North Korean Economy Watch

According to Yonhap:

Output at an inter-Korean industrial complex in the North Korean border city of Kaesong rose by over 10 percent in October from the previous month, data released by the Unification Ministry said Sunday.

In October, companies in the Kaesong complex produced goods totaling US$29.41 million in value, up by $2.72 million, or 10.2 percent, from $26.69 million in September, according to the data.

The figure increased by 8.9 percent from the same month last year, they showed.

Total output for the Kaesong complex had been on the decline since the Cheonan incident in March, in which 46 sailors died in a torpedo attack blamed on North Korea. The figure hit $26.41 million in July.

The data also showed that the number of North Korean workers in the border town complex marked 44,958 in October, rising steadily from 42,397 in March.

“Although the North shelled Yeonpyeong Island on Nov. 23, North Korean workers have been on the rise,” said a ministry official. “According to unofficial statistics, 45,300 North Koreans are working in Kaesong today.”

The Kaesong industrial park is considered the last remaining major symbol of reconciliation efforts between the two Koreas, whose relations have been tense over the past three years. The park began operating in 2004 as a product of the first inter-Korean summit held four years earlier.

Read the full story here:
Output for Kaesong industrial complex increases 10 pct in October
Yonhap
12/19/2010

According to the Choson Ilbo:

Young North Koreans apparently prefer American soaps and films to South Korean ones, and they can now watch both easily. A defector who gave his name as Kim (43) and used to sell TV sets in the North said, “Used color TVs imported from China have both PAL and NTSC options, so there’s no problem receiving South Korean TV signals,” even in remote South Hamgyong Province.

North Korea and China use the PAL format to receive TV signals, while South Korea and Japan use the NTSC format. Some European countries and the Middle East favor SECAM. Most models manufactured after the 1990s allow users to shift formats.

“In South Hamgyong Province, only a few households are able to capture TV signals, but reception is quite good in Hwanghae or South Pyongan provinces,” Kim said. “People there look forward to the evenings when dramas are broadcast.” He said North Koreans also enjoy watching news and current events programs as well and power their TVs with their car batteries during power outages.

Another defector surnamed Yoo (40), who used to sell DVDs in the North and came to South Korea late last year, said North Koreans have grown tired of South Korean TV soaps with their stereotypical plots. “Nowadays, ‘Rambo 4,’ ‘007 Casino Royale,’ and other American action films or TV dramas like ‘Prison Break’ are popular,” she added.

According to Yoo, South Korean TV soaps like “Winter Sonata,” “All In” or “Autumn in My Heart” were popular in the early 2000s, while “Jewel in the Palace” and other historical dramas grew popular in the late 2000s. Recently, action movies are gaining more attention.

North Koreans also prefer American movies to Korean ones. “Practically everyone knows ‘Titanic.'” The movie classic “Gone with the Wind” is popular among upper-class North Koreans in Pyongyang, while young people enjoy action films. “DVDs of American movies or TV dramas fetched the highest prices,” she said. “But now USBs with American TV programs are more popular than DVDs.”

Additional information:
1. Titanic is rumored to have been screened in Pyongyang cinemas.

2. Also, Tom and Jerry was shown on North Korean television in the 1980s. See here and here.

3. We have heard conflicting reports about just how tolerant the North Korean government is of foreign films.

Read the full story here:
N.Korean TV Viewers Favor American Shows
Choson Ilbo
12/18/2010

Forgotten People:  The Koreans of the Sakhalin Island in 1945-1991
Download here (PDF)
Andrei Lankov
December 2010

North Korea: Migration Patterns and Prospects
Download here (PDF)
Courtland Robinson, Center for Refugee and Disaster Response, Bloomberg School of Public Health, Johns Hopkins University
August, 2010

North Korea’s 2009 Nuclear Test: Containment, Monitoring, Implications
Download here (PDF)
Jonathan Medalia, Congressional Research Service
November 24, 2010

North Korea: US Relations, Nuclear Diplomacy, and Internal Situation
Download here (PDF)
Emma Chanlett-Avery, Congressional Research Service
Mi Ae-Taylor, Congressional Research Service
November 10, 2010

‘Mostly Propaganda in Nature:’ Kim Il Sung, the Juche Ideology, and the Second Korean War
Download here (PDF)
Wilson Center NKIDP
Mitchell Lerner

Drug Trafficking from North Korea: Implications for Chinese Policy
Read here at the Brookings Institution web page
Yong-an Zhang, Visiting Fellow, Foreign Policy, Center for Northeast Asian Policy Studies
December 3, 2010

Additional DPRK-focused CRS reports can be found here.

