North Korean Economy Watch

Click image above to see KCNA video of interview with Yun Yong-sok, vice department director of DPRK Joint Venture Investment Committee

According to KCNA (2012-3-23):

The Democratic People’s Republic of Korea is willing to further improve its environment for foreign investment, Yun Yong Sok, a vice department director of the DPRK Committee for Investment and Joint Venture, told KCNA.

He said:

The nation’s economy is gaining momentum, with many industrial establishments and power stations being built across the country.

It is a consistent policy of the DPRK Government to enhance economic cooperation with other countries, while beefing up its self-reliant national economy.

In December last year, the government amended investment-related laws, including the DPRK Law and Regulations on Foreign Investment, laws on joint venture and joint collaboration and the Law on Foreign-funded Businesses and Foreigners’ Tax Payment, in step with the nation’s developing economy and international practices.

It enacted the law on economic zone on Hwanggumphyong and Wihwa islets in the River Amnok and revised and supplemented the law on the Rason economic and trade zone.

The joint development and management in the two economic zones takes on a new way of cooperation. Now it has been under way in a creditable way, driven by the active efforts of both sides of the DPRK and China.

Contracts on joint venture and joint collaboration have been on increase with the investment environment changing for the better.

Rare earth abundant in the country and infrastructure projects lure foreign investment in the DPRK.

The committee will pay deep attention to ensuring the interests of foreign investors, while invigorating the exchange and cooperation with governments, investors and businesses.

In other news, KCNA has adopted the American colloquialism “beefing up”.

Pictured above: (L) The location of the new Haedonghwa Center under construction in Pyongyang (Google Earth), and (R) a representation of the building’s exterior

The Korea Pyongyang Haedanghwa Foodstuff Company (조선평양해당화식품회사는)  has launched a new web page  on the Naenara portal providing content in English, Korean, and Chinese.

This new web site hosts pages of information not just on the company, its subsidiaries, its employees, and its products, but also on Korean food, culture and health. Among the more interesting claims made on the page:

Our service workers come from normal families, and they are not ones grown in the special environment or conditions.

The web page also provides addresses and maps of the subsidiary restaurants and factories in China and the DPRK.

Using information from the web page I was able to locate the position of the Haedanghwa Center (pictured at the top of this post).  It is obviously still under construction.  The lot on which the center is being built has been empty for the last dozen years and lies directly across the Taedong River from the new construction on Mansudae Street.

Pictured above (Rodong Sinmun): New propaganda to build awareness of the upcoming KWP conference.

Institute for Far Eastern Studies (IFES) (2012-3-7):

North Korea announced the Workers’ Party of Korea (WPK) Conference would be held in mid-April. Regarding the conference, Rodong Sinmun released an editorial on February 29.

The newspaper editorial titled, “DPRK to Greet WPK Conference with High Political Enthusiasm” commented, “the Party conference is of particular significance in the party development and accomplishment of the Juche revolution as it will open at a historic juncture when a new century of Kim Il Sung’s Korea starts.”

The editorial goes on to elaborate on the significance of the party conference:

The WPK has marked a new historic turning point in its development.

Kim Jong Un is standing at the head of the WPK and revolution.

Under his guidance the Korean revolution is making more dynamic advances and registering signal achievements in the efforts to build a thriving nation.

The party and revolution have a rosier prospect as the bloodline of Mt. Paektu is given steady continuity generation after generation and the center of the leadership and unity remains unshakable.

With Kim Jong Un at the helm of the WPK, it is shedding its rays as a steel-strong party with the greatest dynamism, a revolutionary one with a strong sense of organization and firm unity and principle and as a great mother party genuinely serving the people, deeply rooted among them.

It is the immense pride that the revolutionary comrades-in-arms of Songun are united closer around the Central Committee of the WPK, sharing thought and intention with Kim Jong Un and keeping pace with him.

The forthcoming conference of the WPK will offer an opportunity of increasing its position and role as a powerful political staff for the Songun revolution, steadfast in monolithic ideology and leadership.

The newspaper highlighted the keywords for the upcoming conference will be Kim Jong Il, Kim Jong Un and the party.

