Archive for the ‘State Offices’ Category

North Korea’s Ministry of External Economic Affairs stresses business at economic development zones is gaining momentum

Friday, October 10th, 2014

Institute for Far Easter Studies (IFES)

In a September 29, 2014 interview by the Choson Sinbo, Director of North Korea’s Ministry of External Economic Affairs, Oh Tae Bong, reported that business in North Korea’s newly established economic development zones (EDZ) is gradually being ramped up. In the interview, Oh mentioned the Jindo Export Processing Zone in Nampo City as an example where foreign investment capital is being prepared for the construction of substructure facilities such as piers and power plants and factories for heavy industry like cement and steel.

The Jindo Export Processing Zone carries out technology transfers and exports completed industrial products to foreign countries. Specifically, Secretary Oh emphasized, “Several countries have expressed great interest in the Jindo Export Processing Zone, and investment contracts have already been signed with a few targets such as Hong Kong.” If the Jindo Export Processing Zone succeeds, it is expected that more processing zones will be developed around the country. If development goes smoothly, the structure of primary export products, including underground resources, would change drastically and promote product diversification.

Secretary Oh also talked about the results achieved through economic cooperation with neighboring countries, saying, “Our nation is consulting with Russian governmental organizations regarding the cooperation issues experienced with railroad reconstruction and modernization.” He mentions that certain agreements have already been made in August 2014, and commented that “Relations between two countries have great effect on foreign economic activity, such as investments.” In other words, despite the US and UN imposed economic sanctions against North Korea, Russia has taken an active stance toward economic cooperation with North Korea.

With regards to the Ministry of External Economic Affairs (formerly the Ministry of Foreign Trade), Director Oh explained that the ministry was newly reorganized in June 2014 to expand the state’s foreign economic activities. According to Oh, the ministry will contribute to the strengthening of economic ties between nations, and take unified command over trade, joint ventures, attraction of foreign capital, and economic development zones.

More specifically, Secretary Oh stated that “Since the Ministry of Trade, the Joint Venture and Investment Commission, and State Economic Development Committee have all been combined into one body responsible for foreign economic enterprises, business complexity has disappeared and unity has been secured.” It is said that, first, the process procedures necessary in economic trade activities have been simplified. Second, the combining of various departments among the three committees into one single organization has improved work efficiency. Finally, the agency-centered system has disappeared, allowing for a much more efficient foreign economic industry.

Share

Second session of 13th Supreme People’s Assembly

Thursday, September 25th, 2014

UPDATE 3 (2014-9-25): Kim Jong-un did not attend the SPA meeting.

According to the Wall Street Journal:

North Korea’s young leader wasn’t in his customary seat as the country convened its rubber-stamp parliament Thursday, adding to South Korean media speculation that Kim Jong Un may be ill.

Only part of the meeting of the Supreme People’s Assembly was shown on state TV, but Mr. Kim wasn’t present and apparently missed the meeting for the first time since he took power after the death of his father Kim Jong Il in December 2011, according to an official for the South’s Unification Ministry who spoke on condition of anonymity because of office rules.

The usually ubiquitous Mr. Kim, the third member of his family to rule the country, hasn’t been seen in state media since attending a Pyongyang concert on Sept. 3. He was shown limping on television in July and again earlier this month, and South Korean media have speculated that Kim has been ill, although there has been no discussion of the absence in the North’s state-run media.

According to Reuters:

Kim, who is considerably overweight, has not featured in state media broadcasts since appearing at a concert alongside his wife and former state entertainer Ri Sol Ju this month.

In July, he was seen walking with a limp at an event with key officials.

But analysts warned against reading too much into Kim’s absence.

“Kim Jong Il didn’t attend every time, either,” said Chris Green, a North Korea expert at Seoul-based Daily NK website. “Moreover, we know that the SPA primarily performs a demonstrative function, it is not a true decision-making body.”

UPDATE 2 (2104-9-25): KCNA reports on the second session of the 13th SPA. Most of the copy is dedicated to continuing education reforms, however at the end of the article, personnel changes at the National Defense Commission are announced:

It recalled Deputy Choe Ryong Hae from the post of vice-chairman of the National Defence Commission (NDC) of the DPRK due to his transfer to other post and Deputy Jang Jong Nam from the post of member of the NDC of the DPRK due to his transfer to other post.

It elected Deputy Hwang Pyong So to fill the vacancy as vice-chairman of the NDC of the DPRK and Deputies Hyon Yong Chol and Ri Pyong Chol to fill the vacancy as members of the NDC of the DPRK at the proposal of Marshal Kim Jong Un.

This list of NDC members (as of October 2013 )can be found here.

Reuters notes:

At the meeting, state media said, Choe Ryong Hae had been removed from the post of vice chairman of the National Defence Commission, a body chaired by Kim, and was replaced by Hwang Pyong So.

