North Korean Economy Watch

UPDATE 2 (2011-9-8): According to the Donga Ilbo:

Hyundai Group Chairwoman Hyun Jeong-eun, who met North Korean leader Kim Jong Il in Pyongyang in 2007, is known to have said Kim believes the 2004 train station explosion in the North Korean town of Ryongchon was an attempt to assassinate him.

According to a diplomatic report released recently by WikiLeaks, Hyun told U.S. Ambassador to South Korea Kathleen Stephens in 2009, “Kim believed that the explosion at Ryongchon Station was a failed attempt to assassinate him, and the (North Korean) People’s Army became his most trusted group after the incident.”

Hyun was quoted as saying, “After the time when his train was to pass Ryongchon Station was revealed through mobile phones, North Korean leader Kim Jong Il believed that the explosion occurred when his train almost reached the station, and after the incident, the introduction of mobile phones in the North was markedly delayed.”

According to the report, the chairman said, “Kim Jong Il fears assassination and a coup the most. He was not an irrational person in the past, but I feel he has changed recently in certain aspects.”

UPDATE 1 (2010-3-23): Adam Cathcart tracks down the original Chinese source and offers a translation:

Curtis, I believe the original source is an article in the Chongqing (Sichuan, PRC) Evening News.  I’ll include the relevant Chinese text in two separate blocks and then translate it:

2004年4月22日中午时分，朝鲜平安北道龙川郡发生了一起严重的火车爆炸事故，导致近200人死亡，1500多人受伤，另有8000多幢房屋被毁。有分析认为，这次造成灾难性后果的朝鲜火车爆炸案，是一次针对朝鲜领导人金正日的暗杀企图。4月22日龙川爆炸事故时，有线索表明不良分子使用了手机，唯恐内部情报外泄，所以手机业务被停了。

On April 22, 2004, around noon, the story is that in North Korea’s North Pyong’an Province, Ryongchon County, a serious train explosion caused the deaths of nearly 200 people and injured more than 1,500 people, while more than 8000 homes were destroyed.

Some analysts believe that the catastrophic consequences of this North Korean train explosion followed from a attempted plan to target North Korean leader Kim Jong-Il for assassination.

At the time of the April 22 Ryongchon explosion, clues collected along the tracks indicated that unhealthy elements had used mobile phones. For fear that internal information would leak [to the outside], the mobile phone business would be stopped.

[Note: The last sentence is pretty interesting; the phrase used is “唯恐” which means “for fear that,” but it can also lead into the idiomatic expression 唯恐天下不乱 which means “in order that all under Heaven remain unchaotic,” which seems to be a tactful dynastic-type allusion to the idea that the DPRK could ignite whenever.]

停止移动电话服务举措的命令由朝鲜国防委员会直接下达，特别是在权力机关或特殊行业就职的人员使用手机受到了严格的限制，原先持有的手机也被没收。朝鲜在境内全面禁止使用手机之后，花大笔钱购置手机的居民大为不满，因为1台手机机身和入网费共约1300美元，在一夜之间就成了废品。

The order to stop mobile phone services came down directly from the [North] Korean National Defense Committee, particularly [stating] that the authority/rights of those in special business sectors to use mobile phones was [henceforth] strictly limited and that previously held mobile phones [should be] confiscated.

After North Korea totally banned mobile phone use within its borders, many residents/citizens, having spent big money (about 1300 USD for everything including accessories and network access fees) to purchase mobile phones, became dissatisfied due to the fact that their cell phones had been rendered into scrap overnight.

[As a side note, I wonder why this news is leaking out of the PRC at a time when Kim Jong Il is said to be mulling over a return trip to China, which would almost certainly be taken by train (through the same station?). It’s a bit mystifying. But then again, Chinese readers probably have more sympathy for North Korea’s striving elites than is often acknowledged and Xinhua, perhaps, puts this story out as a gentle reminder (at a time when people are getting arrested for downloading “unharmonious content” onto their mobile phones) that life in the PRC could be much, much worse. Just my two cents — hope this helps, and thanks for the post.]

