Archive for the ‘Companies’ Category

How the North Korean media describes a market

Tuesday, August 25th, 2015

By Benjamin Katzeff Silberstein

A recent brief from IFES (08-07-2015) details how an article in the North Korean newspaper Tongil Ilbo describes sales at Kwangbok market in Pyongyang (emphasis added):

According to the Tongil Ilbo, there are now a number of local products sold at Pyongyang’s Kwangbok Area Supermarket, which was built in October 1991. “By achieving the informatization and computerization of all business activities, from warehousing to the sale of goods, the Kwangbok Area Supermarket guarantees accuracy and speed in its service. It is a commercial service center managed to guarantee the maximum convenience of its customers,” North Korea’s independent newspaper reported on July 11, 2015.

It explained that the Kwangbok Area Supermarket, which has a total floor area of 12,700 m2, sells household products, electronics, general textile products, and grocery products such as confectioneries on every floor. In addition, each North Korean brand is sold in the relevant department, including brands such as ‘Ryongmasan,’ ‘Kuryonggang,’ ‘Kumkop,’ ‘Hwawon,’ ‘Mirae,’ ‘Songchon,’ and ‘Bommaji.’

Located on the first floor, the grocery department displays local products produced by factories like the Pyongyang Flour Processing Factory, the Kumsong Food Factory, and the Kumkop General Foodstuff Factory for Sportspersons. “People like to purchase locally-produced products […] In the future public service networks like the Kwangbok Area Supermarket will emerge in other places as well,” the newspaper reported.

Kim Song Won, manager of the Kwangbok Area Supermarket, commented, “With the unprecedented growth of the country’s self-sustaining economic foundation, there is greater demand among the people for variety and quality in their products […] Accordingly, we are bringing in many domestic products and are working to provide services so that customers can purchase products that they like.”

Several things in this report are interesting to note. For example, while I am not sure that the market-oriented language is itself anything new in North Korean media lingo, the emphasis is striking. It is consumer preference that matters. Variety is considered important, not just the quality of the products. Again, Kim Il-sung too I believe talked about the importance of quality, but here it’s a matter of producing what people like, rather than what they need.

Read the full text:

IFES Kyungnam

Surge in Local Product Sales at Kwangbok Area Supermarket

08-07-2015

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DPRK insurance market updates

Monday, August 17th, 2015

UPDATE 1 (2015-8-20): The Institute for Far Eastern Studies (IFES) reports on developments in the DPRK’s insurance market:

New Insurance Products Appearing in North Korea

All sorts of insurance products, such as cell phone insurance and insurance against damage to fruit farms, are starting to appear in North Korea.

The Korea National Insurance Corporation (the state insurance company representing North Korea), revealed on its website on August 12, 2015 that the issue of cell phone insurance was discussed at the annual general meeting of provincial governors held in Pyongyang in February 2015.

“At last year’s meeting, provincial governors from all over, including Pyongyang, North Hamgyong Province, Yanggang Province, and Jagang Province, met and introduced new areas of business such as cell phone insurance. They discussed increasing the number of insurance policy holders and expanding coverage to raise insurance premium revenue,” the insurance company reported.

Recently, as the number of cell phone owners shoots up, the instances of lost or damaged phones have also risen. It appears that this new form of insurance is being offered against this backdrop to compensate cell phone owners for such incidents. As in South Korea, it is not yet mandatory for North Korean cell phone owners to purchase cell phone insurance.

Currently, North Korea’s primary mobile carrier, the Egyptian firm Orascom, owns a 75% share in North Korea’s mobile communications company Koryo Link. As of the end of June 2014, the company had 2.4 million cell phone subscribers in North Korea.

The Korea National Insurance Corporation is also preparing to offer insurance for fruit trees in order to compensate owners of fruit farms for damage caused by natural disasters or other events.

The company explained the background behind offering this insurance product on their homepage. According to the website, since Kim Jong Un came to power, a lot of effort has been put into the development of agriculture and fruit farms, but due to recent abnormal climate phenomena like El Niño, these fields have experienced a lot of difficulties.

The website reveals, “Based on experience accumulated in the testing phase, we plan on offering insurance coverage within several years for modern, large-scale fruit farms like Taedong River Integrated Fruit Farm and Kangwon Province’s Kosan Fruit Farm.”

In order to do this, the company has been performing risk appraisals since 2013 with international damage appraisers for each of the fruit farms. This suggests that it is keeping foreign reinsurance companies and contracts in mind.

The company offers fruit farms insurance coverage for a variety of calamities and natural disasters. It covers fruit trees in the event of drought, landslides, or fire; fruit in the event of hail, drought, excessive moisture, extreme heat, or fire; and the quality of fruit in the event of hail, heavy rain, or storms.

The provision of insurance for fruit farms is seen as an extension of North Korea’s ongoing efforts to earn foreign currency through insurance companies.

The fact that various insurance products are appearing in North Korea has attracted attention in the context of North Korea’s recent economic developments. Since Kim Jong Un came to power, the regime has tried to recognize and protect private property as the market economy has expanded through the growth of companies’ independent management rights and the expansion of private profits. Especially in the case of insurance companies, it is believed that the regime is trying to maximize profits by generating additional income through insurance premiums.

ORIGINAL POST (2015-8-17): Elizabeth Shim reports the following at UPI:

On Tuesday, Pyongyang’s Korea National Insurance Corp. posted on its website information on annual meetings held in each province. Issues of mobile phone insurance were discussed during the meetings, South Korean news agency Yonhap reported.

The North Korean insurance firm said in statement that new businesses were being introduced to meet the increased demand for mobile phone insurance in Pyongyang and the provinces, South Korean television network SBS reported.

The mobile phone is becoming a central component of everyday life for many North Koreans, particularly for merchants who are on the road to sell wares around the country – but damage or loss of phones are raising the demand for insurance in the country.

Egyptian firm Orascom owns a 75 percent stake in North Korea’s main network, Koryolink, and offers services to 2.4 million North Koreans.

Other insurance mentioned include new policies for agriculture and protection plans for large-scale fruit farms by the Taedong River and in Kangwon province are being assembled, according to North Korea. The plans would provide protection against weather effects like “El Nino,” that is resulting in increased drought, torrential rain, high temperatures and other factors that are hurting crops.

The Korea National Insurance Corporation web page is here. Here are the two specific reports mentioned in the article:

Annual conference of provincial KNIC branches held

The annual conference of provincial branches of Korea National Insurance Corporation was held in Pyongyang on February 25th and 26th.

It was attended by head-office officials concerned and branch managers, and accountants thereof, of different provinces.

Its agenda involved review of last year’s insurance operations conducted by the provincial branches, and determination of their goals to be reached this year.

Great appreciation was shown in the conference for the branches including the ones in Pyongyang, North Hamgyong Province, Ryanggang and Jagang Provinces, all of which, last year, introduced new insurance products, like mobile phone insurance, into sale, and brought an increase in the number of the insureds and objects to result a rise in premium income, and made prompt indemnifications on a scientific basis thus contributing to the stabilization of operation, production of the insureds concerned and people’s lives, as well.

Stress was laid on adoption and development of effective business strategies plus further improvement and intensification of insurance operation upholding the slogan reading “ Let us all turn out in the general offensive to hasten final victory in the revolutionary spirit of Paektu!”, thus enhancing the role of insurance in line with the development of national economy and improvement of the livelihood of the people as befitting the significance of the year marking the 70th founding anniversary of the Workers’ Party of Korea.

Lectures were given on business practices involving accountancy and some insurance accounts during the conference.

Fruit Crop Insurance to be introduced in future

According to a far-reaching plan of Chairman Kim Jong Il and supreme leader Kim Jong Un to supply the people with fresh fruit in and out of season, Taedonggang Combined Fruit Farm had been built as the best integrated base for fruit production, keeping production going on a high level, and furthermore, Kosan Fruit Farm has been expanded as a large-scale fruit farm with the introduction of scientific, intensive and modernized methods into fruit production.

At present, the farms have boosted production by applying the densely planting method of dwarf fruit trees following the world-wide trend of fruit farming development and growing several kinds of fruit trees including high-grade apple, pear and peach as befits the specific conditions of our country.

They grow apple trees of Korean original varieties such as Hwangju, Pukchong and Unryul together with dwarf apple trees of more than a hundred of varieties including Granny Smith, Fuji and Golden Delicious,and meet their own demand for young saplings by growing them on their own.

However, there have frequently occurred abnormal weather phenomena due to El Nino in recent years, causing negative effects on agriculture and fruit farming in our country and its surrounding countries.

As far as fruit farming is so greatly influenced by the nature and terrain and weather conditions as agriculture, Korea National Insurance Corporation (KNIC) has intention of newly underwriting insurance contracts with fruit farms in our country so as to put production on a normal basis under the adverse weather conditions recently occurred.

The subject matter insured under Fruit Crop Insurance shall be fruit and fruit trees cultivated by fruit farms in DPRK, and the covered risks are as follows;

– Yield Loss Coverage

Drought, freezing, landslide, fire,

– Fruit Tree Loss Coverage

Hail, drought, excessive moisture, extreme heat, fire,

– Quality Loss Coverage

Hail, torrential rainfall and windstorm.