The Wilson Center’s previous NKIDP Working Papers found here.

I also have many papers and publications on my DPRK Economic Statistics Page.

According to the Korea Herald:

Although not so explicitly, the communist North Korea appears to be becoming more aware of capitalist cultures and trends, a change the Kim Jong-il regime has feared the most and tried to prevent for decades.

Not only the social upper crust, but the majority of the general public has seen popular South Korean TV series through copies that flow in from China and is aware of the financial gap between the two divided states, North Korean defectors said during a recent forum in Seoul.

According to the defectors ― among hundreds of others who attempt to abandon their impoverished state and escape to the wealthier South each year ― such changes are causing a headache for the North Korean leader trying to secure internal unity before handing over the regime to his youngest son.

“It is difficult to fend off South Korean products and TV shows from entering the country so as long as China remains to be its main trade partner and financial donor,” said Ju Seong-ha, a North Korean defector who graduated from the North’s top Kim Il-sung University.

“The recent phenomena may result in North Koreans choosing South Korea over their own country when the time comes for them to decide.”

North Korea, which is one of the world’s last remaining totalitarian states and also one of the most secretive nations, keeps its people largely isolated from outside news and strictly forbids them from possessing goods that are not distributed by the ruling Workers’ Party.

But the impoverished state’s heavy dependence on Beijing for food and other commodities is inevitably opening up its people to goods and cultures from capitalist nations, particularly South Korea.

China has emerged as the world’s second largest economy after abandoning Stalinist policies and is one of the largest markets for South Korean pop culture, also widely known as “hallyu.”

Most copies of popular South Korean TV series and news that flow into North Korea are produced in China, which is notorious for illegally making cheap, low-quality copies of copyrighted materials.

A 20-something North Korean who escaped to Seoul last year said he had been “shocked” at the sight of South Korea the first time he saw a soap opera starring the country’s top celebrities.

“We had been told South Korea was an underdeveloped country full of beggars,” the defector said, requesting not to be named for safety reasons. “What I saw were beautiful, trendy people living in a glamorous city.”

“I say 90 percent of North Koreans have seen a South Korean TV series at least once,” he said.

Even security and judiciary officials watch popular South Korean soap operas in secret, another unnamed defector told the Dec. 10 forum in Seoul.

“Because the DVD players are sold at a relatively cheap price in North Korea, many households possess them and share CDs among themselves,” the defector said. “Seeing for themselves how well-off and happy people in the South seem, many people build up admiration for the country.”

The apparent popularity of South Korean culture in North Korea coincides with President Lee Myung-bak’s recently made remarks during his trip to Malaysia.

“No one can possibly stop the changes brewing among the general North Korean public,” the South Korean president had said.

Read the full story here:
Changes brewing in ‘not so isolated’ North
The Korea Herald
Shin Hae-in
12/15/2010

According to the Daily NK:

North Korea’s attack on Yeonpyeong Island on November 23rd has caused a spate of rice price instability in the markets. Even though it is December, rice is now selling for around 1,300 won per kilo, as much as 500 won more than it was just one month ago.

This is contra to the normal trend, which is that the price of food generally declines because farmers on collective farms get food distribution from the state at this time.

A source from North Hamkyung Province explained the details to The Daily NK yesterday, saying, “The price of rice, which was between 800 and 900 won in mid-November, started going up on around the 23rd, and is now over 1,300 won.“

“People have been taken aback by the soaring food prices,” he added

According to the source, on the 8th and 9th the rice price in Hoiryeong Market apparently hit 1,900 won, the highest this year.

This phenomenon, which is rare but not unprecedented, seems to have been caused because the North Korean authorities are trying to raise domestic and international tension on the Korean Peninsula.