ORIGINAL POST (3/22/2010): According to the Donga Ilbo:

A 2004 explosion at a railway station in North Korea was an attempt to assassinate leader Kim Jong Il, China’s state-run Xinhua News Agency quoted an analysis as saying yesterday.

“The train explosion at Ryongchon Station in North Pyongan Province on April 22 that year killed nearly 200 people, injured more than 1,500, and destroyed more than 8,000 homes. The explosion is believed to have been an attempt to assassinate Kim,” Xinhua said.

Though Xinhua quoted an analysis, it is quite unusual for the news agency to say the explosion was an assassination attempt on Kim. Xinhua mentioned the incident while reporting on mobile phone use in North Korea.

The report said the number of mobile phone users in North Korea surged to 20,000 a year after mobile telecom service was launched in November 2002. Pyongyang, however, banned the use of mobile phones following the explosion.

Xinhua said the ban was imposed directly by the National Defense Commission, North Korea’s highest-ranking body, due to fears over the leak of news on the explosion outside of the communist country.

In the early days of mobile phone use, only officials at the people’s committee of the ruling Workers’ Party and the ministries of public safety, national security and defense could use them. After the explosion, however, as many as 10,000 mobile handsets were seized by authorities.

The cost of a mobile handset and registration was as high as 1,300 U.S. dollars when the greenback was traded at 1,200 to 1,300 North Korean won, equal to more than 600 months of monthly wages for the average North Korean worker (2.20 dollars).

In the face of mounting complaints over the ban, North Korean authorities re-allowed the use of mobile phones in March last year.

An estimated 120,000 North Koreans use mobile telecom service. Considering North Korea’s population of an estimated 24 million as of 2008, this translates into one handset per 200 people.

Xinhua added that mobile phones have brought about many changes in the lives of North Koreans.

I am taking this with a grain of salt until I find the source.  I post it here so you can judge for yourself.

Here are before/after images of the Ryongchon explosion.

Read the full srticle here:
“2004 Explosion Was Attempt on Kim Jong Il`s Life”
Donga Ilbo
3/22/2010

Acording to the Netherlands Media Network:

A Seoul-based rights group said today that it has supplied contacts in North Korea with satellite phones to expand news coverage of the secretive communist state and minimise the use of riskier cellphones. Free North Korea Radio, run by North Korean defectors, said it gave satphones to “correspondents” in the North five months ago to try to break down the wall of secrecy.

Several rights groups in South Korea have contacts who relay news via Chinese cellphones with pre-paid cards, but these work only in border areas. Free North Korea Radio, which broadcasts to the North on shortwave as well as running an Internet service, said the satphones give it access to information from more parts of the country.

“Three satellite phones, on top of cellphones, have been in use since last October to bring more live and direct news out of North Korea,” its head Kim Seong-Min told AFP. The three satellite phone operators are based in the capital Pyongyang and the southwest, Mr Kim added. He said they helped spread reports last week that Pak Nam-Ki, a top financial official, had been executed for a failed currency revaluation.

Read the full story here:
Free North Korea Radio correspondents use satphones
Radio Netherlands Worldwide
Andy Sennitt
3/2/2010

Open Radio
Hyelim Kim
2/18/2010

Changdeok, North Korea’s primary word processor like Hangul in South Korea, is a true mirror of the idolization of Kim Il-Sung and Kim Jong-Il.
 
When Changdeok was first launched, the version 1.0, had April 15th, 1990 marked as the release date. It is Kim Il-Sung’s birthday.
 
As a word processor, Changdeok was developed to a 7.0 version in 2002 and has as superior quality of its functions, such as Hangul or MS-Word. It provides Korean, English, Chinese, Russian, and Japanese characters and other various functions such as 2 or 3 dimensions character effects and complex arithmetic calculations.
 
