North Korean Economy Watch

UPDATE 1: Luke Herman provides some additional infomration here.

ORIGINAL PSOT: January has been quite interesting for DPRK watchers as we are seeing the steps taken to establish the legitimacy of Kim Jong-un. Below I have cataloged some visible components of this process:

Kim Jong-un’s “on the spot guidance” (OSG):

Kim Jong-un began the year with a visit to Kumsusan palace to pay respects to president Kim Il-sung and leader Kim Jong-il. The political and cultural symbolism speaks for itself.

Kim Jong-un’s second guidance trip (reported on the same day) was reportedly to the Seoul Ryu Kyong Su 105 Guards Tank Division. This visit is symbolically important because it was on a guidance trip to this very same division that (according to the North Korean narrative) Kim Jong-il began his “Songun” (Military First) leadership.  According to KCNA (2010-8-24):

An oath-taking meeting of servicepersons of the three services of the Korean People’s Army took place at the Ssangun-ri Revolutionary Site in Sukchon County, South Phyongan Province, on Tuesday on the occasion of the 50th anniversary of Supreme Commander Kim Jong Il’s start of the Songun revolutionary leadership.

The reporter and speakers at the meeting recalled that Kim Jong Il started the Songun revolutionary leadership by providing field guidance, together with President Kim Il Sung, to the Seoul Ryu Kyong Su 105 Guards Tank Division of the KPA on August 25, Juche 49 (1960) stationed in Ssangun-ri.

Here is a satellite image (Google Earth) of the Ssangun-ri Revolutionary Site (쌍운리 혁명사적지,  39°25’3.20″N, 125°44’30.74″E):

Joseph Bermudez wrote more about the Seoul Ryu Kyong Su 105 Guards Tank Division here. Kim Jong-il last visited the unit on 2010-12-31.

The remainder of Kim’s guidance trips in January have been overwhelmingly military in nature:

KPA Air Force Unit 1017
Concert Given by Military Band of KPA
Flight Training of KPA Air Force Unit 378
Demonstration by Players of Western Area Aviation Club (KPA)
Mangyongdae Revolutionary School (KPA)
Lunar New Year Reception
Machine Plant managed by Ho Chol Yong (KPA)
Kim Jong Un Inspects Command of KPA Large Combined Unit 671
Kim Jong Un Inspects KPA Air Force Unit 354
Kim Jong Un Inspects KPA Unit 3870
KPA Unit 169 honored with the title of the O Jung Hup-led Seventh Regiment
Music and dance performace
Hero Street Meat Shop
Pyongyang Folk Village (KPA)
2012 New Year’s concert “The Cause of the Sun Will Be Immortal” given by the Unhasu Orchestra
Seoul Ryu Kyong Su 105 Guards Tank Division
Tribute to Kim Il-sung and Kim Jong-il at (Kamsusan)

The media/propaganda campaign:

1. We saw a much-blogged-about hour-long documentary highlighting Kim Jong-un’s bona fides. At this point I don’t have much to add except a translation of Kim Jong-un’s quote in the film which is provided by C. La Shure in the Korean Studies Digest:

“I am accustomed to working through the night and so am not bothered by it. The most joyous and happiest moments for me are when I can bring joy to the comrade supreme commander. Thus, though I have stayed up several nights, I have worked without knowing weariness. Even when I work through several nights, once I have brought joy to the comrade supreme commander, the weariness vanishes and a new strength courses through my whole body. This must be what revolutionaries live for.”

2. Kim Jong-un’s “motherly” or “nurturing” traits have also been emphasized — imitating not only Kim il-sung’s appearance but also his public mannerisms (a la Bryan Myers):

Pictured above:  (Top) The cover of B.R. Myers’ book, The Cleanest Race. (Bottom) Kim Jong-un’s visits to KPA Unit 354 (L) and the Mangyongdae Revolutionary School (R)

3. Efforts may be underway to venerate Kim Jong-un’s mother.  Ko has reportedly been mentioned in the North Korean media.

4. Kim Jong-un has issued several autographs which look remarkably like his father’s (and grandfather’s):

Pictured above: (L) Kim Jong-il’s signature taken from North Korean television. (R) Kim Jong-un’s signature as reported by KCNA on 2012-1-3. The Choson Ilbo also picked up on this.