In 2013, KNIC conducted a risk survey on some fruit farms in our country in cooperation with international loss adjusters, and since then KNIC has underwritten insurance contracts with those farms.

KNIC, on the basis of practical experience gained at that pilot stage, shall cover against the risks mentioned above modernized and large-scale fruit farms including Taedonggang Combined Fruit Farm and Kosan Fruit Farm within a few years to come.

Although KNIC has a dubious history, today the group still posts regular financial information which (if accurate) would make it one of the most financially transparent organizations in the DPRK (Congrats to them for at least trying). See tables here, here, and here.

Previous posts on the Korean National Insurance Corporation here.

Once they figure out crop insurance, the next step should be a commodity futures market!

Read the full UPI story here:
North Korea to provide insurance for drought, lost phones
UPI
Elizabeth Shim
2015-8-12

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Choco Pies in North Korea (UPDATED)

Tuesday, July 14th, 2015

Choco-pie-Pyongyang

Pictured above (Source here): A Choco Pie wrapper in Pyongyang (October 2014)

UPDATE 6 (2015-7-14): The Daily NK reports that the DPRK’s ‘Choco Pie’ knock-off falls far short:

Daily NK has obtained a North Korean snack rolled out to squash demand for a popular South Korean treat that had first become a sensation among factory workers in the inter-Korean industrial complex and spread across the country. Known as ‘Chocolate Danseolgi,’ the snack displays a striking resemblance with the much-loved South Korean ‘Choco Pie’.

The new treat is said to have been produced to cut off fantasies about the capitalist world its workers may harbor.

DNKE_1325_295691_1436859978_i

Starting last month, North Korea has been providing its Kaesong factory workers with ‘Danseolgi’, according to a source who has ties with the North and passed on the new snack to Daily NK on the condition of anonymity. This comes after Pyongyang banned supplies of the famed ‘Choco Pie’ within the industrial complex last year, as they were being sold by the workers on the black market for good returns and gaining greater popularity across the country.

The South Korean ‘Choco Pie’ snack was first introduced to Kaesong workers in 2006. Due to its soaring popularity, many had come to develop a sense of curiosity or fantasies about the South, the source said. Seeing the chocolate cake snack with marshmallow filling win over so much love, Pyongyang set out to create an alternative in the hopes of choking off demand.

Last year, after banning ‘Choco Pie’ supplies, the North tried to force South Korean firms to provide its factory workers with a home-grown chocolate double-layered cake snack, and this year in March, it even rolled out a chocolate coated rice cake treat also similar to an existing South Korean product.

Despite these efforts, local goods have failed to take off, as Kaesong workers are already acquainted with tastes from South Korea and are only eating the ‘Danseolgi’ as they have no other choice, according to the source.

The treat is one of the “latest products” put out for Kaesong workers. “It was smuggled out of the country by way of a North Korean trader in the Rason Economic Special Zone who works with Chinese traders,” she explained.

“Currently in the North, the ‘Chocolate Danseolgi’ is being distributed to workers as supplies, and they’re not sold on North Korea’s regular markets,” she asserted. Every last ingredient used to make the snack, from the butter to the chocolate, is imported from China.

Predictably, Kaesong workers invariably far prefer the taste of the original chocolate snack from South Korea, the source said, adding, “North Korea will never be able to produce the South’s Choco Pie.”

One of Daily NK’s reporters who tried out the North Korean ‘Danseolgi’ described the snack as “decidedly lacking in chocolate flavor ” and “being overwhelmingly pungent of butter.” The wrapper claims to include marshmallow in the product, but our taste tester reported any semblance of its texture to be nonexistent and noted that the cake itself is incredibly prone to crumbling.

UPDATE 5 (2015-6-9): DPRK asks that all South Korean food served in the KIC be replaced by North Korean substitutes. According to Voice of America:

North Korea has asked South Korean businesses at the Kaesong industrial complex to replace all foodstuffs given to its workers at the inter-Korean park with North Korea-made products.

A representative of the South Korean businesses, who visited the complex Tuesday, told VOA’s Korean Service that South Korean companies began distributing North Korean substitutes for popular South Korean food supplies to the North Korean workers as early as March. Almost all South Korea-made food products have now been replaced with North Korean products.

Choco Pie, a popular South Korean snack cake, also has been replaced with a similar North Korea-made sweet. The chocolate covered cake with marshmallow filling has become one of the most popular items in the North’s black markets. Other North Korea-made foodstuffs given to the workers include instant noodles with chicken broth and condiments.

In an attempt to keep South Korean foodstuffs from the complex, the North is imposing an additional business tax on the companies for bringing in South Korea-made products. About 50 South Korean businesses supplying food for the complex face bankruptcy, according to representatives of the South Korean businesses.

Some business owners have expressed concern about the quality of North Korean foodstuffs. One representative said some workers are suffering from food poisoning after the switch.

A South Korean official who asked to remain anonymous told VOA the North Korean move is aimed at blocking the flow of South Korean products into the North and earning foreign currency.

South Korean companies have been providing about $60 per month in snacks to each North Korean worker. With approximately 53,000 workers at the complex, Pyongyang can now garner up to $3 million every month from the snack sales.

UPDATE 4 (2014-9-24): According to the Daily NK, workers in the KIC are receiving a different dessert than the Choco Pie now. Also, the Kumunsan Company is producing substitute goods, and they are winning over consumers:

[…] the once popular South Korean snack Choco Pie is seeing a decline in its asking price. In June, Pyongyang demanded that South Korean companies at the industrial complex stop distributing Choco Pies to workers there, as officials had found it problematic that North Korean workers were saving the snacks and selling them in the markets. More recently, the northern workers have been receiving Chaltteok Pie (찰떡) [a chocolate covered rice cake from the South], individually packaged coffee, yulmucha (율무차)[grainy tea made with Job’s Tears], and candy bars.

“In Pyongyang, at the ‘Geumeunsan Trade Company,’ (금운산, Kumunsan Trade Corporation) they have been baking bread for about a year,” the source said, adding, “Of all the different kinds of bread, the most popular are the ones with butter inside, and they are less than 1000 KPW– much cheaper than Choco Pie.”

The trade company is an affiliate of the Military Mobilization Department [Military Manpower Administration in South Korea], which deals with the procurement of military supplies among its many functions. They either directly import the goods or obtain them from military factories in various locations across the country, and oversee the manufacturing of military equipment and machinery.

Geumeunsan Trade Company maintains branches in multiple areas, including Rasun and Cheongjin, and the office in Pyongyang imports ingredients such as flour, sugar, and cooking oil directly from China. According to the source, the raw material prices are cheaper than in the  North’s markets, and the products taste good, allowing it to monopolize the confectionery market there.

“The company has brought in foreign equipment and technology, putting it ahead of the South’s Choco Pie in price and taste,” he said, concluding, “This is why with the introduction of these different breads in Pyongyang, the price of Choco Pie [from the South] has dropped to 500 KPW from 1,200 KPW.”

See also this story in Radio Free Asia.

Read the full story here:
Kaesong Goods Fetch Highest Market Prices
Daily NK
Seol Song Ah
2014-9-24

UPDATE 3 (2014-7-1): Media reports claim that the DPRK has banned the use/possession of Choco Pies in the Kaesong Industrial Complex. According to the Washington Post:

By some estimates, as many as 2.5 million Choco Pies were traded monthly — though it’s unclear who exactly was so assiduously following Choco Pie markets.

Regardless of its volume, the trade will now surely be shrinking.

According to recent reports in the South Korean press, North Korean authorities have now banned the South Korean-produced Choco Pie at the Kaesong Industrial Complex following a lengthy crackdown on the chocolate treat that has made it scarce in Pyongyang.

Before, workers could pocket as many as 20 pies every night of work. But now, South Korean factory staff said they’ll instead get sausages, instant noodles, powdered coffee or chocolate bars as a bonus.

More information here and here.

UPDATE 2 (2013-9-20): Is the DPRK manufacturing a counterfeit Choc Pie? According to the Daily NK:

Ryongsong-foodstuff-factory-2013-11-21

Pictured Above: Ryongsong Foodstuff Factory, Ryongsong District, Pyongyang (Google Earth)

The price of a North Korean own-brand “Choco Pie” fell to just 500 won in domestic markets following news that the Kaesong Industrial Complex (KIC) was to reopen, Daily NK has learned. The local version of the chocolate snack, which is made by Orion in South Korea, had previously risen to 3000 won on the back of the protracted KIC closure.

A source in Pyongyang reported to Daily NK on the 19th, “Sometime around May, Yongseong [Ryongsong] Foodstuff Factory in Pyongyang started selling ‘Choco Pies’ in the markets. People hadn’t seen a Choco Pie since Kaesong stopped, so their reaction was really something.”

“People were surprised because the packets said ‘Choco Pie’ and ‘Choco Rice Cake’ [a similar product with a glutinous rice center], and they couldn’t tell the difference between them and those from the ‘neighborhood below’ [South Korea] unless they checked closely,” the source went on. “Sure, people could tell they weren’t the real thing as soon as they ate them, but they were still pretty satisfied.”

