Here is a December 2013 satellite image of the renovation (currently under way):
My comments are in this NK News article…
Here is a December 2013 satellite image of the renovation (currently under way):
My comments are in this NK News article…
UPDATE 4 (2014-2-18): Western tourists are still visiting the restaurant (meaning it has a contract with KITC). The restaurant still has the sign “Rakwon Chicken Specialty Restaurant”, though it is a different color than the original. See tourist video here and here.
UPDATE 3 (2014-2-17): The Hakyoreh updates us on the fate of the inter-Korean chicken restaurant:
In 2005, Choi made his first trip to North Korea to inquire about chicken imports. Soon he had changed plans: he would open his own restaurant there selling South Korean-style chicken. Acquaintances tried to talk him out of it, but he was determined. “I went to Pyongyang and I could see there was money in it,” he recalled. And with economic cooperation between South and North at an all time high, he didn’t see much of a political risk either.
He went back and forth to Pyongyang a few times looking for partners. Finally, in June 2007, he opened up the Rakwon Chicken Restaurant, selling South Korean-style chicken on Puksae Road in the Kaesonmun neighborhood of Moranbong District. His North Korean partner provided the building and staff; Choi was responsible for the interiors, ingredients, recipes, and management system. He reached a deal where he took 70% of profits with a total investment of 500 million won (US$470,000). The opening drew a lot of media attention at the time, with write-ups in the South Korean press and foreign outlets like the Washington Post and Japan’s NHK.
Early on, he did strong business selling at fairly steep prices – the equivalent of US$11.30 for a single bird. His clientele came mainly from the city’s upper class and Chinese visitors. Sales of 100 million won (US$94,000) a year looked to be in sight. “My plan was to open up 100 restaurants in the North,” Choi said.
But in 2008, less than a year after he opened the restaurant, Lee Myung-bak took office as South Korean President. Lee’s administration put a stop to the previous decade’s policies of engagement and cooperation with North Korea, opting for sanctions and containment instead.
“There was a promise between the two sides, and I never thought that would be rejected completely,”Choi said. “Suddenly, that was the reality.”
Bit by bit, exchange ground to a halt. A March 2008 shipment of ingredients through Nampo turned out to be Choi’s last interaction. He had not yet received a single share of revenue.
Then came the announcement of the so-called “May 24 measures” in 2010. Following the sinking of the ROKS Cheonan warship the preceding March, Seoul had called a complete halt to all exchange and economic cooperation with North Korea.
“All the May 24 measures did was drive it home,” Choi insisted. “Most of the economic cooperation had been choked off long before that.”
For the next four years, Choi wasn’t able to set foot in North Korea. Without his support, the restaurant lost its chicken focus and began selling ordinary cuisine. Choi’s other business began to suffer too.
“I’d put my house and buildings up as collateral to borrow the 500 million won to invest in the North,” he said. “Then, to top it all off, there was the US financial crisis. Things began to go downhill rapidly in South Korea, and my business started to fall apart.”
UPDATE 2 (2009-1-1): The BBC offers an update of the new chicken restaurant:
The governments may not be on the best of terms but a South Korean businessman seems to have found a way to North Koreans’ hearts: their stomachs.
Choi Won-ho, the owner of a fried chicken chain, was told he was doomed to fail when he opened his first branch in the impoverished North last year.
But encouraged by his progress so far, he is already preparing to open another one.
Mr Choi runs a fast food franchise in South Korea with a total of 70 stores.
He opened one more last year – no real challenge you might think – except this extension to his fried chicken empire is in the heart of one of the most secretive and business-unfriendly places on the planet.
But Mr Choi says the citizens of Pyongyang have been queuing in front of his shop which is taking around $1,000 a day.
He is now preparing to meet North Korean officials in January to finalise the approval for a second outlet.
His customers are almost certainly all members of North Korea’s elite, a country in which the World Food Programme says up to 9m people will face urgent food shortages this winter.
Relations between the two Korea’s have been at a low since the conservative government of President Lee Myung-bak came to power in the South in February.
North Korea has severed official contacts, stopped all cross-border tourism and restricted entry to a joint industrial zone built with southern money.
But despite the chill, Mr Choi’s fried chicken venture seems to be sizzling.
Read the full story here:
South Korea Chicken Success in NK
UPDATE 1 (2008-11-1): The restaurant is set to open in February 2008. According to Yonhap:
An inter-Korean joint-venture chicken franchise will open its first store in Pyongyang early next month, the head of the franchise’s South Korean partner said Friday.
