North Korean Economy Watch

Pictured above: Samsu Dam construction (Google Earth)

According to the Daily NK:

Located at the base of Mt. Nokbong, near Hyesan in Yangkang Province, one particular village of 24 households saw its schools, public facilities and all other vestiges of welfare disappear following the construction of the Samsoo Power Station in 2004, which deprived the area of power.

And yet this village is now overflowing with people. They are here from all over the country, cramming homes and the nearby valley with one purpose in mind; searching for gold. Housewives, workers, university students, farmers, children, drifters, criminals, soldiers and bureaucrats; men and women alike from all different classes are living in this one place with the same aim.

The majority of people dig, without permission from the authorities and with only rudimentary tools. Their only wish is to avoid having to leave town and, hopefully, find some gold. The soldiers and bureaucrats, on the other hand, do not dig, instead using their authority to cream a share of others’ profits.

The daily mission of most people is to dig a hole to extract the ore, take it to the riverside to wash, and then sell it to buy food. With work clothes and a hammer, wash bowl, strong burlap sack, metal bucket, candles, shovel, rope, and a washcloth and drain (with a wooden partition to make it easier to trap gold), they enter the mine.

First the ore has to be dug out of the mine, at which point it can be taken up to the riverbank in the bucket and sprayed with water to remove stones and dirt, then the gold separated off with the washcloth.

Those who get on the wrong side of the bureaucrats or armed forces in this process have their tools confiscated, and any gold they have sweated for as well. Complaint is out of the question. Men who show the slightest resistance are flogged and women sprayed with water and sworn at. For this reason, many people consider bribes of cigarettes or alcohol to be a necessary cost of doing business there.

Those without money enter the mines under the cover of darkness, collect large quantities of dirt and take it away to clean.

As you would expect in these circumstances, accidents are commonplace.

On June 16, 2008, a 39-year old man from Hyesan who had carried more than 200 bags full of soil to the riverbank since dawn finally stopped for lunch, when he heard a cry for help from a person who had tried, and failed, to cross the river. The rescue mission became a tragedy when the man himself drowned.

That particular spot had been used to hunt for gold when the reservoir was dry; but now it was more than 10m underwater. The man, exhausted from hours of backbreaking labor, had been unable to get out. Other people who had been dealing with their own ore nearby tried to save him, but it was no easy task.

The security forces and army eventually combined to retrieve the man two days later. Two days after that, the deceased man’s widow returned to dig for gold on the same riverbank where she had lost both her husband and 9-year old son.

This is just one story that amply demonstrates the heart wrenching reality of life in North Korea. Even to the present day hunger continues to drive people to the foothills of Mt Nokbong. The struggle to survive goes on as ordinary people dig away at the riverbed, all the while hoping to avoid becoming a victim of the regime.

You can read previous posts on the impact of the Samsu Dam here.

Read the full story here:
A Modern Day Gold Rush
Daily NK
Kang Mi-jin
3-15-2011

North Korean market footage
Kim Song Min  (김성민), founder of Free North Korea Radio, has posted some video footage of a North Korean market.

You might be able to see it here, but I make no promises. It definitely won’t work from China.

Nothing remarkable, but interesting.  Of course the market is dominated by female vendors.  Bread and dried squid were for sale.  Also, shoe shines seemed to be popular.

I wish I knew what people were saying in the background.

North Korean Legos
The Russian  blogger that brought us the DPRK’s Linux OS, the DPRK’s PDA device, and the DPRK’s film camera, now brings us the DPRK version of Legos:

Interestingly, the toys come with instructions in both English and Korean.  Maybe the producers are hoping for an opportunity to export in the future?  Finally some actual socialist building blocks behind which the children of the world can unite!  You can read more in Russian here.  You can read more in English here (via Google Translate)

Pyongyang Metro Photos
Most visitors to the DPRK visit the Puhung and Yongwang Metro Stations.  Satellite images here and here. Google has also cataloged lots of pictures pictures of these stations: Puhung, Yongwang.

The Ponghwa Metro Station is located at  39.012100°, 125.744452°–next to the Party Founding Museum.  This station is not visited by foreigners as often, but here are some photos: One, two, three, four.

