North Korean Economy Watch

According to the Mainichi Daily News (Japan):

The president of a motorcycle sales company in Hiroshima was arrested Thursday for allegedly exporting pianos to North Korea in violation of Japanese government trade sanctions.

Hiroshima and Hyogo police suspect Yutaka Oyama, 60, exported 22 used upright pianos from Kobe port to North Korea through China’s Dalian on Nov. 5, 2008, without obtaining permissions from the economy, trade and industry minister.

Oyama has admitted to exporting the pianos during interviews with Kyodo News, saying he had “no other work” amid an economic downturn.

The police raided his office and home in April and confiscated items such as a personal computer and a mobile phone.

Japan in October 2006 banned imports from North Korea and exports to the country of luxury goods, including musical instruments, under economic sanctions designed to penalize Pyongyang for the nuclear test it conducted earlier that month.

The sanctions were strengthened in June last year with all exports banned, in response to another nuclear test the previous month and the North’s past abductions of Japanese nationals.

Read the full story here:
Motorcycle dealer arrested over illegal export to North Korea
Mainichi Daily News
9/16/2010

According to Yonhap:

An increasing number of North Korean defectors have been attempting to seek asylum in foreign countries, hiding their newly-won South Korean nationality and pretending to be fresh from the communist nation, a lawmaker said Wednesday.

Britain and Norway have been among the popular targets for these fake asylum seekers, Rep. Hong Jung-wook of the Grand National Party said, citing data from the foreign ministry. Hong said the government should make sure the issue does not escalate into diplomatic problems.

Apparently over concerns about fake defections, Britain has stopped granting asylum to North Korean defectors since last year. In 2008, Norway found more than 50 North Korean defectors with South Korean passports or identity cards during an inspection of a refugee camp, according to the lawmaker.

Since 2004, a total of 695 North Korean defectors have formally filed for asylum in Britain, with the number of applications rising from 20 in 2004 to 410 in 2007. Of those applicants, 373 were granted the asylum, 185 were denied and 135 under consideration as of March of last year, according to the lawmaker.

But the British government estimates that the actual number of North Korean defectors who had come to the country for asylum purposes since 2004 would be about 1,000 and suspects that 70 percent of them would be of South Korean nationality, the lawmaker said in a release.

Britain reached the estimate after a survey of three dozen North Korean asylum seekers, who agreed to provide their fingerprints for the investigation, found that 75 percent, or 24 people, were found to be of South Korean nationality, the lawmaker said.

“Based on this problem, the British side has been asking that our government provide it with broader information on the fingerprints of North Korean defectors, and even demanding a treaty be signed on this,” the lawmaker said in the release.

Hong also said that about 600 fake asylum seekers are believed to be still staying in Britain or Norway, and called on the government to take steps to bring them home.

“The increase in fake asylum attempts by North Korean defectors is because their life in South Korea is difficult,” Hong said. “The government should allow them to return by granting a grace period so as to prevent the issue from growing into a diplomatic problem.”

The foreign ministry denied that Britain had asked South Korea to take back the fake asylum seekers or demanded a treaty on fingerprint information.

“As this issue is related to our nationals, we have been cooperating with related countries within the necessary bounds and are in talks with related countries to work out appropriate measures,” the ministry said in a statement.

Since the 1950-53 Korean War, nearly 20,000 North Koreans have defected to the South to escape from hunger and political suppression in their communist homeland. But many of them have a hard time getting decent jobs due to their lack of education and social discrimination.

Read the full story here:
Increasing number of N. Korean defectors in S. Korea seek asylum in foreign countries
Yonhap
Chang Jae-soon
9/15/2010

According ot the Daily NK:

An official in the Ministry of Unification has revealed that the government is planning to allow an increase in the number of South Korean nationals permitted to overnight within the Kaesong Industrial Complex.

The new standard will allow a 50% increase in South Koreans staying in the Complex, from the current 600 to a maximum of 900, with the new limits set to take effect after the “Chuseok” harvest festival later this month.

Explaining the plan, the official said, “While the restrictions on residing personnel have been in place, fatigue has accumulated and problems have constantly occurred with companies having a great many production and quality errors,” adding, “So we can expect the government to select this course of expanding the number of residing personnel to between 800 and 900 this week.”

“Especially, maintaining production quality during the period of high demand starting in September with the current staffing levels would be difficult,” the official went on, “so companies have requested an increase in staffing levels, and the government has been considering the companies difficulties and requests.”

However, the official stressed that the move doesn’t mean the government is softening its stance in terms of post-Cheonan sanctions measures, saying, “The May 24th Measures will stay in place, and restrictions on new business investment and new investment in existing businesses will continue.”

