North Korean Economy Watch

According to the AFP:

North Korean refugees struggling to adapt to a bewildering new life in South Korea are increasingly getting sucked into insurance frauds as their first taste of capitalism.

Insurance scams have for years been common in the South, and fraudsters in recent years have targeted the refugees as sometimes unwitting accomplices.

“Sometimes defectors get involved because they don’t know how the insurance system works. They just have no idea what they are doing is wrong,” an official at the Hanawon resettlement centre told AFP.

All North Koreans who flee their impoverished communist homeland for the South must spend their first 12 weeks at the centre, which lies about 80 kilometres (50 miles) south of Seoul.

It offers job education, information on South Korea and basic survival skills — such as buying a subway ticket, opening a bank account and using a credit card.

From May it has also offered a new two-hour course on insurance fraud, with investigators from the Financial Supervisory Service (FSS) warning about the possible consequences.

“We expect that through education, defectors will think twice before making a decision to become an accessory to fraud,” the official, who supervises the course, told AFP on condition of anonymity.

Newly arrived refugees get government financial help but often must repay big debts to the brokers who arranged their escape via China.

This makes them susceptible to taking part in frauds, which focus on bogus medical insurance claims.

After the refugee has bought a private policy or enrols in a state scheme, or both, insurance company workers typically conspire with hospital administrative staff to issue fake certificates of treatment.

When a refugee has been reimbursed by the insurance company, and sometimes by the government, he or she hands over a portion to the accomplices.

“I received about three million won (2,700 dollars) and used the money to pay debts when I came to South Korea,” one woman in her late thirties told the JoongAng Daily newspaper.

Police in Gyeonggi province surrounding Seoul, a known centre for the scams, said that over the past five years ending March refugees received a total of 3.1 billion won from 31 insurance companies in bogus claims.

“It’s prevalent and we are constantly investigating to catch them,” said a provincial police investigator.

The watchdog FSS says refugees typically send 30 percent of their takings from the frauds to brokers in China and the rest to family still in the North.

In one case in 2008, police said they had charged 41 refugees accused of receiving a total of 420 million won through bogus medical claims.

“Insurance fraud has become almost the common thing to do among defectors after they come to South Korea,” Chun Ki-Won, a priest who helps the refugees, told AFP.

“The primary reason why insurance fraud is rapidly increasing is because it’s becoming harder for defectors to adapt to a new environment.”

Refugees find it harder than their southern-born counterparts to find well-paid jobs and some complain of discrimination.

In a survey conducted by legislator Kim Young-Woo, 66 percent of refugees described their living conditions as difficult.

Some 56 percent said their monthly income is below 500,000 won (450 dollars) — officially deemed to be the lowest sum on which families can manage.

About 17,000 North Korean defectors have gone through the Hanawon centre since it opened 11 years ago, and it is currently holding about 500 people.

Read the full story here:
Insurance fraudsters target North Korean refugees
AFP
10/17/2010

Institute for Far East Studies (IFES)
NK Brief No. 10-10-4-1
10/4/2010

Trade between the two Koreas in the first half of 2010 totaled 980 million USD, 51.3 percent more than the 650 million dollars-worth of trade last year. North Korea’s trade with China was also up, by 16.4 percent, to 1.28 billion USD. Kim Jong Il has made two trips to China and the North has taken other steps to boost cross-border trade with the Chinese.

According to a recent report comparing inter-Korean trade to that between North Korea and China, North-South trade in 2007 equaled 91 percent of Pyongyang’s trade with Beijing, but as inter-Korean relations chilled, that number fell to 65 percent in 2008. This year, that number climbed back up to 77 percent, largely because the Kaesong Industrial Complex, which has avoided political entanglement, has grown 96 percent since last year. Textiles and home electronics top the list of goods in inter-Korean trade, while minerals are the top item traded across the DPRK-PRC border.

North Korea’s import of South Korean goods increased by 63 percent to 430 million USD, while the North’s Chinese imports rose a mere 25 percent, but still totaled 930 million USD. 36 percent of South Korean exports to the North are raw materials for North Korean textile production, while 120 million USD-worth of electronics make up the second-largest export industry. Making up the largest sector, 27 percent (250 million USD) of North Korea’s imports from China are made up of minerals and crude oil, while textiles make up 12 percent and base metal resources make up 8 percent. South Korean imports have also grown 43 percent, to 550 million USD, since last year. In comparison, Chinese imports from North Korea shrunk one percent to 340 million USD. Clothing and other ready-for-market textiles made up 44 percent of North Korean exports to the South, while electrical and electronic goods made up 17 percent. Coal, iron, and other key resources made up 51 percent of DPRK exports to China, while zinc and other base metals make up approximately 20 percent.

According to the Choson Ilbo:

A university in North Korea set up with South Korean funding has opened a research center devoted to studying former North Korean leader Kim Il-sung’s “Juche” or self-sufficiency ideology.

Pyongyang University of Science and Technology, which was established with South Korean funding, opened the research center after erecting a monument honoring Kim Il-sung, Grand National Party lawmaker Yoon Sang-hyun of the parliamentary Foreign Affairs, Trade and Unification Committee said Tuesday.