The store set to open in early February will provide a food delivery service using motorbikes for the first time in the communist country, Choi Won-ho, president of the South Korean company said.
No North Korean restaurants offer food delivery service now, according to defectors from North Korea.
Fried, grilled and steamed chicken dishes as well as draft beer are available for delivery, he said, adding the food will be prepared in the North Korean style.
“I recently received a photo of the store’s interior design from our North Korean business partner, Rakwon General Trading Corporation, along with the offer to open the first store before the 66th birthday of North Korean leader Kim Jong-il,” Choi told Yonhap News Agency by phone. “After opening, I will use radio and newspaper ads to promote the business.”
Kim’s birthday, which falls on Feb. 16, is the most festive holiday in the North.
The North Korean company will provide land, some 20 low-cost workers, chicken, and draft beer. The early-stage investment, equipment, cook and spicy chicken will come from the South Korean chicken franchise called “Matdaero Chondak,” Choi said.
The first “Rakwon” chicken restaurant in Pyongyang will have the capacity of seating about 200 people, he added.
The businessman said he will visit North Korea next week to discuss the opening of the store.
“I hope the business will thrive enough so that we can open store No. 10 in Pyongyang,” he added.
Read the full story here:
Inter-Korean joint venture chicken franchise to open first store in Pyongyang
ORIGINAL POST (2007-11-3): A South Korean entrepreneur is investing in a new fried chicken restaurant in Pyongyang:
According to Reuters:
A South Korean businessman plans to begin a fried chicken delivery service in the North Korean capital, with the first foreign-run restaurant in a country that struggles to feed its own people.
Choi Won-ho, head of a fried chicken franchiser that has about 70 restaurants across South Korea, said Friday he is opening a 50-table restaurant in Pyongyang on Nov. 15. It will also deliver chicken and draft beer to homes.
“I have wanted to be the world’s best chicken brand,” Choi told The Associated Press in a telephone interview.
“But I thought it makes no sense to conquer the world without sharing food with our compatriots. That’s why I went there first,” he said. “I plan to get into the Chinese market via Pyongyang.”
He laughed off concerns his venture may be too risky in the impoverished and isolated country of 23 million, where the elite citizens of the capital are much better off than others.
“I don’t think that I’m going to lose money at all,” he said.
It will be the first foreign-run restaurant in North Korea, according South Korea’s Unification Ministry.
Choi, 48, who has been in the fried chicken business for 15 years, said he hired an ethnic Korean Chinese as the main cook for the Pyongyang outlet and taught him all his cooking know-how. About 20 North Koreans will also work at the restaurant and five scooters will be used for deliveries, he said.
Choi said he invested about 500 million won (US$551,339, ?382,264) in the joint venture with a North Korean trading firm that will take 30 percent of the profits from the business.
North Korea is one of the poorest countries in the world and has relied on foreign food aid to feed the population for more than a decade since natural disasters and mismanagement devastated its economy.
Relations between the two Koreas have improved significantly since their first-ever summit in 2000, spurring a series of exchange projects between the Cold War rivals that fought the 1950-53 Korean War. That conflict ended in a truce, not a peace treaty, leaving the two sides still technically at war.
According to the Joong Ang Ilbo:
South Koreans are making two very different attempts to improve the culinary life of impoverished North Koreans.
First, a South Korean fried chicken franchise will open the only foreign-run restaurant in North Korea, targeting family dining on special occasions.
Second, the labor union of a South Korean conglomerate has built a plant in Pyongyang to provide cheap corn noodles to northerners who suffer from food shortages.
Choi Won-ho, who runs Matdaero, a 70-store fried chicken franchise in the South, said yesterday he would open a restaurant in a joint venture with a North Korean state-run trading company, near the Arch of Triumph in central Pyongyang on Nov. 15.
The restaurant will both receive walk-in customers and deliver chicken and draft beer to homes. Such places are common in South Korea, but it will be the first chicken joint of its kind in North Korea.
Choi has invested 500 million won ($551,000) in the restaurant’s cooking facilities, interior decoration and delivery scooters. He will split the profit 70-30 with the North Korean firm.
Choi, 48, who has been a chicken entrepreneur for 15 years, said there should be sufficient demand despite North Korea being one of the world’s poorest countries, because he plans to offer lower prices to locals.
“I will charge about $3 for a whole chicken for North Koreans and at least $12, the same price as in South Korea, for tourists from the South and other countries,” Choi said yesterday by phone. “One whole chicken will be enough for a four-member family, so the price of $3 will not be too burdensome for special occasions.”
