North Korean Economy Watch

Washington Post Foreign Service
Anthony Faiola
September 14, 2003

Notes on the DPRK’s new Fiat:

The first commercial billboards (ever) are going up in Pyongyang.  Fiat is in the Hermit Kingdom.  The billboards are part of what is dubbed the first corporate media blitz to hit North Korea.

Pyeonghwa Motor Corps., a South Korean firm with ties to the Unification Church, coaxed the DPRK government into allowing the campaign.  Pyeonghwa began assembling cars in North Korea 18 months ago using imported Fiat parts.

Creating the ad campaign was not easy, said John Kim.  The government rejected many billboard proposals.

The company began publishing asd in government sponsored trade magazines showcasing the “Whistle” (The name of the car in the DPRK.  Named after a famous song).  Also a SUV model was launched.  Commercials have also appeared on TV.

Cars cost $14,000 and it would take a north Korean 15 years of labor to save up enough money.

When Pyeonghwa opened its $20m factory about 40 miles west of Pyongyang last year, the company hoped to sell 1000 cars in 12 months, but it has unloaded only half that number in 18 months.  Most have gone to government officials and diplomats.

There are only two gas stations in Pyongyang, and the company does not offer financing 

Notes on Politics:

Pyongyang’s news agency recently described new markets as desigend to “dramatically improve the country’s standard of living.”

This month, the North Korean’s announced a cabinet reshuffle that raised Pak Pong Ju, a former chemical industries manager, to the loftier position of Premier.  He is seen as being interested in reforms.

Kim Jong Il has been working to give the authority to fire a worker to factory managers, as opposed to Party officials.

BBC
8/28/2003

North and South Korea have signed a landmark agreement to increase direct trade, the latest step in the slow economic thaw between the two enemies.

According to the agreement, made at bilateral talks unrelated to the simultaneous discussions over nuclear capability, South Korean firms will be encouraged to set up in the North.

The town of Kaesong, just north of the border, has been selected as the site of an industrial park, currently being built by South Korea’s Hyundai.

The two governments will open a corporate liason office in Kaesong, which will deal with the many southern companies keen to exploit cheap northern labour.

Slowly opening

Cross-border economic contacts have become frequent in recent years.

But almost all the $270m (£172m) in north-south trade so far this year has been conducted through intermediary countries, a formality the new agreement aims to dispose of.

The deal represents another step in the extremely slow economic opening of the stalinist North, which long operated in complete isolation from the world economy.

Over the past three years, Pyongyang has reformed its currency, invited visits from foreign investors, cautiously liberalised some prices and planned various – mainly abortive – schemes along the lines of the Kaesong industrial zone.

Reliance on aid

The motivation in much of this, analysts say, is the desperate economic situation in the north.

A series of natural disasters in the 1990s crippled northern agriculture, and the government has done little to put the sector back on its feet.

North Korea – which long rejected outside help – has become increasingly dependent on aid.

This latest agreement concedes to the South the right to oversee the distribution of food aid in the North.

Korea Herald
Chris Gelkin
3/30/2007

“It’s not just about making money, at least not from our perspective as a producer,” declared Felix Abt, president of the Pyongyang-based pharmaceutical company PyongSu Pharma. “The profit margins are very small. It is more about supplying a necessary and quality product at a price people can afford.”

Abt was in Seoul earlier this week meeting with South Korean pharmaceutical companies and aid organizations. On the table was a unique opportunity that would allow them to expand their existing humanitarian work, while at the same time helping to lay a solid foundation for the future of the pharmaceutical sector in North Korea.

“One of the main purposes of my visit here is to meet with the people who donate drugs and medicines to North Korea, or their agents who are based here,” Abt told The Korea Herald. The “frontier-businessman” believes substantial savings could be realized if the donor had the drugs produced locally, in North Korea, rather than purchasing them here in the South or overseas and then having them shipped in.

“We have lower production costs in the North, and of course there would be savings on transportation. All of these cost savings would translate into more money being made available for the actual provision of drugs. And after all, that is the whole point of the exercise, isn`t it?” Abt said, posing a very pertinent question.

