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.
On March 31, KCNA reported on the recent plenary meeting of the Korean Worker’s Party:
The historic March, 2013 plenary meeting of the Central Committee of the Workers’ Party of Korea took place at the building of the WPK Central Committee, supreme staff of the Korean revolution, on Sunday.
First Secretary of the WPK Kim Jong Un guided the meeting.
Present at the meeting were members and alternate members of the WPK Central Committee and members of the Central Auditing Commission of the WPK.
Present there as observers were senior officials of ministries, national institutions, provincial, city and county committees of the WPK, complexes, major munitions factories and enterprises.
The participants paid silent tribute to President Kim Il Sung and leader Kim Jong Il.
Taken up for discussion at the meeting were the following agenda items “1. On tasks of our Party on bringing about a decisive turn in accomplishing revolutionary cause of Juche as required by the present situation and the developing revolution”, “2. On personnel affairs issue to be submitted to the 7th Session of the 12th Supreme People’s Assembly” and “3. On organizational matter”.
Kim Jong Un made a report and concluding speech on the first agenda item.
The plenary meeting set forth a new strategic line on carrying out economic construction and building nuclear armed forces simultaneously under the prevailing situation and to meet the legitimate requirement of the developing revolution.
This line is a brilliant succession and development onto a new higher stage of the original line of simultaneously developing economy and national defence that was set forth and had been fully embodied by the great Generalissimos.
It was stressed at the meeting that the party’s new line is not a temporary countermeasure for coping with the rapidly changing situation but a strategic line to be always held fast to, in the supreme interests of the Korean revolution.
The nuclear weapons of Songun Korea are not goods for getting U.S. dollars and they are neither a political bargaining chip nor a thing for economic dealings to be presented to the place of dialogue or be put on the table of negotiations aimed at forcing the DPRK to disarm itself.
The DPRK’s nuclear armed forces represent the nation’s life which can never be abandoned as long as the imperialists and nuclear threats exist on earth. They are a treasure of a reunified country which can never be traded with billions of dollars.
Only when the nuclear shield for self-defence is held fast, will it be possible to shatter the U.S. imperialists’ ambition for annexing the Korean Peninsula by force and making the Korean people modern slaves, firmly defend our ideology, social system and all other socialist treasures won at the cost of blood and safeguard the nation’s right to existence and its time-honored history and brilliant culture.
When the party’s new line is thoroughly carried out, the DPRK will emerge as a great political, military and socialist economic power and a highly-civilized country which steers the era of independence.
The meeting set forth tasks for carrying out the new line and ways for doing so.
All the officials, party members and other people should wage bold offensive and all-people decisive battle with faith in sure victory and strong determination and thus make the flame of miracle and innovation sweep all fields of national economy.
The pilot fields of the national economy, the basic industrial fields should be drastically developed and production be increased to the maximum. Forces should be directed to agriculture and light industry, key fields in building an economic power to improve and put on a stable basis the people’s living standard at the earliest possible date.
The self-reliant nuclear power industry should be developed and the work for developing light water reactor be dynamically promoted to actively contribute to easing the strain on the electricity problem of the country.
Spurs should be given to the development of space science and technology and more advanced satellites including communications satellites be developed and launched.
The country’s economy should be shifted into knowledge-based economy and the foreign trade be made multilateral and diversified and investment be widely introduced.
The economic guidance shall be fundamentally improved as required by the new situation and Korean-style advantageous economic management methods be completed by embodying the Juche idea.
The DPRK’s possession of nukes should be fixed by law and the nuclear armed forces should be expanded and beefed up qualitatively and quantitatively until the denuclearization of the world is realized.
The People’s Army should perfect the war method and operation in the direction of raising the pivotal role of the nuclear armed forces in all aspects concerning the war deterrence and the war strategy, and the nuclear armed forces should always round off the combat posture.
As a responsible nuclear weapons state, the DPRK will make positive efforts to prevent the nuclear proliferation, ensure peace and security in Asia and the rest of the world and realize the denuclearization of the world.
Institutions in charge of security and safeguard, judicial and prosecution and people’s security and the Korean People’s Internal Security Forces should resolutely foil the vicious moves of the imperialist reactionaries and class enemies, devotedly defend the party, social system and people and surely guarantee the new line of the party with arms and by law.
The party and working people’s organizations and power bodies should increase their militant function and role in every way in the struggle for implementing the party’s line.
The meeting entrusted the Presidium of the SPA and the Cabinet with the matters of taking legal, administrative and technical measures for implementing the tasks.
At the meeting a decision on the first agenda item “On carrying out economic construction and building nuclear armed forces simultaneously and thus bringing earlier the final victory in the cause of building a thriving socialist nation” was adopted with unanimous approval.
The second agenda item, personal affairs issue to be submitted to the 7th Session of the 12th SPA, was discussed and decided at the meeting.
The meeting also dealt with an organizational matter, its third agenda item.
Members of the Presidium of the Political Bureau of the WPK Central Committee, members and alternate members of the Political Bureau were recalled and new ones were elected to fill vacancies.
Pak Pong Ju was elected to fill a vacancy of a member of the Political Bureau of the WPK Central Committee.
Hyon Yong Chol, Kim Kyok Sik and Choe Pu Il were elected to fill vacancies of alternate members of the Political Bureau of the WPK Central Committee.
Members and alternate members of the WPK Central Committee were recalled and new ones were elected to fill vacancies.
Upon authorization of Kim Jong Un, Paek Kye Ryong was appointed as director of the Light Industrial Department of the WPK Central Committee and Yun U Chol as editor-in-chief of Rodong Sinmun, organ of the WPK Central Committee.
Members of the Central Auditing Commission of the WPK were also recalled and new ones were elected to fill vacancies.
Central Committee of the Workers’ Party of Korea Stresses Development of Agricultural, Light, and Nuclear Industries
Institute for Far Eastern Studies (IFES)
The Korean Central News Agency (KCNA) reported on March 31 that a plenary meeting of the Central Committee of the ruling Workers’ Party of Korea was held. At the meeting, a new strategic line was announced to have been set, which called for building a stronger economy and nuclear arsenal. This meeting is drawing attention as it is suspected that Pyongyang will pursue a new economic policy.
The news described the new strategic line as, “most revolutionary and people oriented policy for the construction of a powerful socialist nation by consolidating defense capacity through development of defensive nuclear weapons and economic construction.”
It stressed that this policy is significant as a “creative and parallel policy for defense and economy continuing the policies of Kim Il Sung and Kim Jong Il, which must be adopted as a permanent strategy.”
At the plenary meeting, the main agendas for the parallel policy of economy and defense were announced as: 1) Improvement of the production of people’s economy and capacity enhancement for agricultural and light industries to stabilize prices to improve the lives of the people; 2) development of self-reliant nuclear power industry and light water reactors; 3) development and launch of more satellites including communication satellites through advancement in space science and technology; 4) transition to knowledge economy and diversification of foreign trade to vitalize foreign investments; and 5) establish legislation to be recognized as a nuclear state and develop nuclear arsenal both in quantity and quality until denuclearization is realized worldwide.
At the plenary, the new parallel policy was commended, “The supremacy of the policy is demonstrated by expanding capability in war deterrence and national defense without increasing defense budget and enabled concentration on economic development and improvement of the lives of the people.”
The statement released by the KCNA stated that the plenary meeting’s emphasis on transition to knowledge economy and diversification of foreign trade as the main tasks and appears to be pursuing a “fundamental improvement in economic leadership.”
In addition, the plenary assigned the presidium of the Supreme Peoples’ Assembly and the Cabinet to serve as the economic control tower to oversee the future projects decided at the plenary meeting.
North Korea is continuing to place emphasis on light and agricultural industries. The Kim Jong Un regime entered its second year. The leader was reported to have attended the light industry conference, which was held for the first time in ten years and underscored the importance of concentrating on development of the capacity of light industry.
The new Korean line, 병진 (Pyongjin, Byungjin) is the simultaneous development of nuclear weapons and the economy. Learn more about it here.
Following the central committee plenary meeting, the 7th Session of the 12th Supreme People’s Assembly was held. According to KCNA:
The Seventh Session of the 12th Supreme People’s Assembly (SPA) of the DPRK took place at the Mansudae Assembly Hall Monday.
