Archive for the ‘State Offices’ Category

The drought that didn’t matter, North Korea says – thanks to agricultural reform?

Monday, August 10th, 2015

By Benjamin Katzeff Silberstein

During the past few months, the World Food Program (WFP) has made reoccurring pleas for increased food assistance to North Korea to alleviate the food shortages expected from a severe summer drought. The North Korean government made similar statements and claimed that the drought was the worst one to occur in 100 years. Aid to the country was subsequently increased from the originally planned level, due to the drought. But now, one North Korean official is saying that food production ended up increasing, after all, thanks to agricultural reforms.

A recent brief by the Institute for Far Eastern Studies at Kyungnam University (IFES) cites a July issue of Tongil Sinbo, a North Korean state-run weekly newspaper. There, Chi Myong Su, director of the Agricultural Research Institute of the Academy of Agricultural Sciences in the country, says that

“the effectiveness of field management system (pojon) from cooperative farm production unit system (bunjo) is noticeable and succeeded in increasing grain production despite the adverse weather conditions.”

The article cited by IFES highlights the smaller work-team structure as key to the success of the reforms. Also, it almost outright states that greater economic incentives were the main factor (although they call it “enthusiasm” and “patriotism”):

“Despite the adverse weather conditions last year, the high grain yield was possible due to implementation of scientific farming methods and field management system to increase enthusiasm of farmers,” and “based on this experience, many cooperative farms across the country will expand subworkteam management system to field management system.”

This is interesting for several reasons.

First, the agricultural reforms seem increasingly pronounced. Though other reforms were reportedly backtracked earlier this year, the government seems eager to claim success for the road travelled in agriculture.

I have written elsewhere that the data doesn’t necessarily support a claim that reforms are working. There is still reason to be skeptical – after all, a North Korean government official claiming that his government’s policies are working is not surprising – but even the claim itself is interesting.

Second, the statement raises questions about monitoring and data gathering capacities, both of the regime and relief organizations in Pyongyang. Again, just a few months ago, alarm bells were ringing about a potential food shortage, and now, a regime official claims that food production has increased. What was the basis of the WFP and regime claims that a food shortage was imminent a few months ago, and what has changed since those claims were made?

Another recent IFES brief also deals with North Korean press reports about the agricultural reforms. It quotes a Rodong Sinmun article from earlier in the summer that brings up some adjustment problems that farmers have had, such as learning how to properly use fertilizers. The most interesting part in my opinion is the following:

The newspaper stressed that “when all farmers claim ownership of their field and subworkteam, one can create innovation in the farming operations.”

Thus, it seems like Pyongyang wants to encourage experimentation and diversity in production methods. This would be a potentially important step towards more efficient agriculture. Perhaps it is part of a pattern. Provinces have reportedly gotten significant leeway in setting up their respective special economic development zones, which could also be a way to encourage experimentation in policies and management methods.

According to the Tongil Sinbo article, reforms are set to expand further in the country given the alleged success. Perhaps it won’t be too long before we can learn more about them through assessments by multilateral organizations like WFP.

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Friday fun: New stamps and wild speculation…

Friday, August 7th, 2015

Kim Jong-un has committed significant construction resources to improving the lives of children (particularly orphans) in the DPRK. Now you can share Kim Jong-un’s love of the children (sarcasm) with the people you know by collecting and sending stamps of the Songdowon International Children’s Camp and the new Pyongyang Baby Home and Orphanage:

STAMP-2015- Sondgowon-International-Children-Camp

STAMP-Pyongyang-Baby-Home Orphanage

Although the stamps are meant for foreign collectors, they are denominated as KPW 30. If the cost of a first class letter in the DPRK is 30 won, that translates into appx $.30 at the official rate and $.00375 at the black market rate (nearly 1/3 of a US penny).

But the Pyongyang Baby Home stamp booklet shows four stamps on a post card, so maybe the official price of sending a postcard is KPW120, or $1.20 at the official rate and $.015 at the black market rate. That seems a bit more reasonable, but it is still probably likely that, as in the USA, mail delivery is a drain on the government’s budget (subsidized activity). I wonder how hard it is to raise postal rates in the DPRK?

Luckily the Ministry of Post and Telecommunication (체신성) does not have to rely on the cabinet for its complete budget. There is always the international stamp-collecting market…and a small venture known as KoryoLink.

I also doubt that any of the money generated from the sale of these stamps actually goes to supporting the budgets of the Pyongyang Baby Home and Orphanage and Songdowon International Children’s Camp, but you never know.

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DPRK emphasizes development of marine resources

Thursday, July 30th, 2015

According to KCNA:

Development of Marine Resources Spurred in DPRK

The development of marine resources has been pushed forward in a far-sighted way in the DPRK according to a new national strategy for developing marine resources.

The Ministry of Land and Maritime Transport, the Ministry of Fisheries and the State Hydro-meteorological Administration are paying deep attention to marine survey and observation and research into marine resources, while laying sound material and technical bases for them.

Researchers of Kim Il Sung University have made successes in the research into marine energy resources, marine information system and marine environmental protection. They are also pushing ahead with the research into searching for fishing ground on the East and West seas of Korea and the ocean and into aquaculture and marine mineral resources.

The establishment of a latest marine technology park progresses apace.

Kwak Il Hwan, secretary of the DPRK society for marine studies, told KCNA:

It is one of important national policies to protect and develop marine resources.

Students and citizens are encouraged to get more knowledge about the sea through different occasions like the Day of Sea (July 12) and months for maritime physical culture (July and August).

Big efforts have been paid to putting the research into marine resources on a higher scientific basis.

And here is coverage of the report by the Institute for Far Eastern Studies (IFES):

Marine Development Projects Underway in North Korea
2015-7-30

North Korea’s state-run Korean Central News Agency (KCNA) reported on July 24, 2015 that marine resource development projects, such as the establishment of an Advanced Marine Technology Development Zone, are currently being pursued in North Korea.

While KCNA reports that the establishment of the Advanced Marine Technology Development Zone is moving along, Choson Marine Association head clerk Kwak Il Hwan adds, “Protecting and increasing marine resources while actively developing and using them is becoming one of the state’s main policies.”

The news agency also revealed, “As a marine space resource, ports will be constructed, navigation channels will be developed, and there were will be tidelands and marine tourist spots; on the west coast it will become a tideland capable of development as well as a wealth of information.” This statement indicates that the Advanced Marine Technology Development Zone will be designated on the west coast.

“A training system for our country’s experts and engineers in the marine sector is in place, and a technological foundation for the development and use of marine resources, including research bases in each field all over the country, has been secured,” KCNA reported.

Along with this, the news agency revealed that in the Ministry of Land and Marine Transport, the Ministry of Fisheries, and the meteorological observatory, they are proceeding with projects like maritime studies, marine observations and research projects, and maintenance reinforcement work through material and technical means.

In addition, Kim Il Sung University is pushing for the effective development and use of marine resources, invigorating the exploration of fisheries, sea farming, a marine ecology and environmental information management system, the exploration of marine mineral resources, and collection research projects on the East and West coast and in ocean waters.

KCNA also revealed that research in areas like marine energy resource development, marine environment protection technology, and a marine information system are achieving results.

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DPRK to hold local People’s Committees elections

Tuesday, June 9th, 2015

UPDATE 1 (2015-7-4): Voter rolls displayed at constituencies, sub-constituencies for election of deputies to people’s assemblies. According to KCNA:

Constituencies and sub-constituencies for the election of deputies to the provincial (municipal), city (district) and county people’s assemblies have displayed voter rolls on Saturday.

The voter rolls were worked out, thoroughly pursuant to the Law on the Elections of Deputies to the People’s Assemblies at All Levels.

Registered there are all citizens with suffrage residing in the relevant areas.

The voters are confirming whether they are correctly registered.

ORIGINAL POST (2015-6-9): According to Yonhap:

North Korea said Tuesday that it plans to select deputies to local assemblies in mid-July for the first time since the North’s leader Kim Jong-un took power in late 2011.

Elections for deputies to provincial, city and county people’s assemblies will take place July 19, according to the North’s official Korean Central News Agency.

The elections are held every four years, and the number of seats is determined by the population of each area.

However, they are widely considered a formality as the candidates hand-picked by the ruling Workers’ Party are rubber-stamped into office.

The latest local elections were held in July 2011 when Kim was the communist nation’s heir-apparent.

Elected deputies hold a meeting once or twice every year to set their provinces’ budgets and draw up plans for law enforcement, experts said.

Read the full story here:
N. Korea to hold local elections in July
Yonhap
2015-6-9

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2015 Kaesong wage fight (UPDATED)

Monday, May 25th, 2015

In 2011, Kaesong workers officially received their 5th consecutive annual pay increase. In 2012, they “received” their 6th consecutive pay increase. In 2013 there was no pay increase because Pyongyang closed the complex down in a dispute with the South Koreans. In 2014, work resumed at the complex and Kaesong workers “received” a 5% pay increase, but Pyongyang wanted a 10% to make up for the 2013 year (in which they closed the complex). Now it looks like Pyongyang is raising tensions (unjustifiably in my opinion) to recover a “pay increase” they feel they are owed.

For those new to this topic, I should point out that we are not talking about wages paid to North Korean workers. We are talking about US dollar balances (cash) that are given directly by South Korean firms to the North Korean government. The North Korean government keeps all of the hard currency and pays its workers in local currency. That said, The North and South Koreans still officially refer to “wages” (even though they are nothing of the sort), so I will as well.

I am chronicling this developing story in periodic updates below.

____________________

UPDATE 20 (2015-8-17): Reuters reports that the Koreas have worked out a deal. According to the article:

North and South Korea agreed to increase the minimum wage for North Korean workers at a joint factory park by 5 percent, a South Korean industry representative said, ending a months-long dispute despite heightened tensions on the Korean peninsula.