For each donated dollar, for each dollar spent, he explained, more medicines would actually reach the people who need them.

“So that, from a humanitarian position at the very least, is a very compelling reason for them to buy from us or have us produce them and then organize the distribution.”

PyongSu has been gaining experience through contract manufacturing for charity organizations, donors and pharmaceutical companies, but Abt says there is plenty of scope to do more.

“We have a total staff of about 30 running one full shift,” Abt said, “and obviously we have capacity to expand that.”

Abt said in addition to helping even more North Korean patients in hospitals and clinics throughout the country, aid organizations could also help raise the quality standards of the local pharmaceutical industry.

“Just shipping aid here is all well and good,” Abt explained, “but it has the danger of creating a culture of dependency. So rather than, for example, just giving them fish, we should give them a fishing rod and teach them how to fish.”

By expanding local production in terms of quantity and variety, Abt said, donors would be helping the people to learn how to stand on their own feet.

“This should be particularly interesting for pharmaceutical companies based here in the South,” he said, “it is absolutely in their long-term interests to see a pharmaceutical sector in the North that is developed and meets international standards which could later become a strong and important partner for South Korean companies.”

PyongSu recently underwent an international inspection and has been approved as a producer that meets the highest standards of pharmaceutical producers worldwide.

The company was launched in the summer of 2004 in a joint venture between the Ministry of Public Health and a group of foreign investors. By the end of 2006, PyongSu was producing a range of medications including painkillers and antibiotics among others.

The company`s mission was to reach and maintain production quality and service standards comparable to any pharmaceutical producer elsewhere in the world.

“We are making a direct contribution to the improvement of the local pharmaceutical sector,” Abt said, “through training, education, and our sharing of knowledge with medical professionals and staff at all levels throughout the DPRK.”

PyongSu pharmacists meet regularly with staff from hospitals and clinics to fully understand their needs, and provide them with up to date information on the latest drugs.

Abt said PyongSu has its finger on the pulse of the medical sector in the DPRK, and is in a unique position to serve humanitarian and aid organizations by producing drugs on their behalf and distributing them, “to those who are in need of them.”

BBC
2/5/2003

The two Koreas have re-opened their land border for the first time in half a century, despite continuing anxiety about the North’s nuclear programme.

About 100 South Korean tourism officials passed through the heavily fortified frontier by bus on Wednesday, travelling to the scenic Mount Kumgang tourist resort, some 30 kilometres (18 miles) to the north.

The opening of the first of a set of planned overland links came as the US made its strongest pledge yet to hold direct talks with the North to resolve the nuclear crisis.

North Korea says that the only way forward is for face-to-face talks with Washington, without pre-conditions.

Historic crossing

Buses carrying around 100 officials from the South Korean company Hyundai and invited guests snaked from Kosung on the South’s east coast for a 50-minute journey along a dirt road towards Mount Kumgang.

The 10 buses were escorted by a South Korea military jeep as far as the border.

The jeep then pulled over to allow the buses to make the historic crossing, and a military official from the US-led United Nations Command, which enforces the armistice agreement that ended the Korean War, followed their progress on the other side of the border through binoculars.

If the pilot visit is a success, tours will officially begin next week.

The road is the first of four planned overland routes between the two sides to be completed. A parallel rail link on the east, and a rail and road link on the west are still under construction.

Diplomacy

The links are a key part of South Korean President Kim Dae-jung’s “sunshine policy” of economic co-operation with the Stalinist state.

Seoul has been urging the US to pursue diplomacy rather than sanctions over the current nuclear crisis.

US Deputy Secretary of State Richard Armitage on Tuesday gave a strong assurance that direct talks with Pyongyang would take place.

“Of course we’re going to have direct talks with North Korea. There’s no question about it,” he told the Senate Foreign Relations Committee.

But Mr Armitage said that the consultations would only take place when Washington was confident that it had built a “strong international platform” from which to end North Korea’s nuclear programme.

