North Korean Economy Watch

Institute for Far Eastern Studies (IFES)
NK Brief No. 08-7-29-1
7/29/2008

Of North Korean leader Kim Jong Il’s public appearances during the first half of the year, fully half of them were to military installations or other defense-related sites, making it the most frequented sector, but compared to previous years, the number of visits to sites related to the economy rose considerably.

According to North Korean media sources, from January through June, Kim Jong Il made a total of 49 public visits. Of these, 25 (51%) were to military facilities, while 15 (31%) were to factories, cooperative farms, and other sites related to the nation’s economy. 3 (6%) public appearances were meetings with foreign dignitaries, and 6 (12%) were to public performances and other events.

In January, Kim made five on-site visits to economically important areas, after which there was a lull until May, when Kim appeared at six sites, and then made another 4 economy-related visits in June. In July, Kim has already made three visits to Jangan and North Pyongan Provinces, showing up at production facilities in those areas.

Between January and July of 2007, Kim made only six visits to sites related to the economic sector, less than a third the number of visits this year. In fact, with only 19 site visits for all of 2007, Kim’s appearances in the first half of this year have almost surpassed last year’s total, which itself was an increase over the 16 visits made in 2006.

The first public appearance made by Kim Jong Il in 2008 was at the Yaesung River Power Plant construction site on January 6, and was followed up by an appearance on January 21 the ‘18th National Program Contest and Exhibition’, emphasizing the government’s drive to resolve economic difficulties.

In the same month, Kim Jong Il visited a poultry and pork processing plant, a mushroom plant, a food processing facility, a rabbit breeding farm, and a youth mine, directly inspecting sites related to the lives and livelihoods of the people, appearing to emphasize the slogan announced in this year’s New Year’s Joint Declaration, “Prioritization of the People’s Lives”. Kim’s ‘economic walk’ was seemingly put on hold by a flurry of negotiations between the United States and North Korea regarding the North’s declaration of its nuclear programs and the attempt by the new South Korean government’s revamped policy towards North Korea between February and April, but then regained traction in May, with a visit on the 4th to a mountain orchard in Kangwon Province.

This year, Kim Jong Il’s on-site instructions at facilities related to building the economy and improving the lives of the people appear to be focused on stressing the need to resolve food shortages and ensure that everyone is fed.

Excerpt from Yonhap:

A South Korean factory operating in the joint industrial complex in Kaesong has been closed for nearly 20 days over a feud with a North Korean controller, government and company officials said Monday.

The company, which employs around 300 North Korean workers, took the measure on June 12 after South Korean employees and North Korean officials scuffled over supplies, they said.

The firm demanded the North Korean authorities replace the North Korean controller who allegedly assaulted South Koreans in the fight, but the demand was not met.

It was not known exactly what caused the fight.

A total of 28,277 North Koreans were working for 70 South Korean labor-intensive manufacturers in Kaesong as of the end of May, according to the Unification Ministry.

Read the full article here:
Factory in Kaesong complex closed down over dispute
Yonhap
Shim Sun-ah
6/30/2008

Via Interview Blog:

UPDATE: Here is an interview with Jürgen Bein about the Kaesong Industrial Zone (In German)

Klaus-Martin Meyer: Mr. Eloesser, you recently became the President of Nosotek Joint Venture Company in Pyongyang, the capital of North Korea. In which the field of business is Nosotek operating?

Volker Eloesser: We do general IT outsourcing. This includes data base applications, 3D technology development as well a games production. Nosotek’s customers come from all over the world and some of our products are even used in the US.

Klaus-Martin Meyer: According to your CV, before you were heading to North Korea, you’ve been the general manager of Elocom, a subsidiary of a German Joint Venture between News Corporation (NWS.A) and Verisign (VRSN). It’s quite unusual for a high-ranking manager of a US based public company to move to North Korea.

Volker Eloesser: That’s true. But I don’t see my job as a political mission. At Elocom, I was managing a company producing mobile phone software technology. Neither my old job nor my new one is a political one.

Klaus-Martin Meyer: What’s your opinion about the demolition of the nuclear cooling tower in Yongbyon and the announcement of the US President George W. Bush to remove the country from the terrorism blacklist?

