North Korean Economy Watch

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…

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

North Korea Uncovered v.16
Download it here

The most recent version of North Korea Uncovered (North Korea Google Earth) has been published.  Since being launched, this project has been continuously expanded and to date has been downloaded over 32,000 times.

Pictured to the left is a statue of Laurent Kabila of the Democratic Republic of Congo.  This statue, as well as many others identified in this version of the project, was built by the North Koreans. According to a visitor:

From the neck down, the Kabila monument looks strangely like Kim Jong Il: baggy uniform, creased pants, the raised arm, a little book in his left hand. From the neck up, the statue is the thick, grim bald mug of Laurent Kabila (his son Joseph is the current president). “The body was made in North Korea,” explains my driver Felix. In other words, the body is Kim Jong Il’s, but with a fat, scowling Kabila head simply welded on.

This is particularly interesting because there are no known pictures of a Kim Jong il statue.  The only KJI statue that is reported to exist is in front of the National Security Agency in Pyongyang.  If a Kim Jong il statue does in fact exist, it might look something like this.

Thanks again to the anonymous contributors, readers, and fans of this project for your helpful advice and location information. This project would not be successful without your contributions.

Version 16 contains the following additions: Rakwon Machine Complex, Sinuiju Cosmetics Factory, Manpo Restaurant, Worker’s Party No. 3 Building (including Central Committee and Guidance Dept.), Pukchang Aluminum Factory, Pusan-ri Aluminum Factory, Pukchung Machine Complex, Mirim Block Factory, Pyongyang General Textile Factory, Chonnae Cement Factory, Pyongsu Rx Joint Venture, Tongbong Cooperative Farm, Chusang Cooperative Farm, Hoeryong Essential Foodstuff Factory, Kim Ki-song Hoeryong First Middle School , Mirim War University, electricity grid expansion, Tonghae Satellite Launching Ground (TSLG)” is also known as the “Musudan-ri Launching Station,” rebuilt electricity grid, Kumchang-ri suspected underground nuclear site, Wangjaesan Grand Monument, Phothae Revolutionary Site, Naedong Revolutionary Site, Kunja Revolutionary Site, Junggang Revolutionary Site, Phophyong Revolutionary Site, Samdung Revolutionary Site, Phyongsan Granite Mine, Songjin Iron and Steel Complex (Kimchaek), Swedish, German and British embassy building, Taehongdan Potato Processing Factory, Pyongyang Muyseum of Film and Theatrical Arts, Overseas Monuments built by DPRK: Rice Museum (Muzium Padi) in Malaysia, Statue de Patrice Lumumba (Kinshasa, DR Congo), National Heroes Acre (Windhoek, Namibia), Derg Monument (Addis Ababa, Ethiopia), National Heroes Acre (Harare, Zimbabwe), New State House (Windhoek, Namibia), Three Dikgosi (Chiefs) Monument (Gaborone, Botswana), 1st of May Square Statue of Agostinho Neto (Luanda, Angola), Momunment Heroinas Angolas (Luanda, Angola), Monument to the Martyrs of Kifangondo Battle (Luanda, Angola), Place de l’étoile rouge, (Porto Novo, Benin), Statue of King Béhanzin (Abomey, Benin), Monument to the African Renaissance (Dakar, Senegal), Monument to Laurent Kabila [pictured above] (Kinshasa, DR Congo).

According to Telegeography:

Vietnamese military-owned telco Viettel has announced plans to expand its network to North Korea, Cuba and Venezuela, according to reports in local paper Thanh Nien Daily. Tran Phuoc Minh, deputy director of Viettel, said the company is hoping to hold negotiations with the three countries in order to gain a foothold in their still relatively underdeveloped wireless markets. The cellco expanded its network to Cambodia last year, where it signed up 100,000 wireless subscribers after two months of pilot operations, as well as Laos, where it hopes to attract 50,000 subscribers this year. According to TeleGeography’s GlobalComms database, Viettel had a subscriber base of 28 million at end-2008.

Read the full story here:
Viettel plans network expansion to North Korea, Cuba, Venezuela
TeleGeography
2/6/2009

On market regulations:  North Korean authorities issued three decrees restricting market activity: 1. Markets may only open once every 10 days  2. Only vegetables, fruits, and meat from private citizens can be sold in the markets.  Imported goods and products of state-owned companies are prohibited  3. To reduce the influence and growth of professional merchants, market booths will be allocated on a first-come, first-served basis (no fixed locations).

The “good” news is that the authorities are having trouble implementing these rules:

A Pyongyang source said in a phone conversation with Daily NK on the 7th, “Until now, markets in Pyongyang have been opening at 2 PM every day and operating normally. They are only closed once a week, on Mondays as usual.”

However, the sale of imported industrial goods from China such as clothing, shoes, cosmetics, kitchen utensils and bathing products has become more restricted in the market. Subsequently, street markets or sales of such goods through personal networks have become increasingly popular.

The source noted, “Inspection units regulate the markets with one eye closed and the other eye open, so it is not as if selling is impossible. With a bribe of a few packs of cigarettes, it is easy to be passed over by the units. However, the sale of industrial goods has rapidly decreased and, if unlucky, one can have his or her goods taken, so the number of empty street-stands has been increasing.”

