Archive for the ‘Cabinet’ Category

North Korea’s push for special enterprise zones: Fantasy or opportunity?

Thursday, December 12th, 2013

Bradley Babson
38 North
2013-12-12

In recent weeks North Korea has actively publicized in domestic and foreign news media its determination to pursue an aggressive strategy to develop special enterprise zones (SEZs) throughout the country. This follows and complements the agreement reached between the two Koreas in September to reopen the Kaesong Industrial Complex (KIC)—which was closed unilaterally by the North in April—and to establish new joint management arrangements for that zone designed to ensure its stability in the future and to attract international, not just South Korean, investors.

Both developments have been met with considerable skepticism following erratic North Korean decision-making and the significantly negative impact of the KIC’s closure on South Korean companies as well as on investor risk perceptions of the reliability of investing in North Korea at all. Clearly, whether rebuilding and internationalizing the KIC or proceeding with ambitious plans to expand the role of SEZs as an economic development strategy, North Korea faces major uphill challenges in attracting investors and finding a formula for success. To many experts and economists, these challenges seem near insurmountable, given the current state of North Korea’s economy and investment climate. This leads us to ask:  should anyone take this new SEZ development strategy seriously?

Read more from Dr. Babason here.

Previous NKeconWatch posts on the Economic Development Commission here.

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Jang Song-thaek purge [UPDATED]

Monday, December 9th, 2013

UPDATE 30 (2014-12-1): According to the JoongAng Ilbo, the purge continues:

North Korea is engaged in another purge of people close to Jang Song-thaek, the once powerful uncle of leader Kim Jong-un who fell from grace and was executed last Dec. 12, sending a deep chill through the top ranks of the Workers’ Party and the country’s elite.

According to a report to be published Monday by the Institute for National Security Strategy, which is run by the National Intelligence Service, dozens of senior party members were executed or stripped of their titles in a second phase of a purge of allies of the fallen Jang.

Some were executed on treason charges, heightening fears among the top party elite with connections to Jang.

The report says the second purge began after the collapse of a new 23-story apartment building that killed more than 400 people in Pyongyang in May. Enraged by the accident, the 31-year-old leader blamed “remnants of Jang Song-thaek” for the collapse because the building was constructed by the Ministry of People’s Security, which used to be overseen by Jang.

The report says 20 officials were either executed by firing squad or sent out of Pyongyang in the purge. Choe Pu-il, head of the security ministry who is also known as a basketball coach of Kim when he was young, was demoted and has been out of public sight since July.

In September, nearly 20 members of the Propaganda and Agitation department and Guidance department of the Communist Party were also shot to death on charges of being anti-party, or guilty of bribery, having improper relationships with women and taking drugs.

In October, the report says about 10 party members were shot to death for their connection to Kim’s uncle. One senior secretary from the Workers’ Party’s Haeju committee was also allegedly executed for watching television dramas from South Korea in October.

Some were executed for trivial reasons, such as changing a song lyric that originally praised Kim Jong-un while singing karaoke, the report says.

The string of executions has the entire elite in Pyongyang on edge. According to the report, Foreign Minister Ri Su-yong, who was the de-facto guardian for Kim Jong-un when he studied in Switzerland, fretted about his future because he failed to stop a United Nation’s resolution calling Kim to be referred to the International Criminal Court for crimes against humanity.

“Minister Ri Su-yong feared he could not predict what would befall him after all his diplomatic efforts failed to stop the UN resolution,” wrote senior researcher Hyun Sung-il in the report’s opening statement.

Researcher Hyun was a former North Korean diplomat in Zambia who defected to the South in 1996.

One senior official at the research institute said there is a rumor among top party members that their country could crumble in less than 10 years in such conditions.

“When analyzing Kim’s lip movements during his chats with elderly party members on television, it is not rare to find him insulting them with foul language,” said the official, who spoke on the condition of anonymity.

UPDATE 29 (2014-8-30): The Asahi Shimbun reports on speculated collateral damage:

The purge and execution of North Korea’s de facto No. 2 man eight months ago has resulted in uncertain fates for his associates, some of whom have since been promoted and another likely incarcerated in a political prison camp.

Jang Song Thaek was the uncle to North Korean leader Kim Jong Un through marriage to the younger sister of Kim Jong Il, the late father and predecessor of Kim Jong Un.

Tokyo, Seoul and other parties believe struggles over concessions set the stage for the purge of Jang, who served as vice chairman of the powerful National Defense Commission.

The cadre of the country’s ruling Workers’ Party of Korea included many who had worked with Jang.

Kim Yang Gon, director of the party’s United Front Department, Kim Yong Il, director of the party’s International Department, and Kang Sok Ju, a party secretary, all worked under Jang when he was a section chief in the party’s Organization and Guidance Department in charge of the Foreign Ministry.

Choe Ryong Hae, another party secretary, and Mun Kyong Dok, former chief secretary of the Pyongyang municipal party committee, both worked with Jang when he held a senior position in the party’s youth work department.

Kang Sok Ju remains influential even after Jang’s execution in December. He was likely appointed a party secretary in charge of international affairs in April.

South Korean government officials said Kang recently met a visiting delegation of European political parties. Kang told the delegation that talks between Washington and Pyongyang are expected to take place in January next year, after U.S. midterm elections in November, according to the officials.

Choe Ryong Hae was also appointed a party secretary in April, although he was dismissed as director of the General Political Bureau of the military.

“Choe was held in low regard within the military but remains in the forefront because he has the trust of Kim Jong Un,” said a source well-versed in North Korean affairs.

Ri Su Yong, who is believed to have been under Jang’s direction in the former Commission for Joint Venture and Investment, was promoted to foreign minister in April.

Ji Jae Ryong, ambassador to China and a purported close aide to Jang, also remains politically active.

But life has turned miserable for Mun Kyong Dok, who Tokyo and Seoul believe has likely been sent to a political prison camp.

Kim Yang Gon has been spared a fall from grace, but rumors say he was seriously injured with a broken leg or is receiving about six months of political re-education.

Kim Yong Il may remain the director of the International Department, but he has undeniably lost his clout. There are rumors about his possible transfer to an ambassadorship.

That raises questions about why Jang’s purported associates have been treated differently.

Tokyo and Seoul believe struggles between Jang and the military over concessions set the stage for Jang’s purge.

Jang ordered concessions held by trading companies and other parties under the military’s umbrella to be moved to the Cabinet, the party’s Administrative Department, and other sectors under his own influence, partly because Kim Jong Il had misgivings about the military’s rise in power. The offended military likely co-opted Kim Jong Un to engineer Jang’s purge, according to the story.

No major change has, in fact, been seen in North Korea’s political line since Jang was purged.

“The incident did not develop into a full-scale purge of all officials concerned because it was not a political struggle,” a South Korean government official said.

Choe and other senior officials have taken turns avoiding being mentioned in official news reports for certain periods of time since Jang was purged. They were apparently questioned during those periods over whether they received any distribution of interest from Jang, the findings of which likely decided the fates of officials associated with him.

UPDATE 28 (2014-8-7): The South Korean media reports on the continuing fallout from the Jang purge:

The North Korean regime has shut down the Workers Party department once headed by purged eminence grise Jang Song-taek and executed or interned 11 high-ranking officials, sources said Sunday.

One of them was burned alive.

A source said the regime is preparing a third purge of officials who supported Jang. The first purge involved his family, relatives and high-ranking party officials, while the second purge underway. The third will target his supporters in provincial chapters of the Workers Party.

The source said Jang’s elder sister Kye-sun and her husband and ambassador to Cuba Jon Yong-jin, as well as their son-in-law Kim Yong-ho, who was head of a trading company, were executed. But ambassador to Malaysia Jang Yong-chol, Jang’s nephew, escaped with his life.

He was sent to a concentration camp shortly after Jang Song-taek’s execution but was ordered to return to Pyongyang without a job after South Korean media reported rumors of his execution, the source added.

Jang’s closest confidants Ri Yong-ha and Jang Su-gil as well as nine other high-ranking party officials were purged, while around 100 lower-ranking party officials loyal to Jang were sacked.

O Sang-hon, a deputy minister at the Ministry of Public Security, was “executed by flamethrower,” the source said.

The reason for the horrific method that he had turned the ministry into Jang’s personal protection squad, the source added. O managed a bureau in the ministry as his personal security service and raised its status to the same rank as officials guarding leader Kim Jong-un.

UPDATE 27 (2014-5): For what it is worth, Dennis Rodman claims that Jang Song-thaek is still alive. According to an interview with Dujour:

DJ: And the accusations about him having his family members killed…

DR: You could say anything here about North Korea and people would believe it. The last time I went there, when they said they killed his girlfriend, they killed his uncle, they just fed him to the dogs… They were standing right behind me.

DJ: You’re saying that the uncle that the North Korean government itself confirms was executed is actually alive?

DR: He was standing right there.

UPDATE 26 (2014-4-7): More rumors from the Chosun Ibo on the purge of Jang song-thaek:

The North Korean regime has shut down the Workers Party department once headed by purged eminence grise Jang Song-taek and executed or interned 11 high-ranking officials, sources said Sunday.

One of them was burned alive.

A source said the regime is preparing a third purge of officials who supported Jang. The first purge involved his family, relatives and high-ranking party officials, while the second purge underway. The third will target his supporters in provincial chapters of the Workers Party.

The source said Jang’s elder sister Kye-sun and her husband and ambassador to Cuba Jon Yong-jin, as well as their son-in-law Kim Yong-ho, who was head of a trading company, were executed. But ambassador to Malaysia Jang Yong-chol, Jang’s nephew, escaped with his life.

He was sent to a concentration camp shortly after Jang Song-taek’s execution but was ordered to return to Pyongyang without a job after South Korean media reported rumors of his execution, the source added.

Jang’s closest confidants Ri Yong-ha and Jang Su-gil as well as nine other high-ranking party officials were purged, while around 100 lower-ranking party officials loyal to Jang were sacked.

O Sang-hon, a deputy minister at the Ministry of Public Security, was “executed by flamethrower,” the source said.

The reason for the horrific method that he had turned the ministry into Jang’s personal protection squad, the source added. O managed a bureau in the ministry as his personal security service and raised its status to the same rank as officials guarding leader Kim Jong-un.

UPDATE 25 (2014-2-13): The DPRK has a new ambassador to Laos.

UPDATE 24 (2014-2-8): KCNA reports that the DPRK has replaced its ambassador to Nepal:

DPRK Ambassador to Nepal Appointed
Pyongyang, February 8 (KCNA) — Kim Yong Hak was appointed as DPRK ambassador to Nepal, according to a decree of the Presidium of the Supreme People’s Assembly of the DPRK.

UPDATE 25 (2014-2-5): RFA reports that dozens of entertainers and performers linked to Jang Song-thaek have been imprisoned:

North Korea’s leader Kim Jong Un has ordered the jailing of 40 popular actors and actresses as part of his relentless crackdown on those closely linked to his executed uncle, sources say.

Jang Song Thaek’s execution two months ago followed a massive purge in the government and military, and Kim seems to be moving now to flush out Jang’s allies in the entertainment industry, according to the sources.

“About 40 entertainers, referred to as a group linked to Jang Song Thaek, have been sent to Soosung prison in Chongjin in North Hamgyong province,” a source told RFA’s Korean Service, referring to a detention facility that is usually reserved for “first class” political prisoners.

“I heard this from a North Korean official of North Hamgyong province who is in charge of earning foreign currency,” the source said, as if to reinforce the credibility of his information.

The source said he was informed that entertainers belonging to such popular groups as the Chosun Art Film Studio, Pyongyang Circus Troupe, and Mansudae Art Theater were taken to the prison facility on Jan. 17 in two trucks.

Among those thrown in prison were Ryu Jin Ah, a singer with the Moranbong Band who was known to be Jang’s “lover,” and Li Yik Seung, an actor with Chosun Art Film Studio believed to be involved in “procuring” actresses for Jang and officials close to him, another source said.

The Moranbong Band made a public appearance in July 2012 on Kim’s orders and Ryu was bestowed a top entertainer title a year later, according to the official Korean Central News Agency.

Li, who won the Kim Jong Il Award in February 2012, played the role of a mine owner in “Comrade Kim Goes Flying,” a 2012 romantic comedy film co-produced by North Korea, Britain, and Belgium.

‘Womanizing problem’

The second source, also speaking on condition of anonymity, said Ryu and Li were linked to the 67-year-old Jang’s “womanizing problem,” cited as among reasons for his execution aside from the more serious charges of attempting to overthrow the government and seize power from his nephew.

“It is well known among residents in North Hamgyong province that a number of entertainers have been confined in the Soosung prison in Chongjin,” the source said.

A former Japanese chef for the Kim family told RFA recently that Kim had ordered Jang’s execution for his role in procuring teenage girls to satisfy the sexual desires of Kim’s father and Jang himself.

Chef Kenji Fujimoto said that by having Jang killed, Kim “wanted to prove that he’s different” from his father Kim Jong Il and his grandfather Kim Il Sung, both of whom he said had “quite a history with women.”

Fujimoto, who was Kim Jong Il’s personal sushi chef from 1988 to 2001, claimed that aside from his official duties as de facto number two to Kim Jong Il, the 67-year-old Jang had been in charge of a “pleasure division” tasked with recruiting girls aged 15-16 years for the late dictator.

In his New Year message broadcast on state TV, Kim Jong Un defended the execution of his uncle—who was married to his father’s sister—saying it was a “resolute action” and labeling Jang “scum.”

Jang was also de facto number two under the junior Kim before his execution and was considered instrumental in his rise to power in December 2011.

Sources inside North Korea had told RFA earlier that Kim was already purging the country’s military officer corps of personnel linked to Jang in a massive shake-up that has led to a freeze on military exercises and delayed replacement of cadres in the ruling party but raised promotion prospects for younger officers.

UPDATE 23 (2014-2-3): The DPRK’s ambassador to the United Kingdom gave an interview in which he discussed the purge of Jang Song-thaek. According to the Hankyoreh:

Hyun Hak-bong, North Korean ambassador to the United Kingdom, told the UK’s Sky News that Jang Song-thaek, former head of the administrative division of the Korean Workers’ Party, was executed for misappropriation of public funds.