Kim Jong Un, first secretary of the Workers’ Party of Korea, first chairman of the National Defence Commission of the DPRK and supreme commander of the Korean People’s Army, was present at the session.
Present there were deputies to the SPA.
Also present there as observers were officials of party, armed forces and power bodies, public organizations, ministries and national institutions and those in the fields of science, education, literature and art, public health and media.
All the participants observed a moment’s silence in memory of President Kim Il Sung and leader Kim Jong Il in humblest reverence.
The session decided the following agenda items of the Seventh Session of the 12th SPA of the DPRK:
1. On amending and supplementing some contents of the Socialist Constitution of the DPRK
2. On adopting the DPRK Law on the Kumsusan Palace of the Sun
3. On adopting the ordinance of the SPA of the DPRK “On Consolidating the Position of Nuclear Weapons State for Self-Defence”
4. On adopting the DPRK Law on Developing Space
5. On adopting the decision of the SPA of the DPRK “On Setting up the DPRK State Space Development Bureau”
6. On the work of the DPRK Cabinet for Juche 101 (2012) and its tasks for Juche 102 (2013)
7. On the review of the fulfillment of the DPRK’s state budget for Juche 101 (2012) and state budget for Juche 102 (2013)
8. Organizational matter
The session discussed the first and second agenda items.
Deputy Kim Yong Nam, president of the Presidium of the DPRK SPA, made a report on amendment and supplement to some contents of the Socialist Constitution of the DPRK and on adopting the law on the Kumsusan Palace of the Sun.
Then followed speeches on the first and second agenda items.
Deputy Kim Ki Nam, secretary of the WPK Central Committee, spoke on behalf of the WPK, Deputy Choe Ryong Hae, director of the General Political Bureau of the KPA, on behalf of the KPA and Deputy Jon Yong Nam, chairman of the C.C., the Kim Il Sung Socialist Youth League, on behalf of the youth.
The speakers fully supported and approved of deliberation and adoption of the draft amendment and supplement to the Socialist Constitution of the DPRK and the law on the Kumsusan Palace of the Sun at the current SPA session reflecting the unanimous feelings of all party members, service personnel and youth across the country.
The ordinances of the SPA of the DPRK “On Amending and Supplementing Some Contents of the Socialist Constitution of the DPRK” and “On Adopting the DPRK Law on the Kumsusan Palace of the Sun” were adopted at the session with the approval of all deputies.
The session discussed the third, fourth and fifth agenda items.
The ordinances of the SPA of the DPRK “On Consolidating the Position of Nuclear Weapons State for Self-Defence” and “On Adopting the DPRK Law on Developing Space” and the decision of the SPA of the DPRK “On Setting Up the DPRK State Space Development Bureau” were adopted at the session with the approval of all deputies.
Deputy Choe Yong Rim, premier of the Cabinet, made a report on the sixth agenda item.
Deputy Choe Kwang Jin, minister of Finance, made a report on the seventh agenda item.
Then followed speeches on the sixth and seventh agenda items. Written speeches were presented at the session.
The speakers noted that the Cabinet work and the fulfillment of the state budget for last year were correctly reviewed and summed up, clear tasks of the Cabinet were set forth to meet the requirements of the general offensive to open an epochal phase in building an economic power at the final stage of the all-out action against the U.S. and the state budget was correctly shaped. They expressed full support and approval of them.
They expressed their determination to reenergize the overall economy of the country, step up the grand advance for improving the standard of people’s living to make loud shouts of hurrah for the Workers’ Party and socialism heard this year marking the 65th anniversary of the DPRK and the 60th anniversary of the victory in the Fatherland Liberation War, true to the historic New Year Address of Kim Jong Un and the decision of the March, 2013 plenary meeting of the WPK Central Committee.
The decision of the SPA of the DPRK “On Approval of the Report on the Work of the DPRK Cabinet and the Review of the Fulfillment of the State Budget for Juche 101 (2012)” and the ordinance of the SPA of the DPRK “On the DPRK’s State Budget for Juche 102 (2013)” were adopted at the session with the approval of all deputies.
The session discussed the organizational matter.
At the session Deputy Choe Yong Rim was recalled from the post of premier of the DPRK Cabinet and Deputy Pak Pong Ju was elected premier of the DPRK Cabinet at the proposal of the WPK Central Committee.
Choe Yong Rim was elected honorary vice-president of the Presidium of the DPRK SPA.
Deputies Kim Jong Gak and Ri Myong Su were recalled from the posts of member of the DPRK National Defence Commission (NDC) due to the transfer to other jobs.
Deputies Kim Kyok Sik and Choe Pu Il were elected members of the DPRK NDC to fill vacancies at the proposal of the WPK Central Committee and the WPK Central Military Commission.
Deputy Thae Hyong Chol was recalled from the post of secretary general of the Presidium of the DPRK SPA and Deputy Hong Son Ok was elected secretary general of the Presidium of the DPRK SPA.
Some members of the Cabinet were relieved of their posts and appointed at the session.
Deputy Pak Pong Ju, premier of the DPRK Cabinet, took an oath at the SPA.
KCNA also issued several reports that stemmed from the SPA meeting:
Report on Adopting Draft Amendment and Supplement to Socialist Constitution and Law on Kumsusan Palace of Sun
Pyongyang, April 1 (KCNA) — Kim Yong Nam, president of the Presidium of the Supreme People’s Assembly, made a report on adopting the draft amendment and supplement to the Socialist Constitution of the DPRK and the law on the Kumsusan Palace of the Sun.
According to the report, the draft amendment and supplement to the Socialist Constitution and the law on the Kumsusan Palace of the Sun to be submitted to the session for discussion will legalize the plan and intention of the Workers’ Party of Korea to fix by law the shining achievements made in accomplishing the cause of perpetuating the memory of the leaders and complete it on a new higher stage.
To be supplemented to the preface of the Socialist Constitution is the sentence which says that the Kumsusan Palace of the Sun where President Kim Il Sung and leader Kim Jong Il lie in state is a grand edifice for the immortality of the leaders, a symbol of the dignity of the whole Korean nation and its eternal sacred temple.
The law on the Kumsusan Palace of the Sun specifies that its noble mission is to preserve and glorify forever the palace, which is the supreme temple of Juche, as the eternal temple of the sun of the entire Korean nation.
The law stipulates that Kim Il Sung and Kim Jong Il will be held in high esteem forever as in their lifetime at the Kumsusan Palace of the Sun and that it is the obligation of all the Koreans to regard the Palace as a symbol of dignity and a great pride of the nation.
It also specifies the state duty to spruce up the Palace in a sublime and perfect way with the state, all-people and nationwide efforts and devotedly safeguard the Palace in every way so that no one can violate.
Also stipulated in the law are matters for carrying out the work of eternally preserving the Palace as the most important state work with consistency, organizing the committee for the eternal preservation of the Palace and preserving for photos, train coaches, cars, boat and other relics and orders which represent the noble lives of the great Generalissimos.
Orders were also set so that Korean people, overseas Koreans and foreigners can pay respects to the great Generalissimos at the Kumsusan Palace of the Sun.
Also mentioned in the law are the matters of establishment of special sanctuary of the Palace for its protection and management as well as the management of buildings in the premise of the palace, park, arboretum, outdoor lighting and lighting facilities and orders concerning the operation of the plaza and the park of the Palace.
It was specified in the law that electricity, facilities, materials and other supplies needed for the Palace shall be planned separately and be provided without fail on a top priority basis. The law also set the duty to be fulfilled by relevant institutions to strictly supervise and control on a regular basis the work for safeguarding, eternally preserving and providing the conditions for the management and operation of the Palace.
The reporter said that the law on the Kumsusan Palace of the Sun is the unique code for the immortality of the leaders, adding that it is the biggest honor for the army and people of the DPRK to have the legal weapon for the immortality of the leaders.
The adoption of the law will serve as a historic occasion for defending and further glorifying the idea on perpetuating the memory of the leaders clarified by the dear respected Kim Jong Un, he stressed.
