North Korean Economy Watch

From Wikipedia:

PyongSu Joint Venture Company, Limited is a pharmaceutical company jointly founded in 2002 by Pyongyang Pharmaceutical Company in North Korea and a company headquartered in Hong Kong which is a market leader in pharmaceuticals distribution and contract manufacturing in Asia. The corporate headquarters of PyongSu are in the Songyo district in Pyongyang. PyongSu started trial production in 2004 and, as of 2005, engaged in manufacturing mainly painkillers and antibiotics. At the end of 2006 the foreign-invested stake was sold to another investor. Felix Abt, the 3rd managing director (or president) managed to avoid the closure of the company by turning the heavily loss-making operation into a profit-making one. PyongSu became the first North Korean pharmaceutical factory to reach GMP (a universally recognized quality standard in the pharmaceutical industry as defined by the WHO), repeatedly inspected and confirmed by the WHO. It also became the first ever North Korean company to participate in tender competitions and to win contracts against foreign competitors from China, India, Germany and elsewhere. With an increasing cash-flow generated by itself, the company has even become able to buy and profitably operate pharmacies and other sales outlets in the country. Towards the end of 2008 managing director Felix Abt explained that the company now enjoys 1) a portfolio of products made by itself including an anti-helmintic and an anti-hypertensive drug that meets the patients’ needs well 2) a good reputation as a quality and service-minded company in the DPR Korea and the recognition as the “model company” of the domestic pharmaceutical industry. 3) a good market penetration thanks to wholesaling (that includes a variety of complementary products at affordable prices imported directly from reliable GMP-manufacturers) and its own profitable retail outlets (i.e. pharmacies) and 4) a healthy growth (including a high amount of orders on hand for 2009), sustainability and profitability.

Click here to read a recent interview by Mr. Abt in Interview Blog.

Sometimes the headlines write themselves.

According to the Union of Catholic Asian News (excerpt):

For the first time in almost 60 years, a Catholic priest will stay in North Korea, and look after the welfare of local workers.

Franciscan Father Paul Kim Kwon-soon says he will stay in Pyongyang, probably beginning in late November, and serve as a “social worker” for factory workers in the first joint North-South business venture.

Returning to South Korea from a visit, Father Kim told UCA News on Nov. 4 that North Korea is allowing him to run a newly built welfare center in Pyongyang that houses a soup kitchen, a free clinic and a public bath, even though “they know I am a Catholic priest.” As a visitor, he will have to renew his visa every two months.

According to Father Kim, the three-story welfare center he will manage is within the factory premises and will provide the workers with services such as medical checkups, meals and haircuts. It will have the capacity to offer free meals to up to 1,500 workers a day.

“I can say that the center will be a turning point in the humanitarian aid to the North,” the priest noted. “We only could send aid materials” in the past, he pointed out, whereas he can now bring aid materials to the North and provide direct service.

Saebyol General agreed last February to establish the center after three years of “great efforts” on the part of his Order of Friars Minor, Father Kim explained.

During the four-day visit to the North, Bishop Lazzaro You Heung-sik of Daejeon presided at the opening ceremony of the center on Oct. 30, the priest reported.

On Nov. 1 Bishop You, former president of Caritas Corea, the Korean bishops’ social service organization, celebrated a Mass at Changchung Church, the only Catholic church in North Korea, to thank God for opening the center. About 50 South Korean Catholics including eight priests and four Religious took part. No North Korean Catholics attended.

Father Michael Lee Chang-jun, secretary of Caritas Corea, accompanied Bishop You. He told UCA News on Nov. 5 that he wished “the center could provide its service not only for the workers, but other North Korean people in the neighborhood.”

Cecilia Lee Seung-jung, North Korea program manager for Caritas Internationalis, the worldwide confederation of Caritas organizations, earlier called the agreement on the center a significant development. She pointed out that inter-Korean exchanges have been limited since the current government in Seoul assumed office last February.

Records of South Korea’s Unification Ministry show aid to North Korea from the South Korean government and civil groups amounting to US$63.6 million from January to September 2008, while in 2007 it totaled US$304.6 million.

