North Korean Economy Watch

On Wednesday I attended a panel discussion featuring Marcus Noland, co-author (with Stephan Haggard) of Famine in North Korea, and three North Korean defectors.  Here is the video of the event.  Below is the information on the event from the Peterson Institute website:

Press release (slightly updated w/ comments from the talk)
North Korea is once again headed toward widespread food shortage, hunger, and risk of outright famine. According to Peterson Institute Senior Fellow Marcus Noland, “The country is in its most precarious situation since the end of the famine a decade ago.”

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Calculations by Noland and Stephan Haggard, University of California, San Diego, indicate that the country’s margin of error has virtually disappeared. For technical reasons, estimates produced by the United Nations’ World Food Program and Food and Agriculture Organization (total demand) probably overstate demand implying recurrent shortages year after year (figure 1 above). Noland and Haggard argue that in recent years available supply has exceeded more appropriately calculated grain requirements (adjusted total demand) but that this gap has virtually disappeared. “This is a yellow light about to turn red,” says Noland.

 
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Food prices have almost tripled in the last year, skyrocketing at a rate faster than either the overall rate of inflation or global food prices (figure 2 above). Anecdotal reports describe a breakdown in institutions and increasingly repressive internal behavior. Noland and Haggard forecast that the North Korean regime will ultimately weather this challenge politically by ratcheting up repression and scrambling, albeit belatedly, for foreign assistance.

The North Korean food crisis, now well into its second decade, presents a difficult set of ethical choices. North Korea is critically dependent on food aid, but the government has recklessly soured its relations with the donor community. Yet in the absence of vigorous international action, the victims of this disaster will not be the culpable but the innocent. As of this writing, it already may be too late to avoid at least some deaths from hunger, and shortages of crucial agricultural inputs such as fertilizer are setting the stage for continuing food problems well into 2009.

Paper presentation
Noland discussed two recent papers, written with Haggard and Yoonok Chang, Hansei University, which are based on a pathbreaking survey of more than 1,300 North Korean refugees in China (11 different cities).  The survey provides rare and extraordinary insight into both life in North Korea and the experiences of the refugees in China.

Paper 1: Exit Polls: Refugee Assessments of North Korea’s Transition 
Results from a survey of more than 1,300 North Korean refugees in China provide insight into changing economic conditions in North Korea. There is modest evidence of slightly more positive assessments among those who exited the country following the initiation of reforms in 2002. Education breeds skepticism; higher levels of education were associated with more negative perceptions of economic conditions and reform efforts. Other demographic markers such as gender or provincial origin are not robustly correlated with attitudes. Instead, personal experiences appear to be central: A significant number of the respondents were unaware of the humanitarian aid program (40%) and the ones who knew of it almost universally did not believe that they were beneficiaries (96%). This group’s evaluation of the regime, its intentions, and accomplishments is overwhelmingly negative—even more so than those of respondents who report having had experienced incarceration in political detention facilities—and attests to the powerful role that the famine experience continues to play in the political economy of the country.

Paper 2: Migration Experiences of North Korean Refugees: Survey Evidence from China 
Chronic food shortages, political repression, and poverty have driven tens of thousands of North Koreans into China. This paper reports results from a large-scale survey of this refugee population. The survey provides insight not only into the material circumstances of the refugees but also into their psychological state and aspirations. One key finding is that many North Korean refugees suffer severe psychological stress akin to post-traumatic stress disorder. This distress is caused in part by their vulnerability in China, but it is also a result of the long shadow cast by the North Korean famine and abuses suffered at the hands of the North Korean political regime: first and foremost, perceptions of unfairness with respect to the distribution of food aid, death of family members during the famine, and incarceration in the North Korean gulag, where the respondents reported witnessing forced starvation, deaths due to torture, and even infanticide and forced abortions. These traumas, in turn, affect the ability of the refugees to hold jobs in China and accumulate resources for on-migration to third countries. Most of the refugees want to permanently resettle in South Korea, though younger, better-educated refugees prefer the United States as a final destination.

