North Korean Economy Watch

October 20-27, 2007 (Beijing/Pyongyang)
GPI Consulting

GPI Consulting (Netherlands) is one of the few western companies that has done an audit of the DPRK’s IT capabilitites and has published about them.

They are organizing an IT delegation to visit the DPRK this October.  Here is their marketing flyer and itinerary: NK-IT-tour.pdf

From the Marketing Flyer:

North Korea offers interesting business opportunities in several fields, such as software development, production of computer games, animation and cartoons, data entry en digitization. In order to provide detailed information about the IT opportunities in North Korea, a unique IT Study Tour will take place from 20 – 27 October 2007.

The trip to North Korea will focus on offshoring in the field of IT and BPO (Business Process Out-sourcing). We expect participants from IT- and software organizations that are investigating offshoring, or from consultants researching new offshore locations. Companies interested in exploring a new potential export market are also welcome to join the tour.

Europe still lacks sufficient knowledge about the promising North Korean IT sector. The goal of the business mission is to give the participants detailed information about offshoring, and especially about the opportunities in North Korea. We will strive to have participants from large, small and medium sized companies taking part in the IT study tour.

In order to make a business trip of 7 days attractive, the delegation will visit various companies in Pyongyang in the field of IT, animation, cartoons, computer games and BPO. The business mission will have an informal character with a visit to a university and also with attention to cultural and tourist elements. The participants of the tour will meet in China (Beijing); after returning from North Korea, an extension of the stay in China is possible.

The organizer of this mission is KCC (Korea Computer Center), a major IT services provider in North Korea with offices in several cities, including Pyongyang and Beijing. The European contact for this business mission will be Mr. Paul Tjia, founder and director of GPI Consultancy, Rotterdam, The Netherlands.  Established in 1995, GPI Consultancy is a specialized Dutch consultancy firm in the field of offshore sourcing. It is regularly involved in IT study tours to various offshore countries in Asia.

European Business Association
September 24-27, 2007

The European Business Association (EBA) in Pyongyang and DPRK Chamber of Commerce are orgaizing a booth for European business at the upcoming international trade fair in Pyongyang.  European companies are invited to make use of this opportunity to introduce their business to the North Korean market.

European companies interested in taking advantage of this opportunity are invited to visit the EBA website www.eba-pyongyang.org – please click through to membership for the statutes. The membership fee of 500 Euro will include the following services for companies who would not send their own representative to the trade fair:

• Poster display (maximum size DIN A2)
• Distribution of flyers (maximum size DIN A4)
  Feedback for Korean inquiries by e-mail: any contact request and any inquiry by a Korean company will be registered in a special format and will be supplied asap by   e-mail to your company.
• Photos documenting the participation of your company in the fair.

If a representative will take part, the joint European booth is of course open for him/her to be used during the fair and EBA will support and assist you actively in making contacts and business meetings with potential Korean partners. According to a special arrangement between the EBA Pyongyang and the DPRK Chamber of Commerce, the deadline for visa application has been extended for European businesses to August 20, 2007.

Learn more here

South Korean Ministry of Unification
Serial No.851 (July 30 to August 05, 2007)

Internal Affairs

• According to the report by the Central Broadcasting Station on July 30, North Korea held the Election of Deputies to the Provincial (Municipality Directly under Central Authority), City (District) and County People’s Assemblies of the DPRK on July 29 and announced the result through the report by the Central Election Guidance Committee.
• According to the reports by the Central Broadcasting Station from August 1 to 4, Chairman Kim Jongil inspected a sub-unit of KPA Unit 4318, the Unit 136, and the Unit 273.
• The Central Broadcasting Station reported on August 2 that cooperative farms in Dahungdan-gun, Yanggang-do, are focusing on potato farming.

Inter-Korean Affairs

• According to the reports by the Central Broadcasting Station and Pyongyang Broadcasting Services on August 3, the spokesperson of the Committee for the Peaceful Reunification of the Fatherland announced a statement on August 2 to criticize the U.S.-ROK joint military exercise Ulchi Focus Lens from August 20 to 31.
• The Rodong Daily reported on August 4 that on the occasion of the 10th anniversary of Kim Jong-il’s work “Let Us Carry out the Great Leader Comrade Kim IL Sung’s Instructions for National Reunification,” North Korea held a Pyongyang city report session on August 3 and published a commemorative editorial on August 4 on the Rodong Daily.