Volker Eloesser: This was great news. I think that both parties, the Korean and US government, took wise decisions which hopefully help giving peace a chance through diplomacy. For our business, lifting the sanctions will have a very positive impact, as well as for the People in the DPRK. North Korean Companies, domestic and foreign-invested, were suffering a lot under the sanctions. Foreign trade was very difficult and many potential customers feared to get trouble when making business with the DPRK.

Klaus-Martin Meyer: When did you first get interested into the DPRK? Did you already do active business with North Koreans before?

Volker Eloesser: Of course I did. In the beginning of 2005, I held lectures at the Pyongyang Business School. The Korean participants of my lectures were great people really interested into international business.

Klaus-Martin Meyer: Who are the shareholders of Nosotek? Is it a state-run company?

Volker Eloesser: Nosotek is a joint-venture between a European owned private holding company and the General Federation of Science and Technology of DPRK, a non-government organization.

Klaus-Martin Meyer: Along being the president of Nosotek, you are Chairman of the Supervisory Board of Next Generation Entertainment N.V. (NGE), a Dutch public company. Are there any links between NGE and North Korea?

Volker Eloesser: NGE’s management is highly interested in investing into the DPRK software industry. The CEO Dr. Stefan Heinemann believes that the DPRK will become a very important sourcing market in the near future, which has many advantages over China and India. Having this in mind, it makes a lot of sense for NGE to have a board member with experience in dealing with North Koreans.

Klaus-Martin Meyer: How would you describe the difference of outsourcing software in the DPRK compared to China or India?

Volker Eloesser: The DPRK’s software industry is already very well developed, but only for the demands of the domestic market. Although the skill level of the engineers is as high as the skill level in China or India, most DPRK software companies never made successful international business in large scale. The Korean engineers usually have no experience with western culture, habits and taste. But of course you’ll experience the same, when working with some small Indian or Chinese companies. One major advantage of the Korean engineers is that they don’t move to a new job frequently, like the Chinese. In this matter, you can compare the Koreans with Japanese staff, who usually never leave the company to move to another job. The result is obvious: the experience and knowledge stays within the company and there is no risk of IP leak.

Klaus-Martin Meyer: Are you personally living in North Korea or can you do your job remotely?

Volker Eloesser: It’s definitely required to have western management in a company dealing with western customers. Every attempt of people trying to do this remotely has failed. I’m planning to live in Pyongyang most of the year. I have a nice apartment in the city centre.

Klaus-Martin Meyer: Living in Pyongyang sounds hard. How are the living conditions for foreigners in Pyongyang? What about your family?

Volker Eloesser: Well, it’s not as hard as western readers may think. Of course the hardest thing is to live separated from my wife, but she promised to visit me frequently. Generally, the living conditions for westerners in Pyongyang are good: The air is totally clean, there is no risk of becoming a crime victim, there is a lot of green in the city and the Korean people are generally very friendly .

Klaus-Martin Meyer: Usually, western media has almost no idea about the real working and living conditions of the people in North Korea. Can you tell us something about the working conditions of your local staff?

Volker Eloesser: One of my goals is to achieve working conditions according to German standard. The staff is equipped with the latest computer hardware and enjoys a lot of incentives from the company to make their live comfortable. For example, the company is providing free lunch for the whole staff, which is delicious and nutritious. I myself have lunch together with my engineers every day, and I like it very much. Additionally to the large number of public holidays, the company even sponsors a one-week holiday trip. This is the way we appreciate the performance on the job.

Klaus-Martin Meyer: What are the most difficult obstacles, western managers are facing in the DPRK? Do you stuffer from political pressure?

Volker Eloesser: I’ve not yet experienced any political pressure, but of course you need to get used to the local security regulations and bureaucracy. When you behave politely, don’t do derogative statements about politics and respect the Korean culture, you won’t face any serious problems. The most difficult obstacle is the absence of international experience of the software engineers, combined with the cultural differences typical to Asian countries.

Klaus-Martin Meyer: How many European businesspeople like you have discovered the DPRK as tomorrow’s sourcing market?