The store will hire about 20 North Koreans to take telephone orders, fry the birds and make home deliveries. It will have seating for 50.
Separately, the labor union of Hyundai Motor Company, Korea’s top automaker, said in a statement that it has completed an 1,800-square-meter corn-noodle plant in Pyongyang. The plant can produce two tons of corn noodles a day, it said.
Hyundai Motor’s 44,000 unionized workers agreed in August to help a South Korean humanitarian group build the noodle factory. Workers donated about 12,000 won each, 500 million won in total, for the facility.
“The plant will be a great help to relieve the food problems of North Koreans,” Chang Kyu-ho, a spokesman for the labor union, said. “Corn is a staple food for North Koreans.”
Read the full stories here:
Fried chicken franchise goes North
Joong Ang Daily
UPDATE 2 (2014-1-27): The North Korean restaurant has re-opened in Amsterdam. According to NK News:
While the Pyongyang Restaurant [See Below] shut down the same year as it opened – allegedly due to a dispute between the Dutch owner Remco Van Daal and its North Korean staff – the Haedongwha staff will now be managed in cooperation with an ethnic Korean manager named John Kim.
Kim, who has lived in the Netherlands for most of his life, also runs a business in Pyongyang exporting sand to Singapore, a source familiar with his background told NK News.
Unlike Haedangwha restaurants in China, which are run directly by the North Korean government, the Netherlands branch is unique in having non-North Korean ownership but a North Korean staff.
You can read more about the restaurant in Het Parool.
UPDATE 1 (2012-9-6): The restaurant has closed. According to the Associated Press:
A North Korean restaurant in Amsterdam staffed by cooks and waitresses from the isolated country has closed its doors.
Dutch newspaper De Telegraaf reported Thursday that Pyongyang Restaurant’s closure was permanent and stemmed from a disagreement between its Dutch owners and North Korean staff.
The restaurant was an oddity, believed to be the only of its kind in Western Europe, though there are similar restaurants in Asia. Dutch labor authorities say North Koreans can get work visas for Europe under standard rules, but few do.
A woman who answered the phone at the restaurant said the establishment was closed. She couldn’t say for how long because she was not authorized to do so. Its website says it is closed “due to holidays.” Phone calls to the owner Thursday went unanswered.
See more here at North Korea Leadership Watch.
ORIGINAL POST (2012-2-5): According to Yonhap:
A North Korean restaurant has opened in the Dutch capital of Amsterdam in what could be the communist nation’s latest attempt to earn hard currency and foster closer ties with Europe.
The “Pyongyang Restaurant” was launched late last month under a joint venture between North Korea and two Dutch businessmen. While North Korea is known to operate dozens of restaurants across Asia, it is the first time a North Korean restaurant has opened in Europe, with the exception of a canteen that briefly operated near the North Korean Embassy in Vienna in the mid-1990′s, according to a local source, who spoke on the condition of anonymity.
The restaurant is staffed by nine North Koreans, including the director and manager, Han Myong-hee, who worked for 15 years at a North Korean restaurant in Beijing operated by the North’s ruling Workers’ Party.
Pyongyang Restaurant, which seats 24 people, has its walls covered with pictures of Pyongyang and North Korean nature, while its menu consists solely of a nine-course meal priced at 79 euros (US$104).
Han said there are plans to offer more affordable dishes such as Korean noodles and dumplings after the restaurant’s official opening on Feb. 17.
“After our official launch, we plan to gradually serve a variety of dishes and during lunch hours as well,” she said. The restaurant currently serves only dinner.
The opening ceremony is expected to be attended by the North Korean ambassador to Switzerland, other North Koreans, and key figures from the Netherlands and different European nations, Han said.
Analysts said the restaurant is likely to serve not only as a source of much-needed cash but also as a bridge to Europe for the isolated North.
“North Korea has been putting a lot of effort into normalizing relations with European nations since 2000,” said Yang Moo-jin, a professor at the University of North Korean Studies in Seoul. “The opening of North Korea’s first restaurant in Europe can be seen as the North’s attempt to improve ties with the West through exchanges at the civilian level.”
Read the full story here:
N. Korean restaurant opens in Netherlands
According to the Hankyoreh:
The latest issue of the quarterly publication of North Korea’s Social Science Institute – published on Nov. 15, 2013, and viewed on Jan. 19 – included an article titled, “Major Issues Pertaining to Making the North Korean Economy Stronger by Establishing and Expanding Economic Development Zones.”
