North Korean Economy Watch

Cars 

Uriminzokkiri posted this short video of rush-hour traffic in Pyongyang (YouTube):

I will leave it up to the reader to determine if the video was staged. What is more interesting to me is to see the variety of vehicles used in the shots.  I saw at least one American Dodge Van in the footage (similar to the one I saw parked next to the Pueblo in 2005).  If you know a lot about cars, feel free to try identifying other vehicles in the footage.

And continuing on the automotive front–a tourist to the DPRK took this picture in September 2010:

The picture above is of an American-made, petrol-guzzling “Hummer H2″ (MSRP in 2008 – USD$53,286; 10 mpg_-US; 24 L/100 km; 12 mpg_-imp). The license plate on the vehicle is 평양 22-2722.

In September 2011, Eric Lafforgue took the picture below of what appears to be a second Hummer on the streets of the DPRK.

The license plate on this vehicle is “23-199″. I cannot read the city name on the plate.  According to the photographer:

During my stay in North Korea, i [sp] saw 2 Hummer cars. This is the fist time i [sp] hear north korean people making cristisms about something in their country! They all told me it was a shame to see such a car in North Korea, as it needs lot of fuel. Some people told me that the car number tells that it belongs to a local media (press or tv).

Cola

Mr. Lafforgue has also brought up another interesting topic through his pictures: North Korea’s cola wars!

On the left is a Picture of Cocoa “crabonated drink” [sp] taken by Eric Lafforgue in 2008.  On the right is a picture of  ”코코아 탄산단물” (Translation: “Cocoa Carbonated Drink”) taken by Eric Lafforgue in September 2011.

I might have been inclined to believe they were the same product with different labels (and maybe they are?), however, they appear to be manufactured by different companies.  The cola on the left is manufactured by a company called “룡진” (Ryongjin), a company about which I cannot find any additional information, and the beverage on the right is manufactured by “모란봉” (Moranbong).  I presume that “Moranbong” is actually the Moranbong Carbonated Fruit Juice J.V. Company. According to Naenara:

Moranbong Carbonated Fruit Juice J.V. Company
Add: Taedonggang District, Pyongyang, DPR Korea
Fax: 850-2-381-4410

The company formed in 2004 produces a wide assortment of carbonated fruit juice and health drink.

It has an affiliated factory equipped with hi-tech facilities that conform to hygienic requirements of GMP, ranging from production of bottles and drinks to packing.

Its products include apple, grape, peach, orange, cocoa, lemon and strawberry carbonated juices.

A multifunctional super-antioxidant health drink “Pirobong” is a drawing card in the world market.

The company will steadily increase investment in the development of new brand of drinks and further promote exchange and collaboration with partners across the world.

So why does the DPRK produce competing colas? Wouln’t that be wasteful duplication of processes? No.  Monopolys are generally more wasteful than competitive firms. Though in the past there were few producers of carbonated drinks in the DPRK (Ryongsong Food Factory, Kyongryon Patriotic Soda Factory), the DPRK seems to have moved away from near-monopoly production to a more competitive industrial organization in the production of soda.

Kim Jong-il’s sister, Kim Kyong-hui (KKH), is director of the Light Industry Department in the Worker’s Party and as a result holds all colas in her job portfolio. Without having any special data on the DPRK’s cola market, I would speculate that KKH promotes competition between the different soda producers to increase efficiency and profits for the ultimate goal of improving the positions of her discretionary official and unofficial budgets.

As an aside, earlier this year Forbes ran a story about meetings held between the DPRK’s Taepung International Investment Group and Coca Cola. Taephing is directed by Jang Song-thaek, Kim Kyong-hui’s husband.

Disney

In the past I have pointed out the appearance of Disney characters on North Korean apparel (see here for example). Now they are showing up on mobile phones:

History 1

Here is a video of Lim Su-kyung in Pyongyang (1989). Here is a story about her in the Daily NK. I think I just found her Facebook profile!

History 2

Here is a map of Pyongyang produced int he 1800s.  Other maps of the region here. Hat tip to Kwang On Yoo.

Lift troubles

Here is a 30+ minute video shot in Pyongyang–nearly entirley in the dark. Hat tip to Leonid Petrov.

The video caption reads: “We were touring the 3 Revolutions Exhibition in Pyongyang in 2009, when our elevator lost all power and 11 of us were stuck in blackness, hanging by a North Korean thread.”

According to Yonhap:

North Korea’s former Premier Pak Pong-ju appears to have returned to power with the Workers’ Party, more than three years after he was ousted due to his economic reform drive, according to a Pyongyang broadcast report on Saturday.

The North’s Korean Central Broadcasting Station introduced Pak as the “first deputy director of the Central Committee of the Workers’ Party of Korea,” reporting on the 50th foundation ceremony of Pyongyang’s flagship Okryu Restaurant held Friday with a number of senior officials and workers.

There is no other known figure with the same name among the North Korean power-holding elite.