At the time of the May 24th Measure, the number of personnel permitted to overnight in the Complex was fixed at 550 from its original limit of 1,000, though the real average was only around 500. However, the limit was increased to around 590 in July based, the Ministry of Unification announced at the time, on the “stances of the corporations and (the government’s) experience of running the complex.”

Read the full story here:
Government Plans Kaesong Personnel Change
Daily NK
Chris GReen
9/14/2010

Pictured above: April 25th Sports Club field in Sadong-guyok (사동구역) where the matches were held (Google Maps)

UPDATE 4 (2011-4-25): To mark the ten-year anniversary of DPRK-UK diplomatic relations in September 2010, the British Embassy in Pyongyang and Koryo Tours arranged for the Middlesbrough Ladies Football Club to travel to the DPRK for two friendly matches against the DPRK’s national ladies team.  In addition to the two matches, the ladies team spent an afternoon training children at a local school, and an edited version of the film Bend it like Beckham was shown on North Korean television.  If you can access Facebook, you can see pictures of the visit here and  some videos here.

I managed to get video of one of the matches that was aired on North Korean television, so I edited it and posted it to YouTube:

It is in severn parts.  Part 1 of 7 is here.  The resolution is not great, but I am not a professional video editor!

Koryo Tours now has the ambitious goal of bringing a DPRK women’s football team to Middlesbrough.  According to a recent Koryo Tours newsletter:

We are therefore looking to take a North Korean women’s football team to the UK in 2012.  We also plan to bring a female DPRK film crew to accompany the squad and make a documentary of their time in the UK for both North Korean and international screening.

We do have support from both the British Embassy in Pyongyang and various international institutions but we also need financial support.  It would be extremely useful to have introductions to companies or individuals who you think might be interested in helping us.

Contact Koryo Tours for more information.

UPDATE 3: Sky News has a good summary of the events and a video.

UPDATE 2: According to the BBC, the Middlesbrough FC Ladies lost their second game.

UPDATE 1: According to the AFP, the Middlesbrough FC Ladies lost their first game.

ORIGINAL POST: According to the Guardian:

North Korea, the most secretive country on earth, the nation George Bush located on the Axis of Evil, where the flame of Marxism-Leninism still burns strong, will this week welcome its first British football team: 14 Teesside women players aged from 17 to 23, and their manager, Marrie Wieczorek.

On Thursday, Middlesbrough FC Ladies set off on a football tour with less bar-hopping (it’s illegal to leave your hotel without your guide) and probably more talk about dialectical materialism than usual. “I think it is going to be a bit of a culture shock,” says Wieczorek. “The whole place is shrouded in secrecy.”

At a time of mounting speculation that Kim Jong-il may be stepping down and appointing his son as successor, the team will fly to Beijing and then board an Air Koryo flight to Pyongyang, where they will play two games.

Middlesbrough Ladies will, in their way, be making history. The Democratic People’s Republic of Korea (as it prefers to be known) has so little contact with the outside world that the tour represents one of the most significant cultural exchanges of recent years. But it is also the latest episode in the entirely unlikely relationship between Middlesbrough and North Korea.

Historical link

Back in 1966, when England hosted the World Cup, North Korea played its three group games in the town, and Dave Allan, Middlesbrough’s media manager, said that a bond had existed ever since.

“It wasn’t that long after the Korean War and there were people in Teesside who’d fought in that, and when the Korean team came they were seen as the enemy,” Allan said. “But people really just took them to their hearts. It helped that they played in red, which was the Middlesbrough team colour. But it really was the people themselves, non-stop smiling, and very friendly and open.”

In 1966, North Korea beat Italy in what is routinely referred to as “one of the greatest upsets in World Cup history”, but the team’s failure to win a single game in this year’s finals – the first time they had qualified since then – led to rumours that the national coach had been sent to be “re-educated” on a building site on his return home.

In 2002, Nick Bonner of the travel company Koryo Tours tracked down the 1966 players and brought them back to Middlesbrough in what is still North Korea’s most important non-political exchange with the outside world.

“You don’t hear much about Middlesbrough in this country. But in North Korea they love us,” said Wieczorek. Even more astonishing, she said, they also love women’s football. The North Korean women’s team is currently fifth in the world, and it is as popular a spectator sport as the men’s game.

“Here, on the other hand, it was a battle to even play it when I started out 34 years ago,” said Wieczorek, “and although we’re supported by Middlesbrough FC we still have to raise our own money for transport.”

Culture shock

In North Korea, visitors are expected to bow before statues of the Supreme Leader. Do the Middlesbrough team have any idea what to expect?

Acting captain Rachael Hine, a mortgage adviser with Santander, said: “We know it’s going to be different. But nobody really knows how different.

“We’re just trying to go there with an open mind.”

This was a philosophy that has already been tested. “I told the girls their mobile phones will be confiscated at the airport,” said Wieczorek. “Their jaws just dropped.”