According to the North Korean article, there are five important tasks that must be accomplished if the new Zones are to be successful.
1. building infrastructure such as roads and railroads
2. enacting laws for the special economic zones that take into account the profit of the government and of investors
3. providing benefits for foreign investors
4. operating and managing projects in a way that is suitable to the characteristics of the zones
5. creating the right political and military environment
Read more here:
N. Korea connects politics and military to economic development
Institute for Far Eastern Studies (IFES)
North Korea is encouraging “localization” of raw materials in light industry and construction from this year to improve the lives of the North Korean people.
On January 7, RodongSinmun reported that various cabinet organizations were espousing the New Year’s address of Kim Jong Un. It reported that the Ministry of Light Industry’s executives and employees are engaging in discussions to explore ways to increase localization of raw materials in light industry factories.
A rally was held in Pyongyang earlier this month at Kim Il Sung Square where people pledged to accomplish the national tasks put forward by Kim Jong Un. Tong Jong Ho, Minister of Construction and Building-Materials Industry,delivered a speech that vowed to “make an unprecedented leap in localization of building materials (cement, glass, metals, and other construction materials),” by repairing building materials factories in all provinces.
The Choson Sinbo, pro-North Korean newspaper in Japan,reported on January 2 that at the New Year meeting at the Pyongyang Socks Factory, the plant manager, Lee Sung Hui, made a speech and promised to “raise the level of socks production and localization of raw materials to a higher level in Vinalon and PP fibers (synthetic) this year.”
North Korea is promoting light industry and construction as the key sectors to improve the living standards of the people and asserting localization of raw materials as a priority to make advancements in these fields.
In his New Year message, Kim Jong Un emphasized that lighting industry must play a “major part in improving the people’s standard of living” and that the construction sector is “an important front for solidifying the foundations of a thriving country and creating bases for the people’s happy life.” He called for modernization of factories in light industry and normalization of production, placing importance on increasing the proportion of locally-available raw materials.
Many experts analyze this year’s rising emphasis on the localization of raw materials as reflecting the intentions of the North Korean authorities to focus on pragmatically achievable policy goals first. Of course, increasing the proportion of locally-available raw materials requires the construction of domestic production base, which remains complicated because of international sanctions and lack of foreign currency — issues that cannot be easily resolved– among other limitations.
From 2012, North Korea’s launch of a long-range rocket and third nuclear test was accompanied with rising emphasis on the importance of localization. On December 3, 2013, Rodong Sinmun carried an article entitled, “Localization and National Pride,” that reported on the onsite inspection visits by Kim Jong Un to various economic sectors where he underscored the importance of “equipment, materials, and elements of localization” and “our strengths and technology.”
North Korea acclaimed that the launch of the long-range rocket in December 2012 was a “successful launch of a satellite based on 100 percent domestic science and technology.” Then in February last year, immediately following the nuclear test, it boasted that “Thrilling clap of independent nuclear thunder broke out based on 100 percent of our own wisdom and technology.”
A new year has begun, so most DPRK watchers are analyzing Kim Jong-un’s new year address (a return to a practice established by Kim Il-sung which was replaced by the “joint editorial” in the Kim Jong-il era). I have compiled most of the good analysis of the speech below.
First of all, you can watch the full speech here (in Korean):
You can read the full speech on KCNA here (English, Korean). For those of you who cannot access KCNA, click here to read a PDF of the speech in English and Korean.
UPDATE 2 (2013-12-26): A couple of the individuals involved in getting Rodman into the DPRK for his second trip (post-Vice) have written an op-ed explaining their motivation. According to the article:
Sometimes private citizens can ease tensions between governments when public officials cannot.
Since we met NBA Hall of Famer Dennis Rodman in May, we have been helping to coordinate his visits to the Democratic People’s Republic of Korea and organize an international basketball tournament sponsored by Irish bookmaker Paddy Power. Seeing as our government has branded the DPRK a “critical” national security threat, we find it reflects badly on Foggy Bottom that the three Americans best acquainted with its supreme leader are a retired NBA star, a mixed martial arts fighter and a tuba-playing human geneticist.
Mr. Rodman constantly reminds those around him to “just do one thing: Do your job.” Now it seems he is picking up some of the slack for the U.S. State Department.
Despite decades-old antagonisms, it was ultimately not confrontation but détente between the capitalist and communist blocs that brought the threat of global nuclear war to an end. Perhaps the most memorable episode of this process was President Richard M. Nixon’s visit to the People’s Republic of China and the period of Ping-Pong Diplomacy that laid the groundwork for it; USA/PRC relations were theretofore nonexistent. As Klaus Mehnert put it, the country “had been closed off so completely that there seemed to be about as many astronauts going to the moon as there were foreign observers getting into China.”