He showed a photograph as proof and added, “We must immediately halt further aid for the university, which has turned into a school that propagates the personality cult surrounding the Kim dynasty.”

The university was established with donations gathered by South Korea’s Northeast Asia Foundation for Education and Culture in order to help North Korea to train experts in information and technology, agriculture and biosciences and international trade. North Korea provided the land and labor while South Korea handled the hiring of faculty and management.

The university was scheduled to open in April this year but has apparently yet to begin operations. “North Korea rejected our offer to open an MBA school while demanding that the Juche ideology be included as a prerequisite for graduation,” Yoon said. He added Seoul must make sure to transfer no technology through the university, “since North Korea may use it to develop weapons of mass destruction.”

Satellite imagery of the Pyongyang University of Science and Technology (PUST) can be seen here.

Previous PUST posts can be seen here.

Read the full story here:
S.Korea-Funded University in Pyongyang ‘to Preach Stalinist Ideology’
Choson Ilbo
10/6/2010

According to the Choson Ilbo:

The Defense Ministry is preparing to enlarge the range of propaganda broadcasts and float radios to North Korea, which is refusing to admit responsibility for the sinking of the South Korean Navy corvette Cheonan in March.

During a National Assembly audit of the Defense Ministry and the Joint Chiefs of Staff on Tuesday, Defense Minister Kim Tae-young said the ministry is preparing to switch the format of propaganda broadcasts from FM to AM and float balloons carrying AM radios to the North so that North Koreans can listen to the broadcasts.

The South has in the past sent many radios to the North, Kim said. He added the balloons will also carry propaganda leaflets.

“We’ve already put psychological pressure on the North merely by installing loudspeakers for propaganda broadcasts at 11 locations” along the military demarcation line, the minister claimed. But he added that the government will not start the broadcasts and send the leaflets, which are ready, until the North launches a fresh provocation and there is therefore an urgent need to put pressure on the North.

The New York Times offers some good supplemental information:

After six years of quiet along the border, South Korea has reinstalled 11 sets of psychological warfare loudspeakers, Defense Minister Kim Tae-young said Tuesday in Seoul. He said his ministry had switched its transmitters to the easier-to-receive AM band and was ready to send thousands of AM radios and propaganda leaflets across the border using helium balloons.

A continuing balloon and leaflet campaign by South Korean civilians has angered the North Korean government, which suggests that it has been effective. The leaflets ridicule the North Korean leader, Kim Jong-il, and call for people in the North to rise up. North Korea insisted that the leaflet issue be put on the agenda of recent bilateral military talks.

…

North and South Korea agreed in 2000 to dismantle the loudspeaker systems along the border and to stop radio transmissions. There have been no loudspeaker blasts since 2004, although South Korea made a show of putting some speakers in place in May, after the sinking of a South Korean naval vessel, the Cheonan, in March. Forty-six sailors were killed. The North has denied any involvement.

Read the full story here
Gov’t in Drive to Send Radios to N.Korea
Choson Ilbo
10/7/2010

According to the Donga Ilbo:

More than half of North Korean defectors living in South Korea say they earn under 500,000 won (440 U.S. dollars) per month and suffer hiring discrimination, the results of a survey released Thursday said.

A combined 222 defectors nationwide were surveyed Sept. 15-30 and the study’s results were given to ruling Grand National Party lawmaker Kim Young-woo.

Of the respondents, 76 percent were women in their 20s to 40s. The gender and age ratios were similar to those of the estimated 20,000 defectors in the country, including those expected to enter South Korea by year’s end.

The study said 118 (56 percent) of 211 respondents said they earn under 500,000 won a month, or less than the minimum cost of living (504,344 won) per capita set by the Health and Welfare Ministry. Those who earned more than 500,000 won but under one million won (880 dollars) accounted for 21 percent (44), between one million and 1.5 million won (1,320 dollars) 16 percent (34), and between 1.5 million and two million won (1,760 dollars) five percent (10).

On discrimination in hiring, 93 of 216 respondents (43 percent) said they felt “slight” discrimination and 41 (20 percent) “strong” discrimination. Among 213 respondents, 115 (54 percent) said they earn less than a South Korean for the same work, and 58 (27 percent) out of 206 respondents said they felt ostracized due to their identity.

On their living conditions, 105 (48 percent) of 219 respondents said they are “poor” and 39 (18 percent) “very poor,” while 64 (29 percent) said they lead “moderate” lives, five (two percent) “affluent,” and six (three percent) “very affluent.”

A 40-something North Korean female defector urged South Koreans to show consideration for defectors on the questionnaire.

“We are a family of five. My husband is in bed due to hip surgery. Those unable to work due to illness have a very hard time making a living. I do my best to earn a good living but realize that this is impossible for those who have no power. We are heartened by your words of encouragement. We’d be very happy and grateful if you understand our difficulties and take care of us,” she said.