When the subject of Jang came up in an interview on Jan. 30, Hyun said that Jang was sentenced to death in the court according to the law and that he was shot to death. This is the first time that a North Korean official has explained on the record why and how Jang was executed. Asked about the crimes Jang was charged with, Hyun said that he had committed the acts in question, anti-state acts, and that he had abused his authority and driven the North Korean economy into the ground. Hyun said that among Jang’s crimes was the misuse of 4.6 million euros in 2009.

In 2009, North Korean leader Kim Jong-un’s father Kim Jong-il was still alive. This implies that after Kim Jong-un took power, he suddenly took issue with something that had happened four years earlier.

In regard to this, Hyun said that the party had forgiven Jang’s behavior on several occasions in the past, but that this time his actions went “beyond the red line,” stressing that execution had been the only option.

Addressing reports that Jang’s family and relatives had been killed as well, Hyun called these fabricated reports and dismissed them as “political propaganda by our enemies.” However, when the interviewer asked Hyun if Jang’s family was still alive, the ambassador avoided a definitive response. “I know he was punished but if his family were punished or not, I don’t know,” Hyun said.

UPDATE 22 (2014-1-28): Rimjingang offers some speculation on the continued purges of Jang’s associates.

UPDATE 21 (2014-1-22): Alexandre Mansourov  provides a detailed chronology of Jang’s fall from grace in 38 North.

UPDATE 20 (2014-1-20): Choson Ilbo reports that O Kuk-ryol has been taking over Jang’s portfolio:

A senior North Korean source on Sunday said O is gaining control of the financial operations of the National Defense Commission that was once managed by Jang as well as other business interests.

O has crucially gained control of agencies in charge of bringing in foreign currency such as a body created by Jang to develop an economic zone in Sinuiju near the border with China.

He has thus regained rights to the development of Rajin-Sonbong port, exports of seafood and gold mining that Jang stripped him of in 2010.

Radio Free Asia in the U.S. reported that companies managed by O have had exclusive control of LPG import licenses from China and Russia since Jang’s execution.

UPDATE 19 (2014-1-6): Pyongyang has replaced its coal industry and metal industry ministers. According to the Korea Herald

The North’s official Korean Central News Agency on Sunday introduced Mun Myong-hak as coal industry minister, a position held by Rim Nam-su at least until a year ago, while reporting on the 30th anniversary of a coal mining complex in the western province of South Pyongan.

The charges culminating in Jang’s death unveiled by the KCNA included underpricing overseas “precious underground resources including coal” and land within an up-and-coming special economic zone.

The mineral-rich North has long been seeking to shore up its crumbling economy through exports of coal, iron ore, hard coal and other resources, mostly to China.

Seoul’s spy chief Nam Jae-joon late last month ascribed Jang’s shock purge to discords among the elite over lucrative coal export business.

It remains unclear, however, whether Jang and Rim had had a close relationship.

Former manager of a youth coal mine in South Pyongan, Mun was twice named a member of the Supreme People’s Assembly, in 2003 and 2009, before being introduced last January as head of a youth coal mining complex in Sunchon in the region.

His appointment was the latest in an ongoing personnel shakeup in Pyongyang.

On Thursday, Korean Central Television introduced Kim Yong-kwang as metal industry minister as it aired the reactions of ministry officials to Kim Jong-un’s New Year address. His predecessor Han Hyo-yon last appeared in state media last June.

Kim was vice metal industry minister from June 2008 and manager of a mining complex in Musan, North Hamgyong Province, from December 2011, and was nominated to the steering committee of the funeral of late leader Kim Jong-il around then.

“Our metal industry will actively contribute to strengthening national power by bringing up the working classes’ combative enthusiasm and reproducing steel,” he told the broadcaster on Thursday.

The Choson Sinbo, a pro-Pyongyang newspaper in Japan, said last month that Kim Jong-ha has become secretary of the Cabinet secretariat, succeeding Kim Yong-ho.

UPDATE 18 (2013-12-30): North Korea has recalled its deputy ambassador to UNESCO. According to Yonhap:

North Korea’s deputy ambassador to UNESCO was called back to Pyongyang from Paris on Monday, a diplomatic source said, marking the latest summoning of North Korean diplomats following the recent execution of leader Kim Jong-un’s uncle.

Hong Yong, the North’s deputy permanent delegate to UNESCO, and his wife were spotted at the Beijing airport before boarding an Air Koryo flight earlier in the day, the source said on the condition of anonymity.

Last week, the North’s ambassador to Sweden, Pak Kwang-chol, returned to North Korea. Pak was one of the close aides to the purged uncle, Jang Song-thaek.

“North Korea appears to be intensively carrying out recalls of high-ranking diplomats,” the source said.

“A number of North Korean diplomats, trade officials and businessmen, who served as close subordinates of Jang Song-thaek, have been returned home,” the source said.

North Korea’s ambassador to China, Ji Jae-ryong, has been conducting business as usual, but North Korean diplomats in Beijing “have been recently trying to refrain from outdoor activities,” the source said.

Ji, 71, has shared the same political fate as Jang over the past three decades and served as a “linking pin” between Jang and the Chinese leadership since he took up the post in 2010.

Earlier this month, the North’s ambassador to Malaysia, Jang Yong-chol, a nephew of the executed uncle, had also been summoned back to the country.

Mr. Hong had apparently held the post for just six months.

UPDATE 17 (2013-12-27): Yonhap reports that the DPRK’s ambassador to Sweden has been recalled. According to the article:

North Korean ambassador to Sweden, Pak Kwang-chol, was called back to Pyongyang on Friday, a diplomatic source said, marking the latest recall of North Korean diplomats following the recent execution of leader Kim Jong-un’s uncle.

Pak, one of close aides to the purged uncle, Jang Song-thaek, returned to North Korea via an Air Koryo flight after making a brief stopover in Beijing earlier in the day, the source said on the condition of anonymity.

Escorted by North Korean officials, Pak and his wife were spotted at Beijing airport before boarding the Air Koryo flight, the source said.

Park took up the post in September last year, according to a report by the North’s state media.

UPDATE 16 (2013-12-23): South Korea’s spy chief states that Jang’s demise stemmed from business dealings. According to AFP:

The shock purge and execution of the North Korean leader’s uncle stemmed from his attempts to take control of the country’s lucrative coal export business, South Korea’s spy chief told lawmakers Monday.

The execution — the biggest political upheaval since Kim took power two years ago — sparked speculation that Jang had lost out in a power struggle with hardline army generals.

But Nam Jae-Joon, the head of South Korea’s National Intelligence Service, said Jang’s attempts to secure control of state-run natural resources businesses played a big part in his downfall.

Nam, briefing members of parliament’s intelligence committee on the situation in the North, also said the young ruler currently “appears to have no problem” in his grip on power — but may stage armed provocations against the South sometime between January and March to rally domestic unity.

“Jang intervened too much in lucrative state businesses… related to coal, which drew mounting complaints from other [related] state bodies,” lawmaker Jung Chung-Rae, a member of the committee, quoted Nam as saying at the closed hearing.

Jang for years handled the country’s mineral exports, which go mostly to China.

The impoverished but mineral-rich North has sought for years to bolster its crumbling economy by increasing exports of coal and other minerals, which account for the bulk of its exports to China.

But Jang and his associates angered other top party officials by rapidly expanding their control over the coveted mineral businesses, Jung quoted Nam as saying.

“Kim Jong-Un was briefed about it… and issued orders to correct the situation,” Jung told reporters.

But many officials loyal to Jang did not immediately accept his orders, which eventually led an angry Kim to launch a sweeping purge, the lawmaker quoted the spy chief as saying.

The regime is currently probing officials in the ruling party’s administrative department once supervised by Jang as well as other state-run trading arms, Nam was quoted as saying.

According to the New York Times, also covered the announcement, though this telling of the story focuses more on a dispute that erupted from fishing rights:

The execution of the uncle of Kim Jong-un, North Korea’s leader, had its roots in a firefight between forces loyal to Mr. Kim and those supporting the man who was supposed to be his regent, according to accounts that are being pieced together by South Korean and American officials. The clash was over who would profit from North Korea’s most lucrative exports: coal, clams and crabs.

North Korean military forces were deployed to retake control of one of the sources of those exports, the rich crab and clam fishing grounds that Jang Song-thaek, the uncle of the country’s untested, 30-year-old leader, had seized from the military. In the battle for control of the fishing grounds, the emaciated, poorly trained North Korean forces “were beaten — very badly — by Uncle Jang’s loyalists,” according to one official.

The rout of his forces appears to have been the final straw for Mr. Kim, who saw his 67-year-old uncle as a threat to his authority over the military and, just as important, to his own family’s dwindling sources of revenue. Eventually, at Mr. Kim’s order, the North Korean military came back with a larger force and prevailed. Soon, Mr. Jang’s two top lieutenants were executed.

The two men died in front of a firing squad. But instead of rifles, the squad used antiaircraft machine guns, a form of execution that according to South Korean intelligence officials and news media was similar to the one used against some North Korean artists in August. Days later, Mr. Jang himself was publicly denounced, tried and executed, by more traditional means.

Given the opaqueness of North Korea’s inner circle, many details of the struggle between Mr. Kim and his uncle remain murky. But what is known suggests that while Mr. Kim has consolidated control and eliminated a potential rival, it has been at a huge cost: The open warfare between the two factions has revealed a huge fracture inside the country’s elite over who pockets the foreign currency — mostly Chinese renminbi — the country earns from the few nonnuclear exports its trading partners desire.

..

But when Mr. Kim succeeded his father two years ago, he took away some of the military’s fishing and trading rights and handed them to his cabinet, which he designated as the main agency to revive the economy. Mr. Jang was believed to have been a leading proponent of curtailing the military’s economic power.

r. Jang appears to have consolidated many of those trading rights under his own control — meaning that profits from the coal, crabs and clams went into his accounts, or those of state institutions under his control, including the administrative department of the ruling Workers’ Party of Korea, which he headed.

But this fall, the long-brewing tensions that arrangement created broke into the open. Radio Free Asia, in a report last week that cited anonymous North Korean sources, reported that Mr. Kim saw North Korean soldiers malnourished during his recent visits to islands near the disputed western sea border. They say he ordered Mr. Jang to hand over the operation of nearby fishing grounds back to the military.

According to accounts put together by South Korean and American officials, Mr. Jang and his associates resisted. When a company of about 150 North Korean soldiers showed up at the farm, Mr. Jang’s loyalists refused to hand over the operation, insisting that Mr. Jang himself would have to approve. The confrontation escalated into a gun battle, and Radio Free Asia reports that two soldiers were killed and that the army backed off. Officials say the number of casualties is unknown, but they have received similar accounts.

It is hard to know exactly how large a role the episode played in Mr. Jang’s downfall — there is more money in coal than in seafood — but Mr. Kim was reportedly enraged when he heard of the clash. Mr. Nam said that by mid-November his agents were already reporting that Mr. Jang had been detained. The Dec. 12 verdict noted that Mr. Jang “instructed his stooges to sell coal and other precious underground resources at random.”

Mr. Nam said the fact that such behind-the-scenes tensions had spun so far out of control that Mr. Kim had to order his own uncle’s execution raised questions about the government’s internal unity.

“The fissure within the regime could accelerate if it further loses popular support,” the lawmakers quoted Mr. Nam as saying.

New Focus International has published three articles on the Jang affair. These articles take a different approach than the articles above. These look at Pyongyang’s the de facto political culture and competition between JST and the party’s Organization and Guidance Department. You can read them here:

1. The transformation of N.Korean politics through the execution of Jang Song-thaek

2. Purge and execution of Jang Song-thaek: The transformation of N.Korean political procedure

3. Kim Jong-un is not in charge. Then who is?

4. We have just witnessed a coup in North Korea

5. This is it: North Korea’s hidden power system

Here is coverage at the Wall Street Journal’s Korea Real Time.

UPDATE 15 (2013-12-20): The Daily NK reports that Jang’s family members have been rounded up and punished.

UPDATE 14 (2013-12-6): Jang’s purge has had impact on operations at Rason Economic and Trade Zone and Hwanggumphyong SEZ.

UPDATE 13 (2013-12-17): NK News reports that  articles about Jang song-thaek have been deleted from the KCNA.kp web page (thought not the KCNA.co.jp site). According to the article:

In total, 10-15 articles on Jang were deleted, with approximately 500 other articles mentioning Jang’s name edited to remove Jang’s name specifically.

“The scale of what they’re attempting to do here is unprecedented. North Korea ‘s websites are somewhat of an unknown quantity, and nothing on this scale has been detected before,” said Frank Feinstein, a New Zealand based computing specialist that tracks North Korean media output for NK News’s KCNA Watch.

“They’re attempting to write not just Jang, but several other elites, right out of the history books,” Feinstein added.

UPDATE 12 (2013-12-16): James Person at the Wilson Center’s NKIDB writes about the DPRK’s last major purge in the 1960s.

UPDATE 11 (2013-12-15):  Michael Madden has written a thorough obituary for Jang Song-thaek.

UPDATE 10 (2013-12-15): KCNA lists Kim Kyong-hui on the funeral committee for Kim Kuk-thae, indicating she has survived the purge of her husband.

UPDATE 9 (2013-12-13): 38 North has published three prespectives on Jang’s execution: Haksoon Paik, James Church, Alexandre Mansourov

UPDATE 8 (2013-12-12): NK News has thoughts on Jang’s execution from David Straub, Victor Cha, Andrei Lankov, and Sunny Lee.

UPDATE 7 (2013-12-12): Rodong Sinmun has coverage (in Korean). Here are two images that were published of the tribunal that sentenced Mr. Jang:

jang-tribunal

 

jang-tribunal-2

Top: The three-member military tribunal of the Ministry of State Security. Bottom: Jang can be seen in handcuffs as he is escorted by two guards from the Ministry of State Security.

UPDATE 6 (2013-12-12): KCNA announces execution of Jang song-thaek:

Traitor Jang Song Thaek Executed

Pyongyang, December 13 (KCNA) — Upon hearing the report on the enlarged meeting of the Political Bureau of the Central Committee of the Workers’ Party of Korea, the service personnel and people throughout the country broke into angry shouts that a stern judgment of the revolution should be meted out to the anti-party, counter-revolutionary factional elements. Against the backdrop of these shouts rocking the country, a special military tribunal of the DPRK Ministry of State Security was held on December 12 against traitor for all ages Jang Song Thaek.

The accused Jang brought together undesirable forces and formed a faction as the boss of a modern day factional group for a long time and thus committed such hideous crime as attempting to overthrow the state by all sorts of intrigues and despicable methods with a wild ambition to grab the supreme power of our party and state.