5. The KCNA web page now has a special content filter built specifically to highlight Kim Jong-un’s activities.  They have also started printing his name in a larger type.

6. Kim Jong-un is now part of the DPRK’s infamous criticism sessions. According to the Daily NK:

“The Central Party is propagandizing the greatness of Kim Jong Eun through criticism sessions, and coming down hard on anybody who is reported to have said anything hinting at any doubt of his greatness,” the source said, adding, “all cadres are being careful not to get caught out by this, without exception.”

7. Kim Jong-un  is being called “father” in the official media.  According to the Daily NK:

Choson Central News Agency (KCNA) on the 25th reported that Kim Jong Eun made a visit to the Mangyondae Revolutionary School. During his visit, Kim Jong Eun was greeted by staff and students as “Dear Father,” a designation stressing loyalty.

Rodong Shinmun, a day before, ran an article entitled ‘The sun shines forever’. It stated “our people broken hearted at the loss of our nation’s Father (Kim Jong Il ) and out of love our father (Kim Jong Eun) warmly welcomed the return of our people from overseas.” This statement showed that Kim Jong Eun has succeeded being called ‘father’ following Kim Jong Il.

The newspaper went on to praise Kim Jong Eun, “our people are all one in our father and persist with single-minded unity and great heart.”

8. The Lunar New Year holiday was co-opted to celebrate the rise of Kim Jong-un. In addition to public ceremonies and performances in honor of one of the three leaders (Kim Il-sung, Kim Jong-il and Kim Jong-un), the practice of distributing holiday rations in the name of the leader was resumed. In a sign of the “back to the future” economic policies which may be on the horizon, the DPRK is rumored to be interested in reviving nation-wide food distribution through the PDS.

Institute for Far Eastern Studies (IFES)
2012-1-25

A month into Kim Jong-un’s ascension to power, it is reported that food distribution is likely to resume nationwide in North Korea.

Many experts evaluate this as a symbolic measure to propagate the construction of a powerful economy and improve the lives of the people. For the North Koreans, the most apparent and obvious economic accomplishment is the improvement of the food situation. Thus, North Korea is most likely to take action to normalize food rations as its top priority.

According to a statement made by a South Korean government official on January 20, “Kim Jong-un and his leadership will begin the food distribution as a way to prove to its people about changes forthcoming in the new regime.”He also added, “After years of propagation for the building of a strong and prosperous nation, they must demonstrate it to the people with noticeable results.”

The amount of rations to be provided is still unclear. However, the source emphasized that it was very likely for rice rations to resume, especially with the approaching national holidays, such as the Lunar New Year and Kim Jong-il’s birthday (February 16).

He also commented that “the food distribution will be a nationwide movement and the food ration system will go into effect based on the distribution network of available food supply.”

According to the Food and Agricultural Organization (FAO) and the World Food Programme (WFP), North Korea’s food production in 2011 compared to the previous year rose by 8.5 percent, sitting at about 5.48 million tons (of rough grains or 4.66 million tons of milled grains).

The minimum amount of food consumption in North Korea is 5.4 million tons, but a shortage of about 400,000 tons is expected, including the international food aid and industrial food imports. Among the recent years, this marks the largest deficiency in food supply.

However, such shortages can be overcome with additional food imports and distributing mainly rice reserves.

The last national food distribution in North Korea was in 2005, seven years ago.

North Korea is also likely to exert more effort in food processing production to improve the distribution of daily necessities. With relatively little dependence on raw material imports, North Korea is planning to improve the food situation through expanding the food processing production in agricultural, fishery, and livestock industries, with less competition with Chinese products.

According to KCNA (2012-1-25):

The gross industrial output value grew 1.2 times for twenty days of January this year as against the same period last year.

This is the result of the high-pitched drive waged by all the workers of the country since the first day of this year after receiving with excitement the joint calls of the Central Committee and the Central Military Commission of the Workers’ Party of Korea, the joint New Year editorial for this year and the letter of the working people in South Hamgyong Province.

In the period, the Ministry of Light Industry increased the production 1.4 times and the Ministry of Food and Daily Necessities sharply boosted the production.

Thermal and hydropower stations have increased the ratio of operating the generating equipment.

Much effort is being concentrated on supplying coal to the thermal power plants and chemical and metal plants and developing more coal beds.

The Ministry of Coal Industry produced 12,000 more tons of coal than planned for the 20 days.