The news also emphasized that teachings of Kim Jong Il, his ideology and achievements will be upheld as the sole principle of the party. In addition, the editorial articulated songun politics will be continued as a way to advance the defense industry with Kim Jong Un as the head of the Central Committee of the WPK.

Lastly, the editorial reiterated “under the leadership of the party, revolution and miracle can be created to improve the lives of the people and to complete the construction of powerful nation.”

The Daily NK also reports that security in Pyongyang has already been tightened.

Sheena Chestnut Greitens writes in the New York Times:

What kind of deal do you make with a 20-something who just inherited not only a country, but also the mantle of one of the world’s most sophisticated crime families? When Kim Jong-un, who is thought to be 28 or 29, became North Korea’s leader in December after the death of his father, Kim Jong-il, he became the de facto head of a mafia state.

(more…)

According to the Daily NK:

The North Korean authorities have ordered the formation of ‘Day of the Sun Gift Preparation Committees’ at the provincial Party level and subordinate ‘Day of the Sun Gift Subcommittees’ at the city and county scale, Daily NK has learned.

A Yangkang [Ryanggang] Province source who spoke with Daily NK on the 6th explained, “The ‘Day of the Sun Gift Preparation Committee’ was formed at the start of this month by the provincial Party Committee to prepare for the Suryeong’s birthday, and groups of areas were banded together to form the ‘Day of the Sun Gift Subcommittees’.”

“There was no distribution for February 16th,” the source recalled. “Possibly because the central Party received reports of popular discontent about this and asked some searching questions of provincial cadres, now they are running around trying to get ready for April 15th holiday distribution.”

“Enterprise traders are mostly bringing in soy bean oil, soap and towels via Chinese customs. They are printing ‘Day of the Sun 100th Anniversary’ on the towels,” he added.

The formation of the committees has also reportedly had a noticeable influence on levels of public expectation of the April 15th festivities, representing as it does the first time that ‘Gift Preparation Committees’ have been formed since they disappeared without a trace in the mid 1990s.

“They are already saying that each household is going to receive a huge gift for this Day of the Sun, so people are really expecting a lot,” the source said, adding, “The rumor among jangmadang traders is that every house is going to get a DVD player made by Hana Electronics in Pyongyang.”

As the source noted, the move comes following significant public discontent at the lack of gifts on February 16th (Kim Jong Il’s birthday).

On February 21st, Daily NK reported new of that discontent, citing a Yangkang Province source as saying, “There was a flood of criticism about the total lack of holiday distribution for Gwangmyungsung Day, so they began telling every organ, enterprise and people’s unit meeting, ‘That is because we are close to the 100th anniversary of the Suryeong’s birth, and the Party is preparing big gifts for that.’”

North Korea began giving snacks, rice and other foodstuffs to the people every year on the birthdays of Kim Il Sung and Kim Jong Il, along with things like school uniforms and blankets every 5th and 10th year, in the 1970s. However, the system ceased to function in the 1990s as the country was gripped by famine and economic disintegration.

Meanwhile, sources also report that with the arrival of the early spring lean season, a time when many people on the Korean Peninsula have traditionally struggled to find sufficient sustenance, prices in the market are beginning to creep up.

According to the Yangkang Province source, “Until late last week the Yuan price was 607 won, but now it is up to 635 won. The price of rice has also gone from 3,300 won to 3,800 won.”

Read the full story here:
North Forms Party 4.15 ‘Gift Preparation Committees’
Daily NK
Lee Seok Young
2012-3-5

Institute for Far Eastern Studies (IFES)
2012-2-29

North Korea is likely to make an official announcement of its new economic development plan in April to commemorate the centennial anniversary of Kim Il Sung’s birthday, which is also celebrated as a national holiday in North Korea as the “Day of the Sun.” In addition to the new economic plan, North Korea is also planning to align organizations and establish appropriate legislations in the foreign economic sector. The Daepung Group was recently consolidated with the Joint Venture and Investment Committee (JVIC).

According to an unnamed North Korean source, “many organizations in North Korea with overlapping functions or with unsatisfactory performance were merged as a part of promotion of North Korean socialism. The Daepung Group was merged as a bureau under the JVIC.”

