North Korean Economy Watch

According to Yonhap:

Trade between South and North Korea fell to its lowest level in eight years in 2013 due to their strained relations, data showed Sunday.

Inter-Korean trade reached US$1.15 billion last year, down a whopping 41.9 percent from the previous year’s $1.98 billion, according to the data from the Korea International Trade Association (KITA).

South Korean exports to the North nose-dived 41.1 percent on-year to $531.8 million, with imports from the communist country sinking 42.5 percent to $617.2 million.

The 2013 inter-Korean trade volume was the lowest since 2005, when the figure came to $1.06 billion.

…

In contrast to the plunge in trade with South Korea, the North’s trade with China, its chief ally and largest benefactor, jumped 10.4 percent on-year to a record high of $6.54 billion last year, according to the data.

Between 2009 and 2014, North Korea’s trade volume with China, the world’s second-largest economy, had been growing an annual average of more than 40 percent, the data showed.

According to the Choson Ilbo:

Inter-Korean trade fell to 18 percent of the North’s trade with China, the lowest since 2005.

…

South Korea’s imports of textile goods and electric and electronic products from the North fell 45 percent and 43 percent, while the North’s imports of mineral and textile products from China increased 15 percent and 33 percent.

Of course inter-Korean trade was down due to the DPRK’s closure of the Kaesong Industrial Complex (KIC). Once the complex was reopened, trade began to recover.

More on China-DPRK trade in 2013 here.

Read the full stories here:
Inter-Korean trade hits 8-year low in 2013
Yonhap
2014-2-23

N.Korean Trade with China Grows
Choson Ilbo
2014-2-24

UPDATE 4 (2014-2-18): Western tourists are still visiting the restaurant (meaning it has a contract with KITC). The restaurant still has the sign “Rakwon Chicken Specialty Restaurant”, though it is a different color than the original. See tourist video here and here.

UPDATE 3 (2014-2-17): The Hakyoreh updates us on the fate of the inter-Korean chicken restaurant:

In 2005, Choi made his first trip to North Korea to inquire about chicken imports. Soon he had changed plans: he would open his own restaurant there selling South Korean-style chicken. Acquaintances tried to talk him out of it, but he was determined. “I went to Pyongyang and I could see there was money in it,” he recalled. And with economic cooperation between South and North at an all time high, he didn’t see much of a political risk either.

He went back and forth to Pyongyang a few times looking for partners. Finally, in June 2007, he opened up the Rakwon Chicken Restaurant, selling South Korean-style chicken on Puksae Road in the Kaesonmun neighborhood of Moranbong District. His North Korean partner provided the building and staff; Choi was responsible for the interiors, ingredients, recipes, and management system. He reached a deal where he took 70% of profits with a total investment of 500 million won (US$470,000). The opening drew a lot of media attention at the time, with write-ups in the South Korean press and foreign outlets like the Washington Post and Japan’s NHK.

Early on, he did strong business selling at fairly steep prices – the equivalent of US$11.30 for a single bird. His clientele came mainly from the city’s upper class and Chinese visitors. Sales of 100 million won (US$94,000) a year looked to be in sight. “My plan was to open up 100 restaurants in the North,” Choi said.

But in 2008, less than a year after he opened the restaurant, Lee Myung-bak took office as South Korean President. Lee’s administration put a stop to the previous decade’s policies of engagement and cooperation with North Korea, opting for sanctions and containment instead.

“There was a promise between the two sides, and I never thought that would be rejected completely,”Choi said. “Suddenly, that was the reality.”

Bit by bit, exchange ground to a halt. A March 2008 shipment of ingredients through Nampo turned out to be Choi’s last interaction. He had not yet received a single share of revenue.

Then came the announcement of the so-called “May 24 measures” in 2010. Following the sinking of the ROKS Cheonan warship the preceding March, Seoul had called a complete halt to all exchange and economic cooperation with North Korea.

“All the May 24 measures did was drive it home,” Choi insisted. “Most of the economic cooperation had been choked off long before that.”