In 1967, presidential candidate Richard Nixon expressed his hope for détente with Peking, writing, “There is no place on this small planet for a billion of its potentially most able people to live in angry isolation.” On Christmas 1970, People’s Daily ran a front-page story with a photograph of Chairman Mao Tsetung and American journalist Edgar Snow standing side by side atop the Tien An Men rostrum; at the top of the page, the day’s Mao quote: “All the peoples of the world, including the American people, are our friends.” While Washington dismissed this gesture given Snow’s sympathy for Mao, in retrospect it seems it was intended as a subtle olive branch.
With spring came a chance meeting between American and Chinese ping-pong players concluding with an exchange of gifts. This simple act of humanity touched off a string of cultural and, later, diplomatic interactions.
Days later, the American team was invited to Peking. President Nixon took the opportunity to announce an easing of sanctions and his hope for normalized bilateral relations and “the ending of the isolation of Mainland China from the world community.”
Henry Kissinger’s secret visit to Peking that summer paved the way for “the Week that Changed the World.” Although Nixon and Mao certainly did not see eye to eye, their shared view that diplomacy is preferable to both isolation and war made normal relations between Washington and Peking possible.
The value of cultural exchanges consists in their power to erode misconceptions. For instance, Dr. Terwilliger spent a month this summer in Pyongyang teaching human evolutionary genetics to a class of very talented Korean undergraduates.
Aside from teaching scientific critical thinking, he took care to present his students with the best side of the American people, to demonstrate that we are a generous and friendly people rather than the “brigandish aggressors” of the familiar caricature. He was both surprised and encouraged by their interest in Mr. Rodman’s February visit.
They noted that hearing Mr. Rodman say nice things about their country made them rethink their stereotypes about Americans, for they had now seen one embracing their leader. Many had even read Mr. Rodman’s autobiography and remarked that they admired his frankness in describing the difficulties he faced in his early life.
Such reactions can only bode well. Hostility is inevitable when the common man on each side sees highlighted only the worst aspects of the other. Mutual understanding is where rapprochement starts.
While the first few timid steps may proceed slowly as trust is built, the example of Ping-Pong Diplomacy demonstrates that if the momentum is sustained it can offer governments new options with which to pursue peace and may even be developed into a full gallop (what the Koreans call “Chollima speed”) toward rapprochement. At the very least, track-two diplomacy can present unique opportunities for engagement between private citizens whose governments remain at odds.
Mr. Rodman would be the first to recognize that he is neither a politician nor a diplomat — and yet, that is precisely what makes him such a promising agent of reconciliation. As a cultural icon, Mr. Rodman has the power to project a relatable human face in a way a government functionary simply cannot: by doing down-to-earth things all people can enjoy.
Our government has repeatedly missed the basket, but at least this time Mr. Rodman is there to pick up the rebound. As he has said, “[Kim Jong Un] loves basketball. … Obama loves basketball. Let’s start there.”
An associate professor at Columbia University in New York City, Joseph D. Terwilliger was a member of Dennis Rodman’s September and December delegations to Pyongyang. John Doldo IV, a Watertown native who has also spent time in North Korea, has been working behind the scenes helping to coordinate many aspects of the project. Both authors worked on a strictly voluntary basis in order to avoid any financial conflict of interest.
UPDATE 1 (2013-12-24): According to NK News, the Irish gambling company Paddy Power has decided to end its sponsorship of Rodman’s trips to the DPRK. According to the article:
Irish betting company Paddy Power has ended its partnership with Dennis Rodman and his “basketball diplomacy” initiative.
“We have been reviewing the partnership on an ongoing basis, and with the benefit of hindsight, we probably got this one wrong,” company spokesman Paddy Power (and son of Paddy Power’s founder, Paddy Power) tells NK News.
“Circumstances have changed quite a lot in North Korea; there has been worldwide scrutiny of the North Korean regime, probably more in the past month than in the past couple of years.
“There has been almost total condemnation of North Korea worldwide, and we’re really responding to that.”
Though they won’t be involved, Rodman’s plan to bring 11 other former NBA players to Pyongyang is still a go, according to Power.
“We have spoken to Rodman’s people,” he says. “The event is apparently still happening, but we just won’t be a part of it.”