Read the full story here:
Middlesbrough Ladies’ North Korean football tour guarantees place in history
Guardian
Carole Cadwalladr
9/12/2010

According to the Daily NK:

A new survey [in South Korea] has suggested that the May 24th Measure, which was put in place in response to the sinking of the Cheonan in March, has had a serious effect on entities doing business with North Korea, in many cases harming them in a way capable of putting them out of business altogether.

The survey, conducted by the Korea Chamber of Commerce and Industry, included a total of 500 companies; 200 with trade ties to the North and 300 without.

Of that 200, 93.9% said they have suffered what they characterized as substantial losses since the May 24th Measure imposed a trade ban with the North, while 66.5% said this was enough to put them out of business.

The survey put the average losses of those firms with ties to the North at approximately $800,000.

Meanwhile, around 8 out of 10, or 83%, of the 500 said that they now have no interest in developing business ties with the North, regardless of the political and economic environment.

Read the full story here:
Survey Reveals Effect of Trade Ban
Daily NK
Chris Green
9/8/2010

According to the Associated Press:

Taiwanese investigators raided a local company after it shipped banned machinery to North Korea via a Chinese firm with ties to Pyongyang’s military, a Taiwanese official said Tuesday.

The owner of the Taiwanese company, Ho Li Enterprises, said that two computer-controlled machine tools used in the manufacture of engines were shipped to North Korea earlier this year, but said he was unaware he had broken the law. Huang Ting-chou said that his company’s premises were raided in July by Taiwanese law enforcement officials acting on a tip from the U.S. government.

A Taiwanese law enforcement official confirmed the shipment and raid had taken place but did not discuss U.S. involvement. The de facto American Embassy in Taiwan declined to comment on the claim.

The raid took place as the Obama administration was working on a new set of sanctions against North Korea that were unveiled last month, targeting the assets of individuals, companies and organizations allegedly linked to support for its nuclear program.

North Korea has repeatedly tried to circumvent international strictures designed to stymie its production of missiles and nuclear material and other weapons of mass destruction.

Taiwanese companies are no strangers to sanction-busting attempts. In early 2009, Shanghai’s Roc-Master Manufacture & Supply Company ordered pressure gauges with possible nuclear weapons applications from Taiwan’s Heli-Ocean Technology Co. Ltd. Using backdated purchase orders, the Chinese company had Heli-Ocean ship them to Iran. The transaction violated international sanctions on exporting sensitive equipment to Tehran, which many in the international community suspect is trying to make nuclear weapons.

In an interview with The Associated Press, Huang said the machine tools were originally ordered “more than a year ago” but were shipped only after Ho Li’s Chinese client, Dandong Fang Lian Trading Co. Ltd. in northeastern China’s Liaoning province, was able to pay for them. While acknowledging that the tools ended up in North Korea, he said he had no idea how they would be used or why they would appear on any list of sanctioned items.

The North Korean machine tool deal was first reported Tuesday in Taiwan’s Liberty Times newspaper.

A Taiwanese official, speaking on condition of anonymity because he is not authorized to deal with the press, said that the machine tool shipment violated international sanctions and Taiwanese trade laws. He did not identify the items in question or specify why they violated sanctions.

The official works for the Taipei branch of the Ministry of Justice’s Investigation Bureau — roughly equivalent to the Federal Bureau of Investigation in the United States.

He said that Dandong Fang Lian is managed by a North Korean national with an unspecified connection to the North Korean military, and that the machine tools had ended up in the country’s Sinuiju region, across the Yalu River from Dandong. Sinuiju is the funnel for most Chinese goods entering North Korea.

“Ho Li sold two machine tools … without reporting to the authorities that the equipment was really going to North Korea,” the official said. “We became aware of the violation and when we raided Ho Li in late July we found e-mails and money transfer documents to prove our case.”

Huang said that Dandong Fang Lian specializes in diesel engines and power generators, and that while he had done business with the company before, this was his first venture with them in the machine tool sector.

“I am cooperating with the government in its investigations,” he said.

Neither Ho Li nor Dandong Fang Lian appears on an American list of sanctioned companies.

The Taiwanese official declined to confirm Huang’s assertion that an American tip led to the raid on Ho Li’s premises. The American Institute in Taiwan — the de facto U.S. Embassy on the island — said it would not comment on specific cases but emphasized it cooperates closely with the island on enforcing export controls and stemming the proliferation of weapons of mass destruction.

Read the full story here:
Taiwan firm raided after illicit sale to NKorea
Associated Press
Debby Wu
9/7/2010

According to the Choson Ilbo:

North Korea and China are already starting economic cooperation projects in the border area across China’s northeast and the North’s Rajin-Sonbong region.

The Chinese Ministry of Transport recently designated Jilin Province as a pilot region for international trade and logistics encompassing the three northeastern provinces of China and the Duman (or Tumen) River area, the China Shipping Gazette reported last Friday.