Hwang is a member of a powerful faction created in the 1970s under former leader Kim Jong Il, the father of the current leader, to boost a personality cult around his family.

Choe had been widely seen as a new right-hand man to Kim Jong Un after he purged his uncle last year, but had since fallen back into the shadows.

“Hwang’s appointment as NDC Vice Chairman shows that he has truly risen to become the regime’s de facto number two official,” said Michael Madden, a North Korean leadership expert and contributor to the 38 North website.

Hwang was appointed “according to the wishes of Marshall Kim Jong Un”, the North’s official KCNA news agency said.

Here is the full story:

2nd Session of 13th Supreme People’s Assembly of DPRK Held

Pyongyang, September 25 (KCNA) — The 2nd Session of the 13th Supreme People’s Assembly (SPA) of the DPRK was held at the Mansudae Assembly Hall Thursday.

Present there were deputies to the SPA.

Officials of the party, armed forces and power organs, public organizations, ministries, national institutions and the fields of science, education, literature and art, public health and media attended it as observers.

All the participants observed a moment’s silence in memory of President Kim Il Sung and leader Kim Jong Il.

SPA Chairman Choe Thae Bok made an opening address.

The session discussed agenda items on summing up the implementation of “On Enforcing Universal 12-Year Compulsory Education”, the Ordinance of the SPA of the DPRK, and an organizational matter.

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

The reporter said that the 6th Session of the 12th SPA held in September, Juche 101 (2012) promulgated Ordinance on Enforcing Universal 12-Year Compulsory Education in line with the new requirements of the developing revolution.

According to the report, a work for successfully enforcing the schooling has been dynamically pushed forward as the one involving the whole state, all people and the whole society and signal successes have been made in it.

The work for operating the six-year secondary schools by dividing them into three-year junior secondary schools and three-year senior secondary schools has been wound up in a brief span of time. The first phase programs for the universal 12-year compulsory education were worked out in a matter of one and half years and textbooks of new contents and style were compiled.

Expenditure has been increased in educational field at the state budget, the State Planning Commission, the Ministry of Finance, provincial people’s committees and relevant institutions have ensured funds needed for educational work as planned, thus strengthening the material and technological foundation of schools.

Over the past two years since the promulgation of the ordinance new classrooms have been built or constructed on an expansion basis at schools across the country and many school things produced.

The reporter referred to the tasks facing the field of education.

He underlined the need to build well the ranks of teachers and decisively raise their qualifications and roles.

The general senior secondary schools should teach students with main emphasis on general secondary knowledge and senior secondary technical schools should make preparations in a responsible manner for giving education in basic technology to suit the economic and geographical peculiarities of the relevant areas while giving general education in conformity with the operation of senior secondary technical schools, new type schooling, on a trial basis, he noted.

He also underlined the need to positively push ahead with the work for putting the nation’s universal general secondary education including genius education on a new high stage, reinforce the research forces at educational and scientific research institutions and increase their responsibilities and roles.

He called for improving the conditions and environment for education to be fit for the appearance of a highly civilized socialist country.

Speakers at the session renewed their resolution to decisively improve the quality of education to meet the realistic requirements of the developing education in the age of knowledge-based economy and suit the trend of the world and thus train the younger generation as more dependable revolutionary talents of Juche type equipped with perfect general secondary knowledge, modern basic technological knowledge and creative ability.

The session adopted “On Comprehensively Enforcing Universal 12-Year Compulsory Education and Decisively Improving Its Quality”, the Decision of the SPA of the DPRK.

It discussed the second agenda item.

It recalled Deputy Choe Ryong Hae from the post of vice-chairman of the National Defence Commission (NDC) of the DPRK due to his transfer to other post and Deputy Jang Jong Nam from the post of member of the NDC of the DPRK due to his transfer to other post.

It elected Deputy Hwang Pyong So to fill the vacancy as vice-chairman of the NDC of the DPRK and Deputies Hyon Yong Chol and Ri Pyong Chol to fill the vacancy as members of the NDC of the DPRK at the proposal of Marshal Kim Jong Un.

UPDATE 1 (2014-9-18): The Institute for Far Eastern Studies (IFES) reports on the DPRK’s education policy:

North Korea Prioritizes Budget Support for the Modernization of Education in the Age of Knowledge-Based Economy

A September 6, 2014 article in the Rodong Sinmun reported that First Chairman of the National Defence Commission Kim Jong Un has begun to usher in a “revolution in education for the new century” and emphasized the need to construct a “world power of socialist education in the 21st century” at the 13th National Meeting of Educators held on Sept. 5.

At the meeting, Kim Jong Un’s work, entitled, “Let Us Make a Revolution in Education in the New Century to Glorify Our Country as the One of Education and a Power of Talents” was presented to participants.

In his work, Kim Jong Un advocates for this “revolution in education for the new century,” saying, “Education is part of an unending patriotic plan for the wealth and prosperity of the nation and the people.” The work emphasizes, “How we educate our posterity will be the determining factor of the nation’s power and the propagation of the revolution.”

