North Korean Economy Watch

any letters I missed in that title?

From the Korea Times:

WFP Asks South Korea to Contribute Food to North
By Christopher Carpenter

A representative of the United Nations World Food Program said on Friday that South Korea was considered a potential donor in the new North Korean food aid program.
At a press conference in Seoul, Tony Banbury, the WFP’s regional director for Asia, said he met with officials Friday at the South Korean Ministry of Unification and the Ministry of Foreign Affairs and Trade about contributing to the program.

“Our discussions were very positive,’’ Banbury said. “They are ongoing and I think I’ll leave it at that.’’

Bae Young-han, a spokesman for the Ministry of Foreign Affairs and Trade said that while he could not confirm the meeting with Banbury, South Korea was discussing participating in the WFP effort.

“In the past, we contributed through the WFP channel,’’ Bae said.

Banbury came to Seoul on the heels of signing a letter of understanding with Pyongyang Wednesday to resume aid to the North. It was discontinued in December 2005 when North Korea asked that food aid be replaced with developmental aid.

Banbury said assistance will not be on the scale it was when they left North Korea last year, but that the assistance being provided was better than discontinuing the program completely. Around 1.9 million people will benefit under the new agreement, down from the 6.5 million the WFP was feeding when it left in December.

“The alternative to this was closing down the operation entirely and walking away,’’ he said.

The new program will provide three types of assistance. Roughly half of the 150,000 tons of food that will go to the North over the next two years will be designated for pregnant and nursing mothers, and for babies that are younger than six months of age.

Primary aged school children will receive daily packages of enriched biscuits that provide 75 percent of their daily vitamin and mineral requirements. Finally, communities involved in projects that will increase their ability to produce food will be rewarded with food aid.

“As they do the work, we will pay them in food,’’ Banbury said.

The new program, which Banbury said the North considers a transitional program that will lead to development aid, allows the 10 WFP staff who will be in North Korea to monitor the food distribution system.

The staff will have access to the institutions where food is being distributed, to the community development projects, to areas of the country that may need further assistance and to the logistical operation that brings food into the country and stores it.

Banbury said the WFP would strictly enforce its monitoring policy of “no access-no food.’’

While Banbury said North Korean officials never admitted they needed emergency food assistance, the WFP offered to increase the scope of the program if it were wanted.

“That’s a conversation we might continue in the future,’’ he said.

From the Korea Herald:

South and North Korea resume talks today to discuss the opening of an inter-Korean railway link ahead of former President Kim Dae-jung’s visit to the North in June, an official at the Unification Ministry said yesterday.

In the two-day talks, the schedule for train test-operations and the inauguration ceremony of the cross-border railroad will top the agenda, an official said.

Last month the two Koreas failed to reach an agreement on the issue as the North demanded South Korea provide additional material and equipment to complete the construction of the foundation for its rail station.

Earlier this year, the ministry notified Pyongyang of Kim’s wish to revisit the communist state to meet North Korean leader Kim Jong-il in June. The former president wishes to travel via the reconnected inter-Korean rail link, making the inaugural train journey from Seoul to Pyongyang.

The two Koreas will hold further inter-Korean working-level talks next week from May 16 to work out the details of Kim’s second visit to the North. South Korea hopes a test-run of cross-border trains can be conducted before Kim’s visit to the reclusive country next month.

The two Koreas have almost completed construction work on reconnecting the link that has been closed for half a century. The reconnection of two railway lines that cross the 248-kilometer-long Demilitarized Zone is one of the achievements of the landmark summit in 2000 between then South Korean President Kim Dae-jung and North Korean leader Kim Jong-il.

The 27.3-kilometer Gyeongui railway connects the two border cities of Munsan in the South and Gaeseong in the North, while the 25.5-kilometer Donghae railway crosses the border at the peninsula’s eastern coast.

Yonhap
5/11/2006

The head of South Korea’s National Red Cross is to visit North Korean capital Pyongyang later this month to discuss enhancing medical cooperation between the divided Koreas, Red Cross officials said Thursday.

Red Cross President Han Wan-sang is to be accompanied by 40 officials including hospital heads and 13 officials from the Korean Hospital Association, on his five-day trip to the communist state from May 26, the officials said.

“President Han is scheduled to meet with officials from the North Korean Red Cross, including its Chairman Chang Jae-on, to hold negotiations on ways to develop and increase cooperation and exchanges between South and North Korea,” the Red Cross said in a statement.

Accompanied by heads and officials from other humanitarian organizations and 12 pharmaceutical companies, the Red Cross chief will deliver over 3.7 billion won (US$3.9 million) worth of medical supplies and equipment to the impoverished North, the statement said.

The 41-member delegation will fly directly to the North Korean capital, according to the Red Cross officials.

Red Cross officials from the two Koreas occasionally hold talks to resolve humanitarian issues between the divided countries, such as the tens of thousands of people who remain separated from their family members since the end of the 1950-53 Korean War.

The sides are scheduled to meet to arrange upcoming rounds of reunions between the separated families in June and August.