According to the source, after South Korean Choco Pies disappeared from North Korean markets following the closure of the KIC, domestic traders started looking into importing the original South Korean and similar Chinese versions of the popular treat. However, the cost and difficulty of doing so meant that very few ended up crossing the border.

Therefore, attention turned to domestic production. The source explained, “Production volumes were low at first, and the state tried to control the flow of the product into the markets. They were 500 won a piece at the end of the first month; but that had risen to 3000 won by the end of last month. But the price sank back down upon news of the KIC re-start.”

“As soon as Choco Pies stopped coming out of the KIC, Yeongsong Foodstuffs Factory moved quickly and must have made quite a bit of money,” he guessed. “They were trying to imitate the South Korean pies but the product was way too sweet, which is partly why the price collapsed on the news of Kaesong.”

Only 60% (32,000) of the pre-closure North Korean workforce (53,000) returned to work when the KIC re-opened for a “trial run” on September 16th. At the same time, South Korean businesses, many facing financial difficulties after five months of nonproductive shutdown, have reportedly reduced the quantity of Choco Pies and other snacks previously distributed to workers. It is unclear what effect these circumstances could have on the price of goods flowing out of the KIC over the longer term.

Read the full story here:
NK Choco Pie Price Falls on KIC News
Daily NK
2013-9-20

UPDATE 1 (2011-10-31): According to the Daily NK, North Korean management in the Complex requested back in August that South Korean businesses stop offering ‘Choco-pies’ (a South Korean snack) to North Korean workers and give them cash instead.

ORIGINAL POST (2009-5-20): Donald Kirk has a must-read article in today’s Asia Times on the subtle ways that the Kaesong Industrial Zone is undermining Pyongyang’s control over the North Korean people.  He points out that the DPRK’s verbal attacks on South Korea, combined with demands for new land, labor, and road use contracts in the Kaesong complex, are an attempt to blame South Korea when Kim Jong-il finally closes the project.

Quoting from the article:

Think Choco Pie, the thick wafer-like confection, all pastry and cream, served in the Kaesong Industrial Complex as a daily dessert for the 40,000 North Koreans who toil for 100 South Korean companies with factories in the complex.

“North Koreans love Choco Pie,” said Ha Tae-keung, president of NK Open Radio, which beams two hours of news daily into North Korea from its base in Seoul. “It’s an invasion of the stomach.”

North Korean workers, and the friends and family members for whom they save their daily treats, may salivate over Choco Pie, but it’s giving a severe stomach ache to senior officials fearful of the infiltration of South Korean culture in all corners of their Hermit Kingdom.

Choco Pie – along with other favorite South Korean cakes and candies as well as instant coffee – has come to symbolize the image of the capitalist South as a multi-tentacle beast that may be impossible to digest.

For Kim Jong-il, suffering from diabetes, recovering from a stroke and hoping to survive a few more years while grooming his neophyte youngest son, in his mid-20s, to succeed him, the best way to deal with the Kaesong complex, 60 kilometers north of Seoul and just above the demilitarized zone between the two Koreas, may be to spit it out.

It’s for this reason, said Ha, that North Korea has precipitously scrapped the agreements under which South Korean companies operate in the complex, built and managed by Hyundai Asan, an offshoot of the sprawling South Korean Hyundai empire.

“He’s come to see Kaesong as a burden rather than an asset, and is inclined to shut it down,” said Ha.

While the Kim Jong il government focuses its attention on cultural infiltration from the South, there appears to be little it is doing, or can do, about cultural infiltration from China–the DPRK’s most significant trading and political partner to the north:

When it comes to South Korean cultural infiltration, however, North Korea has far more to fear from the entry of goods from China than from the Kaesong complex. South Korean DVDs and CDs, even soft-core porn movies made in the South, are now distributed surreptitiously throughout North Korea. Electronic gadgetry, MP3 and MP4 players, TV sets, radios and rice cookers, also shipped via China, are also available for those with the money to pay for them.

Read the full article here:
Pyongyang chokes on sweet capitalism
Asia Times
Donald Kirk
5/21/2009

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Sony, “The Interview”, and new US sanctions

Wednesday, December 17th, 2014

UPDATE 28 (2015-3-17): Vox.com reports that a US congressman may have revealed a US response to the Sony hacking:

Rep. Michael McCaul hinted at a think tank event on Tuesday that the US may have been responsible for North Korea’s massive internet outage in late December.

McCaul, in the course of his answer on how the US responds to cyber threats, then mentioned North Korea: “There were some cyber responses to North Korea,” he said, referring to the country’s alleged role in the November hacks against Sony Pictures.

Though he did not explicitly confirm long-held suspicions that US cyberattacks were responsible for North Korea’s mass internet outage, McCaul’s comments have come as close as any official US statement ever has to acknowledging a role.

The comments, made at a cybersecurity policy event hosted by the Center for Strategic and International Studies, were first reported by Bloomberg reporter Chris Strohm and confirmed by a source with knowledge of the event.

Here is a link to the original Bloomberg report.

UPDATE 27 (2015-1-18): The New York Times is reporting that the NSA had broken into North Korea’s computer system before the North Koreans hacked Sony:

Spurred by growing concern about North Korea’s maturing capabilities, the American spy agency drilled into the Chinese networks that connect North Korea to the outside world, picked through connections in Malaysia favored by North Korean hackers and penetrated directly into the North with the help of South Korea and other American allies, according to former United States and foreign officials, computer experts later briefed on the operations and a newly disclosed N.S.A. document.

UPDATE 26 (2015-1-9): The NSA played a role in identifying the DPRK.

UPDATE 25 (2015-1-7): FBI reveals more details (New York Times):

The F.B.I.’s director, James B. Comey, said on Wednesday that the United States had concluded that North Korea was behind the destructive attacks on Sony Pictures partly because the hackers failed to mask their location when they broke into the company’s servers.

Mr. Comey said that instead of routing some of the attacks and messages through decoy servers, the hackers had sent them directly from known North Korean Internet addresses.

Though Mr. Comey did not offer more details about the government’s evidence in a speech in New York, senior government officials said that F.B.I.’s analysts discovered that the hackers made a critical error by logging into both their Facebook account and Sony’s servers from North Korean Internet addresses. It was clear, the officials said, that hackers quickly recognized their mistake. In several cases, after mistakenly logging in directly, they quickly backtracked and rerouted their attacks and messages through decoy computers abroad.

UPDATE 24 (2105-1-5): The DPRK criticized the latest round of unilateral sanctions imposed by the US. According to the New York Times:

North Korea denounced the United States on Sunday for imposing new sanctions on it after a cyberattack on Sony Pictures, calling them byproducts of American “hostility” toward the North.

North Korea reiterated its denial of involvement in the hacking of Sony computers and said Washington’s sanctions would only strengthen resolve to pursue its “military first” policy. That policy calls for an arms buildup, including nuclear weapons development, as a “deterrent” against Washington’s policy.

“The persistent and unilateral action taken by the White House to slap sanctions against the D.P.R.K. patently proves that it is still not away from inveterate repugnance and hostility toward the D.P.R.K.,” an unidentified government spokesman was quoted as saying by the North’s official Korean Central News Agency. D.P.R.K. stands for the Democratic People’s Republic of Korea, North Korea’s official name.

The statement from the spokesman was the North’s first reaction to the new sanctions the Obama administration announced on Friday.

UPDATE 23 (2015-1-2): US sanctions Pyongyang over Sony hack. According to the AP:

President Barack Obama signed an executive order on Friday authorizing the sanctions. Although the U.S. has already sanctioned North Korea over its nuclear program, these are the first sanctions punishing Pyongyang for alleged cyberattacks.

The Obama administration says the sanctions affect three North Korean entities, including a government intelligence agency and a North Korean arms dealer. The U.S. is also sanctioning 10 individuals who work for those entities or the North Korean government.

Those sanctioned are barred from using the U.S. financial system, and Americans are prohibited from doing business with them.

The updates to the treasury department’s list of sanctioned entities and individuals can be found here.

Here is the press release from the treasury department.

Here is additional coverage: Reuters, New York Times, Vox.com.

UPDATE 22 (2014-12-31): FBI still maintains DPRK is behind the attack.

UPDATE 21 (2014-12-25): Lizard Squad takes credit for DDoS attack on Xbox live. Also, I have had trouble accessing North Korean web pages this evening (11:20pm).

UPDATE 20 (2014-12-24): Meet the hacker group, Lizard Squad. Also, here is another story in the New York Times which casts doubt on the theory that the hack originated in the DPRK.

UPDATE 19 (2014-12-24): Via @levie on Tiwtter:

“A country with no internet is now essentially responsible for causing Hollywood to adapt its business model to the Internet. This is weird.

UPDATE 18 (2014-12-24): Martyn Williams reports that “The Interview” will be available on line. More at CNN and Washington Post.

UPDATE 17 (2014-12-23): Sony has authorized a limited release of “The Interview”  on Christmas Day. According to the Associated Press:

“The Interview” was put back into theaters Thursday when Sony Pictures Entertainment announced a limited theatrical release for the comedy that provoked an international incident with North Korea and outrage over its cancelled release.

