North Korean Economy Watch

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 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

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-08-31-1
8/31/2010

An organization representing several major South Korean religious organizations crossed the DMZ on August 27 to deliver over 300 tons (thirteen 25-ton trucks) of flour to the city of Kaesong, with plans to distribute the aid to North Korea’s children and poverty-stricken. This is the first overland delivery of aid since Seoul’s May 24 measures restricting exchanges in response to the Cheonan incident.

Nine members of the organization, representing Buddhism, Catholicism, and Protestantism, travelled to the North. The group intends to visit one or two nurseries, and distribute flour to Kaesong City as well as Jangpung, Keumchon, Daechon, Chongdan and Yondan districts. The delegation is also delivering six boxes of nutrition supplements for children in Kaesong’s nurseries. Before crossing over into North Korea, the group held a press conference in Paju City’s Imjin Park. At the conference, a representative stated that while the aid shipment was later than desired, the organization thanked the South Korean government for making the decision to allow the delivery while facing a difficult situation in the aftermath of the Cheonan incident.

The organization also stated, “Peninsular denuclearization is also important for bringing peace and security to the Korean Peninsula,” but it is necessary to make ensuring the lives of those in both North and South Korea a top priority, and the group “earnestly hopes that the [South Korean] governments’ active support of humanitarian assistance can save the lives of North Korean residents and help to realize inter-Korean reconciliation and peace.”

The organization also stressed that religious teachings emphasized the need to exert all efforts for the desolate and the starving. The group is devoted to helping resolve the North Korean plight caused by starvation and malnutrition, and through these efforts, bringing about peace on the Korean peninsula. The organization, representing those of Jewish, Catholic, Buddhist, Protestant, Korean Buddhist, and Chongdo religions, as well as the United Religions Initiative of Korea, continues to pursue renewed government assistance to North Korea.

The Korean Conference of Religion and Peace (KCRP) issued a statement on August 27 declaring that the South Korean government needed to send aid to the North not only in response to the critical situation caused by recent flooding, but in order to help resolve the chronic food shortages causing ongoing hardship for the people of North Korea. In highlighting the plight of North Koreans, the group emphasizes familial and national ties, stressing Korean unity in calling for government assistance for ‘brethren’ in the North. The group also calls for both Seoul and Pyongyang to “open [their] hearts and hold talks on peninsular peace and unification” rather than continue with the current confrontational policies.

According to KBS:

Families of South Koreans abducted by North Korea are seeking to file a complaint against North Korean leader Kim Jong-il with the South Korean prosecution for crimes against humanity.

The head of the organization of the abductees’ families said that his organization recently obtained a government document proving that North Korea abducted South Korean nationals.

He added that his organization will seek the indictment of the North Korean leader in South Korea. If that is impossible, the organization will sue the North Korean leader via the International Criminal Court.

Meanwhile, a South Korean civic organization, the Crime against Humanity Investigation Committee, sued the North Korean leader with the Hague-based International Criminal Court last month.

Established in 2002, the International Criminal Court is an independent international organization seeking to help end impunity for perpetrators of crimes against humanity. It has 111 member countries.

Read the full Story here:
Families of S.Korean Abductees to File Complaint against Kim
KBS
8/30/2010

According to Yonhap:

A joint delegation of five major religious organizations in South Korea traveled to North Korea Friday to deliver food aid, the second civilian visit to the communist state since Seoul imposed a travel ban in May.

The nine-member delegation of the Catholic, Protestant, Cheondo, Buddhist and Won-Buddhist orders drove to the North from this western border town of Paju, Gyeonggi Province, accompanied by about a dozen trucks carrying 300 tons of flour.

The 250 million won (US$209,170) worth of aid was the second inter-Korean assistance since Seoul imposed a North Korea travel ban in May in protest of the sinking of a South Korean warship two months earlier. North Korea denied involvement in the sinking that killed 46 sailors.

Seoul allowed the first civilian visit on Aug. 17, in which an aid organization delivered 400 million won worth of anti-malaria aid to North Korea.

“The denuclearization of the Korean Peninsula is important, but the lives of the people on the Korean Peninsula take priority over any other issue,” the group said in a joint statement at a ceremony attended by some 150 people, ahead of its departure. “We religious communities from the left and the right are taking a step toward opening the door for reconciliation and peace in the inter-Korean relations.”

During its one-day visit, the delegation will deliver the flour to Kaesong, just north of the inter-Korean border, which will be distributed to inhabitants in the border town and counties in North Hwanghae Province.