Iron mills and steelworks also increased the production.

The freight transport volume increased by 12 percent from the same period last year.

Innovations were made in the production of vinalon and fertilizer by the industrial establishments in the field of chemical industry and in the production of custom built equipment and mining machines by the industrial enterprises of the field of machine industry.

The forestry stations and pit wood stations increased the timber production.

Progress has been reported on a daily basis from the important projects including the building of apartments in Mansudae areas and the Paektusan Songun Youth Power Station.

For the uninitiated, this is about as close as the DPRK gets to releasing economic statistics. Note there are no base numbers–only [some] % increases. Also, despite the measure being officially named “output value”, it is really just a claim of increased physical production.  There is no value (prices) or mention of “services” included in these measures.

Unfortunately without more solid numbers, and the proclivity to ascribe productivity gains to effective propaganda, these reports cannot be taken seriously.

Although we all talk about the DPRK’s GDP and per capita income as if the numbers are solid, the reality is quite the opposite.  In addition to the general lack of information, there are all sorts of methodological problems with assessing the value of the DPRK’s economy.  Here are some helpful sources if you want to learn more:

1. DPRK Economic Statistics Report

2. G. Warren Nutter papers:

- (JSTOR) “Soviet Industrial Growth”, Source: Science, New Series, Vol. 130, No. 3370 (Jul. 31, 1959), pp. 252-255

-(JSTOR) “Industrial Growth in the Soviet Union”, The American Economic Review , Vol. 48, No. 2, Papers and Proceedings of the Seventieth Annual Meeting of the American Economic Association (May, 1958), pp. 398-411

-(JSTOR) Some Observations on Soviet Industrial Growth”, The American Economic Review , Vol. 47, No. 2, Papers and Proceedings of the Sixty-eighth Annual Meeting of the American Economic Association (May, 1957), pp. 618-630

3. The North Korean Economy by Nicholas Eberstadt

4. Assessing the economic performance of North Korea, 1954–1989: Estimates and growth accounting analysis

5. Bank of Korea’s assessment fo the DPRK economy in 2010.

6. My North Korean Economic Statistics Page

KCNA reported that North Koreans celebrated the lunar new year by paying tribute to Kim Jong-il:

On the lunar New Year’s Day, the Korean people are ardently yearning for the leader Kim Jong Il.
People are seen laying flowers or floral baskets before portraits of smiling Kim Jong Il displayed throughout the country, recollecting the undying feats he performed for the country and the people.
An old man, Ri Thaek Ju, living in Sosong District, Pyongyang, told KCNA, “I don’t think the leader left his people. He is among the people. He is greeting the Lunar New Year with us.”

They also laid floral baskets at Kim Il-sung statues (video here):

Floral baskets were placed before the statues of President Kim Il Sung in different parts of the country on the lunar New Year 2012.
Service personnel and Pyongyangites from all walks of life and school youth and children and overseas compatriots staying in the socialist homeland, visited his statue on Ryongnam Hill to pay tribute to him.

…And they also performed plays offering well wishes to Kim Jong-un:

Schoolchildren’s performance “Country of Eternal Sun” took place at the Mangyongdae School Children’s Palace Monday on the lunar New Year 2012.
The performance began with prelude “Please accept, the dear respected Kim Jong Un, our greetings on lunar New Year.”
The performers made a deep bow to Kim Jong Un, representing the unanimous best wishes of the younger generation of the DPRK.

So there are “three generations” of post-revolution North Koreans, and each one now has their own leader to pay homage to on Lunar New Year. Interestingly, Lunar New Year was banned by the DPRK until the 1980s as it was classified as a Chinese holiday. But why ban a cultural holiday when you can co-opt it for political purposes?

The AP also published this story.

UPDATE 1: On January 24, KCNA reported that Kim Jong-un hosted a banquet for senior members of the North Korean government.

UPDATE 2: On January 25, the Daily NK reported some very interesting information from within the DPRK which further shows how the Lunar New Year has been co-opted as a tool for the legitimization of Kim Jong-un’s rule:

A Chinese trader who resides in Pyeongseong, North Korea, arrived in Dandong on January 21 for the start of the Lunar New Year holiday period. The trader, who in this article we will call ‘John’, received permission to visit China after waiting over a month to leave the country since the death of Kim Jong Il. John met with his suppliers in Dandong to order items he would take back into North Korea, before departing for Shenyang to visit relatives.