It has special characteristics devised especially for Kim Il-Sung and Kim Jong-Il. KPS 9566-2003 legislated in 2003 is the most recent version of North Korean industrial standards. 22 of a total 16,776 KPS 9566-2003 characters are not included in Unicode set, a computer standard for encoding characters expressed in most of the world’s writing systems. 16 of KPS 9566-2003 are special characters. And the rest 6– “Kim”, “IL”, “Sung”, “Kim”, “Jong”, and “IL– are reduplications only uses for Kim Il-Sung and Kim Jong-Il.
 
Therefore, “Kim Il-Sung” and “Kim Jong-Il” are recognized as special characters on Character Map and automatically switched to Bold text. But there is nothing wrong with this system because nobody has the same name as Kim Il-Sung and Kim Jong-Il in North Korea.
 
Another Changdeok system indicating the absolute power of Kim Il-Sung and Kim Jong-il are CTRL modifier keys. <CTRL+I> for “Kim Il-Sung” and <CTRL+J> for “Kim Jong-Il” are only modifier keys allowed in the Changdeok system.

These special characters and modifier keys is one side of Kim Il-Sung’s and Kim Jong-Il’s idolization. But, considering “Kim Il-Sung” and “Kim Jong-Il” in North Korean published works must be in bold text, special characters and modifier keys are for convenient editing processes as well.
 
The last distinct feature of the Changdeok system aew font names designed and systemized by the Korea Computer Center and Pyongyang Program Center for convenient electronic publishing. Chollima, Kwangmyong, and Cheongbong are major ones among those interesting fonts.
 
Chollima font is named after the Chollima campaign which led to North Korea’s economic development in 1950s and 60s. It is often used for posters and advertisements.
 
Kwangmyong is the second famous font. Kwangmyong means Kim Jong-Il, and it was named after ‘Baekdu-Kwangmyong legend,’ a novel written to deify Kim Jong-Il.
 
Cheongbong font is a memorial for celebration of Kim Jong-Il’s victory in the battle with Japanese troops during the colonial period. This font is often used for long body paragraphs of texts as well as titles and subtitles.
 
As the Cheongbong system shows, the status of Kim Il-Sung and Kim Jong-Il are special, even in a word processor program. In other words, a field of software is also used as a means for promotion and instigation of the North Korean dictatorship.

According to the Financial Times:

Orascom Telecom, the Egypt-based mobile network operator, says its subsidiary in North Korea, Koryolink, has acquired 100,000 subscribers in its first year and expects to add millions more in the next five years.

The expansion plans come as the isolated country of 24m, which says it wants to be considered a “mighty and prosperous nation” by 2012, steps up efforts to attract foreign investment.

Pyongyang’s economic ambitions come in the face of tough international sanctions on its nuclear arms programme.

“We see that there is a very big plan for an economic boom,” said Khaled Bichara, chief executive of Orascom. “They are really looking to have, by 2012, a much stronger economy. We believe that mobiles and eventually international communication will definitely be part of this.”

Koryolink, a pre-pay system, has been available in Pyongyang and Nampo, the capital’s port, since December 2008. To help expand the network from there, Mr Bichara said North Korea was laying fibre-optic cables in the provinces.

Orascom was installing its most technologically advanced 3G network in North Korea, he said. The 2010 target for user numbers was ambitious but Mr Bichara declined to put a figure on it.

“I think if we achieve the target of this year, that will be a big milestone,” he said. “The number will be big enough to make Koryolink look like a significant company for us because the revenues per customer are interesting and we believe that this business will have customers in the millions within the next four or five years.”

Mr Bichara said the subscription figures showed that mobile phones were not limited to elite members of the military and communist party, as many observers had speculated.

However, the handset price of €140 ($195) put a mobile phone out of most people’s grasp.

