Archive for the ‘South Korea’ Category

South Korean officials in North Korea for joint forest inspection

Wednesday, August 8th, 2018

Benjamin Katzeff Silberstein

Yonhap reports:

A group of South Korean officials left for North Korea on Wednesday to conduct a joint inspection of forests and protect trees from harmful insects and diseases, the unification ministry said.

The officials led by a senior forest agency policymaker crossed into Mount Kumgang on the North’s east coast, where they will jointly examine the forests there, according to the ministry.

They will return home later in the afternoon.

The one-day trip follows up on the agreement reached during working-level inter-Korean talks early last month for forestry cooperation.

They agreed to cooperate in protecting forests along the inter-Korean border and in other areas from damage caused by harmful insects and diseases.

The two Koreas conducted a similar on-site inspection in July 2015 near Mount Kumgang. Two months later, they carried out efforts to fight insects and other damage, which was said to have cost them over 100 million won (US$89,400).

Meanwhile, the North will send six transport officials to the South on Thursday to hold a meeting and discuss details related to their cooperation in modernizing and possibly connecting railways over their border, the ministry said.

The meeting, the second of its kind, will be held at the Customs, Immigration and Quarantine (CIQ) office in Paju, just south of the inter-Korean border.

It came after their first meeting in Kaesong last month to discuss the outcome of an inspection of the conditions of the 15.3 kilometer-long railways from the North’s border town to the Military Demarcation Line (MDL) that separates the two Koreas.

Article source:
S. Korean officials visit N. Korea for joint inspection of forests
Yonhap News
2018-08-08

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Seoul says reopening Kaesong will wait till sanctions are lifted

Friday, August 3rd, 2018

Benjamin Katzeff Silberstein

Korea Herald:

“The government’s stance remains unchanged when it comes to the issue of the resumption of the Kaesong Industrial Complex,” Lee Eugene, a deputy spokesperson of the unification ministry, told reporters during a regular press briefing.

“The stance has not been changed either that things will be considered in line with progress in denuclearization efforts and within the frame of sanctions,” she added. “From a broad perspective, it would be desirable to push for its resumption after the lifting of the sanctions.”

Opened in 2004, the industrial park in the North’s border town of Kaesong was hailed as a key symbol of economic cooperation between the rival Koreas as it combined South Korean capital and technology with cheap labor from North Korea. The Seoul government, however, halted its operation in 2016 in retaliation for Pyongyang’s missile and nuclear provocations.

The North has recently ramped up its call for the South to reopen the industrial park amid a thaw in relations, but the US.

Article source:
Seoul says reopening of Kaesong complex should wait until sanctions lifted
Korea Herald/Yonhap
2018-08-03

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Seoul needs sanctions exemptions, official says

Monday, July 23rd, 2018

Benjamin Katzeff Silberstein

If anyone ever doubted that the US and South Korea are not in lockstep on sanctions…The question is how hard Seoul is pushing behind the scenes, and how hard it is prepared to push. Joongang:

A South Korean delegation that traveled to New York over the past weekend said Seoul needed to be exempted from some international sanctions against the North to implement the Panmunjom Declaration.

The remarks came on the same day that U.S. Secretary of State Mike Pompeo reiterated that sanctions against Pyongyang will remain in place until the North fully denuclearizes.

The rare show of discrepancy between the allies came at an unusually sensitive time between the South and North, after North Korean media excruciated South Korean authorities for what it said was kowtowing to the U.S. on inter-Korean issues.

A local official said Pyongyang appeared to be fed up with Seoul’s reluctance to help the regime wiggle out of sanctions.

South Korea’s official stance has been to support sanctions on the North until the country gives up its nuclear weapons, but from time to time officials have expressed a hope to seek exemptions, especially to work out the cross-border projects that South Korean President Moon Jae-in agreed to with North Korean leader Kim Jong-un during their first summit on April 27.

Last Friday in New York, a high-level South Korean official who spoke on the condition of anonymity decided to convey that hope to reporters – just as Pompeo highlighted in a different news conference that all UN member-states unanimously agreed to fully enforce sanctions on the North. The official was part of a delegation led by South Korean Foreign Affairs Minister Kang Kyung-wha, who traveled to New York to co-host a briefing session with Pompeo on peninsular issues for representatives of the UN Security Council.