The tribunal examined Jang’s crimes.

All the crimes committed by the accused were proved in the course of hearing and were admitted by him.

A decision of the special military tribunal of the Ministry of State Security of the DPRK was read out at the trial.

Every sentence of the decision served as sledge-hammer blow brought down by our angry service personnel and people on the head of Jang, an anti-party, counter-revolutionary factional element and despicable political careerist and trickster.

The accused is a traitor to the nation for all ages who perpetrated anti-party, counter-revolutionary factional acts in a bid to overthrow the leadership of our party and state and the socialist system.

Jang was appointed to responsible posts of the party and state thanks to the deep political trust of President Kim Il Sung and leader Kim Jong Il and received benevolence from them more than any others from long ago.

He held higher posts than before and received deeper trust from supreme leader Kim Jong Un, in particular.

The political trust and benevolence shown by the peerlessly great men of Mt. Paektu were something he hardly deserved.

It is an elementary obligation of a human being to repay trust with sense of obligation and benevolence with loyalty.

However, despicable human scum Jang, who was worse than a dog, perpetrated thrice-cursed acts of treachery in betrayal of such profound trust and warmest paternal love shown by the party and the leader for him.

From long ago, Jang had a dirty political ambition. He dared not raise his head when Kim Il Sung and Kim Jong Il were alive. But, reading their faces, Jang had an axe to grind and involved himself in double-dealing. He began revealing his true colors, thinking that it was just the time for him to realize his wild ambition in the period of historic turn when the generation of the revolution was replaced.

Jang committed such an unpardonable thrice-cursed treason as overtly and covertly standing in the way of settling the issue of succession to the leadership with an axe to grind when a very important issue was under discussion to hold respected Kim Jong Un in high esteem as the only successor to Kim Jong Il in reflection of the unanimous desire and will of the entire party and army and all people.

When his cunning move proved futile and the decision that Kim Jong Un was elected vice-chairman of the Central Military Commission of the Workers’ Party of Korea at the Third Conference of the WPK in reflection of the unanimous will of all party members, service personnel and people was proclaimed, making all participants break into enthusiastic cheers that shook the conference hall, he behaved so arrogantly and insolently as unwillingly standing up from his seat and half-heartedly clapping, touching off towering resentment of our service personnel and people.

Jang confessed that he behaved so at that time as a knee-jerk reaction as he thought that if Kim Jong Un’s base and system for leading the army were consolidated, this would lay a stumbling block in the way of grabbing the power of the party and state.

When Kim Jong Il passed away so suddenly and untimely to our sorrow, he began working in real earnest to realize its long-cherished greed for power.

Abusing the honor of often accompanying Kim Jong Unduring his field guidance, Jang tried hard to create illusion about him by projecting himself internally and externally as a special being on a par with the headquarters of the revolution.

In a bid to rally a group of reactionaries to be used by him for toppling the leadership of the party and state, he let the undesirable and alien elements including those who had been dismissed and relieved of their posts after being severely punished for disobeying the instructions of Kim Jong Il and kowtowing to him work in a department of the Central Committee of the WPK and organs under it in a crafty manner.

Jang did serious harm to the youth movement in our country, being part of the group of renegades and traitors in the field of youth work bribed by enemies. Even after they were disclosed and purged by the resolute measure of the party, he patronized those cat’s paws and let them hold important posts of the party and state.

He had let Ri Ryong Ha, flatterer, work with him since the 1980s whenever he was transferred to other posts and systematically promoted Ri up to the post of first vice department director of the Party Central Committee though he had been purged for his factional act of denying the unitary leadership of the party. Jang thus made Ri his trusted stooge.

Jang let his confidants and flatterers who had been fired for causing an important case of denying the unitary leadership of the party work in his department and organs under it in a crafty manner in a few years. He systematically rallied ex-convicts, those problematic in their past careers and discontented elements around him and ruled over them as sacred and inviolable being.

He worked hard to put all affairs of the country under his control, massively increasing the staff of his department and organs under it, and stretch his tentacles to ministries and national institutions. He converted his department into a “little kingdom” which no one dares touch.

He was so imprudent as to prevent the Taedonggang Tile Factory from erecting a mosaic depicting Kim Il Sung and Kim Jong Iland a monument to field guidance given by them. Moreover, Jang turned down the unanimous request of the service personnel of a unit of the Korean People’s Internal Security Forces to have the autograph letter sent by Kim Jong Un to the unit carved on a natural granite and erected with good care in front of the building of its command. He was so reckless as to instruct the unit to erect it in a shaded corner.

He committed such anti-party acts as systematically denying the party line and policies, its organizational will, in the past period. These acts were a revelation of deliberate and sinister attempt to create extreme illusion and idolization of him by making him appear as a special being who can overrule either issues decided by the party or its line.

He went so rude as to take in the middle even those things associated with intense loyalty and sincerity of our army and people towards the party and the leader and distribute them among his confidants in an effort to take credit upon himself for doing so. This behavior was to create illusion about him.

Due to his persistent moves to create illusion and idolization of him his flatterers and followers in his department and organs under it praised him as “No. 1 comrade.” They went the lengths of denying even the party’s instructions to please him at any cost.

Jang established such a heterogenous work system in the department and the relevant organs as considering what he said as more important than the party’s policies. Consequently, his trusted henchmen and followers made no scruple of perpetrating such counterrevolutionary act as disobeying the order of the Supreme Commander of the KPA.

The revolutionary army will never pardon all those who disobey the order of the Supreme Commander and there will be no place for them to be buried even after their death.

Dreaming a fantastic dream to become premier at an initial stage to grab the supreme power of the party and state, Jang made his department put major economic fields of the country under its control in a bid to disable the Cabinet. In this way he schemed to drive the economy of the country and people’s living into an uncontrollable catastrophe.

He put inspection and supervision organs belonging to the Cabinet under his control in defiance of the new state machinery established by Kim Jong Il at the First Session of the Tenth Supreme People’s Assembly. He put all issues related to all structural works handled by the Cabinet under his control and had the final say on them, making it impossible for the Cabinet to properly perform its function and role as an economic command. They included the issues of setting up and disorganizing committees, ministries and national institutions and provincial, city and county-level organs, organizing units for foreign trade and earning foreign money and structures overseas and fixing living allowances.

When he attempted to make a false report to the party without having agreement with the Cabinet and the relevant ministry on the issue related to the state construction control organization, officials concerned expressed just opinion that his behavior was contrary to the construction law worked out by Kim Il Sung andKim Jong Il. Hearing this, he made the reckless remark that “the rewriting of the construction law would solve the problem.”

Abusing his authority, he undermined the work system related to the construction of the capital city established by Kim Il Sungand Kim Jong Il, reducing the construction building-materials bases to such bad shape little short of debris in a few years. He weakened the ranks of technicians and skilled workers at the unit for the construction of the capital city in a crafty manner and transferred major construction units to his confidants so that they might make money. In this way he deliberately disturbed the construction in Pyongyang.

He instructed his stooges to sell coal and other precious underground resources at random. Consequently, his confidants were saddled with huge debts, deceived by brokers. 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.

It was none other than Jang who wirepulled behind scene Pak Nam Gi, traitor for all ages, to recklessly issue hundreds of billions of won in 2009, sparking off serious economic chaos and disturbing the people’s mind-set.

Jang encouraged money-making under various pretexts to secure funds necessary for gratifying his political greed and was engrossed in irregularities and corruption. He thus took the lead in spreading indolent, careless and undisciplined virus in our society.

After collecting precious metals since the construction of Kwangbok Street in the 1980s, he set up a secret organ under his control and took a fabulous amount of funds from a bank and purchased precious metals in disregard of the state law. He thus committed such anti-state criminal acts as creating a great confusion in financial management system of the state.

He let the decadent capitalist lifestyle find its way to our society by distributing all sorts of pornographic pictures among his confidants since 2009. He led a dissolute, depraved life, squandering money wherever he went.

He took at least 4.6 million Euro from his secret coffers and squandered it in 2009 alone and enjoyed himself in casino in a foreign country. These facts alone clearly show how corrupt and degenerate he was.

Jang was so reckless with his greed for power that he persistently worked to stretch his tentacles even to the People’s Army with a foolish calculation that he would succeed in staging a coup if he mobilized the army.

He fully revealed his despicable true colors as a traitor for all ages in the course of questioning by uttering as follows: “I attempted to trigger off discontent among service personnel and people when the present regime does not take any measure despite the fact that the economy of the country and people’s living are driven into catastrophe. Comrade supreme leader is the target of the coup.”

As regards the means and methods for staging the coup, Jang said: “I was going to stage the coup by using army officers who had close ties with me or by mobilizing armed forces under the control of my confidants. I don’t know well about recently appointed army officers but have some acquaintances with those appointed in the past period. I thought the army might join in the coup if the living of the people and service personnel further deteriorate in the future. And I calculated that my confidants in my department including Ri Ryong Ha and Jang Su Gil would surely follow me and had a plan to use the one in charge of the people’s security organ as my confidant. It was my calculation that I might use several others besides them.”

Asked about the timing of the coup and his plan to do after staging the coup, Jang answered: “I didn’t fix the definite time for the coup. But it was my intention to concentrate my department and all economic organs on the Cabinet and become premier when the economy goes totally bankrupt and the state is on the verge of collapse in a certain period. I thought that if I solve the problem of people’s living at a certain level by spending an enormous amount of funds I have accumulated under various names after becoming premier, the people and service personnel will shout “hurrah” for me and I will succeed in the coup in a smooth way.”

Jang dreamed such a foolish dream that once he seizes power by a base method, his despicable true colors as “reformist” known to the outside world would help his “new government” get “recognized” by foreign countries in a short span of time.

All facts go to clearly prove that Jang is a thrice-cursed traitor without an equal in the world as he had desperately worked for years to destabilize and bring down the DPRK and grab the supreme power of the party and state by employing all the most cunning and sinister means and methods, pursuant to the “strategic patience” policy and “waiting strategy” of the U.S. and the south Korean puppet group of traitors.

The hateful and despicable nature of the anti-party, anti-state and unpopular crimes committed by Jang was fully disclosed in the course of the trial conducted at the special military tribunal of the DPRK Ministry of State Security.

The era and history will eternally record and never forget the shuddering crimes committed by Jang Song Thaek, the enemy of the party, revolution and people and heinous traitor to the nation.

No matter how much water flows under the bridge and no matter how frequently a generation is replaced by new one, the lineage of Paektu will remain unchanged and irreplaceable.

Our party, state, army and people do not know anyone exceptKim Il Sung, Kim Jong Il and Kim Jong Un.

Our service personnel and people will never pardon all those who dare disobey the unitary leadership of Kim Jong Un, challenge his absolute authority and oppose the lineage of Paektu to an individual but bring them to the stern court of history without fail and mercilessly punish them on behalf of the party and revolution, the country and its people, no matter where they are in hiding.

The special military tribunal of the Ministry of State Security of the DPRK confirmed that the state subversion attempted by the accused Jang with an aim to overthrow the people’s power of the DPRK by ideologically aligning himself with enemies is a crime punishable by Article 60 of the DPRK Criminal Code, vehemently condemned him as a wicked political careerist, trickster and traitor for all ages in the name of the revolution and the people and ruled that he would be sentenced to death according to it.

The decision was immediately executed.

You can never clap too loud or too long…

See more NK News here and here.

UPDATE 5 (2013-12-12): Here is Ruediger Frank in 38 North.

UPDATE 4 (2013-12-11): Rodong Sinmun followed up with this article the next day:

An order of the respected Supreme Commander is what our army should carry out at the risk of its life.

It has been invariable faith and will of our revolutionary army at all times — in the days when it had to smash armed provocations of the U.S. and its satellites and in the days when it has been engaged  in both socialist construction and national defense.

Our revolutionary arms has always been merciless at all its enemies, particularly those who attempted to do harm to the headquarters of our revolution; those who refused to obey the order of the Supreme Commander and those who dreamed different dreams while in the same bed.

Jang Song Thaek and a handful of his followers dared to challenge our Party policies and disobeyed the orders of our Supreme Commander. Their crimes have been exposed now. This angered men and officers of our People’s Army.

Roaring voices now come from all corners of the country, “Our rifle never wavers. Hand those betrayers to us. We will finish them off, leaving no traces of their dirty bodies.”

The anti-Party, counter-revolutionary, factional crimes of Jang Song Thaek and his villains make us more keenly alive to the mission of the revolutionary army.

The first target we are going to crush is those who want to haggle about our Party’s line and directions, make a mess of the Party leadership exploits, keep away from the Party and class principles, and those who try to turn the pure minds of our people to rotten fish.

Our revolutionary army knows no one but its respected Supreme Commander Kim Jong Un.

UPDATE 3 (2013-12-10): Rodong Sinmun offers the following summary of the meeting:

Let Us Unite Firm around Kim Jong Un To

Accomplish Revolutionary Cause of Juche

Now our army and people have united firmer than ever before around the Workers’ Party of Korea.

An enlarged meeting of the Political Bureau of the Central Committee of the WPK was held under the guidance of the respected Marshal Kim Jong Un. It was a historic landmark meeting in strengthening our party and accomplishing the revolutionary cause of Juche in our country.

The meeting laid bare the anti-party, counter-revolutionary, factional acts of Jang Song Thaek and his group who opposed the monolithic system of the party leadership.

Our party removed Jang from the Party and purged the party ranks of his group, thus giving a telling blow to the factionalists.

Our army and people welcomed the resolution of the meeting and reaffirmed their conviction to go along the road of final victory under the leadership of the party, holding high the banner of Kimilsungism-Kimjongilism.

The enlarged meeting is of weighty significance in further consolidating the organizational and ideological unity of the party centered on Kim Jong Un.

It will also go a long way towards cementing the single-minded unity of our party and revolutionary ranks.

The meeting also marked an important turn in our efforts to build a thriving nation.

All the Party members, men of the People’s Army and people should learn to know the significance and importance of the meeting and unite them closer around the great party and continue to march vigorously for final victory of revolution.

They must always remain true to Kim Jong Un’s idea and lines and to his leadership. And in this, officials must take the lead.

Complacence and concession are taboo in ideological work because they may leave a margin for any unsound idea to make an inroad and decay sound minds.

The Party organizations of all levels must work to prepare every member of the party and of the working people as one ready to share weal and woe with the respected Marshal.