For the next four years, Choi wasn’t able to set foot in North Korea. Without his support, the restaurant lost its chicken focus and began selling ordinary cuisine. Choi’s other business began to suffer too.
“I’d put my house and buildings up as collateral to borrow the 500 million won to invest in the North,” he said. “Then, to top it all off, there was the US financial crisis. Things began to go downhill rapidly in South Korea, and my business started to fall apart.”

UPDATE 2 (2009-1-1): The BBC offers an update of the new chicken restaurant:

The governments may not be on the best of terms but a South Korean businessman seems to have found a way to North Koreans’ hearts: their stomachs.

Choi Won-ho, the owner of a fried chicken chain, was told he was doomed to fail when he opened his first branch in the impoverished North last year.

But encouraged by his progress so far, he is already preparing to open another one.

Mr Choi runs a fast food franchise in South Korea with a total of 70 stores.

He opened one more last year – no real challenge you might think – except this extension to his fried chicken empire is in the heart of one of the most secretive and business-unfriendly places on the planet.

But Mr Choi says the citizens of Pyongyang have been queuing in front of his shop which is taking around $1,000 a day.

He is now preparing to meet North Korean officials in January to finalise the approval for a second outlet.

His customers are almost certainly all members of North Korea’s elite, a country in which the World Food Programme says up to 9m people will face urgent food shortages this winter.

Relations between the two Korea’s have been at a low since the conservative government of President Lee Myung-bak came to power in the South in February.

North Korea has severed official contacts, stopped all cross-border tourism and restricted entry to a joint industrial zone built with southern money.

But despite the chill, Mr Choi’s fried chicken venture seems to be sizzling.

Read the full story here:
South Korea Chicken Success in NK
BBC
John Sudworth
2009-1-1

UPDATE 1 (2008-11-1): The restaurant is set to open in February 2008. According to Yonhap:

An inter-Korean joint-venture chicken franchise will open its first store in Pyongyang early next month, the head of the franchise’s South Korean partner said Friday.

The store set to open in early February will provide a food delivery service using motorbikes for the first time in the communist country, Choi Won-ho, president of the South Korean company said.

No North Korean restaurants offer food delivery service now, according to defectors from North Korea.

Fried, grilled and steamed chicken dishes as well as draft beer are available for delivery, he said, adding the food will be prepared in the North Korean style.

“I recently received a photo of the store’s interior design from our North Korean business partner, Rakwon General Trading Corporation, along with the offer to open the first store before the 66th birthday of North Korean leader Kim Jong-il,” Choi told Yonhap News Agency by phone. “After opening, I will use radio and newspaper ads to promote the business.”

Kim’s birthday, which falls on Feb. 16, is the most festive holiday in the North.

The North Korean company will provide land, some 20 low-cost workers, chicken, and draft beer. The early-stage investment, equipment, cook and spicy chicken will come from the South Korean chicken franchise called “Matdaero Chondak,” Choi said.

The first “Rakwon” chicken restaurant in Pyongyang will have the capacity of seating about 200 people, he added.

The businessman said he will visit North Korea next week to discuss the opening of the store.

“I hope the business will thrive enough so that we can open store No. 10 in Pyongyang,” he added.

Read the full story here:
Inter-Korean joint venture chicken franchise to open first store in Pyongyang
Yonhap
1/11/2008

ORIGINAL POST (2007-11-3): A South Korean entrepreneur is investing in a new fried chicken restaurant in Pyongyang:

According to Reuters:

A South Korean businessman plans to begin a fried chicken delivery service in the North Korean capital, with the first foreign-run restaurant in a country that struggles to feed its own people.

Choi Won-ho, head of a fried chicken franchiser that has about 70 restaurants across South Korea, said Friday he is opening a 50-table restaurant in Pyongyang on Nov. 15. It will also deliver chicken and draft beer to homes.

“I have wanted to be the world’s best chicken brand,” Choi told The Associated Press in a telephone interview.

“But I thought it makes no sense to conquer the world without sharing food with our compatriots. That’s why I went there first,” he said. “I plan to get into the Chinese market via Pyongyang.”

He laughed off concerns his venture may be too risky in the impoverished and isolated country of 23 million, where the elite citizens of the capital are much better off than others.

“I don’t think that I’m going to lose money at all,” he said.

It will be the first foreign-run restaurant in North Korea, according South Korea’s Unification Ministry.