Volker Eloesser: Actually, not many so far. The European community in Pyongyang is very small. After a few weeks, you know every foreigner. Most Europeans who do business in the DPRK are organized in the European Business Association. But I feel that the community is growing since business managers are more and more recognising that doing business in and with the DPRK is of course working with a frontier framework but also with a great potential of highly-skilled people with an impressive work ethic and an attractive cost-performance ratio – and also an emerging domestic market.

Klaus-Martin Meyer: What drives you personally to go there and build up an internationally operating company?

Volker Eloesser: Leading a foreign invested company in North Korea is a great challenge for me. During my lectures at the Pyongyang Business School, I realized that the skilled North Korean IT engineers have a huge potential for successful software development. This potential is almost unrecognized in the world and therefore unused. I like to be the pioneer who builds up this new outsourcing destination. I believe that economic progress will lead to a general improvement of the people’s living conditions and IT business is a key to economic progress. If you ask me, I would tell you that my work will have a greater impact on improving the North Korean living conditions then just sending bags of rice.

Klaus-Martin Meyer: Do you experience economic progress or political changes in North Korea?

Volker Eloesser: The question about political changes should better be answered by the politicians. But indeed you can see economic progress: Compared to my first visit in 2005, there are now much more cars in the street and the number of foreign investment seem to have significantly grown. A group from Hong Kong is building a large shopping and business area along the Taedonggang river and Orascom from Egypt is continuing the Ryugyong Hotel construction as well as investing into a modern mobile phone network. And recently the German-based Prettl Group (Automotive industry) announced that it will be the first foreign non-Korean company to build a factory in Kaesong.

Klaus-Martin Meyer: Nosotek is located in Pyongyang. Do you think things could be easier for companies operating out of the Kaesong free trade zone?

Volker Eloesser: I’ve never been in Kaesong myself. From what I’ve heard, the free trade zone, which has been build with ROK investment, is a modern factory area, mostly targeted to low-cost production of shoes or textile. I don’t know of any software development in Kaesong. Pyongyang, being the economic and cultural centre of the DPRK with large universities, offers a huge number of qualified engineers.

Klaus-Martin Meyer: What are your plans for Nosotek’s future? How do you see your company in five years? What is your strategy?

Volker Eloesser: My plan for Nosotek is a constant growth. First of course, everybody in Nosotek has to understand the demands of our customers; not only the technical demands but also the usual communication style and habits of the western world. At the moment, we’re only fifty people and I’m starting to build up a powerful middle management, who knows their customer’s expectations. After this has been done, we can begin scaling the business volume.

Klaus-Martin Meyer: Are there other western IT companies having operations in the DPRK?

Volker Eloesser: Nosotek still is the only one. But according to Paul Tjia of GPI Consultancy who organizes business missions to the DPRK, the number of people interested into software development in the DPRK is constantly growing. I hope that Paul will bring more people here to operate software companies. With other Foreigners here, working in the same or similar field of business we together can help strengthening the DPRK to become a better known source for software development. Bangalore is still far, but I’m sure the quality delivered by the Korean IT engineers will be convincing, not only to grow Nosotek, but also to grow the country itself as an outsourcing destination.

Klaus-Martin Meyer: Mr. Eloesser, thank you for the interview.

UPDATE 3 (2013-3-15): Michael Rank offers more information on the DPRK – Taiwan nuclear waste deal:

North Korean-Taiwan nuclear waste deal thwarted over export permit
By Michael Rank

A Taiwanese report says one reason the North Korean nuclear waste deal fell through was that Taipower didn’t obtain an export permit for the waste from the Taiwanese Atomic Energy Council (AEC).

It also says that Taipower claims no final deal was ever signed, so there is no question of the agreement being violated. It quotes Taipower official Huang Tien-huang as saying the North Koreans blocked them from viewing the processing site at Phyongsan (Pyeongsan, 평산, 平山), while the AEC also had procedural problems with the North Koreans, leading it to refuse an export permit.

North Korea has hired a (presumably Taiwanese) lawyer, Tsai Hui-ling, to plead its case, and is claiming NT$300 million (US$10 million) compensation. Tsai can be seen on this English-language video clip.