So many North Koreans now buy Chinese kitchen utensils in the same way Americans purchase cocaine!

But even in Pyongyang they are having troubles enforcing the new rules:

“Since December, rations in Pyongyang have consisted of 90 percent rice and 10 percent corn and in the Sadong-district and in surrounding areas, rice and corn have been mixed fifty-fifty percent.”

“It has even been difficult in Pyongyang, where rations are provided, to convert to 10-day markets due to opposition from citizens, so restricting sales in the provinces, where there is virtually no state provision, is impossible in reality. It is highly likely that the recent measure will end as an ineffective decree, like the ones to prohibit the jangmadang or the sale of grain”[.]

On North Korea’s information blockade:  Radio Free Asia published an informative article on the ability and propensity of North Koreans to monitor foreign broadcasts.  The “good” news is that access to unauthorized information continues to grow.  

The whole article is worth reading (here), but here is an excerpt:

North Koreans manage to gain limited access to foreign media broadcasts in spite of increasing government crackdowns in the isolated Stalinist state.

“We clamped down on the people watching South Korean television sets, but it wasn’t easy,” a North Korean defector and former policeman who monitored North Koreans’ viewing habits said. He said channels fixed by the North Korean authorities could easily be altered to catch South Korean programming.

“You could watch South Korean television such as KBS and MBC in Haeju, Nampo, Sariwon, even in Wonsan,” he said, referring to regions of Hwanghae province, just north of the border with South Korea.

“They reach also to the port cities near the sea. But you can’t watch them in Pyongyang because it’s blocked by mountains.”

He said the police themselves used to watch South Korean television “all the time” along with their superior officers.

“We would enjoy what we watched, but outside in public, we would praise the superiority of our socialist system. We knew it was rubbish.”

“According to North Korean defectors interviewed who came to South Korea right after living in the North, educated, intelligent people in North Korea do listen to foreign stations despite the inherent danger,” Huh Sun Haeng, director of the Center for Human Rights Information on North Korea, said in a recent interview.

He said he made good money fixing people’s radios, so they could get better reception of foreign broadcasts.

“I made good money readjusting channels on radios, or upgrading them with higher frequency parts for local people who want to listen to broadcasts other than the North’s state-run radios. There were at least a few hundred people that I know of who listened to foreign broadcasts,” he said.

He said no television reception reached the northern part of the country near the Chinese border, so people there watched recorded programs on videotape and video CD (VCD) instead.

Read the full articles here:
Pulling Back from Converting to 10-day Markets
Daily NK
By Jung Kwon Ho
1/9/2009   

Growing Audiences for Foreign Programs
Radio Free Asia
Original reporting in Korean by Won Lee
1/8/2009

Today, the Daily NK publishes a review of Peacemaker: South-North Relations and the North Korean Nuclear Issue over the past 20 years,  by Lim Dong Won, “evangelist of the Sunshine Policy” and former director of South Korea’s National Intelligence Service.

The book (not available in English) publicizes dialogues between Kim Jong Il and the author when he visited Pyongyang for the first Inter-Korea Summit in 2000 and as a South Korean delegate in 2002.  

Actually, the Daily NK’s article is not so much a review of the book as it is a series of interesting excerpts:

[Kim Jong il speaking] Joint Security Areais a good movie. I showed it to the generals of the military and cadres of the Party.’ All of sudden, [KJI] asked [the] general of the People’s Army Lee Myung Su and secretary Kim Yong Soon how many series of a South Korean historical drama, “Petticoat Government” they had watched. [KJI] said that ‘South Korea produces historical dramas well. I’ve instructed the Director of the Propaganda Department of the Party to learn the South Korean way of making historical dramas.’

Lim Dong Won also revealed that at the Inter-Korea Summit in 2000, Kim Jong Il agreed with Kim Dae Jung’s comment, “Even after the unification, the U.S. military presence in South Korea will be needed.” The former president Kim asked him “Why are you insisting through your media on the withdrawal of the U.S. military from the South?” and Kim Jong Il replied to him that he wanted President Kim to understand it was just to soothe the peoples’ feeling.

When Lim asked Kim Jong Il to visit Seoul in April of 2002, Kim Jong Il said that “In fact, I tried to visit Seoul in the spring of 2001, but the situation was changed due to George Bush, who looked on us as an enemy, being elected President of the U.S. Furthermore, the situation of the South was such that the leftists demanded that the North apologize to them for the Korean War and the explosion of KAL, and my visiting Seoul would have deteriorated the relations between the North and the South. Therefore, my close associates held me back from going to the South.”

According to his book, Lim revealed that a hot line has been set up since the first Inter-Korea Summit in 2000 and has been used when crises happened between the South and the North. In June, 2002, when a battle occurred in the West Sea, the North sent an urgent telephone-notice, saying “I heard with regret that it happened accidently.”

Read the full story here:
Veiled Dialogues with Kim Jong Il Revealed
Daily NK
6/12/2008

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.

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.