The compromise, reached Monday, raises the monthly wage to $73.87 at the Kaesong Industrial Complex, which is just north of the heavily fortified inter-Korean border.

“The fact that dialogue between South and North met with good results is welcomed and a good signal for stable management in Kaesong,” Yoo Chang-geun, vice chairman of the Corporate Association of Kaesong Industrial Complex, said on Tuesday.

The new wage is slightly below the $3.65 increase, or 5.18 percent, North Korea had demanded, which exceeded the annual increase of 5 percent agreed when the zone was established.

Here is coverage in Yonhap:

South and North Korea have agreed to hike the minimum wage by 5 percent for North Korean workers at a joint industrial park in the North, a government official said Tuesday, a move that will help resolve a monthslong row.

The two Koreas have been embroiled in a dispute following North Korea’s unilateral decision to hike the minimum wage by 5.18 percent for the about 55,000 North Korean workers at the Kaesong Industrial Complex in the North’s border city of the same name.

The quasi-state committees from the two Koreas reached an agreement on Monday to hike the wage to US$73.87, the most contentious issue in the dispute, according to a ranking official at the Unification Ministry. A 5 percent hike is the same level at which the wage has been increased every year so far.

“The most pressing issue of the wage cap has been resolved though there is still a long way to go,” the official said, asking not to be named. “But the move is expected to support the stable supply of labor and improve business conditions.”

The move is expected to raise the total monthly wage by far more than 5 percent when other compensation is included, according to an official at the group of 124 South Korean firms that are running factories in the park.

Seoul has rejected Pyongyang’s unilateral move to hike the wage, saying that it breaches a 2004 agreement that calls for the two sides to set wages through consultations.

In July, the two sides held talks of the joint committee that operates the complex, the first since June last year, but they failed to reach an agreement.

The ministry said that the two Koreas plan to hold a meeting of the committee to discuss how to revise labor guidelines.

The government official said that the two sides have agreed to continue to set the wage cap through consultations.

“By taking into account the grave situation facing inter-Korean ties, the government plans to take measures to develop the complex,” the official said.

According to UPI:

The agreement also covers social welfare for North Korean factory workers in Kaesong. Taken together, the payment of workers’ health insurance and other benefits indicates total income is to increase between 8 and 10 percent.

Coverage for North Korean workers is to include provisions for work-related injuries, death insurance and unemployment benefits.

Workers also are to be compensated for hours worked overtime and for holidays at a rate that is between 50 to 100 percent of regular hours worked, according to South Korean officials.

Ongoing tensions between the two sides have affected business operations in Kaesong but productivity at the complex has soared dramatically despite the wage dispute.

From January to April, production value was estimated to have reached $186 million, up 25 percent from $148 million from the same period in 2014.

None of the media highlighted that nearly all increased spending on North Korean workers at the Kaesong Industrial Complex is simply a larger transfer to the North Korean government will little going to the actual workers themselves.

UPDATE 19 (2015-8-14): North Koreans at the Kaesong Industrial Complex already “paid” more than workers at other foreign-owned ventures. According to Radio Free Asia:

Local employees hired by foreign-invested companies inside isolated North Korea are earning much less than their counterparts who work at South Korean firms inside the Kaesong Industrial Complex, businessmen with knowledge of the situation said.

Foreign-invested companies pay local employees less than the U.S. $70.35 monthly minimum wage paid to the 53,000 North Koreans who work at the Kaesong Industrial Complex, the joint inter-Korean economic project north of the demilitarized zone, sources said.

Some North Koreans who work at the industrial park receive more than U.S. $140 a month when overtime is included, they added.

A Chinese-Korean businessman who operates a roofing material company and metal pressing company in the Rason area on the northeast tip of the country told RFA’s Korean Service that he pays his North Korean workers about 300 Chinese yuan (U.S. $47) a month. Other Chinese companies in Rason pay similar wages to their North Korean employees, he said.

A Chinese businessman who employs about 100 North Koreans at a mine he is developing in Hwanghae province said he pays his workers U.S. $60-$70 a month.

“There might be some wage differences at other foreign companies, but they are not that much different from the level of wages I pay,” he said.

The sources noted that some media reports published outside North Korea put the average monthly wage of workers in the Rason Special Economic Zone, set up by the North Korean government in the early 1990s to promote economic growth through foreign investment, at around U.S. $100. But this contradicts salary information provided by the foreign companies doing business there, they said.

“It’s a big problem paying the same wage rates to the workers dispatched unilaterally by the North Korean authorities [to foreign-invested companies inside the country] without determining whether they’re skilled or unskilled, or taking into consideration if they are men or women, based on the nature of the work they’re supposed to do,” one source said.

While those who work for foreign-invested companies in North Korea also receive an allowance for one meal per day, the sources said, they also log fewer hours than their Kaesong counterparts, because they often fail to report for work whenever authorities order labor mobilizations or electricity supplies are low.

UPDATE 18 (2015-7-17): The talks ended with no resolution. According to Yonhap:

South and North Korea on Thursday failed to settle their months-long dispute over wages of North Korean workers employed at their joint factory park in rare inter-Korean talks held in the communist country.

Delegations from Seoul and Pyongyang sat together in the North Korean border town of Kaesong earlier in the day over the tangle, which started with the North’s unilateral decision in February to hike the minimum wage for about 55,000 North Korean laborers.

The North demanded the per-hour minimum wage be lifted by 5.18 percent to US$74, but the South had resisted the steeper-than-agreed hike before the two countries agreed last week to settle the issue through dialogue.

The ground rules set when the joint cooperation project opened in 2004 capped the maximum rate of wage increase at 5 percent per year.

The meeting ended without any major progress as the two sides failed to narrow gaps on the wage issue, a South Korean official said after the talks broke down.

The two sides intend to meet again to put the issue to renegotiation, although a date has not been set, he noted.

Pak Chol-su, a vice director of North Korea’s special economic zone development department, who heads the North Korean delegation, had earlier expressed hopes for a favorable outcome as the negotiations kicked off inside the Kaesong complex.

Touching on the severe drought reported in the North, Pak also said recent rainfalls “pretty much improved harvest.”

The Thursday meeting marks a rare opportunity of inter-Korean contacts with the countries mired in long-running military and diplomatic tensions.

It was the first meeting of their joint committee in charge of running the Kaesong Industrial Complex since the last one was held in June last year. It was also the first government contact between the countries following a working-level military dialogue convened in October in 2014.

Amid the bellicose mood, the North abruptly called off U.N. Secretary-General Ban Ki-moon’s planned peace-promoting visit to the Kaesong park in May.

The joint factory park, the result of the first-ever inter-Korean summit in 2000, is the last remaining symbol of once-vibrant inter-Korean reconciliation. It has also served as a core source of foreign currency for the cash-strapped North, while providing South Korean companies with a cheap but skilled workforce.

A total of 124 South Korean firms, mostly small- and medium-sized manufacturers, run factories at the complex under the auspice of the South Korean government.

The operation of the complex has been a yardstick of ups and downs for inter-Korean ties.

In April 2013, the North unilaterally shut down the park for about four months amid worsening tensions on the peninsula.

Since the unilateral wage hike demand in February, the countries agreed to tentatively freeze the minimum wage at the current $70.35 level, allowing the two sides to buy time for talks on the wage issue.

Also discussed in the Thursday meeting was how to tighten public order among South Koreans moving in and out of the complex.

The North has vowed to take punitive actions on South Koreans who are caught carrying banned goods into the North including USB memory sticks or newspapers from the outside world.

Here is coverage in the Daily NK. Here is coverage in the Joong Ang Ilbo.

UPDATE 17 (2015-7-9): Two Koreas to hold talks to negotiate Kaesong wage issues. According to Yonhap:

South and North Korea plan to hold talks on a joint industrial park in the North next week to discuss a prolonged dispute over the North’s unilateral move to raise wages for its workers at the complex, Seoul officials said Thursday.

North Korea has accepted the South’s offer for holding the meeting at the Kaesong Industrial Complex next Thursday at the border city of the same name, according to the unification ministry.

The move raises hopes for resolving a months-long wage row between the two Koreas following Pyongyang’s unilateral bid to hike the minimum wage by 5.18 percent to US$74 per month for about 55,000 North Korean workers at the park. A total of 124 South Korean small- and medium-sized enterprises are operating factories there.

The South has rejected the communist neighbor’s move, saying it is in breach of a 2004 agreement that calls for the two sides to set wages through consultations. The wage cap has been set at 5 percent per year.

In August 2013, the two Koreas decided to set up a joint committee in charge of running the industrial park following the North’s unilateral move in April of that year that shut down the park for about four months.

The committee is an integral part of a deal that called for reopening the complex and adopting safeguards to prevent any work stoppages in the future. The committee has not met since June last year due to the North’s refusal.

The joint factory park, which opened in 2004, is the last remaining symbol of inter-Korean reconciliation. It has served as a major revenue source for the cash-strapped communist North, while South Korea has utilized cheap but skilled North Korean laborers.

In what could be a temporary relief, North Korea accepted South Korea’s tentative offer in late May to pay wages at the current level of $70.35, but Seoul and Pyongyang have yet to resolve the issue fully.

Meanwhile, the ministry said that Pyongyang has sent a notice to Seoul saying that it will tighten its surveillance over South Koreans moving in and out of the complex.

The North is known to have expressed complaints over South Koreans bringing in goods, such as mobile phones and newspapers, that are restricted in the North, vowing to take punitive actions if found.

In response, the South said that the issue should be dealt with in accordance with the two sides’ agreement and related regulations, according to the ministry.

UPDATE 16 (2015-5-25): South Korean firms begin paying regular wages, though the matter is still not resolved. According to Yonhap:

South Korean firms in an inter-Korean factory park in North Korea plan to pay wages to their North Korean employees this week, a government official said Monday.