An example of this can be seen in a statement released by a North Korean “social organization”, Chosun Peace Protection National Committee, on the 11th, in which it proclaimed, “Our military and the people are both prepared for either expanded skirmishes or all-out war.”

Elsewhere, people’s unit lectures over the last few weeks have focused on asserting phrases like this one, heard in a northern provincial city lecture, “Since the current situation is extremely tense, you have to live lives appropriate to that tension.”

This atmosphere naturally has spilled over into the markets, where food wholesalers and the “donju,” holders of large amounts of capital, have reacted negatively, according to the source, who explained, “The latest mood is similar to the time when the authorities declared a ‘Quasi-war Footing’ in 1993. As the atmosphere gets more serious, money holders begin to obtain and cling onto foreign currency, so foreign currency dealing and circulation volumes fall and food trade is choked off. Therefore, rice prices soar.”

In additional, military tensions between North and South are having an influence on trade between the North and China, so the amount of Yuan flowing into North Korea has also shrunk, which is another cause of rising currency exchange rates and therefore domestic rice prices.

The source said, “People are saying that this happened because of the gunfight between the North and South,” going on, “For this troubling rumor that a war could break out, smuggling volumes between North Korea and China have also shrunk.”

Although rice has now settled back to 1300 won from its high of 1900 won, the source said many people are still concerned for the winter season.

“Since the 10th, the Yuan has gone down to 330 or 340 won, so the rice price has dropped to around 1,300 won accordingly,” the source said. “But we are worried about whether or not we can afford to eat enough corn porridge this winter.”

The Daily NK has also conducted an additional investigation of currency rates and rice prices in Pyongyang, Shinuiju and Hyesan, comparing December 7th to 13th with November 24th to 30th, to check the effect of this trend across the country.

In the North Korean capital, one U.S. dollar has increased from 1,400 won to 1,750 won, while rice has gone from 750 won to 1,250 won per kilo.

In Shinuiju, meanwhile, both foreign currency exchange rates and rice prices are marginally worse again, moving from 1,450 to 1,800 won per dollar and from 800 won to 1,300 won per kilo respectively, while in Hyesan, the dollar exchange rate mirrored that in Pyongyang, but rice had been hardest hit, going from 900 won to 1,350 won.

Additionally, in Shinuiju on the 9th one Yuan had soared to 420 won, near the level of the period before the redenomination.

This December 2010 price trend is occurring for the third time since 2000. The first was in December, 2005 when the authorities stopped all food trade because the state apparently planned to resume full food distribution. Thereafter, rice prices almost doubled. The second time was in December last year, a phenomenon caused by a measure shutting down the market following the currency redenomination.

According to the Korea Times:

North Korean merchants are exchanging their local currency en masse as war jitters in the wake of Pyongyang’s attack on Yeonpyeong Island have stoked fears that the won may lose its value in the case of war, a report said.

According to North Korea Intellectuals Solidarity (NKIS), a Seoul-based NGO comprised of defectors with lines into the North, currency exchange rates have skyrocketed since the Nov. 23 incident. One hundred yuan, which before the shelling went for 2,000 won, is now worth 35,000 won, NKIS said in a report released Sunday.

“Merchants have heard rumors that if there is war, North Korean bills will become worthless scraps of paper,” NKIS quoted a source as saying, causing traders to exchange their won while they can.

Price of daily goods have also skyrocketed, the report said, with rice jumping from 900 won per kilogram to 1,600 won. Corn climbed from 4,000 won per kilogram to 6,000 won, it said.

The source said the soaring prices have been caused by jitters in the market over the heightened tensions in the wake of the Nov. 23 attack, saying the North’s military has been in a “quasi state of war” since the incident.

The rumors that the won will lose its value in case of a war have slowed market activities as merchants have raised prices and are waiting to see if further military action is on the cards.

Traders in China, from who markets in the North secure much of their goods, have also become reluctant to make transactions involving North Korean currency and are trading what won they have, the source said.

The price jump comes on the heels of reportedly enormous inflation caused by a botched currency reform last year.

The regime redenominated banknotes at a ratio of 100:1 in November last year in a move to squelch a bourgeoning private sector. But the move led to runaway inflation as the price soared by some forty times within the year, according to reports.