The decision is aimed at facilitating transport of goods from China’s northeast to Shanghai and the south via customs points in the Chinese city of Hunchun and the North’s Rajin-Sonbong Port, the weekly added.

A representative of the Yanbian Korean Autonomous Prefecture in Jilin also signed an agreement on bilateral economic cooperation with Kim Su-yol, the chairman of the Rajin-Sonbong special city people’s committee, at the sixth Northeast Asia Trade Expo in Changchun last Thursday.

Read the full story here:
N.Korea, China Promote Business in Border Area\
Choson Ilbo
9/6/2010

According to Yonhap:

South Korean companies hampered by Seoul’s ban on their trade with North Korea have signed up for government loans amounting to 17.4 billion won (US$14.8 million), the unification ministry here said Saturday.

According to a ministry official, a total of 66 companies have asked to borrow government money on a 2 percent interest rate. The ministry began reviewing 155 applications on Aug. 2, the official added.

Read the full story here:
Banned S. Korean traders with N. Korea apply for government loans
Yonhap
9/4/2010

According to the Choson Ilbo:

Chinese President Hu Jintao told North Korean leader Kim Jong-il in strong terms to reform the North’s failed socialist economy and open up the country, a senior South Korean government official said Wednesday.

He made the call during a meeting when Kim visited China last week, using rather more direct terms than Chinese Premier Wen Jiabao had used during Kim’s last visit in May, according to the official. Wen told Kim, “I’d like to introduce to you China’s experience in the reform and opening drive.”

But the official quoted Hu as saying, “Socialist modernization is based on China’s three-decade-long experience in reform and opening. Although self-reliance is important, economic development is inseparable from external cooperation.”

According to a Chinese official, Kim too directly used the terms “reform and opening”  this time. He reportedly told Hu, “Since its launch of the reform and opening drive, China has achieved rapid development.”

Up until recently, top Chinese leaders had regarded the terms as taboo words at bilateral summits for fear of upsetting North Korea’s delicate feelings, but Wen first broke the taboo in May, and Hu in his advice to Kim even used language such as “enterprise,” “market mechanism” and “external cooperation.”

A diplomatic source in Beijing said China’s insistence on talking about reform shows how concerned China is with the North’s mismanagement of the economy.

China’s business media made upbeat observations about the North turning toward reform, quoting Kim as saying he was “deeply impressed” after touring major cities in China’s northeastern region such as Changchun, Harbin and Jilin.

In an editorial Tuesday, the Global Times, a sister newspaper of China’s official People’s Daily, wrote, “Living in the shadows of South Korea, Japan and the U.S., North Korea has to wrap itself up tighter in order to fend off military threats, and threats of political and cultural infiltration. North Korea’s opening-up will help relieve tensions in Northeast Asia. But, the knot does not only lie on the North’s side. Other countries in this region must redouble their efforts to untangle the knot.”

It is unclear whether Kim will listen. The North Korean leadership is afraid of any reform that could weaken its stranglehold, and at the moment tight control is essential if the regime is to officially establish Kim Jong-il’s son Jong-un as his father’s heir.

Kim has paid lip-service to the Chinese economic development model before. After returning from a trip in the early 2000s, he introduced some timid elements of the market economy but swiftly clamped down when markets became too brisk and a new class of successful businesspeople began to look like a threat to his regime.

Han Ki-bum, a former deputy director of the National Intelligence Service in charge of North Korean affairs, in his doctoral thesis quotes Kim as telling economic officials in June 2008, “If you think I’m talking about reform and opening as if I were going to introduce the market economy you’re completely mistaken.”

At the moment, Kim apparently wishes to stick it out, but the North’s dire straits amid international sanctions will make it difficult to ignore Chinese demands.

At the meeting, Hu pointed out that economic cooperation between the two countries would be a “win-win strategy” where “the government takes the initiative, enterprises play a leading role, and the market mechanism is set in motion,” according to the South Korean official.

“That means that if China gives the North something, it should also pay in return,” a South Korean security official speculated.

Read the full story here:
Hu ‘Told Kim Jong-il It’s Time for Economic Reform’
Choson Ilbo
9/2/2010

According to the Choson Ilbo:

The United States is offering $750,000 in emergency aid to North Korea to help aid recovery from devastating floods.

The U.S. Special Envoy for North Korea Human Rights, Robert King, told VOA Wednesday that the money will be given to three U.S. non-governmental organizations — Samaritan’s Purse, Global Resource Services, and Mercy Corps.

He said the organizations will use the money primarily for medical supplies and will fly the aid into Pyongyang beginning later this week.

Read the full story here:
U.S. Offers Flood Aid to N.Korea
Choson Ilbo
9/2/2010