According to Church sources, North Korea maintains that 3,000 Catholics in North Korea practice their faith at “home worship places” across the country, with no residing priest or nun. Between 1949 and 1950 all priests and nuns who remained in the North were executed or disappeared.

It is very interesting that the mission will be operated out of a South/North joint venture company rather than North Korea’s Changchung Cathedral in eastern Pyongyang.  There are countless reasons why concerned parties believe this to be a superior arrangement.

To learn more about Pyongyang’s new hemp factory, click here.

To read the full story mentioned ablove, click below:
Catholic Priest To Work In North For Social Welfare
Union of Catholic Asian News
11/6/2008

UPDATE: A Catholic Priest will be operating a mission out of the factory.  Read more about this here. 

ORIGINAL POST: Yes, you read the title correctly.  Billed by Yonhap as the first inter-Korean joint venture in Pyongyang:

Pyongyang Hemp Textiles is a cooperative effort between the South’s Andong Hemp Textiles and the North’s Saebyol General Trading Co., with a total investment of US$30 million shared equally by the two sides, according to the officials.

Around 1,000 North Koreans will be working for the textiles and logistics firm, which is built on 47,000 square meters of land in Pyongyang, they said.

…The opening ceremony for the joint venture was delayed for close to two months due to deteriorating inter-Korean relations, which worsened after a South Korean woman was shot to death while traveling the communist country in early July. Pyongyang refused to apologize for the shooting, and denied requests from Seoul to cooperate in a fact-finding mission into the death.

If anyone has any idea where this company is located on Google Earth, please let me know. 

According to Wikipedia, which is not an authoritative source:

Industrial Hemp is produced in many countries around the world. Major producers include Canada, France, and China. The United States is the only industrialized nation to continue to ban industrial hemp. While the Hemp is imported to the United States more than to any other country, the United States Government does not distinguish between marijuana and non-psychoactive Cannabis used for industrial and commercial purposes.

The South Korean government seems to have made some significant changes to the way business is to be conducted between themselves and the North.  It seems regulations have been eased on South Korean companies seeking permission to operate in the North—and some new subsidies have been put on the table.

From the Korea Times:

The government Tuesday abolished a system under which companies here must receive a permit to do business in North Korea.

As a result, companies which have been seeking to operate in the reclusive state would see simplified procedures when they start inter-Korean projects.

The Cabinet approved revisions of the law governing trade and cooperation between South and North Korea.

Under the previous licensing system, a permit for both companies and projects were necessary.

But now, companies have to get approval for their projects only and inter-Korean cooperation programs designated by a presidential decree can proceed without the approval.

If firms get the license in a dishonest way, the government can cancel it.

In a bid to diversify trade between the two Koreas, the revision allows services and intangible things as well as goods to be exchanged.

The government also approved a revision bill to encourage foreign investors to invest in inter-Korean trade.

It says that foreigners who invest $10 million or more can get some incentives such as cash grants.

The legislation on South-North cooperation was introduced in 1990 to support exchanges and cooperation between the two Koreas.

The Ministry of Unification has a committee under itself to coordinate related policies and make a decision on important inter-Korean cooperation issues.

To promote economic, cultural and social exchange projects, a permit from the minister has been required.

If caught violating the law, the person will be sentenced to up to three years imprisonment or fined up to 10 million won ($6,770).

Read the full article here:
Inter-Korean Business Procedures Simplified
Korea Times
Kim Sue-young
10/28/2008

Korea Business Consultants has published their latest newsletter.  You may download it here.

Topics covered include:
Six Party Talk progress
South Korea/Russia gas deal
More factories opening in the DPRK
UN survey of DPRK population
Summit pledges
Pyongynag hosts autumn trade fair
KEPCO to Abandon NK Reactor Gear
Trust Company Handling DPRK’s Overseas Business
DPRK-Russia Railway Work Begins
ROK Opposition Calls for Renewed Cooperation with DPRK
ROK Delegation Leaves for DPRK
ROK Aid Workers Leave for DPRK
“ROK Makes US$27.6 Billion from DPRK Trade”
“Kaesong Output Tops US$400 Million”
DPRK, Kenya Set Up Diplomatic Ties
Medvedev Hails DPRK Anniversary
Claim to North Korean rock fame
International Film Festival Opens
Ginseng

According to Yonhap:

Hyundai Asan Corp., a unit of the South’s Hyundai Group in charge of businesses in North Korea, opened the tour to Kaesong in December last year. Everyday, about 370 people visit the North Korean city, about 70 kilometers north of the frontier separating the two Koreas.