The reporter said that the Presidium of the Supreme People’s Assembly of the DPRK submits the draft amendment and supplement to the Socialist Constitution and the draft law on the Kumsusan Palace of the Sun to the SPA session for discussion according to Article 95 of the Socialist Constitution.
DPRK’s Law on Kumsusan Palace of Sun Adopted
Pyongyang, April 1 (KCNA) — The DPRK’s Law on the Kumsusan Palace of the Sun was adopted.
The ordinance of the DPRK Supreme People’s Assembly on it was promulgated Monday.
The Kumsusan Palace of the Sun where President Kim Il Sung and leader Kim Jong Il lie in state is the
eternal temple of the sun of the whole Korean nation.
The ordinance says that the SPA decides to adopt this law to eternally preserve and glorify forever the
Kumsusan Palace of the Sun as a grand edifice for the immortality of the leaders symbolic of Kim Il Sung’s and Kim Jong Il’s Korea.
Law on Consolidating Position of Nuclear Weapons State Adopted
Pyongyang, April 1 (KCNA) — A law on consolidating the position of nuclear weapons state for self-defence was adopted in the DPRK.
An ordinance of the Supreme People’s Assembly of the DPRK in this regard was promulgated on Monday.
The ordinance said as follows:
The DPRK is a full-fledged nuclear weapons state capable of beating back any aggressor troops at one strike, firmly defending the socialist system and providing a sure guarantee for the happy life of the people.
Having an independent and just nuclear force, the DPRK put an end to the distress-torn history in which it was subject to outside forces’ aggression and interference and could emerge a socialist power of Juche which no one dares provoke.
The Supreme People’s Assembly of the DPRK decides to consolidate the position of the nuclear weapons state as follows:
1. The nuclear weapons of the DPRK are just means for defence as it was compelled to have access to them to cope with the ever-escalating hostile policy of the U.S. and nuclear threat.
2. They serve the purpose of deterring and repelling the aggression and attack of the enemy against the DPRK and dealing deadly retaliatory blows at the strongholds of aggression until the world is denuclearized.
3. The DPRK shall take practical steps to bolster up the nuclear deterrence and nuclear retaliatory strike power both in quality and quantity to cope with the gravity of the escalating danger of the hostile forces’ aggression and attack.
4. The nuclear weapons of the DPRK can be used only by a final order of the Supreme Commander of the Korean People’s Army to repel invasion or attack from a hostile nuclear weapons state and make retaliatory strikes.
5. The DPRK shall neither use nukes against the non-nuclear states nor threaten them with those weapons unless they join a hostile nuclear weapons state in its invasion and attack on the DPRK.
6. The DPRK shall strictly observe the rules on safekeeping and management of nukes and ensuring the stability of nuclear tests.
7. The DPRK shall establish a mechanism and order for their safekeeping and management so that nukes and their technology, weapon-grade nuclear substance may not leak out illegally.
8. The DPRK shall cooperate in the international efforts for nuclear non-proliferation and safe management of nuclear substance on the principle of mutual respect and equality, depending on the improvement of relations with hostile nuclear weapons states.
9. The DPRK shall strive hard to defuse the danger of a nuclear war and finally build a world without nukes and fully support the international efforts for nuclear disarmament against nuclear arms race.
10. The related institutions shall take thorough practical steps for implementing this ordinance.
DPRK Law on Developing Space Adopted
Pyongyang, April 1 (KCNA) — The Law on Developing Space was adopted in the DPRK.
The ordinance of the DPRK Supreme People’s Assembly on it was promulgated Monday.
DPRK SPA Decides to Set Up State Space Development Bureau
Pyongyang, April 1 (KCNA) — The DPRK decided to set up the State Space Development Bureau.
The decision of the Supreme People’s Assembly (SPA) of the DPRK promulgated on Monday said:
The DPRK is a full-fledged satellite manufacturer and launcher.
It is an invariable stand of the DPRK to develop the country into a world-class space power by exercising its legitimate right to space development for peaceful purposes.
To step up economic construction and improve the people’s standard of living by radically developing the space science and technology of the country and guide and manage all the space activities of the DPRK in a uniform way, the SPA decides as follows:
1. The DPRK State Space Development Bureau shall be set up.
2. The bureau is a state central institution which guides and manages the supervision and control over the working out of a space development program and its implementation and space development work in a uniform way.
3. The Cabinet of the DPRK and other institutions concerned shall take practical measures to implement this decision.
Work of Cabinet for Last Year and Tasks for This Year
Pyongyang, April 1 (KCNA) — At the 7th Session of the 12th Supreme People’s Assembly held on Monday, Deputy and Premier Choe Yong Rim made a report on the last year’s work of the DPRK Cabinet and this year’s tasks.
According to the report, last year electricity and coal production and the volume of railway freight transport increased amid the endeavors to shore up the four pilot fields of the national economy. Increase was also made in the production of a variety of industrial goods, the report said, and went on:
The Kumsusan Palace of the Sun was remodeled to be the supreme temple of Juche, the National Gifts Exhibition House, Pyongyang Folklore Park, Changjon Street, Rungna People’s Pleasure Park and other big edifices in the era of Songun have been built.
Big industrial projects such as the Huichon Power Station, Tanchon Port, Taedonggang Building Materials Factory were completed and technological updating and modernization of major factories and enterprises in the field of metal, machine, chemical and light industries have been pushed forward, consolidating the material and technological foundation of the national economy.
Satellite Kwangmyongsong 3-2 was successfully manufactured and launched and the third underground nuclear test by the use of smaller and lighter A-bomb of great explosive power was successfully conducted.
The bases for the production of cutting-edge technical goods were built and projects for the development of science and technology have been successfully carried out and the modernization of the information and communications field have been stepped up.
A law on the enforcement of the universal 12-year compulsory education was promulgated. This paved a wide avenue for consolidating the socialist education system and raising the quality of education.
In the field of health care, a telemedicine service has been successfully introduced. The DPRK’s players glorified the honor of the country at major international sports events including the 30th Olympic Games and other signal achievements were made in the field of cultural construction.
The reporter said that this year’s tasks are to realize at an early date the lifetime desire of President Kim Il Sung and leader Kim Jong Il, who devoted their whole lives to putting the country’s economy on the level of a prosperous and powerful country and to making the people live with no more to desire in the world.
According to the report, this year the Cabinet will organize the economic work with a main emphasis on solving issues arising in the people’s living by shoring up the pilot fields, the basic industrial field, consolidating the springboard for building an economic power and concentrating all efforts on agriculture and light industry while regarding coal industry and metal industry as key fields.
It is necessary to increase the production of coal.
Technological updating and modernization of iron works and steel works will be stepped up while improving the bases for the production of Juche iron which have already been built in the field of metal industry. Strict measures for supplying raw materials and fuel should be taken to increase the production of rolled steel more than 3.5 times as compared with last year and thus meet the need for steel.
The field of railway transport will ease strain on transport by consolidating the material and technical foundation of railways.
The grain production plan for this year should be carried out without condition.
The whole country should make efforts for the reclamation of Sepho Tideland and the construction of stock-breeding bases and thus complete the creation of grassland within this year.
The production should be put at a high rate at major chemical factories and the percentage of locally available raw materials should be significantly increased. The production at mines, factories and enterprises in Tanchon area should be increased and exports be boosted to ensure in a responsible manner funds for improving the people’s living standard.
Big efforts should be directed to the construction of dwelling houses. Wonsan area should turn into a world-level resort and tourist destination and living environment and conditions be improved in provinces, cities and counties.
The state investment in the field of science and technology should be increased and the flame of industrial revolution in the new century be raised so as to bring about a decisive turn in building an economic power by dint of science and technology.
Ultra-modern technological goods of high competitiveness should be massively researched and developed. Scientific and technological issues arising in the technological updating and modernization of the national economy should be satisfactorily solved.
The state investment will be increased in education and the preparations for enforcing the universal 12-year compulsory education system be rounded off within this year and fresh progress be made in education, public health, literature, arts, sports and all other fields of cultural construction.
All the fields and units of the national economy should build under a long-term plan export bases for producing second-stage and third-stage processed goods and finished goods of high competitiveness at international markets by relying on locally available resources and indigenous technology. Latest scientific and technological achievements should be positively introduced to increase the varieties of exports and remarkably raise their quality.