The two chiefs of the Daepung International Investment Group (Daepung Group) were Workers’ Party of Korea (WPK) Unification Strategy Department Director Kim Yang Gun, who served as the chairman of the board, and Pak Chol Su, a Korean-Chinese businessman, who headed the group as the president and elected standing vice-chairman. They were in charge of attracting large foreign investment needed for the “10-Year State Strategic Plan for Economic Development (2011-2020).”

The WPK Director of Administration Jang Song Thaek is in charge of the Daepung Group and the JVIC and is likely to have ordered the merge of the two organizations to increase work efficiency. Kim Yang Gun’s position as the head of Daepung weakened after the souring of inter-Korean relations despite his efforts to bring investment from the South. As a result, Kim will likely step down from his position and Pak Chol Su and the executive management of the JVIC will likely manage the Daepung Group in the future.

The JVIC has also faced changes in its organization with the appointment of Ri Gwang Gun as the new head of the JVIC. Other foreign investment companies and related organizations were merged and the roles of the directors were revised.

The Beijing office of the JVIC has opened its doors in December 30 last year. North Korea is likely to dispatch experts and professionals from various organizations to provide “one-stop service” to attract more investment to North Korea, starting from this April.

Kim Chol Jin is the person in charge of the JVIC Beijing Office. The Rason Special Economic Zone (SEZ) and Hwanggumpyong SEZ will have a change in leadership, as Hong Suk Hyong will replace Kim Il Young as the new vice-chairman.

The previous chairman of the JVIC, Ri Su Yong, who was also the former ambassador of the DPRK to Switzerland, is now serving as the new advisor to Kim Jong Un at the Secretary’s Office.

*Addendum: Choson Exchange has been talking about this for a couple of months.  See posts here (2012-3-4),  here (2010-2-13) and here (2012-1-10).

Pictured Above: Mansudae Grand monument.  (L) Google Earth, (R) Digital Globe

UPDATE 1 (2012-4-13): The Kim Jong-il statue and Kim Il-sung statues were unveiled today to much “fan fair”:

Above pictures via KCNA. Compare these with the photo I took of the Kim Il-sung statue in 2004.

Video of the unveiling can be found here (YouTube).

According to KCNA:

Statues of President Kim Il Sung and leader Kim Jong Il were successfully built on Mansu Hill.

The statues portray smiling Kim Il Sung who indicates the way ahead with his hand held forward and smiling Kim Jong Il blessing Songun Korea prosperous morrow while looking far into its bright future in the new century.

Large sculptures on both sides of the statues have been renovated on the highest level.

The unveiling ceremony took place with splendor Friday.

There were huge crowds of people from all walks of life, servicepersons, youth and students, 300 000 in all, on Mansu Hill and nearby streets. They were holding bouquets and balloons.

Supreme leader of the Workers’ Party of Korea and the people of the DPRK Kim Jong Un, first secretary of the WPK, first chairman of the National Defence Commission of the DPRK and supreme commander of the Korean People’s Army, was present at the opening ceremony.

Present there were senior party, state and army officials, chairpersons of friendly parties.

Also on hand were delegates to the celebrations of the centenary of the birth of the President, creators, officials and employees of the Mansudae Art Studio, officials of the party, armed forces and power bodies, social organizations, ministries and national institutions, anti-Japanese revolutionary fighters, anti-Japanese patriotic martyrs, servicepersons of the Korean People’s Army and the Korean People’s Internal Security Forces (KPISF), officials in the fields of science, education, literature and arts, public health and media, heroes, bereaved families of revolutionary martyrs, men of merits and working people in the city.

Also present there were a delegation of the Koreans in Japan and delegations of overseas compatriots and overseas Koreans, the chief of the Pyongyang mission of the Anti-Imperialist National Democratic Front, diplomatic envoys of different countries and representatives of international organizations here and foreign guests who are participating in the World Congress on the Juche Idea, the international festival and the April spring friendship art festival.

The statues were unveiled by senior party, state and army officials.

The moment thunderous cheers of “Hurrah!” resounded forth, fireworks were displayed and balloons were released.

Laid before the statues were large floral baskets in the joint name of the Central Committee of the WPK, the Central Military Commission of the WPK, the National Defence Commission of the DPRK, the Presidium of the Supreme People’s Assembly, Cabinet and in the name of all the Korean people.