Daily NK met with John in Shenyang on January 22 to ask him whether or not the rations announced by North Korean authorities had actually been distributed as planned. As he is a Chinese expatriate, he says he did not receive any rations this time, however “ordinary people did get them. The rations were half white rice and half mixed-grain rice.”

“Even within Pyeongseong, people got different rations depending on what street or neighborhood they live in – some got 3 days worth, others got 5. Our People’s Unit gave 3 days. But that wasn’t the problem; in one area people got grain rice mixed with corn, and the really unlucky amongst them were disappointed to find that their rations had already gone off.”

“On the way here I also heard from people living in Sinuiju who were given corn soup rather than rice of any sort,” John says. Given that corn soup costs roughly half as much to provide as other grain rations, evidently the government distributed corn-based rations in some cities and counties in order to help carry out its plan.

According to John, authorities also offered to supply fish to citizens. “They handed out coupons to buy a sailfin sandfish for 2,800 won and called this an order from Kim Jong Eun.” With this coupon citizens could head to a government-run store and purchase the fish for 2,800 won, however John says that most people declined to buy from the government-run stores when fresh sandfish could be bought from the market for 3,300 won.

Regarding crackdowns on foreign currency, John said that “It would be hard for people like me to live if the government stopped people using the Yuan. When I purchase stock I have to pay for it in Yuan, so if I wasn’t able to do that I wouldn’t be able to trade. That might end up being the case again. The ‘gruppas’ (inspection teams) are showing up to carry out crackdowns on illegal foreign exchange transactions, but this has just driven most people to do it in the privacy of their own houses.”

“Even people who lose their foreign currency in the crackdowns can get it back with a bribe. How can you stop that? Even cadres like foreign currency, so how can it work if they order a crackdown?”

Institute for Far Eastern Studies (IFES)
2012-1-18

North Korea is continuing to put forward new laws for the special economic zones (SEZs) such as Rajin-Sonbong and Hwangumpyong Island. Recently, North Korea announced special guidelines for the tax investigations of foreign businesses in the zones.

North Korea’s Academy of Social Science Newsletter Volume 4 (published on November 2011) released an article titled, “Suggestions to Improve Tax Investigations in the Special Economic Zone,” which included detailed instructions for the policy improvement for tax investigation for SEZs. Here, particular emphasis was placed on the enhancement of the tax investigation system — to be accurate and rational — for the foreign investment companies.

The article explained, “Based on the principles of equality and reciprocity for the construction of powerful economic state, the tax investigation system in the SEZ must be improved especially at the present time when SEZs are being constructed and expanded to increase economic trade with other nations.”

It also stressed tax officials must be equipped with, “comprehensive knowledge and experience who accurately understand the entire process of business management. They must be capable of creating new tax investigation methods and be able to discern the various forms of tax evasions.”

For the qualifications of the tax officials, the article recommended that the officials be selected based on their knowledge and experience; ability to develop techniques for tax investigation; awareness of rules and regulations of tax laws and bylaws, and regulations of rights and responsibilities of taxpayers; and capability of conducting research on foreign tax investigation policies.

The Academy of Social Science is a government agency of the DPRK, and the recent article on the tax investigation reflects that the government has already begun the process of implementing the tax investigation guidelines and laws in the SEZs.

The article emphasized establishing a tax investigation system acceptable to foreign companies. One can construe this as North Korea’s effort to attract more businesses to the SEZ, which is currently suffering from poor performance.

In addition, North Korea is believed to be placing weight on the tax investigation based on its past experiences with the South Korean companies in the Kaesong Industrial Complex (KIC). In the past, the officials of the Central SpecialDirect General Bureau toured the industrial districts in China and showed keen interests in the tax management.

On December 8, 2011, the KCNA reported that the Standing Committee of the Supreme People’s Assembly (SPA) has adopted the Economic Zone Act for Hwanggumpyong and Wihwa Islands. The law was revised and supplemented to include the Free Economic and Trade Act of Rajin-Sonbong. However, the details of these laws were not disclosed and some experts are predicting that these laws are likely identical to the Chinese laws in China’s flourishing SEZs.