A PRC report quoting Taiwanese reports says the first stage of the deal worth US$75.66 million envisaged shipping 60,000 barrels of nuclear waste, and a further 14,000 barrels in the second stage, with a total value of $150 million and that the North Koreans were after the deal as a source of foreign exchange at the height of the famine. There have been ten rounds of negotiations to try to resolve the dispute, the report says, adding that Taiwan decided in 1999 that it would process the waste domestically.

As I reported in 2008, North Korea signed a deal with a Chinese company to recycle industrial waste that is so polluted that other countries have refused to handle it.

A slightly fuller Chinese report than the one I cited earlier names the Chinese company involved as Dalian-based Huatai Recycling Resources Co Ltd and says it has close links with the North Korean National Defence Commission, foreign ministry, environment ministry and foreign trade ministry.

It also says the North Koreans have four large recycling sites at Sinuiju and Nampo, two for lead batteries and two for electronic goods, and that they are able to recycle a wide array of equipment, from plastics to refrigerators as well as computers, phones and scanners, including goods that are banned for recycling in China.

It is not clear if the Chinese-North Korean deal was actually implemented.

UPDATE 2 (2013-3-2): The DPRK intends to sue Taiwan for breach of contract in its failure to begin the Taiwan – DPRK waste management project. According to the China Post (Taiwan):

North Korea is poised to sue Taiwan Power Co. (台電) for damages of NT$300 million, over an alleged breach of a contract signed more than 16 years ago, according to lawyers working on Pyongyang’s behalf.
Litigation will begin March 4, North Korea’s legal counsel said.

In 1996, Taipower allegedly committed to a contract with North Korea in which nuclear waste from Taiwan would be shipped and stored in the isolated communist nation, according to reports.

However, the plans were halted due to North Korea’s then-inadequate waste storage facilities and the sudden eruption of international uproar over the scheme, with Taiwan paying US$8.72 million to preserve a five-year option period in 1998, according to the lawyers, who added that North Korea continued to invest in its waste storage facilities under the assumption that the deal would be completed.

After over 10 rounds of negotiation over the past 15 years, North Korea is now accusing Taipower of complacency and negligence, citing a lack of communication and effort to fulfill the agreed-upon obligations.

In light of North Korea’s unexpected litigation, Taipower has said that such a dated case needs a comprehensive internal review before a response can be formulated.

The lawsuit marks a surprising development in the ongoing row over the proposed plan to construct a fourth nuclear power plant in Taiwan, as the ruling and opposition parties wrestle over the terms of the proposed referendum, which would decide the fate of the plant.

UPDATE 1 (2009-1-8): A Taiwanese official is under investigation for activities related to the Taiwan – DPRK waste management deal. According to the AFP (via Singapore’s Straits Times):

The Apple Daily reported on Thursday that prosecutors had begun investigating claims that Chen might have pocketed 300 million Taiwan dollars of financial aid in 2004 and 2005 in exchange for North Korea handling the island’s nuclear wastes.

The daily, which did not name its sources, alleged the cash would be given to a high-ranking North Korean official through a contact who promised to help Taipei set up a ‘direct communication channel’ with Mr Kim Jong-Il’s regime.

However, Taiwan did not establish any form of contact with North Korea nor send its nuclear waste to the communist state after the foreign ministry paid the money, the report said.

Self-ruled Taiwan is formally recognised by only 23 countries and does not have diplomatic ties with North Korea.

Read the full story here:
Funds were for N.Korea
AFP via Straits Times
1/8/2009

ORIGINAL POST (2008-6-30): According to Michael Rank in the Telegraph:

North Korea is planning to recycle waste that is so polluted other countries refuse to handle it.

Through a Chinese-language website (link here) the country is seeking supplies of plastic and electronic waste which “can be processed in [a North Korean port] but which other countries and territories are restricted from dealing in”, reflecting the country’s dire economic plight and its scant regard for international norms.

Isolated and desperately poor, North Korea is a beginner so far as toxic waste is concerned, although in 1996 it signed a deal with Taiwan to dispose of its nuclear waste from atomic power plants.