He also warned that North Korea’s reported moves toward restarting a plutonium reprocessing facility could enable it to build four to six nuclear weapons within months.

Despite Washington’s assurances that it has no plans to invade North Korea, it has announced that is considering strengthening its military forces in the Pacific Ocean as a deterrent against Pyongyang.

US officials said the reinforcements would help signal that a possible war with Iraq was not distracting the US.

But the commander of the 37,000 US forces in South Korea, General Leon LaPorte, stressed on Tuesday that any deployment would be made in conjunction with Seoul.

Economic co-operation

Some analysts believe the nuclear stand-off is simply a blackmailing tactic by the North to obtain more aid for the impoverished nation.

In easing the North’s economic plight, Hyundai has played a key role. It has hitherto organised cruises to the North by boat, but they have lost the company money.

Hyundai hopes the cheaper overland trip will attract more tourists.

But its role in inter-Korean co-operation has not been without controversy.

The company became embroiled in a scandal last week when government auditors revealed that a Hyundai affiliate had sent nearly $200 million to North Korea just before the 2000 inter-Korean summit.

The company said the money was used to finance its business projects in the North; opposition lawmakers allege the money was a pay-off for the summit.

Members of the ruling Millennium Democratic Party have called on President Kim Dae-jung to make a public statement, while opposition politicians are calling for an independent counsel to investigate the fund transfers.

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Here are sections of interest:

About DPRK, Agriculture, China, Economy, Energy, Transition

According to the BBC (2002-9-23):

North Korea’s hardline socialist regime has appointed a Chinese-born entrepreneur to oversee a radical experiment with free-market economics.

Local news agencies reported on Monday that Yang Bin, a 39-year old tycoon listed last year by Forbes magazine as China’s second-richest man, is to run the newly-created ‘special administrative region’ of Sinuiju, next to the border with China.

The North Korean government aims to turn Sinuiju into a capitalist enclave in a country which has until now been cut off from the mainstream global economy.

“It will be a totally capitalist region,” Mr Yang told US cable TV channel CNN.

“It will have its own legislative, judicial and executive powers without any interference from central government.”

Going Dutch

Analysts have said the decision to build a free-market economy in Sinuiju underlines North Korea’s determination to reform after half a century of near-total isolation.

The North Korean government’s choice of chief reform strategist appears to be an astute one.

Born and brought up in China, but now a Dutch citizen, Mr Yang is the founder of a diversified business empire which has amassed him a personal fortune estimated at $900m.

He moved to the Netherlands in the late 1980s and set up a successful textile company before returning to China in the 1990s to start a horticultural business specialising in orchids.

Flower power

Through his Euro-Asia group of companies, Mr Yang now also has interests in tourism and real estate.

Last year, Mr Yang set up a joint venture horticultural company in the North Korean capital Pyongyang which may be the basis for his contacts with the country’s leadership.

However, Mr Yang’s fortunes suffered a temporary setback earlier this year when shares in his Hong Kong listed firm slumped amid investor doubts over its financial position.

The BBC also published this information (2002-9-23):

A Chinese businessman has been chosen to become the chief executive of Sinuiju, a special administrative region created along North Korea’s border with China.

The businessman, Yang Binn, says he will run the area along capitalist lines, creating a free-wheeling capitalist enclave similar to Hong Kong.

He plans to move more than 500,000 people from the 132 square kilometre area along North Korea’s border with China.

There will be a new legal system, possibly based on European law.

There will be elections to a legislature and administrators and judges hired from foreign countries, including the West.

Window to the world

For the hardline socialist state of North Korea, the scope of these changes is unparalleled.

Mr Yang, a Chinese business tycoon, has been hand-picked by North Korea’s leader, Kim Jong-Il.

Mr Yang said Mr Kim had created the project as a window for the rest of the world to see that North Korea is experimenting with change.

However, a wall will be built to keep North Koreans out of the self-governing capitalist zone.