Kim Jong Un also stated, “The goal to be attained by the revolution in education in the new century is to turn the country into a power of socialist education in the 21st century by bringing up all school youth and children as reliable pillars for the building of a thriving nation and educating all the people to be well versed in science and technology.” To achieve this, Kim Jong Un emphasized that the “decisive strengthening” of secondary education is the fundamental link of the education revolution.

He states, “Just as how trees with the strongest roots grow the perfect fruit, secondary education must be strengthened in order to produce talented individuals and raise the overall level of intelligence of workers.”

He continues, “In order to realize the grand goal of the revolution in education for the new century, the strong leadership guidance provided by the Party’s Juche-based education ideology and policy must be implemented according to the demands of the generation and the development of the revolution.”

More specifically, his work mentions the importance of improving the education system: “An important task facing the revolution in education in the new century is to round off the educational system and improve the guidance and management of the educational work in order to successfully train talents of new type required by the era.”

Kim Jong Un also emphasized the need to rear wholesome, well-rounded children from the time they are young while at home, school, and out in society. Furthermore, he stated, “The education in the age of knowledge-based economy should not be the one for letting students learn existing knowledge but it should be developed in the direction of putting its contents on a practical, comprehensive and modern basis so that students may grasp faster new and useful knowledge and more successfully apply them in practice.”

In order to accomplish this, Kim Jong Un said, “All the fields should regard the educational work as part of their work, always pay deep attention to it and help solve the issues arising in the field of education in a responsible manner.”

ORIGINAL POST (2014-9-4): According to KCNA:

DPRK Supreme People’s Assembly to Be Convened

Pyongyang, September 5 (KCNA) — The Second Session of the 13th Supreme People’s Assembly of the Democratic People’s Republic of Korea will be held in Pyongyang on September 25, Juche 103 (2014).

A relevant decision of the Presidium of the Supreme People’s Assembly was promulgated on Sept. 4.

Information on the first session of the 13th SPA can be found here.

Information on the election of the 13th SPA can be found here.

Here is what the Daily NK has to say:

It is the norm for the SPA to convene each spring to carry out the core responsibilities of ratifying personnel changes and hearing budgetary reports. Two of the more noteworthy results of the meeting in April this year were then-Director of the KPA General Political Department Choe Ryong Hae being made a deputy in the National Defense Commission, and Ri Su Yong being handed the foreign affairs portfolio. Ri, a seasoned diplomat, is scheduled to speak to the UN General Assembly later this month.

Conversely, second sessions do not occur every year as a matter of course; rather, they are convened when necessary for the accomplishment of Workers’ Party objectives. One such session convened on September 25th, 2012, for instance, resulted in wide-ranging changes to the state education system, most notably the addition of a 12th year of mandatory schooling.

As a result, attention is set to focus on personnel shifts and the possibility of major policy announcements.

Share

Rodong Sinmun calls for strengthening the cabinet in economic matters

Friday, September 5th, 2014

UPDATE 1 (2014-9-11): IFES reports: North Korea emphasizes innovation using “economic management in our style” approach:

North Korea has announced that the nation’s economic management problem will be solved through their “own style,” once again stressing the superiority of the Socialist self-reliant economic model and reiterating the need to construct a strong and prosperous nation.

A September 3, 2014 editorial in the Rodong Sinmun argues the importance of economic management and leadership, saying that it must be improved to meet the demands of the North Korean economy, which has reached a new turning point in its development.

“Economic Management System in Our Style” is North Korea’s new approach to economic principles originally stemming from Kim Il Sung and Kim Jong Il. The editorial emphasizes that it is a project that will bring real results and continuous development.

Furthermore, the editorial argues that economic management and leadership must be carried out according to objective economic law and scientific reason in order to ensure the greatest possible economic practicality.

The article also emphasizes the role of scientific technology, saying that “Research and development must be actively promoted in all areas and all aspects of the people’s economy. New scientific technology must be integrated into production in order to renovate the economy and meet the demands of the new generation.”

The editorial also calls for conservation of national human and material resources as much as possible, as fundamental problems in building a strong economic nation and improving the life of the people, including the lack of adequate power and food, have yet to be solved.

The roles of economic advising agencies and their workers were emphasized as being especially important. The editorial stresses that these economic advisers must become aware of the deep responsibility they hold, and must work to achieve real results in improving the country’s economic management.

Finally, the role of the Cabinet was also emphasized as the commander of the economy. Specifically, the editorial calls for the strengthening of the Cabinet-centered system, in which the Cabinet should oversee all economic institutions and sectors and create policies accordingly. In addition, the Cabinet’s role to guide companies with scientific business and corporate strategies is emphasized so that they may actively engage in creative business activities.