Other speakers: Several North Korean defectors also spoke as part of North Korean Freedom Week here in Washington DC.  Comments and biographies below:

Kim Seung Min: Founder and Director of Free North Korea Radio, the broadcasting program providing news and information to North and South Korea and China. Kim attended both elementary and high school in Pyongyang before serving in the North Korean Army. He escaped from North Korea to China in 1996 but was arrested and repatriated. While traveling from Onseong to Pyongyang to face punishment for leaving the country without government permission, he jumped from a moving train to escape to China again and eventually made his way to South Korea. He worked as a laborer at a coal factory in Yenji, China, until his uncle in South Korea helped him to escape to South Korea. He attended Yonsei University and Graduate School at Joong Ang University, where he received a Master of Arts degree. After serving in leadership roles in the North Korean defector groups, he founded Free North Korea Radio, which was available on the internet beginning April 2004 and began broadcasting on shortwave in December 2005 with regular daily broadcasting beginning in April 2006. (Born 5/6/62 in Jangang Do, North Korea)

*Mr. Kim was a captain in the KPA for 16 years.  He talked about how soldiers were no better off in terms of access to food than ordinary North Koreans.  Starting in 1986, the DPRK state limited food supplies to the military to only rice, leaving the generals up to their own devices for feeding the army.  This led to a break-down in discipline and now people resent the personal behavior of many soldiers who are looking for food.

Kang Su Jin:Founder and Representative of the Coalition for North Korean Women’s Rights, the only organization focused specifically on increasing awareness of the horrors facing North Korean women in China, the role of women in democratizing North Korea, empowering and encouraging North Korean women who have resettled in South Korea, and building cooperation with other organizations. Kang was a member of the elites from Pyongyang and was the Manager of Supply from 1991 to 1998 of the Bonghwasan Hotel in Pyongyang, the biggest hotel in Pyongyang, which catered to high-ranking party and army officials and was used for special events. When food distribution stopped in Pyongyang in 1996, the regime announced that all hotels had to operate on their own, and conditions became very difficult for the workers. Kang visited China and saw how much better off the people were and decided to defect to South Korea. (Born 10/23/66 in Pyongyang, North Korea)

Kim Young-il:President and Founder of People for Successful Korean Reunification (P-SCORE), an organization founded in the fall of 2006, specifically to ensure the successful reunification of the Koreas would not adversely affect the South Korean economy. To that end, PSCORE, chiefly composed of young people, studies other reunification models, informs about the human rights conditions in North Korea, and prepares and educates young North Koreans to be ready to help lead a reunified Korea. Because Kim was not born into an elite family in North Korea, he was not allowed to attend university and was destined to become a coal miner after serving his mandatory military service. While in the military he witnessed many people including soldiers dying of starvation. His own uncle died of starvation and his cousins were left to wander the streets. His family made the decision to defect to China in August of 1996 instead of starving to death in North Korea. They survived there for five years bribing the police not to turn them in until they safely defected to South Korea in January 2001. Lim received a BA in Chinese from Hankook University of Foreign Studies in August 2006. (Born 4/10/78 in Hamheung, North Korea)

*Mr. Kim still communicates with people in the DPRK on a regular basis.  He said that the price of rice inside the DPRK is sensitive to external supply shocks (or even the rumors of external supply shocks).  This means that reports of aid cut offs could result in temporary domestic price spikes even if aid is delivered.

UPDATE: Photo and coverage in the Daily NK.

Daily NK
Moon Sung Hwee
4/8/2008

April 8th is Postal Service Day in North Korea. Each province has a branch office of the Ministry of Posts and Telecommunications and Communication Maintenance Bureau. The postal system manages the distribution of letters, telegrams, telephone calls, TV broadcasts, newspapers and magazines. Additionally, they mint stamps and also operate an insurance agency in name only.