“Dennis is very appreciative of Paddy Power’s support up to this point for this historic game of basketball diplomacy taking place on Jan. 8th,” Rodman’s agent Darren Prince told the Associated Press.
The organizer, Michael Spavor, has been tweeting the trip here. Based on his pics, here is the appx itinerary:
1. Arrive at night and drive to hotel (motorcade). 2013-12-19
3. Dennis Rodman “leads” training for DPRK team. Game scheduled against an American team in January. Pic 1, Pic 2, Pic 3, Pic 4, Pic 5. 2012-12-20. Here is AP video of the training. Rodman is smoking a cigar.
4. Travel to Koryo Hotel for lunch. 2012-12-20
Rodman and the group left the DPRK without meeting Kim Jong-un, however, I suspect that he will get together in the upcoming fourth trip slated to take place in January.
“It has nothing to do with me. I mean, whatever his uncle has done, and whoever’s done anything in North Korea, I have no control over that,” Rodman said in Beijing. “I mean, these things have been going on for years and years and years.
“I’m just going over there to do a basketball game and have some fun,” he said.
Ahead of the trip, Seoul-based North Korean human rights activist Shin Dong-hyuk said in an open letter in the Washington Post that Rodman should talk to Kim about human rights abuses in North Korea.
Rodman said it was not his place to talk about such issues.
“People have been saying these things here and there. It doesn’t really matter to me. I’m not a politician. I’m not an ambassador,” he said.
“I’m just going over there to try and do something really cool for a lot of people, play some games and try to get the Korean kids to play,” he said.
“Everything else I have nothing to do with. If it happens that he wants to talk about it then great. If it doesn’t happen I just can’t bring it up because I don’t (want) him to think that I’m over here trying to be an ambassador and trying to use him as being his friend and all of a sudden I’m talking about politics. That’s not going to be that way,” Rodman said.
Rodman is expected to provide North Korea’s national basketball team with four days of training during the trip.
He also intends to return to Pyongyang in January with a team of fellow former National Basketball Association stars to hold basketball games on Kim’s birthday.
According to Yonhap:
North Korea is focusing more on diversified development of its economy and pushing regional industries to play a greater role in earning foreign capital, Pyongyang watchers said Sunday.
Observers in Seoul said that the Oct. 31 issue of “economic research” published in the North highlighted the need for regional governments to generate more revenue, bolster industrial output and earn more foreign capital.
According to papers in the research journal that offer a glimpse into how Pyongyang wants to run the country, factories in the provinces must strive to modernize and form close knit alliances with industries located in the capital city and with laboratories.
This call is similar to a speech given by Vice Premier Ro Du-chol on Wednesday at a ceremony marking the 40th anniversary of regional governments being given authority to generate profits and manage their respective budgets.
The senior official stressed that all cities and counties need to do their utmost to improve their economies and come up with necessary policy plans.
Such a move calls for redoubled efforts to attract overseas investments in mineral mines and other manufacturing facilities.
Ro’s remarks have been interpreted as Pyongyang paying more attention to regional economies and getting local authorities to take charge of providing for its citizens, instead of relying on the central government.
Related to such calls, the North recently announced that it will set up a total of 14 special economic zones across the country to pursue economic growth and bring in more investments. At present the communist country only has four such special zones, including those set up in Kaesong and the Mount Kumgang resort.
“There has been a trend coming into this year of the North paying closer attention to building up its regional economy,” said Cho Bong-hyun, an analyst at the IBK Economic Research Institute. The North Korean expert said that this may be a move by the North to bring about results on the economic front under the Kim Jong-un leadership.
Kim, who took over running the country following the sudden death of his father in late 2011, has called for the simultaneous development of the country’s nuclear capability and its economy.
This move is seen as a departure from the “songun,” or military-first politics, pursued by his late father, Kim Jong-il.
Read the full story here:
N. Korea focusing more on regional development: research journal
UPDATE 3 (2013-11-14): North Korea accelerating economic reforms? Wages and prices to be self-regulated (IFES):
North Korea appears to be pushing for internal economic improvement measures. Chosun Sinbo, the pro-North Korean newspaper in Japan, released an article on November 6 that discussed various performance-enhancing management and operational changes that took place at the Pyongyang Essential Foodstuff Factory this year.
Chosun Sinbo referred to Kim Jong Un’s speech made last March at the plenary meeting of the Central Committee of the Workers’ Party about improving economic management and named the recent changes at the food factory as a pilot project for this purpose. The news article added that “There are studies to bring fundamental changes in economic management and specific measures are being made to turn this into a reality.”