Foreign Affairs

• The standing committee chairman of the Supreme People’s Assembly Kim Young-nam made a formal visit to Algeria, Egypt, and Ethiopia from July 24 to 31.
• North Korean delegates led by Minister of Foreign Affairs Pak Ui-chun visited the Philippines to attend the ASEAN Regional Forum from July 28 to August 2.
• With the U.S. House’s adoption of the resolution on comfort women, North Korea is continuously criticizing Japan, maintaining Japan’s raising the abduction issue is causing trouble in the six party talks.
• North Korean Minister of Foreign Affairs Pak Ui-chun met South Korean counterpart Song Min-soon during the ASEAN Regional Forum and reaffirmed that the abolition of the U.S. hostile policy against North Korea should be the precondition of the implementation of the second step of February 13 Agreement. 

Institute for Far Eastern Studies (IFES)
8/1/2007

INTER-KOREAN RELATIONS

Following two days of talks between economic representatives of the two Koreas at the Kaesong Industrial Complex, South Korea announced on July 7 that it would begin shipping raw materials to the North in exchange for DPRK natural resources. South Korea shipped 800,000 USD of polyester fabric on July 25, and is set to send the rest of the materials by the end of November. North Korea accepted South Korean prices for the goods, and will pay transportation, cargo working, and demurrage costs, as well. South Korea will pay for shipping, insurance, and the use of port facilities. On 28 July, a South Korean delegation left for the North in order to conduct on-site surveys of three zinc and magnesite mines. The team will spend two weeks in North Korea.

It was reported on 17 July that North Korea proposed a joint fishing zone north of the ‘Northern Limit Line’ dividing North and South territorial waters to the west of the peninsula. Seoul turned down the offer.

Inter-Korean military talks broke down early on 26 July after only three days of negotiations as North Korea insisted on the redrawing of the Northern Limit Line.

North Korea demanded on 27 July that workers in the Kaesong Industrial Complex be given a 15 percent pay raise. The North Korean workers will not work overtime, weekends or holidays beginning in August unless the raise is granted.

It was reported by the Korea International Trade Association on 26 July that inter-Korean trade was up 28.6 percent in the first six months of 2007, totaling 720 million USD.

RUSSIA-DPRK INVESTMENT

It was reported on 19 July that Russia and North Korea have agreed to connect Khasan and Najin by rail, enlisting investment from Russian oil companies interested in an inactive refinery at Najin Port capable of processing up to 120,000 barrels per day. The project is estimated to cost over two billion USD.

MONGOLIA-DPRK RELATIONS

During a four-day visit to Mongolia by Kim Yong-nam beginning on 20 July, the two countries signed protocols on cooperation on health and science, trade and sea transport, and labor exchange issues. This follows on the heals of an agreement to allow South Korean trains to travel through North Korean territory on to Mongolia in route to Russia and Europe.

JAPAN-DPRK PROPAGANDA

Japan took one step further to recover abductees in North Korea this month when the government began broadcasting propaganda into the DPRK intended for Japanese citizens. The broadcasts are made in Korean and Japanese (30 minutes each) daily, and updated once per week.

U.S.-DPRK PEACE PROSPECTS

U.S. Ambassador to the ROK Alexander Vershbow stated that Washington was prepared to negotiate a permanent peace regime on the Korean Peninsula by the end of the year if North Korea were to completely abandon its nuclear ambitions.

EGYPT-DPRK INVESTMENT

The Egyptian company Orascom Construction Industries announced a 115 million USD deal with North Korea’s state-owned Pyongyang Myongdang Trading Corporation to purchase a 50 percent state in Sangwon Cement. To put this in perspective, the deal in worth more than four times the amount of frozen DPRK funds that had caused six-party talks to break down and delayed the implementation of the February 13 agreement.

NORTH KOREAN SOCIETY

The Economist reported on 7 July that, according to foreigners living in the North’s capital, concern for petty law appears to be weakening. Citizens are reportedly smoking in smoke-free zones, sitting on escalator rails, and even blocking traffic by selling wares on the streets.