Sony Entertainment CEO Michael Lynton said Tuesday that Seth Rogen’s North Korea farce “will be in a number of theaters on Christmas Day.” He said Sony also is continuing its efforts to release the film on more platforms and in more theaters.

“We have never given up on releasing ‘The Interview,'” Lynton said in a statement Tuesday. “While we hope this is only the first step of the film’s release, we are proud to make it available to the public and to have stood up to those who attempted to suppress free speech.”

For Sony, the decision was the culmination of a gradual about-face: After initially saying it had no plans to release the movie, the company began softening its position after it was broadly criticized.

Moviegoers celebrated the abrupt change in fortune for a film that appeared doomed as “The Interview” began popping up in the listings of independent theaters across the country Tuesday, from Atlanta to Los Angeles. The film stands to open in as many as a few hundred theaters on Thursday, the day it was originally set for wide release.

One of the loudest critics of the film’s shelving — President Barack Obama — hailed Sony’s reversal.

“The president applauds Sony’s decision to authorize screenings of the film,” said Obama spokesman Eric Schultz. “As the president made clear, we are a country that believes in free speech, and the right of artistic expression. The decision made by Sony and participating theaters allows people to make their own choices about the film, and we welcome that outcome.”

Rogen, who stars in the film he co-directed with Evan Goldberg, made his first public comments in a surreal ordeal that began with hackers leaking Sony executives’ emails and culminated in an ongoing confrontation between the U.S. and North Korea. The FBI has said North Korea was behind the hacking attacks.

“The people have spoken! Freedom has prevailed! Sony didn’t give up!” said Rogen on Twitter.

“VICTORY!!!!!!!” said James Franco, who co-stars in the film. “The PEOPLE and THE PRESIDENT have spoken.”

The film will be showing at the Alamo Draft House (where Team America was yanked).

UPDATE 16 (2014-12-23): In Update 11 I noted that the US has asked for Chinese support. Apparently China is cool to the idea. According to the Washington Post:

China said Tuesday there was no proof that North Korea was behind a cyberattack on Sony Pictures Entertainment, signaling its reluctance to side with the United States over the incident, while also rejecting speculation it could have cut off Pyongyang’s Internet access as punishment.

Asked about American requests for help from China to punish North Korea for cyberattacks, Hua Chunying, a spokeswoman for China’s foreign ministry, said the United States and North Korea needed to communicate directly.

She said Beijing had not seen proof of who was behind the attack on Sony. “We need sufficient evidence before drawing any conclusion,” she said at a news conference.

Administration officials had asked China last Thursday to block Pyongyang’s access to Internet routers and servers based in China, to expel North Korean hackers living in China and to pressure the regime of Kim Jong Un to end its alleged cyberoffensive against companies in the United States, according to one official.

Read the full story here.

UPDATE 15 (2014-12-22): This morning I was having trouble loading some North Korean web pages. Looks like others were as well: Martyn Williams, Bloomberg, Vox, New York Times, Wall Street Journal, Washington Post.

UPDATE 14 (2014-12-22): Martyn Williams has some more information here.

UPDATE 13 (2014-12-21): KCNA has published a second statement on the Sony hacking–this time from the National Defense Commission (the initial statement was from the Ministry of Foreign Affairs):

U.S. Urged to Honestly Apologize to Mankind for Its Evil Doing before Groundlessly Pulling up Others

Pyongyang, December 21 (KCNA) — The Policy Department of the National Defence Commission of the DPRK issued the following statement Sunday:

Strange thing that happened in the heart of the U.S., the ill-famed cesspool of injustice, is now afloat in the world as shocking news.

The Sony Pictures Entertainment, the biggest movie producer in the U.S., which produced the undesirable reactionary film “The Interview” daring hurt the dignity of the supreme leadership of the DPRK and agitating even terrorism and had a plan to distribute it, was exposed to surprisingly sophisticated, destructive and threatening cyber warfare and has been thrown into a bottomless quagmire after suffering property losses worth hundreds of millions of dollars.

The public in the U.S. is now describing this case as “disgrace suffered by Sony Pictures Entertainment,” “very sorry thing caused by the U.S.,” “Sony Pictures Entertainment showing a white flag before hackers” and the “unprecedented disaster suffered by the U.S.”

Those who meted out a stern punishment of justice were reported to be cyber experts styling themselves “guardians of peace”.

Seized with terrible horror and threat in face of their merciless hacking attack in retaliation against unjust actions, many movie and drama distributors in North America including 41 states of the U.S. and Canada immediately canceled the screening of the reactionary movie. And it was reported that the Sony Pictures Entertainment which directly sponsored its production and distribution hastily issued a statement on Dec. 25 that it would suspend the screening of the undesirable movie which had been planned in 63 countries.

The NDC of the DPRK highly estimates the righteous action taken by the “guardians of peace,” though it is not aware of their residence.

It, at the same time, considers as fortunate the step taken by the Sony Pictures Entertainment to give up the overall distribution of the above-said movie due to the decision and strong pressure of the movie and drama distributors for stopping the screening of the reactionary movie, though belatedly.

This is an official stand of the army and the people of the DPRK on what happened in the heart of the U.S.

This stand is taken by the DPRK because the movie “The Interview” is an undesirable and reactionary one justifying and inciting terrorism which should not be allowed in any country and any region.

Another reason is that the movie is run through with a story agitating a vicious and dastardly method of assassinating a head of a legitimate sovereign state.

No wonder, even political and social circles of the U.S. commented that it is quite wrong to defame the head of the state for the mere reason that his politics is different from that of the U.S. and it is in the hostile relationship with the latter and, therefore, the Sony Pictures Entertainment got into a serious trouble and paid a due price.

For these reasons, the DPRK is more highly praising the “guardians of peace” for their righteous deed which prevented in advance the evil cycle of retaliation– terrorism sparks terrorism.

It is quite natural that the movie and drama producers should refrain from undesirable deeds contrary to the noble mission to lead morality and civilization.

But what matters is that the U.S. and its followers are groundlessly trumpeting that the recent cyber attack was made by the DPRK.

The FBI issued the results of the investigation into the hack at the Sony Pictures Entertainment on December 19.

According to them, it suffered tremendous losses.

One may say this is the due price incurred by wrong deed, the evil act of hurting others.

The U.S. released a statement asserting that this loss was caused by the DPRK.

No matter how big and disgraceful the loss may be, the U.S. should not pull up others for no reason.

The FBI presented a report on the results of technical analysis of hacking program used by the “guardians of peace” for this attack, citing it as the ground that the serious hacking was caused by the DPRK.

The report says the malignant code had access to north Korea’s IP already known several times and the hacking methods applied in the “March 20 hacking case” and during cyber warfare against media and various other computer networks in south Korea in recent years are similar to that applied against the Sony Pictures Entertainment this time, being another ground that “this was done by the north”.

The report, in particular, adds that the malignant code and algorithm applied during the attack are similar to what was used during the hacking attack on south Korea, citing it as a proof.

Not satisfied with those groundless “evidence”, the FBI is letting loose ambiguous remarks that it is hard to fully prove due to the “protection of sensitive information sources.”

This means self-acknowledgement that the “assertion about the north’s deed” came from an intentional allegation rather than scientific evidence.

It is a common sense that the method of cyber warfare is almost similar worldwide. Different sorts of hacking programs and codes are used in cyberspace.

If somebody used U.S.-made hacking programs and codes and applied their instruction or encoding method, perhaps, the “wise” FBI, too, could not but admit that it would be hard to decisively assert that the attack was done by the U.S.

Moreover, the DPRK has never attempted nor made a “cyber-attack” on south Korea. The rumor about “cyber-attack” by the DPRK was a concoction made by the south Korean puppet regime and its plot.

After all, the grounds cited by the FBI in its announcement were all based on obscure sci-tech data and false story and, accordingly, the announcement itself is another fabrication. This is the DPRK’s stand on the U.S. gangster-like behavior against it.

What is grave is that U.S. President Obama is recklessly making the rumor about “DPRK’s cyber-attack on Sony Pictures” a fait accompli while crying out for symmetric counteraction, strict calculation and additionally retaliatory sanctions.

This is like beating air after being hit hard. A saying goes every sin brings its punishment with it. It is best for the guilty to repent of its evil doings and draw a lesson when forced to pay dearly for them.

The DPRK has clear evidence that the U.S. administration was deeply involved in the making of such dishonest reactionary movie.

It is said that the movie was conceived and produced according to the “guidelines” of the U.S. authorities who contended that such movies hurting the dignity of the DPRK supreme leadership and inciting terrorism against it would be used in an effective way as “propaganda against north Korea”.

The U.S. Department of State’s special human rights envoy went the lengths of urging the movie makers to keep all scenes insulting the dignity of the DPRK supreme leadership in the movie, saying it is needed to “vex the north Korean government”.

The facts glaringly show that the U.S. is the chief culprit of terrorism as it has loudly called for combating terrorism everywhere in the world but schemed behind the scene to produce and distribute movies inciting it in various countries of the world.