The Kaeson Metro Station is next door to the Arch of Triumh (39.043059°, 125.754027°).  A friend sent some North Korean postcards that seem to come from this station, though the pictures look like they were taken in the 1970s: one, two, three, four, five, six, seven, eight, nine, ten, eleven.

Pyongyang goes pop: sex scandal on the socialist music scene
According to a story in The Guardian:

There was mild controversy last year when a secret video featuring Wangjaesan’s female dance troupe entered the public domain. The video was being privately circulated among the elite, but reached the North Korean public before making it over the border to China – and therefore the world. Normally seen in traditional, body-cloaking hangbok dresses as they perform polite folk numbers, this little clip revealed unprecedented levels of sexiness in Pyongyang, as the girls popped up in sparkly hot pants and did the splits. Western displays of decadence like this are illegal but, given Kim Jong-il’s alleged love of pornography, perhaps he turned a blind eye to this one.

The video of the dancers can be found here (though it is a VERY slow download) or you can watch it on YouTube here and here.  I could not find a better version this time around.  Here is the original story in Yonhap (2009-11) when the story broke (with picture).

UPDATED: This video is allegedly of the same group.

The 4 of 31 fishermen
I have not spent much time blogging about the 4 of 31 North Korean fishermen who drifted to the South and do not wish to return to the DPRK.  I did track down the six videos the North Koreans filmed with the family members.  They were posted to YouTube by Uriminzokkiri.  See them here: One, two, three, four, five, six. If anyone can translate these, or give us a rough idea, I would apprecaite it.

KFA sets up branch in Israel!
Alejandro Cao de Benos seeks to build sympathy for the DPRK among the Israelis.

According to the Daily NK:

This year, the North Korean authorities have been cracking down on the sale and distribution of products, tools and materials coming out of the Kaesong Industrial Complex. As a result, such Korean goods, formerly an expensive but popular choice in Hwanghae and South Pyongan Provinces, are now hard to find in markets.

A source from South Pyongan Province who spoke with The Daily NK in China explained, “Right up until last year, literally anything being made in the Kaesong Complex was available in the market, including clocks, metal, screws, clothes, underwear, toys and parts of electronics. However, the amounts have fallen dramatically since regulations were strengthened.”

The reason behind the regulations is unclear, however; the source suggested it could only be because of deteriorating inter-Korean relations.

Regardless, the source went on, “Nowadays, revealing the fact you sell those Kaesong Complex goods results in high fines and puts you in a bind” Therefore, he went on, “Only bread (Choco Pies), stainless steel or ceramic bowls and underwear are being sold.”

One consequence of the crackdown is that it makes the sale of other South Korean products smuggled in from China equally difficult. Albeit with some provincial differences, clothes and electronics cannot now be displayed on stalls, and must be sold in alley markets in secret.

A source from Shinuiju explained, “Market watch guards go around markets every day inspecting stalls with no notice; their investigation into South Korean products is really severe.” He explained, “If they find goods with Korean writing on, they confiscate them and give them back after two or three days later, after fines have been paid.”

“I hear there was a decree from above reinforcing crackdowns, but won’t this only lead to bribes?” the source pointed out.

Even when readily available, South Korean products are at the top of the price range, so most average families cannot afford them; one Choco Pie, a circular, individually wrapped chocolate cake made famous by the movie “JSA”, is between 180 and 200 won, a set of women’s underwear is 90,000 won, and a set of roughly ten plates, five or six small bowls and some coffee cups is around 250,000 won.

The source reported, “Due to the severe regulations, some traders sell them at home or in secret, hiding the goods behind the curtain.”

Interestingly, one South Korean official with the Kaesong Industrial Complex told the Daily NK that product leakage is not a problem at Kaesong, saying, “There have been almost no cases of complete products leaking out, but it is possible for stock, tools or things provided to workers like Choco Pies. However, the leaks are not enough to affect factory management.

And yet, one defector who used to be a worker in a shoe factory in charge of testing product quality explained that the siphoning off of materials, complete products, tools and other things is common among North Korean workers.