The main systemic changes made at the Pyongyang Essential Foodstuff Factory were the increase in autonomy of the company and the enforcement of wage differential based on performance. Based on the principle of cost compensation, prices of products produced with raw materials at the factory may be freely adjusted after consulting with the state.
The news article further explained that “The principle of socialist distribution is a simple system of distributing as much as you earn and the cost of living is determined by labor productivity.” It also reported that some of the employees’ wages increased. Such news is likely intended to advertise to the outside world about North Korea’s changing domestic economic policies.
The North Korean economic journal Kyongje Yongu has also been increasingly reporting on the principle of distribution based on economic performance. In the recent issue published on October 30, 2013 (issue No. 4), an article titled “The Principle Problem of Properly Implementing the Socialist Labor Wage System” criticized the equalization of product distribution as it decreases the enthusiasm of workers toward production: “The strength and life used during the process of labor must be compensated through the principle of earning the amount of your labor.” The article stressed that wages must increase with production and rationalized the need for such wage increase.
Chosun Sinbo and Kyongje Yongu articles reveal the long-term efforts by the North Korean government in enhancing research about economic improvement measures and expanding projects in various factories, companies, and cooperative farms to implement these measures.
Recently, North Korea launched the State Economic Development Commission and organized a number of international forums on special economic zones. These can be construed as possible signals toward economic reform, as North Korea continues to make various changes in its internal economic policies.
UPDATE 2 (2013-11-7): Another story of note in the Daily NK ties factory wage increases to the ability of enterprises to negotiate prices with the state:
Choson Sinbo, the regular publication of the pro-North Korea General Association of Korean Residents in Japan (Chongryon), has published news of a Pyongyang-based food factory being used as a testing ground for independent economic management. The enterprise fixes prices semi-independently in discussion with the state and pays increased wages, the piece, published yesterday, explained.
The publication conveyed, “Pyongyang Essential Foodstuff Factory became a test unit and conducted research in order to enact changes to overall economic management. They are currently implementing these.”
It continued, “Of particular note is the organization of production and economic management based on cost compensation principles and the socialist rules of division. Pyongyang Essential Foodstuff Factory has enacted the measures for themselves and prepared the collateral to allow for expansion and reproduction.”
“This factory has shed the state planning model and sources its own materials, and in discussion with the state it has been able to set its own prices as it sees fit. There is also a measure currently being adopted that provides monthly allowances in consideration of the labor of the employees,” it further emphasized.
However, a high-ranking defector was skeptical when asked about the piece, telling Daily NK, “These factories produce things like soybean paste, soy sauce, salt and side dishes. They have always played the role of distributor to the people, so there is no way that they would be able to just set prices how they wish on these products. It’s likely that the measures focus on work teams making apple and pear beverages, liquor and beer; things that do not relate to improving the lives of the people.”
UPDATE 1 (2013-11-7): The Daily NK follows up on the DPRK’s strategy to bring official wages in line with the price level:
North Korea’s decision to drastically increase the wages of workers in parts of the heavy industrial sector is designed to boost morale and improve productivity, the better to expand the country’s capacity to generate foreign currency income from investments in the exploitation of its mineral resources.
As exclusively reported yesterday by Daily NK, major industrial concerns in North Hamkyung Province such as Kim Chaek Iron and Steel Complex have raised wages by a factor of approximately one hundred, from a derisory 3,000 won per month, around half the market price of a kilo of rice, to 300,000 won. Thus far, 100,000 won of the total has been paid in cash and the remainder in kind in an attempt to head off the very real danger of dramatic price inflation that would result from 100% cash payments.
That such a substantial wage rise was only deemed feasible in enterprises with the potential to export primary or secondary resources for foreign exchange should not come as a surprise. Smaller domestic enterprises don’t have the liquid resources to take such a step. As with the Kaesong Industrial Complex, wages in cash and kind have always been more generous for workers in joint venture enterprises than elsewhere. The latest move reflects an extension of that reality.
At this early stage, experts believe that the measure is designed to create a business model for North Korea not unlike that on show at Kaesong, under which each province can improve its economic performance and attract greater quantities of foreign capital. By actively nurturing those rare businesses that are competitive in the regional environment, the country hopes to raise productivity overall.
A researcher with Industrial Bank of Korea, Cho Bong Hyun told Daily NK, “Raising salaries for enterprises in the minerals sector looks like an inevitable choice, since productivity couldn’t have been expected from light industrial enterprises when the operational level of most of those factories is so low.