It is not exaggeration to say in the light of the prevailing situation that the U.S. administration and President Obama looking after the overall state affairs of the U.S. have been behind the case.

Can he really cover up the crimes he has committed by trying so hard to falsify the truth and turn white to black.

So we watched with unusual attention what had been done by the “guardians of peace” to avert terrorism and defend justice.

Yet, we do not know who or where they are but we can surely say that they are supporters and sympathizers with the DPRK.

The army and people of the DPRK who aspire after justice and truth and value conscience have hundreds of millions of supporters and sympathizers, known or unknown, who have turned out in the sacred war against terrorism and the U.S. imperialists, the chieftain of aggression, to accomplish the just cause.

Obama personally declared in public the “symmetric counteraction”, a disgraceful behavior.

There is no need to guess what kind of thing the “symmetric counteraction” is like but the army and people of the DPRK will never be browbeaten by such a thing.

The DPRK has already launched the toughest counteraction. Nothing is more serious miscalculation than guessing that just a single movie production company is the target of this counteraction. Our target is all the citadels of the U.S. imperialists who earned the bitterest grudge of all Koreans.

The army and people of the DPRK are fully ready to stand in confrontation with the U.S. in all war spaces including cyber warfare space to blow up those citadels.

Our toughest counteraction will be boldly taken against the White House, the Pentagon and the whole U.S. mainland, the cesspool of terrorism, by far surpassing the “symmetric counteraction” declared by Obama.

This is the invariable toughest stand of the army and people of the DPRK.

Fighters for justice including “guardians of peace” who turned out in the sacred drive for cooperation in the fight against the U.S. to defend human justice and conscience and to dismember the U.S. imperialists, the root cause of all sorts of evils and kingpin of injustice, are sharpening bayonets not only in the U.S. mainland but in all other parts of the world.

The just struggle to be waged by them across the world will bring achievements thousands of times greater than the hacking attack on the Sony Pictures Entertainment.

It is the truth and inevitability of the historical development that justice prevails over injustice.

Whoever challenges justice by toeing the line of the biggest criminal U.S. will never be able to escape merciless punishment as it is the target of the sacred drive for cooperation in the fight against the U.S.

The U.S. should reflect on its evil doings that put itself in such a trouble, apologize to the Koreans and other people of the world and should not dare pull up others.

UPDATE 12 (2014-12-21): Obama states he will consider adding the DPRK back to the list of state sponsors of terror. According to the New York Times:

As the United States moves closer to taking Cuba off the list of state sponsors of terrorism, President Obama said he would “review” whether to return North Korea to the list, part of a broader government response to a damaging cyberattack on Sony’s Hollywood studio.

“We have got very clear criteria as to what it means for a state to sponsor terrorism, and we don’t make those judgments just based on the news of the day,” Mr. Obama told CNN in an interview broadcast Sunday. “We look systematically at what’s been done.”

North Korea was removed from the list six years ago, but the government has again prompted the ire of the United States after the F.B.I. said it had extensive evidence that linked the North Korean government to a cyberattack on Sony Pictures.

UPDATE 11 (2014-12-21): Media reports indicate the US will seek Chinese support to resolve North Korean hacks. According to the New York Times:

The Obama administration has sought China’s help in recent days in blocking North Korea’s ability to launch cyberattacks, the first steps toward the “proportional response” President Obama vowed to make the North pay for the assault on Sony Pictures — and as part of a campaign to issue a broader warning against future hacking, according to senior administration officials.

“What we are looking for is a blocking action, something that would cripple their efforts to carry out attacks,” one official said.

So far, the Chinese have not responded. Their cooperation would be critical, since virtually all of North Korea’s telecommunications run through Chinese-operated networks.

It is unclear that China would choose to help, given tensions over computer security between Washington and Beijing since the Justice Department in May indicted five hackers working for the Chinese military on charges of stealing sensitive information from American companies.

The secret approach to China comes as American officials, convening a half-dozen meetings in the White House Situation Room last week, including one of the top national security team on Thursday night, have been developing options to give to the president during his vacation in Hawaii. They include new economic sanctions, mirroring those recently placed on Russian oligarchs and officials close to President Vladimir V. Putin, which would cut off their access to cash — the one perk that allows the elite surrounding Kim Jong-un, the North Korean leader, to live lifestyles their starving countrymen can barely imagine.

The sessions also included discussions of “information operations” directed at the North Korean people, officials said, but similar efforts by South Korea to sway opinion in the North have often created a furious backlash.

This was also covered by the Wall Street Journal.

Although China has made no public response to the request, a separate report in the New York Times indicates that frustration with the DPRK among China’s leadership is as an all time high.

UPDATE 10 (2014-12-20): The DPRK denies involvement and makes an offer:

DPRK Foreign Ministry Rejects U.S. Accusation against Pyongyang over Cyber Attack

Pyongyang, December 20 (KCNA) — A spokesman for the Foreign Ministry of the DPRK gave the following answer to a question put by KCNA Saturday as regards the U.S. accusation against the DPRK over a cyber attack on a movie company in the U.S.:

Obama, Kerry and other high-ranking authorities of the U.S. cried out for sort of counter-measure Friday, claiming that the results of the investigation into the cyber-attack on the Sony Pictures Entertainment proved that the DPRK was behind it.

They, without presenting any specific evidence, are asserting they can not open it to public as it is “sensitive information.”

Clear evidence is needed to charge a sovereign state with a crime.

Reference to the past cyber-attacks quite irrelevant with the DPRK and a string of presumptive assertions such as “similarity” and “repetition” can convince no one.

The U.S. act of daring charge the DPRK with a crime based on absurd “investigation results” reveals its inveterate bitterness toward the DPRK.

This is proven, as in the recent cyber-attack, by the recent urge made by a man called a “human rights special envoy” of the U.S. State Department to movie-makers that they should harass the north Korean government and keep alive scenes hurting the dignity of the its supreme leadership.

The U.S. ruling quarters are working hard to divert the criticism of its administration to the DPRK as the plan of putting on show the anti-DPRK film on Christmas Day canceled due to the controversial cyber-attack, causing an uproar in the U.S.

We will never pardon those undesirable elements keen on hurting the dignity of the supreme leadership of the DPRK. In case we retaliate against them, we will target with legitimacy those responsible for the anti-DPRK acts and their bases, not engaging in terrorist attack aimed at the innocent audience in cinemas.

The army of the DPRK has the will and ability to do so.

The U.S. State Secretary is going to justify the production of the movie hurting the dignity of the supreme leadership of a sovereign state while trumpeting about the freedom of expression. He should know that there is punishment of libel in enforcement of international law.

We propose the U.S. side conducting a joint investigation into the case, given that Washington is slandering Pyongyang by spreading unfounded rumor.

We have a way to prove that we have nothing to do with the case without resorting to torture as what the CIA does.

The U.S. should bear in mind that it will face serious consequences in case it rejects our proposal for joint investigation and presses for what it called countermeasure while finding fault with the DPRK.

UPDATE 9 (2014-12-19): Some technology writers still believe the the DPRK was not behind the attack. And here. And here.

UPDATE 8 (2014-12-19): US Department of State on the hacking.

UPDATE 7 (2014-12-19): President Obama makes remarks on the hackingMore politics here.

UPDATE 6 (2014-12-19): There is the official FBI press release on the matter.

UPDATE 5 (2014-12-19): The New York Times has published information from the FBI that implicates the DPRK in the Sony hack:

The F.B.I. on Friday said it had extensive evidence that the North Korean government organized the cyberattack that debilitated Sony Pictures computers, marking the first time the United States has explicitly accused the leaders of a foreign nation of hacking American targets.

The bureau said that there were significant “similarities in specific lines of code, encryption algorithms, data deletion methods, and compromised networks” to previous attacks by the North Koreans. It also said that there were classified elements of the evidence against the North that it could not reveal.

“The F.B.I. also observed significant overlap between the infrastructure used in this attack and other malicious cyberactivity the U.S. government has previously linked directly to North Korea,” the bureau said. “For example, the F.B.I. discovered that several Internet protocol addresses associated with known North Korean infrastructure communicated with I.P. addresses that were hardcoded into the data deletion malware used in this attack.”

The F.B.I. said that some of the methods employed in the Sony attack were similar to ones that were used by the North Koreans against South Korean banks and news media outlets in 2013.

“We are deeply concerned about the destructive nature of this attack on a private sector entity and the ordinary citizens who worked there,” the F.B.I. said.

It added: “Though the F.B.I. has seen a wide variety and increasing number of cyberintrusions, the destructive nature of this attack, coupled with its coercive nature, sets it apart. North Korea’s actions were intended to inflict significant harm on a U.S. business and suppress the right of American citizens to express themselves. Such acts of intimidation fall outside the bounds of acceptable state behavior.”

North Korea has been under extraordinary economic sanctions for decades, and it has done nothing to curb either its nuclear program or these cyberattacks. A military response seems unlikely — the White House said on Thursday that it was examining options for a “proportional response,” and that would seem to rule out conventional military options.

Some of the evidence has been developed from “implants” that the National Security Agency has placed in networks around the world. But North Korea has proved to be a particularly hard target, because it has relatively low Internet connectivity to the rest of the world, and its best computer minds do not move out of the country often, where their machines and USB drives could be accessible targets.