Let all of us more firmly unite around Kim Jong Un and continue our onward march with full vigor to realize the idea and cause of the great generalissimos.

UPDATE 2 (2013-12-9): Martyn Williams is the first in the Western Hemisphere to get the TV footage:

Michael Madden has some of the names and relationships from the video outlined here.

UPDATE 1 (2013-12-9): Andrei Lankov offers analysis at NK News. Alexandre Mansourov offers additional information at 38 North.

ORIGINAL POST (2013-12-9): According to KCNA (2013-12-9):

Jang-ST-Arrested

Pictured above (Yonhap, KCTV): Jang being removed from Politburo meeting. Jean Lee notes that Jang was sitting in the audience. He was not up on the stage with other members of the leadership.

Report on Enlarged Meeting of Political Bureau of Central Committee of WPK

Pyongyang, December 9 (KCNA) — A report on the enlarged meeting of the Political Bureau of the Central Committee of the Workers’ Party of Korea (WPK) was released on December 8.

The following is the full text of the report:

An enlarged meeting of the Political Bureau of the Central Committee of the WPK was held in Pyongyang, the capital of the revolution, on Dec. 8.

Respected Comrade Kim Jong Un, first secretary of the WPK, guided the meeting.

Present there were members and alternate members of the Political Bureau of the Central Committee of the WPK.

Leading officials of the Central Committee of the WPK, provincial party committees and armed forces organs attended it as observers.

Our party members, service personnel and all other people have made energetic efforts to implement the behests of leader Kim Jong Il, entrusting their destiny entirely to Kim Jong Un and getting united close around the Central Committee of the WPK since the demise of Kim Jong Il, the greatest loss to the nation.

In this historic period for carrying forward the revolutionary cause of Juche the chance elements and alien elements who had made their ways into the party committed such anti-party, counter-revolutionary factional acts as expanding their forces through factional moves and daring challenge the party, while attempting to undermine the unitary leadership of the party.

In this connection, the Political Bureau of the C.C., the WPK convened its enlarged meeting and discussed the issue related to the anti-party, counter-revolutionary factional acts committed by Jang Song Thaek.

The meeting, to begin with, fully laid bare the anti-party, counter-revolutionary factional acts of Jang Song Thaek and their harmfulness and reactionary nature.

It is the immutable truth proved by the nearly 70-year-long history of the WPK that the party can preserve its revolutionary nature as the party of the leader and fulfill its historic mission only when it firmly ensures its unity and cohesion based on the monolithic idea and the unitary center of leadership.

The entire party, whole army and all people are dynamically advancing toward the final victory in the drive for the building of a thriving nation, meeting all challenges of history and resolutely foiling the desperate moves of the enemies of the revolution under the leadership of Kim Jong Un. Such situation urgently calls for consolidating as firm as a rock the single-minded unity of the party and the revolutionary ranks with Kim Jong Un as its unitary centre and more thoroughly establishing the monolithic leadership system of the party throughout the party and society.

The Jang Song Thaek group, however, committed such anti-party, counter-revolutionary factional acts as gnawing at the unity and cohesion of the party and disturbing the work for establishing the party unitary leadership system and perpetrated such ant-state, unpopular crimes as doing enormous harm to the efforts to build a thriving nation and improve the standard of people’s living.

Jang pretended to uphold the party and leader but was engrossed in such factional acts as dreaming different dreams and involving himself in double-dealing behind the scene.

Though he held responsible posts of the party and state thanks to the deep political trust of the party and leader, he committed such perfidious acts as shunning and obstructing in every way the work for holding President Kim Il Sung and Kim Jong Il in high esteem for all ages, behaving against the elementary sense of moral obligation and conscience as a human being.

Jang desperately worked to form a faction within the party by creating illusion about him and winning those weak in faith and flatterers to his side.

Prompted by his politically-motivated ambition, he tried to increase his force and build his base for realizing it by implanting those who had been punished for their serious wrongs in the past period into ranks of officials of departments of the party central committee and units under them.

Jang and his followers did not sincerely accept the line and policies of the party, the organizational will of the WPK, but deliberately neglected their implementation, distorted them and openly played down the policies of the party. In the end, they made no scruple of perpetrating such counter-revolutionary acts as disobeying the order issued by the supreme commander of the Korean People’s Army.

The Jang group weakened the party’s guidance over judicial, prosecution and people’s security bodies, bringing very harmful consequences to the work for protecting the social system, policies and people.

Such acts are nothing but counter-revolutionary, unpopular criminal acts of giving up the class struggle and paralyzing the function of popular democratic dictatorship, yielding to the offensive of the hostile forces to stifle the DPRK.

Jang seriously obstructed the nation’s economic affairs and the improvement of the standard of people’s living in violation of the pivot-to-the-Cabinet principle and the Cabinet responsibility principle laid down by the WPK.

The Jang group put under its control the fields and units which play an important role in the nation’s economic development and the improvement of people’s living in a crafty manner, making it impossible for the economic guidance organs including the Cabinet to perform their roles.

By throwing the state financial management system into confusion and committing such act of treachery as selling off precious resources of the country at cheap prices, the group made it impossible to carry out the behests of Kim Il Sung and Kim Jong Il on developing the industries of Juche iron, Juche fertilizer and Juche vinalon.

Affected by the capitalist way of living, Jang committed irregularities and corruption and led a dissolute and depraved life.

By abusing his power, he was engrossed in irregularities and corruption, had improper relations with several women and was wined and dined at back parlors of deluxe restaurants.

Ideologically sick and extremely idle and easy-going, he used drugs and squandered foreign currency at casinos while he was receiving medical treatment in a foreign country under the care of the party.

Jang and his followers committed criminal acts baffling imagination and they did tremendous harm to our party and revolution.

The ungrateful criminal acts perpetrated by the group of Jang Song Thaek are lashing our party members, service personnel of the People’s Army and people into great fury as it committed such crimes before they observed two-year mourning for Kim Jong Il, eternal general secretary of the WPK.

Speeches were made at the enlarged meeting.

Speakers bitterly criticized in unison the anti-party, counter-revolutionary factional acts committed by the Jang group and expressed their firm resolution to remain true to the idea and leadership of Kim Jong Un and devotedly defend the Party Central Committee politically and ideologically and with lives.

The meeting adopted a decision of the Political Bureau of the Party Central Committee on relieving Jang of all posts, depriving him of all titles and expelling him and removing his name from the WPK.

The party served warning to Jang several times and dealt blows at him, watching his group’s anti-party, counter-revolutionary factional acts as it has been aware of them from long ago. But it did not pay heed to it but went beyond tolerance limit. That was why the party eliminated Jang and purged his group, unable to remain an onlooker to its acts any longer, dealing telling blows at sectarian acts manifested within the party.

Our party will never pardon anyone challenging its leadership and infringing upon the interests of the state and people in violation of the principle of the revolution, regardless of his or her position and merits.

No matter how mischievously a tiny handful of anti-party, counter-revolutionary factional elements may work, they can never shake the revolutionary faith of all party members, service personnel and people holding Kim Jong Un in high esteem as the unitary centre of unity and unitary centre of leadership.

The discovery and purge of the Jang group, a modern day faction and undesirable elements who happened to worm their ways into our party ranks, made our party and revolutionary ranks purer and helped consolidate our single-minded unity remarkably and advance more dynamically the revolutionary cause of Juche along the road of victory.

No force on earth can deter our party, army and people from dynamically advancing toward a final victory, single-mindedly united around Kim Jong Un under the uplifted banner of great Kimilsungism-Kimjongilism.

Though the report notes that many of Jang’s associates have been purged, Yonhap notes that the DPRK ambassador to China, one of Jang’s associates, is conducting business as usual.

The North Korean ambassador to China, considered one of the close aides to the purged uncle of the North’s leader Kim Jong-un, appears to be conducting “business as usual for now,” a Seoul diplomatic source said Monday, on the same day that Pyongyang confirmed the powerful uncle had been sacked from office.

The North Korean ambassador, Ji Jae-ryong, has shared the same political fate as the purged uncle, Jang Song-thaek, over the past three decades, and served as a “linking pin” between Jang and the Chinese leadership since he took up the post in 2010, the source said.

“So far, we have detected no unusual movements at the North Korean embassy in Beijing,” the source said on the condition of anonymity.

“It has also been business as usual for Ambassador Ji Jae-ryong and other North Korean diplomats,” the source said.

The same article notes that some of Jang’s relatives in Malaysia were recalled.

Last week, an intelligence source in Beijing said that the North Korean ambassador to Malaysia, Jang Yong-chol, who is a nephew of Jang, was believed to have been recalled home.

The wife and two 20-something sons of the North Korean ambassador to Malaysia were also spotted last week before boarding an Air Koryo flight in China’s northeastern city of Shenyang, multiple witnesses said.

And in Cuba (Japan Times)…

North Korea’s ambassador to Cuba, Jon Yong Jin — the husband of Jang’s elder sister — has also been recalled, he said, according to a joint briefing by ruling and opposition party lawmakers.

Here is the report by Voice of [North] Korea:

See Madden’s post here. NK News has info here.

Here is coverage in major media outlets: New York Times, Bloomberg, Los Angeles Times, Wall Street Journal (and here), Associated Press.

Although it is still rumor at this point, some have speculated that Jang has been executed. The Ministry of Unification asserts he is “safe”. The JoongAng Daily reports he is in his Changgwang residence.

It is also rumored that one of Jang’s associates is under the protection of the South Korean government at a secret location in China  (see here and here). Two other associates, Ri Ryong-ha and Jang Su-gil, have allegedly been executed. Seoul denies they have anybody under their protection.

Mr. Jang’s removal was announced several days ago by the South Korean intelligence service.  According to the New York Times:

Mr. Jang’s apparent fall from power came after his two deputies at the administrative department of the ruling Workers’ Party of Korea were executed last month on charges of “corruption and anti-party activities,” according to South Korean lawmakers who were briefed by intelligence officials in a hurriedly scheduled meeting at the National Assembly in Seoul.

The intelligence agency did not reveal how it learned of the executions, the lawmakers said.

“I don’t think Jang’s deputies were executed for mere corruption. Rather, they were executed because they established a ‘power,’ ” said Cheong Seong-chang, a senior analyst at Sejong Institute in South Korea.

Mr. Jang would not be the first No. 2 or the first uncle of the North Korean leader to lose power. Kim Jong-il plotted a purge of his own powerful uncle to solidify control after the death of his father, the North’s founding president, Kim Il-sung.

In July last year, Kim Jong-un removed his then No. 2 man, Vice Marshal Ri Yong-ho.

Analysts said they suspected that Mr. Jang’s downfall may have been engineered by Kim Won-hong, who was made head of the nation’s secret police and spy agency in April last year, and Vice Marshal Choe Ryong-hae, who became the top political officer in the military under Mr. Kim. On Tuesday, the South Korean intelligence officials said North Korea’s secret police began investigating the corruption of Mr. Jang’s close allies this year.

Reuters offers great background info on Mr. Jang:

The man considered the power behind the throne in secretive North Koreais believed to be out of a job, thanks to his nephew and leader Kim Jong Un, and it wasn’t immediately clear if this time he can find the way back.

Jang Song Thaek survived purges and official displeasure to reach the pinnacle of his career, thanks largely to his sometimes tempestuous marriage to Kim Kyong Hui, the 67-year-old daughter of North Korea’s founder, Kim Il Sung.

The Pyongyang power couple formed a kind of regency in the obscurantist political world of the North behind Kim Jong Un, its young and mercurial leader, who succeeded his father, Kim Jong Il, in December 2011.

“The most important thing for Jang Song Thaek is he has institutional memory – he knows where all the bodies are buried and that’s critical in North Korea,” said Mike Madden, a North Korea expert and author of NK Leadership Watch blog.

“He knows who has a drinking problem, and whose wife likes to talk to her relatives a little too much.”

The couple’s reach was augmented by their control over the ruling Korean Workers’ Party’s secret funds that handle the Kim family’s finances both at home and abroad, according to An Chan Il, a former North Korean military officer who defected to the South and has become an expert on the North’s power elite.

After his dismissal in 2004, Jang, 67, was rehabilitated to stand at the peak of power as Vice Chairman of the National Defence Commission, the country’s top military body, and was a member of the ruling Workers’ Party Politburo.

He has likely been sacked from both posts, according to South Korean lawmaker Jung Cheong-rae, who on Tuesday cited a senior South Korean official with the National Intelligence Service (NIS).

“Jang is both the greatest benefactor and the greatest threat (to Kim Jong Un)”, said Park Hyeong-jung at the state-run Korea Institute of National Unification in Seoul back in April.

Jang met Kim Kyong Hui when they were students at Kim Il Sung University. He had good looks and charm, was popular and outgoing, known more for partying and deftness with the accordion than his academic achievements, according to Hwang Jang-yop, a former Workers’ Party secretary and defector who was head of the school at the time.

PARTIES AND WOMEN

His humble background made Jang a less than ideal suitor for the headstrong daughter of North Korea’s founder. Yet Kim Kyong Hui did not let her father’s objections stop her from marrying – with the help of her brother, according to Jang Jin Song, a North Korean defector who previously worked at the Workers’ Party United Front Department, a propaganda unit tasked with destabilising South Korea.

The marriage was not a happy one, he said. As Jang Song Thaek started rising through the ranks of the Workers’ Party, he became less attentive to his family. It was an open secret that he partied hard and womanised, said defectors in Seoul and South Korean politicians who met Jang on a 2002 visit as part of an economic delegation touring the South’s industrial successes.

Their daughter, Kum-song, died in an apparent suicide while attending school in France, ironically because her parents objected to her boyfriend, according to Jang Jin Song.

Kim Kyong Hui herself had an affair with a young pianist who taught her daughter, according to Jang Jin Song, who recalled that a classmate of his at the Pyongyang University of Music and Dance had been a rival for Kim’s affections. The piano teacher, a former child prodigy and household name, and who was 10 years younger than his paramour, would soon disappear.

Kim Kyong Hui would be told he had committed suicide. But Jang the defector said Kim knew her husband had had her lover killed, one of a vast number of people to fall victim to a reign of terror Jang Song Thaek orchestrated in the late 1990s.

Before he became the power behind the throne under Kim Jong Un, Jang was ejected from the elite in 2004 for angering Kim Jong Il by hosting lavish parties, according to media reports and assessments by South Korean think-tanks.