However, on January 11, 2012, Yonhap News Agency of South Korea reported that China rejected the new Special Economic Zone Act of the DPRK because it is “not business-friendly.” The news reported, “China said the law was not business-friendly, telling North Korea that the law had some problemsregarding taxes, accounting, remittance of profits and stability of investment.” It is reported that North Korea is working on the revision of these laws and likely for a new special zone act to be passed by the Standing Committee of the DPRK’s Supreme People’s Assembly (SPA).

Pictured above (Google Earth) is Changsong Town in North Pyongan Province. This town is the home of the Changsong Joint Conference which was held in August 1962.  This meeting was referenced in the DPRK’s most recent Cabinet plenary meeting on the DPRK economy.

According to KCNA (2012-1-22):

An enlarged Cabinet plenary meeting was held.

Present there were Premier Choe Yong Rim and cabinet members.

Attending the meeting as observers were senior officials of the organizations under direct control of the Cabinet, directors of management bureaus, chairpersons of provincial, city and county people’s committees, chairpersons of provincial rural economy committees, chairpersons of provincial planning committees, directors of provincial foodstuff and daily necessities management bureaus and managers of major factories and enterprises.

Prior to the meeting, the participants paid silent tribute to the memory of leader Kim Jong Il.

The meeting reviewed the fulfillment of last year’s national economic plan and discussed how to implement the decision of the Political Bureau of the Central Committee of the Workers’ Party of Korea, joint calls of the WPK Central Committee and the Central Military Commission and the militant task put forward in the joint New Year editorial.

Vice-Premier Ro Tu Chol made a report to be followed by speeches.

The enlarged meeting set it as a priority task for this year to direct efforts into developing light industry and agriculture to improve the people’s livelihood and successfully carrying out the WPK’s prosperity-oriented strategy in the pilot domains and basic industries of the national economy upholding the flames of South Hamgyong Province. It also indicated the tasks and ways for it.

Also discussed was an issue of raising higher the flames of great innovation of South Hamgyong Province in the light industrial and agricultural fields.

The meeting mentioned the need to produce quality consumer goods favored by the people in the field of light industry and effect a decisive turn in development of local industry this year marking the 50th anniversary of the historic Changsong joint conference.

It also stressed the need for ministries and national institutions to help Changsong County in its industrial development.

Also discussed at the meeting were such issues as fulfilling the assignments for grain production for 2012 both in lowland and mountainous areas, making the best use of modern stockbreeding and poultry bases and large fruit and fish farms as well as the tasks for ministries and national institutions to preferentially supply materials, equipment and electricity to farming processes.

The meeting drew attention to the tasks for the industrial fields of electric power, coal, metal, railways and machine and construction and building materials, etc.

The meeting tabled the tasks for all ministries, national institutions and provincial people’s committees to lay their own scientific and technological foundations for stepping up the work for turning the economy into one based on technology in a forward-looking manner as required by the industrial revolution in the new century.

It also discussed the tasks for the fields of education, literature and art, public health, sports, capital construction, land management and urban management.

The meeting stressed the need for all economic officials to preserve the socialist principle and ensure profitability in economic management, operate and manage the economic work on the basis of detailed calculation and science as well as the need for ministries, national institutions and industrial establishments to set up strict order regarding planning, financial dealings and administration.

Relevant decisions were made at the meeting.

As premier of the Cabinet Choe Yong-rim has made quite a few prominent appearances in the DPRK media in the last two years which highlight his official efforts to improve the North Korean economy. His most recent public appearance (January 12) is reported to have been at the Jenam Coal Mine.

Kim Jong-un, however, is not a member of the Cabinet, so he did not attend the meeting. To date his legitimacy is being established through his relationship to Kim Jong-il/Kim Il-sung and as a leader of the KPA—rather than as a leader in the government or even the party (at least so far).

As a result, Kim Jong-un’s guidance visits have consisted almost exclusively of visits to KPA units.  In this month alone, he has visited the 105 Tank Brigade, KPA Unit 169, KPA Unit 3870, KPA Unit 354, KPA Unit 671, and the KPA soldiers constructing the Pyongyang Folk Village on the outskirts of Pyongyang. Uriminzokkiri has also credited him with spearheading the DPRK’s nuclear tests.

UPDATE: Here is Yonhap coverage of the meeting.

“Changsong Joint Conference”
The KCNA article prompted me to look into the “Changsong Joint Conference”, a term that did not ring a bell. The most recent reference I can find to it is this blurb from a March 2011 article in Korea Magazine:

The Changsong Joint Conference of Local Party and Economic Officials was held in August 1962.