North Korea has been rolling out economic improvement measures since early 2012, starting with the agriculture sector. Since then, an “independent profit system” has also been introduced in various factories and businesses where managers are allowed more autonomy in managing operations, but are ultimately responsible for the business’s productivity.

Beginning this year, the “business know-how” concept was applied to various farms and factories, and increased profits reportedly have begun to see their way back into the hands of the workers. The workers, whose job performance has increased due to the rise in profits, are seen as the driving force of North Korea’s economic development.

ORIGINAL POST (2014-9-5): Thanks to Choson Exchange for spotting this one. According to Rodong Sinmun (2014-9-4):

Giving Full Play to Advantages and Might of Self-surpporting Economy

It is necessary to settle the issue of economic management by Korean style in order to fully demonstrate the advantages and might of the Juche-oriented socialist self-supporting economy and win the final victory in the drive for building a thriving nation.

The establishment of Korean-style economic management method is, in essence, the work to apply, carry forward and develop the principle and methods of economic management indicated by President Kim Il Sung and leader Kim Jong Il as required by the present times.

It is necessary to hold fast to the socialist principle in improving the economic management.

It is essential to ensure the maximum economic profitability by guiding and managing economy according to the objective laws of economy and scientific reason.

In order to improve the economic management it is important to raise the responsibility and role of the economy guidance institutions and officials.

It is possible to successfully achieve economic development only by working out a scientific economy development strategy, enlisting the natural resources and all potentials of the country to the maximum, ensuring a steady growth of production and keeping the overall balance of economy.

The Cabinet is the economy command of the country.

It is necessary to strengthen the Cabinet responsibility system, system centering on the Cabinet, concentrate all the economic fields and overall economic work on the Cabinet and take measures under the supervision of the Cabinet.

The editorial calls for improving the economic management as required by the developing reality and intended by the party and thus giving fuller play to the advantages of Korean-style socialism and bring about a fresh turn in the building of a thriving nation.

Here is a PDF of the web page should the URL go bad.

It is worth noting briefly that this is what we have seen recently in recent consolidation of the JVIC, SEDC, and Ministry of Foreign Trade into the Ministry of External Economic Affairs.

Share

DPRK replaces 5,000 won note

Monday, August 18th, 2014

UPDATE 3 (2014-9-2): Simon Cockerell has posted a photo of the new note to his instagram account. You Can see it here.

UPDATE 2 (2014-8-18): According to the Daily NK:

Daily NK has learned that the recent 5000 KPW note exchange has prompted an overall apathetic response from residents in North Korea. As Daily NK first reported here on July 31st the North Korean authorities informed residents that the largest denomination monetary unit would be replaced with a new bill.

US Dollars and Chinese Yuan being the currencies of choice in the markets, the recent collection and exchange of the highest denomination bill “doesn’t really affect people’s lives.”

A source in the capital reported to Daily NK on August 14, “A new [5000 KPW] note has been issued, but the exchange of old to new notes hasn’t made much headway.” This is hardly a nuisance to most residents, who are used to adapting, she went on to explain. “People are fairly indifferent about the new 5000 bill, and anyone who expresses concern about it is considered to be a fool by others.”

Production of the new 5000 KPW notes began last year; at the end of July 2014, the Chosun Central Bank announced that residents would have until 2017 to exchange the old bills. “At first, residents didn’t know what the exchange rate would be when they converted to the new bills, so a bit of chaos ensued; once they found out it was a 1:1 exchange rate, things have been pretty quiet of late,” she explained. “The number of residents holding 5000 KPW notes is pretty low so there isn’t an atmosphere of concern surrounding the matter.” The source did add that it cannot be verified at this time if those in rural or farming areas are equally as impervious to the matter.

The source cited two chief factors underpinning this resident indifference: trust in the authorities continues to decline, as does the value of North Korean currency.

The 5000 KPW bill is the largest denomination of bill in North Korean currency, but when compared with foreign currencies like Chinese Yuan or US Dollars, its value is dismal, considered by most to be “wastepaper.” By current exchange rates, 1 USD is equal to 8000 KPW; in other words, the largest note in North Korea [5000 KPW] is less than 1 USD or equal to approximately 5 RMB.

Moreover, at current market prices, 5,000 KPW [6000 KPW per kilo] is insufficient for people to purchase a kilo of rice or a dozen eggs [5000 KPW yields six eggs at present]. “Even when people buy a block of tofu [700 KPW], they use dollars,” the source explained. “Because merchants only do business in US Dollars of Chinese Yuan, people save all their money in these currencies.”

Citing the 2009 currency reforms, she explained the shift in public sentiment on the KPW, “People won’t suffer any losses even if there are 10 more currency reforms. Even those in poorer, rural areas regard North Korean currency as something for ‘use by the state’ and keep their assets in rice and other goods. ”

This shift in attitude of North Korean currency as “means of exchange” to “means of savings” occurred during and after the Arduous March in the 1990s [the North Korean famine if 1994-1998]. After ceasing distribution of regular food rations, starvation quickly became rife. In order to minimize dependency on a broken state system, people sought to build assets by saving as much KPW as possible.