Trade should be made diversified and multilateral while conducting a variety of trade activities. The joint venture and collaboration should be actively promoted and the work for setting up economic development zones be pushed forward.
Review of Fulfillment of State Budget for Last Year and State Budget for This Year
Pyongyang, April 1 (KCNA) — Deputy Choe Kwang Jin, minister of Finance, made a report on the review of the fulfillment of state budget for last year and the state budget for this year at the 7th Session of the 12th Supreme People’s Assembly held on Monday.
According to the report, the state budgetary revenue last year was over-fulfilled by 1.3 percent, an increase of 10.1 percent over the previous year.
The plan for local budgetary revenue was carried out at 113.8 percent.
The state budgetary expenditure was implemented at 99.6 percent, an increase of 9.7 percent over that in the previous year.
44.8 percent of the total state budgetary expenditure for the economic development and improvement of people’s living standard was used for funding the building of edifices to be presented to the 100th birth anniversary of President Kim Il Sung, the consolidation of the material and technological foundation of Juche-based, modern and self-supporting economy and the work for face-lifting the country.
38.9 percent of total expenditure was spent for enforcing popular policies and measures for social culture under socialism such as the universal free compulsory education system, free healthcare, social insurance and social security, recuperation and relaxation systems as well as those for development of literature and art and building of a sports power.
Some of the total state budgetary expenditure went to national defence.
According to the report, this year’s state budgetary revenue and expenditure have been shaped in such a way as keeping the overall economy afloat and bringing about a decisive turn in stabilizing and improving the standard of people’s living.
The state budgetary revenue is expected to increase 4.1 percent over that last year.
Out of this, the transaction tax, main source of budgetary revenue, is expected to grow 3.5 percent, the revenue from the profits of state enterprises 6 percent, revenue from the profits of cooperative enterprises 5.3 percent, the revenue from the depreciation 2.8 percent and revenue from real estate rent 3.4 percent.
In the total state budgetary revenue, national budgetary revenue will account for 83 percent and local budgetary revenue 17 percent.
Provinces, cities and counties are envisaged to ensure expenditure with local import and put a huge amount of fund into national budget.
The state budgetary expenditure is expected to grow 5.9 percent over last year.
It was decided to increase expenditure in the field of coal, electricity, metal and railway transport 7.2 percent, the field of agriculture and light industry 5.1 percent, basic investment in capital construction and big overhaul 5.8 percent, the field of science and technology 6.7 percent, the field of education 6.8 percent, the field of public health 5.4 percent, the field of social insurance and security 3.7 percent, the field of sports 6.1 percent and the field of culture 2.2 percent.
Some of the total state budgetary expenditure will go for national defence.
A large amount of educational aid fund and stipends will be sent for the education of Korean children in Japan to promote the development of the democratic national education of the General Association of Korean Residents in Japan.
The reporter called for working hard to glorify this significant year marking the 65th anniversary of the DPRK and the 60th anniversary of the victory in the Fatherland Liberation War as a year of gigantic creation and innovations, in hearty response to the historic New Year Address by Kim Jong Un and the decision made at the March, 2013 plenary meeting of the WPK Central Committee.
Here is what Yonhap had to say about the DPRK’s defense budget:
North Korea is expected to spend 16 percent of its budget on national defense in 2013, up 0.2 percentage point from the year before, the country’s state media said Tuesday.
According to the Rodong Sinmun, an organ of the North’s ruling Workers’ Party, Finance Minister Choe Kwang-jin reported to a meeting of the Supreme People’s Assembly in Pyongyang on Monday that the money is needed to effectively cope with “indiscriminate” provocations by the United States and its followers.
The paper, however, did not disclose the exact size of the defense budget, although South Korea’s unification ministry speculated that last year’s military budget totaled US$910 million.
The proportion of the spending plan compared to the overall budget, is the highest tallied since 1998, according to South Korean analysts.
From 1998 through 2002, the North is estimated to have spent 14.4 percent to 14.5 percent of its annual budget on defense, with numbers going up and being fixed at 15.8 percent in the 2007-2012 period, they said.
1. Here and here is KCTV footage of the SPA meeting.
Pictured Above (Google Earth): The Mansudae Assembly Hall, meeting place of the Supreme Peoples’ Assembly. To the east of the Hall is the new Peoples’ Theater and new housing apartments along Changjon and Mansudae Streets.
A rare “second session” of the DPRK’s Supreme Peoples’ Assembly was held on September 25th. The unicameral legislature, with little de facto authority, usually holds a single meeting in April of each year. The last special “second session” was held in June 2010 (see below for more information).
This 6th session of the SPA was widely anticipated outside the DPRK because many analysts believed the country would be announcing a plethora of economic adjustment measures. See here for background. None of this was discussed publicly.
Here is KCNA coverage of the session:
Sixth Session of 12th SPA Held
Pyongyang, September 25 (KCNA) — The Sixth Session of the 12th Supreme People’s Assembly of the DPRK was held at the Mansudae Assembly Hall Tuesday.
Kim Jong Un, first secretary of the Workers’ Party of Korea, first chairman of the DPRK National Defence Commission and supreme commander of the Korean People’s Army, was present at the session.
Deputies to the SPA were present there.
Officials of party, armed forces and power bodies, public organizations, ministries and national institutions and those in the fields of science, education, literature and arts, public health and press were present as observers.
The session decided on agenda items of the session.
On Enforcing Universal 12-Year Compulsory Education
Deputy Choe Thae Bok made a report “On Enforcing Universal 12-Year Compulsory Education.”
He said that the DPRK government will enforce the universal 12-year compulsory education to drastically improve and strengthen the secondary general education and further consolidate the socialist education system to meet the requirements of the developing revolution and the times.
The new educational system is aimed at helping the younger generation round off the secondary general education by teaching them general basic knowledge and basic knowledge of modern technologies in the period of the 12-year systematic education which consists of one-year pre-school education, five-year primary school education, three-year junior middle school education and three-year senior middle school education, reporter noted.
He referred to the issues arising in successfully enforcing the new education.
Then followed speeches.
The speakers said that the enforcement of the universal 12-year compulsory education at this significant period when the new century of Kim Il Sung and Kim Jong Il’s Korea started is the firm determination and will of the WPK to steadfastly carry forward and glorify the idea and cause of Generalissimos Kim Il Sung and Kim Jong Il who devoted their all to the future of the country all their life.
The enforcement of the new education provided a sure guarantee for putting secondary general education onto a higher stage and effecting an epochal turn in the work to train able revolutionaries in keeping with the requirements for the building of a thriving nation, they noted.
Ordinance of the SPA of the DPRK “On Enforcing the Universal 12-Year Compulsory Education” was adopted at the session.
The session discussed organizational issue.
Hong In Bom, chief secretary of the South Phyongan Provincial Committee of the WPK, and Jon Yong Nam, chairman of the Central Committee of the Kim Il Sung Socialist Youth League, were elected members of the SPA Presidium to fill the vacancies.
Choe Hui Jong was recalled from the post of chairman of the Budget Committee of the SPA and Kwak Pom Gi elected chairman of the budget committee.
Issues Concerning Enforcement of Universal 12-year Compulsory Education Discussed at SPA Session
Pyongyang, September 25 (KCNA) — Deputy Choe Thae Bok made a report on enforcing the universal 12-year compulsory education at the sixth session of the 12th Supreme People’s Assembly of the DPRK held on Tuesday.
According to the report, the DPRK government will enforce the universal 12-year compulsory education to drastically improve and strengthen the secondary general education and further consolidate the socialist education system to meet the requirements of the developing revolution and the times.
The universal 12-year compulsory education represents the development of the universal 11-year compulsory education that has been enforced by the DPRK government, and a new higher stage of the secondary general education.
The new education system is aimed at helping the younger generation round off the secondary general education by teaching them general basic knowledge and basic knowledge of modern technologies in the period of the 12-year systematic education which consists of one-year pre-school education, five-year primary school education, three-year junior middle school education and three-year senior middle school education.
The reporter said that the enforcement of the universal 12-year compulsory education is a huge task to be carried out as a nationwide movement with the involvement of whole society. He elaborated on it.
