amnokgang, Manpho and Hyesan economic zones, Hungnam, Hyondong and Wiwon industrial zones, Onsong Island and Sinphyong tourist zones, Songrim and Waudo export processing zones and Orang and Pukchong agricultural zones. A briefing on investment is expected to be given at exhibitions and expositions in Pyongyang and Rason cities of the DPRK and other countries to introduce the development master plans. The DPRK will further strengthen the international exchange and cooperation through those economic development zones. [SEZ]
N.Korea in Development Drive for Duman River
North Korea is wooing help from South Korea, China and Russia in developing the Duman River area as a business hub. The North Korean Academy of Social Sciences put forward the proposal in the latest issue of its quarterly journal late last year. "Developing the Duman River and nearby areas has emerged as a way for multinational economic cooperation in the Northeast Asian region over some two decades since the 1990s," Prof. Ri Haeng-ho of the academy wrote in a paper. He also noted that laying oil and gas pipelines and linking the Trans-Siberian Railway have become major projects for cross-border cooperation. [Tumen] [SEZ]
Private Purchases of Solar Photovoltaic Panels in the DPRK: Signs of Green Growth on the Way?
By David Von Hippel and Peter Hayes 13 January, 2015 This paper was originally published with support from the Hanyang University’s Energy, Governance and Security (EGS) Center, available in Global Energy Monitor Vol. 2, No.9. I. Introduction In the following Policy Forum, David von Hippel and Peter Hayes examine the growth of solar panel purchases in North Korea. They write, “The DPRK’s growing markets for solar PV systems suggest two things. First, it suggests that that there is likely a high level of suppressed demand for electricity in the in both rural and urban areas. Second, the evident willingness on the part of DPRK citizens to pay high costs per unit of electricity delivered by use of PV/battery systems reflects the very high “opportunity cost” of foregoing the use of electricity when it is needed.” A combination of lack of investment due to international economic sanctions and limited foreign exchange earnings, coupled with multiple chronic and ongoing problems with energy supply infrastructure, have left per-capita electricity consumption in the Democratic Peoples’ Republic of Korea (DPRK) far below that of its Southern neighbor. On average, the DPRK consumes an estimated 420 kWh (kilowatt-hours) of grid electricity per capita annually, while the Republic of Korea (ROK) consumes 9300 kWh per capita/year, more than 20 times as much.[1] [Electricity] [Sanctions]
Command and Conquer: The Co-option of Market Forces in the DPRK
By Christopher Green | December 31, 2014 | No Comments One of the lasting contributions of Karl Polayni’s The Great Transformation is the argument that the modern market economy is a constructed institution, the result of deliberate government policies meant to separate the social from the economic. The contention that markets are political constructs–products of “great transformations”–is as valuable to the study of North Korea today as it was of 19th century England (the time and place of Polyani’s study). So is Daron Acemoglu and James Robinson’s recent work Why Nations Fail, a contemporary study of the factors that explain why some nations thrive and others crumble. Acemoglu and Robinson argue that the better politics and markets are separated, the more dynamic a nation is (and vice-versa). In the latest in a series of review essays on the North Korean marketization literature (in Korean), Christopher Green distills and analyzes Park Hyeong-jung’s “Towards a Political Analysis of Markets in North Korea” [?? ??? ?? ???? ??]. The implicit influence of Polyanyi is clear and the direct influence of Acemoglu and Robinson (whose work Park draws upon) is present. Political economists take heed. — Steven Denney, Managing Editor Command and Conquer: The Co-option of Market Forces in the DPRK by Christopher Green Down the years, few South Korean scholars of North Korea have achieved name recognition outside the Korean peninsula. Within the small group that does have a presence in the international community today, Park Hyeong-jung is one of the most prominent. A senior researcher with the state-run Korea Institute for National Unification (KINU), in December 2012 Park published “Towards a Political Analysis of Markets in North Korea” in the Bulletin of the Korean Political Science Association [???????], the journal of the Korean Political Science Association [??????].[1] [Marketisation]
How and Why the Western News Media Get North Korea’s Economy Wrong
By Stephen Gowans It is the accustomed practice of Western news media to refer to North Korea’s official news agency, KCNA, as a propaganda outlet, by which is implied that it is a source of self-serving lies. It would be more accurate to say that KCNA propagates the point of view of the North Korean government, which is unquestionably self-serving, or at least intended to be. It is hardly likely that anyone would express a point of view that was deliberately self-damaging. And as far as lies go, while I have no evidence that the North Korean government lies, it would come as no surprise to discover that it has, from time to time, backed its point of view with deceptions, both deliberate and unintended. Humans, as a rule, are not unfailingly honest or free from cognitive biases that sometimes make it difficult for them to see what others see, and North Koreans are as human as anyone else. All the same, were KCNA to carry reports completely devoid of deception, it seems very likely that it would still be the case that the Western news media would label the news agency a propaganda outlet, in the sense of passing off deliberate lies as truth. This is so because the North Korean view is so often at odds with the spin pumped out in Western capitals by officials of state and reported and passed along by Western news media that it must seem to the purveyors of the Western point of view than the North Korean alternative must be wrong and deliberately so. [Propaganda] [Economy]

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