Tragically, those savings were reduced to worthless scraps of paper during the currency reforms in 2009.The goal of the currency redenomination of November 30, 2009 was officially to bring inflation under control and eliminate monetary overhang, but the result of the 100:1 redenomination was catastrophic. This led to a complete transformation in resident commercial activity. The North Korean residents lost complete faith in state-issued banknotes and adopted foreign currencies, namely Chinese Yuan and US Dollars, as the preferred legal tender for business transactions.

“Because KPW is ‘not even worth counting’, there are more and more people who don’t care about the new 5,000 won bill,” she went on. “Instead of curiosity or trepidation as to the motivations behind the exchange, people just feel reassured by holding onto foreign currency.”

Once the privilege of traders and Party officials working abroad, accessibility to these foreign currencies has trickled down to market vendors and young students. Daily NK has recently learned that markets in all major cities in the North even provide small change back to customers in US Dollars and Chinese Renminbi.

Read the full story here:
Residents Indifferent to 5000 KPW Swap
Daily NK
Seol Song Ah
2014-8-18

UPDATE 1 (2014-8-12): Chris Green has more at NK News here.

ORIGINAL POST (2014-8-11): According to the Choson Ilbo:

North Korea’s new 5,000 banknotes no longer feature a picture of nation founder and demigod Kim Il-sung. But the new note shows Kim’s childhood home in Mangyongdae.

The new bills feature the house prominently on the front and on the back a museum in Pyongyang that displays gifts Kim and his son Jong-il received from foreign leaders*.

During a botched currency reform in 2009, Kim Il-sung was also dropped from the 2,000 and 1,000 won bills.

The 5,000 won note is North Korea’s largest denomination and nominally worth around US$50, though its actual market value is nearer $1. Workers in the North Korean state economy are paid some W3,000 a month on average, making it vital for most to seek other forms of income.

A North Korean source said when the new notes were officially announced on July 25, they sparked fears of yet another misguided currency reform, triggering a certain amount of chaos as food prices surged temporarily and some people began stockpiling food.

* Presumably the Choson Ilbo is referring to the International Friendship Exhibition at Myohyangsan. This is not in Pyongyang (Though it used to be!).

Read the full story here:
N.Korea Drops Kim Il-sung from New Banknotes
Choson Ilbo
2014-8-11

Share

On the availability of Chinese and North Korean rice

Tuesday, July 22nd, 2014

According to the Daily NK:

As volumes of rice bought and sold in North Korea continue to rise, stores operated by foreign-currency earning entities and market vendors are entering into greater competition for customers, inside sources in North Korea report.

“Goods including rice, beans and flour are flowing in steadily from China,” a source from North Pyongan Province explained. “In the olden days the arrival of July would have meant the worst conditions for rice, but this year there have been no big shifts and prices have stayed stable.”

A second source in North Hamkyung Province corroborated the state of affairs, saying,  “Every day a number of freight trucks loaded with rice come in through the customs house at Hyesan, and there’s the smuggled stuff, too.”

“It used to be the norm for rice to retail in the jangmadang [market]Stores only traded it wholesale,” the North Pyongan Province source went on. “But now stores are retailing it, too. Any time rice comes in through customs, buyers are there lining up to take it.”

“Stores” run under the auspices of foreign-currency earning entities began to spring up Pyongyang and other major cities toward the end of 2006. They were given formal permission to sell rice and corn alongside manufactured goods, thus in effect ending the state’s official dominance of domestic grain circulation.

The rice sold in markets comes from two sources: China, and domestic farms.  Stores mostly sell rice originating in China, whereas market vendors tend to purvey rice from a variety of sources, sources say. The ratio of Chinese to North Korean rice sold in public markets is roughly 6:4.

Lower socio-economic groups and restaurants catering to the general public tend toward Chinese rice, which is plentiful and cheap but considered insufficiently glutinous. On the other hand, affluent groups are the main purchasers of rice grown in North Korea. The stickiness of the product is higher, but so is the price: roughly 500 KPW more per kilo than Chinese varieties.

“First to attract customers, and then to turn them into regular visitors, both shops and markets are competing on price and service,” one source explained. “The stores sell their rice for 100 or 200 KPW less than the jangmadang, but customers there cannot negotiate, and the seller never throws anything in for free.”

However, this appears to be changing. According to the source, stores have now begun to grant greater price autonomy to shop officials, allowing for haggling over price and other forms of value-added.

“Customers can negotiate prices and get home or business delivery if they purchase more than 100kg,” one source reported. “It’s just like in the market now. Shops have started providing extra services, and delivery men, eager as they are to earn money, have started crowding outside storefronts waiting for customers where once they would have waited on the road.”