The order and phases for the enforcement of the system shall be fixed properly and be thoroughly carried out, he said.
An important task for enforcing the universal 12-year compulsory education is to properly shape the educational contents and improve the methods of education, he added.
He called for stepping up the work for improving the curricula which constitute a basis in arranging the educational contents, and confirming the general goal of the secondary general education, goals of the courses of study and the scope and level of educational contents. He also underscored the need to write and publish necessary textbooks at an early date.
He also underlined the need to strengthen education in computer technology and foreign languages with a main emphasis on the education in general basic knowledge in the field of basic sciences including mathematics, physics, chemistry and biology.
He also called for kicking off an intensive drive for creating new and substantial educational methods and generalizing them as well as actively introducing test methods for correctly assessing the abilities of students.
All the schools should carry out the positive drive to put the teaching, experiments and practical training on an IT basis, computerize the educational administration and management and establish information communications network between the education committee and educational institutions across the country so that teachers and students can receive information necessary for the education in time, the reporter noted.
He also called for successfully building up in a substantial way the ranks of teachers who are directly responsible for education and drastically raising their levels and roles.
Increased state investment in the educational field and provision of educational conditions are a sure guarantee for the successful enforcement of the universal 12-year compulsory education, he said, and continued:
The expenditure for education should be markedly increased in the state budget, and electricity, equipment and materials needed for education be provided on a preferential basis.
The role of organizations patronizing schools should be raised and the officials of all units including provincial, city and county people’s committees should pay deep attention to the education and push forward the work for the enforcement of the universal 12-year compulsory education in close combination with the model education county movement.
Educational and scientific research institutions should strengthen study for raising the quality of the universal 12-year compulsory education on the basis of a correct review and analysis of the present state of education of the country and the worldwide education trend. They should analyze and systematize scientifically and theoretically the new and advanced teaching methods and experience created in practice and generalize them.
The reporter stressed the need to step up the work for successfully enforcing the universal 12-year compulsory education true to the noble intention of the dear respected Kim Jong Un manifested in his ardent love for the younger generation and the future.
Ordinance of DPRK SPA on Enforcing Universal 12-Year Compulsory Education Promulgated
Pyongyang, September 25 (KCNA) — Ordinance of the DPRK Supreme People’s Assembly on enforcing universal 12-year compulsory education was promulgated at the sixth session of the 12th SPA held in Pyongyang Tuesday.
According to the ordinance, the DPRK government enforced the compulsory primary education in 1956, compulsory secondary education in 1958 and Korean-style unique universal 9-year compulsory technical education which closely combined secondary general education with basic technical education and education with production in 1967.
In 1972 the DPRK government introduced the universal 11-year compulsory education, the first of its kind in the world.
The enforcement of the universal 11-year education was a just measure for raising the level of free compulsory education, improving the contents of education and bringing up the new generations to be able revolutionaries and competent socialist builders intensely loyal to the party, the leader, the country and its people as required by the era and the developing revolution.
The DPRK is now demonstrating its might as a dignified military power possessed of nuclear deterrent, a country that manufactures and launches satellites. Korean-style CNC technology and flexible production system have been introduced to the different domains of the national economy and a great number of Juche-based and modern heavy and light industrial bases and grand monuments have been built. This is associated with the feats and merits of young scientists and youth who have grown up, receiving the universal 11-year compulsory education.
The Workers’ Party of Korea and the DPRK government are set to enforce the universal 12-year compulsory education reflecting the present requirements for building a prosperous socialist country in all fields now that the requirements for education have risen higher than ever before.
The enforcement of the universal 12-year compulsory education is a step reflecting the dear respected Kim Jong Un’s noble outlooks on the country, the younger generation and future and it is a great event that demonstrates before the whole world that the DPRK is dynamically advancing toward an educational power and a highly civilized socialist country.
The universal 12-year compulsory education is the most just and advantageous education for drastically raising the quality of education to meet the requirements for the development of education in the age of knowledge-based economy and the trend of the world and bringing up the younger generation to be Juche-type able revolutionaries possessed of ample secondary general knowledge, modern basic technology and creative ability.
The SPA of the DPRK discussed the issue of enforcing the universal 12-year compulsory education and made a decision.
According to the decision, the universal 12-year compulsory education shall be enforced in all areas of the DPRK.
The universal 12-year compulsory education shall be enforced free of charge and all children from 5 to 17 years are obliged to receive this education.
This education consists of one-year pre-school education and five-year primary schooling, three-year junior middle schooling and three-year senior middle schooling.
The six-year middle schooling shall be enforced from the 2013-2014 school year, divided into three-year junior middle schooling and three-year senior middle schooling.
The work for converting the four-year primary schooling to five-year primary schooling shall go through the preparatory phase to be started in the 2014-2015 school year and this shall be finished in 2-3 years.
Educational system and education of special courses of study shall be decided as separate issues.
Measures shall be taken to solve the shortage of teachers resulting from the enforcement of the universal 12-year compulsory education, raise their qualifications and improve educational methods.
State investment in education shall be increased and conditions and environment necessary for the enforcement of the universal 12-year compulsory education be created.
Administrative guidance and legal control shall be strengthened for the successful enforcement of the universal 12-year compulsory education.
Here is additional coverage of the session by various outlets:
Wu Xisheng, vice general manager of the Xiyang Group, told the Global Times Thursday that the company’s partner in North Korea was an enterprise affiliated with the Korean Workers’ Party, instead of what the country called a private entity.
Wu also said Xiyang is one of dozens of Chinese companies who have been cheated by North Korea.
Hu Chenpei, a diplomat with the business section of the Chinese embassy in Pyongyang, told the Global Times that it is “an isolated case of business disputes,” adding that both sides of the story are true.
“We have been in contact with related departments in North Korea, hoping the two sides could iron out their disputes through rational discussions,” said Hu.
However, Wu insisted that the North should repay their losses or the group will reveal further details about “how Pyongyang cheated it.”
When contacted by the Global Times, a diplomat with North Korea’s embassy in Beijing said he had never heard of the Xiyang Group and refused to comment.
The North Korean spokesperson also said his government will continue improving its investment environment to further draw international investment, and protect the legitimate rights and interests of international investors who follow the principles of mutual respect, equality and mutual benefit as well as observing laws.
Liu Ming, a researcher with the Shanghai Academy of Social Sciences, said the disputes have dealt a blow to Chinese enterprises’ confidence in North Korea.
UPDATE 4 (2012-9-5): In a Reuters article, Xiyang responds to the KCNA statement:
Xiyang told Reuters in an interview after the North’s statement that it had been “cheated” and it lambasted Beijing’s policy of propping up North Korea’s unreformed regime which it said that it was done for geo-political reasons.
“It (Xiyang) has carried out only 50 percent of its investment obligations though almost four years have passed since the contract took effect,” KCNA quoted a spokesman for North Korea’s Commission for Joint Venture and Investment as saying.
Xiyang refused to curb its criticism of North Korea when it spoke to Reuters, suggesting that Beijing was doing little to help companies that ran afoul of what it viewed as arbitrary rulings by North Korean officials.
“This isn’t just about us – it is about all companies investing in North Korea,” Wu Xisheng, vice general manager of Xiyang told Reuters.
“They just don’t have the conditions for foreigners to invest. They say they welcome investment but they don’t have the legal or social foundations.”
UPDATE 3 (2012-9-5): KCNA has issued an official comment on the xian affair:
Media Should Maintain Impartiality in Report about DPRK
Pyongyang, September 5 (KCNA) — A spokesman for the DPRK Commission for Joint Venture and Investment on September 5 issued the following statement:
The Xiyang Group of the Haicheng City, Liaoning Province of China on August 2 posted on its Internet website an article criticizing the DPRK over the disputes that cropped up between the Group and the Korean Ryongbong Corporation in the course of implementing a joint venture contract for the development of magnetite concentrated ore.
After the article was published, some media echoed it before and after the report about the results of the third meeting of the DPRK-China Guidance Committee for developing two economic zones was made public.
They added their own analyses to the article posted by the Group. They even aired what the anti-DPRK hostile forces reported in the past to malignantly slander the inviolable social system and policy of the DPRK.
Generally, it is international usage and commercial ethics to settle disputes that occurred in the course of economic relations in line with the relevant arbitration item of the contract.