So far, Koryolink offers only a basic voice and text messaging service. International calls and roaming services are not provided but Mr Bichara said starting them would be simple given the sophistication of the network being installed.

Koryolink is a joint venture in which Orascom has a 75 per cent stake. The rest is owned by Korea Post & Telecommunications Corp, the state fixed-line provider.

Thanks to a reader for sending this to me. 

Read the full article here:
N Korea operator looks to millions of 3G users
Financial Times
Christian Oliver and Heba Saleh
2/3/2010

According to the Associated Press:

Military officials from the two Koreas communicated through new fiber-optic cables to help facilitate the travel of 330 South Koreans heading to an industrial complex in the North on Wednesday, Unification Ministry spokeswoman Lee Jong-joo said.

South Korea has sent fiber-optic cables and other equipment to the North to help its communist neighbour modernize its military hot lines with the South, she said.

The new hot lines replaced outdated copper cable hot lines that will remain as spare lines, said Lee, the spokeswoman.

The new hot lines will serve as a key mode of communication for border crossings for people travelling to and from the joint industrial complex at the North Korean border town of Kaesong, she added.

I assume the upgrade to fiber optic means that the bureaucracy of border crossing has been computerized.  Rather than reading information across the phone line border officials can now send it electronically (including photos) to speed up processing on the North Korean side of the border.

Read the full story here:
Divided Koreas open new, updated military hot lines to facilitate border crossings
Associated Press (via Winnipeg Free Press)
12/29/2009

At the end of Q2-2009 Koryolink had signed up nearly 48,000 subscribers.  At the end of Q3-2009, this number has grown to more than 69,000.  According to Telegeography:

North Korea’s only mobile operator, CHEO Technology, which offers services under the Koryolink brand, has signed up 69,261 customers as at 30 September 2009. The company was awarded a 25-year licence to operate 3G services in January 2008, with the first four years on an exclusive basis. It is owned by Orascom Telecom Holding of Egypt (75%) and state-owned Korea Post and Telecoms Corporation (25%). Koryolink launched services in December 2008 in the capital Pyongyang, but the network has since been expanded to include the main road running up to the northern city of Hyangsan, with the company currently working on expanding services nationwide. In the first nine months of 2009, the cellco reported revenue of USD18.5 million, while earnings before interest, tax, depreciation and amortisation (EBITDA) reached USD9.99 million with a margin of 54%. Average revenue per user (ARPU) for the third quarter of 2009 totalled USD21.6, down from USD22.8 in the previous quarter. With a focus on network rollout and network quality improvement, Koryolink invested USD25 million in the first nine months of 2009.

Thoughts and additional information:

1. For the record, Koryolink is not the only mobile phone operator in the DPRK.  It is the only 3G operator. A little research on this site will turn up plenty of information on the DPRK’s first cell phone provider.

2. See past Koryolink and Orascom posts here.

3. It is interesting that the DPRK and Orascom have expanded 3G service from Pyongyang to Myohyangsan.  Though a popular spot for North Korean elites and tourists, it is not a commercial hub by any means…

Associated Press
10/28/2009

South Korea sent fiber-optic cables and other equipment to North Korea on Wednesday to help its communist neighbor modernize military hot lines with the South — the latest sign of improving relations.

The shipment of communication equipment and materials worth 850 million won ($712,000) comes days after the South offered to send the North 10,000 tons of corn in its first direct food aid to the impoverished nation in nearly two years.

The North cut off six of nine hot lines in May 2008, citing technical problems, amid high tensions between the sides.

The lines were restored in September, and Pyongyang recently asked Seoul to help modernize the lines.

For a decade, South Korea was one of the biggest donors to the North, which has faced chronic food shortages since flooding and mismanagement destroyed its economy in the mid-1990s.

UPDATE 8:   According to the BBC, Orascom claims the final plans for the hotel have yet to be approved:

Dozens of Egyptian engineers and some 2,000 local workers are working on the Ryugyong project, which Orascom’s chief operating officer Khaled Bichara tells the BBC is “progressing well”, despite reported problems with suspect concrete and misaligned lift shafts.