Read the full story here:
Price War as Stores Take on Nimble Vendors
Daily NK
Seol Song Ah
2014-7-22

Share

Cabinet meeting on economic policy held

Tuesday, July 22nd, 2014

According to Yonhap:

North Korea recently held a top Cabinet meeting to assess its economic policy in the first half of 2014 and discuss a strategy in the coming quarter, according to a news report.

Premier Pak Pong-ju attended the extended Cabinet plenary session, according to the July 13 edition of the Minju Josun obtained by Yonhap News Agency on Tuesday. It did not specify when it was held.

Cabinet members raised the need to minimize flood damage this summer as a top priority and also stressed the importance of enhancing electricity production, said the North Korean government newspaper.

They also called for a concerted effort to develop the metalworking industry and the chemical sector, which the communist nation views as two pillars of its economic growth drive, it added.

In the first half of 2014, the North exceeded its target in several economic sectors, said the newspaper.

Salt production increased by 39,800 tons from last year’s total and fish catches jumped by 17,000 tons, it said.

Read the full story here:
NK officials discuss economic policy in key Cabinet meeting
Yonhap
2014-7-22

Share

Kumgang Resort operational status (UPDATED)

Monday, July 14th, 2014

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

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

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

___________

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

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

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

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

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

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

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

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

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

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

2011-8-23: South Korean workers leave Kumgang

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

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

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

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

2011-4-29: SPA designates Kumgang special zone

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

2010-11-15: Kumgang re-fozen

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

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

2010-5-16: Taephung shows Chinese investors Kumgang

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

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

2010-4-23: Seoul denounces the seizure

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

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

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

2010-3-24: Investors worried about losing out

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

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

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

Share

DPRK creates Ministry of External Economic Affairs

Wednesday, June 18th, 2014

According to KCNA:

Ministry of Foreign Trade Reorganized as Ministry of External Economic Affairs

Pyongyang, June 18, 2014 20:58 KST (KCNA) — The DPRK decided to reorganize the Ministry of Foreign Trade as the Ministry of External Economic Affairs of the DPRK by merging the Joint Venture and Investment Commission of the DPRK and the State Economic Development Committee of the DPRK with it.

The Presidium of the DPRK Supreme People’s Assembly promulgated a decree in this regard on Wednesday.

Here is what Choson Exchange, who predicted the merger, had to say:

We think this is a good thing. Investor agreements, ‘exclusive’ rights and attraction need to be streamlined to prevent multiple ‘exclusive’ rights being sold. While this can bureaucratize the investment process, things really can’t get more bureaucratic than it is now in North Korea.

Here is analysis by the Institute for Far Eastern Studies (IFES) (2014-6-26):

North Korea Establishes “Ministry of External Economic Affairs” to Oversee Economic Cooperation and Attraction of Foreign Capital

On June 18, 2014, North Korea established the “Ministry of External Economic Affairs,” a massive organization that will oversee the state goals of attracting foreign capital and international economic cooperation. The Korean Central News Agency (KCNA) reported that this change came through a decision made by the Presidium of the Supreme People’s Assembly (SPA), who announced, “The Joint Venture and Investment Commission and the State Economic Development Committee have been combined with the Ministry of Foreign Trade and renamed to the Ministry of External Economic Affairs.”

The KCNA did not report on the new ministry’s specific status or duties, nor reveal the name of who has been chosen to lead it. The three organizations that have been combined to create the Ministry of External Economic Affairs are all Cabinet-affiliated economic groups.

The Ministry of Foreign Trade and the Joint Venture and Investment Commission were previously responsible for the nation’s foreign trade and attracting foreign capital, respectively. The State Economic Development Committee, which had its status elevated from the State Economic Development Board in October 2013, oversees the establishment and management of the various regional economic development zones (EDZ). It appears that although the three agencies targeted for the merge were separated by name according to their respective domains, there are several aspects of their duties which overlap with one another.

Therefore, the creation of this new Cabinet-affiliated ministry can be interpreted as an attempt to reach a breakthrough in North Korea’s stagnating international economic cooperation.

In May 2014, Foreign Trade Minister Ri Ryong Nam visited Syria and discussed plans to invigorate mutual investment and economic cooperation between the two nations not only through trade, but through agriculture and various other methods. On May 12, Ri Song Hyok, the director of the Joint Venture and Investment Commission, announced a development plan for the Wonsan-Kumgang Special Tourist Zone at an investment briefing in Pyongyang aimed at attracting foreigners. The management of Special Economic Zones (SEZ) is the responsibility of the State Economic Development Committee.

In 1998, the Ministry of Foreign Trade was established and encompassed the entirety of North Korea’s international economic activities. However, in July 2010, the Joint Venture and Investment Commission was created and oversaw the attraction of foreign capital, and in October 2013 the State Economic Development Committee was established to develop North Korea’s SEZs. With the creation of these additional organizations in 2010 and 2013, it became inevitable for the work and responsibilities of each agency to overlap one another.