Choi, 48, who has been in the fried chicken business for 15 years, said he hired an ethnic Korean Chinese as the main cook for the Pyongyang outlet and taught him all his cooking know-how. About 20 North Koreans will also work at the restaurant and five scooters will be used for deliveries, he said.

Choi said he invested about 500 million won (US$551,339, ?382,264) in the joint venture with a North Korean trading firm that will take 30 percent of the profits from the business.

North Korea is one of the poorest countries in the world and has relied on foreign food aid to feed the population for more than a decade since natural disasters and mismanagement devastated its economy.

Relations between the two Koreas have improved significantly since their first-ever summit in 2000, spurring a series of exchange projects between the Cold War rivals that fought the 1950-53 Korean War. That conflict ended in a truce, not a peace treaty, leaving the two sides still technically at war.

According to the Joong Ang Ilbo:

South Koreans are making two very different attempts to improve the culinary life of impoverished North Koreans.

First, a South Korean fried chicken franchise will open the only foreign-run restaurant in North Korea, targeting family dining on special occasions.

Second, the labor union of a South Korean conglomerate has built a plant in Pyongyang to provide cheap corn noodles to northerners who suffer from food shortages.

Choi Won-ho, who runs Matdaero, a 70-store fried chicken franchise in the South, said yesterday he would open a restaurant in a joint venture with a North Korean state-run trading company, near the Arch of Triumph in central Pyongyang on Nov. 15.

The restaurant will both receive walk-in customers and deliver chicken and draft beer to homes. Such places are common in South Korea, but it will be the first chicken joint of its kind in North Korea.

Choi has invested 500 million won ($551,000) in the restaurant’s cooking facilities, interior decoration and delivery scooters. He will split the profit 70-30 with the North Korean firm.

Choi, 48, who has been a chicken entrepreneur for 15 years, said there should be sufficient demand despite North Korea being one of the world’s poorest countries, because he plans to offer lower prices to locals.

“I will charge about $3 for a whole chicken for North Koreans and at least $12, the same price as in South Korea, for tourists from the South and other countries,” Choi said yesterday by phone. “One whole chicken will be enough for a four-member family, so the price of $3 will not be too burdensome for special occasions.”

The store will hire about 20 North Koreans to take telephone orders, fry the birds and make home deliveries. It will have seating for 50.

Separately, the labor union of Hyundai Motor Company, Korea’s top automaker, said in a statement that it has completed an 1,800-square-meter corn-noodle plant in Pyongyang. The plant can produce two tons of corn noodles a day, it said.

Hyundai Motor’s 44,000 unionized workers agreed in August to help a South Korean humanitarian group build the noodle factory. Workers donated about 12,000 won each, 500 million won in total, for the facility.

“The plant will be a great help to relieve the food problems of North Koreans,” Chang Kyu-ho, a spokesman for the labor union, said. “Corn is a staple food for North Koreans.”

Read the full stories here:
Fried chicken franchise goes North
Joong Ang Daily
Moon So-young
11/3/2007

S Korean businessman to debut fried chicken at first foreign-run restaurant in North Korea
Reuters (Via DPRK Studies)
Jaesoon Chang
11/3/2007

Institute for Far Eastern Studies (IFES)
2014-2-9

In this third year of the Kim Jong Un regime, the expanding activities of the Cabinet are drawing much attention. High-level officials of the Cabinet are frequently appearing at public events in North Korea and Kim Jong Un is repeatedly emphasizing the importance of this organ of state power.

North Korean media reported on the February 12th annual mass rally celebrating Kim Jong Un’s Songun leadership at the secret camp in Mount Paektu. The speakers at the event were reportedly Senior Workers’ Party of Korea (WPK) Department Deputy (1st vice) Director Choe Hwi, Vice Minister of the People’s Armed Forces Kang Pyo Yong, and Vice Premier Jon Sung Hun.

At the event, Vice Premier Jon delivered a speech and expressed determination to “follow the ideology and policy of our revered leader Kim Jong Un and solidify the monolithic leadership system of the Party in all state economic policy.” In addition, he promised to elevate the status and responsibilities of the Cabinet as “the control tower” of the nation’s economy.