The high number of tourists to Kaesong comes as the two Koreas are still bickering over responsibility in the July death of the South Korean tourist, who was fatally shot dead by a North Korean soldier while touring the North’s scenic mountain resort of Geumgang.

Since then tours to Mt. Geumgang, which began in 1998, have been indefinitely suspended.

In a ceremony to celebrate the 100,000th tourist, Hyundai Asan Chief Executive Officer Cho Kun-shik expressed hope that the two Koreas could amicably resolve the impasse over the shooting death.

According to the Associated Press (via the New Zealand Hearld):

Company officials said most of the tourists have been South Koreans but about 2,600 Americans, Japanese and other foreigners also have taken part in the programme.

Before the [Kumgangsan] shooting incident, about 10,000 people travelled to Kaesong every month, but the number of monthly visitors declined to about 7,450 in August and 5,770 in September, according to Hyundai Asan.

Facts:

1. By May 2008, 40,090 tourists had visited Kaesong, and the daily quota was increased from 300 to 500.  

2. Last August, Hyundai announced it was sending $928,560 to North Korea for the Kaesong tours. 

3. According to Dr. Lankov, the price to customers is W180,000, W100,000 of which is paid to the DPRK.  Additionally, Hyundai pays for all infrastructure improvements.  If these numbers are correct, the DPRK has grossed (and probably netted) W10,000,000,000  since the project was launched (appx. US$9,800,000 using an average interbank exchange rate from January through today).

4.  Although Hyundai Asan asserts (above) that appx. 370 tourists visit Kaesong per day, the most recent monthly figures (5,770 in September) indicate a mere 192/day.  370 is the number derived by taking the total (100,000) and dividing it by the number of days the project has run (appx. 270 this year)…so the daily average trend by month is now well below the annualized daily average.

Read more here:
N. Korean city draws 100,000 tourists from South despite shooting impasse
Yonhap
10/15/2008

North Korea: Border city draws 100,000 tourists
Associated Press (via the New Zealand Hearld)
10/16/2008

North Korea Uncovered: Version 12
Download it here

About this Project: This map covers North Korea’s agriculture, aviation, cultural locations, markets, manufacturing facilities, energy infrastructure, political facilities, sports venues, military establishments, religious facilities, leisure destinations, national parks, shipping, mining, and railway infrastructure. It is continually expanding and undergoing revisions. This is the 12th version.

Additions include: Tongch’ang-dong launch facility overlay (thanks to Mr. Bermudez), Yongbyon overlay with destroyed cooling tower (thanks to Jung Min Noh), “The Barn” (where the Pueblo crew were kept), Kim Chaek Taehung Fishing Enterprise, Hamhung University of education, Haeju Zoo, Pyongyang: Kim il Sung Institute of Politics, Polish Embassy, Munsu Diplomatic Store, Munsu Gas Station, Munsu Friendship Restaurant, Mongolian Embassy, Nigerian Embassy, UN World Food Program Building, CONCERN House, Czech Republic Embassy, Rungnang Cinema, Pyongyang University of Science and Technology, Pyongyang Number 3 Hospital, Electric Machines Facotry, Bonghuajinlyoso, Second National Academy of Sciences, Central Committee Building, Party Administration Building, Central Statistics Bureau, Willow Capital Food House, Thongounjong Pleasure Ground, Onpho spa, Phipa Resort Hotel, Sunoni Chemical Complex (east coast refinery), Ponghwa Chemical complex (west coast refinery), Songbon Port Revolutionary Monument, Hoeryong People’s Library, Pyongyang Monument to the anti Japanese martyrs, tideland reclamation project on Taegye Island. Additionally the electricity grid was expanded and the thermal power plants have been better organized. Additional thanks to Ryan for his pointers.