In the late 1990s, the national postal system was completely ruined

In North Korea, postal service offices are set up in each “ri”—a small village unit–, of each county to deliver letters, parcel posts and telegrams. Following the March of Tribulation in the late 1990s, the delivery system was completely destroyed and its formal structure was left in tatters. Even in the 1980s when the North Korean economy and people’s lives were relatively stable, it took around 15 days to two months on average to deliver a letter from Pyongyang to a rural village.

In the case of a telegram, it took generally 3 or 4 days to reach a postal office in a rural area. In the late 1980s, to guarantee efficiency within the telegram delivery system, the authorities supplied the offices with second-hand bicycles from Japan.

After the March of Tribulation, letters disappeared due to train delays and frequent blackouts, and the telegram service was virtually incapacitated due to the lack of electricity.

Telephones were restricted to control the outflow of national secrets

North Korea uses a separate electricity supply for its telephone system. Even if there is a power blackout in a village, villagers can still use the telephone network. In 1993, fiber-optic cables were installed and the use of mail and telegram services began to decline. North Korean people call fiber optic cable a “light telephone.”

North Korea built an automatic telecommunicates system by developing multi-communication technology with imports of machinery and by inviting engineers from China in 1998.

In 2003, authorities allowed cadres to use telephones in their houses and in 2005, they also allowed people to use the telephone at home as long as they paid 2,000 North Korean won (approx. USD0.6) a month (a monthly salary is 1,500 won per laborer).

In August, 2007, the government tightened regulations regarding the telephone system. People could make calls only within their province. Authorities said the reason was to prevent the outflow of national secrets.

The Ministry of Posts and Telecommunications controls TV and other broadcasting. There is no cable TV in North Korea. Authorities set up an ultra-short wave relay station in each county to relay television broadcasts.

North Korea signed a contract with Thailand for satellite broadcasting and installed U.S.-made transmission and relay facilities in 2000.

People can now listen to “Chosun Central Broadcasting,” but in rural areas, it is difficult to recieve signals because the broadcasting facilities and cables have already begun to deteriorate.

People sarcastically say a “newspaper is not about news but about “olds.” The authorities pay special attention to the successful delivery of the Workers Party Rodong Shinmun bulletin. To deliver Rodong Shinmun from Pyongyang to each province or even to each city and county by train, it normally takes 4-5 days. Sometimes, it takes more than a week.

People also say they use an “oral-paper” to get information because rumors are faster than the Rodong Shinmun.

Postal service workers were dragged to prison camps

In 1992, the Minister and all related officials of Posts and Telecommunications were fired, and the Minister, the Vice Minister and their families were sent to political prison camps for having wasted national finances for the import of factory machinery to produce fiber-optic cables from the U.K.

They submitted a proposal to Kim Jong Il to buy factory machines in order to earn foreign currency through the production and export of fiber optic cables. However, in the end they eventually bought worn-out machines from the U.K. and failed to earn profits. In addition, they embezzled some of the funds.

In 2001, in Lee Myung Soo Workers-District of Samjiyeon, Yangkang Province, two office workers and a manager of a relay station broadcasted Chinese TV programs that they were watching to residents by mistake, so they were sent to a political prison camp and their families were expelled to a collective farm.

Agents of the National Security Agency are stationed at the Ministry of Posts and Telecommunications in order to scrutinize mail, parcels, to tap telephone wires and to supervise residents.

The Ministry regularly dispatches professional engineers to the 27th Bureau, to the airwaves-monitoring station, and to the 12th Bureau, which was newly established to censor mobile phones.

On Postal Service Day, Chosun Central Agency often delivers praise for the development of North Korea’s postal system and facilities under the General’s direction.

However, most ordinary citizens will not be able to watch or read about it in time, for the lack of paper, electricity, infrastructure, and delivery systems.

GPI Consulting is once again hosting an IT business delegation in conjunction with the Pyongyang International Trade Fair this spring. 