Soon after the briefing, the official told South Korean correspondents in New York that the South Korean government “needed” some exemption from international sanctions on the North to implement the Panmunjom Declaration, adding that it was asking the international community to grant that exemption as it was leading the North through dialogue and cooperation.

Full article:
Seoul needs sanctions exemption, official says
Jung Hyo-Sik, Yoo Jee-Hye, and Lee Seung-Eun
Joongang Daily
2018-07-23

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WSJ on South Korean firms planning for business opportunities in North Korea

Monday, July 23rd, 2018

Benjamin Katzeff Silberstein 

WSJ:

After months of rapprochement—including summit meetingsbetween North Korean leader Kim Jong Un and South Korean President Moon Jae-in, and one between Mr. Kim and President Donald Trump —hopes are rising for more open access to North Korea, a country of 25 million people with vast mineral reserves and lots of cheap labor.

Samsung C&T Corp . , the de facto holding company of South Korea’s biggest and best-known conglomerate, created a North Korea task force in May, staffed by an executive and three managers.

Samsung’s construction arm, which has built some of the world’s tallest skyscrapers and is building subway lines in Singapore and Riyadh, Saudi Arabia, sees opportunity in the North as economic growth slows in the South.

Full article here:
Companies See Glimmers of Opportunity in North Korea
Jonathan Cheng
Wall Street Journal
2018-07-23

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North Korea’s negative growth in 2017: things look bad, unsurprisingly, but take the numbers with a grain of salt

Friday, July 20th, 2018

By Benjamin Katzeff Silberstein

Bank of Korea (BOK) has put out their yearly estimate of North Korea’s GDP trends. This year, they estimate that the country’s GDP decreased by 3.5 percent. Off the top of my head, this seems a fairly reasonable estimate, particularly since sanctions were only in force for a minor part of the year (late fall and onward). Some quick thoughts below:

As always, remember: estimate GDP in North Korea is very, very hard. How do you evaluate, for example, the market sector versus the state sector? Given how complicated and partially opaque North Korea’s system for pricing it, how can a GDP figure even be reasonably estimated? That said, BOK has been doing this for many years, and their figures are, for all their faults and flaws, some of the most reasonable estimates among the few that exist. Still, as one of the leading experts in the field once told a class of grad students studying the Korean economy: if someone gives you a figure on the North Korean economy with a specific decimal number, you can be sure that it’s wrong.

Some news outlets have made a big number of the fact that this contraction is the largest for over two decades, according to the BOK numbers. While that is true, the proportions are very different: in 1997, BOK estimates that the economy contracted by 6.5 percent, that is, almost double the contraction of 2017. So we’re not talking about any crisis nearly as significant as the famine of the 1990s.

BOK estimates a drop by 1.3 percent in agricultural and fisheries production. Notably, still, market prices for food have looked completely normal throughout the year, as this blog has noted several times before. It’s unclear how exactly agricultural production is estimated, and what the “sector” here really means – only what goes into the state-side of agricultural production and supply, or the sale of surplus production on the semi-private markets? The latter may very well be underestimated given how tricky it is to asses what share of agricultural production still lies firmly and solely within the state system.

It’s unclear how much of the shortfall in electricity production is compensated for by items like solar panels and other forms of electricity generation increasingly prevalent on the ground. Many have noted the various creative ways in which much of the North Korean population already adapts to the shortfall and unreliability of public supply of electricity.

The estimated trade numbers are very dire but also probably approximately realistic. Though the 37 percent shortfall in exports may be an overestimate given that they (presumably) don’t account for smuggling, it is undeniable that the economy is taking a very large hit from sanctions. People who recently visited the Chinese border speak of very low levels of activity in goods transports and the like. This gives cause for some skepticism toward the reports claiming that Chinese sanctions enforcement has gone much more lax lately: it may well have, but that hardly means the doors are flung open. At the same time, imports went up 1.8 percent. Either China is letting North Korea run a trade deficit which they assume they’ll get back once sanctions are eased, or the regime has much more currency stashed away to pay with the goods for than many have thought. The truth may lie somewhere in the middle there.