It was reported on July 11 that a letter sent earlier in the year by the North Korean Red Cross indicated severe shortages of medical supplies. The letter stated that North Korea would accept any medicine, even if it was past expiration, and accept all consequences for any problems that arose from using outdated supplies. The (South) Korea Pharmaceutical Manufacturers Association had no choice but to reject the request.

Events were held on July 11 in North Korea in order to promote women’s health and well-being issues. Marking World Population Day, a North Korean official stated that the DPRK has cooperated with the UN Population Fund since 1986, and is now in the fourth phase of cooperation.

Seeing entertainment venues as a “threat to society”, North Korean security forces have been implementing a shutdown of karaoke bars and Internet cafes. These venues mainly cater to traders in the northern regions of the country.

It was reported on July 13 that construction of North Korea’s first all-English language university was nearing completion. The Pyongyang University of Science and Technology, funded largely by ROK and U.S. Christian evangelical groups, will hold 2600 students and offer undergraduate and post-graduate degrees in business administration, information technology, and agriculture.

Local elections were held on 29 July for DPRK provincial, city, and country People’s Assemblies. 100 percent of 27,390 candidates were approved with a 99.82 percent turnout reported.

Asia Times
Michael Rank
8/1/2007

Above the chic shops and arcades of London’s Pall Mall, the flag of the Democratic People’s Republic of Korea wafts incongruously in the wind. Look inside, and portraits of the Great Leader and the Dear Leader stare out at you.

No, the North Korean army hasn’t marched across the River Thames, but Pyongyang has established a small cultural enclave in London’s West End in the form of the first major exhibition of North Korean art in the Western world.

Curator David Heather says he first got the idea after meeting a North Korean painter at an art exhibition in Zimbabwe in 2001. “I got chatting with Mr Pak and he invited me to Pyongyang,” said Heather, making it all sound surprisingly straightforward. But the 45-year-old financier admits that mounting the exhibition was “quite a challenge … very time-consuming” and also admits that he has no great knowledge of art or the international art market.

He describes the surprisingly extensive exhibition of about 70 artworks as “an opportunity for people to see art from what is a secretive and protective society at first hand”.

The show ranges from apolitical landscapes and ceramics to a vast, blatantly propagandistic battle scene celebrating the routing of the US Army in the Korean War, as well as hand-painted posters on such unexpectedly diverse themes as “international hero” Che Guevara and “say no to sexual slavery in the 21st century”. This is a clear reference to Korean and Chinese “comfort women” who were forced into prostitution to serve Japanese soldiers during World War II.

Heather brought over three of the artists to London for the opening of the exhibition, including Pak Hyo-song, whom he had met in Zimbabwe and who has two dramatic – if highly un-North Korean – wildlife paintings of zebras and lions on show.

Pak spent five years in Zimbabwe as representative of the Mansudae Art Studio, North Korea’s leading group of official artists, whose activities include designing monuments and propaganda posters on behalf of foreign, mainly African, governments.

Pak’s dramatic if not entirely lifelike oil paintings seem to have been influenced by the well-known British African wildlife artist David Shepherd, and sure enough, the 47-year-old “Merited Artist” told Asia Times Online at the opening party that he was a great fan of Shepherd.

He is undoubtedly the only North Korean artist to have had a one-man show in Europe, after Heather mounted an exhibition of 15 of his paintings in Wiesbaden, Germany, in 2005.

The London opening featured a remarkable mix of people. It was was a rare chance for the three North Korean artists and normally elusive members of the North Korean Embassy in London to mix socially with South Korean diplomats, art collectors and business people as well as with British Foreign Office officials, members of Britain’s tiny pro-Pyongyang New Communist Party, and at least one aging Moonie.

Heather said he had hopes of bringing the show to Paris, Berlin and even New York, and that only a few days after the opening he had already sold 50 posters at 250-300 pounds sterling (US$500-600) each, as well as two large paintings priced at several thousand pounds.

The sum of 300 pounds may sound like a lot for a none too subtle North Korean poster by an anonymous artist, but propaganda art is highly fashionable nowadays, with Chinese posters from the 1960s and 1970s fetching hundreds of dollars in London and New York. Given that the North Korean posters are hand-painted while the Chinese pictures are mass-produced prints that originally cost a few cents, the North Korean versions may turn out to be rather smart investments.