Laid were floral baskets in the name of ministries, national institutions, armed forces organs, provinces, cities, counties, important units which were visited by the President and Kim Jong Il, units of the KPA and the KPISF, party and power bodies and factories, enterprises, co-op farms, universities, colleges and schools in Pyongyang and local areas.

Floral baskets were also laid by the diplomatic corps and the military attaches corps here and foreign guests and overseas compatriots.

All the participants bowed to the statues.

Kim Yong Nam, member of the Presidium of the Political Bureau of the WPK Central Committee who is president of the Presidium of the Supreme People’s Assembly of the DPRK, made a speech.

He said that Kim Jong Un instructed to build the statue of Kim Jong Il on Mansu Hill together with that of Kim Il Sung and energetically led the work to build them on the highest level in the shortest time possible.

It was possible to erect the statues on the highest level in a matter of some 100 days thanks to the yearning and devotion made by all the soldiers and people, overseas Koreans and the world progressives.

This great auspicious event is a precious fruition of the noble moral obligation of Kim Jong Un and his energetic leadership. It is also a striking manifestation of the unshakable will of the army and people of the DPRK to hold Kim Il Sung and Kim Jong Il in high esteem for all ages.

ORIGINAL POST (2012-3-1): Hannah Barraclough (Koryo Tours) reports on the CanKor web page:

A new statue of Kim Jong Il on a horse was unveiled at Mansudae Art Studio on the 15th Feb. It has been placed alongside the one already existing there of Kim Il Sung on a horse. It also appears that they are making a new large statue of Kim Jong Il which will go on Mansu Hill next to the one of Kim Il Sung there which is currently covered up. This is expected to be completed by April.

Additional Information:

1. The Kim Il-sung statue on Mansu Hill was recently covered up for renovations of the Korean Revolution Museum located directly behind it.

2. Here, here, and here are recent posts on different construction projects in Pyongyang.

3. A memorial to Kim Jong-il has recently been carved into Mt. Sokda and a memorial to Kim Jong-il is reportedly under construction in Hoeryong.

4. Here and here are additional stories on efforts to venerate Kim Jong-il.

Institute for Far Eastern Studies (IFES)
2012-2-16

The KCNA announced on February 9 that the “Foreign Investment Bank Law” was modified and supplemented. According to the report, the amended law included “those businesses in operation for over ten years are exempt from income tax on the profit collected in the first year and Bank of Chosun [Bank of North Korea] will be exempt from business taxes on the interest revenue collected from loans provided to companies on favorable terms.”

The previous law already had regulations about exemption of transaction taxes but nothing on business tax. The foreign investment company and foreigner tax law regulated that two to ten percent of profit to be paid by the foreign companies in service and construction sectors.

While the prior law stated, “tax exemption will be provided for the first year for income tax on those businesses over ten years old, and 50 percent exemption will be given in the next two years,” the “50 percent limit” was omitted in the amended legislation.

According to the KCNA, “The law has 5 chapters and 32 articles which included the contents of categorization and specification for areas to establish foreign investment banks, property rights, and autonomy on business management.”

On February 10, the KCNA announced that the Foreign Investment Company Registration Law, Foreign Investment Company and Foreigner Tax Law, and Foreign Investment Company Bankruptcy Law were amended.

In reference to the ordinance of the Supreme People’s Assembly Standing Committee signed on December 21, 2011, provided that this law consisted of 6 chapters and 34 articles with specifics on business establishment, address, tax, and tariff registrations. However, no other details were given.

On January 30, the KCNA also reported the “Labor Law of Foreign Investment Company” was amended and supplemented. This law consists of 8 chapters and 51 articles on hiring and labor contracts, rest, protection, social insurance, and security.

In addition, the “Financial Management Law of Foreign Investment Company” and “Fiscal Law of Foreign Investment Company,” was also modified. However, no other details were provided.

The KCNA has reported that North Korea modified foreign investment laws previously in 1992, 1999, and 2004. This year marks the fourth amendment.

The news elaborated, “The DPRK is encouraging foreign companies to investment in our country based on complete equality and reciprocity and will not nationalize or collect the invested asset,” reiterating the safety and security of foreign investment.