Read the full stories here:
Chinese tycoon to lead North Korea reform
BBC
2002-9-23

North Korea steps up economic reform
BBC
Damian Grammaticas
2002-9-23

UPDATE 1: The full statue for the Sinuiju SAR can be found here.

ORIGINAL POST: According to KCNA (2002-9-20):

Basic law of Sinuiju special administrative region

Pyongyang, September 20 (KCNA) — The Sinuiju special administrative region has come into being according to a decree of the Presidium of the Supreme People’s Assembly of the Democratic People’s Republic of Korea. The Presidium of the DPRK Supreme People’s Assembly adopted the basic law of the Sinuiju special administrative region on September 12, Juche 91 (2002). The law consists of six chapters (politics, economy, culture, fundamental rights and duties of residents, structure and emblem and flag of the region) and a total of 101 articles.

According to the law, the region is a special administrative unit under the sovereignty of the DPRK and the state puts the region under the central authority.

The state endues the region with the legislative, executive and judicial power and shall keep the legal system of the region unchanged for 50 years.

The DPRK cabinet, state commissions, ministries and national institutions shall not interfere in the region’s affairs and external affairs concerning the region shall be handled by the state.

The region shall conduct external activities on its own responsibility within the limit approved by the state and can issue its own passports.

The land and natural resources of the region belong to the DPRK and the state allows the region to be turned into an international financial, trade, commercial, industrial, up-to-date science, amusement and tourist centre.

The state shall give the region the rights to develop, use and manage the land and encourage the businesses in the region to hire manpower of the DPRK.

The period of leasing the land of the region shall last until December 31, 2052.

The state shall encourage investments of investors in the region and provide investment environment and conditions for economic activities favorable for businesses.

The DPRK shall encourage the region to properly pursue cultural policies so as to increase its residents’ creativity and meet their demand for cultural and emotional life, introduce up-to-date science and technology and actively develop new domains of science and technology.

The residents shall not be discriminated irrespective of sex, country, nationality, race, language, property status, knowledge, political view and religious belief and foreigners without citizenship shall have the same rights and duties as the residents.

The procedures of moving and travelling to other areas of the DPRK and other countries shall be established by the region.

The legislative council is the legislature of the region and the legislative power shall be exercised by the legislative council.

DPRK citizens of the region can become deputies to the legislative council and foreigners with the right to reside in the region can also hold the same post.

The legislative council shall have chairman and vice-chairmen elected by itself.
The governor shall represent the special administrative region.

The governorship can be taken by a resident of the region who has working ability and enjoys high reputation among the inhabitants.

The governor shall promulgate the decisions of the legislative council and directions of the administration, issue orders and appoint and dismiss members of the administration and the chief of the prosecutor’s office of the region.

The administration is the region’s executive body and general administrative organ.

The chief of the administration is the governor and the posts of department chief of the administration and the chief of the police agency shall be held by residents of the region.

The prosecution affairs of the region shall be undertaken by the prosecutor’s office of the region and the district prosecutor’s offices.

The prosecutor’s office of the region shall be accountable to the governor.

Trial in the region shall be undertaken by the court of the region and district courts. The court of the region is the supreme court.

The region shall use not only the emblem and flag of the DPRK but also its own emblem and flag and the order of their use shall be established by the region.

The region shall apply no other laws but the DPRK laws concerning nationality, emblem, flag, anthem, capital, territorial waters, territorial air and national security.

The Korean version of the article is not available on the KCNA web pages, however, according to the Sijuiju SAR wikipedia page, the Korean name is “신의주 특별 행정구’.

The Wikipedia page for the project is here.

BBC
9/12/2002

Efforts to revive a struggling tourism project between North and South Korea have broken down in the mountain resort of Kumgang just north of their shared border, local media reported.

The three days of talks were aimed at designating Mount Kumgang – also known as Diamond Mountain – a special tourist area open to the free flow of foreign capital and linked by a land route to the South.

But the despite running into extra time late on Thursday the talks ended without the two sides reaching an agreement.

