Archive for the ‘Domestic publication’ Category

North Korea to attract foreign capital through foreign media

Thursday, May 7th, 2015

Institute for Far Eastern Studies (IFES)

As North Korea struggles to attract foreign investment due to international sanctions, an argument is growing in North Korea that it needs to launch an investment charm offensive targeting foreign media.

Already skilled in socialist propaganda, North Korea appears intent on fully employing those skills in the attraction of investment, the essence of management in capitalism.

In the January 20th issue of the monthly Kim Il Sung University newspaper (vol. 1, 2015), an editorial was published entitled, “The Importance of Proactively Using Various Means to Attract Investment.” This editorial emphasized the importance of using the media in order to attract investment.

It argued that if the government invited esteemed members of the media when publicizing developments like a new investment environment or policy and the media reported on these events to their respective news agencies, it “could promote these developments widely at home and abroad through such special reports.”

Following this, the editorial advised that authorities select widely-circulated newspapers and magazines commonly read by investors and companies and submit to these publications news regarding things such as the progress of talks, the signing of contracts and agreements, the scale of businesses and related events.

It also suggested that authorities advertise in TV commercials during peak-viewing time. In the case of newspapers, it advised that they pay attention to their selling price, political inclination and religious nature when considering the daily, morning and evening papers.

While stating that maintaining relations with media outlets is important, the editorial also entreated that the government invite members of the press to investment-related events or inform them at the proper time regarding news of the Special Economic Zones (SEZs).

Furthermore, it argued that in order to effectively publicize investment opportunities, economic development zones themselves need to create homepages and make employees proficient in how to use the Internet and search for information that investors request in a timely manner.

At the same time, because “decadent and reactionary ideas and cultures can infiltrate, and information regarding investment targets can be carried away” through the Internet, the editorial did not forget to suggest that authorities only enable selected institutions and interested parties will be permitted to use the Internet.

In addition, in order to facilitate the exchange of information with investors, the editorial encouraged the government to introduce detailed procedures and methods for maintaining email accounts and to use programs like Excel for managing data and documents.


Kim Jong-un’s 2015 new year address

Thursday, January 1st, 2015

Martyn Williams has posted the best video of it (with English subtitles):

Here is coverage of the speech in the North Korean media (KCNA):

1. Kim Jong Un Makes New Year Address

2. Kim Jong Un Refers to Achievements Made by DPRK Last Year

3. Kim Jong Un Underlines Need to Consolidate Country’s Might as Socialist Political and Ideological Power

4. Kim Jong Un Calls for Fresh Turn in Building Revolutionary Armed Forces and Enhancing Defence Capability

5. Kim Jong Un Advances Tasks to Effect Upswing in Building Socialist Economic Giant and Civilized Nation

6. Kim Jong Un Set Forth Ways of Carrying out This Year’s Tasks

7. Kim Jong Un Deals with Issue of National Reunification

8. Kim Jong Un Deals with Issue of Foreign Relations

9. New Year Address Having Public Response

10. Workers and Farmers Meet to Vow to Implement Their New Year Tasks

Here is coverage of the speech in the international media:

1. N. Korean leader’s speech ‘meaningful’: Seoul (Yonhap)

2. N. Korean leader’s speech arouses cautious optimism (Korea Herald)

3. Kim Jong-un says North Korea is open to ‘highest-level’ talks with South (Guardian)

4. Kim Jong Un Makes Apparent Summit Offer to South Korea (Wall Street Journal)

5. New Year’s Address Reveals a Nervous Leader (Daily NK)

6. Kim’s New Year’s speech reveals economic priorities (Lankov/NK News)

7. Jumping to Conclusions…Again (Klingner/38 North)

8. What’s New in Kim Jong Un’s New Year’s Speech (38 North)

9. Kim Jong Un’s New Year Speech: The Prospects for the 2015 Economic Policy (IFES)

10. Pyongyang’s ‘Year in Review’ Package Emphasizes Kim (Wall Street Journal)


North Korea increases production of consumer goods according to consumer demands and preferences

Monday, August 25th, 2014

Institute for Far Eastern Studies (IFES)

Due to the strengthening of capitalism and competition in North Korean society, it appears that the status of consumers has risen considerably.

In the North Korean economy — which has clung to a supply-oriented, planned economic model — it is extremely rare to see production change in response to consumer demands and preferences.

The Rodong Sinmun, the official newspaper of the Central Committee of the Workers’ Party of Korea, published an editorial on August 3, 2014, calling for the “Brisk Opening of the August Third Consumer Goods Production Movement.” This editorial encourages the public by assuring that the consumer products will be made according to the needs and demands of the people.

“A socialist society cannot think about the production of consumer goods that are above the reaches of the people,” the editorial emphasizes, and that “the peoples’ demands and interests are [the Party’s] absolute top priority, and it is the noble duty of the Party to create these desired consumer goods for the people to enjoy.”

Through the use of various media, North Korea has propagandized the “consumer-focused” policy, claiming to have spurred competition and the increase in quality of products and services throughout the nation.

Joguk (Motherland), a media outlet of the pro-North Korean General Association of Korean Residents in Japan, published an article in their August 2014 issue entitled, “The Standard of Competition Is Determined by the People.” The article emphasizes production tailored to consumer demands, saying that “Product evaluation is something which can be done only by those who demand and directly use the product; it can only be done by the general public.”