Marketing language:
Business trip to the “11th Pyongyang International Trade Fair” (May 2008)
North-Korea is slowly opening up to the outside world. The trade with neighboring China and South-Korea is already growing fast, and also several European companies are conducting business. An excellent way to collect information and to make new contacts is by visiting the annual “International Trade Fair”, wich takes place from 12-15 May in Pyongyang. Companies interested in exploring business opportunties in North-Korea are invited to join our 10-17 May IT-business mission. The participants will be offered a tailormade program, with a focus on the International Trade Fair. For European companies, it is possible to make use of a collective European stand: for only 600 Euro, they can present their products or services to the public (or have them presented by local staff).   
 
IT- and multimedia study tour to North-Korea (May 10-17, 2008 )
The main focus of our business mission is to explore IT opportunities in North Korea. The goal of this studytour is to give the participants detailed information about offshoring. The IT-participants will visit firms in Pyongyang in the field of IT, animation, 2D and 3d design, cartoons, computer games, mobile games,and BPO. The business mission will have an informal character, with some attention to cultural or touristic elements. The trip will start in Beijing, and after returning from North Korea, an extension of the stay in China is possible in order to visit additional firms. The program of the tour has been added, and can also be found at: www.gpic.nl/NK-IT-tour.pdf   
 
Contact Information: 
Paul Tjia (sr. consultant)
GPI Consultancy, P.O.  Box 26151, 3002 ED Rotterdam, The Netherlands
tel: +31-10-4254172  fax: +31-10-4254317 E-mail: paul@gpic.nl  Website: www.gpic.nl

From Reuters…

[Naguib Sawiris, CEO] said he was “astonished” how quickly the North Korean authorities wanted the service to start and he had high hopes for business in the country.

“We firmly believe that in the next three or four years we will be having a couple of million subscribers there and we will be seeing ARPUs in the range of $12 or $15 (a month),” he added.

Sawiris said that of the $400 million the company plans to invest in North Korea over the next three years, about $200 million would probably come in the first year, with $100 million in each of the two subsequent years.

Read the full story here:
Egypt’s OT seeks 100,000 N Korean subscribers from May
Reuters
3/12/2008

How pervasive is the flow of outside information in North Korea?  Typically stories in the media answer this question as though geography is the determinate variable: Cities near the Chinese border are the most influenced by heterodox ideas (since cell phones, clear television signals, and smuggling have been commonplace for years), and cities in the south (along the DMZ) are the most isolated (aside from Kaesong).  North Korea’s internal travel restrictions prevent foreign ideas from spreading.  This view was recently repeated by Andrei Lankov.

“The Kaesong exception” is thought to be correlated to the growth of the the Kaesong Industrial Zone.  The theory goes that the thousands of North Koreans who are employed in Kaesong (who work in South Korean facilities for South Korean managers) pick up bits of outside information at the margin and share it with their friends and family back home.  It is not an unreasonable theory.   

A new story in the Daily NK, however, presents evidence which points to ideological contamination on a nationwide scale (irrespective of geography).  The story claims that the city of Haeju is not only thoroughly exposed to South Korean radio and television - it is a production hub of a pirate video market:

“We can receive the TV broadcast of KBS (Korean Broadcasting System) and SBS (Seoul Broadcasting System) fine in Haeju. Sometimes, we can watch MBC (Moonhwa Broadcasting Corporation) as well. I watched Dae Jo Yong (a popular TV drama from KBS) on TV. However, I wanted to watch it again, so I bought a CD and watched it several more time.” He said, “We can get copies of South Korean TV programs from China. However, a great number of copies are also produced in Haeju.”

In a nod to communist efficiency, the subject interviewed in the Daily NK story even claims that in Haeju it is easier to pick up South Korean television signals than those from North Korea! 

With a “manufacturing” facility in Haeju, black market DVDs or VCDs can be copied and distributed throughout the south east even if security is tighter along the Chinese border.  Additionally, these DVDs/VCDs would be cheaper and more widely distributed because they are produced locally (as opposed to using Chinese labor/capital) and will require fewer middlemen to get them across the border and into the hands of consumers.  If this has been going on for some time, then it is safe to assume that most urban centers from Haeju to Pyongyang have regular access to South Korean media! 