The move came days after Pyongyang accepted Seoul’s tentative offer of wage payments for North Korean workers at the factory park in North Korea’s border city of Kaesong at a previously agreed level until separate consultations are held.

The deal on Friday would allow South Korean firms to pay the wage based on the US$70.35 per month that was originally set. But it called for the 124 South Korean firms to provide retroactive pay based on the outcome of separate consultations.

The official said North Korea demanded that South Korean firms in Kaesong pay March and April wages by the end of this month. The official asked not to be identified, citing policy.

The sides have yet to produce a deal over the more sensitive issue of a wage cap, which has been set at 5 percent per year.

In February, North Korea unilaterally decided to hike the minimum wage by 5.18 percent to US$74 per month for about 53,000 North Korean workers in the factory park.

The factory park, an outcome of the first-ever inter-Korean summit of leaders in 2000, is a major symbol of reconciliation between the rival Koreas.

It combines South Korean capital and technology with cheap North Korean labor to produce clothes, utensils, watches and other labor-intensive goods.

The factory park is a major source of hard-currency for the impoverished north.

UPDATE 15 (2015-5-22): Koreas buy time for talks on wage at factory park. According to Yonhap:

North Korea has accepted South Korea’s tentative offer of wage payments for North Korean workers at a joint industrial park, allowing the two sides to buy time for talks on Pyongyang’s unilateral wage hike, officials said Friday.

The two Koreas have been embroiled in the wage dispute as North Korea unilaterally decided in February to the hike minimum wage by 5.18 percent to US$74 per month for about 53,000 North Korean workers at the Kaesong Industrial Complex in the border city of the same name.

The agreement between the quasi-state committees from both sides will allow South Korean firms to pay the wage based on the $70.35 per month that was originally set, according to government officials. Then, the 124 South Korean firms will provide retroactive pay.

Friday’s deal is not final as the two Koreas have not produced a breakthrough over the more sensitive issue of a wage cap. But the North has accepted Seoul’s offer to pay the wage at a previously agreed level until separate consultations are held.

Seoul has rejected the North’s unilateral move, saying that the North violated a 2004 agreement that calls for the two sides to set wages together. The wage cap has been set at 5 percent per year.

“The move will ease concerns about production setbacks that could be sparked by North Korean workers’ threat not to work or to seek a work slowdown,” the Ministry of Unification said in a statement.

It added that the government will make efforts to resolve the wage dispute as soon as possible through talks with North Korea.

The agreement came amid concerns about the strained inter-Korean ties following North Korea’s recent abrupt cancellation of its invitation for U.N. Secretary-General Ban Ki-moon to visit the industrial complex.

On the same day a group of businessmen visited the KIC to help resolve the impasse. According to Yonhap:

A group of South Korean businessmen visited a joint industrial complex in North Korea Friday amid a drawn-out row over wage payment for North Korean workers there, an official from the group said.

The two Koreas have been embroiled in the wage dispute as North Korea unilaterally decided in February to hike monthly wages by 5.18 percent for about 53,000 North Korean workers at the Kaesong Industrial Complex in the border city of the same name. Seoul has rejected the North’s unilateral move.

The group of South Korean businessmen with factories there visited the complex in an effort to resolve the prolonged dispute as the 10-day period of the wage payment for April began Sunday. They made similar visits three times before.

The visit came as North Korea abruptly canceled its invitation for U.N. Secretary-General Ban Ki-moon to visit the industrial park, dampening hopes for better inter-Korean ties.

The joint industrial park, which opened in 2004, is the last remaining symbol of inter-Korean reconciliation following a landmark inter-Korean summit in 2000. It has served as a revenue source for the communist country while South Korea has utilized cheap but skilled North Korean labor.

Seoul said that Pyongyang violated a 2004 agreement that calls for the two sides to set the wages together. The wage cap has been set at 5 percent per year.

In August 2013, the two Koreas also decided to set up a joint committee in charge of running the complex following the North’s unilateral move to shut down the park for about four months in April of that year.

Seoul has requested its companies not to send out paychecks, vowing to punish violators. But despite the warning, about 50 out of 124 South Korean companies have paid March wages to the North’s workers apparently after threats from the North.

Here is coverage in Xinhua.

UPDATE 14 (2015-5-19): Kaesong companies pass resolution opposing North’s unilateral wage raise. According to the Hankyoreh:

Kaesong Industrial Complex tenant companies reached an agreement not to accept North Korea’s unilateral demands to increase wages. Instead, they agreed to provide the North Korean authorities with a letter of guarantee to pay the difference in the wages once North and South Korean negotiators reach an agreement.

During a general meeting of the Corporate Association of Gaeseong Industrial Complex (CAGIC) on May 18, with about 90 tenant companies attending, a group of company chairs approved a letter of guarantee they had proposed providing to the North Korean Bureau of Central Special District Development.

On May 15, the association chairs visited Kaesong to meet Park Chol-su, deputy chief of the bureau, and offered to write a letter of guarantee. The letter would state that the companies refuse to accept North Korea’s request to raise wages but promise to retroactively pay the difference in the wages and the late fees according to the agreement that North and South Korean authorities eventually reach.

On Apr. 20, the deadline for paying the wages for March, the North Korean bureau had asked the South Korean tenant companies to sign a letter of guarantee in which they would effectively acknowledge the wage increase on which it had unilaterally decided and agree to pay the ensuing late fees. Reportedly, five companies agreed to this demand.
In order to prevent South Korean companies from giving in to North Korea’s demands for raising wages, the South Korean government asked them to first deposit workers’ wages with the South Korean management committee, which would then forward the payment to the North Korean bureau.

The government is putting pressure on tenant companies, threatening that it will not extend the loan repayment schedule for companies that do not obey these instructions. Tenant companies were loaned emergency operating funds when the complex temporarily shut down in 2013.

“During a meeting with the group of company chairs on May 17, the Unification Minister said that, if we can show that the companies are not agreeing to North Korea’s demand to raise the wages, the Ministry might not predicate extending the loan repayment schedule on depositing workers’ wages with the management committee,” CAGIC Chairman Chung Ki-sup told reporters after the general meeting on Monday.

“In order to comply with this, we reached an agreement in the general meeting today to pay North Korea the April wages according to the February rates, before North Korea had asked for a wage increase.”

This past February, North Korea notified South Korea that it would be unilaterally increasing the minimum wage of North Korean workers at the Kaesong complex by 5.18% from US$70.35 to US$74 a month beginning with the March wages.
49 of the 125 tenant companies had paid the wages to North Korea as of May 8. The South Korean government is currently investigating to see whether these companies used double bookkeeping to pay their wages at the level North Korea demanded.

The South Korean government has insisted on raising the minimum wage no more than 5% through deliberations between North and South, as the labor regulations stipulated before North Korea unilaterally revised them.

On May 15, the South Korean government sent a message to North Korea through the secretariat of the Inter-Korean Joint Committee on the Kaesong Complex proposing that the committee hold its sixth meeting on May 20, but North Korea again refused to receive the message.

The joint committee was set up after operations at the complex were suspended for five months in 2013 in order to prevent the reoccurrence of such a shutdown. The committee is supposed to convene every quarter, but last year, only one meeting was held.

UPDATE 13 (2015-5-14): The North Koreans have issued a statement that tried to tie the Kaesong wage increase to revision of domestic labor regulations rather than a unilateral action against South Korea. According to KCNA:

New Labor Regulations to Be Invariably Enforced in KIZ
Pyongyang, May 14, 2015 09:56 KST (KCNA) — The Presidium of the Supreme People’s Assembly of the DPRK revised the labor regulations and promulgated them in November last year in conformity with the development of industrial zones, taking into full consideration the situation in the Kaesong Industrial Zone (KIZ), realities in international special zones, etc.

Pursuant to them, the DPRK notified the south side that a new wage pattern would be applied from March this year so that businesses of the south side might be fully ready for the new regulations.

In consideration of conditions of businessmen, the DPRK took such generous measure as extending the date of wage payment for March a week.

Nevertheless, the south Korean authorities, far from thanking the DPRK for its good faith and generosity, pulled up it over its legitimate enforcement of legislation, terming it “unilateral one violating the north-south agreement.” Not content with this, they are threatening and blackmailing the businesses to prevent them from paying the wages for March while making investigations into them.

A spokesman for the General Bureau for Central Guidance to the Development of the Special Zone declared in a statement on Wednesday the KIZ is an economic special zone being operated together with businessmen of the south side and that the south Korean authorities, therefore, have neither reason nor pretext to interfere in it.

We cannot but take a serious note of the fact that the south Korean authorities are set to apply a “deposit” system to wage payment from April, something rare to be found in economic zones of other countries, in a crafty bid to use the businessmen for wantonly violating the laws and regulations in the KIZ and openly encroaching upon the sovereignty of the DPRK, the statement noted, and went on:

Businessmen of the south side should keep vigilance against this move so that they may not be scapegoats for the authorities’ plot to wantonly violate the DPRK’s laws and regulations in the KIZ, an encroachment upon its sovereignty.

They should seriously think once again over what they would gain by yielding to the pressure of the authorities to turn the KIZ into the one of factories without workers where business autonomy is seriously violated.

Explicitly speaking, the issue of enforcing the new labor regulations is not an issue to be discussed at the talks between authorities as it is an issue concerning the DPRK’s legitimate enforcement of legislation.

The south Korean authorities should stop at once putting the brake and pressure upon the businesses’ autonomous management in the KIZ and deliberately laying an obstacle in the way of the operation of the KIZ and ensure their free management.

Not only the south Korean authorities but also the commission responsible for the management of the KIZ are to blame for the situation prevailing in the zone.

If the management commission continues working hard to infringe upon the inviolable sovereignty of the DPRK, making the KIZ a political bargaining chip for someone under the manipulation of the south Korean authorities, departing from its mission, the DPRK will call it into question for the ensuing serious consequences and it would not be possible for the DPRK to entrust the management of the KIZ to the commission.