Pak, a long-time industry technocrat and pragmatist, was named premier of the North’s Cabinet in September 2003. He spearheaded the North’s so-called July 1st Economic Measure reform drive toward market economy, which aimed to give more autonomy to state firms and gradually reduce state rationing of food and daily necessities.

But his strong initiative triggered a backlash from the party and the military that resulted in his dismissal. Pak was suspended from duty in June 2006 on charges of fund apprehension and was fired in April the following year. Kim Yong-il, then land and marine transport minister, replaced him.

Pak is believed to have been demoted to a managerial post at a clothing factory outside Pyongyang.

Cho Myung-chul, a senior researcher at the Korea Institute for International Economic Policy who has defected from North Korea, viewed Pak’s reinstatement as a signal of a shifting North Korean economic policy toward pragmatism, following its failed currency reform last year.

“Pak is an emblematic figure of the July 1st Economic Measure that promoted pragmatism. His reinstatement could be connected with an economic policy shift back to pragmatism after the anti-market currency reform failed.”

In a bid to curb the burgeoning merchant class and strengthen its socialist system, North Korea implemented a surprise currency reform in November, knocking two zeros off its denominations. But the move backfired, worsening food shortages and triggering social unrest.

Apparently taking responsibility for the botched reform, Premier Kim Yong-il was replaced by Choe Yong-rim in June.

The broadcast report on Saturday did not specify which department of the Workers’ Party Pak joined, but it is likely that he was posted to the light industry department, considering the ceremony involving a restaurant and the fact that he was the department’s first deputy director in 1993.

Pak is believed to be a close confidante to Jang Song-thaek, vice chairman of the National Defense Commission and brother-in-law of North Korean leader Kim Jong-il. Jang is seen as the central figure in grooming Kim’s third and youngest son, Jong-un, as the next leader.

Japan’s Mainichi Shimbun reported on Aug. 15, quoting multiple sources, that Pak and about 20 other figures close to Jang had been reinstated within the past two years. The report also said Pak has risen to the second highest spot in the party’s light industry department, which is headed by Kim Kyong-hui, Kim Jong-il’s sister and Jang’s wife.

According to the New York Times:

He is the latest among senior North Korean officials whose sudden banishment and equally unexpected reinstatement have sparked outside speculation about Mr. Kim’s intentions. Mr. Pak appeared to have fallen from Mr. Kim’s favor when he was fired from the premiership in 2007 and sent to work as a factory manager in a provincial town.

“His reinstatement could signal the return of pragmatists and reformists,” said Cheong Seong-chang, a North Korea analyst in the Sejong Institute south of Seoul. “We may be able to see him push the economic reform and openness he had once championed.”

Analysts in Seoul say that few North Korean officials wield much individual influence in Mr. Kim’s government. But they say that they can infer Mr. Kim’s plans from the way he punishes and rewards officials identified with various policy approaches.

“Pak’s reinstatement indicates that North Korea is shifting back to market reforms, even if grudgingly, after its botched attempt to re-enforce state control on the economy,” said Baek Seung-joo, the head of North Korea research at the government-financed Korea Institute for Defense Analyses in Seoul.

Mr. Pak, a lifetime technocrat, was best known as the architect of “Measures to Improve Economic Management Order.” Issued on July 1, 2002, they indirectly acknowledged the failure of the North’s ration system by instructing factories, collective farms and other economic units to provide their own daily necessities and give incentives for workers.

In September 2003 Mr. Pak was made prime minister, a post in charge of carrying out economic policies.

His reforms were necessitated by the collapse of the centrally planned economy after a famine in the mid-1990s. But they also coincided with — and fueled — the spread of private markets, which quickly emerged as a key source of food and other necessities for North Koreans.

But Mr. Pak’s reform programs irked the government’s old guard, especially in the hard-line military, which had grabbed the lion’s share in trade under the old system. The markets facilitated the influx of DVDs and other smuggled goods the government considered a capitalist threat.

Around 2005, North Korea began controlling markets. Its attempt to reinforce state control on the economy peaked late last year when it replaced its banknotes with a new currency, shut down markets and ordered people to buy goods only from state-run stores. The currency reform was aimed at stifling the markets by drastically reducing traders’ personal wealth in the old currency.

The moves quickly backfired. Inflation surged as traders hoarded their goods and government stores failed to meet demand. Sporadic protests were reported. Earlier this year, Pak Nam-gi, head of finance and planning who led the failed currency reform, was executed, according to South Korean news reports. North Korean markets began coming back to life, according to recent defectors.

Pak Pong-ju, the former prime minister, returns as North Korea prepares for a party caucus early next month. Officials and analysts in Seoul say they will monitor the meeting for changes in the cabinet and party leadership that might provide clues to Mr. Kim’s plans to hand over power to his third son, Kim Jong-un, who is in his late 20s.

Mr. Pak’s reinstatement adds to the growing influence of Jang Song-taek, Mr. Kim’s brother-in-law, said Mr. Baek, the researcher.