Cho continued, “The Kim Jong Eun regime, which is currently concentrating on producing results in the economic sphere, made this decision based on the fact that for some time it has been earning foreign currency quite easily by exporting its mineral resources. They also hope that by raising salaries they can induce greater productive effort, since workers have not wanted to work properly since the public distribution system collapsed [in the 1990s].”
Yoon Deok Ryong, a senior research fellow with the Korea Institute for International Economic Policy added, “Kim Jong Eun has granted this autonomy to firms and raised wages in order to earn foreign currency and firm up his system. He wants to right the economy by discriminating in favor of businesses that are somewhat competitive.”
However, despite cautious enthusiasm for the latest step, the two experts cautioned that unless North Korea moves further in the direction of a market economic system, the measure might not prove effective.
Cho explained, “No matter how tightly the North Korean authorities seek to control economic activity, they will find it almost impossible to stop these wage rises inciting inflation and causing the value of the North Korean Won to nosedive even more. There is also the danger of conflict with between military and Party-Cabinet elements over the management of mineral resource enterprises that can be used to produce military goods.”
Yoon added that workers in enterprises excluded from the latest wage rises will not see the bigger economic picture, and will simply be aggrieved at there being no improvement in their own conditions. “Conflict is unavoidable,” he concluded.
ORIGINAL POST (2013-11-6): According to the Daily NK:
Wage levels for workers in some larger industrial enterprises have risen by a factor of approximately one hundred times, Daily NK has learned. The move, which was put forward as part of the “June 28th Policy” in mid-2012 and is designed to bring wages more into line with market price levels, appears designed to improve the productivity and competitiveness of major industrial concerns.
According to a source from North Hamkyung Province, the monthly wage of people working at Musan Iron Mine, Kim Chaek Iron and Steel Complex and Sungjin Steel Mill rose from an average of just 3000-4000 won up to 300,000 won in September and October. In an attempt to forestall the inflation that such a step would otherwise guarantee, 200,000 won of the payment is issued in goods, with just 100,000 won provided in cash.
The source explained to Daily NK on the 5th, “In September the order was handed down in the name of the State Economic Development Commission to Musan, Kim Chaek and Sungjin; it was about guaranteeing independence in terms of production and the authority to set salary levels. At the time most workers did not believe that they were going to be given a wage of 300,000 won, and are really surprised now that they are actually getting it.”
The source went on to assert that the same instructions have been handed down to all provinces, not only North Hamkyung. “Relatively more competitive” industrial enterprises in each province have been selected, he said, and are resetting wages at a higher level.
Explaining the system of payments in kind, the source said, “Because they are concerned about the danger of inflation being created by the wage rises, they give 200,000 won of it in rice, vegetables, side dishes, other necessities, and electronics. Only the remaining 100,000 won is given in cash.” Workers have been told “not to make purchases in public markets since the state is now providing for your daily needs,” although the instruction is not likely to be adhered to.
Predictably, the source revealed that the move has attracted attention from surrounding enterprises. “Workers who had been ‘off sick’ are coming back,” he said, “and workers from other enterprises have been descending on us after hearing that we are getting a lot of wages and other stuff.”
The move appears designed to increase the competitiveness of major industrial enterprises in North Korea, and to improve the attractiveness of joint ventures to companies in China.
At the time of writing, the dramatic wage increase has not generated rice price inflation in public markets in the North Hamkyung Province region. For example, the price of rice in Musan is currently stable at around 5,800 won/kg.
On this, the source concluded, “Because some of the wages have been given in kind, demand in markets will not rise for the time being.” However, he cautioned that later, when workers attempt to buy and sell the products they have received, instability and inflation could result.
Read the full story here:
Wages Rise 100x in Heavy Industry
Lee Sang Yong
Pictured Above (Google Earth): The Pyongyang International Football School and support facilities
According to the Korea Herald (Yonhap):
International soccer’s governing body FIFA has provided funds worth $500,000 to build infrastructure to update a soccer academy in Pyongyang, a media outlet reported Thursday.
The International School of Football opened earlier this year and has been training North Korean youths between the ages of 6 and 13, according to a report by Radio Free Asia.
The Washington-based broadcaster said support was given as part of its “goal project” to help build football-related infrastructure in less affluent countries.
FIFA started providing support to the North from 2001 onwards, with around $2 million having been spent so far on six development projects.
Related to the school, North Korean media said its leader Kim Jong-un in June personally designated a name for the new facility that opened on May 31.
Read the full story here:
FIFA gives funds to improve soccer academy in N.K.
Korea Herald (Yonhap)