“The way they hide things and bring them out of the factory is really expert. I sometimes put up to 20 pairs of shoes on my body and came out of the factory. If you wear a long, thick winter coat then it is not so remarkable. Sometimes we did it in collusion with the factory manager.”

Read the full story here:
South Korean Products Disappear from Markets
Daily NK
Park Jun Hyeong and Mok Yong Jae
2010-3-10

Institute for Far Eastern Studies (IFES)
NK Brief No. 11-03-07
3/7/2011

The number of male workers in Kaesong Industrial Complex (KIC) increased according to the Ministry of Unification (MOU). Since the establishment of the complex, women made up 84-85 percent of the total work staff. But from last May, the number fell below 80 percent and currently is around 74 percent.

In contrast, the number of male workers steadily increased from 15 percent from last year to 26 percent, an increase of over 10 percent.

Out of the new hires of all of last year, 56 percent were male. Even sewing factories generally dominated by female employees began to accept male workers.

Many of the South Korean companies in Kaesong preferred young female workers over male for higher work efficiency; but with declining manpower, more male workers are being hired than previously.

An official from the MOU stated, “We are facing difficulties with labor supply lately,” and added, “Many are even coming from Pyongyang in addition to the nearby areas of Kaesong.”

The total production output of Kaesong Complex reached 323.32 million USD last year, an increase of 26 percent against the previous year.

Kaesong is a popular employment spot for the North Koreans due to its higher wages and extra perks including coupons exchangeable for daily necessities and free coffee and snacks.

The MOU official also noted that even in times of troubled inter-Korean relations, North Korean officials and workers on several occasions have expressed their hopes for the KIC to continue. “KIC is a space we acquired from the North for the purpose of fulfilling our national strategy. We need to be more proactive in utilizing this opportunity to its full potential.”

On the other hand, North Korea sent a letter proposing working-level talks on the industrial complex to the South earlier last month. In the letter the North expressed, “We hope for your active support to resume the working-level talks of the Kaesong Industrial Complex at the earliest possible date to revitalize the currently stagnant business. We look forward to your positive response.”

On January 8, the DPRK officially proposed for the resumption of KIC working-level talks at the earliest possible date through a statement made by the spokesperson of the Committee for the Peaceful Reunification of Korea. Specifically, late January or early February was suggested.

On January 18, the Central Special Zone Development Guidance of North Korea also proposed through its representative for working-level talks related to the KIC to be held in Kaesong on February 9.

The request from the DPRK is analyzed to be an attempt to relax restrictions prohibiting new businesses and investments in the KIC from the “May 24 Sanctions” that the South Korean government put into effect in 2010 following the sinking of the South Korean naval corvette Cheonan in March of last year.

According to the Choson Ilbo:

The North Korean regime in January launched a new surveillance bureau charged with snooping on its people, Radio Free Asia reported Thursday.

Quoting a source in the city of Hyesan, Ryanggang Province RFA said the bureau, named 118 Sangmu, combines forces from the State Security Department, the Ministry of Public Security, prosecutors’ offices and party organs, in accordance with leader Kim Jong-il’s instructions “to eradicate antisocialist elements.” Senior officials involved are baffled because the new bureau’s tasks overlap with those of an already existing bureau, 109 Sangmu, it claimed.

Since its launch in 2005, 109 Sangmu cracked down on drugs and DVDs of South Korean soap operas. Over recent years, surveillance bodies have mushroomed, including Bureau 27, an agency which monitors mobile phone use under the State Security Department; 111 Sangmu, which cracks down on child beggars; patrol units of the Ministry of Public Security; mobile strike forces; border guard posts under the Civil Defense Department; and worker inspectors.

The proliferation is already causing problems. On Feb. 24, a pitched battle broke out near the border in North Hamgyong Province between border guards and a security patrol over how to handle three smugglers, a man and two women, who were arrested by the patrol after border guards pursued them, RFA quoted another source in the province as saying. “It nearly led to a shoot-out between the two groups,” the source added.