South Korea reacted furiously to the deal and Taiwan was eventually forced to back down and cancel the agreement.

North Korea also offered to recycle the North Sea Brent Spar oil storage platform, which Royal Dutch Shell had proposed dumping in the deep Atlantic in 1995.

This caused an environmental furore, with Greenpeace claiming that the structure was full of oil and burying it at sea would result in serious pollution.

An enterprising young North Korean official in London unexpectedly offered to come to the rescue, suggesting that his country could dispose of the structure, saving Shell and the British government from further embarrassment.

The offer was turned down as Shell didn’t want to be seen turning to a regime as dubious as North Korea, but Greenpeace’s own reputation took a serious knock when it was forced to admit that it had enormously over-estimated the amount of oil remaining in Brent Spar’s storage tanks.

North Korea’s waste recycling plans are part of a much bigger, £5 million ($10 million) project to enlarge a port on its west coast and develop it into an export base including a duty-free zone.

“There are no limits, any business taking advantage of [North] Korea’s low labour costs for intensive processing is welcome,” the website states.

Although the port is not named, it is almost certainly Nampo, which is close to the capital and is the largest harbour on North Korea’s west coast. The development covers 30,000 square metres (320,000 square feet) and is “expandable”.

The port currently accepts vessels of up to 10,000 tonnes but the plan is to increase this to 50,000 tonnes.

The project is pitched at Chinese companies, and interested parties are asked to contact a firm in the Chinese city of Dandong on the North Korean border.

A deal with China would help to counterbalance a recent agreement with state-owned Russian Railways to build a £50 million ($100million) container terminal on North Korea’s east coast as part of a £1.5 billion ($3 billion) plan to create a rail corridor linking South Korea with Europe via North Korea and Russia.

Russian Railways wants to turn the port of Rajin into a hub capable of handling 320,000 containers a year for shipment from South Korea to Europe.

Russia and China have fought bitterly over rights to refurbish Rajin. A few years ago China appeared to have won out when a 50-year deal was announced with the Chinese border city of Hunchun, but this came to nought and Russia was the ultimate winner in the battle to revitalise the north-eastern port and ultimately link it with Europe.

The original source, a Chinese language website, is here.

To read the full story click here:
North Korea in bid to recycle toxic waste
Telegraph
Michael Rank
6/30/2008

Michael Rank, a China/North Korea specialist based in London reports:

A Chinese company has opened a joint venture iron mine in North Korea with registered capital of €36 million ($57 million), a Chinese website specialising in North Korea reports (link here).

The Chinese partner is S Group, whose main aim includes developing magnesite mines in North Korea, but for some reason it switched from magnesite to iron mining.

The mine in Ongjin-gun (gun=county), Hwanghaenam-do (South Hwanghae, do=province), south of Pyongyang, has been in operation since the second half of last year, and the company running it is the Xihai/Seohae (West Sea) Joint Enterprise, the website says, but gives no further details.

The Chinese report erroneously places Ongjin-gun in Hwanghaebuk-do (North Hwanghae) but it is confirmed as being in Hwanghaenam-do by  조선지도첩 (Joseon Jidocheop, Atlas of Korea, Pyongyang, 1997), p. 45. I have not been able to find any other reference to a Chinese mining company called S Group.

Chinese steel company Tonggang (Tonghua Steel), based in the northeastern province of Jilin, was reported by a Chinese newspaper in January 2006 to be spending four billion yuan ($506 million) to develop the Musan iron mine in Hamgyeongbuk-do (North Hamgyong province), said to be North Korea’s largest iron deposit – and the biggest in Asia, according to some estimates.

Magnesite (magnesium carbonate) is used in protecting the linings of steel furnaces, in the production of synthetic rubber and in making fertilisers.

Kim Dong-Jin, head of South Korean steel company POSCO‘s China branch, visited Pyongyang Tuesday for talks on purchasing more of the DPRK’s coal, iron ore, and other raw materials.

According to the AFP: 

POSCO, the world’s fourth largest steelmaker, has imported 200,000 tons of coal from North Korea every year.