Of course a decline in acceptance of the state ideology means the government must rely on external controls (rather than an individual’s self-control) to maintain the system.  The good news is that external controls can be avoided through technolgy, corruption, or both: 

“In the border areas with China and South Korea such as Hwanghae and Kangwon Province, the North Korean authorities try to prevent people from watching S. Korean TV by soldering and pre-tuning TV sets to Chonsun (North Korea) Central TV. Lately, the authorities also attempt to restrict the usage of remote control by covering the sensor with silver paper.

However, North Korean people circumvent the regulation. Instead of giving away their remote control to the authorities, they purchase an extra and watch the TV as they please after removing the silver paper. After all, the authorities’ efforts to control TV channels turn out to be futile for those who have remote control TV sets.

The full article can be found here:
North Korean People Copy South Korean TV Drama for Trade
Daily NK
Lee Sung Jin
2/22/2008

Since Orascom announced at the end of January that it was going into the cell phone business in the DPRK, there has been a lot of follow up reporting which has flushed out a broader picture of the DPRK’s attempts to launch a mobile phone network.

Today Yonhap is reporting that Pyongyang will likely go live with the Orascom project in April, although on a piecemeal schedule:

The measure will affect only Pyongyang, the North’s capital, this time and gradually expand to cover other major cities in the communist country, the Tokyo Shimbun said, quoting an unnamed North Korean official in Beijing.

North Korea has prohibited its people from using mobile phones since a deadly explosion occurred at the Ryongchon train station near the North’s border with China in April 2004. Debris of a mobile phone with adhesive tape attached to it was reportedly found at the scene of explosion, leading the authorities to impose the sudden ban in the belief that the mobile phone could have been used as a detonator.

More details of the deal also emerged:

Cheo [an Orascom subsidiary] secured a 25-year license and will invest up to US$400 million in network infrastructure. The North Korean state company owns a 25 percent stake in Cheo, Orascom said.

How accessible will the  new phones be?

Choi Yeong-cheol, 43, who defected from North Korea in 2006, said that senior party and administrative officials as well as trade workers were given mobile phones for free in 2002. “But ordinary people have not even dreamed of using a mobile phone because it cost them 170,000 North Korean won,” Choi told Daily NK, a Seoul-based Internet newspaper. The figure of 170,000 won is big money considering the average monthly payment for ordinary North Korean workers is up to 3,000 won (US$1) now.

The full article can be found here:
N.K. to lift mobile phone ban in April: Japanese daily
Yonhap
2/18/2008

The Reporters Without Borders 2008 Annual Report has been published.  It is not an index (with rankings assigned to each country) but rather a survey that groups nations into one of five quintiles based on the publisher’s perceptions of press freedom: (1. Good situation, 2. Satisfactory situation, 3. Noticeable problems, 4. Difficult situation, 5. Very noticeable problems.

If you read the report (here), it is mostly a qualitative analysis and there does not seem to be any objective methodology for grouping countries into a particular quintile. (Disclaimer: I have note read the whole thing, but usually the methodology is spelled out in its own section for these types of publications, but I have not been able to find it). This worries me because if there is no standard methodology, with relative weights, then the results are vulnerable to questions of subjectivity.

North korea is ranked a “Very Noticeable Problem.”  To read just the North Korea section of the report click: rwb-dprk.pdf. 

Daily NK
Jung Kwon Ho
2/8/2008

On the 23rd of last month, six households were expelled from Haesan City in Yangang Province for the reason of “their families having fled to South Korea” and 25 households were simultaneously expelled under the charges of illicit trade along the North Korea-Chinese border, a North Korean inside source relayed on the 5th.

The source said, “6 of the 152 who were arrested at the inspection which was carried out from August to October of last year by the ‘5 divisions combined Anti-Socialist Inspection Group’ received a long-term prison labor camp sentence for the reason of ‘having secret communication with family members who defected to South Korea. When their sentence was confirmed, the expulsion of the rest of the family members ensued.”

