North Korean Economy Watch

Institute for Far Eastern Studies (IFES)
NK Brief No. 08-11-17-1
11-17-2008

North Korea’s capital city of Pyongyang appears to be getting a facelift. The (North) Korean Central Broadcasters has reported that a city beautification project is underway in Pyongyang.

An apartment-erecting crane is building a new skyscraper, while construction has been restarted on the 16-year old remains of the shell of the Ryukyung Hotel as large-scale construction equipment and barges crowd the river as piles of construction materials can be found at each construction site.

Pyongyang insiders report that efforts getting underway in this anniversary year marking 60 years since the founding of the country are part of an effort to make Pyongyang a completely new city by 2012, when the North will mark the 100th birthday of its eternal president, Kim Il Sung.

Pyongyang is being developed as a ‘showcase capital’ for international visitors to the poverty-stricken North, as the North Korean people refer to Pyongyang as the ‘capital of the revolution.’

Recently, South Korean representatives from organizations providing aid to the North have reported being been surrounded by new construction of hotels and other buildings and the refurbishment of older buildings such as the Pyongyang Grand Theater.

What is curious is that the origin of the capital needed for these large-scale construction projects appears to indicate growing investment from foreign enterprises. The Ryukyung Hotel construction is reportedly being supported by a United Arab Emirates (UAE) company.*

A South Korean entrepreneur recently in Pyongyang quoted a Pyongyang official as saying, “The Ryukyung Hotel will be complete within three years,” and that the Daedong River Hotel construction was almost in the finishing stages with the help of foreign investment.

In January of this year, the Egyptian wireless communications company Orascom announced it would invest 400 million USD in order to construct the North’s first wireless communications network.

Also, North Korea’s foreign trade appears to have grown this year, especially because, as energy demand has sharply increased, the North’s export of mined materials to China appears in early calculations to have expanded considerably.

* NKeconWatch: This is the first I have heard about a UAE firm.  Previously, discussion centered only around Orascom.

Parallax Journal of International Perspectives
Volume V, No. 1, (Fall 2008)
Michael Madden

Download the PDF here: maddenarticle.pdf

Abstract: Called the “Worst building in the history of mankind” by Esquire Magazine, North Korea’s Ryugyong Hotel is one of the twenty tallest buildings in the world, despite being little more than a desolate concrete shell.  How the building came to be constructed and who constructed it becomes a small cultural history lesson on the secretive communist state.

About the author: Michael Madden studied writing with Stratis Haviaras and LArry Heinenmann, and spent several years under the tutelage of Christopher Ricks.  He is currently working on a satellite map of Pyongyang juring Japan’s annexation of the Korean Penninsula from 1910 to 1945.  Mr. Madden is a member of the association of Literary Scholars and Critics.  He works with the Office of the Dean, College of Arts and Sciences, at Suffolk University in Boston, Massachusetts.

North Korea Uncovered: Version 12
Download it here

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

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

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

Version 12 available: Download it here

The most authoritative map of North Korea on Google Earth
Download it here

This map covers North Korea’s agriculture, aviation, cultural locations, markets, manufacturing facilities, railroad, energy infrastructure, politics, sports venues, military establishments, religious facilities, leisure destinations, and national parks. It is continually expanding and undergoing revisions. This is the eleventh version.

Additions include: Mt. Paegun’s Ryonghung Temple and resort homes, Pyongyang’s Chongryu Restaurant, Swiss Development Agency (former UNDP office), Iranian Embassy, White Tiger Art Studio, KITC Store, Kumgangsan Store, Pyongyang Fried Chicken Restaurant, Kilju’s Pulp Factory (Paper), Kim Chaek Steel Mill, Chongjin Munitions Factory, Poogin Coal Mine, Ryongwun-ri cooperative farm, Thonggun Pavilion (Uiju), Chinju Temple (Yongbyon), Kim il Sung Revolutionary Museum (Pyongsong), Hamhung Zoo, Rajin electrified perimeter fence, Pyongsong market (North Korea’s largest), Sakju Recreation Center, Hoeryong Maternity Hospital, Sariwon Suwon reservoir (alleged site of US massacre), Sinpyong Resting Place, 700 Ridges Pavilion, Academy of Science, Hamhung Museum of the Revolutionary Activities of Comrade Kim Il Sung, South Hamgyong House of Culture, Hamhung Royal Villa, Pork Chop Hill, and Pyongyang’s Olympic torch route. Additional thanks go to Martyn Williams for expanding the electricity grid, particularly in Samjiyon, and various others who have contributed time improving this project since its launch.