The conference marked the beginning of developing the local industry throughout the country.

In recent years the county has made strenuous efforts to carry out the plan of the Workers’ Party of Korea for the building of a thriving nation and achieved many successes.

Hundreds of hectares of forests of raw materials and timber forests including pine-nut, wild-walnut and larch forests have been newly created.

The Changsong Foodstuff Factory gathers in scores of kinds of wild fruits including acorns, wild grapes, fruits of Actinidia arguta and Crataegus pinnatifida every year in mountains.

Recently its officials and workers have modernized all production processes including wild fruit drinks and wines as required in the IT age to produce foodstuffs in time.

Wines made from the fermented juice of wild grapes, fruits of Actinidia arguta and other wild fruits, Crataegus pinnatifida, Rubus crataegifolius, carbonated Actinidia arguta and other fruit juices, dried bracken and sliced bracken and other wild vegetables preserved in soy sauce are in great demand for their peculiar flavour.

The Changsong Textile Mill which started operation with six housewives has been turned into a modern fabric producer. As a treasure mill, it makes a great contribution to the improvement of the people’s standard of living. It produces quality fabrics, woolen knitted goods and quilts and blankets with local raw materials.

The Changsong Paper Mill produces paper from ground pulp. It has streamlined the equipment to improve the qualities of goods.

Looking round the local-industry factories in Changsong County in November last year, Kim Jong Il kindled the flame of developing the local industry throughout the country after the model of Changsong.

Changsong County stands at the head of development of local industry. Now its people work harder to change further the looks of their home village.

Another blogger seems to have located a single page of a book on the Changsong Joint Conference. Fortunately, he typed out the introduction:

The great leader Comrade Kim Il Sung had made a farsighted plan for bridging the gap between town and country and between regions and raising equally the living standards of all the working people. For this Changsong County had been taken as a model.

The great leader who had long pushed preparations for rapid improvement in the livelihood of the mountain peasants, studied deeply the state of affairs in this part of the country, and through his several on-the-spot guidances, paved the shortest cut to establish a socialist paradise.

In August 1962, in order to spread the example of Changsong across the land he convened the historic Changsong Joint Conference of Local Party and Economic Functionaries. There he put forward a new policy and overall ways and means to enhance the role of the county and develop local industry and agriculture, so as to improve radically the people’s living conditions.

In 1974, our people erected in Changsong the historic monument to the on-the-spot guidance of the respected and beloved leader Comrade Kim Il Sung, out of their wish to retell throughout generations the profound care of the fatherly leader who had shown the bright future of mountain villages and transformed that area into a people’s paradise fine to live in.

Kim Jong-il last visited Changsong in November 2010 where he visited the Changsong Foodstuff Factory, Changsong Textile Mill, and Changsong House of Culture. The first two locations are the shining examples of the success of the Changsong Joint Conference.  The Changsong House of Culture is where the meeting was officially held in 1962.

But if the goal of the conference is to reduce the disparity in the DPRK’s living standards, Changsong is probably not the best place to start. Changsong is home to one of the North Korean leadership’s most well-known luxury retreats.  This is because it was was extensively photographed by Kenji Fujimoto while he was working as Kim Jong-il’s personal chef.   See a satellite image and Mr. Fujimoto’s pictures of the compound here. You can see the Taegwan leadership train station Kim used to visit the compound here.

Institute for Far Eastern Studies (IFES)
2012-1-12

The adoption of Act No. 1194 by the Supreme People’s Assembly of the DPRK was recently confirmed. “The Democratic People’s Republic of Korea’s Corporate Law” or the “Corporate Law” was reported to have passed more than a year ago in November 11, 2010.

The “Corporate Law” is evaluated as an important indication of the direction of the economic policy of North Korea since Kim Jong-un was appointed as the next successor at the Third Party Conference held on September 28, 2010.

The law consists of five chapters: 1) Basic Principles of the Corporation; 2) Organization of the Corporation; 3) Management Organization of the Corporation; 4) Business Management Activities of the Corporation; and 5) Projects of the Corporation.

The first article of this act “The Mission of the Corporate Law” states that the law was enacted to, “contribute to the development of the people’s economy and to secure the management system of the socialist corporations by establishing the system and order for the organization and management activities.”