Heather said he had “no idea” how much he had invested in the exhibition, including renting a gallery on one of London’s most expensive streets for six weeks. “I don’t do it to make or lose money,” he said, but he clearly takes pride in being “a good negotiator”.

He said the North Koreans are “very direct and straightforward” and that “they are very open to ideas”. He has visited Pyongyang just once, in 2004, and conducted most of his negotiations in Beijing. Heather said he had bought 150 artworks, which he would show in rotation. Pricing the pictures was difficult, as this was the first time North Korean works of art were being sold in the capitalist West, he noted. “It opens up a new market which wasn’t there before.”

The biggest and most expensive picture in the exhibition is called Army Song of Victory and is priced at 28,000 pounds. A collective work by seven artists, it shows a Korean People’s Army brass band celebrating as US troops flee in the Battle of Rakdong River in 1950. A spokeswoman said the gallery was considering an offer of 21,000 pounds on the opening night.

Heather said he had received “a lot of help” from the North Korean Embassy and the British Foreign Office, and quiet encouragement also from the South Korean Embassy, which was anxious to see what North Korean art was all about. He has taken the North Korean artists to the Houses of Parliament, the British Museum and the historic city of Bath – despite the floods covering much of western England – and invited them to his home for a traditional British dinner of roast beef and Yorkshire pudding.

Heather has clearly formed an excellent rapport with the North Korean Embassy, and has even played golf with one of its diplomats on a course near London. “He’s sort of average like me. He has played on the Pyongyang golf course; it’s mainly for the elite,” Heather explained.

But holding an art exhibition is just the beginning, and Heather is now hoping to bring a 150-member North Korean orchestra over to London next year. “I’m hoping they will play in the Royal Albert Hall or Royal Festival Hall,” he said, referring to London’s two biggest concert halls.

This may not be quite as far-fetched as it sounds. Heather is working on the orchestra project with British soprano Suzannah Clarke, who has given several concerts in Pyongyang and is one of North Korea’s few foreign celebrities. Her rendition of “Danny Boy” is said to be especially popular with North Korean audiences. Given her fame and his business prowess, it’s an unlikely plan that just could come off.

Artists, Arts and Culture of North Korea runs at La Galleria, 5b Pall Mall, London SW1Y 4UY, until September 2.

Daily NK
Kim Chan Ku, Researcher in the Institute for Far Eastern Studies
7/26/2007

1989 July 14th. Kim Ki Dong, a manager at Rajin ship repairs and superintendent and Choi Chng Ku (affiliated with Daesung General Bureau) of Rajin’s Donghae Marine Products for Exports made a decision to reinvestigate business plans for a ship maintenance factory.

The 3.30PM train headed for Kimchaek arrives at Kimchaek station at 10.40 in North Hamkyung where an official from Kimchaek Fisheries Office came awaiting their guests. We headed for the villa.

Through these business investments, a small fraction of North Korea’s closed doors have been opened and the number of tourists continued to rise. In addition, a great number of Korean-Americans were reunited with their separated North Korean families.

In fact, most of these people had been thinking about small-scale investments with the purpose of frequently meeting their separated families. I was the only person wanting to invest in North Korea despite not having any connections.

In 1988, Koreans with American citizenship thought they were allowed to invest in North Korea different to U.S. North Korea policies. It was at this time problems began to arise.

Korean-Americans only permitted 1 visit to North Korea per year

The U.S. government had claimed North Korea as an enemy state and for this reason had placed restrictions to the number of visits to North Korea. The U.S. had drafted and was regulating a list of visitations to North Korea in which Korean-Americans took no notice of. With the sole reason that North Koreans were of the same race, people traveled unrestricted to North Korea in which the U.S. had deemed an enemy state. However, the U.S. government could not accept this.

Around this time, the number of visits had been reported to the U.S. Department of Treasury.
1) All Korean-Americans residing in the U.S. (with citizenship or permanent residency) are permitted to travel to North Korea on 1 occasion per year.
2) No more than US$100 worth of goods possessed or purchased in North Korea can be brought into the country.
3) All Korean-Americans are prohibited from investing in North Korea and are prohibited from arbitrating any businesses for other North Korea advancement.