The annual mass rally is held for those to display loyalty to the deceased leader Kim Jong Il (whose birthday is celebrated on February 16). The event is attended by party, state, and military officials. Since Kim Jong Un’s power transition in 2011, it is unprecedented for the North Korean media to cover the speech of the vice premier at this rally.

In addition, a national conference of sub-workteam heads in the agricultural sector (National Conference of Subworkteam Leaders in the Agriculture Sector) opened at the Pyongyang Indoor Stadium from February 6 to 7. At the conference, DPRK Premier of the Cabinet Pak Pong Ju, DPRK Vice Premier and State Planning Commission Chairman Ro Tu Chol, Vice Premier and Minister of Agriculture Ri Chol Man, Vice Premier and Minister of Chemical Industry Ri Mu Yong, and other high-level Cabinet officials were present, demonstrating the rising status of the Cabinet.

In particular, Kim Jong Un sent a letter (“Let Us Bring About Innovations in Agricultural Production under the Unfurled Banner of the Socialist Rural Theses”) to the participants at the conference. In the letter, he stated that “It is essential to enhance the role of the Cabinet and the agricultural guidance organs,” and that the power to make a transformation in agricultural production will depend “largely on the role of the Cabinet and the agricultural guidance organs.”

Furthermore, DPRK Premier Pak is actively conducting onsite inspections of various agricultural and economic related sites. He visited the construction site of the Sepho Tableland on January 29 and made a field survey of the Hwanghae Iron and Steel Complex and Posan Iron Works on February 2.

In a speech in April 2012, Kim Jong Un mentioned plans to strengthen the power of the Cabinet. This policy appears to be ongoing. As North Korea continues to emphasize agriculture as a core economic focus as well as improvement of the lives of the people, the role and the activities of the Cabinet are likely to be reinforced.

Institute for Far Eastern Studies (IFES)
2014-2-6

A pilot operation of the new electronic entry system, or radio frequency identification system (RFID), to facilitate the travel to and from the Kaesong Industrial Complex (KIC) was completed on January 15 and pilot operation began from January 28, 2014.

According to a Ministry of Unification (MOU) official, “The construction of the system began from December 11 last year and it was completed this month on the 15th. The trial operation period will begin from the 28th.”

The RFID system was agreed upon last September at the second meeting of the South-North Joint Committee for the Kaesong Industrial Complex in order to improve the South Korean companies’ access to the KIC.

The new RFID system will replace the paper document inspection with an electronic card system and personnel screening will be reduced to 5 seconds from 13 seconds while vehicle screening time will be reduced to 7 seconds from 15 seconds.

In particular, the reduced inspection time will facilitate the travel and ease the heavy traffic during Monday mornings and Friday afternoons: for personnel screenings, from 17 minutes to 5 minutes; for vehicle inspections, from 19 minutes to 8 minutes.

However, the existing personnel and vehicle access to the KIC which requires a 3-day advance notice still remains in effect, and the mobility of personnel and vehicles will still be strictly monitored and chaperoned by the North Korean military.

On the other hand, the fourth round of the sub-panel meeting was held on January 24 to discuss the operation of the RFID system, Internet connectivity, and simplification of customs process at the KIC.

In regards to the streamlining of the customs process, the two countries agreed to change it from ‘complete’ to ‘selective’ examination, but differences still remain over the ratio to be applied to the selective probe.

As for the issue of Internet connection, it is still in the infant stage and the two sides agreed to resume the negotiation on February 7.

According to Yonhap (via the Korea Herald):

A fuel ration system in North Korea seems to have been dismantled due to a chronic fuel shortage, a report said Monday.

The report by the state-run Korea Energy Economics Institute (KEEI) said a majority of households in North Korea secure their fuel for heating and cooking on the black market or by themselves, hinting that the country’s fuel ration system might have been scrapped.

The report was made on the basis of data compiled from a poll of 350 North Korean defectors who fled the country after 2011.

According to the report, 51.1 percent of the North’s households bought their heating and cooking fuel on the market, with 42 percent gathering their fuel, such as firewood, by themselves.

Only 6.8 percent of them were provided with fuel for heating and cooking through the country’s fuel ration channel.