South Korea’s investment in the North’s rich mineral resources has been sluggish due to the standoff over the North’s nuclear programme and mixed views on whether such investment can be profitable.

North Korea has promoted raw material exports as a means of generating much needed hard currency for some time.  Unfortunately, this development strategy will bring the fewest benefits to the North Korea people. Look at any oil-exporting country for comparison.  Raw materials exports generally enrich the politically connected—and workers, who in North Korea are unable to leave their jobs or negotiate their wages, generally (pun alert) get the shaft.

South Korean firms operating in the North, however, do tend to offer better working conditions than North Korean or Chinese firms.  If POSCO launches operations in North Korea, hopefully public pressure and the profit motive will see an increase in productivity, wages, and working conditions for the DPRK’s miners.

South Korea apparently also operates a graphite mine in North Korea.  If anyone has any information on this, please send it my way.

Read the full story here:
POSCO eyes NKorea raw materials
AFP
6/25/2008

According to the Daily NK, the price of rice in North Korea is falling faster than the purchasing power of the Won.  My congratulations to the few individuals who no doubt figured out how to short North Korean rice (borrow it, sell it, then buy some more at the new lower price to pay back the loan). For the poor North Koreans who bought into the bubble at its peak, as many North Koreans of modest means might have, they now know what it feels like to own real estate in the US. Unfortunately, there is no insurance, options, or other hedges available for North Korean entrepreneurs to diversify their holdings, so asset bubbles probably hurt much more than in developed economies.

From the Daily NK:

An inside source from North Hamkyung Province said in a phone conversation with Daily NK on June 19, “Some people started hoarding huge volume of rice after hearing the rumor that the price of rice would go up as high as 5,000 won/kg. However, these people are now suffering heavy losses as the price has plunged dramatically lately. ”

The source said that around mid-late March this year, the price of rice started rising and a rumor began to circulate in the market that the price of rice would rise as high as four to five thousand won per kilogram. It was about that time when people with big fortunes started stockpiling rice, which further contributed to the increase of rice price, the source said.
 
“Around the end of May, rice price started falling dramatically because another rumor began to circulate that rice aid from foreign countries would arrive at Nampo Port and merchants, upon hearing the rumor, rushed to bring out their rice for sale,” the source said. “Right now, those who borrowed money from family and relatives to hoard rice are going crazy over the situation,” the source added.

As of June 17, the price of rice in major border cities of North Korea ranges between 2,100 won/kg and 2,500 won/kg. In fact, the price of rice dropped almost by half in the last one month.

This is not to suggest that food is now plentiful in North Korea and we are seeing a necessary downward adjustment in prices, but rather a demonstration of the volatility of North Korea’s markets.  Prices disproportionately rise and fall on rumors because there is no way to easily verify information.  North Korea has neither a mercantile exchange, futures contracts, nor an effective communications or transportation system.  Simply dealing with these initial problems would go a long way towards stabilizing and rationalizing food prices. 

UPDATE: On June 9, a Good Freinds report was published in Yonhap which indicated China increased its quota on food exports to the DPRK.

To read the full article, click below:
Rice Price Falls by Half, Bringing Misfortune to Traders Hoarding Rice
Daily NK
Lee Sung Jin
6/23/2008

The Daily NK posted a fascinating interview with a local North Korean merchant.  He provides interesting anecdotes of everyday life:

Tongil Market (Featured in A State of Mind):

Nowadays, the way to survive is selling in the jangmadang (market). With the exception of the residents of the Joong-district and its vicinity, who are often mobilized to national events, seven out of 10 households do business in the jangmadang. In the Pyongyang Tongil (unification) Market alone, the number of people doing business is between 5,000~6,000 people. The size of a street-stand is approximately 50cm by 50cm large. There are also about 2,000 people selling outside of the market.”

“There are people also selling in the alleyways. The Tongil Market usually consists of people from the Tongil Street, so merchants from the other regions cannot do business there. In the Tongil Market alone, there are around 8,000 people [doing business]. Because the Market is so large, the cadres from the other regions frequently come to buy goods.”