“Suffice it to say,” one senior intelligence official said this week, “that we almost never name a suspect country. So when we do, it’s got to be based on something fairly strong.”

As the F.B.I. pointed out, the attacks at Sony share similarities with a similar series of destructive attacks last year on South Korean banks and broadcasters, and they used the same data-wiping tool that Iranian hackers used to destroy data on 30,000 computers at Saudi Aramco in 2012, according to forensics researchers.

In 2009, a similar campaign of coordinated cyberattacks over the Fourth of July holiday hit 27 American and South Korean websites, including those of South Korea’s presidential palace, called the Blue House, and its Defense Ministry, and sites belonging to the United States Treasury Department, the Secret Service and the Federal Trade Commission. North Korea was suspected, but a clear link was never established.

But those were all “distributed denial of service” attacks, in which attackers flood the sites with traffic until they fall offline. The Sony attack was far more sophisticated: It wiped data off Sony’s computer systems, rendering them inoperable.

“The cyberattack against Sony Pictures Entertainment was not just an attack against a company and its employees,” Jeh C. Johnson, the secretary of the Department of Homeland Security, said in a statement. “It was also an attack on our freedom of expression and way of life.”

Mr. Johnson said the attacks underscored the importance of taking measures “to rapidly detect cyberintrusions and promote resilience throughout all of our networks.”

“Every C.E.O. should take this opportunity to assess their company’s cybersecurity,” he added.

UPDATE 4 (2014-12-18): Paramount has chickened out and will not let any theater show “Team America” right now…See here and here.

UPDATE 3 (2014-12-18): Christmas day screening of Team America at the Alamo Draft House is already sold out.

UPDATE 2 (2014-12-18): Maybe time for a Team America sequel?

UPDATE 1 (2014-12-18): Team America to the rescue! At least one American theatre will stick up for the first amendment. And let’s be honest, it is probably a much better movie.

Oh, and this.

ORIGINAL POST (2014-12-17): Today Sony Pictures announced it was canceling the opening of the film The Interview. According to NBC:

Sony is dropping its planned Dec. 25 release of “‘The Interview,” the comedy starring Seth Rogen and James Franco that depicts the assassination of North Korean leader Kim Jong Un.

The decision comes after some of the nation’s largest movie theater chains, including Regal, Cinemark, Carmike and Cineplex, said they were holding back or dropping “The Interview” from screens in the aftermath of a hack that has ballooned from embarrassing disclosures for Sony Pictures executives to involve threats against theaters screening the film.

“Sony Pictures has been the victim of an unprecedented criminal assault against our employees, our customers, and our business,” Sony said in a statement Wednesday, saying that it reached the decision after the top cinema chains pulled out.

“Those who attacked us stole our intellectual property, private emails, and sensitive and proprietary material, and sought to destroy our spirit and our morale — all apparently to thwart the release of a movie they did not like. We are deeply saddened at this brazen effort to suppress the distribution of a movie, and in the process do damage to our company, our employees, and the American public,” the company said.

At the same time, another North Korea themed film was also put on hold.

This seemed like a massive over-reaction in my opinion until a few minutes later when this story was published by the New York Times:

American intelligence officials have concluded that the North Korean government was “centrally involved” in the recent attacks on Sony Pictures’s computers, a determination reached just as Sony on Wednesday canceled its release of the comedy, which is based on a plot to assassinate Kim Jong-un, the North Korean leader.

Senior administration officials, who would not speak on the record about the intelligence findings, said the White House was still debating whether to publicly accuse North Korea of what amounts to a cyberterrorism campaign. Sony’s decision to cancel release of “The Interview” amounted to a capitulation to the threats sent out by hackers this week that they would launch attacks, perhaps on theaters themselves, if the movie was released.

You can read the remainder of the article here.

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New statues at Security University of the DPRK (MSS University)

Wednesday, November 19th, 2014

MSS-Uni-Statues-2014-11-19

Pictured above: Security University of the DPRK (formerly “University of KPA Unit 10215″) in Mangyongdae District (39.044446°, 125.633676°)

KCNA has announced the unveiling of new statues of Kim Il-sung and Kim Jong-il at the “Security University of the DPRK”. The bases for these new statues can be seen in the satellite imagery, but the statues themselves can be seen in the official photos below:

MM00227339

MM00227349

According to the article:

Present there were Kim Ki Nam, Choe Thae Bok, Pak To Chun, Kim Won Hong, Jo Yon Jun, and commanding officers of the Ministry of State Security, officials of security organs at various levels and teachers, students and employees of the university and their families and officials and those of meritorious services of units which contributed to erecting the statues.

Kim Jong-il last visited this facility on May 5, 2009. Kim Jong-un has yet to make an official visit.

univ-of-KPA-unit-10125

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Kumgang Resort operational status (UPDATED)

Monday, July 14th, 2014

Pictured above (Google Earth): April 2010 satellite imagery of the Kumgang tourist resort

The Kumgang resort was receiving 400,000 visitors per year until in July 2008 it became the scene of a terrible tragedy, the shooting of a South Korean tourist. Following the incident, the South Korean government prohibited its citizens from visiting the resort until the DPRK allowed a joint-Korean investigation of the shooting and made a guarantee of future safety.  The DPRK never agreed to these terms so the park fell idle.

The suspension of the project has cost the DPRK government millions of dollars. In response it has moved to pressure the ROK government to change course and allow the tours to resume. Below I have kept a timeline of the course of these events and their outcomes.

___________

2014-7-14: The Hankyoreh marks July 11–the 6th anniversary of the day when tours to Mt. Keumgang in North Korea were suspended. 

“As a result of the suspension of tourism to Mt. Keumgang, we have lost nearly 1 trillion won [US$981 million], including the 300 billion won [US$294.32 million] invested in the facilities and an estimated 530 billion won in lost revenue,” the investors said. They urged the governments of North and South Korea to immediately hold working-level talks to resume tourism to Mt. Keumgang and to hold reunions for divided families.

“The position of the government is that the issue of the safety of its citizens must be resolved before it can allow tours to Mt. Keumgang to resume. In addition, given the continuing UN Security Council sanctions in response to North Korea’s nuclear and missile testing, which occurred after tours to Mt. Keumgang were halted, we think that the tours cannot be resumed until the government indicates that doing so would not be in violation of UN sanctions,” said Ministry of Unification spokesperson Kim Ui-do during a regular press briefing on July 11.

2012-11-27: The Hankyoreh reports that North Korea provided a written guarantee for the safety of tourists at Mt. Kumkang during 2010 working level talks with the South Korean government.

2011-9-6: South Korea asks foreigners not to invest in Kumgang saying such investments would violate existing property rights.

2011-9-6: Park Chol-su, head of Daepung International Investment Group, said he wants to discuss with South Korea’s Hyundai Asan how to handle its assets at the North’s Mount Kumgang.

2011-8-31: Chinese tourists arrive in Kumgang on Mangyongbong.

2011-8-30: South Korea calls for international boycott of Kumgangsan resort

2011-8-28: Taephung Investment Group outlines new Kumgang business plan

2011-8-24: Kumgang opened to DPRK and Chinese toursits

2011-8-23: South Korean workers leave Kumgang

2011-8-22: DPRK orders expulsion of remaining South Korean staff, auctioning of assets

2011-8-19: Hyundai officials visit Kumgang amid dispute over fate of company assets

2011-8-6: Steve Parks claims he has signed an MOU with the DPRK government

2011-6-2: “DPRK Law on Special Zone for International Tour of Mt. Kumgang” released. PDF of the statute here.

2011-4-29: SPA designates Kumgang special zone

2011-4-1: DPRK rescinds Hyundai’s Kumgang contract rights

2010-11-15: Kumgang re-fozen

2010-10-31: Family reuniuons were held there in October/November

2010-8-7: DPRK using Kumgagn assets to serve tourists in the North

2010-5-16: Taephung shows Chinese investors Kumgang

2010-5-3: Most South Korean and Chinese employees leave

2010-4-25: The National Defense Commission takes over the properties and puts the Korea Taepung International Investment Group in charge of attracting investors and tourists to the resort.

2010-4-23: Seoul denounces the seizure

2010-4-11: Chinese tourists began arriving at the resort (here and here).

2010-4-11: Employees told to leave/sealed up

2010-4-11:The DPRK “seizes” the Hyundai properties in the Kumgang resort

2010-3-24: Investors worried about losing out

2010-3-18: DPRK threatens to seize Kumgang Resort

2010-3-18: Hyundai-Asan’s chief offers to resign

2010-3-10: DPRK threatens to revoke contracts with South Korean partner, Hyundai-Asan

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New KNIC web page

Thursday, June 19th, 2014

The Korea National Insurance Corporation (KNIC) has a new web page that is internet accessible. Martyn Williams was the first to notice it. Although the web page offers information in English and Korean, I have only examined the English portal and I am unaware if there are significant differences between the two.

According to the web page:

KNIC, as a sole insurer of the DPR Korea has over 10 provincial insurance branches and over 200 insurance offices at municipal (district) and county levels under its umbrella nationwide and representative offices overseas.