“There have been no issues that have caused us too much trouble,” Mr Bichara says. “Most of the work at the moment is coverage of different areas of the building. The first job is to finish the outside – you can’t work on the insides until the outside is covered.

“You can see that we have already completed the top of the building where the revolving restaurant will be. After 2010, that’s when it will be fully safe to start building from the inside.”

How the building will be divided up is not yet finalised the company says, but it will be a mixture of hotel accommodation, apartments and business facilities. Antennae and equipment for Orascom’s mobile network will nestle at the very top.

Mr Bichara denies reports that the company’s exclusive access to North Korea’s fledgling telecoms market is directly linked to the completion of the hotel.

But he says the job is a way of planting a rather tall flag in the ground. “We haven’t been given a deadline, we are not tied into doing it by a certain time,” he said.

“But when you work in a market like this, where we cannot sponsor things, a project of this kind is good to do – it’s word of mouth advertising for us, it builds good rapport with the people – on its own it’s a great symbol, one which cements our investment.”

Read the full article here:
Will ‘Hotel of Doom’ ever be finished?
BBC
10/15/2009

Read previous posts about the Ryugyong’s construction below: (more…)

The Choson Ilbo recently posted an article which contained several interesting facts.  Quoting from the article:

A W35 million price tag for the Internet connection to transmit a five-minute piece of footage is only one of the endless list of inconveniences that make up daily life in North Korea (US$1=W1,163). Kristine Kwok, a reporter for Hong Kong’s South China Morning Post who accompanied Chinese Premier Wen Jiabao on his visit to North Korea on Oct. 4 to 6, recounts them in a story titled “Life in the Hermit Kingdom.”

“Accessing the Internet is a distant dream for North Korean citizens and an expensive luxury for visiting foreigners,” Kwok wrote. “Filing a news report of Wen shaking hands with North Korean leader Kim Jong-il would cost a TV station the equivalent of HK$233,472. The North Korean Foreign Ministry eventually decided to pay all the Internet fees for the reporters –much to their relief.”

The report said North Korea’s 24 million people are barred from the Internet, with connections available only in some hotels, where sending a picture costs around W68,000 and a single email W3,400. North Korea has set up road blocks along the information super highway and is committing “robbery,” Kwok added.

The last time I visited the DPRK, I recall that emails and phone calls from the Yangakdo Hotel are exorbitant–also, there are no phone books available and switch board operators (yes, they still have them) are of no help. If you don’t know the number you need to call you have to get creative.  But, with prices like that you would think the DPRK would like more journalists to visit!

Also mentioned in the article is Pyongyang’s new fast-food Samtaesong Restaurant, which I blogged about here when it opened.  According to the article “Samtaesong” translates to “three big stars”.  I am going to go out on a limb and guess that those three stars are the “Three Stars of Paektu: Kim il Sung, Kim Jong Suk, and Kim Jong il.”  now you can show your loyalty to the three stars while eating a burger, which is much more pleasant than standing silently in line formation under the hot sun for hours on end while political leaders you have never met read long speeches to you.

Also, “The most expensive item on the menu is ‘crispy chicken,’ which costs 3 euros, while a hamburger costs between 1.2 to 1.7 euros. That is high given the fact that North Korea’s per-capita GDP was US$1,000 last year, but AFP said Samtaeseong sells 300 burgers each day.”

Read the full article here:
Int’l Press Gets Glimpse of N.Korea’s Daily Grind
Choson Ilbo
10/13/2009

UPDATE:  According to Business Monitor International:

koryolink, North Korea’s sole mobile service provider has reported strong subscriber demand. The joint venture (JV), which is 75% controlled by  Orascom Telecom of Egypt and the remainder held by state-owned  Korea Post and Telecommunications Corporation (KPTC), saw its subscriber base rise by 149.2% quarter-on-quarter (q-o-q) in Q209 to end with 47,863. The operator stated it had encouraged interest in its services through further cuts in connection fees, the introduction of free SMS for the first time and the revision of free minutes to satisfy customer requirements.