The article further states that “Products popular among the general public and used by the masses are evaluated accordingly for their high quality.” It also mentions the cosmetic brands “Eunhasu” and “Pomhyanggi” as examples.

In a July 30, 2014 article, the Choson Sinbo introduced the Potong River Shoe Factory, which is responsible for the production of popular products such as the so-called “kill heel” high-heeled shoes, wedge-heeled shoes, and pointed stilettos. By working together with a department store and periodically reviewing customers’ feedback, the Potong River Shoe Factory can produce shoes to cater to shoppers’ preferences.

This method of setting the focus on consumer evaluation can also be found in North Korea’s education system.

On August 7, 2014, the Rodong Sinmun introduced the “bottom-up evaluation” system at Kim Jong Suk Middle School. This process, touted as one of the successes of educational reform, allows students to evaluate their teachers once per semester. By creating competition among educators, this system is expected to have effects all across the nation.

These types of changes are said to have close relations to the Kim Jong Un regime’s policy focusing on light industry, which also accounts for the improvement of standards of living for the people.

It appears that unlike the heavy chemical industry previously emphasized by the Kim Il Sung and Kim Jong Il regimes, light industry must consider not only production amounts, but the quality of the products as well. This inevitably leads to the emphasis being put on consumer product reviews.

Through consumer reviews, competition arises and productivity is increased, leading to the production of consumer goods with higher added value. Despite being called a “Socialist Competition,” in reality this system may not be so different from capitalism.


Social Science Institute on the DPRK’s Economic Development Zones

Monday, January 20th, 2014

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
Choi Hyun-june


North Korea promoting localization of raw materials for light industry and construction sectors

Monday, January 20th, 2014

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.”


Kim Jong-un’s new year address (2014)

Wednesday, January 1st, 2014

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.


38 North and here

New York Times

Washington Post

Institute for Far Eastern Studies

Yonhap and here

Choson Exchange

Stephan Haggard

Council on Foreign Relations

Nautilus Institute


New Focus International

Evans Revere


DPRK’s “Economic Research” focuses on regional economic development zones

Sunday, November 10th, 2013

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


Recent DPRK wage increases / economic management changes

Wednesday, November 6th, 2013

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
Daily NK
Lee Sang Yong


North Korea stressing science and technology in agricultural sector

Friday, March 15th, 2013

Institute for Far Eastern studies (IFES)

North Korea is emphasizing the importance of science and technology in the agricultural sector.

The Rodong Sinmun, the official newspaper of the Workers’ Party of Korea (WPK), recently featured an article written by Ri Yong Gu, director of the Ministry of Agriculture, titled “Key Issues to Pay Attention for Introducing Technology Products in Farming Operations.” The article emphasized the importance of science and technology in the WPK’s policies and claimed technology products, such as farm machineries, fertilizer, pesticides, and soil conditioners must be introduced to promote agricultural production.

In addition, the article called for accurate assessment of economic benefits to be gained by introduction of technology products and for evaluation of scientists, technicians, and farmers to mobilize the public and to integrate science and technology with production in all units of the agricultural sector.

Technology products were explained as an important factor for reducing agricultural production costs, making crucial the selection of appropriate technology based on the experience and skill level of farmers and soil conditions of each farm.

Choson Sinbo, the Japan-based pro-North Korean newspaper, featured an article on February 27 that scientific farming methods were incorporated in the Samji River Collaborative Farm that linked with the Center for Agricultural and Technology Dissemination through a computer network.

It is not new for North Korea to emphasize the use of science and technology in agriculture; however, in recent years, more emphasis is being placed on this factor.

In the 2013 New Year’s speech by North Korean leader Kim Jong Un, agricultural and light industries were named as the frontline industries for economic construction. In the speech, Kim stressed that “incorporating science and technology into agricultural production and increasing the level of integration must be accomplished in order to reach wheat production target for this year.”

In time for rice planting season in May, North Korea is hoping to increase fertilizer production and to promote agricultural technology in order to boost production countrywide.

This emphasis is in line with the successful launch of the long-range rocket launch last December, preferential atmosphere toward scientists, and promotion of science and technology in the economic sector.

Increased grain production last year may be due to improved fertilizer supply. Production is expected to improve this year as scientific farming continues to be emphasized.


A Semantic Network Analysis of Changes in North Korea’s Economic Policy

Tuesday, January 15th, 2013

Published by the journal Governance
Authors: Changyong Choi and Jesse D. Lecy

Download a PDF of the article here.


To shed light on the inner workings of policymaking in North Korea, this study examined the process behind economic policy change through an analysis of the official state economics journal (Journal of Economic Research 경제연구). Semantic networks are used to trace the introduction and evolution of policies during four distinct economic periods in North Korean history between 1986 and 2009. Although reform is catalyzed by political and economic crises, the emergence of new policy topics occurs incrementally prior to change. Specifically, new policy discourse tends to emerge in gradual and cautious ways but policy change occurs swiftly in periods of crisis. During periods of stability, the state retreats to the centralized socialist economic system, often through coercion and force. This view of the policy process suggests that foundations of economic reforms in North Korea are yet weak and instable, and policy reform will continue to be vulnerable to the political influence of conservatives.