A notice was made which specifically stated that strict penalties would be made under U.S. law against any persons who did not comply to the 3 law enforcements. However, I continued with my work.

Following consultations with company authorities, a whole day was spent drafting business plans needed to repair a Russian cargo ship. On examining the business plans, it was decided that a floating dock would be the most appropriate and cost effective operation.

A decision made to help overrun coastal facilities

평양으로 돌아온 나는 종합검토 결과 라진-선봉지역은 일제 때부터 일본군인들이 사용했던 항구이고, 또 지역적으로도 앞으로 동북아 물류 중심 항구로 손색이 없겠다는 결론을 내렸다. 또한, 북한 측의 요구를 고려해 라진-선봉 지구에 시설을 하기로 했다. 원 부자재인 플로팅 독(Floating Dock)은 내가 책임지고, 그 외의 모든 설비는 대성총국 측에서 책임지기로 합의서를 작성했다.  

On returning to Pyongyang, I made a decision on the results which indicated that the Rajin-Sunbong region had been used as a port by Japanese soldiers during Japanese occupation and that geographically, this region possessed no disadvantages in being the focal port of distributing goods in the future of North East Asia.

For 10 days, I visited many small and large ports throughout North Korea’s eastern coast and having seen the incomparably inadequate state of the ports in comparison to South Korean marine business, I made the decision to help these people and signed a contract.

On returning to Seoul, I spent a lot of time collating data that needed to be submitted by September. For 3 weeks, colleagues spent the summer working for more than 10 hours each day taking pictures and collecting information on North Korea companies and repair factories on location in Busan.

3 people, a planner, work colleague and myself, Kim Song Chan, a businessman from LA with experiences in trading with Communist countries arrived early in the morning of September 25th at North Korea’s embassy on the borderline and having received the visas arrived in Pyongyang.

In addition, a trading manager, advisor and colleague also joined us on our journey as we left on a special night train headed for Sunbong at 5PM on the 27th. The railroads were so poor that I felt as if I had bordered a boat and I couldn’t see anything as there was no light.

On the following morning, we arrived at Kimchaek city at 8AM. The purpose of this trip was to make ultimate decisions on fisherman, refrigerator and storage for the company, as well understand the present condition of catching turban shells and location for ship repairs. At the time, the Chosun Central Fisheries Committee had requested us to construct facilities at either Rajin or Wonsan port, but the Daesung General Bureau requested that the facilities be constructed at Kimchaek port as it provided all the good conditions.

Bloomberg
Bradley K. Martin
7/26/2007

To make painkillers and antibiotics in his factory in Pyongyang, Swiss businessman Felix Abt needs reagents, chemicals used to test for toxic impurities. Abt can’t get them now — because the world refuses to sell North Korea a product that is also used to manufacture biological weapons.

Such sanctions on trade with the regime of Kim Jong Il — some dating back to the Korean War — may be the next diplomatic battleground after North Korea bowed to pressure last week and shut down five nuclear facilities at Yongbyon.

North Korea said July 16 that ending sanctions, and its removal from a U.S. list of countries that sponsor terrorism, are prerequisites for further progress in the negotiations to end its nuclear weapons program. The U.S., meanwhile, says the next step is for North Korea to disclose all its nuclear capabilities, followed by a permanent dismantling of Yongbyon.

North Korea is playing a “tactical game,” said David Straub, a Korea specialist at Johns Hopkins University’s School of Advanced International Studies in Washington. After shutting down Yongbyon and receiving a pledge of 950,000 tons of oil, the reclusive nation will try to “force the U.S. and others to lift sanctions,” Straub said in an e-mail exchange.

While many of the post-Korean war sanctions were lifted between 1994 and 2000 by President Bill Clinton, Americans are prohibited from exporting “dual-use” products or technologies, a wide range of items that might have military as well as civilian applications — including reagents and even aluminum bicycle tubing, which might be used to make rockets.

UN Sanctions

Much of the world joined the sanctions regime after North Korea tested an atomic device last October. The United Nations called on member states to stop trade in weapons, “dual-use” items and luxury goods. Japan went further, stopping used-car exports and banning port calls by North Korean vessels.

Now that North Korea has shut its facilities at Yongbyon and allowed in international inspectors, the haggling will begin on the next steps. If its demands aren’t met, North Korea could kick out the inspectors and restart the plants, as it did in 2002.