The energy consumption of a North Korean household was estimated at 0.291 tons of oil equivalent (TOE) as of 2011. The TOE is a unit of energy which is equivalent to the amount of energy released by burning one ton of crude oil.

The consumption of energy gaining from coal briquettes accounted for 36.8 percent of the total, reaching 0.107 TOE, followed by wood with 0.069 TOE, electricity with 0.038 TOE, oil products with 0.025 TOE and propane gas with 0.023 TOE.

The energy consumption for heating took up 50.9 percent of the total, amounting to 0.148 TOE.

The KEEI said a program for fuel aid to North Korea should be mapped out on the basis of exact data on the energy consumption in the North’s private sector.

You can download the full report here in Korean (PDF). Here is the web page for the Korea Energy Economics Institute.

Read the full story here:
Fuel ration seems to have been dismantled in N. Korea: report
Yonhap
2014-2-3

Kim Chol-jin, the deputy chief of North Korea’s National Committee for Economic Development, is seen with North Korea head-of-state Kim Jong-un in Pyonyang’s water park (top left) and at the Masik Pass ski resort (top right). A Shanghai businessman uploaded the two lower pictures showing Kim meeting Chinese businessmen onto his blog in January 2012. (Yonhap)

According to the Korea Herald:

Kim Chol-jin is the newest influential economic policymaker in North Korea said analysts, after television images recently showed the bureaucrat accompanying head of state Kim Jong-un on multiple inspection rounds.

The North Korean Central News Agency broadcast images of Kim Chol-jin, the deputy chief of the National Committee for Economic Development, shadowing the North Korean leader to economically symbolic sites such as the Masik Pass ski resort last December. The ski resort opened last year as part of efforts to boost foreign tourism in the reclusive country.

“That deputy seat is actually closer to that of a minister here in the South,” said Ahn Chan-il, the head of the World North Korea Research Center. “He will likely have clout on North Korea’s economic policies.”

North Korea analysts expect Kim Chol-jin to spearhead much of the North’s recent economic plans to earn cash through foreign investment.

But the latest television images showing Kim Chol-jin do not include his immediate boss, the chief of the National Committee for Economic Development, implying that he is the de facto executive and his boss a mere figurehead, according to sources.

The deputy committee chief is an experienced trade official. He served at the North’s Ministry of Foreign Trade and at government agencies facilitating Chinese investment. Sources say he has extensive business connections in China and experience trading with South Korea in the mid-2000s.

Kim, along with Park Bong-ju [Pak Pong-ju], the Premier of North Korea and Roh Du-chol [Ro Tu-chol], head of the National Planning Commission, are expected to be the key members of North Korea’s economic policy team. North Korea experts consider Park and Roh to be market-orient reformists although one analyst voiced caution.

“Yes, (there) are changes on the margins, but they’re more for maintaining the current (political) system,” said Daniel Pinkston, the Deputy Project Director of the International Crisis Group’s North East Asia office.

The North’s economic development committee is the communist country’s key macroeconomic decision-making body. The committee oversees special economic zones, which lower taxes for foreign companies willing to invest there. Russia and China have been the main bidders.

Read the full story here:
New economic czar emerges in N. Korea
Korea Herald
Jeong Hunny
2014-2-3

When Jang Song-thaek was purged, the North Korean prosecutors provided a laundry list of offenses committed against the nation. Among his crimes, Jang was specifically criticized for his management of assets in the Rason Economic and Trade Zone. The public accusation stated, “Jang made no scruple of committing such act of treachery in May last as selling off the land of the Rason economic and trade zone to a foreign country for a period of five decades under the pretext of paying those debts.”

The unnamed “foreign country” in the quote is obviously China, and the subtext of the quote implies that Rason contracts signed under Jang’s protection are in danger of being violated as the North Koreans reorganize the allocation of rents among key leadership organizations. This has to be unnerving to the Chinese business partners that signed these contracts and have been investing in the zone. In a best-case scenario for the investors, the reorganization of patronage would simply mean that they are just making payments to different organizations, but otherwise, business is pretty much unchanged. However, if the North Koreans are taking the drastic step of invalidating contracts and confiscating property, then we would expect to see a significant slow down in development of the zone in the future.