The English web page provides basic financial and corporate information from 2008-2012. You can check out financial highlights, underwriting performance, and the consolidated balance sheet. It is unclear why 2013 and Q1 2014 data is not presented, but it is not like the shareholders or regulators are going to be up in arms about it.

On the corporate side we have a letter from the chairman of the executive management committee (since there are no shareholders he cannot be chairman of the board of directors)–again seeming to date from late 2012 or early 2013. We also see a list of the members of the executive management committee and an organization chart. The organization chart shows a list of internal divisions but does not explain how KNIC is linked to the cabinet.

KNIC posted a table of financial data (all numbers are in millions of KPW and cannot be verified):

KNIC-table

The chart shows gross written premiums (총접수보험료) experienced an average growth of 16.6% (from 41,939m KPW to 48,905m KPW) between 2008 and 2012. Investment revenue (투자수입) also increased 87% (from 1,597m KPW to 2,996w KPW). Profits (순소득), however, fell 31% on average from 8,041m KPW in 2008 to 5,544m KPW in 2012. So over time, the firm has experienced increasing costs. I am not sure what these costs are, but if you love forensic accounting, please go through the financial reports and let me know.

The DPRK won experienced a significant loss in value compared to the US$ on the black market in 2012, falling from 4,400 to 9,100 per 1$. Using an annual average rate of 6,750 KPW to the US$, profits totaled just $821,333. Using the black market rate of 9,100, profits total $609,203. Using the official rate of 100KPW to the US$, profits grow to $55.44 million. Using the official Euro rate of 130KPW, profits total E42.64 million.

It is unclear what exactly “Pre-state payment result” (국가납부전 결과) is, but I believe it is the equivalent of “Earnings Before Taxes (EBT)” under Generally Accepted Accounting Principles (GAAP). Since the DPRK has officially abolished taxes, direct cash transfers to the state must take another name, so it appears to simply be “State Payment”, but it is definitely not “tax”.

“Profit for the year” listed for each year is .675 of the “Pre-state payment result” which tells us the unofficial tax rate on the firm is a flat 32.5% (1-.675) on net earnings.

It is unclear what happens with profits in these firms. In privately owned firms in capitalist countries, profits are generally reinvested in the business or distributed as dividends to shareholders, partners, or proprietors.

Moving on to the corporate side, the web site lists the following major operational departments:

1. Property Insurance Department is in charge of non-life insurance classes, such as property, crop, livestock, engineering and motor applied from institutions, enterprises, cooperatives and individual citizens.

2. Marine Insurance Department handles such lines as marine hull, cargo and liability, aviation hull and liability applied from institutions, enterprises and cooperatives.

3. Life Insurance Department provides life and personal accident coverage applied from institutions, enterprises, cooperatives and individual citizens.

4. Economic Cooperation Insurance Department offers different classes of insurance to newly developed economic zones and foreign invested enterprises (foreigners, joint ventures, representative offices, correspondent branch offices, embassies and international organizations) including Rason Economic and Trade Zone and Hwanggumphyong and Wihua Islet Economic Zone.

5. Reinsurance Department organizes reinsurance protection for primary insurance accounts written by KNIC. This department has a bad reputation in the west.

6. Investment Department conducts investment activities into financial securities and mining, and manages non-insurance enterprises like a shipping company.

7. Additional divisions: Market Research, Insurance Cooperation, Financial Supervision, Finance & Accounting, Administration and Protocol, all of which are engaged in their respective functions.

 

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Zimbabwe signs $5m contracts with DPRK for statue and museum

Wednesday, March 12th, 2014

According to the Christian Science Monitor:

The cost of Bona Mugabe’s wedding on March 1, attended by the heads of state of South Africa, Zambia, and Equatorial Guinea at Mugabe’s private home in Harare’s plush Borrowdale suburb, cost $5 million.

Just after the wedding, plans leaked out that Mugabe’s Zanu (PF) government clandestinely signed North Korea, one of its old friends, to build two statues of Mugabe at an estimated cost of $5 million.

The statues were commissioned by the minister of local government, Ignatius Chombo.

One is a nearly 30-foot high bronze image worth $3.5 million to be placed in Harare; the other is a $1.5 million version to be placed in a $3.8 million museum to be built in Mugabe’s rural Zvimba home, in Mashonaland West. Building statues of leaders is something North Korea has considerable experience doing.

Read more about the story at Bloomberg and Bulawayo 24.

I have documented many of North Korea’s Africa projects on this web page.  See here.

Read the full story here:
Mugabe splashes $5m on N. Korea statues
Christian Science Monitor
Mxosili Ncube
2014-3-12

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DPRK insists Jang purge will not lead to economic policy change

Sunday, December 15th, 2013

Following Jang’s purge, there has been speculation about what exactly will happen to economic relations between China and the DPRK and with ongoing efforts to introduce economic reform measures in the DPRK. According to the People’s Daily (China):

The execution of the uncle of Pyongyang’s top leader may temporarily affect some cooperation projects with China, but economic ties between the neighbors will remain stable in the long run, analysts say.

The Democratic People’s Republic of Korea’s official news agency KCNA reported on Friday that Jang Song-thaek, uncle of supreme leader Kim Jong-un, was executed on Thursday for being a traitor.

Jang was in charge of economic affairs and cooperation with China.

“Following Jang’s execution, the DPRK is likely to review cooperation projects with China,” said Gao Haorong, an expert on DPRK studies at the Xinhua Center for World Affairs Studies, a think tank under Xinhua News Agency.

Jang led delegations to China for negotiations on economic projects, including Hwanggumpyong Island, a special economic zone near Dandong in Liaoning province.

Chen Qi, a professor in international affairs at Tsinghua University, said that after Jang’s execution, China and the DPRK may need some time to rebuild connections to continue cooperation on such projects and to further their economic cooperation.

But Wang Junsheng, a researcher in East Asian studies at the Chinese Academy of Social Sciences, said the impact will be short-term and limited.

“Pyongyang needs China to support its economic development, and this offers opportunities for Chinese companies, so both sides want to advance ties,” Wang said.

“Both countries have the will to consolidate their relations, given frequent high-level visits,” he said.

The latest such exchange saw Chinese Assistant Foreign Minister Zhang Kunsheng meet a visiting delegate from the DPRK’s Foreign Ministry on Friday.

At a news briefing on Friday, Chinese Foreign Ministry spokesman Hong Lei said China hopes and believes that economic relations between the two countries will continue to advance.

Hong said it is in line with the interests of both to develop economic ties. China will further promote economic cooperation with the DPRK.

He described Jang’s execution as “an internal affair” of the DPRK.

In response, the DPRK has started sending signals that Jang’s purge will not lead to any surprises. Eric Talmadge writes for the Associated Press:

The execution Friday of Jang, considered to be North Korea’s second most powerful man and a key architect of the country’s economic policies, should not be taken as a sign that the North will change its economic course or its efforts to lure foreign investment, Yun Yong Sok, a senior official in the State Economic Development Committee, said in an interview with The Associated Press in Pyongyang.

“Even though Jang Song Thaek’s group caused great harm to our economy, there will be no change at all in the economic policy of the Democratic People’s Republic of Korea,” Yun said. “It’s just the same as before.”

Jang’s sudden purge and execution for allegedly trying to overthrow the government has raised questions about how solid the North Korean regime is and whether it will be able to stay the course on policies aimed at raising the country’s standard of living.

The North has shown no willingness to abandon its nuclear weapons program to get out from under international trade sanctions. That makes investment or financing from major international organizations difficult if not impossible.

It also means the success of the zones hinges on China, North Korea’s only major ally, and Jang was seen as a crucial conduit between Pyongyang and Beijing, along with being a supporter of China-backed reforms, such as the zones, to revive the North’s moribund economy.

Jang met with top Chinese officials during their visits to Pyongyang, and in 2012 traveled to China as the head of one of the largest North Korean delegations ever to visit the Chinese capital to discuss construction of the special economic zones, which Beijing hopes will ensure North Korea’s stability.

Yun, however, downplayed Jang’s importance in policymaking and said his removal would instead speed progress on the economic front because he was a threat to the unity of the nation. He said Jang’s execution should not scare away Chinese investment, which is crucial to the success of the zones.

“By eliminating the Jang Song Thaek group, the unity and solidarity of our party and people with our respected marshal at the center has become much stronger, our party has become more determined and the will of our soldiers and people to build a prosperous socialist country has been strengthened,” Yun said. “Our State Economic Development Committee welcomes investment and business from any country to take part in the work of developing our new economic zones.”

Yun said local officials have been tasked with drawing up the plans for the zones in their jurisdictions and are likely to formally submit them for approval to his commission within the next few months.

At the same time, rumors from the South Korean media indicate that North Korean businessmen in China are returning home in large numbers. According to Yonhap (2013-12-14):

North Korean businessmen in China have been summoned back to their country in large numbers in connection with the execution of North Korea’s No. 2 man two days ago, sources familiar with the issue said Saturday.

The businessmen worked out of the northeastern Chinese cities of Shenyang and Dandong to facilitate trade between the two countries and attract Chinese investment in North Korea, according to the sources.