The KIZ is, in actuality, a zone for north-south economic cooperation, not a theater for confrontation between the authorities of the north and the south.

The DPRK will keep enforcing the new labor regulations for the normal development of the KIZ in the future.

UPDATE 12 (2015-4-21): Pyongyang has allowed normal wages to be paid for March of 2015. According to the Hankyoreh:

“The North said it would allow the payment of the regular wages for now and calculate the difference from the hike later,” explained Corporate Association of Gaeseong Industrial Complex chairman Chung Ki-sup in a telephone interview with Hankyoreh on Apr. 20. That day marked the deadline for payment of March wages to North Korean workers at the complex.

North Korea recently announced a unilateral 5.18% hike in the minimum wage at the complex, which would raise monthly pay from US$70.35 to US$75.00. The South Korean government has blocked tenant companies from complying on the grounds that a unilateral increase beyond the agreed-upon 5% ceiling is unacceptable.

Chung explained that North Korea “wants us to sign statements confirming the unpaid difference.”

“Wage payments were already made over the course of ten days, so late fees for the difference are being deferred until this weekend,” he added.

The agreement buys a few extra days for authorities on both sides to discuss the matter before additional frictions erupt over the minimum wage hike at the complex. Tenants companies have reportedly convinced North Korea to accept the earlier US$70.35 minimum wage standard for March pay, with the difference to be paid retroactively after authorities reach an agreement on the matter.

“It appears that North Korea took into account the difficult position the tenant companies are in with the South Korean government insisting that they not pay the extra amount,” Chung explained.

“I don’t think North Korea wants the repercussions of this to grow either,” he said.

A group of tenant company directors at the complex had initially planned to visit Kaesong on Apr. 20 to discuss the wage issue, although the plans were eventually canceled.

“Our biggest concern is out of the way now that the North has agreed to accept the pre-hike pay,” Chung said. “My understanding is that the visit was canceled because they concluded it wasn’t going to really fix matters as they stand now.”

UPDATE 11 (2015-4-20): Kaesong firms stuck between Korean governments. According to Arirang News:

South Korea’s Kaesong business owners are stuck in a dilemma.

On the one hand, they’re facing the prospect of having to pay a late fee if they don’t comply with the North’s demand for a wage hike, but on the other hand, they face the possibility of punitive measures from the South if they do.

None of the 124 South Korean companies have paid the March wages yet, which are due April 20th.

North Korea has threatened to impose a late fee of 15 percent per month if the South Korean companies don’t issue the wage payments on time.

South Korea says it will not accept the North’s unilateral demand for a wage hike, saying Pyongyang violated a 2004 agreement that calls for two quasi-governmental committees to set the pay rate together.

The two committees met for a second time on Saturday, but failed to reach a compromise.

In addition, Seoul has warned the South Korean companies operating in the complex that they will face punitive measures if they concede to the North’s wage hike demands.

The two Koreas have been at odds over the issue since February, when the North unilaterally decided to raise the wage level by more than 5 percent to roughly 74 U.S. dollars a month starting in March for the approximately 53-thousand North Korean workers in the complex.

Seoul’s Unification Ministry says it is still sending messages to Pyongyang asking to meet on the wage issue, but the North maintains that it’s a matter for Pyongyang to decide.

Yonhap reports that a few South Korean firms have made increased payments in accord with Pyongyang’s demands:

Three South Korean firms have paid more wages for North Korean workers in the Kaesong Industrial Complex as Pyongyang demanded, a government source here said Monday.

Their move runs counter to the South Korean government’s firm stance not to accept the communist neighbor’s unilateral decision to raise wages for its 53,000 workers in the North’s border town.

The North unilaterally decided to raise the minimum wage by 5.18 percent to US$74 per month, starting in March, for those workers employed by the 124 South Korean small- and medium-sized firms in the Kaesong zone.

Three of the firms paid the increased wages, the source said. They are expected to face administrative punitive action from Seoul’s government.

The South’s unification ministry, meanwhile, dismissed news reports that the North extended a deadline for the payment of the March wage.

UPDATE 10 (2015-4-15): Seoul hints at drawn-out row over Kaesong wage problem. According to Yonhap:

South Korea said Monday it will not be restrained by a timetable in resolving an ongoing row over wage hikes for North Korean workers at a joint industrial park in the North.

The two Koreas have been in dispute since the North unilaterally decided in February to raise the wage level by 5.18 percent to US$74 per month starting in March for about 53,000 North Korean workers hired by South Korean companies at the Kaesong Industrial Complex in the North’s border city of the same name.

Seoul is seeking to hold talks with the North over the issue through a quasi-governmental committee as the payday for the March wages, which began Friday, will last for 10 days. None of the 124 South Korean firms have paid March wages to North Korean workers.

Seoul’s unification ministry said that it will do its best to resolve the wage dispute, adding that the row may be prolonged if it passes the deadline.

“As we cannot exclude the possibility that the wage dispute cannot be settled until April 20…the Seoul government will continue to make efforts to resolve the issue,” Lim Byeong-cheol, spokesman at the unification ministry, said at a press briefing.

“What’s important is that the government has the will to tackle this row. We do not prejudge any situations without having a specific deadline in mind.”

Seoul has not accepted the North’s unilateral move, saying Pyongyang violated a 2004 agreement that calls for two quasi-government committees from each side to set the wages together. The wage cap has been set at 5 percent.

Its efforts for the talks have gained urgency as North Korea will take days off on Wednesday and Thursday to mark the April 15 birth anniversary of its late founder, Kim Il-sung.

The industrial complex opened in the early 2000s, the last remaining symbol of inter-Korean reconciliation. It has served as a major revenue source for the cash-strapped communist country.

Lim also called on North Korea to stop threatening to retaliate against a move by Seoul activists to resume their campaign to send anti-Pyongyang leaflets and other materials via balloons across the inter-Korean border.

“It is not desirable for North Korea to criticize Seoul activists’ leaflet launch as it is a matter of freedom of speech,” Lim said. “North Korea should immediately stop making threatening remarks to South Korean people.”

Despite Seoul’s request for restraint, anti-North Korea activist Park Sang-hak on Thursday made an attempt to launch balloons carrying leaflets and copies of DVDs of “The Interview,” a U.S. comedy film about a plot to assassinate North Korean leader Kim Jong-un. His attempt was scuttled by police.

North Korea said Friday it will take “ruthless” actions against Seoul activists’ move, saying that the move to send the U.S. movie to the North is tantamount to a declaration of war against Pyongyang.

UPDATE 9 (2015-4-1): S. Korea not budging on Kaesong wage row (Yonhap):

South Korea said Wednesday it will ask the country’s firms at the Kaesong Industrial Complex in writing not to succumb to North Korea’s pressure to raise wages for its workers.

The unification ministry said it will soon send a formal letter to 124 South Korean firms operating in the zone just north of the inter-Korean border.

The move comes as the companies, mostly small and medium-sized, will begin to pay March’s wages to around 53,000 North Korean employees on April 10.

In February, the North decided unilaterally to revise a set of labor rules that included the elevation of the minimum wage for its workers at the Kaesong Industrial Complex from US$70.35 to $74 starting in March.

The South has rejected the North’s decision, saying the wage issue should be decided through bilateral discussions.

It has urged the South’s firms in Kaesong not to follow the North’s measure.

“We plan to send an official letter to them in order to again make clear the government’s stance on the matter,” Unification Ministry spokesman Lim Byeong-cheol said.

He added there has been no progress yet in efforts to hold talks with North Korea to discuss the issue.

Here is coverage in the Hankyoreh.

UPDATE 8 (2015-3-18): South Korean business owners have crossed into the Kaesong complex to complain about Pyongyang’s unilateral wage increase. According to the Financial Times:

On Wednesday more than a dozen businessmen representing about 120 companies visited Kaesong, about 10km north of the border, to voice their concerns about the move, amid growing concerns about the future of the joint economic project

“The unilateral change of labour rules is a problem,” said Chung Ki-sup, head of the council of the South Korean businesses operating in Kaesong, ahead of the 14-member delegation’s arrival in the North. “But this can be easily resolved when dialogue resumes.”

Mr Chung said the North’s stance might in part be a reaction to Seoul’s refusal to ban North Korean defectors and rightwing civic groups from sending anti-North leaflets across the border.

Experts say the wage disputes are unlikely to lead to another closure of the industrial complex, but the problems have renewed scepticism over the merits of the project.

“The disputes are unlikely to be resolved anytime soon,” said Park Hyung-joong, researcher at Korea Institute for National Unification. “Pyongyang wants to use Kaesong as a political bargaining chip when inter-Korean relations are not good. So the complex will remain exposed to political problems, but closing it carries too big political risks for both sides.”

Here is coverage in the Daily Mail and Yonhap.

UPDATE 7 (2015-3-17): The DPRK has tried circumventing the South Korean government to reach out to the Kaesong firms themselves. According to Arirang News:

In an unprecedented move, North Korea asked the heads of South Korean companies operating at the inter-Korean industrial complex in Kaesong to gather for a meeting that was scheduled for earlier in the day.

No specifics about the meeting were announced and the South Korean government asked the company heads. not to respond to Pyongyang’s call.

Instead, the South Korean government held a meeting in Seoul this afternoon with most of the leaders of companies from the complex.

Seoul discussed possible countermeasures and urged the leaders not to abide by Pyongyang’s one-sided demands.

Watchers believe the meeting was Pyongyang’s way of pressuring the South Korean companies to go along with its unilateral decision to raise wages for its workers from a little over 70 U.S. dollars to 74 dollars a month and revise labor regulations.