The “5 divisions combined Anti-Socialist Inspection Group” carries out the duty of regulating the inspection of anti-socialist elements by temporarily transferring people and organizing groups from five organizations, such as the Party, the Central Procurator’s Office, the Central Court, the National Security Agency, and the People’s Safety Agency.

During this inspection, 152 people who possessed cell phones and are related to crossing the border were rounded-up, 50 received a long-term prison labor camp sentence, and 100 received a labor training corps sentence. Also, 25 households with charges of illegal trade along the North Korean-Chinese border and owned foreign films were expelled, which made a total of 31 households who were forcibly expelled.

According to the source, the North Korean authorities who were surprised by the inspection results of the Anti-Socialist Group formed the second group on December 19th and unfolded a concentrated investigation of cell phone possessions and connections to families who defected to China and South Korea in Hyesan, after having considered the gravity of illicit acts of civilians in the Yangkang Province border region.

The 31 households who were expelled were those who were detained in the first inspections which began in August, 2007 and another mobilized expulsion took place in the dead of the night under the order of the second-round Anti-Socialist Group.

The source relayed, “Those who were detained in the first-round of inspections mostly owned cell phones and were people who smuggled with Korean-Chinese people in China. The 2nd Anti-Socialist Group newly cast suspicion on receiving money from South Korean National Intelligence Service and handing over North Korean internal information.”

The Party committee of Hyesan, with the expulsion approaching, mobilized a general meeting per each people’s unit and gave the following order to civilians, “The people who are expelled are all relatives of the traitors who betrayed the country and are traitors who have sold our national secret. We must not help or sympathize with those who have participated in treasonous acts.”

Those who were purged were driven to a farmland far away from the border region without any means of basic survival and were forcibly moved to abandoned homes of those who had starved to death during the “March of Tribulation” or had become beggars.

The Party committees of the farming village held a meeting of farmers before the arrival of the expelled families and gave the order of “Those who are expelled are family members of those who committed ‘treasonous acts,’ so we must not help them.”

The source added, “The 31 households who were expelled were a part of the first round of purges and after February 16th (Kim Jong Il’s birthday), the number of households who will be expelled will increase. The cadres and Chinese emigrants who were detained in the first round of inspections were excluded from this expulsion.”

Several days ago, Orascom Telecom issued a press release claiming “that it has been granted the first commercial license to provide mobile telephony services in the Democratic People’s Republic of Korea (DPRK) using WCDMA (3G) technology,” and also claiming, ”The DPRK has a population of approximately 23 million of which 67% is between the age of 15 and 64 years, moreover, there is currently no mobile services in the country.”

(Although we won’t know if these demographics are correct until the next census).

However, Dr. Aidan foster Carter took issue with these statements this weekend in the Asia Times…

In 2008, not even North Korea is a cellphone virgin. The DPRK and mobile telephony have a tangled history, starting over a decade ago. (There’s a very useful account as of 2005 at this site.) The tale includes a joint bid in 2002 by several South Korean firms to build a CDMA network in Pyongyang, which sank when Washington made it clear it would not let Qualcomm sell the technology.

That false start apart, our Egyptian Columbus is ignoring, and perhaps usurping, a Thai Leif Ericsson in the shape of Loxley. Back in 1995, the Thai conglomerate set up a 70:30 joint venture, North East Asia Telephone & Telecommunication, with the very same partner Orascom has now bagged, KP&TC. NEAT&T had a 30-year “exclusive” concession - or so it thought.

They’re not the only ones. Hyundai used to vie with Samsung to be South Korea’s biggest chaebol or conglomerate. The group’s northern-born founder, the late Chung Ju-yung, was a pioneer of inter-Korean business. His reward was to be fleeced rotten by Pyongyang, which charged almost a billion dollars for a six-year tourist concession - and then coolly offered bits of it to rival operators like Lotte. As a result, Hyundai splintered into separate firms - and no other chaebol will touch the North with a bargepole. Cheating really doesn’t pay.