Internal Surveillance Agencies Mushroom in N.Korea
Choson Ilbo
3/4/2010

UPDATE: KCNA Video here (Youtube)

ORIGINAL POST: According to KCNA:

The DPRK encourages foreigners to make investments in the country on the principle of equality and reciprocity and neither nationalizes nor seize their invested properties, said an official of the DPRK Committee of Investment and Joint Ventures.

In an interview with KCNA, Ri Song Hyok said the DPRK law on foreign investment stipulates the principles and order for protecting the investment of foreigners and ensuring legitimate rights and interests of foreign-invested businesses.

“The law gives a full detail of the requirements of the DPRK’s investment policy, foreign investment forms and methods, investors’ business conditions, investment sectors, incentive measures and preferential treatment in the Rason economic and trade zone,” he said.

According to the principles and order stipulated by the law, regulations have been provided on investment, joint venture, foreign business, foreign-invested business, taxation for foreigners, foreign-invested bank, land lease and Rason economic and trade zone, he added.

The law on foreign investment was adopted in the country on October 5, Juche 81 (1992) and revised in 1999 and 2004.

Well if they say they won’t nationalize or seize invested properties….

The DPRK’s law on foreign investment can be found here.

It is also interesting that KCNA uses the American spelling of “nationalize” rather than the British spelling of “nationalise” since there have been far more British English teachers in the DPRK than American.

According to the Choson Ilbo:

But now sources say Beijing seems to think it is high time to persuade the North to reform and open up as the economy is on the verge of collapse. It is pressuring the regime to develop Rajin-Sonbong into a model of Chinese-style reform, and it needs to use Rason Port for its own Tumen River project. This is swiftly attracting Chinese investment to the area.

Beijing reportedly even plans to supply electricity to the Rajin-Songbong area. “The replacement of transformers aimed at getting electricity from China is underway, and Chinese electricity is expected to be supplied from April,” said a North Korean defector.

Beijing has already established an economic mission there that is to handle any conflict with the North Korean authorities. China pressured Pyongyang to sort out traffic, communication and customs issues, and the North apparently agreed to all demands. “Customs clearance took less than 5 minutes,” said a Chinese businessman who visited Rajin-Songbon recently. Previously it took more than three hours and customs officials would extort bribes with false charges. No mobile phone calls to China can be made yet, but landlines are working and mobile phone calls are to be possible soon.

Until last year, not even Chinese people were permitted to watch TV channels from abroad and there were tight limits on what they could say or do. But now Chinese are all but free to do as they please in Rajin-Songbon, and the security officials stationed there have been brought to heel and told not to interfere with Chinese business activities.

Rajin-Songbong used to have so many security officials that it was said the population was half traders and half police, and they frequently hauled people off for questioning on groundless charges.

The North is said to have started selling land in the city to Chinese business at US$50 per 3.3 sq. m downtown and $30 in the suburbs. The Chinese still don’t trust the North Korean regime and are reluctant to purchase, but the fact that the land is for sale at all is a momentous change.

Pyongyang is in negotiations with Beijing to build a massive industrial park in the area like the joint Korean Kaesong Industrial Complex.

Read the full sotry here:
Chinese Businesses Pour into N.Korea’s Rajin-Songbong
Choson Ilbo
2/26/2011

UPDATE 3 (2/23/2011): According to Yonhap:

A recent survey of North Korean defectors in South Korea showed Wednesday that a large number of them use part of their resettlement money from the government here to help their families in the North.

In the survey conducted in November by the Organization for One Korea, a group run by unification activists, 71 percent of 350 respondents said they have sent money back to the communist country before. About 66 percent of the cash remitters said that they used part of their money received from the South Korean government.

In an effort to buffer the initial costs of resettlement, the government here provides each defector with a subsidy of 6 million won (US$5,330) and partly finances their housing.

More than 20,000 North Korean defectors have arrived in South Korea since the 1950-53 Korean War ended in a truce. The number does not account for the estimated tens of thousands hiding in China.

According to the survey that had a margin of error of 3.59 percentage points, about half of the cash remitters said brokers took away 30 percent of their money sent to the North as a fee, while only 65 percent believed the remainder was entirely delivered.