UPDATE 6 (2015-3-12): The DPRK rejects South Korea’s call for talks on Kaesong wages. According to Yonhap:

North Korea claimed Thursday its decision to raise wages for its workers at the Kaesong Industrial Complex is a legitimate measure under its sovereignty, dimming hopes of an early resolution to disputes between the two Koreas over the issue.

The North’s Central Special Development Guidance Bureau, which is in charge of operating the complex, made clear that it is not a matter to be decided through consultations with the South’s government.

Last month, Pyongyang notified Seoul of its unilateral decision to elevate the minimum wage from US$70.35 to $74 starting in March. It also said it would collect 15 percent of their basic wage plus overtime payments as “social security.” Currently, the South’s firms pay 15 percent of the basic wage alone.

The South strongly protested against the decision, suggesting that the two sides hold dialogue on March 13 to discuss the problem.

Officials here emphasized that the two Koreas have agreed to decide every issue related with the operation of the joint venture through mutual consultations.

The decision on the wage hike is a “normal and legitimate” exercise of the North’s legislative rights, the bureau’s spokesman told Pyongyang’s propaganda website, Uriminzokkiri.

It’s not a subject for bargaining with the South, he added.

It makes no sense, he added, for the North to hold talks with the South at a time when it is staging a war rehearsal with joint military drills with the United States on the peninsula.

He argued that wages for the North’s workers in Kaesong are still low for their heightened skills and productivity and in comparison with the wage level in special economic zones in other nations.

UPDATE 5 (2015-3-11): Throwing fuel on the fire of this mess, the North and South Koreans are required to resolve real estate rental rates this year. There will be no practical way to resolve this issue independently of the ongoing wage dispute. According to Yonhap:

When the Kaesong Industrial Complex in the North’s border town of the same name started operations in 2004, Seoul agreed with Pyongyang to pay the rent for the North Korean land used by South Korean companies from 2015 after negotiations on the amount.

In November, the North’s Central Special Development Guidance Bureau in charge of the industrial complex notified its South Korean counterpart of its intention to start talks on the rent issue, according to the officials.

But the negotiations are widely expected to face a bumpy road, given a wide opinion gap shown in the countries’ previous exchanges on the issue.

In 2009, the North attempted to collect up to US$10 of rent per 3.3 square meters of land, but it faced strong opposition from South Korea, so the plan was dropped immediately.

Following the North’s notification in November, Seoul has decided not accept such a level of rent as put forth by the North in 2009, which could further mount the inter-Korean tension over the factory complex down the road, according to the officials.

The joint Kaesong factory park is already at the center of an inter-Korean feud after the North announced last month its unilateral decision to raise the minimum wage of North Korean workers in the park from US$70.35 to $74 starting with their March wages.

Seoul, however, rejected the wage increase decision and said it will punish any South Korean firms complying with the North Korean demand.

April 10 is feared to become a watershed in the inter-Korean tension over the Kaesong park as South Korean firms will start paying March wages that day.

South Korean officials have previously said that the North could take extreme measures, such as the withdrawal of its workers from the complex in a bid to increase pressure on the issue.

UPDATE 4 (2015-3-9): South Korea not happy with the DPRK’s moves on Kaesong. According to Yonhap:

South Korea’s unification ministry issued a strongly-worded statement Monday against North Korea’s attitude on their joint venture in Kaesong, calling again for immediate dialogue to resolve pending problems.

It’s “deeply regrettable” that the North is not responding to Seoul’s offer of talks to discuss Pyongyang’s unilateral decision to raise wages for its workers at the Kaesong Industrial Complex, said the ministry.

“It’s questionable whether (the North) has the will for the development of the complex as the two sides agreed,” its spokesman Lim Byeong-choel said, reading out the statement at a press briefing.

The North is violating an inter-Korean agreement and rules to decide all issues related to the operation of the Kaesong zone, including working conditions, added Lim.

Last month, the communist nation announced a 5.18-percent hike in the minimum wage for its workers in the zone to US$74 a month starting in March.

“The government can never accept such a unilateral measure by North Korea,” the official said. “The government will take every necessary step for the development of the Kaesong Industrial Complex and the protection of (the South’s) firms there.”

He urged Pyongyang to hold talks with the South on Friday as proposed.

Launched in 2004 in the North’s border town, the zone is home to about 120 South Korean firms, mostly small and medium-sized, which employ more than 53,000 North Korean workers.

The South’s government has advised the companies not to comply with the North’s decision on the wage level.

UPDATE 3 (2015-3-4): South Korean government holding meeting with stakeholders to determine response to DPRK. According to Yonhap:

The South Korean government said Wednesday it will hold a round-table meeting this week with the heads of local firms operating in the Kaesong Industrial Complex to discuss how to handle North Korea’s unilateral decision to raise the wages of its workers there.

The unification ministry is scheduled to hold the meeting with the council of relevant companies at its headquarters in Seoul at 5 p.m. on Thursday, said ministry spokesman Lim Byeong-cheol. The ministry is in charge of inter-Korean relations.

“We plan to review measures regarding the recent situation,” he said at a press briefing. “Along with related government officials, Chung Ki-sup, head of the council, and about 10 other representatives will attend (the meeting).”

Another ministry official also said the meeting is intended “to share the government’s position on the matter and listen to the opinion of the firms.”

Last week, the North announced it would raise the minimum wage for its workers in the zone by 5.18 percent to US$74 a month starting in March.

South Korea said it cannot accept a decision made without mutual consultation.

The ministry spokesman said the North has not responded yet to the South’s offer of talks on the Kaesong complex on March 13.

“The government will continue to urge North Korea to hold consultations between the authorities of the two sides, which are essential for the development of the Kaesong Industrial Complex,” Lim said.

The North is apparently aware that both sides have already agreed to resolve every problem related to the operation of the joint venture, he added.

UPDATE 2 (2015-2-26): According to Yonhap:

North Korea has notified South Korea of its unilateral decision to raise the minimum wage for its workers at the Kaesong Industrial Complex by 5.18 percent, the unification ministry said Thursday.

In a fax message sent Tuesday, the North said it would increase the minimum wage from $70.35 to $74 starting on March 1, a ministry official told reporters.

In addition, the North announced that it would collect 15 percent of their basic wage plus overtime payments as “social security,” he said. Currently, the South’s firms pay 15 percent of the basic wage alone.

The North Korean workers’ average wage amounted to $141.4 per month in 2014, according to the ministry’s data.

Under Pyongyang’s plan, South Korean firms will have to pay $164 on average for a North Korean worker a month, up 5.53 percent from the current $155, said the official.

He stressed that the South’s government can’t accept the North’s move.

“The two sides are supposed to set wages for workers at the complex and other working conditions through mutual consultations,” he said. “The government will advise our firms to pay the current level of wages until the issue is settled through consultations between the related authorities of the two sides.”

Those companies are scheduled to pay March wages for the North’s workers between April 10-20.

Earlier Thursday, the South attempted to deliver a protest letter, but the North refused to receive it, said the official.

“It’s very regrettable that the North shows such an attitude,” he said.

About 120 South Korean garment and other labor-intensive plants employ more than 53,000 North Koreans at the complex, which was created in 2004.

UPDATE 1 (2014-12-09): North Korea amends Kaesong Industrial Complex labor regulations, lifts wage increase limit. According to the Institute for Far Eastern Studies (IFES):

According to a December 5th report of North Korea’s propaganda media Uriminzokkiri, the Presidium of the Supreme People’s Assembly reached a decision on November 20 to revise the Act on the Kaesong Industrial Complex (KIC).

It reported that ten provisions in the Kaesong worker regulations were revised including the 5 percent ceiling on annual wage increase to the minimum wage.

North Korea’s General Bureau for Central Guidance on the Development of the Special Zone delivered the notice in writing to the Kaesong Industrial Complex Management Committee on December 8, stipulating that 13 provisions were revised. Out of the 49 total provisions, the 13 provisions that were modified pertain to the function of the KIC Management Committee and the wage system.

According to the decision, North Korea elucidated the labor and wage regulations will be unilaterally directed by the General Bureau, dismissing the authority of the KIC Management Committee. Furthermore, the clause that depicts the minimum wage of USD 50.00 and limit of 5 percent wage increase were deleted. Instead, the revised provisions prescribe that the General Bureau will make the decision every year.

In addition, overtime pay will be increased from the current 50 percent to between 50 to 100 percent. Furthermore, workers who have worked for more than a year will be eligible for severance pay, regardless of the condition of their leave. The previous clause stated severance pay was to be paid only when the termination incurred from “circumstance of the company”; but this condition has been deleted from the revised clause, and pay must now be given even for voluntary leave. Also removed was the provision that states the wage should be paid directly to the employee in cash.

Meanwhile, the South Korean government made a statement disproving the recent modifications to the KIC regulations. The South Korean government is refuting North Korea’s decision based on the fact that it was a unilateral decision by the North without consulting the joint committees of the KIC. The South is affirming its position to strongly counter against the North’s one-sided decision.

Revision of the labor regulations of the KIC is regarded as a violation to the general agreement that undermines the stability and the credibility of the KIC regulations. Such labor regulations clearly violate the inter-Korean agreements on wage system and various labor and tax systems newly reached by the various institutions in the North-South Joint Committee of the KIC after the KIC was restarted last year.

The current minimum wage of a KIC worker is USD 70.30, which reaches up to an average of USD 150.00 per month after various incentives are included. Each company is paying a total of USD 210.00 per employee where 15 percent of the minimum wage is allocated to social insurance, transportation, and snack costs.

North Korea has persistently demanded for a wage increase. North Korean employees dispatched to China’s Dandong City are paid an average of USD 300.00 per month. Thus, the recent move by North Korea can be seen as a move to raise the minimum wage at the KIC to a similar level. In addition, this move can be interpreted as North Korea’s intention to maximize economic gain by taking unilateral action toward tenant companies in the KIC.