The second article, “The Definition of Corporation” defines a corporation as an “economic unit that operates as an organization that directly handles the labor, facilities, equipment, materials, and finances for the production or volunteer activities.”

Article 9, “The Legal Rights and the Legal Protection Principles,” indicates that the “legal rights and interests of the corporations are protected by the government.” Article 10, however, specifically states that this particular law does not apply to the special trade zones and the foreign investment companies.

Article 18, “The Organization of the Corporation,” has a clause that states “the managing organization has the jurisdiction to close down corporations for unreasonable or lack of prospects that does not meet the standards and the demands of the national policy and reality.”

Article 21 depicts a manager as a “person representing the corporation and responsible for the entire business.” The manager, chief engineer, and assistant manager’s specific responsibilities were also explicated. The hierarchy was clearly indicated where the assistant manager was to report to the chief engineer and the manager while the chief engineer has to report to the manager.

Article 29 affirms that a business is to be managed based on established business and corporate strategies in which every year a draft of the people’s economy plan must be submitted to the appropriate authorities. The written economic plan must be followed on a daily, monthly, quarterly, and by index basis (Article 30).

Articles 31 to 37 include specifics on the improvements of production technology while Articles 38 to 43 include regulations to enhance the management system.

In particular, Article 42 stipulates that the corporation must promote sales based on supply plans and contracts. Those sales that do not follow the plan and the contract cannot be sold.”

Article 44 states, “The appropriate amount of labor is scientifically determined and managed based on the socialist distribution principles and a precise socialist wage system must be implemented.”

In other words, socialist principles will be applied to both the sales of merchandise and wage system. While the corporation will receive autonomy in many areas, clear regulations are provided for sales in addition to evaluation and incentive system for labor.

In recent years, North Korea has continuously passed economic laws for economic construction and enhancing the lives of the North Korean people. Such laws include the following: The Agricultural Law passed on November 3, 2009; Real Estate Management Law on November 11, 2009; the Country of Origin for Export Law on November 25, 2009; and Comprehensive Equipment Import Law on November 11, 2009.

UPDATE (2011-12-19): KJI’s financial manager appears on tour of Kwangbok.  According to Yonhap:

The head of a shadowy North Korean agency charged with managing slush funds for leader Kim Jong-il has again appeared in public after five months.

Recent footage from the North’s state television network showed Jon Il-chun standing closer to Kim than Kim’s heir apparent son, Kim Jong-un, on an inspection tour of a supermarket in Pyongyang.

Kim Jong-un is being groomed to succeed his father Kim Jong-il as the country’s next leader in what would be the country’s second hereditary power transfer.

Jon and Kim Jong-un were also seen standing side by side on an escalator at the Kwangbok Area Supermarket, according to recent photos released by the North’s official Korean Central News Agency.

Jon, who has rarely been exposed to media, was last seen on Kim’s trip to a factory in July.

He heads Office 39, which has often been referred to as Kim’s “personal safe” for its role in raising and managing secret funds for the North Korean leader.

The office is also believed to be involved in counterfeiting US$100 bills and drug trafficking.

Last year, the United States blacklisted Office 39 as one of several North Korean entities to come under new sanctions for its involvement in illegal activities such as currency counterfeiting.

ORIGINAL POST (2011-12-16): According to the Daily NK:

Chosun Central News Agency (KCNA) today reported news of an onsite inspection by Kim Jong Il, Kim Jong Eun and others to the Kwangbok District of Pyongyang, the city’s commercial center. The main site on the visit was reportedly the newly expanded and redesigned Kwangbok Department Store.

The redevelopment of the store was ordered by the elder Kim following his trips to China earlier this year, where he was repeatedly exposed to the full force of China’s commercial development.

According to KCNA, “To enhance the people’s welfare and improve their lives, upon the direct suggestion and boundless affection of the fatherly General with his perpetual concern for the people, Kwangbok Department Store, which was constructed in October, 1991, has been transformed anew into the commercial center of Kwangbok District.”

“From warehouse to sale, the realization of information technology and numerical control of all management operations guarantee accuracy and speed, and the store has been stocked to guarantee the utmost convenience of visitors,” it went on.

KCNA went on to say that Kim Jong Il listening to information from related officials, and subsequently declared himself satisfied with the way the store matched the people’s needs in all areas, from sales plans to the amount and quality of goods available.