While the Kim Jong Un regime has been focusing its efforts on attracting foreign capital and developing SEZs by strongly supporting the two recently established committees, the Ministry of Foreign Trade was unable to operate properly due to international sanctions. This has led to the recurring observation that, in reality, the ministry has become a titular institution.

The establishment of the Ministry of External Economic Affairs can be seen as a measure taken to increase the efficiency of decision-making and implementation of foreign trade-related issues, and to put an end to the confusion and inefficient inter-competition that arose out of the creation of these additional agencies. From the start of his leadership, Kim Jong Un stressed “constructing a strong economic nation” as a top national goal; attraction of foreign capital and international economic cooperation has become the vital factor to achieve the desired rapid economic development, for the lack of internal resources.

The newly appointed Foreign Minister Ri Su Yong—at the 1st session of the 13th SPA in April 2014—is well-versed in economic affairs. His appointment appears as a strategic move to increase the importance of economic cooperation within North Korea’s diplomatic relations. Ri Su Yong was chairman of the Joint Venture and Investment Commission from 2010 to 2012. With the establishment of the Ministry of External Economic Affairs, which will oversee all of the nation’s foreign economic activities, it is expected that North Korea will steadily push to attract additional foreign capital and develop special economic zones.

Here are previous posts on the Ministry of Foreign Trade, the Joint Venture Investment Commission (JVIC), and the State Economic Development Committee (SEDC).

Share

Market prices stable despite lean period

Friday, May 16th, 2014

According to the Daily NK:

Rice prices in North Korea remain stable despite the arrival of the April-May “spring hardship period,” inside sources have conveyed to Daily NK.

Spring months are usually tough because food supplies run low as North Korea, with its relatively low level of external trade in foodstuffs, waits for the early domestic potato harvest at the end of June. This in turn impacts market rice prices; in May 2012, the price of a kilo of rice skyrocketed by 20% in a single month.

However, this year has been a good one. Sources convey that a kilo of rice is trading in Pyongyang, Sinuiju and Hyesan for 3700, 3850 and 3900 won respectively. This is consistent with preceding months, and below the 4000 won mark initially recorded last December.

The price of corn, often used as a cheap substitute by low-income households when rice gets expensive, is also showing a stable or downward trend. At 800-1000 won per kilo, it is 500 won less than it was in April.

Several factors are contributing to this relative stability, a Hyesan source contended. Firstly, work units on cooperative farms are bringing their stores of rice to market in bulk payment for resources for the planting season. Secondly, May has seen a small decrease in the exchange rate, and this has helped to keep the rice price down in terms of imports.

“It’s the spring planting season and work units have to purchase resources like diesel and fertilizer. People say that ‘rice is money,’ and now they’re selling rice they had stored from last year to purchasing farming products. This means there is enough rice in the markets and the price is stable,” the source said.

A Pyongyang-based source also reported stable market prices, as well as consistent state ration delivery in April.

“The authorities have been continually distributing rations and there is sufficient rice in the markets. More people are buying meat including pork because some laborers had a wage increase. The rice price could drop even further,” he assessed.

Nevertheless, experts in Seoul assert that rice prices could be negatively affected by current dry conditions in the country’s western breadbasket zones

Cho Bong Hyun of the IBK Economic Research Institute clarified to Daily NK, “The recent price stability in North Korea’s markets is because of continuous distribution since the release of military rice reserves last year. Expectations around this year’s output could also impact prices further down the line. Some will plan to store rice if they anticipate this year being a lean one, which will in turn drive up the rice price.”

Read the full story here:
Market Prices Stable Despite Lean Period
Daily NK
Lee Sang Yong
2014-05-16

Share

Who uses Rason’s ports? Lease confusion explored (UPDATED)

Wednesday, May 7th, 2014

UPDATE 2 (2014-5-7): The exact legal status of some of the ports remains a mystery. I have attempted to clarify and point out some of the remaining areas of confusion below.

Rason-port-9-2013

Pictured above (Google Earth): A 2013-9-14 satellite image of Rason Piers 1 and 2. Pier 1 (Top) is used by the Chinese. The Royale Star is docked at Pier 2.

When Jang Song-thaek was purged, among the laundry list of offenses he was alleged to have committed against the regime was this:

Jang made no scruple of committing such act of treachery in May last as selling off the land of the Rason economic and trade zone to a foreign country for a period of five decades under the pretext of paying those debts.

This phrase had Pyongyang watchers abuzz over whether Chinese contracts in Rason were in any danger of being violated by the North Korean government. Of course it was immediately unclear what enterprise(s) would be affected since we are all unaware of any significant deals reached in May of 2013.

A recent statement by a  North Korean official in the Hong Kong media has, however, raised the issue of contract credibility in the DPRK yet again.