But the media have kicked off massive propaganda campaign, defying international usage and commercial order. This cannot be interpreted otherwise than an act of fanning up the dishonest forces in their moves to drive a wedge between the two countries in their economic cooperation and chill the atmosphere for investment.
As far as the procedures for the signing and implementation of the contract between the DPRK Ryongbong Corporation and the Steel Co. Ltd., of the Group and the bilateral disputes are concerned, the Group is also to blame for the abrogation of the contract. In the light of the process of implementing the obligations under the contract, the Group is chiefly to blame from the legal point of view.
It has carried out only 50 percent of its investment obligations though almost four years have past since the contract took effect.
So the two contracting parties again sat together only in vain over the timeline for the completion of the first-phase investment and commissioning.
As for 16 provisions which the Group set forth as the major issue of the disputes, it is the legal obligation of the Group related to the contract to implement them according to the mutual contract in which both sides agreed on the article that “two sides sign it on the basis of the DPRK Law on Joint Venture”.
As regards the dealing of sales price of trial products, the Group insisted on its self-opinionated proposal for settling its debts within the boundary of China, in disregard of the procedures in price dealing pursuant to the relevant financial management norms.
Media should comply with the standards for fairness and objectivity, create an atmosphere helpful to settling the disputes between the two contracting parties and refrain from an act that can be misused by the hostile forces for their vicious propaganda.
We will in the future, too, improve and round off the investment environment to further expand the international investment relations to meet the demand of the developing times and the lawful requirement of the international investment relations under the condition that the security of the country is guaranteed by dint of Songun. We will also ensure the legitimate rights and interests of all investors willing to develop international investment relations on the principles of mutual respects, equality, reciprocity and law-observance.
UPDATE 2 (2012-8-17): Michael Rank sent over the photos below which the Xiyang Group published (source here). I had a Korean friend (thx Angela) look over these and give me an idea of what they say:
This appears to be the DPRK business license or registration. It claims that the Korea Ryongbong Ryonhap Company (조선령봉련합회사) and the Chinese Soyang Jipdan Corporation (중국서양집단공사사) “merged” to form the Yangbong Hapyong Company (양봉합영회사). The new firm is made up of 1,000 local employees and two foreigners. The investment terms also appear to be denominated in Euros.
This image appears to be the cover sheet to the agreement between the two firms. The cover sheet states that this agreement has been approved at the highest levels and that both firms agree to be bound by its terms.
UPDATE 1 (2012-8-15): Michael Rank has followed up on the Xiyang Group story in the Asia Times:
China likes to claim that its relations with North Korea are “as close and lips and teeth” but those teeth are infected with a poisonous abscess so far as one Chinese company is concerned.
In an extraordinary attack, a Chinese mining company has accused the North Koreans of tearing up a multi-million-dollar deal, intimidating its staff, imposing outrageous extra charges and cutting off its power and water, as well as of corruption and demanding prostitutes whenever their North Korean counterparts visited China.
“Xiyang Group’s investment in North Korea was a nightmare, and we were taking our lives in our hands when we entered the tiger’s lair,” the company says.
Xiyang Group, based in the northeastern province of Liaoning, says it was the biggest single Chinese investor in North Korea, having in 2011 signed a 240 million yuan (US$38 million) deal to form a joint venture iron mine that was to produce 500,000 tonnes of iron powder a year.
A few months after the contract was signed, the North Koreans made a series of extraordinary demands that led to the Chinese walking out in fury and to launching what must surely be the fiercest public attack they have ever made on their supposed close ally. 
The company aims much of its invective at a particular North Korean official, who, it says, is “the leader of the criminal gang who deceived Xiyang, this great plotter and fraudster …” The official, Ri Seong-kyu, was the North Korean side’s faren, or legal representative, in the deal and he is blamed for everything that went wrong.
When negotiations began in 2006 the plan was for the Chinese company to take a 75% stake in the venture, but it turned out that North Korean policy stipulated that a foreign firm could own no more than a 70% stake in a natural resources company such as a mine.
Xiyang says Ri, “violating the North Korean national investment law”, nevertheless signed a joint venture contract in which the Chinese side took a 75% stake, “forging an investment certification document in order to gain Xiyang’s confidence”.
He later told the Chinese company that the document was null and void because of the stipulation that the North Korean side must have at least a 30% stake, but Xiyang did not realise his deception until September 2011.
Xiyang says it first became interested in investing in North Korea in 2005 in response to the Chinese government’s call for Chinese companies to “venture out” and invest abroad, “but we had heard that North Koreans do not keep to their word, national laws are not strong and it is easy to be cheated, so we were extremely cautious in our investigations.”
It also notes the secrecy that pervades business dealings in North Korea, which prevented Xiyang from sending ore samples back to China for testing, but despite all this the company “took the great risk of investing”.
“North Korea’s system of doing business is [based on] government departments’ secrecy in relation to foreigners, and they do not allow foreigners to visit government departments to do business,” the online report complains.
It says there were “all kinds of unimaginable serious problems” in reaching an agreement, but after years of negotiations production finally began in April 2011. However, the North Koreans unilaterally annulled the agreement last February, when they “used violent methods” against Xiyang staff, cutting off their water, electricity and communications and smashing the windows of their living quarters.
At 2am on March 3, a group of 20 armed police and security officials led by a North Korean company official woke up the sleeping Chinese and told them the North Korean premier had annulled the deal and they were to leave the country immediately.
Ten senior Xiyang employees, who seem to have been the only ones remaining in North Korea out of over 100 originally sent, were “treated as enemies”, put on a bus and deported via the border city of Sinuiju.
The statement includes a highly personal attack on Ri, who, it says, has a huge paunch and is “North Korea’s number one fat man”, weighing 108 kilograms. “Everybody knows North Korea is suffering grain shortages and ordinary people do not have enough to eat, so North Koreans are quite thin but Ri Seong-kyu’s unusual fatness fully reveals what a luxurious life he leads … When people like Ri Seong-kyu go to China they let down their country and themselves and make all kinds of demands, for money, gifts, food, drink, girls …”
Xiyang said it had paid over US$800,000 in kickbacks to corrupt North Korean officials, including $80,0000 for a Hummer for Ri in 2008 and $100,000 in 2009 for a construction project in which he was involved in South Hwanghae province. In addition, Ri and his cronies would demand gifts of laptops, cellphones and vast amounts of booze, and to be provided with masseuses.
“Sometimes the Chinese would not provide any girls, so they would get them themselves and put it on their room bill,” expecting Xiyang to pay for all their personal expenses, bringing the bill to over 200,000 yuan per person.
This was not all – they would demand a receipt for their expenses that had been paid for by Xiyang, so they could claim the same costs when they returned to North Korea, according to the Xiyang statement.
Xiyang officials, on the other hand, had to pay all their own expenses in North Korea, were only allowed to eat in certain restaurants and were followed 24 hours a day by security officials. Even when Ri invited the president of Xiyang to his home, his host charged $2,000 for the privilege.
The report says the crunch came in September 2011 when the North Koreans made 16 demands that violated the terms of the contract, including a 4-10% sales levy, a one euro (US$0.17) per square metre per year rent charge, a hike in electricity prices and a charge of one euro per cubic metre of sea water consumed.
They also banned the company from releasing waste water, or even clean water, into the sea, which “amounted to the North Koreans forcibly halting production”.
The most serious act by the North Koreans was a ban on sales, the document states, which was clearly aimed at ensuring an end to the joint venture. “Ri Seong-kyu claimed all these [regulations] were included in North Korea’s national joint venture law, and we could not sell the 30,000 tonnes of iron powder that had been produced. In these circumstances, if Xiyang had carried on investing and manufacturing [in North Korea], we would have been the biggest fools in the world.”
Many of Xiyang’s complaints will sound all too familiar to anyone who has visited North Korea. The document tells how Xiyang staff were at first banned from buying food in so-called free markets. After much pleading the authorities finally agreed to this, but each person had to be accompanied by two minders and the route had to be approved by the security police.
Although the mine was only 500 meters from the sea, staff were banned from taking strolls along the shore.