Two years later, he was back, and in 2011 was widely credited with orchestrating the ouster of Army chief of staff Ri Yong Ho, a major rival who had been a loyal aide to the father of Pyongyang’s current leader.

Jang’s removal, if final, could mean Kim Jong Un has lost perhaps the strongest benefactor he could have to help his transformation into a ruler of the calibre of his predecessors, a factor that leaves the question of his future return open.

“Jang’s a big potato to get rid of,” said Madden of NK Leadership Watch. “They can’t get rid of him completely. If they do, they’re in trouble because this is the guy you do not want going to a foreign country.

“… Jang is basically a Kim Jong Il figure. Kim Jong Un does not have the intellectual capacity to do what his father did. His father was really in touch with a lot of things that Kim Jong Un is not.”

See also this article by Aiden Foster-Carter in the Wall Street Journal’s Korea Real Time.

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International railroad cargo law passed

Friday, November 8th, 2013

Institute for Far Eastern Studies (IFES)
2013-11-8

It was recently confirmed that North Korea has passed the International Railroad Cargo Law, Decree No. 2041 at the Presidium of the Supreme People’s Assembly on December 14, 2011. Under this law, foreign investors in the country are provided legal protection of civil rights and interests.

The Law consists of chapters on the fundamentals of the International Railway Cargo Law; planning and contracts for international railway cargo; and transporters of international railway cargo. According to the law, international railroad business will be placed under the jurisdiction of the “Central Railway Transport Guidance Agency,” and will be accountable for all freights of exports and imports going in and out of the country.

The law proclaimed, “There will be strict system and order in the international railway freight system to ensure smooth transports of goods.” Specifically, the international railroad freight plan, A national planning agency will establish annual plans by quarterly and deliver it to the “Central Railway Transport Guidance Agency,” and the agency will make detailed monthly reports and transfer that information to relevant institutions, enterprises, organizations who used the railroad.

The transport contract is to be made between the transporting company and the owner of the freight and it must bear product name and quantity of the cargo being shipped, departing and arriving border stations, sender and receiver of the cargo, conditions and period of transport. In the law, it also explains export or import of prohibited materials or items that may interfere with the international railway cargo will be strictly restricted.

The law also states, the transporter must notify the recipient of the cargo two hours before the cargo arrives at the final destination, and in case of, delay or loss of goods, compensation for damages must be provided. The amount of compensation cannot exceed the amount of all the goods combined. The cargo owners must pay the transporting company for the services and prices incurred for transporting cargos and wages for labor. The cost will be determined by the State Price Commission.

Violation of contract will allow transportation agencies to claim indemnity for the damages and must submit documents with amount and grounds for claim, documents for transporting goods, and filed accident report at the station by a fixed date and submit the dossier to the railway transport authorities. The railway transport agency must process the claim within three months from the date of report.

The law also provides details on sanctions and conflict resolution. If a delay occurs, the party that is responsible must pay compensation for delays or those that interfered with the normal transporting operation, the law provides for administrative and criminal liability to the responsible party. As for conflict resolution, any disputes should be resolved through negotiation, but for those cases that are not resolvable, it must be resolved through arbitration or by trial.

This law is considered as a measure in preparation to revitalize the railway projects with Russia and China.

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Recent DPRK wage increases / economic management changes

Wednesday, November 6th, 2013

UPDATE 3 (2013-11-14): North Korea accelerating economic reforms? Wages and prices to be self-regulated (IFES):

North Korea appears to be pushing for internal economic improvement measures. Chosun Sinbo, the pro-North Korean newspaper in Japan, released an article on November 6 that discussed various performance-enhancing management and operational changes that took place at the Pyongyang Essential Foodstuff Factory this year.

Chosun Sinbo referred to Kim Jong Un’s speech made last March at the plenary meeting of the Central Committee of the Workers’ Party about improving economic management and named the recent changes at the food factory as a pilot project for this purpose. The news article added that “There are studies to bring fundamental changes in economic management and specific measures are being made to turn this into a reality.”

The main systemic changes made at the Pyongyang Essential Foodstuff Factory were the increase in autonomy of the company and the enforcement of wage differential based on performance. Based on the principle of cost compensation, prices of products produced with raw materials at the factory may be freely adjusted after consulting with the state.

The news article further explained that “The principle of socialist distribution is a simple system of distributing as much as you earn and the cost of living is determined by labor productivity.”  It also reported that some of the employees’ wages increased. Such news is likely intended to advertise to the outside world about North Korea’s changing domestic economic policies.

The North Korean economic journal Kyongje Yongu has also been increasingly reporting on the principle of distribution based on economic performance. In the recent issue published on October 30, 2013 (issue No. 4), an article titled “The Principle Problem of Properly Implementing the Socialist Labor Wage System” criticized the equalization of product distribution as it decreases the enthusiasm of workers toward production: “The strength and life used during the process of labor must be compensated through the principle of earning the amount of your labor.” The article stressed that wages must increase with production and rationalized the need for such wage increase.

Chosun Sinbo and Kyongje Yongu articles reveal the long-term efforts by the North Korean government in enhancing research about economic improvement measures and expanding projects in various factories, companies, and cooperative farms to implement these measures.

Recently, North Korea launched the State Economic Development Commission and organized a number of international forums on special economic zones.  These can be construed as possible signals toward economic reform, as North Korea continues to make various changes in its internal economic policies.

UPDATE 2 (2013-11-7): Another story of note in the Daily NK ties factory wage increases to the ability of enterprises to negotiate prices with the state:

Choson Sinbo, the regular publication of the pro-North Korea General Association of Korean Residents in Japan (Chongryon), has published news of a Pyongyang-based food factory being used as a testing ground for independent economic management. The enterprise fixes prices semi-independently in discussion with the state and pays increased wages, the piece, published yesterday, explained.

The publication conveyed, “Pyongyang Essential Foodstuff Factory became a test unit and conducted research in order to enact changes to overall economic management. They are currently implementing these.”

It continued, “Of particular note is the organization of production and economic management based on cost compensation principles and the socialist rules of division. Pyongyang Essential Foodstuff Factory has enacted the measures for themselves and prepared the collateral to allow for expansion and reproduction.”

“This factory has shed the state planning model and sources its own materials, and in discussion with the state it has been able to set its own prices as it sees fit. There is also a measure currently being adopted that provides monthly allowances in consideration of the labor of the employees,” it further emphasized.

However, a high-ranking defector was skeptical when asked about the piece, telling Daily NK, “These factories produce things like soybean paste, soy sauce, salt and side dishes. They have always played the role of distributor to the people, so there is no way that they would be able to just set prices how they wish on these products. It’s likely that the measures focus on work teams making apple and pear beverages, liquor and beer; things that do not relate to improving the lives of the people.”

UPDATE 1 (2013-11-7): The Daily NK follows up on the DPRK’s strategy to bring official wages in line with the price level:

North Korea’s decision to drastically increase the wages of workers in parts of the heavy industrial sector is designed to boost morale and improve productivity, the better to expand the country’s capacity to generate foreign currency income from investments in the exploitation of its mineral resources.

As exclusively reported yesterday by Daily NK, major industrial concerns in North Hamkyung Province such as Kim Chaek Iron and Steel Complex have raised wages by a factor of approximately one hundred, from a derisory 3,000 won per month, around half the market price of a kilo of rice, to 300,000 won. Thus far, 100,000 won of the total has been paid in cash and the remainder in kind in an attempt to head off the very real danger of dramatic price inflation that would result from 100% cash payments.

That such a substantial wage rise was only deemed feasible in enterprises with the potential to export primary or secondary resources for foreign exchange should not come as a surprise. Smaller domestic enterprises don’t have the liquid resources to take such a step. As with the Kaesong Industrial Complex, wages in cash and kind have always been more generous for workers in joint venture enterprises than elsewhere. The latest move reflects an extension of that reality.

At this early stage, experts believe that the measure is designed to create a business model for North Korea not unlike that on show at Kaesong, under which each province can improve its economic performance and attract greater quantities of foreign capital. By actively nurturing those rare businesses that are competitive in the regional environment, the country hopes to raise productivity overall.

A researcher with Industrial Bank of Korea, Cho Bong Hyun told Daily NK, “Raising salaries for enterprises in the minerals sector looks like an inevitable choice, since productivity couldn’t have been expected from light industrial enterprises when the operational level of most of those factories is so low.

Cho continued, “The Kim Jong Eun regime, which is currently concentrating on producing results in the economic sphere, made this decision based on the fact that for some time it has been earning foreign currency quite easily by exporting its mineral resources. They also hope that by raising salaries they can induce greater productive effort, since workers have not wanted to work properly since the public distribution system collapsed [in the 1990s].”

Yoon Deok Ryong, a senior research fellow with the Korea Institute for International Economic Policy added, “Kim Jong Eun has granted this autonomy to firms and raised wages in order to earn foreign currency and firm up his system. He wants to right the economy by discriminating in favor of businesses that are somewhat competitive.”

However, despite cautious enthusiasm for the latest step, the two experts cautioned that unless North Korea moves further in the direction of a market economic system, the measure might not prove effective.

Cho explained, “No matter how tightly the North Korean authorities seek to control economic activity, they will find it almost impossible to stop these wage rises inciting inflation and causing the value of the North Korean Won to nosedive even more. There is also the danger of conflict with between military and Party-Cabinet elements over the management of mineral resource enterprises that can be used to produce military goods.”

Yoon added that workers in enterprises excluded from the latest wage rises will not see the bigger economic picture, and will simply be aggrieved at there being no improvement in their own conditions. “Conflict is unavoidable,” he concluded.

ORIGINAL POST (2013-11-6): According to the Daily NK:

Wage levels for workers in some larger industrial enterprises have risen by a factor of approximately one hundred times, Daily NK has learned. The move, which was put forward as part of the “June 28th Policy” in mid-2012 and is designed to bring wages more into line with market price levels, appears designed to improve the productivity and competitiveness of major industrial concerns.

According to a source from North Hamkyung Province, the monthly wage of people working at Musan Iron Mine, Kim Chaek Iron and Steel Complex and Sungjin Steel Mill rose from an average of just 3000-4000 won up to 300,000 won in September and October. In an attempt to forestall the inflation that such a step would otherwise guarantee, 200,000 won of the payment is issued in goods, with just 100,000 won provided in cash.

The source explained to Daily NK on the 5th, “In September the order was handed down in the name of the State Economic Development Commission to Musan, Kim Chaek and Sungjin; it was about guaranteeing independence in terms of production and the authority to set salary levels. At the time most workers did not believe that they were going to be given a wage of 300,000 won, and are really surprised now that they are actually getting it.”

The source went on to assert that the same instructions have been handed down to all provinces, not only North Hamkyung. “Relatively more competitive” industrial enterprises in each province have been selected, he said, and are resetting wages at a higher level.

Explaining the system of payments in kind, the source said, “Because they are concerned about the danger of inflation being created by the wage rises, they give 200,000 won of it in rice, vegetables, side dishes, other necessities, and electronics. Only the remaining 100,000 won is given in cash.” Workers have been told “not to make purchases in public markets since the state is now providing for your daily needs,” although the instruction is not likely to be adhered to.

Predictably, the source revealed that the move has attracted attention from surrounding enterprises. “Workers who had been ‘off sick’ are coming back,” he said, “and workers from other enterprises have been descending on us after hearing that we are getting a lot of wages and other stuff.”

The move appears designed to increase the competitiveness of major industrial enterprises in North Korea, and to improve the attractiveness of joint ventures to companies in China.

At the time of writing, the dramatic wage increase has not generated rice price inflation in public markets in the North Hamkyung Province region. For example, the price of rice in Musan is currently stable at around 5,800 won/kg.

On this, the source concluded, “Because some of the wages have been given in kind, demand in markets will not rise for the time being.” However, he cautioned that later, when workers attempt to buy and sell the products they have received, instability and inflation could result.

Read the full story here:
Wages Rise 100x in Heavy Industry
Daily NK
Lee Sang Yong
2013-11-6

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New info on the DPRK’s exchange rates and Economic Development Zones

Sunday, November 3rd, 2013

James Pearson writing in Reuters updates us on the state of the DPRK’s domestic currency:

In a dimly-lit Pyongyang toy shop packed with Mickey Mouse picture frames and plastic handguns, a basketball sells for 46,000 Korean People’s Won – close to $500 at North Korea’s centrally planned exchange rate.

Luckily, for young North Koreans looking to shoot hoops with Dennis Rodman, the new friend of leader Kim Jong Un, the Chinese-made ball actually costs a little less than $6 based on black market rates.

Once reserved for official exchange only in zones aimed at attracting foreign investment, and in illegal underground market deals elsewhere, black market rates are being used more frequently and openly in North Korean cities.

Publicly advertised prices at rates close to the market rate – around 8,000 won to the dollar versus the official rate of 96 – could signal Pyongyang is trying to marketise its centrally planned economy and allow a burgeoning “grey market” to thrive. This could boost growth and capture more of the dollars and Chinese yuan circulating widely so that North Korea can pay for imports of oil and food.

Unofficial market rates could become more widespread following an announcement last month of 14 new special economic zones (SEZs) aimed at kickstarting a moribund economy where output is just one fortieth of wealthier South Korea’s. A spokesperson for the Korea Economic Development Association, a local organization tasked with communicating policy in the new SEZs, told Reuters that exchange rates in the new zones are to be “fixed according to (local) market rates.”

“The official rate for the won is like a placeholder,” said Matthew Reichel, director of the Pyongyang Project, a Canadian NGO that organizes academic exchanges with North Korea. “We all know that the value of the won is not this.”

UNDER STRAIN

An estimated 90 percent of economic transactions along North Korea’s border with China are in yuan, an embarrassment for a country whose policy stresses economic independence, and something that reduces the grip that authorities attempt to exercise over its people and economy.

Pyongyang does not publish economic data, but is believed to have run a sizeable current account deficit for years, straining its ability to pay for imports in hard currency.

An attempt in 2009 to revalue the won and confiscate private foreign currency savings prompted protests from market traders and forced a rare policy reversal and public apology from state officials.

“Due to its lack of foreign currency, the North Korean government will have to tolerate black market rates, even if it has difficulty in officially recognizing them,” said Cho Bong-hyun, a North Korea economics expert at the IBK Economic Research Institute in Seoul.