The U.N. estimated last month that some 5 million North Koreans will face food shortages this year due to lack of staple grains, while the economy is believed to be suffering heavily from international sanctions imposed for the regime’s missile and nuclear tests.

Meanwhile, Pyongyang, which claims Seoul instigated the shelling by firing into its territory during a military drill, continued to threaten the South over the weekend, saying, “The army and the people of the DPRK are ready for both an escalation and an all-out war.”

According to the Institute for Far Eastern Studies:

After North Korea rained artillery onto Yeonpyeong Island, military tensions have continued to grow, impacting the price of rice and the currency exchange rate in the North”s traditional markets. On December 13, NK Intellectual Solidarity reported that this has shaken the livelihoods on North Korean people. According to the group, rice has shot up 77 percent, from 900 won to 1600 won per kilogram, since the November 23 attack. The price of corn has also gone up by 50 percent, to 600 won per kilogram. At the same time, the exchange rate for Chinese yuan has risen, at least in the market in Hyeryong, from 220 to 350 won per yuan, a 59 percent increase.

Daily NK has also reported that post-Yeonpyeong food price increases have been significant, and as the Autumn harvest comes to a close in December, smaller rations to those working on collective farms is expected. A contact in North Hamgyong Province reported, “Rice prices that were 800-900 won [ per kilogram] in mid-November shot up to 1100 won and have recently risen to 1300 won…people are reeling at the sudden rise in prices.” According to the source, rice hit a high of 1900 won in the Hyeryong market around December 8-9.

The very first to reflect military tensions between the to Koreas were money handlers and wholesalers. A source in North Korea compared today”s atmosphere with that experienced in 1993, and explained that as people”s concerns about war increase, money traders become more conservative, tightening up the exchange of currency and therefore slowing the entire wholesale market, driving up prices. A survey by DailyNK from December 7-13 revealed that the exchange rate in Pyongyang rose from 1400 to 1750 won between November 24 and the end of the month, while the price of rice rose from 750 won to 1250 won per kilogram over the same period. In Sinuiji, the exchange rate rose from 1450 to 1800 won, while rice costs went up from 800 to 1300 won per kilogram. Hyesan showed similar trends, with the exchange rate rising from 1400 to 1800 won and rice rising from 900 to 1350 won per kilogram.

While food prices have fallen from their peak after the Yeonpyeong shelling, they are still high enough to cause significant difficulties for the average North Korean. Price hikes seen recently are three times as severe as those seen from 2000-2010, including the huge jump seen in 2005 when authorities attempted to reintroduce the central rationing system. Combined with last year”s failed currency reform attempt, the latest price hikes have severely strained the livelihoods of most North Koreans.

UPDATE: From the Institute for Far Eastern Studies

DPRK prices, exchange rate, skyrocket after shelling
Institute for Far Eastern Studies (IFES)
NK Brief No. 10-12-15
12/15/2010

After North Korea rained artillery onto Yeonpyeong Island, military tensions have continued to grow, impacting the price of rice and the currency exchange rate in the North”s traditional markets. On December 13, NK Intellectual Solidarity reported that this has shaken the livelihoods on North Korean people. According to the group, rice has shot up 77 percent, from 900 won to 1600 won per kilogram, since the November 23 attack. The price of corn has also gone up by 50 percent, to 600 won per kilogram. At the same time, the exchange rate for Chinese yuan has risen, at least in the market in Hyeryong, from 220 to 350 won per yuan, a 59 percent increase.

Daily NK has also reported that post-Yeonpyeong food price increases have been significant, and as the Autumn harvest comes to a close in December, smaller rations to those working on collective farms is expected. A contact in North Hamgyong Province reported, “Rice prices that were 800-900 won [ per kilogram] in mid-November shot up to 1100 won and have recently risen to 1300 won…people are reeling at the sudden rise in prices.” According to the source, rice hit a high of 1900 won in the Hyeryong market around December 8-9.