Quite why the North Koreans acted with such prejudice against Xiyang isn’t clear, but part of the reason may lie in the location of the mine. It is in Ongjin county on the west coast, a highly sensitive area ever since this small peninsula ended up in North Korea after the Korean war even though it lies below the 38th Parallel. (It is also close to the port of Haeju, from where the iron was to have been exported).
The Chinese government may wish to dismiss this as a spat between a little known Chinese company and a single corrupt North Korean official, but it has brought into the open the deep suspicion that exists between the two countries.
The Chinese have long felt unable to trust the North Koreans with their xenophobic, quasi-Maoist personality cult, while the North Koreans are equally suspicious of the emerging superpower on their doorstep eagerly eyeing the smaller country’s natural resources.
Change may now be in the air, and the more open leadership style of North Korea’s young Kim Jong-eun has sparked speculation of economic reform and a fresh approach to foreign investment in his country, but horror stories such as this may indicate Kim’s style may be just that – all style and no substance.
North Korea has recently signed a deal with China to jointly develop three mines in the North, a North Korean investment firm said Thursday, as the cash-strapped country steps up attempts to earn hard currency from overseas.
A Beijing unit of North Korea’s Committee of Investment and Joint Venture struck the joint development deal with a Chinese international trading company in Beijing on June 9, according to the unit’s Chinese-language Web site.
“The China firm’s president and his parties conducted field inspections into one (North Korean) gold mine and two iron ore mines and confirmed the investment and development scheme,” the Web site said. “Facility building is now well underway for the project,” it said.
Details on the terms of the deal were not provided.
Experts said the deal is the first foreign investment deal announced by the Beijing unit, which is run by the Committee of Investment and Joint Venture in charge of luring overseas capital and investment into the North.
The joint North-China mining venture also illustrates growing exports of underground resources from the North to China, its closest ally and a major source of foreign currency.
Exports of mineral resources to China reached 8,420,000 tons during the first nine months of 2011, growing sharply from the annual volume of 4,799,000 tons in 2010 and 2,480,000 tons for the whole of 2008.
Although Yonhap does not report the Chinese company’s identity, the IBTimes reports that it is named “Baoyuanhengchang”. According to the article:
Baoyuanhengchang confirmed the plans to develop the mines, as per its pronouncement, noting both parties had conducted field inspections.
“Facility building is already underway and everything is going as planned,” it said. No details of the terms, however, were provided.
The pronouncement has been considered a milestone as this was the first time that North Korea publicly announced its efforts in enlisting foreign investors to help develop its potentially vast mineral wealth, Arirang News reported.
I have yet to determine in which specific projects Baoyuanhengchang is investing.
However, a warning to the Chinese investors can be found below. According to the Donga Ilbo:
A Chinese conglomerate that tried to advance into the North Korean mining industry has been forced out of the Stalinist country due to contract cancellations.
Calling its past five-year investment in the North “a nightmare,” Xiyang Group has filed for arbitration with the Chinese government.
Based in Liaoning, China, the group said Wednesday that it had set up a joint venture with North Korea in March 2007 to build a plant there that extracts iron from ore. Of the paid-in capital of 47.52 million U.S. dollars, the company put up 75 percent of the amount in cash and North Korea 25 percent for land and mine exploration and also managerial rights for 30 years.
Xiyang company invested 37.14 million dollars, the biggest investment for a Chinese private company in North Korea. Pyongyang approved the incorporation in April 2007.
With a target of 500,000 tons of ore dressing per year, Xiyang sent about 100 workers to North Korea and produced 30,000 tons in April last year. In September last year, however, Pyongyang requested modification of 16 items on the contract including a demand of 4-10 percent of sales of products for using raw materials; 1.24 dollars for every square meter of land leased, and 17 cents per cubic meter of sea water for industrial use.
Xiyang said the demands were not included in the original contract, which was ratified by the North Korean parliament in October 2009.
The conglomerate refused modification of the contract, prompting Pyongyang to suspend the effectuation of the contract and cancel corporate establishment Feb. 7. North Korea also suspended power, water and communication supply at the plant.
Xiyang said that on March 3, North Korean police and 20 security guards went to where the Chinese workers were staying and forced them to ride a bus to deport them outside the Chinese border.
The group said the North requested modification of the contract to steal the ore dressing facility that the country lacked in capital and technology to introduce.
A Xiyang source said, “When our company was established in 2007, North Korea had a law restricting a foreign company`s stake in a joint venture to now more than 70 percent. But the North said the law will be revised soon and requested a 75-percent stake. Eventually, this was a drag.”
“Not only North Korean authorities but also the North Korean company we established ties with had a high-end attitude, including a request for money in U.S. dollars.”
Xiyang Group explained the violation of the contract and put it on the Internet to complain of the injustice. Its complaint is titled “Nightmare in North Korea Investment.”
So the North Koreans are violating a contract which was ratified by the Supreme Peoples’ Assembly? That does not inspire confidence.
In 2007 Xiyang set up the Sohae Joint Venture Company to work the Ongjin Iron Mine (Google Earth coordinates: 37.960294°, 125.368651°) and the Xiyang Paekgumsan Joint Venture (aka Soyang Paekgumsan Joint Venture Co.) to work in haevy industry and construction. Although the story does not mention it, I believe the problems are at the Ongjin Mine. I am unsure of the status of the Paekgumsan Joint Venture.
Below I have posted a summary of stories from the Fifth session of the 12th SPA. The stories cover the lead up to the SPA, the completion of Kim Jong-un’s succession (inheriting the title “First Chairman” of the National Defense Commission), and KCNA reports of the official DPRK state budget.
The fifth session on the 12th Supreme People’s Assembly was held on April 13. Premier Choe Yong Rim told the legislators the nation’s top priority is to build up the light and agricultural industries to become an economically powerful nation.
According to the KCNA, Premier Choe also reported on the results of last year’s accomplishments while presenting this year’s goals. He elaborated, “The total industrial production rose by 102 percent against last year (2011) and production of hydroelectric power, iron ore, zinc, generators, fertilizers, and magnesia clinker has significantly increased.”
Other achievements of 2011 were announced, completion of Huichon Power Station, technological improvements in three major chemical factories (Hungnam Fertilizer Complex, 2.8 Vinalon Complex, and Namhung Youth Chemical Complex), and construction of high-rise apartments in the Mansudae area in Pyongyang.
It also stressed that the development and joint venture of special economic zones (SEZ) will be strengthened to promote economic and technological cooperation with foreign countries.
Finance Minister Choe Kwang Jin reported on the state budget, stating that last year’s revenue was 101.1 percent, while local government budget reached 112.8 percent. The national budget expenditure was 99.8 percent. For this year’s national budget, revenue was set higher at 108.7 percent and expenditure at 110.1 percent.
Out of the targeted state budget revenue of 108.7 percent, the detailed for budget revenue increase is as follows: transaction revenue (107.5 percent), national corporation profit (110.7 percent), cooperative organization profit (105.3 percent), real estate usage revenue (101.9 percent), and social insurance (101.7 percent).
As for the aimed 110.1 percent increase for this year’s national budget expenditure, the breakdown of the increase is as follows: light and agriculture industries (109.4 percent); power, coal, metal, railroad industries (112.1 percent); basic construction (112.2 percent); science and technology development (110.9 percent); education (109.2 percent); health (108.9 percent); social insurance and welfare (107 percent); sports (106.9 percent) and culture (106.8 percent).
From the total budget expenditure, 15.8 percent will be allocated to national defense and special scholarships and aid will continue to be provided to ethnic Korean children in Japan.
The KCNA announced on February 9 that the “Foreign Investment Bank Law” was modified and supplemented. According to the report, the amended law included “those businesses in operation for over ten years are exempt from income tax on the profit collected in the first year and Bank of Chosun [Bank of North Korea] will be exempt from business taxes on the interest revenue collected from loans provided to companies on favorable terms.”
The previous law already had regulations about exemption of transaction taxes but nothing on business tax. The foreign investment company and foreigner tax law regulated that two to ten percent of profit to be paid by the foreign companies in service and construction sectors.
While the prior law stated, “tax exemption will be provided for the first year for income tax on those businesses over ten years old, and 50 percent exemption will be given in the next two years,” the “50 percent limit” was omitted in the amended legislation.