Read the full story below:
S. Korea’s pan-religious delegation travels to N. Korea with flour aid
Yonhap
8/27/2010

Institute for Far Eastern Studies (IFES)
NK Brief No 10-08-19-1
8/19/2010

Despite the ongoing inter-Korean tensions, and the stand-off over the Cheonan incident in particular, the first two quarters of 2010 saw an all-time record of 980 million USD-worth of inter-Korean exchange. However, with the South Korean government ceasing all inter-Korean trade outside of the Kaesong Industrial Complex in reaction to the investigation results finding North Korea responsible for the sinking of the South Korean naval corvette Cheonan, cross-border trade between the North and South has fallen and is expected to remain approximately 30 percent lower during the second half of the year.

According to South Korean customs officials, inter-Korean trade in the first half of the year was worth 983.23 million USD, with ROK imports worth 430.48 million USD and exports worth 552.75 million USD; a 122.27 million USD trade surplus. This is a 52.4 percent rise over last year’s first two quarters of trade, worth 645 million USD. In the first six months of 2009, South Korea exported 259.91 million USD (66%)-worth of product, and imported 385.1 million USD (44%) in goods. This year’s trade volume was nearly 100 million USD higher than the previous record, set in 2008, of 884.97 million USD. It was also around six times more than the 161.63 million USD recorded in 1999, when inter-Korean trade first became significant.

In 1999, North-South trade totaled 328.65 million USD. Despite rocky inter-Korean relations at the time, cross-border trade continued to grow, and with the expansion of the Kaesong Industrial Complex and other projects, first topped one billion USD in 2005, squeezing above the marker at 1.08872 billion USD. This growth continued in the latter half of the decade, hitting nearly 1.38 billion USD in 2006, 1.795 billion USD in 2007, and 1.82 billion USD in 2008. Repercussions from the North’s second nuclear test in 2009 caused trade to fall off to 1.666 billion USD in 2009.

On May 24, the South Korean government announced that all inter-Korean trade outside of the Kaesong Industrial Complex would be halted due to North Korea’s sinking of the Cheonan. If this trade ban continues, cross-border trade during the second half of the year is expected to be down 30 percent. The inter-Korean project in Kaesong makes up 70 percent of inter-Korean trade, so that other individual projects add up to only about one third. It is the suspension of these projects that is lowering North-South exchanges by 30 percent.

Actually, there was a decline in trade during the first six months of the year. In June, exports totaled 56.88 million USD, while imports were worth 66.18 million USD (total: 123.06 USD). This is 21 percent (33.31 million USD) less than in May. Exports were down 4 percent and imports dropped by 32 percent. Compared to trade prior to the ROK government’s measures, the trade of electric and electronic goods, transportation, and other capital goods actually raised from 19.31 million USD to 21.21 million USD, while mined goods and other consumables dropped from 76.81 million USD to 36.86 million USD.

UPDATE: According to Yonhap:

A group of five South Koreans on Tuesday crossed the heavily armed border into North Korea, an official here said, delivering 400 million won (US$340,000) worth of anti-malaria aid despite tension between the divided states.

The crossing marked the first South Korean civilian visit to the communist state since Seoul banned trips to North Korea three months ago in protest over the sinking of a South Korean warship in March near their Yellow Sea border.

A doctor and four others, including two drivers, traveled to the North Korean border city of Kaesong on Tuesday morning, Unification Ministry spokesman Chun Hae-sung told reporters. The doctor was needed to explain to North Korean authorities how to use the aid kits, Chun said earlier this week.

ORIGINAL POST: According to Yonhap:

South Korea will allow a doctor to travel to North Korea next week in the first approval of a civilian visit on a humanitarian mission to the communist state since Seoul banned exchanges with Pyongyang in May over the sinking of a South Korean warship, an official said Friday.

The doctor, accompanied by two drivers, will visit the North Korean border town of Kaesong next Tuesday, Unification Ministry spokesman Chun Hae-sung told reporters in a briefing. The group is transporting 400 million won (US$336,100) worth of anti-malaria aid from a civilian relief group, Chun said.

“The doctor’s visit has been granted because he needs to explain to the North how to use the aid kits,” he said, adding any spread of malaria in the North has the potential to affect South Korean residents south of the border.

Read the full story here:
S. Korea to allow rare civilian visit to N. Korea amid tension
Yonhap
Sam Kim
8/13/2010

According to Yonhap:

Inter-Korean trade soared to a record high in the first half of this year despite escalating tensions caused by the sinking of a South Korean naval ship in late March, a government report said Thursday.

Two-way trade jumped 52.4 percent on-year to US$983.2 million in the January-June period, according to report by the Korea Customs Service (KCS). It also represents a six-fold increase from the $161.6 million tallied in the same period in 1999.

Outbound shipments spiked 66 percent on-year to $430.5 million, with imports from the North surging 44 percent to $552.7 million for a deficit of slightly more than $122.2 million.