The very first to reflect military tensions between the to Koreas were money handlers and wholesalers. A source in North Korea compared today”s atmosphere with that experienced in 1993, and explained that as people”s concerns about war increase, money traders become more conservative, tightening up the exchange of currency and therefore slowing the entire wholesale market, driving up prices. A survey by DailyNK from December 7-13 revealed that the exchange rate in Pyongyang rose from 1400 to 1750 won between November 24 and the end of the month, while the price of rice rose from 750 won to 1250 won per kilogram over the same period. In Sinuiji, the exchange rate rose from 1450 to 1800 won, while rice costs went up from 800 to 1300 won per kilogram. Hyesan showed similar trends, with the exchange rate rising from 1400 to 1800 won and rice rising from 900 to 1350 won per kilogram.

While food prices have fallen from their peak after the Yeonpyeong shelling, they are still high enough to cause significant difficulties for the average North Korean. Price hikes seen recently are three times as severe as those seen from 2000-2010, including the huge jump seen in 2005 when authorities attempted to reintroduce the central rationing system. Combined with last year”s failed currency reform attempt, the latest price hikes have severely strained the livelihoods of most North Koreans.

Read the full stories here:
Tensions Driving Rice Price and Exchange Rate Hikes
Daily NK
Yoo Gwan Hee
12/14/2010

DPRK prices, exchange rate skyrocket after shelling
Institute for Far Eastern Studies (IFES)
NK Brief No. 10-12-15
12/15/2010

‘Yeonpyeong shelling causes inflation in Pyongyang’
Korea Times
Kim Young-jin
12/13/2010

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-12-13
12/13/2010

According to a report on Kim Jong Il”s on-site inspections and guidance, the leader of the North made 148 trips throughout the country between the beginning of the year and December 6, most of which were to sites related to economic activities. The South Korean Ministry of Unification revealed that, of Kim”s visits, 33 were to military sites, 58 to sites related to the economy, and 11 visits related to foreign affairs. These numbers are similar to those seen in 2009 (i.e., 148 visits: 43 military sites; 58 economy; 13 foreign relations). It was also reported that Kim Jong Un accompanied his father on 28 of those trips in 2010. The North Korean official media has continued, even after the shelling of Yeonpyeong Island, to report on Kim”s on-site guidance, and the visits appear to focus on production facilities related to the people”s livelihoods.

One recent report revealed that Kim visited a cigarette factory, food processing facility, and traditional medicine producer in Hyeryong, while another report noted Kim”s visits to mining facilities and a food processing plant in Musan, as well as magnesia factory, mining equipment factory, and port facilities under construction in Danchun.

Kim Jong Il has made 12 site visits since the Yeonpyeong Island incident on November 23, seven of which were to sites important to the economy. While Kim has focused on visits to South Hamgyong Province in the past, he has recently shown more interest in North Hamgyong, as well.

On December 3, Korea Central Broadcasting reported on Kim Jong Il”s visit to the Musan food processing plant, attributing him with having “expressed great pleasure” that the plant was turning out flawless food items that would “significantly add” to the lives of the people. He also explained to the workers that it was their duty to help improve the lives of the people of the town.

Kim Jong Il also visited the Kim Chaek Ironworks and stressed the importance of Juche-driven self-reliant production and an independent economy. On December 6, the KCNA released a 7-page account of Kim”s visits, which observers believe could have significant meaning.

According to the Daily NK:

An oft-cited example of an advocate of reform within the North Korean leadership, former Prime Minister Park Bong Ju [aka Pak Pong-ju] appeared alongside Kim Jong Il during a recent onsite inspection at a Pyongyang sock factory, leading to suggestions that North Korea may again be contemplating the idea of embracing economic reform.

However, this is less likely than another explanation; that Park was brought back into the fold to oversee a number of revisions to the legal code during 2010.

Park, whose appearance at the onsite inspection was verified in five images broadcast by Chosun Central Television on the 11th, was a leading architect of the July 1st Economic Management Reform Measure of 2002, which formalized a number of relatively liberal economic policies.

He then became Prime Minister in September 2003, but was deposed during a period of economic retrenchment in April 2007, sent into virtual exile in South Pyongan Province as manager of Suncheon Vinalon Complex.

As a result of this career path, Park is seen by many as a reformist thinker in the North Korean elite.

Therefore, when he stepped back onto the main political stage this August, three years and four months later, mentioned in a report published by Chosun Central News Agency on August 21st about the 50th anniversary of a well-known Pyongyang restaurant, Okryugwan, it led to suggestions that North Korea might be set to head down the road to economic reform, led by Park as Party First Vice Director.