Kumgang Mountain first opened to South Korean tourists in 1998, allowing them to visit the Stalinist North by cruise ship, despite the fact that the two states technically remain at war.

Financial crisis

The scheme was hailed as a success which had helped to cool relations between the two states.

But the number of tourists visiting the resort dropped away after South Korea’s privately owned Hyundai Group, which ran the cruise trips, ran into financial problems.

According to the Yonhap news agency the talks failed because Pyongyang insisted that Seoul should guarantee it would pay for the loss-making tourism business operated by Hyundai Group.

The South reportedly rejected this demand and the talks broke down.

“Failing to narrow differences, both sides ended the talks without an agreement produced,” the South’s chief delegate Cho Myung-Kyoon said.

But Mr Cho suggested that the talks might resume.

“I hope the two sides will soon meet again to continue discussions based on the contents of talks this time,” he said.

Easing tension

South Korea’s proposal that Mount Kumgang should be classed a special tourist area would pave the way for investors to build facilities such as golf courses, ski resorts and other entertainment facilities which could help boost tourism in the communist country.

The limited cruise tours to Mount Kumgang have already been a key source of income for the impoverished North.

But in the past the North has rejected the South’s plans for Kumgang, citing environmental and security reasons.

However, in recent weeks there have been signs of rapprochement between the two countries as the impoverished North reaches out internationally for much needed aid.

On Thursday North Korea signed a deal with the American-led United Nations Command, for the construction of an east coast rail link between the two Koreas.

A similar deal for a rail link on the western side of the peninsula was agreed last year, but it has yet to be implemented.

From the BBC:
9/5/2002

North Korea has announced that it will open up its companies to more foreign investment, as part of a new policy to liberalise its economy.

The Korea Trade-Investment Promotion Agency (Kotra) said that it would now allow foreign investors to take stakes in Korean companies of more than 50%.

“In the case of joint ventures, foreign companies could take only up to 50% of stake in the past, but now there is no problem if their stake goes above the level,” Kotra said, quoting North Korea’s vice trade minister Kim Yong-sul.

The country is hoping that the rule change will encourage Japanese and South Korean businesses to take a greater stake in the North Korean economy.

Economic sea-change

In the past few months, North Korea has devalued its currency and abolished a convertible version of the won used in transactions with foreigners.

The country has also raised prices and wages, and placed more emphasis upon companies being profitable.

Changes to the foreign ownership rules were explained at a conference in Tokyo, which was attended by about 50 Japanese businessmen.

“The measure is an effort by Pyongyang to expand trade and business with other countries,” Kim Sang-shik, a Kotra official, said.

He added that North Korea had attracted $120m (£76.7m) of foreign investment to a special trade zone at the end of 2000 – more recent figures were unavailable.

Socialist profits

The new economic policies aim to wean factories and companies in North Korea off state subsidies and become self-sustained.

North Korea’s planned economy has been in place since the communist state came into being in 1947.

People in the country have been afflicted by droughts and numerous natural disasters, acerbated by an inefficient economy.

The economy grew by 3.7% in 2001, after a 1.4% expansion the previous year, according to estimates from the Bank of Korea – the South Korean central bank.

Following the ownership rule change, Kotra said it expected more South Korean companies to take stakes in companies across the border.

Trade between the two neighbouring countries increased by 8.9% year-on-year to $215m in the first half of this year.

Plans to build railway and road links between the two Koreas were agreed last month.

KCNA
4/6/2002

Kim Yong Sun meets S. Korean delegation

Kim Yong Sun, chairman of the Korean Asia-Pacific Peace Committee, met a delegation that had attended a ceremony of commissioning the Pyonghwa Motors General Factory at the People’s Palace of Culture today and had a talk with it in an atmosphere overflowing with compatriotic feelings.

Setting Up Shop in N. Korea: Car Firm Plunges In
Los Angeles Times
Barbara Demick
3/28/2002

Company linked to Sun Myung Moon’s church is to open an assembly plant in April.