The report, however, said that with most cross-border exchanges being cut off by Seoul in retaliation for the sinking of the South Korean warship Cheonan, inter-Korean trade is expected to drop about 30 percent on-year in the second half.

A Seoul-led multinational investigation team found the North responsible for the sinking of the 1,200-ton warship that resulted in the deaths of 46 sailors. The North countered that it was in no way in involved.

Only the Kaesong Complex, located just north of the DMZ that separates the two countries, has not been affected by the fallout from the ship sinking. The complex accounts for roughly 70 percent of all inter-Korean trade and is home to 120 South Korean companies that make products with the help of North Korean laborers.

The customs office, meanwhile, said trade between the two Koreas rose from $328.6 million in 1999 to $1.08 billion in 2005 and peaked at $1.82 billion in 2008. Last year, the trade volume fell to $1.66 billion after Pyongyang detonated its second nuclear device.

According to the Choson Ilbo:

In spite of strained inter-Korean relations following the March sinking of the South Korean Navy corvette Cheonan, trade volume between the two Koreas hit a record high in the first half of this year.

According to data from the Korea Customs Service, the total value of exchanged goods reached over US$983 million in the January to June period, up more than 52 percent from $645 million a year ago.

The latest figure tops the previous record of $885 million in 2008, and is six times higher than the $162 million recorded in 1999.

The South’s cross-border exports jumped 66 percent to $435 million, and inbound shipments 44 percent to $553 million.

Amid the ever-changing atmosphere on the Korean Peninsula, inter-governmental efforts to spur North-South trade and the expansion of the joint Kaesong Industrial Complex have fueled a gradual yet continuous growth in trade activity.

The annual trade volume, which amounted to nearly $329 million in 1999, peaked at over $1.8 billion in 2008 before dropping slightly to $1.67 billion in the wake of North Korea’s second nuclear test in 2009.

Experts, however, forecast the trade volume to drop by as much as 30 percent on-year in the second half of this year, reflecting Seoul’s suspension of all trade with Pyongyang, except for operations at the Kaesong Industrial Complex, in response to the sinking of the Cheonan.

Much attention is focused on the future of business at the industrial park, which produces 70 percent of the goods traded between the two sides.

Read the full stories here:
Inter-Korean trade hits record high in H1: report
Yonhap
8/12/2010

Inter-Korean Trade Reaches Record High
Choson Ilbo
8/13/2010

According to the Joong Ang Daily:

The northern Gyeonggi area, sharing the border with North Korea, is vulnerable to malaria because the mosquitoes with malaria parasites come from the North. Without vector controls in North Korea, our quarantine efforts are limited.

The spread of malaria had been expected because South Korea has stopped all North-bound shipments of aid, including pesticides and malaria drugs, as part of the sanctions against North Korea following its attack against the naval vessel Cheonan in March.

Health authorities warned in April about a possible breakout of malaria along the border regions. Although they saw the disease coming, nothing could be done about it.

On June 24, the Unification Ministry belatedly permitted a local civilian group to send quarantine aid to North Korea, but shipments have not taken place because of procedural difficulties. Even if the aid is delivered, it will be too late to contain the disease. Any action should have taken place before May.

If the Unification Ministry had seriously considered preventing the spread of malaria from the North, it should not have stopped at approving a delivery of local aid, but instead should have sought support from international groups. From 2001 to last year, the government had been shipping anti-malaria supplies to North Korea via the World Health Organization. This aid protects our people as much as it does North Koreans.

Malaria is not the only adverse result from severed ties with North Korea. The government announced on May 24 that it would cease all inter-Korean trade.

The measure, though understandable, dealt a heavy blow to 800 small- and mid-sized companies whose business primarily involves trade with North Korea. It was motivated by revenge and generated the same adverse fallout as that suffered by the people who have been infected by malaria from the North.

The tardy response to the problems created also proved of little help. The government on July 26 announced it will offer special aid loans to the Kaesong firms to save them from possible bankruptcy. The loans, though cheaper than regular corporate loans, will nonetheless have to be repaid and it may have come too late.

The May announcement of sanctions against North Korea should have included help to our companies to compensate for the damage from the trade sanctions.

Read the full story here:
Hard-line policies affect us, too
Joong Ang Daily
http://joongangdaily.joins.com/article/view.asp?aid=2924376
Cho Dong-ho
8/10/2010

UPDATE 3 (9/6/2010): The DPRK has announced the release of the fishing crew.  According to Reuters:

North Korea said on Monday it was releasing the seven-man crew of a South Korean fishing boat, including three Chinese, after they illegally entered its waters last month.

State news agency KCNA said the crew would be sent back South Korea “taking into consideration the fact that they admitted the seriousness of their act and gave assurances that they would never repeat such an act”.