In June, Mr. Kim presided over a session of the rubber-stamp Supreme People’s Assembly where Mr. Jang, a potential caretaker for his son, was elevated to the No. 2 post in the ruling hierarchy. In the same meeting, Mr. Pak’s successor as prime minister, Kim Yong-il, who reportedly made a rare apology in February for the botched currency reform, was fired.

Mr. Pak, as first deputy director, is believed to report directly to Kim Kyong-hee, Mr. Kim’s younger sister and Mr. Jang’s wife, who works as party director in charge of the North’s light industries, Mr. Cheong said.

Read the full stories here:
N. Korean ex-PM Pak Pong-ju appears to be back in power
Yonhap
8/21/2010

North Korea Reinstates Market-Oriented Official
New York Times
Choe Sang-hun
8/23/2010

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-06-14-2
6/14/2010

During the third session of the 12th Supreme People’s Assembly, convened on June 7, Kim Jong Il promoted his brother-in-law Jang Sung Thaek to vice-chairman of the National Defense Commission (NDC), named a new premier, and replaced several department heads and ministers. This appears to be an attempt to shore up the regime as it seeks to “open the door to a strong and prosperous nation” by 2012, the 100th anniversary of the birth of Kim Il Sung. Kim Jong Il made a personal appearance at this latest assembly meeting, unlike the SPA meeting held in April. The leader’s presence hints at the importance of the latest gathering.

This promotion of Jang Sung Thaek and shake up of Cabinet positions appears to be part of efforts to realize the quickly approaching goal of establishing a ‘strong and prosperous nation’ by 2012, assigning those most able to positions of responsibility, regardless of age or experience. Most notably, Jang, widely thought to be second-in-command in North Korea, was promoted to vice-chairman of the NDC. He was first appointed to the NDC at the first meeting of the 12th SPA in April 2009, making his climb to vice-chairman in a mere 14 months.

Before the latest promotion, Jang held the position of vice-director of the Workers’ Party of Korea, a newly created position that he was the first to hold. In this position, Jang oversaw national security offices, police, and the courts, putting him in a position of power difficult for anyone else to achieve. Having traveled to both South Korea and China, Jang Sung Thaek was likely promoted to present the image of a strong military and, at the same time, establish stable relations with the international community in order to ensure a smooth transition of power as well as to resurrect the economy by 2012. When Kim Jong Il led a delegation to China last May, the Chinese government treated Jang very well, ignoring standard protocol for someone in his position.

In addition, Choe Yong Rim was named the North’s new premier, and eight new vice-ministers were appointed. Regional Party secretaries were allowed to participate directly, allowing those who are most knowledgeable of local conditions to impact the decisions of the administration. Most of the new appointments were very experienced elites, including Choe Yong Rim (80) as premier, and Kang Neung Su (80), Kim Rak Hui (77), Ri Thae Nam (70), and Jun Ha Chul (82). The regime is promoting a number of veterans who are making their “last stand for the motherland” as part of the effort to ensure stable transformation of power after Kim Jong Il.

With Kim Rak Hui’s appointment as vice-premier and new appointments to the Ministry of Foodstuff and Daily Necessities Industry as well as the head of the Light Industry Ministry, North Korea seems to be pursuing the improvement of standards of living promised in the 2010 New Year’s joint editorial. Pyongyang Party officials appear to be attempting to reassert a centrally planned economy in the aftermath of botched currency reform efforts; however those witnessing regional economic conditions appear much more able to come up with appropriate economic policies. North Korea has been unable to make any significant progress in resolving its food shortages or its inability to provide daily necessities to the public, leading the regime to scapegoat some high-ranking officials. Now, many in and outside of North Korea are watching closely to see if the regime can launch economic efforts capable of successfully ‘opening the door to a Strong and Prosperous Nation’ in the next two years.

According to the People’s Daily (Xinhua):

The Democratic People’s Republic of Korea (DPRK) has decided to promote the production of consumer goods in order to improve people’s lives, the Rodong Sinmun newspaper reported Wednesday.

The major task was to continue exploiting the potential of the light industry, raising production, improving quality, promoting the modernization of enterprises and guaranteeing its operation at full capacity, a cabinet meeting has agreed.

Besides, the ministers underlined the importance of the spring ploughing and sowing, saying supply to the rural area should be ensured.

They also demanded sectors such as metal, electricity, coal and railway continue promoting production to create condition for the improvement of people’s lives.

The newspaper said DPRK’s Premier Kim Yong Il attended the cabinet meeting, but did not mention the exact date.

Industrial production grew 16 percent in the first quarter, compared to the same period a year before, said the paper.

Consumer goods are part of Kim Kyung-hui’s (Kim Jong-il’s sister) portfolio as head of the KWP’s light industry department.

Read the full story here:
DPRK to promote production of consumer goods
People’s Daily (Xinhua)
4/21/2010