According to the KCNA, “The law has 5 chapters and 32 articles which included the contents of categorization and specification for areas to establish foreign investment banks, property rights, and autonomy on business management.”
On February 10, the KCNA announced that the Foreign Investment Company Registration Law, Foreign Investment Company and Foreigner Tax Law, and Foreign Investment Company Bankruptcy Law were amended.
In reference to the ordinance of the Supreme People’s Assembly Standing Committee signed on December 21, 2011, provided that this law consisted of 6 chapters and 34 articles with specifics on business establishment, address, tax, and tariff registrations. However, no other details were given.
On January 30, the KCNA also reported the “Labor Law of Foreign Investment Company” was amended and supplemented. This law consists of 8 chapters and 51 articles on hiring and labor contracts, rest, protection, social insurance, and security.
In addition, the “Financial Management Law of Foreign Investment Company” and “Fiscal Law of Foreign Investment Company,” was also modified. However, no other details were provided.
The KCNA has reported that North Korea modified foreign investment laws previously in 1992, 1999, and 2004. This year marks the fourth amendment.
The news elaborated, “The DPRK is encouraging foreign companies to investment in our country based on complete equality and reciprocity and will not nationalize or collect the invested asset,” reiterating the safety and security of foreign investment.
Some analyze the recent amendment as an effort to attract more foreign investment into the country. Similarly, North Korea has recently announced the Special Economic Zone Act for the development of Hwanggumpyong and Wiwha Islands. In addition, the state-run Academy of Social Sciences published a newsletter emphasizing the rational tax investigation for foreign companies.
On February 10th, Choson Central News Agency (KCNA) reported fresh amendments to North Korea’s laws governing foreign investment.
KCNA revealed, “Chosun’s law on the registration of foreign-funded enterprises has changed. 34 articles in 6 chapters of the law, which was made according to a December 21st, 2011 decision of the Standing Committee of the Supreme People’s Assembly to cover the founding, residence, taxation and customs of businesses, have been amended.”
As is ordinarily the case, specific amendments were not included in the report.
On February 9th, North Korea also announced revisions to its Foreign Investment Bank Law issuing exemptions from consumption tax. Last month also saw revisions to banking as well as labor and financial management laws.
The amendments appear aimed at assuaging the fears of Chinese enterprises over issues such as the threat of expropriation. Indeed, China is said to have last month rejected initial laws governing the management of special economic zones at Hwanggeumpyeong and Wihwa Island nr. Shinuiju for a variety of reasons.
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NK Investment Laws Get Another Makeover Daily NK
Kim Tae Hong
Institute for Far Eastern Studies (IFES)
North Korea is continuing to put forward new laws for the special economic zones (SEZs) such as Rajin-Sonbong and Hwangumpyong Island. Recently, North Korea announced special guidelines for the tax investigations of foreign businesses in the zones.
North Korea’s Academy of Social Science Newsletter Volume 4 (published on November 2011) released an article titled, “Suggestions to Improve Tax Investigations in the Special Economic Zone,” which included detailed instructions for the policy improvement for tax investigation for SEZs. Here, particular emphasis was placed on the enhancement of the tax investigation system — to be accurate and rational — for the foreign investment companies.
The article explained, “Based on the principles of equality and reciprocity for the construction of powerful economic state, the tax investigation system in the SEZ must be improved especially at the present time when SEZs are being constructed and expanded to increase economic trade with other nations.”
It also stressed tax officials must be equipped with, “comprehensive knowledge and experience who accurately understand the entire process of business management. They must be capable of creating new tax investigation methods and be able to discern the various forms of tax evasions.”
For the qualifications of the tax officials, the article recommended that the officials be selected based on their knowledge and experience; ability to develop techniques for tax investigation; awareness of rules and regulations of tax laws and bylaws, and regulations of rights and responsibilities of taxpayers; and capability of conducting research on foreign tax investigation policies.
The Academy of Social Science is a government agency of the DPRK, and the recent article on the tax investigation reflects that the government has already begun the process of implementing the tax investigation guidelines and laws in the SEZs.
The article emphasized establishing a tax investigation system acceptable to foreign companies. One can construe this as North Korea’s effort to attract more businesses to the SEZ, which is currently suffering from poor performance.
In addition, North Korea is believed to be placing weight on the tax investigation based on its past experiences with the South Korean companies in the Kaesong Industrial Complex (KIC). In the past, the officials of the Central SpecialDirect General Bureau toured the industrial districts in China and showed keen interests in the tax management.
On December 8, 2011, the KCNA reported that the Standing Committee of the Supreme People’s Assembly (SPA) has adopted the Economic Zone Act for Hwanggumpyong and Wihwa Islands. The law was revised and supplemented to include the Free Economic and Trade Act of Rajin-Sonbong. However, the details of these laws were not disclosed and some experts are predicting that these laws are likely identical to the Chinese laws in China’s flourishing SEZs.
However, on January 11, 2012, Yonhap News Agency of South Korea reported that China rejected the new Special Economic Zone Act of the DPRK because it is “not business-friendly.” The news reported, “China said the law was not business-friendly, telling North Korea that the law had some problemsregarding taxes, accounting, remittance of profits and stability of investment.” It is reported that North Korea is working on the revision of these laws and likely for a new special zone act to be passed by the Standing Committee of the DPRK’s Supreme People’s Assembly (SPA).
The adoption of Act No. 1194 by the Supreme People’s Assembly of the DPRK was recently confirmed. “The Democratic People’s Republic of Korea’s Corporate Law” or the “Corporate Law” was reported to have passed more than a year ago in November 11, 2010.
The “Corporate Law” is evaluated as an important indication of the direction of the economic policy of North Korea since Kim Jong-un was appointed as the next successor at the Third Party Conference held on September 28, 2010.
The law consists of five chapters: 1) Basic Principles of the Corporation; 2) Organization of the Corporation; 3) Management Organization of the Corporation; 4) Business Management Activities of the Corporation; and 5) Projects of the Corporation.
The first article of this act “The Mission of the Corporate Law” states that the law was enacted to, “contribute to the development of the people’s economy and to secure the management system of the socialist corporations by establishing the system and order for the organization and management activities.”
The second article, “The Definition of Corporation” defines a corporation as an “economic unit that operates as an organization that directly handles the labor, facilities, equipment, materials, and finances for the production or volunteer activities.”
Article 9, “The Legal Rights and the Legal Protection Principles,” indicates that the “legal rights and interests of the corporations are protected by the government.” Article 10, however, specifically states that this particular law does not apply to the special trade zones and the foreign investment companies.
Article 18, “The Organization of the Corporation,” has a clause that states “the managing organization has the jurisdiction to close down corporations for unreasonable or lack of prospects that does not meet the standards and the demands of the national policy and reality.”
Article 21 depicts a manager as a “person representing the corporation and responsible for the entire business.” The manager, chief engineer, and assistant manager’s specific responsibilities were also explicated. The hierarchy was clearly indicated where the assistant manager was to report to the chief engineer and the manager while the chief engineer has to report to the manager.
Article 29 affirms that a business is to be managed based on established business and corporate strategies in which every year a draft of the people’s economy plan must be submitted to the appropriate authorities. The written economic plan must be followed on a daily, monthly, quarterly, and by index basis (Article 30).
Articles 31 to 37 include specifics on the improvements of production technology while Articles 38 to 43 include regulations to enhance the management system.
In particular, Article 42 stipulates that the corporation must promote sales based on supply plans and contracts. Those sales that do not follow the plan and the contract cannot be sold.”
Article 44 states, “The appropriate amount of labor is scientifically determined and managed based on the socialist distribution principles and a precise socialist wage system must be implemented.”
In other words, socialist principles will be applied to both the sales of merchandise and wage system. While the corporation will receive autonomy in many areas, clear regulations are provided for sales in addition to evaluation and incentive system for labor.
In recent years, North Korea has continuously passed economic laws for economic construction and enhancing the lives of the North Korean people. Such laws include the following: The Agricultural Law passed on November 3, 2009; Real Estate Management Law on November 11, 2009; the Country of Origin for Export Law on November 25, 2009; and Comprehensive Equipment Import Law on November 11, 2009.