Tensions have mounted on the peninsula this year after the sinking of a South Korean warship — Seoul says it was sunk by a North Korean torpedo — and a series of recent military drills by the United States and South Korea.

UPDATE 2 (8/18/2010): The DPRK has acknowledged that it has the ship and crew.  According to Bloomberg:

North Korea confirmed it seized a South Korean fishing boat last week off the communist country’s east coast for violation of the maritime border.

North Korea is investigating the four South Korean and three Chinese crew members, who had “confessed that they intruded into the economic waters,” the state-run Korean Central News Agency reported. The North Korean navy captured the boat on Aug. 8 at around 10:15 a.m. local time, the report said.

South Korea has sent a message to North Korea, urging a swift return of the 41-ton Daeseung and its crew. The incident came amid heightened tensions between the two countries after the South accused the North of torpedoing one of its warships in March, killing 46 sailors.

North Korea fired a barrage of artillery shells into the water off its west coast on Aug. 9 after repeated threats of “retaliation” against South Korea’s joint naval drills with the U.S. The U.S. and the South held anti-submarine exercises off the Asian country’s east coast last month and plan to hold more in the coming months.

UPDATE  1  (8/11/2010): According to Yonhap:

South Korea said Wednesday it sent North Korea a message urging the prompt release of the crew of a South Korean fishing boat the communist state seized three days ago amid high military tensions.

North Korea accepted the message delivered through a western military hotline between the two countries at 10 a.m., Unification Ministry spokeswoman Lee Jong-joo said in a briefing.

The message, addressed to the North’s top Red Cross official, contains a call by his South Korean counterpart to free the seven crew members of the Daeseung “promptly in line with international law and customs and on humanitarian grounds,” Lee said.

South Korea is investigating whether the 41-ton boat, which had left for a joint fishing area off the east coast of the Korean Peninsula on Aug. 1, trespassed into the North’s exclusive economic zone. Pyongyang has yet to offer any word on the state of the crew that included four South Koreans and three Chinese.

“We have also asked the North to explain in detail how the fishing boat was seized,” Lee said, adding the Red Cross channel is often used in inter-Korean issues involving civilian boats.

The seizure came amid high tensions between the two Koreas in the wake of the deadly March sinking of a South Korean warship near their western sea border. On Monday, North Korea fired more than 100 rounds of artillery along the Yellow Sea border near the area where South Korea had just ended five-day-long naval drills.

A government source said South Korea and China have been discussing the issue.

“An official at the South Korean embassy in China met with a Chinese government official a few times recently” to discuss the seizure and share information, the source said on condition of anonymity. “The seized crew include Chinese … If negotiations for their release begin in the future, we plan to cooperate with China where necessary.”

In July of last year, a South Korean fishing boat, the Yeonan, accidentally crossed into North Korea’s waters and was towed to a nearby port. The boat was released about a month later.

And according to Reuters:

Chinese diplomats in North Korea were trying to check the reports, said China’s official Xinhua news agency.

“If the report is confirmed, the DPRK should treat the Chinese crew members well with humanitarianism, guarantee their rights and interests, and inform the Chinese side of their conditions, the (Chinese) officials said,” according to Xinhua.

ORIGINAL POST: Surprisingly not anywhere near the NLL…

According to the New York Times:

North Korea  seized a South Korean fishing boat in waters near their eastern sea border, the South Korean Coast Guard said Sunday, straining already high tensions between the two Koreas.

The 41-ton squidding boat was believed to have been detained after entering the North’s exclusive economic zone, where foreign fishing boats are banned, the coast guard said in a statement.

Four South Koreans and three Chinese crew members were on board. South Korea’s national news agency, Yonhap, quoting an unnamed coast guard official, said that the ship was being towed to Songjin, a port on the eastern coast of North Korea, for interrogation of the crew.

“Our government hopes for the safe return of our ship and crew according to international laws,” the coast guard’s statement said.

…

The South Korean squid ship left Pohang, a port on the east coast of South Korea, on Aug. 1 and was scheduled to return to port on Sept. 10. It made its last daily radio report to the South Korean Coast Guard on Saturday evening.

UPDATE via the Washington Post:

According to one report in the South Korean media, the boat was operating in a maritime area shared by North Korea and Russia, about 160 miles off the North Korean coast.

Additional thoughts
1. Well it is probably a good thing there was a Chinese crew aboard the ship as this will make it difficult for the DPRK to claim the fishing vessel was attempting  espionage.  If Chinese fishermen can protect South Korean ships from DPRK espionage accusations we might be able to predict that an escalation in tensions between North and South Korea will result in increased employment of Chinese fishermen in the ROK….Chinese fishermen index?

2. Songjin is known in North Korea as Kimchaek.  See a satellite image of it here.