Read the full story here:
Insight: Won for the money: North Korea experiments with exchange rates
Reuters
2013-11-3

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North Korea adopts renewable energy law

Tuesday, September 17th, 2013

Institute for Far Eastern Studios (IFES)
2013-9-17

North Korea is showing great interest in the green industry that pursues both environmental conservation and economic development. Recently, North Korea is stressing the importance of pollution prevention for the construction of a powerful nation, such as research and development in solar and wind renewable energies, and recycling. In addition, it is establishing legal framework to support it.

The Korean Central News Agency (KCNA) reported on September 2, 2013 a new renewable energy law was adopted at the Presidium of the Supreme People’s Assembly. The news reported the law addressed the principle problems in the development and usage of renewable energy. In August last year, the Environmental Protection Act was amended which added the use of renewable energy development, environmental certification system, and recycling technology to the regulations.

According to the news, Renewable Energy Act entails these following components: 1) definition and mission of renewable energy, 2) research and development of renewable energy resources, 3) basic principles in the usage, 4) planning and encouraging the development of renewable energy, 5) enforcement of the materials and technical sectors of renewable energy, and 6) legal requirements to guide the renewable energy sector projects. The Act consists of six chapters and 46 clauses.

The mission of the law is to encourage the development and use of renewable energy and invigorate the renewable energy industry by enabling the sustainable development of economy and improve people’s living standards and contribute to environmental protection.

In addition, the news reported that the law in the field of renewable energy must “strengthen the material and technical foundation for the development of the renewable energy industry and the state is responsible for systematical advancement of investment in renewable energy.”

In addition, the law also included provisions that stressed international cooperation and assistance from other countries and international organizations for the exchange and cooperation for the development of the renewable energy sector. The news provided details that included provisions, “the institutions, enterprises and organizations of the renewable energy sectors must conduct scientific research in renewable energy,” “research plan for renewable energy resources will be established by national planning agencies and the state planning agencies should develop renewable energy resources plans according to the environmental conditions and energy demand and based on the current status of renewable energy technology.”

The news also added that the Renewable Energy Act introduced the basic requirements, development, and objectives of the law. It emphasized hydro, wind, solar, marine, and biological energies are clean energy resources that do not affect the environment, and also promote the construction of powerful socialist economy. It also claimed North Korea must actively seek strategies to industrialize renewable energy that reflect realistic conditions.

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DPRK Economic Development Commission

Friday, September 6th, 2013

UPDATE 5 (2013-10-31): North Korea Opens Fourteen Special Economic Zones Nationwide (IFES):

North Korea announced that it has opened fourteen special economic zones (SEZs) in various provinces this year.

The Rodong Sinmun, official newspaper of the Workers’ Party of Korea (WPK) covered the news about the Pyongyang International Conference on Special Economic Trade Zone held from October 16 to 17, 2013. This conference was convened by the Korean Economic Development Commission.

According to the newspaper, a law professor from Kim Il Sung University, Dr. Kang Jong Nam, presented at the conference and said, “There are four well-known special economic zones in our country: the Rason Economic and Trade Zone, Hwanggumpyong and Wiwha Islands Economic Zones, Kaesong Industrial Complex, and Mount Kumgang International Tourism Zone. But from this year, fourteen new economic zones were established.” However, details on where these fourteen new SEZs are located were not disclosed.

Kang added, “To meet the growing demands for development, operation and management of new economic development zones, increasing legal measures are being taken to reinforce the development with establishment of new laws or amendment of existing laws.”

North Korean leader and Chairman of the National Defence Commission Kim Jong Un made a statement at the WPK Central Committee meeting in early March, saying that economic development zones be established in each province, taking into consideration the special characteristics of each region.

Experts confirmed that North Korea has officially announced its plans to develop Wonsan and Chilbosan as tourism zones this year. SEZ development of Kangryong District in Southern Hwanghae Province began from last July.

In addition, the Korean Central News Agency announced on October 17 that ‘Kaesong High-Tech Industrial Park’ will be jointly developed by North Korea and foreign consortium, and this is likely to be one of the new fourteen SEZs built this year.

North Korea is actively hosting international forums targeted to attract foreign investment into the country, with experts from Canada, Malaysia, the United States and other foreign countries attending.

The Rodong Sinmun also quoted Director Choe Hyon Chol of the Korean Association of Economic Development: “It is crucial to educate and train experts to work in the economic zones and this will be the next step for the development of SEZs.” He also said that “We are willing to participate in various functions such as international forums, investment briefings, and exhibitions to encourage more international investment and cooperation.”

Meanwhile, on October 21 the KCNA reported on the extended cabinet plenary meeting. At the meeting, reports were given on the performance of the third quarter of the national economic plan and measures to successfully implement the plans for the fourth quarter. The central agenda for the last quarter is increasing production of coal and steel products and improving agricultural and light industries to resolve the shortage of food and consumer goods for the people. In addition, improvement in education, health services, and sports sectors were named as imperative areas to recover the country’s status as a powerful socialist nation. Specific tasks and strategies of the fourth quarter were presented at the meeting for the implementation of the national budget.

UPDATE 4 (2013-10-31): Rodong Sinmun follows up on the Economic Development Commissions’ conference on Special Economic Zones:

On Oct. 16 KCNA reported that the Pyongyang International Conference on Special Economic Zone (SEZ) development opened. Many foreign sources conveyed the news, each with their own comments.

Economic experts from without were not many in number, but each of the attendants was a specialist who had either been involved in successful development of SEZ in Asia and the rest of the world or rich in relevant research experience.

Among the organizers of the conference was Prof. Kyung Ae Park, director of the Center for Korean Research, University of British Columbia, who played a big role in inviting experienced specialists and scholars to the conference.

The first foreign speaker on the first item on the agenda was professor of the Chinese University of Hong Kong.
Exchanged at the conference were experience on SEZ development in Vietnam, Malaysia, India and many other Asian countries.

Economists and specialists from Canada and the U.S. also spoke at the conference.

Many speakers expressed their unusual feeling of having the opportunity of academic exchange on SEZ development in the city of Pyongyang.

Impressions on Pyongyang were in some points common to all. They said in one voice that Pyongyang, the capital of the DPRK, is beautiful and peaceful, and that Korean economists and specialists were very sincere and enthusiastic in their attitude to the SEZ development.

All the attendants of the conference, both from within and without, expressed thanks to the Korean Economic Development Society, the sponsor, and Kyung Ae Park, organizer, of the conference, which was conducive to seeking a new way of economic development that suits the needs of the 21st century.

UPDATE 3 (2013-10-24): North Korea Launches New Economic Development Organizations (IFES, 2013-10-24)

North Korea announced that it had installed the State Economic Development Commission to oversee the national economic development.

The Korean Central News Agency (KCNA) reported on October 16 that preamble to raise the existing General Bureau for State Economic Development to State Economic Development Commission was adopted at the recent Presidium of the Supreme People’s Assembly. Details for appointment of officials and function of the commissionareyet to be announced.

The bureau was established in 2011 to design and carry out the 10-year plan for the development of the national economy. The elevation of this institution from bureau to commissioncan be interpreted as increasing emphasis on economic development.

In particular, the State Economic Development Commissionis likely to serve as the control tower, overseeing the development of special economic zones and the 10-year economic plan.

The KCNA also reported on the establishment of a non-state organization called the Korean Economic Development Association. As the news explained, this organization was installed for the purpose of “attracting interests of economic, business, and academic communities from abroad in special economic zones (SEZs)” and “to promote SEZs to companies and organizations of other countries to draw investments for development in these areas.”

The association is expected to organize and provide support services to foreign investors and coordinate debates, conferences, exhibitions, economic information exchanges, and provide advisory services, in accordance with government mandates and investment agreements. Essentially, the association’s chief focus is to attract foreign investments into SEZs and provide various services to assist their activities in the economic zones.

The news reported the first project of the association was the organization of the “Pyongyang International Conference on Special Economic Zones (SEZ) Development,” held at the Yanggakdo International Hotel. The conference brought together economic experts from North Korea, the United States, Canada, India, and Malaysia. The association’s contact information (phone and fax numbers;email address)were also released.

The launch of a non-state organization for the promotion of SEZs is a first for North Korea. This is considered as a follow-up measure to the Law on Economic Development Zones, which was enacted in June 2013.

UPDATE 2 (2013-10-23): Rodong Sinmun follows up on the Economic Development Commissions’ conference on Special Economic Zones and reports that there will be 14 Economic Development Zones:

An International Conference on Special Economic Zone (SEZ) Development was held in Pyongyang, the beautiful capital of Juche Korea on Oct. 16 and 17 under the sponsorship of the Korea Economic Development Association. It proceeded in an amicable atmosphere with the participation of competent economic professors and experts of Canada, Malaysia, U.S., Vietnam, India and China, economists and researchers of the Korea Economic Development Association, Kim Il Sung University, University of National Economics, Wonsan Jong Jun Thaek University of Economics and Academy of Social Sciences and officials of various fields who were striving to develop regional economy in Rason City and other areas.

The conference heard first the speeches of Vice-chairman of Korea Economic Development Association Ri Chol Sok and Prof. Kyung Ae Park from University of British Columbia, who was the organizer of the conference. It discussed 6 themes. The matter of primary concern at the conference was the actual situation and prospect of special economic zone development in the DPRK and the legal system related to it. Officials of the Korea Economic Development Association and professors of Kim Il Sung University spoke of this matter.

Thanks to the measures of the DPRK government, Rason Economic Trade Zone, Hwanggumphyong-Wihwado Economic Zone, Kaesong Industrial Zone and Mt. Kumgang International Tourist Special Zone have already been created and this year witnessed the establishment of 14 economic development zones. In conformity with this, legal measures for development, management and operation of the special economic zones were newly taken and the existing laws are being revised and supplemented.

At the session held on the theme “Next Steps for DPRK Economic Zones” held prior to the closing ceremony, Choe Hyon Chol, director of the Korea Economic Development Association, explicated the prospects for development of the special economic zones in our country and hoped for broad and positive international cooperation.

The Pyongyang International Conference on Special Economic Zone Development held under tense situation was an important occasion showing the peace-loving stand and policy of the WPK and DPRK which are concentrating efforts on the development of economy and improvement of people’s living standard.

Here is coverage of this report in Yonhap.

UPDATE 1 (2013-10-17): In September, IFES reported the creation of the DPRK’s Economic Development Commission” (See original post below). It appears that KCNA has finally announced its creation. According to KCNA in two different articles:

General Bureau for State Economic Development Renamed

Pyongyang, October 16 (KCNA) — The DPRK decided to rename the General Bureau for State Economic Development the State Economic Development Commission.

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

And…

Economic Development Association Organized in DPRK

Pyongyang, October 16 (KCNA) — The Economic Development Association was organized in the Democratic People’s Republic of Korea.

As a non-governmental organization, it helps foreign businesses and entities to get a better knowledge of special economic zones in the DPRK and to make investments in them.

It is also working to assist business activities of foreign investors in the zones.

As part of its first work, it hosted the Pyongyang International Conference on Special Economic Zone (SEZ) Development in Pyongyang starting from Wednesday, attended by economists from Canada, Malaysia and the United States.

The details to contact with the association are as follows:
Tel: 00850-2-381-5912
Fax: 00850-2-381-5889
E-mail Address: [email protected]

Here is the Korean version of the articles:

국가경제개발총국을 국가경제개발위원회로 하기로 결정

(평양 10월 16일발 조선중앙통신)조선에서 국가경제개발총국을 국가경제개발위원회로 하기로 결정하였다.

이와 관련한 조선민주주의인민공화국 최고인민회의 상임위원회 정령이 16일 발표되였다.(끝)

조선경제개발협회 조직

(평양 10월 16일발 조선중앙통신)조선경제개발협회가 조직되여 자기 활동을 시작하였다.

협회는 다른 나라의 기업들과 단체들이 조선의 특수경제지대들에 대하여 잘 알게 하고 그 진출을 협력해주는 민간급단체이다.

조선의 특수경제지대개발에 도움이 되는 투자토론회, 상담회, 전시회, 경제정보교류, 자문봉사, 정부의 위임에 따르는 투자합의, 투자가들의 기업활동방조 등 다양한 봉사를 제공하고있다.

협회는 앞으로 조선의 특수경제지대개발에 관심을 가지거나 투자에 참가하는 여러 나라 경제계와 기업계, 학계의 광범한 인사들의 리익을 도모하기 위해 자기의 역할을 끊임없이 높여나가게 된다.

조선경제개발협회는 첫 사업으로서 카나다와 말레이시아, 미국을 비롯한 여러 나라의 경제전문가들을 초청하여 16일부터 특수경제지대개발에 관한 평양국제토론회를 주최하고있다.

협회는 전화 00850-2-381-5912와 확스 00850-2-381-5889, 전자우편 [email protected]로 기업, 단체들과 련계하고있다.(끝)

I am unsure of the difference between the “Economic Development Commission” and the “Economic Development Association”, but they appear to be the same organization. The same name difference is apparent in the Korean articles as well: 조선국가경제개발총국, 조선경제개발협회. I also assume this is the same “Economic Development Commission” reported by IFES in September and posted below.

The first high profile event of the Korea Economic Development Association/Commission was an event: The Pyongyang International Conference on Special Economic Zone (특수경제지대, SEZ) Development. Below are articles on the event:

KCNA (2013-10-16):

International Conference on SEZ Development Opens in DPRK

The International Conference on Special Economic Zone (SEZ) Development opened at the Yanggakdo International Hotel in Pyongyang on Wednesday, with economists from the Democratic People’s Republic of Korea, Canada and other countries in attendance.

In this regard, KCNA met Ri Chol Sok, vice-president of the Korea Economic Development Association.
Ri said:

The conference takes place at a time when the DPRK is paying deep attention to developing special economic zones in local areas, as the Rason Economic and Trade Zone.

The conference deals with present-day situation and prospect of the special economic zones in the DPRK and its laws for SEZs, characteristics of special economic and exports processing zones in China and Vietnam as well as the experiences gained in developing them.

It also introduces the roles the zones play in the economic development in each country.

The DPRK has constituted a series of laws for ensuring free business activities in the zones.

Meanwhile, the country is making efforts to improve economic management methods, while consolidating the socialist economic system.

This conference will mark a good occasion in promoting international exchange and cooperation and in developing the economy of the country.

Xinhua:

The Democratic People’s Republic of Korea (DPRK) said Wednesday it would establish special economic zones open to investment from “any country.”