ORIGINAL POST (2014-12-9): In 2011, Kaesong workers received their 5th consecutive annual “pay increase”. In 2012, they received their 6th consecutive pay increase. In 2013 there was no pay increase because Pyongygang closed the complex down in a dispute with the south Koreans. In 2014, Kaesong workers received a 5% pay increase, but Pyongyang wanted a 10% to make up for the 2013 year (in which they closed the complex!). Now it looks like Pyongyang is signaling that it intends to unilaterally raise wages.

According to Yonhap:

South Korea is scrutinizing North Korea’s unilateral decision to amend a number of wage-related clauses at the jointly operated Kaesong Industrial Complex, an official said Tuesday.

As soon as a review of the North’s demands are finished, the government will take appropriate steps, the unification ministry official told reporters.

“We are in the process of reviewing and analyzing the contents revised by the North,” he said on background.

The South and the North have an agreement over 49 items in place on the working conditions for around 53,000 North Korean workers in the zone.

Without prior consultations with the South, the North announced its decision to revise 13 of them, which include scrapping a 5-percent cap on the annual minimum wage increase rates, easing qualifications for severance pay and strengthening the authority of the North’s agency in charge of running the complex, according to the official.

North Korean workers’ wages have jumped 5 percent every year since 2007. North Korean workers are currently paid US$70.35 each month. If various allowances and incentives are counted, wages reach $130, reportedly about 50 percent higher than the average income of workers in North Korea.

Read the full story here:
S. Korea reviewing NK move over Kaesong workers’ wages
Yonhap
2014-12-9

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‘High-temperature air-combustion technology’ developed

Thursday, April 23rd, 2015

Institute for Far Eastern Studies (IFES)

At the Third Session of the 13th Supreme People’s Assembly (SPA) held on April 9, Premier Pak Pong Ju of the DPRK Cabinet delivered a progress report on the Cabinet’s performance for the previous year and goals for this year. He said, “High-temperature air-combustion technology and other technologies that do not require the use of heavy oil should be introduced into various fields of the national economy.” As North Korea is a non-oil producing country, such technology would be beneficial. But whether this technology is possible requires careful consideration.

According to various state media reports, “high-temperature air-combustion technology” maintains the internal temperature of the furnace by combusting gas or liquid raw material into the air by heating it to high temperature, wherein high temperature needed at the time is acquired through the gasification of anthracite. Respectively, this technology is also called the high-temperature, air-combustion technology by the gasification of anthracite.

This technique is known as energy-saving advanced technology that manages the thermal efficiency which greatly lowers the heat loss that occurs from the used gas discharge. This technology is characterized by its wide range of application that includes heating of the metal factory that uses heavy oil as fuel, as well as glass melting furnace, furnace refractories (or kilns), pottery baking furnace, and heat treatment furnace.

For the production or heating of rolled steels, application of this technology allows for effective production without the use of heavy fuel oil.

Accordingly, the Ministry of Metal Industry has begun to implement projects with major metal industry enterprises such as Kim Chaek Iron and Steel Complex, Hwanghae Iron and Steel Complex, and Chollima Steel Complex. This technology is being introduced into various enterprises including all steel production process and refractories that use heavy oil.

In 2011, North Korea emphasized “vanguard technological breakthroughs” and constructed heating furnace equipped with high-temperature air combustion technology at the Kim Chaek Iron and Steel Complex for the commemoration of Kim Il Sung’s 100th birthday. It was widely publicized that introduction of this technology has put an end to the steel billets production system that uses heavy fuel oil.

In this regard, Rodong Sinmun reported on January 11 that Kaesong Insulator Factory in North Hamgyong Province succeeded in the complete domestic production of high-speed transfer switch and thermal mass which is the core of the high-temperature air-combustion technology. It also drew particular attention as the news touted that this was the first successful introduction of “large-scale continuous furnace.”

The newspaper boasted that, “the introduction of the high-temperature air combustion technology was introduced with a small investment into the heating furnace and kilns in each sector of the people’s economy,” and evaluated this as a result of “our capabilities and technology that proceeded in accordance with the principles of ‘our-style’ modernization.”

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North Korea to concentrate state budget towards economic construction

Monday, April 20th, 2015

Institute for Far Eastern Studies (IFES)

North Korea has drafted a budget that emphasizes improving the lives of its citizens and the establishment of an economic power this year.

The state-run Korean Central News Agency (KCNA) reported that on April 9, 2015, North Korea held the 3rd Session of the 13th Supreme People’s Assembly (SPA), where authorities balanced accounts from last year’s spending and decided the budget for this year.

“This year the state budget was designed to further strengthen the self-defense capabilities of national defense while putting technology firmly at the front and bringing about a transformation in the building of an economic powerhouse,” North Korea’s head of the Finance Ministry, Ki Kwang Ho, explained at the session.

First, North Korea decided to raise the entire budget expenditures over last year by 5.5 percent to celebrate the 70th anniversary this October of the establishment of the Worker’s Party of Korea (WPK).

This year the national defense expenditures represent 15.9 percent of the budget, the same as last year. Meanwhile, authorities decided to increase investment in the technology sector over last year by 5 percent.

The following areas were also increased over last year: forestry (9.6 percent), basic construction (8.7 percent), physical education (6.9 percent), education (6.3 percent), culture (6.2 percent), general industry and light industry (5.1 percent), fisheries (6.8 percent), agriculture (4.2 percent) and health (4.1 percent).

Every aspect of the budget is designed to improve the citizens’ lives and further economic development. Finance Ministry Director Ki Kwang Ho explained, “[the budget] enables the state to raise the entire People’s economy and drastically improve the lives of the people while fully engaging in the forest restoration battle and the construction of monumental building projects.”

North Korea, however, did not disclose the full amount of the budget. Based on the budget, it is predicted that North Korea will concentrate state management this year on improving the people’s quality of life.

In his New Year’s address, First Chairman Kim Jong Un intimated his intentions to better the lives of the people through economic reform this year.

“We need to solve the people’s food issue through the three axes of agriculture, livestock and fisheries and bring the food situation to the next level […] We need to encourage businesses to be proactive and creative to take the lead in business activities,” he proclaimed in his address.

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DPRK real estate market: sustained boom, or bubble?

Saturday, April 11th, 2015

According to the Hankyoreh:

“They say there are apartments in Pyongyang selling for US$200,000.”

Jung Eun-yi, a research professor at Gyeongsang National University, was talking about how rapidly housing prices in North Korea have been rising. Jung had just returned from spending January and February in Dandong, China, where she had been tracking trends in the North Korean housing market. In July 2014, the highest price for an apartment in Pyongyang that heard about in Dandong had been US$100,000.

Needless to say, this doesn’t mean that an apartment worth US$100,000 had doubled in value to US$200,000 in the past six months. Nevertheless, the appearance of apartments worth US$200,000 indicates just how quickly Pyongyang apartments are increasing in quality, size, and value.

Jung is one of the foremost experts in South Korea on prices in the North Korean housing market. She received considerable interest from the media because of a paper that she presented at the World Conference on North Korean Studies at the end of Oct. 2014 in which she reported that some apartments in Pyongyang were selling for US$100,000.

In 2013, she had gained attention in the academic community by publishing a paper that included a detailed breakdown of housing prices in the North Korean city of Musan, North Hamgyong Province, down to the neighborhood.

Based on the data collected during her most recent stay in Dandong, Jung argues that there are signs that the housing market in North Korea is turning into a real estate market, rather like South Korea. If a housing market is one in which houses are bought simply for the purpose of living in them, a real estate market is formed when people start to see the houses they buy both as a residence and an investment.

What enabled Jung to publish such a pioneering paper on the North Korean housing market is that she spends all four months of her summer and winter vacations each year in Dandong, where she researches trends in the North Korean housing market.

Jung says that there are several reasons why she is interested in the North Korean housing market. The market offers hints at how the North Korean market economy is developing; it reflects the economic policies that the Kim Jong-un regime are adopting; and it provides a great deal of information about the appearance of a propertied class inside North Korea and about the growing wealth gap between the rich and poor.

What follows is a summary of the interview that Jung gave to the Hankyoreh on Mar. 30, organized by topic.

North Korea’s housing market: most profitable business area

Jung explains that one of the biggest recent changes in the North Korean housing market is the participation of North Korean trading companies. The reason, she says, is that building and selling houses has become even more lucrative than trade.

Why would that be? Jung explains that, while there is a lot of potential demand, there is a limited number of suppliers, creating a monopoly in the market. In other words, it’s easy to find buyers once you build a house.

But there’s just one catch. Before trade companies can jump into the housing market, they have to be working with someone who has connections in North Korea’s bureaucratic system.

As of now, housing transactions in North Korea are technically illegal. Given this situation, it is essential that a business have access to someone who can negotiate the bureaucracy so that it can provide the person buying the house with the permit that is legally required for them to move in.

According to Jung, no matter how much financial backing a developer may have, “they will fail without a partner who can cut through all the red tape.”

The growth of the house-buying class

Jung says that the price of housing in North Korea is linked to rice and US dollars (the exchange rate). When calculations are made in rice, the preferred unit is the ton.

The growth in a housing market that involves the movement of such huge amounts of rice and dollars implies that an increasing number of people in North Korea have that much purchasing ability.

The increasing level of purchasing power, or disposable income, can also be verified in the fact that houses in North Korea are improving in quality every day.

The concept of the “front room” was introduced in some ritzier North Korean houses back in the 1990s. Front room means a living room that includes a kitchen with a sink, rather than the traditional coal-burning kitchen. But even since then, houses have been becoming more elaborate, some using high-quality materials from China.

However, the very increase in the number of people with property – the consumers of these new houses – also implies that the gap between the rich and the poor is widening. Behind every house that is sold is a family whose financial destitution leaves them no choice but to sell the house in which they had been living. In this way, the growth of the housing market in North Korea offers another glimpse at the growing wealth disparity there.