The top North Korean official in charge of promoting economic ties with China is believed to have been Jang Song-thaek, the once-powerful uncle of North Korean leader Kim Jong-un.

With Jang’s execution on Thursday, however, North Korea appears to be cracking down on those loyal to him by summoning them back to their country, the sources said.

Jang was executed immediately after a special military tribunal found him guilty of treason, according to the North’s state media.

“Large numbers of North Korean businessmen in Shenyang and Dandong have gone home in a hurry this week,” said one source, who declined to be identified.

“Judging from their numbers and the fact that it was so sudden, it doesn’t appear to be related to the second anniversary of (the death of former North Korean leader) Kim Jong-il on Dec. 17,” the source said, referring to the late father of the current leader.

According to another source, Norea Korea plans to summon all of its officials and staff from China in stages.

“The ostensible reason will be to educate them on the government’s policies, but (in fact), those classified as having connections to Jang Song-thaek will never be able to go abroad again and will be purged,” the source said, also requesting anonymity.

On Chinese report insinuated that Jang’s ouster could affect Chinese investment in the Hyesan Youth Copper Mine. According to Shanghai Metals Market:

 North Korea’s Zhang Chengze [Jang Song-thaek]  event might undermine Wanxiang Group’s 500-million-yuan ($81.6 million) investment in Huishan copper mine [Hyesan Youth Copper Mine], according to a report by the business magazine China Entrepreneur.

Back in 2004, Wanxiang Group’s chairman Lu Guanqiu started investing in Huishan copper mine with a joint venture company Sino-Mining International Investment Co. and added up total investments to 560 million yuan over the years, according to the report.

The mine, said to have a copper reserve largest in Asia and located just 10 kilometers from the China-North Korea border, was put into production in 2011. Yet daily operations met with many political hurdles since, the report said.

Zhang Chengze, North Korea’s young leader Kim Jeong-eun’s uncle and close aid with a pro-China view, was executed by Kim earlier this month.

Both the Rason and Hwanggumphyong Special Economic Zones have been brought to a standstill following Jang’s purge. Leaders from both projects have been called back to Pyongyang.

You can read posts related to Jang’s purge here.

Click to read posts on the Economic Development Zones and the new Law on Economic Development Zones.

Read the full story here:
N Korean Official: Purge Won’t Hurt Economic Policy
Associated Press
Eric Talmadge
2013-12-15

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Largest known rare earth deposit discovered in DPRK

Thursday, December 5th, 2013

2013-12-Jongju

Pictured above (Google Earth): Jongju County

According to Mining.com:

Privately-held SRE Minerals on Wednesday announced the discovery in North Korea of what is believed to be the largest deposit of rare earth elements anywhere in the world.

SRE also signed a joint venture agreement with the Korea Natural Resources Trading Corporation for rights to develop REE deposits at Jongju in the Democratic People’s Republic of Korea for the next 25 years with a further renewal period of 25 years.

The joint venture company known as Pacific Century Rare Earth Mineral Limited, based in the British Virgin Islands, has also been granted permission for a processing plant on site at Jongju, situated approximately 150 km north-northwest of the capital of Pyongyang.

The initial assessment of the Jongju target indicates a total mineralisation potential of 6 billion tonnes with total 216.2 million tonnes rare-earth-oxides including light REEs such as lanthanum, cerium and praseodymium; mainly britholite and associated rare earth minerals. Approximately 2.66% of the 216.2 million tonnes consists of more valuable heavy rare-earth-elements.

According Dr Louis Schurmann, Fellow of the Australasian Institute of Mining and Metallurgy and lead scientist on the project, the Jongju deposit is the world’s largest known REE occurrence.

The 216 million tonne Jongju deposit, theoretically worth trillions of dollars, would more than double the current global known resource of REE oxides which according to the US Geological Survey is pegged at 110 million tonnes.

Minerals like fluorite, apatite, zircon, nepheline, feldspar, and ilmenite are seen as potential by-products to the mining and recovery of REE at Jongju.

Further exploration is planned for March 2014, which will includes 96,000m (Phase 1) and 120,000m (Phase 2) of core drilling, with results reported according to the Australia’s JORC Code, a standard for mineral disclosure similar to Canada’s widely used National Instrument 43-101.

Also from Mining Weekly:

SRE Minerals Limited announces the results of exploration and studies in collaboration with the Korea Natural Resources Trading Corporation of the Democratic People’s Republic of Korea

SRE Minerals Limited (“SRE” or “the company”) announced today their joint venture agreement with the Korea Natural Resources Trading Corporation for rights to develop all rare-earth-element deposits at Jongju, North Pyongan Province.

The joint venture company known as Pacific Century Rare Earth Mineral Limited has the rights under the joint venture agreement which includes the exploration, mining, beneficiation and marketing of all REE deposits in the Jongju area for the next 25 years with a further renewal period of 25 years.

Under the terms of the JV agreement SRE has also been granted permission for a National Rare Earth Mineral Processing Plant on site at Jongju, which is situated approximately 150 km north-northwest of the capital city of Pyongyang, within the North Pyongan Province, Democratic People’s Republic of Korea.

Leading Australian mining and geological consultancy, HDR Salva Resources Pty Ltd, has been SRE’s technical representative for the project and has been commissioned to access the mineralised potential of the Jongju REE target* with special reference to detailed mapping, extensive trenching and limited drilling.

HDR Salva Resources (Pty) Ltd.’s initial assessment of the Jongju REE Exploration Target* indicates a total mineralisation potential of 6.0 Bt (216.2 Mt total rare-earth-oxides including light rare-earth- elements such as lanthanum, cerium and praseodymium (mainly britholite and associated rare earth minerals). Approximately 2.66% of the 216.2 Mt TREO consists of heavy rare-earth-elements. A detailed classification of mineralised potential present in the Jongju REE Target* is presumed to be:

• 664.8 Mt @ >10.00% TREO,
• 1.1 Bt @ 4.72% TREO,
• 579.4 Mt @ 3.97% TREO, and
• 3.63 Bt @ 1.35% TREO.

Dr Louis Schurmann said: “The Jongju Target* would appear to be the World’s largest known REE occurrence.”

Technical information in this announcement has been compiled by Dr Louis W. Schurmann, who is a Fellow of the Australasian Institute of Mining and Metallurgy and a Professional Natural Scientist with over 18 years of experience relevant to the styles and types of rare earth mineral deposits under consideration, and to the activities which has been undertaken to qualify as a Competent Person as defined by the Australasian Code for Reporting of Minerals Resources and Reserves (JORC) 2004. Dr Schurmann consents to the inclusion of information in this publication.

Further exploration is planned to recommence in March 2014, which will include 96,000m (Phase 1) and 120,000m (Phase 2) of core drilling. Results from the exploration program will be reported according to the Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Mineral Council of Australia (JORC Code (2004 / 2012)).

Investigations by the DPRK’s Academy of Science geologists have also identified several HREE targets*. There are also seven newly discovered carbonatite complexes which have been identified as green-field exploration targets. Exploration programs have been planned to assess their potential in 2014, together with the evaluation of known bastnasite and monazite deposits.

According to the mentioned HDR Salva Resources’ assessment, the Jongju REE Target* also contains economical quantities of rare and critical metals associated with fluorite, apatite, zircon, magnetite, ilmenite, nepheline and feldspar. These commodities will also be addressed during future exploration and further studies.
“This joint venture agreement reinforces the strong and constructive relationship SRE has developed with the DPRK over that time,” he said.

“The REE resource potential of the DPRK, while estimated to be massive has only been lightly explored to date. Given the major economic significance of the effective utilisation of these important minerals to the DPRK, we look forward to working in close co-operation with our partner to progress the development of this excellent opportunity.”

In terms of back ground, the majority of rare earth elements were sourced from placer deposits in India and Brazil in 1948. During the 1950’s, supply came mainly from South Africa, mined from large veins of rare earth-bearing monazite. Then from the 1960’s to 1980’s, rare earths were supplied primarily from the U.S., predominantly from Mountain Pass in California. Competition from China and environmental concerns eventually saw the U.S. operations shut down, and for the last 15 years China has dominated global supply. China today supplies an estimated 90-95% of the global market.

China has recently set quotas to restrict its rare earth exports, and global suppliers have made considerable headway in reducing dependence on Chinese supply. Based on this, several major rare earth companies have been taking advantage of this situation while many junior exploration companies have embarked on exploration programs to add value to small and relatively low-grade REE occurrences.

References to Exploration Target(s)* or Target(s)* in this document are in accordance with the guidelines of the JORC Code (2004). As such it is important to note that in relation to reported Exploration Targets or Target any reference to quality and quantity are conceptual in nature. Exploration carried out to date is insufficient to be able to estimate and report rare-earth mineral resources in accordance with the JORC Code (2004). It is uncertain if further exploration will result in the determination of a rare earth mineral Resource.

Further information will be available at www.pcreml.com and www.sreminerals.com

Here is coverage in Voice of America,  Time, The Diplomat.

Read the full story here:
Largest known rare earth deposit discovered in North Korea
Mining.com
Frik Els
2013-12-5

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