North Korean defectors are 17 times likelier to depend on government allowances, according to the Unification Ministry. Over 50 percent of defectors depend on a universal welfare program that pays them about 400,000 won (US$355) a month.

Defections began to accelerate after a massive famine swept through North Korea in the mid-1990s, killing an estimated 2 million people. North Korea considers defectors criminals punishable even by death.

Read previous recent stories about remittances below.
(more…)

Institute for Far Eastern Studies (IFES)
NK Brief No.11-02-18
2/18/2011

Despite the severed inter-Korean relations, Kaesong Industrial Complex related trade reached USD 1,442,860,000, surpassing last year’s figure (USD 940 million) by 53.4 percent.

Trade at Kaesong continuously rose since 2004, almost reaching USD 1 billion by 2009. Then it sharply jumped over the one billion mark last year in 2010.

A closer look at the numbers is as follows: 2004 (USD 41.69 million); 2005 (USD 176.74 million); 2006 (USD 298.79 million); 2007 (USD 440.68 million); 2008 (USD 884.40 million); 2009 (USD 940.55 million); 2010 (USD 1.44 billion).

This rise in trade brought the total trade figure up to USD 1.912 billion by 2010, an increase of 13.9 percent against last year’s total of USD 1.679 billion.

The number of total workers in North Korea reached 42,397 in March 2010, steadily increased to 44,958 in October, and reached 45,332 by November.

However, after the Cheonan incident, South Korea issued a suspension on inter-Korean trade, causing a drop in general trade and processing on commission.

General trade declined by 54 percent from 2009 to USD 117, 860, 000 while processing on commission was down by 22.5 percent to USD 317, 560, 000.

Consequently, the composition of the inter-Korean trade changed, contributing to the proportion of the trade in Kaesong to increase to 75.5 percent from 56 percent in 2009. General trade on the other hand, fell from 15.3 percent to 6.2 percent and processing on commission dropped from 24.4 percent to 16.6 percent from 2009.

In addition, commercial transactions — such as general trade and processing on commission — in Kaesong comprised 98.8 percent of total inter-Korean exchange while noncommercial activities like humanitarian assistance only reached 1.2 percent.

Also in 2010, a total of 13,119 South Koreans visited North Korea, which is an increase of 7.9 percent from the previous year (12,616 people). This is due to the rise in the number of people visiting the Kaesong Industrial Complex.

According to the Ministry of Unification, 94.5 percent (123,023) of the total visitors to the DPRK had involvement with the Kaesong Industrial Complex. This is an increase of 7.9 percent from 2009 (111,811 people).

In comparison, most of the noneconomic related visits to the DPRK declined since the Cheonan incident including socio-cultural exchanges and humanitarian assistance. With the implementation of the May 24 sanctions against North Korea, noneconomic related visitation to North Korea decreased 23 percent from 2,313 people to 1,773 from the previous year.

According to the Donga Ilbo:

North Korea has reportedly appointed Vice Trade Minister Jo Jong Ho as chairman of a civic committee for Rajin-Sonbong Special City, a major post in the North, to succeed Kim Su Yol, who was dismissed late last year.

Jo is a member of a group that supports Kim Jong Un, the youngest son of North Korean leader Kim Jong Il and heir apparent, and reportedly has helped set the North’s new economic policy.

A source on North Korean affairs said Sunday, “Jo Jong Ho has been named the new chairman of the people’s committee, a post which has remained vacant after the dismissal of former chairman Kim due to sluggish foreign investment.”

“Since Jo used to work with former Trade Minister Im Kyong Man, chief secretary of the ruling Workers’ Party for Rason City, he will likely enjoy a harmonious working relationship with Im.”

Pyongyang has apparently deployed a key member of the power elite among supporters’ groups of Kim Jong Un to an important economic region to lay the foundation for a successful power succession based on economic achievements.

The source said, “The North deployed a Kim Jong Un supporter at a time when Pyongyang is striving to establish the structure for power succession,” adding, “Since Jo is fluent in English, activities to attract foreign investment from overseas enterprises will likely gather momentum.”

Read the full story here:
NK appoints heir apparent`s supporter to key post
Donga Ilbo
2/14/2011