Following news of Jang’s purge, initial reports indicated that both DPRK and Chinese members of the Rason Management Committee had departed the SEZ and that most activities have come to a complete halt. But there are not enough reports to firmly conclude this is the case. Now New Focus has published information on some of the changes taking place in the Rason SEZ. The usual caveats apply:

The Kim Il-sung villa in Rajin-Sonbong is no longer available for hire, according to a reliable source in the area. The de-listing happened in the course of a Ministry of State Security (MSS) surveillance operation in North Korea’s Rajin-Sonbong special economic zone.

The operation was instigated under orders from the Organisation and Guidance Department (OGD) of the Workers’ Party, as it tightens its grip on the zone in the aftermath of Jang Song-thaek’s purge and execution. Nevertheless, the operation is being conducted in a relatively discreet manner so as not to startle Chinese businessmen in the zone.

The talk among senior DPRK cadres is that although Rajin-Sonbong’s Party Secretary, Party Committee Chair and MSS Supervisor are Jang Song-thaek’s associates, they are being left alone for the time being because of their close personal relations with Chinese investors; but that following the Supreme People’s Assembly elections in March, they will be replaced.

Nevertheless, the highest ranking female cadre in Rajin-Sonbong, the Tourism Director, was taken away. This prompted rumours that she was Jang Song-thaek’s lover, but her circumstances make this very unlikely.

The International Club in Rajin-Sonbong closed after the purge of Jang Song-thaek and the coming and going of Chinese businessmen has also decreased. The Kim Il-sung holiday villa in Rajin-Sonbong, which had been rented by HK investing company Emperor Group, has now been confiscated.

This villa is a 70s construction built as a getaway for Kim Il-sung and was a prized landmark in Rajin-Sonbong, with even a commemorative monument to mark the villa’s location. When the Emperor Group set up a casino in the area, they asked for permission to hire the villa for its VIP guests. At first, the Rajin-Sonbong Party Committee refused because it was considered a sacred landmark related to Kim Il-sung.

The person who secured the deal for the Emperor Group was an ethnic Korean Chinese named Ri Bong-hui, director of a fuel oil company. He donated US$1 million as a brokerage fee and the rental permit was granted. Rumours have now been spread that this fee had gone personally to Jang Song-thaek.

Existing land lease agreements in the Rajin-Sonbong special economic zone have also been affected. These originally stipulated that at US$20 / m2, plots of land could be leased for 20-50 years, depending on their location. The agreements have now been invalidated on the grounds that the details had been mismanaged by Jang Song-thaek.

Further, personnel tax and operating tax have been re-calculated and a request has been made by Party authorities in Rajin-Sonbong for the appropriate payments to be made in yearly groupings. As the Rajin-Sonbong authorities have asked for ten years back payment, many small investors from China are complaining about their losses.

The fact that the new rulings are being applied only to smaller companies is said to be exacerbating their disgruntlement. Chinese firms making larger investments are currently exempt, but some are still worried that the new measures might be applied to the bigger investors in a second phase of rulings.

Institute for Far Eastern Studies (IFES)
2014-1-23

North Korea is promoting stable “political and military environment” as a necessary component to attract foreign investment and regional development through advancement in economic development zones (EDZs).

The Academy of Social Sciences’ newspaper (November 15, 2013 edition) published an article entitled “The Critical Issues in Advancement of Economic Development Zones to Construct a Powerful Economy.” Five major challenges were identified, which included the “creation of a favorable political and military environment.”

As the newspaper explained, “Investors take into consideration the political and military environment of the countries that they will invest in,” and “our fundamental objective is to ensure stability of investments through favorable political and military environment in the EDZs.” Other important issues raised in the article included the creation of a stable political situation, removal of the risk of war, and strengthening of military power.

This corroborates the reality that North Korea is faced with, as the country must create favorable political and military environment as the Kim Jong Un regime pursues its stated national goals of improving the lives of its people and the construction of a powerful economy.

In his New Year address, Kim Jong Un emphasized the need to improve inter-Korean relations and urged the South Korean government to positively respond to this effort. He also refrained from using confrontational remarks. North Korea seems to be demonstrating a willingness to manage the political atmosphere on the Korean peninsula.