 

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South Korean companies gearing up to rush north, part x

Wednesday, July 18th, 2018

Benjamin Katzeff Silberstein

Hardly a day goes by without a new article on South Korean companies or business interests eyeing investments in North Korea as a golden opportunity. Here’s the Korean Tourism Association (from Joongang Daily):

Attracting both local and foreign travelers to lesser-known mountains and rivers across the peninsula is one of the goals of the Korea Tourism Organization under its newly appointed president Ahn Young-bae.

In the spirit of easing tensions between North and South Korea, Ahn plans to set up a team that will focus on promoting travel throughout both countries.

“If the relationship between the South and North [improves], ‘peace travel’ will really start to take off,” said Ahn during his first press conference, adding that this is one way to develop unique tour programs that can appeal to many travelers.

To develop new ideas to make the tourism industry in Korea more sustainable, Ahn also plans to set up a new tourism big data center. Here, he said, one can find out which areas are becoming popular vacation spots and what travelers are purchasing during their time away from home so that the travel industry can set up better marketing strategies. While a future management team, another initiative Ahn plans to start, will focus on how to make such changes, a value management team will conduct research based on the data and present their findings to the organization.

Full article:
KTO sees opportunity up North : New president plans to use big data to improve local tourism
Lee Sun-Min
Joongang Daily
2018-07-18

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South Korea, North Korea and Russia discuss railway cooperation

Sunday, July 15th, 2018

Benjamin Katzeff Silberstein

Trilateral cooperation discussions on the cross-peninsular railway happened in Rason despite Russia’s earlier cancellation:

A group of representatives from South Korea’s presidential panel returned home Sunday after a trip to North Korea, where they discussed possible trilateral economic cooperation involving the two Koreas and Russia, its official said.

The Presidential Committee on Northern Economic Cooperation sent an 11-member team led by committee chairman Song Young-gil to the North’s northeastern border region of Rason. They stayed there for two days from Friday.

The team originally planned to attend a seminar hosted by Russia to discuss trilateral economic cooperation involving the two Koreas and Russia but canceled its participation. Instead it had discussions with North Koreans and Russians on the Rajin-Khasan project and other issues, the official said.

Rason, formerly known as Rajin and Sonbong, was designated as a special economic zone in 1991. The North has sought to develop the zone by drawing outside investment but faced setbacks amid its continued provocations.

The Rajin-Khasan project, in particular, is a logistics project aimed at transporting coal from Russia to the North by using a 54 km-long railway linking Khasan in Russia to the Rajin port of North Korea and then to South Korea by ship.

There have been test operations of the transport route three times, including the latest one in November 2015.

The trilateral cooperation project, however, has been put on hold as South Korea banned maritime transport from the North in early 2016 in the wake of the North’s nuclear and missile provocations.

South Korea and the United States have said that full-fledged economic cooperation with the North should wait until it carries out its promised “complete denuclearization.”

“The Rajin-Khasan project is not subject to U.N. sanctions but to sanctions imposed by the U.S. So we plan to draw up and propose a broad picture and make preparations for joint study until there is progress in denuclearization and discussion begins on lifting those sanctions,” the panel official said.

Article source:
Presidential panel discusses Rajin-Khasan cooperation during trip to N.K.
Yonhap News
2018-07-15

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Reopening Kaesong key to cooperation, says ROK gov’t official

Friday, July 13th, 2018

Benjamin Katzeff Silberstein

A South Korean official (albeit one specifically representing the interests of the zone) calls re-opening Kaesong a “first step” towards resumed inter-Korean economic cooperation. Yonhap:

A South Korean official in charge of promoting investments in North Korea’s Kaesong Industrial Complex said Friday that the reopening of the now-suspended industrial park in the North’s border town will be a first step towards resuming inter-Korean economic cooperation.

Addressing a unification symposium in Seoul, Kim Jin-hyang, chairman of the Kaesong Industrial District Foundation, said the operation of the Kaesong complex has to be restarted as quickly as possible.

“Inter-Korean economic cooperation cannot be discussed without the Kaesong Industrial Complex,” said Kim, who doubles as chief of the Kaesong Industrial District Management Committee.

The government of former President Park Geun-hye abruptly announced the closure of the Kaesong park on Feb. 10, 2016, in retaliation for the North’s fourth nuclear weapons test and long-range missile launch.

Kim dismissed the abrupt closure of the complex as a “completely failed policy,” saying, “The decision was a grave disaster that shut down peace, economy and security altogether. North Korea was never dealt a blow when the Kaesong park was closed.”