“We must proceed with the kind of commercial activity that can sell to the people of the capital city those things that they would not be able to live without in their daily lives such as clothing, shoes, food, conveniences, family items, school goods and cultural things, and leave them with no complaint,” he emphasized.

Read the full story here:
Kim Satisfied with “Transformed” Store
Daily NK
Kang Mi Jin
2011-12-16

UPDATE (2011-12-13): According to Radio Free Asia (in Korean), the Chinese government has agree to provide the DPRK with new meteorological equipment.  According to the article:

중국 정부가 유엔 산하 기구를 통해 북한에 첨단 기상관측장비를 지원하기로 결정한 것으로 밝혀졌습니다.

정아름 기자가 보도합니다.

중국정부가 지난 12일 북한에 컴퓨터를 통해 기상관측 정보를 받아보는 자동기상 관측장비(Automatic Weather Systems) 4대를 지원 하겠다는 의사를 유엔 산하 세계기상기구에 전달했습니다.

세계기상기구는 13일 자유아시아방송(RFA)에 이번 지원의 정확한 시점과 지원대상지역은 정해지지 않은 상태이라고 전했습니다.

Here is the article translated by Google Translate.

Jospeh Bermudez recently wrote about the DPRK’s hydro meteorological service.

ORIGINAL POST: According to the Korea Times:

A meteorological expert called for international assistance for North Korea, saying it was lacking in up-to-date meteorological equipment.

The Radio Free Asia quoted Avinash Tyagi, director of the climate and water department of the World Meteorological Organization (WMO), who visited North Korea in mid-March, as saying “equipment and computers used for weather forecasting were in urgent need of replacement.”

Tyagi’s visit with two other colleagues was the first by a WMO team in eight years.

They were supposed to visit the North last November in light of severe flooding last summer, but the trip was postponed.

The floods cost many lives and left many homeless in Sinuiju near the border with China, drawing immediate international humanitarian assistance, including from the South.

The expert said new equipment would help improve the food situation in the country and encouraged the international community to help. He added of the 186 observatories scattered through the country, only 27 were connected to the international meteorology network. Even the equipment there was outdated, made in the 1970 and 80s.

Food shortages are a chronic problem for North Korea, and this has got worse in recent years, which prompted the regime to run an unprecedented campaign to call for food aid from other countries.

More on the DPRK’s 2011 food situation here.

Read the full story here:
N. Korea in need of new meteorological equipment
Korea Times
4/1/2011

According to the Daily NK:

It has been confirmed that over one month in February and March this year, the Chosun Workers’ Party replaced the membership of all male party members over 60 and women over 55 with ‘honorary membership’.

It reportedly took just a month for the plan to be implemented from the Central Party down through provincial, city and county levels.

Honorary members are not required to attend weekly, monthly and quarterly self-criticism sessions in their areas of residence. In addition, honorary membership grants the right to absent themselves from frequent official meetings including study sessions, Party lectures, meetings for the dissemination of Party orders etc.

Honorary members are also exempt from a 2% deduction from wages for Party membership dues. Hitherto, cadres were still required to pay their Party dues even when the enterprises to which they had been dispatched were not operating due to shortages of raw materials, and even in retirement (usually after turning 60) Party members were still required to pay dues to local Party organizations.

On the other hand, honorary membership does still mandate presence at important events including reporting meetings or events to commemorate the birthdays of Kim Il Sung and Kim Jong Il.

Many newly-honorary members are understood to have welcomed the new measure. One source from Pyongan Province told Daily NK, “When they heard it, elder Party members were calling it ‘another act of kindness from the great General’.”

However, some of the targeted cadres are less happy with having their wings clipped. A source from North Hamkyung Province said that some irritated elderly members of the Union of Democratic Women are leaving before being pushed, putting in minimum effort or simply not attending events at all.

Elsewhere, while senior Central Committee, Cabinet and other central government organ staff are holding onto their administrative duties for now, many apparently believe they know which way the wind is blowing.

Looking at the situation today, one high level official who defected to South Korea in May this year commented to Daily NK, “It is a message to all the veterans that they need to leave because this is the Kim Jong Eun era.”

Read the full story here:
Party Elders Handed Honorary Membership
Daily NK
Lee Beom Ki and Choi Song Min
2011-12-6