Predictions for the North Korean housing market 

Jung expects that the North Korean real estate market will continue to expand for a significant period of time. Just as in South Korea, there was also an explosion in demand for houses in North Korea starting in the early 1980s because of the baby boomers, the generation of those born around 1957.

However, the demand in North Korea was suppressed by the “arduous march,” Jung believes. During this famine in the mid-1990s, when the severe shortage of food caused people to starve to death, the massive flight of people out of the country actually led to an increase in the number of vacant houses around North Korea’s border with China.

But with the subsequent development of private markets and the appearance of people with money to spend in the 2000s, these vacant residences were the first to be sold at cut-rate prices. This signaled the beginning of growth in the housing market.

Housing prices in North Korea increased rapidly then faltered during the currency reform in 2009, when the Kim Jong-il regime attempted to put limits on these markets. But from 2011 to 2014, after the North Korean government started to tolerate the markets again, housing prices soared once more.

Jung believes that the growth trend in North Korean housing prices will continue for the time being. The reason is that demand for housing both among baby boomers and among new members of the propertied class is likely to continue.

The North Korean housing market and Kim Jong-un’s economic reforms

Jung explains that the regime of Kim Jong-un is taking steps toward normalizing the housing market. Presumably, the regime has concluded that the official economy of the country is suffering major losses because the housing market is outside of the system.

As one example, Jung cites housing deals between private citizens in the 1990s. While the volume of transactions greatly increased during this period, the failure to solve the issue of legal collateral resulted in unending disputes about these transactions.

There was also widespread corruption connected with them. Jung says that sometimes the housing allocation department of the urban management bureau of the people’s committee – which is in charge of issuing residential licenses – would confiscate houses that had been illegally bought by low-ranking officials and then conduct business with those houses themselves. Since the housing market did not go beyond individuals making money, it did not benefit government finances.

Jung believes that the Kim Jong-un regime was trying to stamp out this kind of corruption when it established housing delegation offices in 2013. These offices are public organizations whose purpose is to take money from public citizens and to build them a new house. The existence of this organization is another example that both central planning and market forces are at work in the North Korean economy today.

Jung sees this as being part of efforts to institutionalize market mechanisms. “This is evidence that the Kim Jong-un regime is going beyond the military-first policy known as Songun that was instituted by Kim’s father and moving down the path toward socialist capitalism,” she said.

Housing market: A market economy learning center

According to Jung, the housing market is turning into a “learning center” writ large for the market economy – not just for the Kim regime, but for the North Korean public. Most crucially, housing prices in North Korea are already being decided based on a variety of factors, including access to transportation, markets, nearby facilities, and even the number of floors. As an example, Jung mentioned the price of apartments in Musan, a county in North Hamgyong Province. The most expensive apartments on the market there are seven-story buildings for “people of national merit.” But the most expensive, she said, are not the seven-story blocks, but the five-story ones. The smaller buildings go for more because they don’t have elevators, which makes them better for moving firewood. One- to two-story buildings are less popular because they are seen as similar to South Korea’s, Jung added. Even in North Korea, a number of different variables go into shaping housing market prices.

Chinese presence in the North Korean real estate market 

Jung also noted that some Chinese people have begun branching into the North Korean real estate market. Chinese residents of North Korea who were interviewed in Dandong indicated that more and more Chinese have begun investing after seeing the real estate. North Korea has not yet made its housing fully open to foreigners, but those who invest in North Korea are reportedly allowed to buy housing for temporary residence. It’s a sign that regulations on foreign activities are being relaxed. As a result, an increasing number of Chinese people are investing in needed areas such as toll processing and solar energy development in Pyongyang and other places – and acquiring housing and land in the process. The strategy is twofold: immediate gains, along with more long-term profits from the land.

The real estate housewives of North Korea? 

“It hasn’t reached that point yet, but the signs are there.” According to Jung, relatively rigid enforcement of the one-family, one-home rule in North Korea means the country has yet to develop a visible community of “housewife speculators” buying and selling homes for profit. But there have been cases of people buying homes under their mother’s name, or investing when a house is still incomplete and cheaper before turning around and selling at a higher price when it is finished, she added. Both are similar to the kinds of behaviors seen among South Korea’s housewife speculators. As these activities increase, Jung notes, the idea of the home as a place of residence only is giving way to the idea of real estate as an investment – even in North Korea.

The increasingly market-oriented nature of the North Korean housing market, and the Kim Jong-un regime’s attempts to incorporate the changes into its system, led Jung to predict that the shift toward market economy principles will only grow and intensify going ahead. The question now is whether this market-oriented real estate market will lead North Korea to reprise the disastrous experience of ’70s-era Gangnam as the economy grows – or whether the result will be something completely different.

Read the full story here:
North Korean real estate market: sustained boom, or bubble?
Hankyoreh
Kim Bo-geun
2015-4-11

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DPRK pushing forest restoration

Friday, April 10th, 2015

According to Radio Free Asia:

North Korea’s regime has increased the power of the country’s forest management departments to assist in a “greenification” scheme of the barren nation, but the campaign is facing setbacks as central authorities push ahead with planting unsuitable trees despite warnings from local officials, sources said.

Last year, authorities in North Korea launched a campaign of “nationwide greenification,” sources said, with the primary goal of planting trees to replenish soil nutrients and prevent erosion in the country, which has been ravaged by decades of environmental degradation.

As part of the campaign, authorities enlarged the size of state-run tree nurseries and fields for planting seedlings, while North Korean leader Kim Jong Un recently announced that the public should “not lament the denudation of the forests, and organize trees species systematically and economically.”

The central government increased the size of each province’s forest management department, which had formerly been considered a hardship placement because of environmental neglect, and elevated its status to that of other state organs, a source from Yanggang province told RFA’s Korean Service.

“Provincial forest management departments have now become popular enough to compete against other organs of power,” the source said, speaking on condition of anonymity.

“Forest planning experts who had not been treated well before are now eligible as provincial committee members,” he said.

As part of the “greenification” campaign, the government significantly increased the supervisory power of the forest management departments, granting them control of tree nurseries and seedling production, sources said.

“This is because Kim Jong Un’s regime needs the agency to not only design forest restoration projects, but also determine how much land should be used, and even what species of trees should be planted on it,” the source said.

The forest management departments soon realized that existing plans, which relied on whatever saplings were available, had to be revamped to incorporate criteria such as species of tree, quality of soil and local climate into the planting process, a source from North Hamgyeong province told RFA.

Tree species requested by the forest management departments to suit their local conditions require at least three years to produce, the source said, but central authorities—eager to meet targets set as part of the “greenification” campaign—are demanding that the planting campaign proceed regardless.

“Even though it will take additional time, [local authorities] have to organize the forest scientifically and systematically, according to the requests of the forest management departments,” he said.

“There are lots of complaints to the forest organizing committees [under the forest management departments] pushing people to plant trees even though the correct species by region have not been produced.”

Barren landscape

According to the Seoul-based Korea Environment Institute, forest cover in North Korea dropped by 17 percent from the 1970s to the late 1990s.

Following the collapse in the early 1990s of the Soviet Union—which provided discounted oil to its communist ally—oil imports into North Korea dropped by more than half, while the use of firewood for heating more than doubled.

The Soviet Union had also provided fertilizer to the North, and when farmers were unable to produce enough food, forest area was cleared to make room for additional farmland.

Only 44.95 percent of North Korea was covered by forest in 2012, according to the World Bank, which says that the area has decreased every year since 2000, when 57.58 of the nation was forested.

Residents of the impoverished country routinely scavenge any organic material they can find for food, fuel or animal food, leaving little that contributes nutrients to the soil.

Without trees to hold the soil, rains frequently lead to flash floods and landslides in the country.

Read the full story here:
North Korea Pushes Ahead With ‘Greenification’ Despite Lack of Suitable Trees
Sung-hui Moon
Radio Free Asia
2015-04-10

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Third session of 13th SPA held

Thursday, April 9th, 2015

According to KCNA (2015-4-9):

The Third Session of the 13th Supreme People’s Assembly (SPA) of the DPRK took place at the Mansudae Assembly Hall Thursday.

Present there were deputies to the SPA.

Present there as observers were officials of the party, armed forces and power organs, social organizations, ministries and national institutions and those in the fields of science, education, literature and art, public health and media.

The participants observed a moment’s silence in memory of President Kim Il Sung and leader Kim Jong Il, founder and builder and eternal leaders of the DPRK.

Discussed at the session were “1. On the work of the DPRK Cabinet for Juche 103 (2014) and its tasks for Juche 104 (2015)”, “2. On summing up the fulfillment of the state budget of the DPRK for Juche 103 (2014) and its state budget for Juche 104 (2015)” and “3. Organizational matters”.

Deputy Pak Pong Ju, premier of the Cabinet, made a report on the first agenda item.

He said that last year the DPRK registered great successes in grain production, provided a guarantee for completing the stock-breeding base in Sepho area as a gift to the 70th anniversary of the founding of the Workers’ Party of Korea and built many monumental structures, icons of Juche architecture, through army-people coordinated operations.

It opened up a bright prospect for implementing the behests of Kim Jong Il on turning the Chongchon River into one of treasure and patriotism, made progress in developing economy and improving the people’s living standard by dint of science and technology and made great achievements in the fields of sports, education and public health, he noted.

It is the main tasks for this year to settle the food problem of the people with the farming, stock-breeding and fishery as the three thrusts, boost electricity production and put the metal industry on a Juche basis while taking it as the lifeline and key point to carry out the behests of Kim Jong Il and pushing forward them consistently, he said, referring to the concrete tasks.

Deputy Ki Kwang Ho made a report on the second agenda item.