“The Kaesong complex was not a special favor to the North. It was intended to support the South Korean economy stuck in a low-growth trap,” he said.

Kim noted that the Kaesong park is also very symbolic in terms of security and peace, arguing that the mix of about 60,000 South and North Korean workers in a single location can deter tensions and guarantee peace.

He stressed that South Korea should now join Singapore, Russia and China in preparing for large-scale investments in North Korea following its successive summit talks with the United States and South Korea to enhance the peace mood on the Korean Peninsula.

Article source:
Reopening of Kaesong Industrial Complex key to inter-Korean cooperation: official
Yonhap News
2018-07-13

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Two Koreas agree on railway improvements

Wednesday, June 27th, 2018

Benjamin Katzeff Silberstein

AP reports on talks between North and South Korea to improve North Korean railways, including a great overview of current railway systems in the country:

North Korea’s state media on Wednesday acknowledged inter-Korean discussions on “issues arising in reconnecting, updating and using the railways on the east and west coasts,” but did not describe that South Korea would be sending officials and experts to examine the country’s aging rail system.

The agreement Tuesday to start joint inspections of North Korea’s railways on July 24 was apparently as far as the rivals could go at the moment. The vows to upgrade the North’s railways and roads will remain purely aspirational until international sanctions against North Korea are lifted and the South is freed to take material steps.

The talks at the border village of Panmunjom were the latest to discuss ways to carry out peace commitments made by North Korean leader Kim Jong Un and South Korean President Moon Jae-in.

During their April 27 summit, when they issued a vague commitment to denuclearize the Korean Peninsula, Kim and Moon expressed a desire to modernize North Korea’s railways and roads and reconnect them with the South. The Koreas are to hold another meeting on Thursday to discuss roads.

South Korean officials say better transport would greatly improve North Korea’s economy by facilitating trade and tourism. It may also provide the South with cheaper ways to move goods in and out of China and Russia. However, some experts say updating North Korean trains, which creak slowly along rails that were first laid in the early 20th century, would require a massive effort that could take decades and tens of billions of dollars. It might be impossible to embark on such projects unless North Korea denuclearizes, which isn’t a sure thing.

THE WEST SIDE

In their summit, Kim and Moon called for “practical steps” toward the “connection and modernization” of railways and roads between South Korea’s capital, Seoul, and North Korea’s Sinuiju, a port town on its border with China, and also along the peninsula’s “eastern transportation corridor.”

During the meeting on April 27, Kim went against the grain of North Korean propaganda by describing the country’s transport conditions as poor and praising South Korea’s bullet train system, clearly communicating an eagerness to improve his country’s rail networks, according to comments provided by South Korea’s presidential office.

In Tuesday’s meeting, the Koreas agreed to start inspections of the North Korean portion of a railway that once connected Seoul and Sinuiju before moving on to railways in the eastern region.

Japan completed a 499-kilometer (310-mile) railway line connecting Seoul and Sinuiju in 1906, mainly to move soldiers and military supplies, before it annexed the peninsula in 1910. The Gyeongui line was separated in 1945 at the end of World War II, when the peninsula was liberated from Japanese colonial rule but also divided between a U.S.-controlled southern side and a Soviet-controlled north. The peninsula remains in a technical state of war after the 1950-53 Korean War ended in an armistice, not a peace treaty.

The Gyeongui line was temporarily reconnected during a previous era of rapprochement between the rivals in the 2000s. The Koreas in December 2007 began freight services between South Korea’s Munsan Station in Paju and North Korea’s Pongdong Station, which is near the border town of Kaesong. The South used the trains to move construction materials northbound, while clothing and shoes manufactured from a factory park jointly operated by the Koreas in Kaesong were sent southbound.

The line was cut again in November 2008 due to political tensions over North Korea’s nuclear program and the hard-line policies of a new conservative government in Seoul.

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THE EAST SIDE

Japan during its colonial rule completed a 193-kilometer (120-mile) rail line between North Korea’s Anbyon county and South Korea’s Yangyang along the peninsula’s eastern coast in 1937. The Koreas temporarily reconnected the cross-border part of the line between 2007 and 2008 to move South Korean tourists in and out of the North’s scenic Diamond Mountain resort. However, the project never advanced beyond a trial run before South Korea pulled out in June 2008 amid worsening ties.