Almost all of the operator’s subscribers are based in the capital Pyongyang. This is due to the prevalence of two retail outlets based in the downtown area, in addition to three KPTC shops, which sell koryolink services, while the level of network coverage is significantly higher in the capital than anywhere else in the country. Although calls can be made outside of Pyongyang, the reception is often poor, suffering from weak service quality and dropped calls.

Mobile penetration rates, based on Pyongyang’s population are estimated at 1.4%, which is significantly lower than the 30% cited by cellular-news sources. Demand for mobile in the capital has been led not by government officials and foreign ownership but by ordinary citizens. State employees and foreigners are prohibited from owning mobile handsets, which has been deemed a security risk, with authorities wishing to control information from being circulated outside. This was a primary reason for the decision to ban mobile services in the country following the explosion in the northern Ryongchon train station in April 2004, which was said to have been a failed assassination attempt on North Korean leader Kim Jong-il, who had passed through the station several hours before the explosion. A state of emergency was subsequently declared, and the country cut all telephone and mobile lines in order to stop news from getting out

While the two most likely market segment groups able to afford and own mobile handsets have been barred from usage, this has not impacted mobile revenues. Indeed, koryolink announced that its Q209 revenues had risen by 179.7% q-o-q to US$12.472mn, based on strong subscriber growth and ARPUs of US$22.8.

Meanwhile, there are plans to create a national mobile network across the country, according to the North Korean Central Broadcasting Station, as cited by state news agency Yonhap News. Fibre-optic cables are also being laid to link the capital with all provinces with the intention of supplying digital services. The automation and digital capacity of the country’s data networks are said to have already risen by some sevenfold over the last 16 years.

ORIGINAL POST: Download Orascom’s financial report for the first half of 2009 (here in PDF).  The information on Koryolink is on page 24.  Here is the text:

Being the first full fledged operator to serve DPRK offering attractively priced services and utilizing state of the art technologies, Koryolink was met with very positive market reception. The first of its kind mobile fair in the history of DPRK was launched during the last two weeks of March.

In order to capitalize on the subscriber growth momentum, in the second quarter of 2009 Koryolink introduced further reduction in connection fees as well as free SMS for the first time. Additionally, the mix of free minutes was revised to satisfy customer requirements. Such changes resulted in even more positive demand.

Throughout the second quarter, demand on Koryolink services remained strong and the subscriber base at the end of Q2 ended just short of 50K representing an increase of 149% in subscriber base compared to Q1. Koryolink subscriber base stood at 47.85 thousand by the end of Q2.

Koryolink retail network currently consists of 2 large sales shops strategically located in downtown Pyongyang with 3 additional scratch card sales outlets located within KPTC post office shops. Koryolink plans to expand the indirect sales network through the inauguration of 6 more outlets within KPTC shops. A separate after sales service shop is planned for Q3.

According to the report, at the end of the second quarter of 2009 Orascom reported that Koryolink’s mobile subscriber base reached 47,863 (this was apparently leaked earlier in the year so no surprises there), up from 19,208 three months earlier. During Q2 MOU rose to 199 per month, but ARPU fell to USD22.8, compared to USD24.7 in the first quarter of 2009.

And according to Yonhap:

Orascom reported that its operating profit from North Korea reached US$2.49 million in the April-June period, soaring about eight fold from $312,000 for the previous quarter.

Second quarter sales for Koryolink, a 75-25 percent joint venture between Orascom and North Korea, amounted to $8.01 million, with its profit margin reaching 31 percent, up substantially from the 7 percent for the previous three months, according to Orascom.

Read more Koryolink stories here.