According to Yonhap:

Chinese companies have not leased piers at a port of North Korea’s free trade zone, a Pyongyang official has told Hong Kong media, raising speculation that the shock execution of the North Korean leader’s uncle might have soured business ties with its key ally.

China reportedly agreed to invest about US$3 billion in developing the free trade zone in North Korea’s northern tip of Rason, formerly known as Rajin and Sonbong, in late 2011. The special trade zone sits across the border from China’s northeastern Jilin province.

There have been media reports that Chinese companies have leased two piers at the Rason port, but Kim Chun-il, a division chief of the port’s foreign business bureau, denied such reports during an interview with Hong Kong-based Phoenix TV.

Asked by a Phoenix TV journalist whether China won the right to exclusively use two piers at the port, Kim replied in Korean, “There are no piers that are specially used by the Chinese side.”

“They (Chinese people) have said so, but we have never formally rented out Pier 1 and Pier 2 to them,” Kim said.

The interview was made during a 72-minute special TV program on the Rason trade zone, which was aired on April 19. The program’s video footage can be seen on the website of Phoenix TV.

Kim said that Russia leased the Pier 3 at the port, adding that North Korea plans to modernize the two piers on its own.

The Chinese media did indeed claim at least once (see here) that they were “using” Piers 1 and 2. And Dr. Bernhard Seliger told us back in September 2012 that the Chinese were using the port, although no lease was signed [see below].

However, it is not true that the North Koreans have never announced an agreement on Pier 1 at Rason. I posted an article (back in March of this year) in which Choe Hyon Chol, section chief of the new State economic Development Commission, stated the following:

The Rajin Port, a transit trade port, is the hub of international cargo transit transportation and transport of exports and imports of entrepreneurs who invested in the zone.

The port has assignments to transport marine products for export from the East Sea of Korea and every kind of cargoes from and to northeast area of China and Far East Region of Russia.

The Rajin Port consists of three wharves; wharf No. 1 is designed to be renovated and operated by China Dalian Chuang Li Co., Ltd. and wharf No.3 by Rason International Container Transport J. V. Company to be set up according to the contract with Russian Rail Trade Co., Ltd.

I cannot imagine that a Chinese company is going to renovate and operate the pier without a clear contract. Of course the status of that contract is now called into question. Has the Chinese firm pulled out?  Have the North Koreans canceled the contract? Are North Korean individuals from different agencies just not on the same page? Who knows?

Still no word on Pier No. 2.

Great recent photos of Rason port by Ray Cunningham here.

You can read the Yonhap story here:
N. Korean official says no piers for China at special trade zone
Yonhap
2014-5-2

UPDATE 1 (2012-9-5): It appears the information in the original post is out-of-date now. So here is an update:

Pictured Above (Google Earth): Rajin Port

Dr. Bernhard Seliger of the Hanns Seidel Foundation writes in with an update on the Rajin Port:

The 80 year old port has three piers, of which the No. 3 pier is used by the Russians. They have a long-term lease (50 years starting in 2008) and while they are currently doing some work there, it is not being used for exports.

China is interested in using Pier No.1 (where it rents a warehouse to store coal) and Pier No. 2 (currently in use by the Koreans). Plans have also been expressed (now cancelled) to build 2 new piers (No. 4 and 5) (See here). For many years the Chinese and North Korean governments have negotiated a pier rental agreement, but for now there is no concrete result–though at numerous times it has been maintained that China already rented the port. What exactly the problems are is not known. For now China uses the port to bring coal from the northernmost Heilongang Province to southern China via a sea route, an event which took place twice this year.

Theoretically, the port as a handling capacity of 3 million sq. tons, however the maximum real handling was 800.000 tons in 1979, while last year it was 200.000 tons. The depth of the harbor is 9 m.

In a report from Xinhua (2012-8-28), the Chinese assert they are using ports 1 and 2.

China […] was using No. 1 and 2 piers, while Russia had leased No. 3 pier, said an official in charge of foreign affairs of the port.

So there is some discrepancy between the Chinese account and Dr. Seliger.

ORIGINAL POST (2010-5-23): What are the three piers at Rason used for? 

rajin-ports-thumb.jpg

The City of Rajin (Rason) has three ports (pictured above–click for large version).  According to a 1998 UNDP report, Pier No. 1 (on the right) was known as the “Russian-Japanese Bulk Fertilizer Terminal. It has now been leased by the Chinese. Port No. 3 (left) was formerly known as the Rajin Alumina Terminal.  This is now leased by the Russians (see here). A fellow North Korea-watcher tells me that Pier No. 2 is reserved for the North Koreans.

KBS recently ran a video on recent changes in Rason. I have uploaded the segment to YouTube (Apologies to readers in China).  You can see the video here.

On a side note, if anyone in China has the time and savvy to rip videos from my YouTube account and re-post them on Youku please go for it.

Share