However, Park’s re-emergence does not mean that North Korea is about to turn towards market mechanisms on an official basis; conversely, it is more likely to be related to the revision this year of a number of laws which were actually designed to strengthen the control and supervisory functions of state institutions.

North Korea officially revised the People’s Economic Planning Law on April 6th alongside the Pyongyang Management Law, revised on March 30th, and both its Labor Protection and Chamber of Commerce and Industry Laws, revised on July 8th.

In revealing the legal revisions to The Daily NK in an interview in November, an inside North Korean source commented on the intention behind the changes, saying, “The People’s Economic Planning Law of 2001 alleviated national controls and supervision, even though it came before the July 1st measure of 2002. However, the revised bill strengthens national controls.”

Additionally, the source went on, “This series of bills including the revised People’s Economic Planning Law are the basis of the nation’s control, management and supervision. It should be understood as being part of the same flow as the series of measures undertaken during the succession process since October of 2007, when market controls began wholeheartedly; the 150-day Battle, 100-day Battle and currency redenomination.”

Accordingly, research suggests that North Korea probably chose to play the Park Bong Ju card now to revise state policy to try and sort out the problems left behind by the failure of the 2009 currency redenomination and to address the pressing need to improve the state of the domestic economy, whilst also hoping that the appointment of an official with a reformist image might attract investment from Northeast China and further afield.

Michael Madden has written a bio of Pak Pong-ju. Read it here.

Read the full Daily NK sotry below:
Park’s Appearance Unlikely to Mean Real Reform
Daily NK
Kim So-yeol
12/13/2010

According to Yonhap:

North Korean leader Kim Jong-il paid more visits to factories and other economy-related sites than to military units and other locations this year in a sign that the autocratic leader is trying to improve internal unity, Seoul’s Unification Ministry said Monday.

Kim has made a total of 148 “field guidance” trips across the country this year, with 58 of them, or 40 percent, made to economic sites and 33 visits to military units, ministry spokesman Chun Hae-sung told reporters.

In particular, Kim made 16 public appearances in November, and only one of them was a visit to the military while seven were to economic sites, a ministry official said on condition of anonymity.

“This is seen as an attempt to promote internal unity or to demonstrate he is in charge,” the official said.

Kim’s sister, Kim Kyong-hui, and his brother-in-law, Jang Song-thaek, accompanied Kim on most of the field trips in November, the official said.

Since the North’s deadly shelling of South Korea’s Yeonpyeong Island on Nov. 23, Kim has made a dozen public appearances, with seven of them to economic sites.

Kim’s heir-apparent and youngest son, Kim Jong-un, accompanied his father on 28 of the 148 field trips this year, according to the ministry.

Read the full story here:
Kim Jong-il focuses on economic sites for ‘field guidance’ trips this year
Yonhap
12/6/2010

According to Yonhap:

Once hailed as vanguards of reconciliation but now threatened by simmering animosity between the Koreas, a group of South Korean businessmen pleaded Thursday with senior lawmakers to safeguard their operations in North Korea against further political fallout.

Since North Korea mounted a deadly artillery attack on the South Korean island of Yeonpyeong on Nov. 23, these seasoned businessmen have had jitters over the fate of their factories built in the western North Korean border town of Kaesong.

Considered the last remaining symbol of reconciliation between the divided countries, the joint industrial complex houses more than 120 South Korean firms employing 44,000 North Korean workers.

Holding a commercial fair at the National Assembly, representatives from eight companies and officials from their association mingled with two dozen lawmakers and scrambled to tout their products as bearing the messages of hope and peace.

“We have achieved a level of quality that enables us to compete with any other industrial complexes in the world,” Bae Hae-dong, chief of the association of South Korean factories, said in a speech. “Yet, we remain easily affected by inter-Korean political circumstances. We especially deplore the situation that has arisen since North Korea attacked Yeonpyeong.”

The shelling of the small fishing community killed two marines and two civilians in the most indiscriminate attack on South Korean soil since the 1950-53 Korean War that ended in a truce.

A travel ban imposed on North Korea a day after the attack remains in place, allowing only a limited amount of raw materials to be sent to Kaesong and hamstringing manufacturing operations there.