Some analyze the recent amendment as an effort to attract more foreign investment into the country. Similarly, North Korea has recently announced the Special Economic Zone Act for the development of Hwanggumpyong and Wiwha Islands.  In addition, the state-run Academy of Social Sciences published a newsletter emphasizing the rational tax investigation for foreign companies.

UPDATE (2012-3-1): Accoridng to Stratfor, the Chinese have denied they plan to make this investment.

The Chinese Foreign Ministry denied allegations made in a Feb. 16 South Korean media report regarding its agreement with North Korea to jointly develop the Rajin-Sonbong Special Economic Zone (SEZ), a port area in northeast North Korea commonly referred to as the Rason Special Economic Zone.

According to the Yonhap news agency, Beijing agreed in late 2011 to invest about 19 billion yuan ($3 billion) into Rason, for which it would receive the lease of three piers for 50 years. Under the agreement, Beijing would also build an airfield, a thermal power plant and a 55-kilometer (34-mile) railway track connecting Rason to Tumen, China. The Chinese Foreign Ministry claimed that the specific details of the report are untrue and that China and North Korea had agreed only in principle to develop the zone.

China has long exerted its economic influence in North Korea and has an interest in the strategically important Rason Special Economic Zone. Chinese involvement in Rason dates back to the 1990s, though Beijing increased its involvement considerably in 2005 when it secured the rights to one of the port’s piers. Beijing has been particularly involved over the past few years. While the details of the deal remain unknown, it is clear that Beijing has arranged to help Pyongyang develop Rason, possibly by connecting the remote port to northwest China. Such a development would revitalize the zone — to the benefit of both countries.

ORIGINAL POST (2012-2-15): According to Yonhap:

China has secured the rights to build three new piers in a special economic zone in North Korea’s northeast and use them for 50 years, sources said Wednesday.

China will also build an airfield and a thermal power plant in the special economic zone known as Rason, as well as a 55-kilometer railway track between China’s northeastern city of Tumen and Rason.

North Korea and China reached an agreement late last year to build infrastructure in Rason with Chinese investment of about US$3 billion, according to the sources in Seoul and Beijing.

The Daily NK offers some more data:

China has agreed to dig out dock 4 at Rasun to make it possible for 70,000 ton vessels to dock and to construct a runway long enough to accommodate passenger and cargo aircraft within the SEZ; the railroad is due to be complete by 2020, while the development of dock 5 and 6 will follow that of dock 4, Yonhap sources claim.

This agreement was reportedly signed quietly by North Korea’s Joint Ventures Committee and the Chinese government shortly before Kim Jong Il’s death.

The North Koreans have sought the construction of an airport and expansion of the port  for some time.

KITC published the image above in 1995 (Source here).  If you look carefully on the right side of the picture you will see the site of a proposed airport.

Above is a more recent map of Rason published by the DPRK. In the middle of the above map you can see a small airplane which represents the desired location of a future airfield. It is in the same location as shown on the KITC map.

Here is the approximate location on Google Earth (42.397884°, 130.592084°):

If you look at the left side of the KITC photo you can also see that there are many piers, however today there are only three.  I suspect that the new piers will be constructed south of the current piers and will look something like this:

The railway and power plant projects are intereting as well.  There is already a thermal power plant in Sonbong, so I expect that the Chinese are simply renovating it so that it generates more power or is simply more reliable (Google Earth:  42.327275°, 130.382585°):

At a presentation at the Korea Economic Institute in Washington, DC, Andray Abrahamian reported that increased electricity supplies for the Rason Zone could come from China.

As for the Tumen (China) – Rason railway line…this already exists as well.  The DPRK’s Hambuk Line (함북선) runs from Chongjin to Namyang (border with Tumen) to Rason:

The Tumen to Rason leg of this railway line, however, is approximately 156km (according to Google Earth) and likely runs pretty slowly.  The proposed new Chinese-built Tumen-Rason line is intended to be just 1/3 the distance!