The plan of state budgetary revenue for last year was over-fulfilled 1.6 percent, 6 percent increase over the previous year, the plan for state budgetary expenditure was carried out at 99.9 percent, and 46.7 percent of the total state budgetary expenditure was spent for the development of the national economy, 37.2 percent for the cultural field and 15.9 percent for national defence, he said.

The state budgetary revenue for this year will grow 3.7 percent over last year.

The state budgetary expenditure for this year will grow 5.5 percent over last year, 15.9 percent of total budgetary expenditure will be spent for national defence and bigger investment will be made to shore up the national economy and to improve the people’s living standard, he said.

Speakers said that the work of the Cabinet and the fulfillment of the state budget for last year have been reviewed correctly, clear-cut tasks for this year for improving the standard of people’s living and building an economic power have been advanced and the state budget was properly shaped to fully display the advantages of the socialist system. They expressed full support and approval of them.

They evinced the pledge to consolidate the political and military might of the country in every way, bring about fresh progress in all spheres of socialist construction and thus mark the 70th anniversaries of the WPK founding and the liberation of Korea as grand festivals of victors.

The session adopted a decision of the SPA of the DPRK “On approving the report on the work of the DPRK Cabinet and the summing up of the fulfillment of the state budget for Juche 103 (2014)” and an ordinance of the SPA of the DPRK “On the state budget of the DPRK for Juche 104 (2015)”.

Deputy Pak To Chun was recalled from member of the DPRK National Defence Commission due to his transfer to other post.

Deputy Kim Chun Sop was elected member of the DPRK NDC to fill a vacancy upon the authorization of Marshal Kim Jong Un.

KCNA also reports “SPA Session Reviews Cabinet Work Last Year and Advances Its Tasks for This Year“:

Deputy Pak Pong Ju, premier of the Cabinet, delivered a report on the work done by the Cabinet last year and tasks facing it this year at the Third Session of the 13th Supreme People’s Assembly (SPA) of the DPRK Thursday.

According to the report, last year was a year of shining victories as the foundation for winning a final victory in all fields of building a thriving nation was consolidated and invincible might of Juche Korea was strikingly demonstrated under the wise leadership of Marshal Kim Jong Un.

Farming materials including chemical fertilizers, rice-seedling transplanting machines, mobile threshing machines, farm machine parts and oil were provided as planned last year, true to the intention of the party which set the agricultural field as a key field in the drive of pushing forward economic construction and improving the standard of people’s living and an outpost of defending socialism.

Pasture covering 50 000 hectares was created in the Sepho area and the work of securing livestock was pushed ahead simultaneously with the construction of structures and preparations for their operation to provide a guarantee for completing the stock-breeding base in Sepho area as a gift to the 70th anniversary of the Workers’ Party of Korea.

The Wisong residential district for scientists, Yonphung Rest Home for Scientists, Pyongyang Orphanage and Baby Home and lots of other monumental structures were built as icons of Juche-based architecture.

More than 1 000 valuable scientific and technological development projects were carried out.

The coal industry showed 28 percent increase in production over last year.

The production of cement jumped 12 percent over last year and that of various industrial indices including nitrogen fertilizer, salt and timber also went up.

Players of the DPRK bagged many gold medals at the 17th Asian Games and other international sports events, demonstrating the honor of the country. The popular policies of the party were implemented at a higher level in the fields of education and public health.

Referring to the tasks for this year, he stressed the need to consistently hold fast to the implementation of the behests of leader Kim Jong Il as a lifeline and the most important work. The main thrusts for this year are to organize the economic work with a main emphasis on solving the food problem of the people with agriculture, stock-breeding and fisheries as the three pivots, drastically increasing power production and putting metal industry on Juche basis, the reporter said.

He called for improving the production environment of the units associated with the leadership feats of President Kim Il Sung and Kim Jong Il and steadily raising their modernization level so as to continue glorifying their undying feats.

It is important to thoroughly carry out the party’s strategic line on simultaneously developing economic construction and the building of a nuclear force and provide equipment, raw materials and funds necessary for the combat readiness of the People’s Army and the defence industry in a responsible manner and thus actively contribute to bolstering up the defence capabilities.

Investment in the field of science and technology should be increased and efforts be concentrated on solving scientific and technological problems urgently required by reality including key state projects for the development of science and technology.

Scientific farming methods should be actively introduced into the agricultural field and drive of securing and saving water should be conducted and such farming materials as chemical fertilizers, rice seedling transplanting machines, rolled steel, farm machine parts and oil be satisfactorily provided.

Ministries, national institutions and provincial people’s committees should complete flawlessly and qualitatively the construction of dwelling houses, pens of domestic animals, public buildings, pavement of roads and creation of windbreaks by the 70th anniversary of the WPK. The management of modern stock-breeding bases, fish breeding bases, greenhouses and mushroom production bases in different parts of the country should be put on normal footing and production be boosted there.

In the fisheries field fishing boats and fishing tackle should be modernized and scientific fishing methods be actively introduced to haul fishes all the year round.

In the field of light industry, local supply of raw and other materials should be actively pushed forward and their production be markedly boosted to provide the people with more consumer goods.

A decisive measure should be taken to provide equipment and materials needed for thermal power plants and coal mines on a top priority basis.

The power stations in tiers on the River Chongchon, Paektusan Songun Youth Power Station, Ryesonggang Power Station, Orangchon Power Station and other hydroelectric power stations that were planned by Kim Jong Il should be completed in a short span of time.

Efforts should be focused on further rounding off the work of putting metal industry on a Juche basis.

In the chemical industrial field, production should be put on a normal footing at Juche fertilizer and Juche fiber production bases.

High temperature air combustion technology and other technologies that do not require the use of heavy oil should be introduced into various fields of the national economy.

Sustained great efforts should be directed to reenergizing the production in the vanguard sectors and key industries of the national economy such as railway transport, mining, forestry and machine-building industry.

All the fields and units should turn out in the drive of restoring forests and work hard to turn the mountains of the country into those in thick verdure full of nuts and fruits. Substantial work should be conducted to turn Pyongyang into the hub and model of Songun culture and a world class city and to spruce up provincial, city and county seats so that they may preserve their local characteristics.

The work to drastically improve education in the new century should be actively pushed forward, enthusiasm for sports should be raised higher and lots of fine literary pieces be created to encourage all people in the general offensive for glorifying the grand October festivals.

The reporter called on all the officials in the field of economic guidance to thoroughly carry out the important tasks set forth by Kim Jong Un in the New Year Address and at the enlarged meeting of the Political Bureau of the Central Committee of the Workers’ Party of Korea and fulfill their responsibilities and duties in the general offensive this year marking the 70th anniversaries of the WPK and the liberation of Korea.

Finally, KCNA reports “SPA Session Reviews Implementation of State Budget for 2014 and Sets forth State Budget for 2015“:

Deputy Ki Kwang Ho, minister of Finance, made a report on the review of the fulfillment of the state budget of the DPRK for Juche 103 (2014) and the state budget for Juche 104 (2015) at the Third Session of the 13th Supreme People’s Assembly on Thursday.

According to the report, the plan of state budgetary revenue for last year was over-fulfilled 1.6 percent, 6 percent increase over the previous year.

The local plan for budgetary revenue was carried out at 122.2 percent and the plan for state budgetary expenditure at 99.9 percent.

46.7 percent of the total budget was spent for the development of the national economy.

37.2 percent of the total state budgetary expenditure was spent for the cultural field including education, public health, sports and literature and art.

15.9 percent of total expenditure was directed to national defence.

The state budgetary revenue and expenditure for this year have been shaped in such a way as to bolster up the capabilities for self-defence and effect a turn in building a socialist economic power and a highly civilized nation by giving definite precedence to science and technology.

The state budgetary revenue will grow 3.7 percent over last year; transaction revenue is expected to swell 2. 6 percent, revenue from the profits of state enterprises 4.3 percent, revenue from the profits of cooperative organizations 3. 2 percent, real estate rent 0.7 percent, social insurance fee 2.8 percent, revenue from sale of properties and price differential 1.4 percent, revenue from other sources 0.8 percent and revenue from economic trade zones 3.6 percent.

The national budgetary revenue will account for 79 percent and the local budgetary revenue 21 percent of the state budgetary revenue. Provinces, cities and counties are expected to ensure expenditure with the revenue from local sources and provide profits to the national budget.

The national budgetary expenditure is expected to grow 5.5 percent over last year for focusing investment in augmenting the national power, developing science and technology and undertaking the projects for fulfilling the grandiose plan of the party so as to financially guarantee the general advance for greeting the grand October festival with labor achievements.

15.9 percent of total expenditure will be spent for national defence.

The allocation of funds for the field of science and technology is expected to go up 5 percent.

4.2 percent more financial disbursement will be made for the agricultural field, 6.8 percent more for the fisheries field, 5.1 percent more for the industrial field including light industry and vanguard fields of the national economy, 8.7 percent more for capital construction and 9.6 percent for the forestry field to shore up the national economy as a whole, bring about a turn in improving the people’s living standard and wage a dynamic drive for the building of monumental edifices and reforestation.

Expenditure for education goes up 6.3 percent, that for public health 4.1 percent, that for sports 6.9 percent and that for culture 6.2 percent so as to provide a financial guarantee for the drive for bringing about a turn in building a highly civilized socialist state.

A large amount of funds will be sent as educational aid fund and stipends for the children of Koreans in Japan this year, too.

The reporter stressed that the Korean people faced with huge tasks this year but the DPRK is sure to emerge victorious as there are the tested and seasoned leadership of the Workers’ Party of Korea, invincible revolutionary spirit and fighting spirit and the army and people full of revolutionary and patriotic enthusiasm.

Here is a summary in Yonhap:

 

Additional information:

1. 38 North offers analysis by Ruediger Frank and Alexandre Mansourov.

2. The Institute for Far Eastern Studies (IFES) offered two reports.

3. Here is coverage in the Daily NK.

4. Here is coverage in Yonhap.

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