Even in North Korea, capital enhances worker productivity: 

Mr. A said that in the markets, the sale of industrial goods (all kinds of products such as clothing brought from China) and cosmetics are supposed to be lucrative. The traders usually bring in about 5,000 won per day and 15,000 won per month. Such an amount of money can buy about 2kg of rice per day. The people who make a lot of money are the marine product merchants. They make around 7,000~8,000 won per day. Marine products are often purchased by officials who have money and rice.

The people in the lowest class do not have the capital to do business, so a majority of them sell noodles or food. They make about 1,500 won per day, which can purchase about a kilogram of corn. People who sell food sell rice, sidedishes, and snacks on site. To them, selling is a battle to survive.

Coping mechanisms:

Mr. A relayed that not-so-affluent households raise several domestic cattle, collect medicinal herbs or brew liquor to sell. The remnants of the liquor are used as livestock feed. Selling two bottles of liquor made of corn as raw material generates about 500 won in profit. However, the authorities have strictly been regulating brewing liquor in homes, resulting in difficult situations. If exposed for making liquor, both the person-in-charge and the People’s Party Unit chairman are banished to the countryside.

Beekeeping is seasonally supposed to be lucrative. In May when the acacia flowers start to bloom, the number of people who collect honey in the mountains increases. In the surrounding areas of Pyongyang, there are at least trees on the mountains, so beekeeping has been feasible. One person can collect about 100kg of honey per month by keeping around 15 beehives. The honey is usually consumed by people who want to use it in medicine or by officials.

Work overseas:

“The utmost goal of workers in Pyongyang is to go to another country to earn money. Recently, they have even gone to the Middle East, Southeast Asia, Africa, and the Democratic Republic of Congo. Once they leave, they do not return for three years. They can go back or stay in Pyongyang. Workers who have gone to Russia or to Congo for farming come back with 10,000~20,000 dollars in three years.”

“With that money, they can buy a house and prepare a significant amount of capital for business. Those who have gone abroad not only do the work ordered by organizations, but also engage in private farming, do business and save as much money as they can. There have been a quite a few people around me who have gone abroad recently to make money this way. Out of 100 male workers, there is at least one or two. In order to go overseas, one has to pay 300~400 dollars in bribes.”

Read the full article here:
Doing Business Is a Battle
Daily NK 
Jung Kwon Ho
6/18/2008

The Daily NK reports food prices are falling in North Korea on news that international aid is due to arrive—proving that although the politics might not make much sense, the economic actors are rational: 

The price of rice in Pyongyang ha[d] risen to 3,000 won per 1kg, but since late May, the high-quality polished rice has been around 2,500 won, the medium quality rice around 2,400 won and unpolished brown rice around 2,300 won. Wild rice imported from Northeast Asia has been around 2,300 won. [Which was the price in April].

The price of corn is still around 1,500 won. Rice is not lacking in the jangmadang [markets], but corn has been. The reason for that is that last year, there was a rumor that planting soy and making tofu is lucrative, so everyone planted soy instead of corn.”

UPDATE: The article does not suggest that the food situation is getting better.  People are also economizing their consumption which mutes demand to some degree (eating two meals a day for instance). 

Read this very interesting article here:
Doing Business Is a Battle
Daily NK 
Jung Kwon Ho
6/18/2008

After China and the USA made high-profile food donations to North Korea, the Russians finally joined the game.  Russia’s Foreign Minister claims that by the end of June his country will have sent 3,000 tons of flour to UN World Food Program distributors in North Korea. The first aid deliveries arrived in North Korea by train on June 11.

I am surprised Russia waited so long to get into the game.  Russia has been prodding North Korea to link its Trans-Siberian rail traffic to South Korea, and they want to make sure the Chinese don’t squeeze them out of North Korea’s Raijin Port (which does not freeze in the winter).  Food aid might not have helped these processes along, but waiting so long to jump on the bandwagon can’t have helped. 

In March of this year, the Russians inked a deal to renovate the railway lines between their border and Raijin (the tracks are different gagues).

Read about the aid here: 
Russia to deliver 3,000 tons of flour to North Korea
Novosti
6/9/2008

Russia sends food aid to North Korea
Associated Press
6/19/2008