“The Bush administration must choose between settling for a temporary closure of the nuclear sites and taking a strategic decision to coexist” with North Korea, said Kim Myong Chol, Tokyo-based president of the Center for Korean-American Peace, who for three decades has encouraged foreign reporters to consider him an informal North Korean spokesman. “Otherwise, the agreement will break up, leaving the U.S. with little to show.”

‘Contentious Issue’

Sanctions represent “a multiplicity of issues that could become contentious,” said economist Marcus Noland, North Korea specialist at the Peterson Institute for International Economics in Washington, in an e-mail exchange. China has already called for the lifting of the UN sanctions imposed Oct. 14.

North Korea agreed with the U.S., South Korea, Russia, China and Japan on Feb. 13 to close its Yongbyon reactor, which produced weapons-grade plutonium, and to eventually declare and disable all of its atomic programs. Working groups will meet in August before another round of talks in September.

If the U.S. insists on a list of all the country’s nuclear facilities without starting to negotiate on sanctions, North Korea might consider that “a spoiler” for the talks ahead, Kim Myong Chol said.

Swiss businessman Abt said that in the past he could get around U.S. sanctions for his North Korean pharmaceutical factory by buying supplies from other countries. The UN sanctions shut off those sources.

Using Old Stocks

“Luckily, we have enough stock of reagents, but when it runs out we would not be able to guarantee the safety of our pharmaceuticals any longer,” he said.

Abt, 52, is president of Pyongsu Pharma Joint Venture Co., an enterprise with ties to the Ministry of Public Health that makes painkillers and antibiotics for humanitarian organizations in North Korea. He is also president of Pyongyang’s European Business Association.

“The same is true in many other civilian industries,” said Abt, who moved to North Korea from Vietnam five years ago. Gold mines are affected too, he said: “If they cannot import cyanide, they can’t extract the gold.” Cyanide is another “dual-use” product, part of the process for making some chemical weapons, he said.

All this has “a highly negative impact” on the economy at a time when the regime has announced it wants to focus on development, Abt said. Foreigners are showing “more and more interest in doing business here,” Abt said, predicting that North Korea will eventually be regarded as a successor to Vietnam as “the newest emerging market.”

KCNA
7/25/2007

The world medical circles call for producing natural medicines today when various synthetic medicines are rampant.

The Unphasan Pharmaceutical Institute of the DPRK has developed and perfected natural medicines efficacious for the diseases such as arteriosclerosis, hyperlipemia, diabetes, obesity, hyperuricemia, hepatitis and pancreatitis which should be treated for a long time. Now the medicines are being applied to clinical treatment.

Director of the institute Sonu Su Yong told KCNA that the research team has developed medicines with natural substances as their main raw material and they are made an effective use in the treatment of diseases.

He went on to say:

To prevent the break of immune systems by anticancer agent, antituberclosis agent and other medicines, the team has made immune activator-Immunoton injection from fish skin. The injection is efficacious for the treatment and prevention of diseases including the acute and chronic hepatitis and pancreatitis.

Discle is potent for hyperlipemia. It, which has no side effect and prevents the disease from returning, is more effective than Symbastatin.

High-Ins is made of various natural substances. It improves insulin selectivity. It is good for the treatment of diabetes.

Health food Defatty is potent for simplex obesity which has not high lipid in blood. Among the newly developed medicines are health food Lipohepa for liver, health food Kumsanjong for hyperuricemia, health food Chitosan for hyperlipemia and osteoarthrosis and combined enzyme health food Dipansin for the digestive diseases. They are all patented medicines made by the institute with natural medical stuffs.

Daily NK
Kim Young Jin
7/24/2007

The North Korean government, with the approaching Provincial People’s Assembly delegate elections on the 29th of this month, stepped-up one level the management of citizens and regulation of cell phones.

Kang Ki Ok (pseudonym), a civilian of Hyesan in Yangkang Provicne, said in a phone conversation with the reporter on the 20th, “Nowadays, I am afraid to turn on my cell phone. The People Safety agents and the National Security agents inspect us with fury in their eyes. People who use cell phones during the election season are punished, so there are people who bury their phones by putting them into jars.”