I hope this map will increase interest in North Korea. There is still plenty more to learn, and I look forward to receiving your contributions to this project.

Version 12 available: Download it here

Institute for Far Eastern Studies (IFES)
NK Brief No. 08-9-23-1
9/23/2008

North Korea’s Chosun International Development Trust Company, founded less than four years ago, is quickly emerging as the center for all of North Korea’s overseas business transactions. This was made public in an article published in the September 18 edition of the Chosun Sinbo, the newspaper of the Jochongryeon, an organization representing the North Korean diaspora in Japan.

The newspaper introduced the trust as being involved in “business and trade dealings with other countries, investment trust activities, financial services and other activities,” while “raising the credit rating of related domestic enterprises through solid business practices and broadly and continuously expanding business transactions with foreign enterprises.” This trust was founded in April 2004, and handles import-export business and investment trust services, as well as financial services and other activities for foreign enterprises. The main imports of the trust are soybean oil and other foodstuffs, fertilizer, and farm-use products such as vinyl sheeting, which are high on the list of consumer demands within North Korea. The trust has set up an exchange market in the Botong River area of Pyongyang, and is responsible for providing production materials to the North’s businesses and farming towns.

This business also focuses on trust investment and financial services. According to the Chosun Sinbo, the trust is “solidifying economic utility and connecting domestic and international firms that are promoting positive prospective plans, guaranteeing and investing capital necessary for the development of national businesses.” The paper also explained that the trust “also provides financial services, actively promoting the management of domestic enterprises.” According to the article, it appears that the Chosun International Investment Trust Company is receiving foreign capital and investing it in North Korea’s domestic businesses.

The trust seeks capital, particularly Chinese capital in Beijing and Jilin, and invests this foreign capital in the building and operating of a leaf tobacco processing plant, a hygienic products production plant, food processing facilities, automobile repair facilities, and other joint venture and cooperative venture projects.

Capital Club, Beijing
Sept 29, 2008

Spearkers include: Dr. Leonid Petrov and Paul Tija
Agenda and reservation information here: dprk_seminar.pdf

The DPRK (North-Korea) is in need of many foreign products and investments, while there are also opportunities for production and outsourcing. From the end of September to 4 October 2008, a Dutch economic mission will investigate the business climate in this country, with participants from different business sectors, including agribusiness, light industry and computer software.   
 
Before leaving for Pyongyang, the trade mission will start its tour in Beijing. On 29 September, some of the participants will join the BenCham (Benelux Chamber of Commerce) event: “Doing business with North-Korea”. This dinner/seminar takes place at the famous Capital Club and will start at 18:30. The leader of the trade delegation, Paul Tjia of GPI Consultancy, will give a presentation. If you or your colleagues in China are interested, then you are welcome to join the event. Program details (including information on registration and dress code) can be found in the PDF file above.       
 
Due to the growing European interest in trading with the DPRK, we are planning to organize another trade mission to North-Korea in 2009. This trip will be open for business participants from other countries as well. If you are interested in joining a future trade mission, or wishing to cooperate, please contact us for further details.    
 
With best regards,
Paul Tjia (sr. consultant ‘offshore sourcing’)
GPI Consultancy, P.O. Box 26151, 3002 ED Rotterdam, The Netherlands
E-mail: paul@gpic.nl tel: +31-10-4254172  fax: +31-10-4254317 Website: www.gpic.nl

The South Korean Ministry of Unification has reports on economic output at the Kaesong Industrial Zone.  Below are the highlights from Yonhap:

The total output by South Korean factories operating in North Korea has exceeded US$400 million, Seoul’s Unification Ministry said Monday.

Companies at the Kaesong industrial complex produced goods worth a total of US$410 million between January 2005, when the compound was opened, and July this year. One-fifth of all goods produced were exported, according to the ministry handling inter-Korean affairs.

The output in the first seven months of this year amounted to $140 million, up 51 percent from the same period last year.

As of August, 79 firms operated in the area, employing more than 32,000 North Korean workers, mostly women.

Read the full article here:
Production in inter-Korean business town tops $400 million
Yonhap
9/15/2008