The South Korean Red Cross provides large amounts of fertilizer and food aid to the North in addition to its annual medical and technical support for the impoverished country, which has depended on outside handouts to feed a large number of its people since the mid 1990s.

From the Associated Press and Yonhap:

North Korea’s trade volume with foreign countries, excluding South Korea, rose marginally last year to reach its highest figure since 1991.  Trade is up 5% to $3 billion. The figure doesn’t include inter-Korean trade, which is considered “exchanges between the same ethnic group,” KOTRA said.

The [southern] Bank of Korea claims the DPRK’s economy has grown for six straight years. Modest economic reforms since 2002 have encouraged some private enterprise, allowing the limited emergence of an entrepreneurial class with money to spend on imported goods.

North Korea recorded a trade deficit of $1 billion last year, up 23%. Imports increased 9.1 percent to $2 billion, but exports fell 2.1 percent to $998 million, the agency said.

The trade agency attributed the drop in exports to plummeting overseas shipments of fisheries goods, one of the North’s key exports, and a 20% annual decrease in shipments to Japan.

The North’s imports grew on rising inbound shipments of energy-related natural resources as well as food from China. The neighboring nation’s increasing investments in the North also triggered a rise in machinery imports into the country, the agency said.

The rankings of the DPRKs trading partners remains unchanged: 1. China, 2. Thailand, 3. Japan and 4. Russia

CHINA:  Trade with China is up 14% from 2004 at $1.58 billion, 52.6% of North Korea’s total exports and imports last year.  Two-thirds of that trade was made up of North Korean imports, which grew 35.2% to $1.08 billion, much of it food and energy. 

“North Korea has to depend on China for most of its food and energy resources,” KOTRA said. “China has also been rapidly increasing its investment in North Korea in recent years, which leads to an additional boost to the amount of trade between the two countries.”

JAPAN:  Imports and exports between North Korea and Japan fell 23% to $194 million in 2005–the fourth straight year of decline since Pyongyang acknowledged abducting Japanese citizens in the 1970s and 1980s.

South Korea: Trade between the two Koreas reached an all-time high of $1.05 billion in 2005, boosted by commercial activity at a joint industrial complex in North Korea, KOTRA said. Including trade with South Korea, the North’s trade volume stood at $4.06 billion last year, with trade between the two Koreas accounting for 26% of the total, it said.

From Hankyoreh:
Why Is Danchon in North Korea Important?
South Korea Proposes Joint Developments with North Korea

South Korea suggested to the North a plan to designate Dancheon, South Hamgyeong Province, as a “special joint resource development district” in the 18th South-North ministerial talks held at Pyeongyang at the end of April. According to a statement, the South and North agreed to “consider a program to jointly develop resources,” but it is obvious that Dancheon is a candidate to become the third joint special economic zone, after the tourist district of Mt. Kumgang and the Kaesong Industrial zone.

In the early stages of the 1994 Agreed Framework regarding the curtailing North Korea’s nuclear program in exchange for investment, North Korea proposed to the U.S. that it invest in two mines and a port in the Dancheon area. Peter Hayes, executive director of the U.S.-based public policy think tank Nautilus Institute, expressed regret that the U.S. missed an opportunity to make the North dismantle its nuclear weapons program, in an article published May 2 on the institute’s web site. Is it possible for Dancheon to become another symbol of South-North cooperation? Since the North has suggested the development of the zone to the U.S. in the past, the North will surely accept the South’s interest in the project.

Why Dancheon?

If the two Koreas designate a special district for joint resource development, government officials and experts agree that Dancheon is an ideal place. In short, the area has infinite potential. Dancheon has deposits of 25 kinds of minerals, including zinc, magnesite, lead, gold, silver and asbestos.

There also are mining industry-related factories. The Dancheon refinery, which came into operation in 1985, produces 100,000 tons of zinc in a year, and the Ryongryang plant processes the raw slag that can be supplied to brick factories.

Many experts say that Dancheon has a better distribution infrastructure than other mining areas. Dancheon has its own port, and Cheongjin and Sinpo ports are just 40km and 80km away from Dancheon, respectively.

Benefits for both Koreas

The South imports all of the zinc and magnesite it uses. If the special economic zone program succeeds, the Dancheon area will provide the South with a steady flow of needed minerals.

Politically, the success of the project could bring about a certain degree of ‘restraint effect’ against foreign capital in the North, including putting a check on China, which has been of late coveting the mineral resource potential of the North.

If the North increases the operating status of its mines, currently between 20 and 30 percent of total employment capacity, with the help of capital and technology from the South, the project will both generate more jobs and help the North earn foreign currency. With this kind of success, a “special district” would mean a win-win economic cooperation.

Obstacles remain

The largest problem is whether the North Korea will accept the program. Fortunately, Dancheon is known to have no military facilities. But it is not clear if the military will agree to the terms of a special economic district, which means a near-complete opening of the area to the South. Due to this, the statement issued in the recent ministerial meeting regarding further development did not specify the Dancheon area, analysts point out.