At first glance, there couldn’t be a more improbable business proposition than opening an automobile factory in North Korea, where hardly anybody owns a car or knows how to drive. Even more surprising is that the company making this investment is an affiliate of the Unification Church, headed by the thumpingly anti-communist Rev. Sun Myung Moon.

Against all odds, Pyonghwa Motors next month is opening a $55-million auto assembly plant where there once were rice paddies in the western coastal city of Nampo. It is one of the largest private ventures in North Korea, a bastion of militant communism that only recently has cracked open its doors to foreign investment in a desperate quest for hard currency.

“This country was so closed that nobody, not God, not Buddha, could get in the last 50 years without a visa,” Park Sang Kwon, the president of Pyonghwa Motors, said at a news conference Friday in Seoul, the South Korean capital, where the company is headquartered. “Nobody, even in my own company, believed it was possible to build an automobile in North Korea. Only I believed.” Initially, the assembly line will turn out Fiat Sienas, a compact model, but Pyonghwa Motors hopes to develop its own model for the North Koreans.

The communist government, which also owns a stake in the company, has contracted to buy 1,000 cars in the first year. After that, the company hopes to sell vehicles in China, Russia and, if the political situation allows, South Korea. The plant has the potential to turn out 20,000 cars a year.

The unlikely relationship between the Unification Church and North Korea dates to 1991, when Moon visited the country’s founder and chief ideologue, Kim Il Sung. That paved the way for Moon, an archconservative who nonetheless supports dialogue with the North, to buy two hotels in Pyongyang, the North Korean capital, including the 161-room Potonggang, which boasts of being the only hotel in the isolated country with satellite television.

The North Koreans also allowed Moon’s followers to develop Jongju, the northwestern town where Moon was born, into a pilgrimage site–another coup for the Unification Church because the communist nation bans all practice of religion.

In addition to the car assembly plant, Pyonghwa wants to open a department store, gas stations, automobile showrooms and what the company described as a “World Peace Center” in Pyongyang to promote cultural and educational exchanges.

Pyonghwa officials say they hope the investments will advance the reconciliation process between the two Koreas, estranged for more than half a century. Indeed, the name of the company means “peace” in Korean.

“We will show the North Koreans brotherly love through this project,” Park, the company president, said Friday, flashing slides for journalists of North and South Korean employees working together in building the assembly plant, then clowning around as they pose for a photograph.

From a financial viewpoint, the company hopes that low labor costs will allow it to turn out automobiles more cheaply than elsewhere in Asia. The company now employs about 200 North Korean auto workers who are paid an average of $120 a month.

“We are bound to succeed,” Park said. “There are no unions, low labor costs. The workers are very clever, very quick to learn, and they are harshly controlled by their superiors.”

Among the extraordinary problems that Pyonghwa has encountered in trying to do business in North Korea is the erratic power supply and poor transportation system. The new plant is situated next to a 2-year-old highway linking Nampo with Pyongyang, 25 miles to the northeast. However, the road was constructed with picks and shovels; it does not accommodate heavy trucks well and frequently needs repairs. Merely putting up a sign over the front gate of the factory was a struggle, in which capitalism ultimately triumphed over communism.

“This is the first time anybody was allowed to put a company logo on a billboard in North Korea,” Park said.

The plant’s grand opening, scheduled for April 5, comes as North Korea is going through a particularly rough patch in trying to attract foreign investment. The rapprochement with South Korea has ground to a halt, while President Bush’s characterization of North Korea as part of an “axis of evil” has hardly induced companies to invest.

There also have been a number of well-publicized failures. Hyundai, the South Korean conglomerate, recently had to turn to its own government for a bailout to rescue its 3-year-old venture bringing tourists to North Korea’s scenic Mt. Kumgang.

“We advise companies to look carefully, to cross-check everything as much as possible before doing business in North Korea,” said Jean-Jacques Grauhar, secretary-general of the European Chamber of Commerce in Seoul. “We don’t think the legal framework is satisfactory at this stage, and the general way of doing business is not yet developed.”