Ri Chol Sik, deputy head of the Korea Economic Development Association (KEDA), told the first international conference on Special Economic Zone (SEZ) development here that the DPRK was preparing to open many SEZs at provincial level, with legal protection and preferential policy already set up.

“Policies and regulatory environment and their implementation are critical to the success of SEZs,” said Bradley Babson, chair of the DPRK Economic Forum at the U.S.-Korea Institute at John Hopkins School of Advanced International Studies.

A DPRK professor with Kim IL Sung University told Xinhua the seminar was “a great opportunity for our people to learn from other countries’ successful experience on SEZs.”

The seminar, sponsored by KEDA and co-hosted by Park Kyung Ae, director of the Canada-DPRK Knowledge Partnership Program (KPP) at the University of British Columbia, Canada, was attended by DPRK scholars and officials and dozens of foreign economic specialists from countries such as the United States, Canada, China, Vietnam, India, and Malaysia.

Park told Xinhua it was a chance to exchange ideas and promote cooperation between DPRK and the outside world. She has been engaging for years in a KPP academic exchange program, which sends DPRK professors to study and do research in Canada.

KEDA, a newly formed non-government organization, aims to support activities by foreign businesses and scholars interested in the country’s special zones, said KCNA, DPRK’s official news agency.

The non-governmental association, the first of its kind in DPRK, arranges meetings, supports business activities and offers information and consulting to prospective investors.

Also on Wednesday, the National Economic Development General Bureau was renamed the National Economic Development Committee, KCNA said.

And from KCNA on 2013-10-17:

Ri Chol Sok, vice-president of the Korean Economic Development Association (KEDA), said in his closing address at the Pyongyang International Conference on Special Economic Zone (SEZ) Development that other countries’ experience would be helpful to the DPRK seeking to create economic development zones in its localities.

The conference was held at the Yanggakdo International Hotel on October 16-17, with the attendance of KEDA officials, professors of Kim Il Sung University, University of National Economy, Academy of Social Sciences and other related institutions and economists of the DPRK and experts of academic and economic circles of different countries, including University of British Columbia in Canada, Chinese University of Hong Kong, University of Delhi in India, Planning & Economic Research in Malaysia and University of Wisconsin in the United States.

It focused on such matters as the features of SEZ planning and the study of its examples, management and investment in SEZ and development course of SEZ.

Its participants presented papers on experience and lessons of some countries and valuable propositions and exchanged their views on the prospect of SEZ development in the DPRK and international cooperation in this respect.

Professor Pak Kyong Ae of University of British Columbia in Canada recalled that the conference was conducive to establishing and putting into practice the strategy of comprehensive economic development including the creation of SEZs.

The professor hoped that the good ties forged between the participants through the conference would lead to continuous exchange.

And from Xinhua (2013-10-17):

The Democratic People’s Republic of Korea is hosting an international conference to explore ways of developing its economy. Earlier this year, the country announced a new law governing new economic zones.

A sign of new climate in economic development, thirteen foreign academics and experts from countries including the US, Canada, India, China, Malaysia and Vietnam gathered in Pyongyang on Wednesday for an international economic conference.

They joined about 60 economists from the Kim Il Sung University, the Academy of Social Sciences, and other local institutions.

The conference comes as economic zones are starting to be created all over the country. On June 5th, the DPRK’s state news agency KCNA announced a new law governing special economic zones. Foreigners can now invest in the new economic zones with preferential conditions for land-use, employment and tax.

The DPRK has experimented with special economic zones for years. In the early 1990s, the DPRK set-up the Rason Special Economic Zone in the far northeast, but it made little progress until recently being reinvented as a joint project with China.

Another DPRK-China joint economic development project on the border between the two countries at Hwang-gum-pyong is still at a much earlier stage of development.

The joint industrial zone with South Korea at Kaesong has not long reopened after a months-long shutdown earlier this year due to tensions on the peninsula.

The new law on special economic zones is one of a number of signs that the DPRK may be seeking to speed up its economy.

Here is coverage in Yonhap (2013-10-16):

North Korea has established a private organization to develop special economic zones, its media said Wednesday, following toughened business sanctions slapped on the communist country for its nuclear weapons test earlier in the year.

The organization, dubbed the Korean economic development federation, aims to support activities of foreign businesses and scholars interested in the special zones in North Korea, the Korean Central News Agency (KCNA) said.

The regime’s news wire added that the organization will arrange meetings, support business activities and offer consulting and information to prospective investors.

As part of its first official activity, the federation arranged an international conference attended by United States, Canadian and Malay economists that kicked off earlier in the day in Pyongyang, the KCNA said.

North Korea observers said that the creation of a civilian entity to manage a handful of special zones is a first for the communist country and that it follows the revision of related laws in late May aimed at fueling growth and attracting more foreign investors.

“The federation seems to be a copy of similar private sector organizations in capitalist countries and shows the importance placed on pulling off economic growth by the Kim Jong-un government,” said Lim Eul-chul, a research professor at Kyungnam University in South Korea.

Other experts said with the toughened sanctions from the United Nations, the North may be seeking to circumvent the existing business and trade restriction by creating a private body.

Here is coverage in the Daily NK:

According to an October 16th report by Chinese news agency Xinhua’s correspondent in Pyongyang, Yoon Yong Suk, who is in charge of the Chosun Economic Development Committee, recently spoke at the “Pyongyang International Symposium on Special Economic Zone Development,” held at the Yanggakdo Hotel. He said, “We are actively preparing to establish special economic zones in all provinces and introduce foreign capital.” Chosun Economic Development Committee is a “non-state” institution established for the purpose of developing special economic zones.

He explained, “At the Central Committee meeting last March, it was decided that special economic zones should be established in each province, and tourist areas, too, in order to invigorate the tourist industry, and bring about greater diversity in international trade. Currently, each province is moving forward with the establishment of development zones and the task of attracting foreign currency, in accordance with the plan.”

“It is the consistent policy of our country to develop the Rason Special Economic Zone, the Hwangguempyeong and Wihwa Island areas, Mt. Geumgang International Tourist Area, and economic development zones in each province,” he added. “We will find practical and logic means by which to expand economic, trade and scientific exchanges, as well as enhance understanding, exchanges and contacts with governments, private industry, and private groups.”

On October 1st, Daily NK reported that economic officials in provincial areas of North Korea had been ordered to formulate plans for the designation of two candidate cities for development, and that legal and systemic modifications were being investigated, in order to try and ensure interest from foreign capital.

According to Daily NK’s information, the profit derived from joint ventures would be shared 50-50; owever, foreign companies would only have to cover the cost of land use and wages.

Naenara, one of the DPRK’s official web portals, has also posted lots of content on the meeting. See here, here, here, here, here, and here. I have compiled all these articles into this PDF.

Read full story here:
N. Korea sets up civilian body for special economic zones
Yonhap
2013-10-16

ORIGINAL POST (2013-9-6): On May 29, the Presidium of the Supreme People’s Assembly promulgated the “DPRK Law on Economic Development Zones“. Now it appears they have named a body to administer the law. According to the Institute for Far Eastern Studies (IFES):

DPRK Economic Development Committee launched: Special economic and tourism zones to be named (IFES)

In the wake of normalizing the Kaesong Industrial Complex (KIC) agreement, North Korea has announced that it had installed the Economic Development Committee and named special economic and tourism zones, as well as newly appointed officials in charge. In the near future, North Korea has plans to announce specific special economic zones in Sinuiju, Nampo, and Haeju, along with tourism zones in Mount Baekdu, Wonsan, and Chilbosan. The head and director-level executives for the Economic Development Committee are likely to be appointed from the Joint Venture Investment Committee. The head of the Tourism Development is reported to be the former director of Korea Tourism Administration.

Meanwhile, North Korea has released the preamble of the economic development law adopted at the recent Presidium of the Supreme People’s Assembly held on May 29. As inter-Korean relations are progressing with the plans of restarting the Kaesong Industrial Complex and the reunion of separated families moving forward, North Korea’s economic development law is drawing attention once again.

In principle, the selection process for the special economic zones must possess these following elements: Area must 1) be in a favorable location for foreign economic cooperation and exchanges; 2) contribute to the economic and science and technology development; 3) be at a fixed distance from the residential areas; and 4) be at a location that does not intrude in the state protected areas (Article 11). This can be interpreted as the North’s effort to segregate the existing residential areas with the special economic zone similar to the Kaesong Industrial Complex so as to minimize the political and social impact of these zones.

The newly confirmed information for the new Economic Development Law is the list of development activities. “Investors from other countries are permitted to develop economic zones either alone or in collaboration after obtaining state approval (Article 20).” Evidently, North Korean institutions and enterprises may also develop economic zones after receiving approval from the state.

In addition, the law granted comprehensive property rights to the development companies. It states that “Companies have the right to sell, re-lease, bequeath, or transfer the ownership of the buildings and land lease” and “the selling or re-lease price shall be determined by the development company” (Article 29).

As for recruitment of workers, there is a provision that states “our country’s labor force must be given preferential consideration” (Article 41), and “the minimum wage for the employees of the Economic Development Zone shall be determined by central guidance organization of special economic zone” (Article 42). This poses some concern as the employee wage at the Economic Development Zone could be compared to that of the KIC, which could lead to wage disputes after the KIC begins to implement its internationalization process.

Another noteworthy change is the currencies permitted at the zone: “currency for circulation and payment must be Korean Won (KPW) or other specified currency” (Article 46), suggesting that other currencies such as the US dollar and euro will be allowed.

Furthermore, the Act specifies that “Companies in the economic development zone will decide on the commodity and service prices, and all the prices in the Economic Development Zone between institutions, enterprises and organizations shall be determined by the international market price based on agreement of all the parties” (Article 43). This suggests that the products produced in the zone may be traded domestically in North Korea.

In this Act, corporate income tax rate was set at 14 percent of profits and “Economic Development companies that operate for more than 10 years will be considered for a tax cut or exemption from the corporate income tax.” Article 58 grants “communication guarantees” for the usage of mail, telephone, and fax services, but did not include the use of the Internet.

Posts on the DPRK Law on Economic Development Zones can be found here.

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Business slow at JVIC Beijing office

Friday, August 23rd, 2013

According to Yonhap:

The only sign of activity at the North Korean trade promotion agency here in Beijing is the faintly lit banner in front, and it is hard to tell whether the office is open for business.

No one is seen at the reception desk of North Korea’s Investment and Development Group building, located in a northern Beijing suburb, and its front door, though appears to be open, remains stationary for most of a weekday.

“North Koreans are still working there,” said a Chinese cleaner near the building, who only gave his surname Wu.

The Beijing branch of North Korea’s Investment and Development Group was believed to have launched operations early last year, but it appears certain to be a dead duck as the North’s unpredictability continues to keep Chinese investors away.

Its website has not posted any statement since Jan. 23 this year, and there was no response to a phone call made on Aug. 16.

A South Korean diplomatic source in Beijing, who spoke on the condition of anonymity, said the North Korean branch has been dormant since the North’s defiant launch of a long-range rocket last December.

Tensions on the Korean Peninsula soared early this year, with North Korea conducting its third nuclear test and its near-daily war threats during an annual joint military drill between South Korea and the United States.

“We have figured out that operations at the Beijing office of the North’s Investment and Development Group almost ground to a halt,” the source said.

China, North Korea’s biggest trading partner and aid donor, has become increasingly frustrated with its wayward ally, particularly after the North’s February nuclear test. In May, the Bank of China closed accounts with North Korea’s Foreign Trade Bank, which was accused by the U.S. of helping to finance the North’s nuclear weapons program.

According to the South Korean Embassy in Beijing, North Korea’s trade volume with China fell 6 percent on-year in the first six months of this year.

The North’s trade with China stood at US$2.95 billion in the January-June period, compared with $3.14 billion a year earlier, embassy officials said.

Exports to China rose 6 percent to $1.36 billion, while imports declined 14 percent to $1.59 billion, they said, citing official data.

Read the full story here:
N. Korea appears to struggle to woo Chinese investors
Yonhap
2013-8-23

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DPRK Law on Economic Development Zones Enacted

Monday, June 24th, 2013

UPDATE 4 (2013-9-6): On May 29, the Presidium of the Supreme People’s Assembly promulgated the “DPRK Law on Economic Development Zones“. Now it appears they have named a body to administer the law. According to the Institute for Far Eastern Studies (IFES):

DPRK Economic Development Committee launched: Special economic and tourism zones to be named (IFES)

In the wake of normalizing the Kaesong Industrial Complex (KIC) agreement, North Korea has announced that it had installed the Economic Development Committee and named special economic and tourism zones, as well as newly appointed officials in charge. In the near future, North Korea has plans to announce specific special economic zones in Sinuiju, Nampo, and Haeju, along with tourism zones in Mount Baekdu, Wonsan, and Chilbosan. The head and director-level executives for the Economic Development Committee are likely to be appointed from the Joint Venture Investment Committee. The head of the Tourism Development is reported to be the former director of Korea Tourism Administration.

Meanwhile, North Korea has released the preamble of the economic development law adopted at the recent Presidium of the Supreme People’s Assembly held on May 29. As inter-Korean relations are progressing with the plans of restarting the Kaesong Industrial Complex and the reunion of separated families moving forward, North Korea’s economic development law is drawing attention once again.

In principle, the selection process for the special economic zones must possess these following elements: Area must 1) be in a favorable location for foreign economic cooperation and exchanges; 2) contribute to the economic and science and technology development; 3) be at a fixed distance from the residential areas; and 4) be at a location that does not intrude in the state protected areas (Article 11). This can be interpreted as the North’s effort to segregate the existing residential areas with the special economic zone similar to the Kaesong Industrial Complex so as to minimize the political and social impact of these zones.

The newly confirmed information for the new Economic Development Law is the list of development activities. “Investors from other countries are permitted to develop economic zones either alone or in collaboration after obtaining state approval (Article 20).” Evidently, North Korean institutions and enterprises may also develop economic zones after receiving approval from the state.

In addition, the law granted comprehensive property rights to the development companies. It states that “Companies have the right to sell, re-lease, bequeath, or transfer the ownership of the buildings and land lease” and “the selling or re-lease price shall be determined by the development company” (Article 29).