Experts forecast that even if the two Koreas agree to develop another special district, it will take a long time before goods can be produced. In addition, the North will have to settle a few problems before the project can get underway, such as legislation concerning foreign investments and ownership.

A cost problem exists, as well. In light of the previous cases of Kaesong and Mt. Kumgang, the South will have to provide almost all the infrastructure necessary to develop the special district. An industry official has estimated the cost at more than one trillion won (about one billion US dollars), due to the condition of the North’s transportation routes and electricity grid.

From the Korea Herald:

the ROKs Ex-Im Bank has focused on bolstering economic cooperation with developing countries and promoting reconciliation and cooperation with North Korea. Ex-Im Bank is the official inter-Korean settlement bank for South Korea with Foreign Trade Bank of North Korea as its counterpart.

A number of initiatives were carried out to promote better operation of the state-run lender’s Economic Development Cooperation Fund and the Inter-Korean Cooperation Fund.

Active policy dialogues with partner countries, for example, has significantly increased effectiveness through simplified procedures and co-financing approaches with multilateral development institutions. The Inter-Korean Cooperation Fund supported infrastructure projects such as the construction of roads and railways connecting the two Koreas, while providing humanitarian aid to North Korea. The fund also provided loans to South Korean firms involved in trade with North Korea.

Yonhap
5/30/2007
Kim Hyun

A cover album of North Korean pop songs featuring South Korean singers will be released in Seoul next month based on an unprecedented musical copyright contract between the two Koreas, promoters in Seoul said Wednesday.

Some Northern songs have gained popularity in the South, where they have been circulated illegally. Pyongyang has protested the unregistered circulation through informal channels since it established copyright laws in 2000.

From the Joong Ang Daily:

Jay Lefkowitz, Washington’s special envoy on North Korean human rights, has continued to criticize the working conditions for North Korean laborers at the Kaesong Industrial Complex, where South Korean companies have located plants.

On the surface, wages and working conditions are the main issue, but experts say there is a more fundamental difference between Seoul and Washington on economic support for the North and on human rights issues there.

In an essay in the Wall Street Journal’s weekend edition, Mr. Lefkowitz said daily wages for North Koreans at the complex were less than $2. That appears to be correct; the monthly minimum wage at the complex is $57, including a 30 percent commission to the government. But because companies at the site pay those wages to a North Korean labor service provider, it is not known how much, if any, of the wages actually find their way into workers’ pockets.

There are currently, 6,850 North Korean workers at the complex; the number will go up by about a fifth this month.

The Unification Ministry here was outraged by Mr. Lefkowitz’s comments, especially by a reference to “slave labor.” The minister, Lee Jong-seok, said on Sunday that he wasn’t sure whether Mr. Lefkowitz was trying to improve human rights in the North or hamper them.

Seoul has put human rights issues in North Korea on the back burner, angering many conservatives here, arguing that the best way to improve rights was by economic development of the North, assisted by massive amounts of economic assistance from South Korea. 

From Yonhap: 

SEOUL, May 1 (Yonhap) — North and South Korea are to hold working-level talks this week to discuss ways to increase economic cooperation, including Seoul’s proposal to jointly develop the Han River’s sand-rich estuary and mineral mines in the communist North, Seoul’s Unification Ministry said Monday.

The new round of dialogue between officials of the Inter-Korean Economic Cooperation Promotion Committee is to be held in the North’s border town of Kaesong from Wednesday through Thursday, the ministry said in a press release.

The meeting will include talk of ways to jointly develop the western mouth of the Han River, called the Imjin River in the North, which is believed to contain at least 1 billion cubic meters, or about 1.6 billion tons, of sand.

It will also serve as a venue to fix the next meeting of the inter-Korean committee, the highest-profile dialogue between the divided Koreas. Last month the two sides agreed on a deadline of end-May.

The sand project was proposed by Unification Minister Lee Jong-Seok, Seoul’s chief delegate to the inter-Korean Cabinet talks, at a meeting in Pyongyang last month.

The Seoul metropolitan area houses almost half of the country’s 48 million population live and requires some 80 million tons of sand a year for use in construction, according to ministry officials.

The South Korean minister also proposed the two sides work together in developing the North’s zinc and magnesite mines in the country’s northwestern city of Danchon.

In an eight-point agreement adopted at the end of the ministerial talks, the North Korean side welcomed Seoul’s proposal, but left actual projects for joint mining to be discussed at the upcoming inter-Korean economic talks.

The South Korean delegation is to be led by the head of the ministry’s social and cultural exchanges bureau, Kim Chun-sig, while the North Korean side will be led by Cho Hyon-ju, an official from the North’s National Economic Cooperation Committee, the ministry said.

From the Korea Times:

A head doctor of Hyundai Asan Hospital in the Kumgang tourist area, which was set up to deal with emergency cases among South Korean tourists, told Unification Minister Lee Jong-seok that North Korean soldiers sometimes sneak into the hospital.

Their commander has apparently ordered them to stay away from the South Korean tourist districts, but still the ordinary soldiers come to get better medical treatment, he said.