In addition to its assembly line, Pyonghwa is refurbishing used cars imported from Japan for resale in North Korea. That business opened early last year and has brought in about $300,000 in sales.

There are 3,000 passenger cars in North Korea for a population of 23 million. All are said to belong to the government or top officials.

Pyonghwa also owns a Fiat assembly plant in Vietnam and has tried various automotive projects in China, which so far have been unsuccessful.

The company’s affiliation with the Unification Church is unclear. Several businesspeople in Seoul said it is part of the church, although company officials said it is merely owned by individuals who are church members, including Park, who owns about 80%.

“This really has nothing to do with religion, and the fact that our president is a member of the church doesn’t affect the way the company does business,” said Lee Hyun Tak, a Pyonghwa official.

Unification Church to sell 1,000 cars in N.Korea in ’02
Reuters
Samuel Len
3/22/2002

The automotive arm of South Korea’s Unification Church said on Friday it has finished building a $55 million car assembly plant in famine-hit North Korea, whose government has pledged to buy 1,000 cars each year.

“North Korea wants to develop its own model as soon as possible,” Park Sang-kwon, the company’s president, told a news conference in Seoul.

Business prospects in the reclusive country seemed to glow shortly after President Kim Dae-jung of South Korea held an unprecedented summit in 2000 with North Korean leader Kim Jong-il.

But relations between the neighbours chilled last year and have come under even greater pressure after President George W. Bush labelled North Korea part of an “axis of evil” in January.

North and South Korea remain technically at war as the 1950-53 Korean War ended without a peace agreement.

Undaunted by this atmosphere, Pyeongwha Motors Corp, the first South Korean company to build an auto plant in the north, says it sees a burgeoning market.

Pyeongwha, which means “peace” in Korean, is a joint venture with North Korea’s Ryonbong company. The assembly plant in the port city of Nampo will be capable of rolling out up to 20,000 cars annually when it opens on April 5.

Two years ago, Pyongyang completed a spanking new, 10-lane highway linking the port city of Nampo to the capital, he said.

All that’s needed, Pyeongwha says, are cars to fill the empty roads of a country of 23 million people. However, there were just 3,000 passenger cars among the 290,000 to 300,000 vehicles in North Korea in 1999.

NORTH KOREAN CAR EXPORTS?

The Unification Church, founded in 1954 by Reverend Sun Myung Moon and famed for mass wedding ceremonies, is also a considerable business force in South Korea. Its interests range from refining titanium to pharmaceutical products.

“We were chosen because we approached them with an offer to develop our own offspring,” he said. “We want to fill North Korea with cars and then export them.”

Exports could begin anywhere from 10 to 15 years down the road, with North Koreans preferring to export an indigenous model fitted with a Pyeongwha engine, Park said.

The orders from the North Korean government alone would be enough for the company to break even. Ssales are expected to rise to 2,000 to 3,000 cars next year, he said.

The plant assembles one model for domestic sales, the Siena compact designed by Italy’s Fiat SpA FIA.MI.

Pyeongwha has imported used Japanese cars into North Korea and refurbished for resale using North Korea’s cheap labour. It has been selling 20 to 30 cars a month, at between $10,000 to $15,000, mainly to foreign businessmen and diplomats, Park said.

Park painted a picture of life in the North Korean capital far different from the horrific images of outer regions described by aid workers.

“There’s a nine-hole golf course in the city, as well as a driving range,” built by ethnic Koreans in Japan, Park said.

Wikipedia:

Stockholders
70% Pyonghwa Motors (Seoul) (owned by the Unification Church)
30% Ryonbong Corp.

Car models
Hwiparam (휘파람 – Whistle) – based on the Fiat Siena
Ppeokkugi (뻐꾸기 – Cuckoo) – based on the Fiat Doblò
Premio (also known as Cuckoo 3) – based on a Dandong Shuguang pick-up
Pronto (also known as Cuckoo 2) – based on a Dandong Shuguang SUV
Junma – apparently based on the SsangYong Chairman

Video from DPRK state television