Read the full story here:
NK Defectors Complain of `Cold Lifestyle` in S. Korea 
Donga Ilbo
10/1/2010

According to Arirang News:

South Korea’s Unification Ministry on Wednesday finally endorsed the Inter-Korean Cooperation Fund worth 8 billion won, or roughly 7 million US dollars in an effort to help North Korea recover from the aftermath of summer floods.

The total cost of aid to be sent is about 12.2 million dollars with about 7 million donated by the Council for the Promotion of Inter-Korean Exchange and Cooperation, chaired by Unification Minister Hyun In-taek and the rest coming from Seoul’s agriculture ministry.

The money will buy 5-thousand tons of rice to be shipped on October 25th from Gunsan Port to the North Korean city of Sinuiju.

Other aid includes 10-thousand tons of cement, three million cases of cup noodles and medicine.

Read the full story here:
S. Korea Endorses US$7 Mil. Inter-Korean Cooperation Fund
Arirang News
9/30/2010

According to Yonhap:

Trade between South and North Korea surged in the first half of the year despite high tensions over the communist nation’s alleged sinking of a South Korean warship in March, a trade organization said Wednesday.

South Korea’s exports to the North soared 63 percent on-year to US$430 million in the January-June period with North Korea’s exports to the South jumping 43 percent to $550 million, according to the Korea International Trade Association (KITA).

Read the full story here:
Inter-Korean trade jumps in H1 despite soured relations
Yonhap
9/29/2010

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-09-20-1
9-20-2010

The South Korean Ministry of Unification announced on September 14 that the number of ROK workers allowed in the Kaesong Industrial Complex, previously limited to fewer than 600, would be increased by two to three hundred. In response to the sinking of the ROKS Cheonan, the South Korean government limited inter-Korean economic cooperation through the May 24 Measure, sharply cutting the number of South Korean workers in the joint industrial complex from around 1,000 down to 500. However, after companies in the complex voiced complaints over production losses caused by the measure, the government slightly raised the number of workers allowed, to 600, in mid-July. With this latest decision, the number will return to almost as many as were working prior to the May 24 Measure. This is the first sanction among those passed on May 24 to be practically rescinded.

A spokesperson for the Ministry of Unification stated, “Companies in the KIC have been complaining about growing difficulties in maintaining quality and of worker fatigue due to the reduction of employees [allowed in the complex],” and announced that the ministry had decided to increase the number of workers since it sees no physical threat to them. This announcement came as inter-Korean relations, which took a sharp turn for the worse after the sinking of the ROKS Cheonan, appear to be improving, with North Korea returning South Korean fishermen seized last month, the ROK Red Cross decision on September 13 to send disaster relief in response to flooding in the North, and working-level discussions on a reunion for separated families being held. However, the spokesperson also stated that although the number of workers allowed to travel to North Korea was being increased, no new or additional investments were being allowed in the KIC, as originally dictated by the May 24 Measure.

Even before the announcement to increase the number of workers in the KIC, the South Korean government had shown flexibility when it came to the May 24 Measure; contracts made before the measure were honored, and North Korean manufactured and agricultural goods have continued to be imported under agreements reached before the sanctions. The government was flexible on humanitarian aid, as well, continuing to provide assistance to the most destitute in North Korea despite the decision to suspend aid on principle. Medical aid, particularly to prevent the spread of Malaria, has also continued. Recently, the South Korean government decided to allow the ROK Red Cross to send 5,000 tons of rice and 10,000 tons of cement, worth approximately 100 million won, to North Korea in response to massive flooding. This is the first time since the Lee Myung-bak administration came to power that any rice aid has been sent to the North. It is very likely that it will be sent as private-sector aid.

Seoul continues to ban visits to North Korea, but private-sector organizations have been allowed to travel to the Kaesong region. Despite the May 24 Measure, exceptions have been made for South Koreans involved with economic cooperation in the KIC and the Mount Keumgang areas. Among the sanctions passed in May, the ban on North Korean ships operating in South Korean waters and the ban on new investment in the North are still being enforced, but the suspension of inter-Korean exchanges, travel to the North, and provision of humanitarian aid have all been eased.

Among the Ministry of National Defense measures, the only psychological warfare tactic employed has been through radio broadcasts, while the distribution of leaflets and the broadcasting over loudspeakers were canceled after North Korean protests. Joint U.S.-ROK anti-submarine warfare exercises in the West Sea were postponed, while the U.S. put on a show of force with the deployment of an aircraft carrier to the East Sea in late July. Maritime interdiction drills led by the ROK military are planned for mid-October. The South Korean government insists that the May 24 Measure continues to stand unchanged, yet the enforcement and execution of the details is less than uniform.

The government’s position is that the restriction on workers in the KIC was not a sanction aimed at North Korea, but rather, a measure to protect South Korean workers; therefore, easing this restriction cannot be seen as a lifting of the May 24 Measure. Ultimately, it appears that a slight improvement in inter-Korean relations has led to a small amount of flexibility in implementing the May 24 Measure, but that the government will continue to enforce the measure until North Korea takes responsibility for sinking the ROKS Cheonan.

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