As for recruitment of workers, there is a provision that states “our country’s labor force must be given preferential consideration” (Article 41), and “the minimum wage for the employees of the Economic Development Zone shall be determined by central guidance organization of special economic zone” (Article 42). This poses some concern as the employee wage at the Economic Development Zone could be compared to that of the KIC, which could lead to wage disputes after the KIC begins to implement its internationalization process.

Another noteworthy change is the currencies permitted at the zone: “currency for circulation and payment must be Korean Won (KPW) or other specified currency” (Article 46), suggesting that other currencies such as the US dollar and euro will be allowed.

Furthermore, the Act specifies that “Companies in the economic development zone will decide on the commodity and service prices, and all the prices in the Economic Development Zone between institutions, enterprises and organizations shall be determined by the international market price based on agreement of all the parties” (Article 43). This suggests that the products produced in the zone may be traded domestically in North Korea.

In this Act, corporate income tax rate was set at 14 percent of profits and “Economic Development companies that operate for more than 10 years will be considered for a tax cut or exemption from the corporate income tax.” Article 58 grants “communication guarantees” for the usage of mail, telephone, and fax services, but did not include the use of the Internet.

Posts on the Economic Development Commission can be found here.

UPDATE 3 (2013-8-30): In August, the Pyongyang Times issued the following information on the DPRK’s Law on Economic Development Zones:

New law friendly towards investment

The law on economic development zone was enacted and promulgated in the DPRK on May 29.

The Pyongyang Times staff reporter Kim Rye Yong interviewed Kang Jong Nam, PhD and researcher at Law College of Kim Il Sung University, about the law.

What is the difference between this law and other laws that are in force in such special zones as Rason Economic and Trade Zone, Hwanggumphyong and Wihwado Economic Zone and Kaesong Industrial Park?

The recent law is applied to economic development zones to be newly established.

According to the law, an economic development zone is the area where investors receive preferential treatment in their economic activities in line with the legislation specially laid down by the state. Such a zone includes industrial, agricultural, tourist, exports processing and cutting-edge technology development areas. It is a principle to establish such a zone in the area which is favourable for external economic cooperation and exchange, conducive to the development of the country’s economy, science and technology and somewhat distant from residential areas and reserves.

Foreign investors may develop the zone singly or jointly and DPRK institutions and enterprises may be developers.

The zone shall be invested by foreign bodies corporate, individuals (natural persons) and economic groups and overseas Koreans.

The law defines that the investors’ rights, interests, properties and lawful profits are under protection by law. The state shall not nationalize or expropriate their properties. Should unavoidable circumstances make it necessary to expropriate or temporarily use their properties for the public good, it shall inform them of this in advance and make a full and timely compensation for this.

The personal safety of investors is also protected by law. Without legal grounds they will not be subjected to detention or arrest and their residences will not be subjected to search.

Where there are treaties concluded between the DPRK and foreign countries as regards personal safety, they shall prevail.

How is an economic development zone managed?

It is managed by the economic development zone management body under the guidance and with the assistance of the central special economic zone guidance organ and the people’s committee of a relevant province or a municipality directly under the central authority.

The management body carries out assignments given by the central organ and the people’s committee including the formulation of rules of the development and management of the zone, creation of investment environment and invitation of investment, licensing of the establishment of enterprise and its registration and the licensing, supervision and cooperation related to the construction, management and operation of project.

The law stipulates that an investor can lease land for a maximum of 50 years and, if need be, continue to use the land by renewing the contract before the expiry date.

The enterprise income tax rate shall be 14 per cent of settled accounts profits and that in encouraged sectors 10 per cent, a very low rate. An enterprise that operates in the zone for over ten years shall enjoy the benefit of exemption from or reduction of taxes. Where an investor reinvests profits to increase registered capital or sets up a new enterprise to operate it for over five years, he shall be paid back 50 per cent or 100 per cent of the income tax.

Tariff in the zone is preferential.

The prices of goods and services dealt between enterprises in the zone and those of goods dealt between the enterprises in the zone and the Korean economic organizations outside the zone shall be fixed by mutual consent between the parties proportionate to international market prices.

UPDATE 2 (2013-6-24): The Institute for Far Eastern Studies (IFES) offers information on the new law:

North Korea passes economic development zone law
Institute for Far Eastern Studies (IFES)
2013-6-14

Since the start of Kim Jong-un regime, internal economic management measures continue to be established. Recently, a new law was enacted for the establishment of economic development zones.

The KCNA reported on June 5 that a law for economic development zones was adopted and “in this regard, ordinance of the DPRK Supreme People’s Assembly’s Standing Committee was promulgated at the session on May 29.”

This legislation is a follow up to the decision reached on April 1 this year by the Supreme People’s Assembly for the creation of economic development zones.

The legislation is composed of 7 chapters and 62 sections, which cover matters such as configuration, development, management, conflict resolution, and so forth.

The report added that “Economic development zones, in accordance with the regulations set forth by the state, are entitled to various privileges as special economic zones.”

In addition, “Foreign corporations, individuals, economic organizations, and overseas Koreans are able to invest in the economic development zones, and can freely engage in economic activities including establishment of businesses, branches, and offices.” It also indicated that “the state will provide preferential terms to investors in areas such as land usages, recruitment, and tax payments.”

The details of the rights granted to investors were expounded, emphasizing that economic development zone is a special zone, and provides legal safeguards to protect the rights, investment properties and legitimate profits of foreign investors.

According to the KCNA, the economic development zones will include various economic and science and technology sectors such as industrial development, agricultural, tourism, export processing, and high-tech development zones.

Chairman Kim Jong-un delivered a speech at the WPK’s Central Committee Meeting entitled “Economic Development Zones Must Be Created in Every Province Reflecting the Regional Characteristics,” hinting at the state’s policy to attract more foreign investment to accelerate the development of the economic zones.

In particular, investments in infrastructure construction, state-of-the-art science and technology sector, and production of goods highly competitive in the international market were especially encouraged.

The management of these economic development zones will be separated into local-level and central-level zones, indicating that economic development zones will be established in all parts of the country.

However, this law does not apply to the preexisting economic and trade zones in Rason, Hwanggeumpyeong, Wihwa Island, Kumgang and Kaesong. The new legislation indicates that North Korea is committed to economic development regardless of the tense relations on the Korean Peninsula.

UPDATE 1 (2013-6-23): Yonhap offers new details of the legislation not published by KCNA:

North Korea will offer a maximum 50 year lease on land for the economic development zones it wants to set up across the country to spur outside investment, an analysis of a propaganda magazine monitored in Seoul showed Sunday.

Close examination of the May 29 edition of the Tongil Sinbo, a weekly magazine that highlights activities taking place in the isolationist country, revealed the lease system.

The 50-year scheme for development zones is on par with land lease favors offered by Pyongyang to businesses operating in the Kaesong Industrial Complex and the Rason Economic and Trade Zone. The plan can offer assurances to investors, which can be a critical incentive.

Kaesong is on the west coast just north of the demilitarized zone, while Rason is located in the country’s northeastern region near the border with China and Russia.

In addition, the weekly said companies will be able to freely buy and sell rights on buildings and land in the economic zones and even hand over property deeds with a clause being fixed that can allow the present rights holder to release it to a third party.

Development of land leased can be assisted by North Korean state organizations and companies.

The weekly said Pyongyang has set corporate tax rates for these zones at 14 percent of earnings after the settlement of accounts, with the government pledging the safety of all foreigners in the special zones under North Korean law.

In regards to where the development zones will be set up, the weekly said the North will give priority to areas that can trade easily with the outside world, a region that can contribute to the advancement of the national economy, and a location that is separate from local residences.

The report said that all authority for the new development zones will be given to a centralized economic oversight organization to make it easier for investors to talk to authorities and receive administrative assistance.

Read the full story here:
N. Korea to offer max 50 years lease on land in economic development zones
Yonhap (via Global Post)
2013-6-23

ORIGINAL POST (2013-6-5): According to KCNA (2013-6-5):

DPRK Law on Economic Development Zones Enacted

Pyongyang, June 5 (KCNA) — The DPRK enacted a law on economic development zones.

A decree on the law was promulgated by the Presidium of the Supreme People’s Assembly of the DPRK on May 29.

The law has seven chapters (62 articles) and additional rules (two articles).

The law deals with fundamentals of the law, establishment, development and management of economic development zones, economic transactions in the zones, their encouragement, preference and settlement of complaints and disputes.

According to the law, economic development zones are special economic zones in which preference is granted as for economic activities under the laws and regulations specially provided for by the state.

The economic development zones include industrial development zone, agricultural development zone, tourism development zone, exports processing zone, ultra-modern technological development zone and other development zones in the fields of the economy and science and technology.

The state will assort the economic development zones into local-level economic development zones and central-level economic development zones and manage them according to their affiliations.

Foreign corporate bodies, individuals and economic organizations and overseas Koreans can invest in the economic development zones and also set up businesses, branches and offices and conduct free economic activities.

The state shall provide investors with conditions for preferential economic activities regarding the use of land, employment of labor, payment of taxes, etc.

The state shall specially encourage investment in the fields of infrastructural construction and ultra-modern science and technology and in the field producing goods with high competitiveness in international market in the economic development zones.

Rights granted to investors and investment properties and legal income are protected by law in the zones.

The law on economic development zones and regulations and rules for its enforcement will be applied as for economic activities like development and management of the economic development zones and the operation of businesses.

This law is not applied to the Rason Economic and Trade Zone, Hwanggumphyong and Wihwado economic zones, Kaesong Industrial Zone and Mt. Kumgang Tourist Special Zone.

Here is the Korean version of the article from KCNA (2013-6-5):

경제개발구법 채택

(평양 6월 5일발 조선중앙통신)조선에서 경제개발구법이 채택되였다.

이와 관련한 조선민주주의인민공화국 최고인민회의 상임위원회 정령이 5월 29일에 발표되였다.

법은 7개의 장(62개조)과 부칙(2개조)으로 구성되여있다.

경제개발구법의 기본, 경제개발구의 창설, 개발, 관리와 경제개발구에서의 경제활동, 장려 및 특혜, 신소 및 분쟁해결에 대해 서술되여있다.

법에 의하면 경제개발구는 국가가 특별히 정한 법규에 따라 경제활동에 특혜가 보장되는 특수경제지대이다.

경제개발구에는 공업개발구, 농업개발구, 관광개발구, 수출가공구, 첨단기술개발구 같은 경제 및 과학기술분야의 개발구들이 속한다.

국가는 경제개발구를 관리소속에 따라 지방급경제개발구와 중앙급경제개발구로 구분하여 관리하도록 한다.

다른 나라의 법인, 개인과 경제조직, 해외동포는 경제개발구에 투자할수 있으며 기업, 지사, 사무소 같은것을 설립하고 경제활동을 자유롭게 할수 있다.

국가는 투자가에게 토지리용, 로력채용, 세금납부 같은 분야에서 특혜적인 경제활동조건을 보장한다.

경제개발구에서 하부구조건설부문과 첨단과학기술부문, 국제시장에서 경쟁력이 높은 상품을 생산하는 부문의 투자를 특별히 장려한다.

경제개발구에서 투자가에게 부여된 권리, 투자재산과 합법적인 소득은 법적보호를 받는다.

경제개발구의 개발과 관리, 기업운영같은 경제활동에는 이 법과 이 법에 따르는 시행규정, 세칙을 적용한다.

라선경제무역지대와 황금평, 위화도경제지대, 개성공업지구와 금강산국제관광특구에는 이 법을 적용하지 않는다.

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Premier Pak Pong-ju attends the first extended cabinet meeting

Friday, May 3rd, 2013

Institute for Far Eastern Studies (IFES)
2013-5-3

On April 22, for the first time since Premier Pak Pong Ju took office as the new Premier of the DPRK Cabinet, North Korea held an extended cabinet plenary meeting. Cabinet members discussed a variety of topics including the economy, enhancing nuclear capability for military purposes, advancing the party line, the results of the National Light Industry Convention, the first quarter assessment of the People’s Economic Development Plan, and adjustments to be made to the People’s Economic Development Plan during the second quarter.

The meeting has spurred interest in what economic breakthroughs will be made under Premier Pak’s direction. While this was only the first extended meeting held since Premier Pak became premier, there appeared to be no fundamental changes in the party line. The results from the last Politburo extended meeting regarding the National Light Industry Convention and the advancement of the party line in the areas of economics and the nuclear program were mirrored in the cabinet meeting. At the meeting, cabinet members emphasized groundbreaking measures that would contribute to improving the lives of the North Korean people.

At the Light Industry Convention, Kim Jong Un ordered for the normalization of operations of factories that produce consumer goods. As Pak was the official in charge, it is likely that he demanded for specific plans to stabilize production.

At the extended cabinet meeting, measures in response to the international sanctions against the country were also discussed. The KCNA reported the results of the meeting: “Foreign economic business must be strengthened to destroy the blockade of the US imperialists and their followers and put forth tasks and measures to explore favorable conditions to become an economic powerhouse.”

In order to avoid the sanctions of the international community, North Korea must continue foreign trade with China and other countries, as covertly as possible.

With respect to the contents of the meeting, Minju Choson, the state-run North Korean government newspaper, reported that “specific plans were discussed to expand the fuel production and restart Yongbyon GMR (graphite moderated reactor), and educational programs for nuclear experts.” In addition, plans for the development of practical and communications satellite were established and reaffirmed in order to continue the launch of long-range ballistic missiles.

North Korea’s long-range missiles, restart of the Yongbyon nuclear facility, and uranium exploration are under the control of the Second Economic Commission, military defense (military economy affairs), not the Cabinet. The Second Economic Committeeis the central coordinating body of the DPRK’s military-defense industry. Yet, the cabinet declared its decision to continue nuclear and missile launches at the cabinet meeting. This would suggest that the cabinet is supportive of Kim Jong Un’s “byungjin line,” or policy of pushing forwarding economic construction and the building of a nuclear force.

Expectations that cabinet reform would be mentioned did not come to fruition. There is a probability that Premier Pak is preparing to implement in earnest the ‘6-28 Economic Management Improvement Policy’ which has been in the works internally since last year.

North Korean leader Kim Jong Un, since delivering the New Year’s Address last January, has promoted Premier Pak as the leader most qualified to execute plans to make North Korea an economic power. However, it is unclear whether Premier Pak will be able to meet such a challenge given the limited reforms in progress and the deterioration of the external situation. On the other hand, Premier Pak chose a cooperative farm for his first site visit which suggests that the North Korean cabinet may concentrate on agricultural sector this year.

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