South Korea has ambitions to significantly extend the eastern “Donghae” line so that it connects its southernmost port of Busan with North Korea’s northernmost industrial cities of Chongjin and Rajin. Seoul hopes the line will eventually link South Korea with Russia and the trans-Siberian railway. South Korea also hopes to eventually reopen a railway between Seoul and North Korea’s eastern coastal town of Wonsan which ran through the middle of the peninsula.

Article source:
Koreas agree to improve North’s railways, but work must wait
Kim Tong-Hyung
AP News
2018-06-27

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South Korean companies gearing up to rush north

Sunday, June 10th, 2018

By Benjamin Katzeff Silberstein

These days, it seems that scarcely no South Korean company isn’t looking north. Hopes are high that with a diplomatic opening – if this time is different, which we really don’t know – North Korea will be open for business. And aside from some Chinese companies and entities, no other have the know-how and language skills to make investments in North Korea profitable. Indeed, those that have happened have largely been in the realm of “adventure capital”, that is, high risks with the potential of high rewards. It seems that relatively few have reached the latter.

Many South Korean businesses will likely ask that the government underwrite potential investments, given the vast political risk. Moon’s government doesn’t seem completely adverse to this, despite the questions it raises about moral hazard and market fairness.

Looking at the types of investments that companies are talking about, it is hardly a given that they will – if they happen – have a positive, broad impact on the North Korean system and society. See below for the sorts of investments being talked about:

SM Group said it has set up a task force to check the country’s mineral resources, particularly in iron ore. The group said its ownership of South Korea’s sole operational iron ore mine effectively gives it an edge over others in terms of processing know-how and facilities it has on hand.

North Korea’s iron ore deposits are estimated at 50 billion tons worth some 213 trillion won (US$197.7 billion).

Besides resources, companies such as Keangnam Enterprises Co. and Dong Ah Construction Industrial have said they are moving to secure a foothold in the North’s building business once all sanctions are lifted.

Dong Ah said its past experience as a builder for the defunct Korean Peninsula Energy Development Organization that moved to build a light water reactor for Pyongyang could help it win future orders, especially in power infrastructure work areas.

Keangnam said that its participation in Seoul’s Official Development Assistance program for emerging economies will make it easier for it to engage in similar projects in the North if conditions permit.

SM Line Corp said it wants to ship North Korean resources using the country’s cheap labor and explore the opening of new shipping routes and related shore infrastructure.

“Work in the North will be a win-win development for all sides, and this is the reason why the company is looking into the matter,” a source at the shipping line said.

Besides medium-size companies, the large conglomerate Lotte said it has set up a team that can expand business ties not only with North Korea but also Russia and China.

Meanwhile, there has been growing interest by local companies who want to set up operations at Kaesong Industrial Complex in North Korea, which has been shuttered following the North’s nuclear and long-range missile provocations.

Dong-a Publishing said it wanted to take advantage of the low labor costs to set up business in Kaesong.

The company said due to the labor intensive work in the publishing field it makes sense to move its plant to the North.

Related to such moves, a business group representing South Korean firms that had operated factories in Kaesong said recently that upwards of 20 companies a day have called to make inquiries about opening new factories in the special economic zone.

Article source:
S. Korean mid-tier companies interested in biz opportunities in N. Korea
Yonhap News
2018-06-10

Much of what’s being talked about, in other words, is extraction of natural resources. Sure, this would be done with North Korean labor, but even though the domestic economy could get an upswing through these sorts of operations, North Korea wouldn’t necessarily reap the full potential benefits of its mineral assets, which could be sold for much higher prices if they were locally refined and processed. This is likely something that the North Korean leadership is very well-aware of, and Kim Jong-un talked about it in speeches in the 1990s. But given the need for hard currency, they may not see that they have much of a choice in the matter.

Other companies want to get in on the cheap labor. That’s all fine and good for the companies and the potential prospective North Korean employees, but factories of this sort can be set up pretty easily without sourcing raw materials locally, and with few connections with overall North Korean society.

In other words, if these investments come to see the light of day (again, a big “if”), it’s not a given that it’ll be in any way transformative for the North Korean economy. We have seen much of this before, and we know from Kaesong that the state is indeed both capable and willing to contain economic development to specific areas, keeping it separated and in check from broader North Korean society.

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