But back to the luck of the Loxleys. Having begun with a mainly fixed network in the Rason special economic zone in the northeast, several years later in 2003 Loxley rolled out mobile service in Pyongyang - only to see them banned after a mere six months. That was in May 2004, soon after a huge rail explosion destroyed a swath of the northwestern town of Ryongchon - hours after Kim Jong-il’s train had passed through from China. Officially an accident, one rumor is that this was an assassination attempt triggered by a mobile phone.

Whatever the reason, with service still suspended over a year later, Thailand’s then foreign minister, Kantathi Suphamongkhon, went to Pyongyang in August 2005 to fight Loxley’s corner. He got no joy. North Korea still bars hand-phones, confiscating them from the rare foreign visitor at the country’s Sunan airport and coming down hard on bold souls along the northern border who have illicit mobile phones using Chinese networks. Last October, a factory boss who made international calls from 13 lines - unlucky for some - installed in his basement was reportedly executed in a stadium in front of 150,000 people.

Dr. Foster-Carter gives a great summary of the DPRK’s mobile phone adventures, but I have a couple of data points that flush out the story a bit further.

While visiting Pyongyang in 2005, I personally witnessed an elite North Korean woman (who also claimed to have a reserved room at the Koryo) discretely use a mobile phone, then wrap it in a pink handkerchief a store it in her purse.  Even my guides were shocked, having previously told me that cell phones were recalled for security reasons.  One told me, “She must be special, I am just a normal person.”

Additionally, many journalists to the country are provided with state-sanctioned cell phones to use.  I met a reporter from Reuters who had one.

The full article can be found here:
North Korea: The Columbus complex
Asia Times
Aidan Foster-Carter
2/2/2008

Orascom Telecom
(Hat tip to Werner)
1/30/2008

Orascom Telecom Holding S.A.E. (“OTH” or “Orascom Telecom”) announced today that it has been granted the first commercial license to provide mobile telephony services in the Democratic People’s Republic of Korea (“DPRK”) using WCDMA (3G) technology.

The license was granted to OTH’s subsidiary CHEO Technology JV Company (“CHEO”) which is controlled by Orascom Telecom with an ownership of 75% while the remaining 25% is owned by the state owned Korea Post and Telecommunications Corporation. The terms of the license allows CHEO to offer services to its customer throughout the country, the duration of the license is 25 years with an exclusivity period of four years. Orascom Telecom intends to invest up to US$400 million in network infrastructure and license fee over the first three years in order to rapidly deploy a high quality network and offer voice, data and value added services at accessible prices to the Korean people. OTH intends to cover Pyongyang and most of the major cities during the first 12 months of operations.

The DPRK has a population of approximately 23 million of which 67% is between the age of 15 and 64 years, moreover, there is currently no mobile services in the country. The operation in the DPRK will complement OTH’s existing operations in Asia and will further enhance OTH’s position as the leading GSM operator in the emerging markets.

Naguib Sawiris, Chairman & CEO, Orascom Telecom, stated “We are continuing to head in the right strategic direction; our Greenfield license in the DPRK is in line with our strategy to penetrate countries with high population and low penetration by providing the first mobile telephony services. OTH has consistently proved its ability to successfully roll out mobile services into countries where no other operator has. OTH will continue to increase shareholder value and maintain its leadership in the markets it operates in.”

About Orascom Telecom
Orascom Telecom is a leading international telecommunications company operating GSM networks in six high growth markets in the Middle East, Africa and South Asia, having a total population under license of approximately 430 million with an average mobile telephony penetration of approximately 37% as at September 30th 2007. Orascom Telecom operates GSM networks in Algeria (”OTA”), Pakistan (”Mobilink”), Egypt (”Mobinil”), Tunisia (”Tunisiana”), Bangladesh (”Banglalink”), and Zimbabwe (”Telecel Zimbabwe”). Orascom Telecom had reached approximately 65 million subscribers as at September 2007.

Orascom Telecom is traded on the Cairo & Alexandria Stock Exchange under the symbol (ORTE.CA, ORAT EY), and on the London Stock Exchange its GDR is traded under the symbol (ORTEq.L, OTLD LI).