Disclaimer: I cannot vouch for the authenticity of many locations since I have not seen or been to them, but great efforts have been made to check for authenticity. These efforts include pouring over books, maps, conducting interviews, and keeping up with other peoples’ discoveries. In many cases, I have posted sources, though not for all. This is a thorough compilation of lots of material, but I will leave it up to the reader to make up their own minds as to what they see. I cannot catch everything and I welcome contributions.  Additionally, this file is getting large and may take some time to load.

North Korea does not publish economic data.  The size of North Korea’s economy is estimated by South Korea’s Central Bank (Bank of Korea), the US Central Intelligence Agency (CIA), and other think tanks such as the Sejong Institute (Lee Jong Seok). 

According to a recent report by the Bank of Korea, North Korea sufferd its second full year of economic contraction (as defined by GDP), 1.1% in 2006 and 2.3% in 2007.  The bank estimates North Korea’s 2007 gross national income (GNI/GNP) at $26.7 billion, per capita GNP at $1,152 (assuming population of 23 million).  If you are interested in knowing the difference between GNP and GDP, click here.

Here are some highlights from the report:

Agriculture, forestry & fisheries marked a 9.4% decrease following a 2.6% decrease in 2006

Mining increased 0.4% in 2007, down from 1.9% increase in 2006

Manufacturing increased 0.8%, higher than 0.4% 2006 increase. -1.7% growth in light industry, due to the decrease in food products and beverages. +2.3% growth in heavy industries led by expansion of metal and machinery products.

Electricity, gas & water production increased 4.8%, (+2.7% in 2006), from hydroelectric and steam power generation.

Construction production -1.5%, (-11.5% in 2006), from reduced non-housing construction and civil engineering.

Services +1.7%, (+1.1% in 2006). Hotel, restaurant, transport, post & telecom industry expanded.

Trade volume (goods) fell 1.8% to $2.941 billion, 1/248 South Korea’s. Exports fell 3.0%, imports fell 1.3%.

These estimates are based on trade figures obtained from the Korea International Trade Association, Korea Trade and Investment Promotion Agency, fuel and food aid figures from aid groups such as the International Red Cross and the World Food Program, as well as information provided by frequent visitors.

More information here:
Full report by Bank of Korea  and data (recomended)

North Korea’s Economy Shrank in 2007, Second Annual Contraction
Bloomberg
Heejin Koo
6/17/2008

UPDATE POST: No your eyes do not deceive you!  According to Yonhap,  Orascom Telecom (the people behind the DPRK’s latest efforts at building a moile network) also appear to be partnering with the DPRK on completing the Ryugyong Hotel:

North Korea resumed the construction of a highrise hotel building in Pyongyang last month, which was suspended for nearly 20 years due to funding problems, informed sources here said Monday.

“North Korean authorities restarted the construction of Ryugyong Hotel in April,” the sources said, quoting those who recently returned from trips to Pyongyang.

Orascom Telecom Holding of Egypt is North Korea’s partner for the construction, the sources said. “If completed, the hotel will be used as an accommodation for foreign investors and visitors, a business center and an international convention center among others,” a source said.

The 330-meter hotel is expected to be the world’s tallest when completed.(Yonhap)

Whatever they do, it will not be as cool as this. 

Here is the IFES take:

ORASCOM and DPRK to complete Ryugyong Hotel Construction
Institute for Far Eastern Studies
NK Brief No. 08-5-20-1
5/20/2008

Sources recently returning to China from Pyongyang have reported that North Korea has resumed efforts to complete the 105-story Ryugyong Hotel. With only 20 buildings in the world taller than the 330-meter structure, it would be by far the largest building in all of North Korea.

Baekdu Mountain Architects and Engineers began building the highrise in 1987 but halted construction in 1992 amid economic hardships and rumors of structural deficiencies. The North has been seeking foreign investment of up to 300 million USD to complete the structure.

Traders in Shenyang, China with ties to Pyongyang say the North has now found that funding, partnering with Egypt’s Orascom Group. Orascom has publicized significant investment plans for North Korea in the last twelve months. Orascom Telecom Holding announced on January 30 of this year that it had been granted the first-ever commercial license to provide WCDMA 3G technology-based cellular service to North Korea, and put forth plans to invest 400 million USD to create a nationwide infrastructure.

This deal followed on the heals of Orascom’s first venture into DPRK investment, announced in mid July, 2007, when Orascom Construction Industries purchased a 50 percent stake in the North’s Sangwon Cement Factory near Pyongyang. This venture involved the injection of 115 million USD, which is being used to modernize the facility and increase production capacity from 2.5 million tons to 3 million tons per year.

In addition to Orascom Telecom Holding and Orascom Construction Industries, the Orascom Group also includes Orascom Hotels and Development and Orascom Technology Solutions.