“We are suffering a 10-15 percent decline in production due to the ban,” said Kim Ssang-kyu, general manager at Pyxis Inc., which produces jewelry cases and other accessories.

Sung Hyun-sang, president of Mansung Corp., which makes women’s clothing, claimed the damage in production amounts to as much as 50 percent.

“We understand the ban is for the sake of our safety, but we’re sure the North Koreans won’t hurt us. They know how important we are” to their cash-strapped economy, Sung said.

“We can only worry and pray for now,” an official at Shinwon, which produces men’s suits, said, asking not to be named because his remark could be taken sensitively.

About 410 South Koreans remained in Kaesong as of Thursday, a drop from 760 on Nov. 23 when the artillery exchange erupted between the Koreas, according to the Unification Ministry in Seoul.

The Kaesong complex produced its first articles — kitchen pans — in 2004 even though the two Koreas had agreed four years earlier on the project in an effort to lessen border tension.

Combining South Korean capital and know-how with the cheap labor in North Korea, the park recently reached a total of US$1 billion in production. Supporters of the estate say its significance goes far beyond economic benefits.

“Kaesong has been a safety pin whenever the security on the Korean Peninsula sagged to a dangerous level,” Kim Choong-whan, a legislator with the ruling conservative Grand National Party (GNP), said in a speech.

Park Joo-sun, who is with the liberal Democratic Party (DP) and sponsored the fair, expressed hope that the park will survive the crisis sparked by the North’s shelling.

The fair was scheduled before the crisis, organizers said. The lawmakers who attended it included Park Jie-won, a DP lawmaker who led the organization of the 2000 summit, and Lee Sang-deuk, President Lee Myung-bak’s older brother who is a GNP legislator.

“Sir, please help us,” Bae told the influential lawmaker touring the booths set up at the fair.

Gently embracing Lee with his arm in a show of friendship, another businessman smiled widely and whispered to Lee, “This is the lifeline of peace.”

In a brief interview on the sidelines, Lee downplayed the economic damage the South Korean firms said they have incurred since the travel ban on North Korea came into effect on Nov. 24.

“They should and can withstand this. It is a risk they were willing to take,” he said as he stepped onto the elevator taking him to his office inside the building.

Vice Unification Minister Um Jong-sik, who admitted in a speech that the companies were suffering drops in production, would not say how long the ban will stay in effect.

“All things and situations must be considered before we can make a decision,” he said after a long pause, when asked if South Korean artillery drills planned for next week in the Yellow Sea would prompt the ministry to extend the ban.

“For now, we’re doing our best to listen to these companies and address their needs as much as we can,” he said as he left the fair with two bags full of clothing he bought from Mansun Corp.

South Korea and the United States ended their four-day joint naval drills mobilizing an American aircraft carrier in the Yellow Sea on Wednesday, a move they believed would intimidate North Korea into calling off further acts of provocation.

The U.S. has 28,500 forces stationed in South Korea, a legacy of the Korean War in which it led U.N. forces to fight against North Korea. Since a U.S. commander drew a line separating the waters of the Koreas at the end of the war, the North has denied its validity, triggering a series of deadly naval clashes there with the South.

North Korea says any further artillery drills by the South on Yeonpyeong, less than 10 kilometers from the North Korean coast, are bound to violate its waters because the Northern Limit Line is null.

The communist state maintains that it fired at Yeonpyeong because it had been provoked by South Korean forces shooting artillery shells at its side across from Yeonpyeong.

Read the full story here:
Businessmen plead for help as tension threatens their factories in N. Korea
Yonhap
Sam Kim
12/2/2010

A couple of Weeks ago, the Korea Economic Institute released a paper by Kevin Shepard on foreign direct investment and trade with the DPRK.  May of the topics discussed will be familiar to readers of this blog, so I thought I would repost it here.

Buying into the Hermit Kingdom: FDI in the DPRK (PDF)
Korea Economic Institute Academic Paper Series: November 2010, Volume 5, No. 11
Kevin Shepard

Additional Informaiton:
1. Previous KEI academic papers can be found here.

2. North Korea CRS reports.

3. My DPRK Economic Statistics Page

4. My DPRK Business Resources Page (which needs updating)