Additional Information:

1. The Russians built a railway line from their border to the Rajin Port. Learn more here.

2. The Chinese and Russians have already rented two of Rajin’s three ports.

Read the full stories here:
China secures right to use 3 piers to be built on N. Korean port for 50 years
Yonhap
2012-2-15

China Reportedly Grabs 3 Docks and More
Daily NK
2012-2-15

Following the unveiling of the Kim Jong-il memorial carved into Mt. Sokda last week, today KCNA announced the unveiling of a Kim Il-sung and a Kim Jong-il statue at the Mansudae Art Studio in Pyongyang.

Click image for a larger version.

You can watch the unveiling in video format on the KCNA page here. You can watch the video on YouTube here.

According ot KCNA:

The statues of President Kim Il Sung and leader Kim Jong Il riding on horses together were erected at the Mansudae Art Studio with approach of the Day of the Shining Star.

Their construction, the first of its kind in the history of the Workers’ Party of Korea and the Korean revolution, is a great glory and pride of Kim Il Sung’s nation and Kim Jong Il’s Korea.

A ceremony of unveiling the statues took place on Tuesday.

Present there were senior party, state and army officials Kim Yong Nam, Choe Yong Rim, Ri Yong Ho, Kim Yong Chun, Kim Ki Nam, Choe Thae Bok, Yang Hyong Sop and Kang Sok Ju, officials of party, military and power bodies, social organizations, ministries and national institutions, men and

officers of the Korean People’s Army and the Korean People’s Internal Security Forces, officials and employees of the Studio and working people in the city of Pyongyang.

Senior officials of the party, state and army and officials of the studio unveiled the statues.

Laid at the statues is a floral basket from Kim Jong Un, supreme leader of the WPK and the people and KPA supreme commander.

Placed were floral baskets in the name of the WPK Central Committee, the Presidium of the DPRK Supreme People’s Assembly, the DPRK Cabinet, the Ministry of the People’s Armed Forces, the Ministry of People’s Security, working people’s organizations, ministries and national institutions,
units of the KPA and party and power organs in the city.

The participants made bows to the statues.

Kim Yong Nam, member of the Presidium of the Political Bureau of the C.C., the WPK and president of the Presidium of the SPA, made an address at the ceremony.

It was the unanimous desire and ardent wish of all the Party members, servicepersons and people to erect a statue of Kim Jong Il as well as Kim Il Sung’s in order to hand down for all ages the prominent traits and revolutionary feats of the illustrious great man, the speaker said, adding:

This ardent desire has been realized thanks to Kim Jong Un’s boundlessly noble loyalty and meticulous guidance.

He called for glorifying the revolutionary careers and undying feats of Kim Il Sung and Kim Jong Il forever with the immutable faith that they are always with us.

The participants looked round the statues after being briefed on them.

Though the unveiling displayed BOTH Kim Il-sung and Kim Jong-il statues, there was previously a Kim Il-sung statue located at this exact spot.  I am not sure if this statue has been decommissioned, moved, or incorporated into the new sculpture:

This is only the third Kim Jong-il statue of which I am aware–and the first located outside.

There is a Kim Jong-il statue at the International Friendship Exhibition in Myohyangsan:

The other Kim Jong-il statue is in the Ministry of the Peoples’ Armed Forces:

Both the Kim Il-sung statue and the Kim Jong-il statues were manufactured on location at the Mansudae Art Studio:

Pictured above (Google Earth): The Mansudae Art Studio in Pyongyang. The blue roofs indicate that most of the buildings have recently been renovated.

At the same time, the Daily NK reports that Kim Jong-un has asked that the costs of memorializing his father not be passed on the people (like this).

UPDATES related to the celebrations of Kim Jong-il’s 70th birthday:

1. Kim Jong-il also named “Generalissimo” — a title previously reserved for his father, Kim Il-sung.  This clears the way for Kim Jong-un to be promoted to “Marshal”.  Many officers were also promoted and awarded the Kim Jong-il Prize. Daily NK coverage here.

2. Commemorative gold and silver coins were issued to celebrate Kim jong-il’s 70th birthday. See more here and here.

3. New stamps were issued.

4. A military tribute was held in Kumsusan Palace (which was renamed Kumsuan Palace of the Sun). See video here.

5. The KCNA web page added a Kim Jong-il photo album. See it here.

6. A new Kim Jong-il badge is issued.

7. NK Leadership Watch coverage here.

8. Here is my lengthy collection of material published when Kim Jong-il passed away.