North Korea is seeking to mollify the turmoil that followed the regime’s execution of Kim Jong Un’s uncle, Jang Song Thaek, last month, and to encourage favorable atmosphere necessary for economic development.

In addition, the newspaper described the four other major tasks for the advancement of EDZs: infrastructure maintenance of railway, roads, airfields, ports, power plants, water and sewage, hotels, and postal services; enactment of EDZ laws that take into consideration the interests of the state and the investors; provisions for preferential treatment for foreign investors; and business management and operation that fully take into consideration regional characteristics.

In May 2013 North Korea enacted its new EDZ law and announced plans to install special economic zones across the country. In November 2013 the names of 13 EDZs were announced*, with each one said to be tailored to its own area’s local characteristics and environment.

*NKeconWatch: 14 zones were announced.

According to the Hankyoreh:

The latest issue of the quarterly publication of North Korea’s Social Science Institute – published on Nov. 15, 2013, and viewed on Jan. 19 – included an article titled, “Major Issues Pertaining to Making the North Korean Economy Stronger by Establishing and Expanding Economic Development Zones.”

According to the North Korean article, there are five important tasks that must be accomplished if the new Zones are to be successful.

1. building infrastructure such as roads and railroads

2. enacting laws for the special economic zones that take into account the profit of the government and of investors

3. providing benefits for foreign investors

4. operating and managing projects in a way that is suitable to the characteristics of the zones

5. creating the right political and military environment

Read more here:
N. Korea connects politics and military to economic development
Hankyoreh
Choi Hyun-june
2014-1-20

Institute for Far Eastern Studies (IFES)
2014-1-20

North Korea is encouraging “localization” of raw materials in light and construction industries from this year to improve the lives of the North Korean people.

On January 7, Rodong Sinmun introduced that various Cabinet organizations were espousing the New Year’s address of Kim Jong Un. It reported, “The Ministry of Light Industry’s executives and employees are engaging in discussions to explore ways to increase localization of raw materials in light industry factories.”

Pyongyang City rally was held earlier this month at the Kim Il Sung Square pledging to accomplish national tasks put forward by Kim Jong Un. Tong Jong Ho, Minister of Construction and Building-Materials Industry delivered a speech that vowed to “make an unprecedented leap in localization of building materials (cement, glass, metals, and other construction materials),” by repairing building materials factories in all provinces.

The Choson Sinbo, pro-North Korean newspaper in Japan reported on January 2 that at the New Year Meeting at the Pyongyang Socks Factory, the plant manager, Lee Sung Hui made a speech and promised to “raise the level of socks production and localization of raw materials to a higher level in Vinalon and PP fibers (synthetic) this year.”

North Korea is promoting light and construction industries as the key sectors to improve the living standards of the people and asserting localization of raw materials should take precedence to make advancement in these fields.

In his New Year message, Kim Jong Un emphasized that the lighting industry had a “significant role in improving people’s lives,” and the construction sector was “at the frontline to providing a place of happiness for the people.”

In particular, he encouraged modernization of factories in light industry and directed normalization of production and placed great importance on localization of raw materials.

Many experts analyze the rising emphasis on the localization of raw materials this year reflect the intentions of the North Korean authorities to achieve realistic and achievable policy goals first. However, localization of facilities entail construction of domestic production base but this is met with limitations such as international sanctions and lack of foreign currency which is not an easy issue that can be resolved in a short period.

From 2012, North Korea’s launch of a long-range rocket and third nuclear test was accompanied with rising weight on the importance of localization of equipment and technology. On December 3, 2013, Rodong Sinmun carried an article entitled, “Localization and National Pride,” that reported on the onsite inspection visits by Kim Jong Un to various economic sectors where he underscored the importance of “equipment, materials, and elements of localization” and “our strengths and technology” on many occasions.

North Korea acclaimed the launch of long-range rocket in December 2012 was a “successful launch of a satellite based on 100 percent domestic science and technology.” Then in February last year immediately following the nuclear test, it boasted, “Thrilling clap of independent nuclear thunder broke out based on 100 percent of our own wisdom and technology.”