The North Korean government, when the People’s Assembly election season comes around every four or five years, concentrates on regulating the society by observing the movement of citizens and examining the registration cards.

The members of the elections preparations committee, composed of National Security agents, chairmen of People’s Units, and head officials of each provincial unit, are ordered to strictly investigate illegal acts occurring in their regions and to control them. Illegal acts are punished at the end of the elections.

According to Mr. Kang, the outflow of information has been secured at the border region with the upcoming delegate elections, so concentrated cell phone regulation were carried out. Further, the control of the border has been toughened recently, so the escape fee has skyrocked to the North Korean currency of 1 million won (approx. US$1,075).

Another source relayed, “Safeguarding Kim Il Sung, Kim Jong Il statues and research offices have been toughened by inspection units composed of each organ and enterprise farming laborers. Further, they are making sure that historic places and vestiges of battle are not destroyed.”

This source said, “Youth Leagues have also organized inspection units and are regulating unemployed persons and are strictly making sure that juveniles do not watch South Korean dramas and listen to illegal CDs and South Korean songs.”

On one hand, related to election preparation, each city, district, and county candidates were posted at the election site and citizens over 17 have gone into preparations such as conducting voter registrations through the election committee.

The source also relayed that the People’s Safety Agency have actively stepped up inspections by summoning civilians who have gone out to foreign sites to catch clam and mine gold for survival.

When the movement of the North Korean authorities to strengthen the solidarity of the regime was presented through this election, the citizens, in fear of being punished as trial cases, have produced a cautious atmosphere.”

At the time of the Supreme People’s Assembly elections in 2003, when thefts or acts of violence occurred, perpetrators were stringently punished regardless of whether or not they were members of the Workers’ Party. Further, in the case that teenagers got into fist fights, the parents were disciplined and jointly held responsible.

Mr. Kim, who defected in 2006, said, “At the time of the 1991 provincial elections, in the province where we were living, teenagers got into a fist fight. One of the gangs who started the fight accused the opponent of “stirring a political event destroying elections” and went to the parents and got compensation for damages by threatening them.”

Institute for Far Eastern Studies (IFES)
NK Brief No. 07-7-23-1
7/23/2007

North Korea is calling for training for financial specialists in order to protect against the pitfalls of credit transactions and currency exchanges. In a recently acquired copy of the latest issue of the North’s economic journal, “Economy Research”(2007, no.2), ‘bank risk’, the term applied to the hazard of potential losses, was explained in detail, stating, “In order to strengthen the improvements made in foreign currency trading, an important issue is that banks, such as the Trade Bank, dealing with overseas debts identify and thoroughly resolve potential threats.”

It is especially exceptional that the North Korean journal fully introduced the bank risk involved in financial transactions within a market-based economic system. This issue also reported on the events of May 20, when movement toward a resolution to the issue of frozen DPRK accounts in the Delta Banco Asia took place.

The journal divided ‘bank risk’ into three categories, ‘finance risk’, ‘credit risk’, and ‘management risk’. Finance risk was defined as, “the risk that a variety of changes within capitalist financial markets could carry with them adverse effects”. Further on, finance risk was divided into ‘foreign exchange risk’ caused by fluctuations in exchange rates, and ‘interest risk’ driven by changing interest rates.

In addition, “Economy Research” also carried pieces on rational management of the banking management system, subjective evaluation of bank risk, and establishing a strategy for preventing bank risk. “The outcome of [strategy for] prevention of bank risk rests entirely on the quality, skill, and roles of workers responsible for bank administration.”

The journal also stressed that even though quality information resources and materials on financial data are available, “if the quality and skill of workers in the banking sector cannot be raised,” then bank risk cannot be understood, analyzed, or evaluated, and an appropriate strategy cannot be implemented. “When workers constantly improve their quality and turn their attention to preventing bank risk…then an appropriate strategy can be set up.”

In one article, training in international financial transactions was called for, with the journal printing, “Even though today’s workers know how to use modern information resources and include financial experts with foreign language skills, they need to be well versed in the changing modern banking sector and international financial transactions.” From the 2002 “Foreign Investor Banking Law’ to last year’s ‘Commercial Banking Law’, established to stimulate private-sector financial transactions, North Korea continues to tweak its financial system.