Read the full article here:
N. Korea resumes construction of luxury hotel  
Yonhap
5/19/2008

ORIGINAL POST:
Orascom Completes 3G Test Call in North Korea
Cellular News
5/19/2008

Orascom Telecom has announced the successful completion of the first call on the CHEO network in North Korea. Orascom  says that the success of this trial network using WCDMA technology represents the first step in providing coverage throughout the country.

CHEO, a subsidiary of Orascom Telecom, is looking to launch its full commercial mobile services within the second half of 2008.

Earlier this year, the company said that it expects to sign up an initial 100,000 subscribers when it launches its new GSM network in North Korea. Speaking on a conference call, CEO Naguib Sawiris said that the service would start in three main cities in the country and the company will then pause to assess the impact.

The company aims to spend an initial US$200 million on the network over the next twelve months, with US$100 per year for the two years after that.

Orascom’s license was granted to the company’s subsidiary CHEO Technology JV Company (”CHEO”) which is controlled by Orascom Telecom with an ownership of 75% while the remaining 25% is owned by the state owned Korea Post and Telecommunications Corporation. The terms of the license allows CHEO to offer services to its customer throughout the country, the duration of the license is 25 years with an exclusivity period of four years.

Regulators in the country met with their counterparts in China in March to discuss controlling mobile radio frequencies along the border between the two countries.

Plans by South Korean companies to build a CDMA network in the capital city in 2002 were cancelled following diplomatic pressure by the USA.

As has been chronicled before on this website, North Korean embassies generally secure their own  operating funds.  Although this might seem odd to western observers, it is an innovative model that has its benefits (i.e. the embassies earn a profit and economic considerations play a large role in determining whether an embassy is worth the cost).  There is also a downside to this model, and that is that more than one North Korean diplomat has been caught in some sort of shady smuggling or tax avoidance scheme.

The staff at the DPRK’s embassy in Germany, however, have been quite entrepreneurial in managing their real estate holdings.  They are converting their old offices into hotel space:

The Cityhostel Berlin will initially have 37 rooms at a charge of 20 Euros ($31) per head a night, Sankei reported. A reception with a grand piano is being built and a Korean restaurant is due to open in May, the newspaper said.

The embassy buildings, occupying 8,160 square meters (87,788 square feet), were built in the 1970s during the Cold War and are located in old East Berlin, Sankei said. Staff numbers at the embassy were cut after the Cold War ended and the building being converted was previously leased to corporations, Sankei said.

Update 4/5/2008:
From the Daily Telegraph:

A spokesman for the North Korean embassy dismissed the reports as Japanese propaganda, however.

“The rumours about this hostel are based on Japanese media reports, but they are not correct,” the spokesman said.

“The Japanese media are very much influenced by their government and they probably gave out this wrong information because they are our enemies.”

but…

On its website, City Hostel notes that it signed a contract in December to occupy the building, which it describes as “formerly the consulate of North Korea”.

Read the full articles here:
North Korea Converts German Embassy Into Hostel, Sankei Reports
Bloomberg
Hideko Takayama
3/25/2008

Enjoy your stay… at North Korean embassy
Daily Telegraph
Harry de Quetteville
4/5/2008

The most authoritative map of North Korea on Google Earth
North Korea Uncovered v.7
Download it here

This map covers North Korea’s agriculture, aviation, cultural locations, manufacturing facilities, railroad, energy infrastructure, politics, sports venues, military establishments, religious facilities, leisure destinations, and national parks. It is continually expanding and undergoing revisions. This is the sixth version.

Additions to the latest version of “North Korea Uncovered” include: A Korean War folder featuring overlays of US attacks on the Sui Ho Dam, Yalu Bridge, and Nakwon Munitians Plant (before/after), plus other locations such as the Hoeryong Revolutionary Site, Ponghwa Revolutionary Site, Taechon reactor (overlay), Pyongyang Railway Museum, Kwangmyong Salt Works, Woljong Temple, Sansong Revolutionary Site, Jongbansan Fort and park, Jangsan Cape, Yongbyon House of Culture, Chongsokjong, Lake Yonpung, Nortern Limit Line (NLL), Sinuiju Old Fort Walls, Pyongyang open air market, and confirmed Pyongyang Intranet nodes.

Disclaimer: I cannot vouch for the authenticity of many locations since I have not seen or been to them, but great efforts have been made to check for authenticity. These efforts include pouring over books, maps, conducting interviews, and keeping up with other peoples’ discoveries. In many cases, I have posted sources, though not for all. This is a thorough compilation of lots of material, but I will leave it up to the reader to make up their own minds as to what they see. I cannot catch everything and I welcome contributions.

The most authoritative map of North Korea on Google Earth
North Korea Uncovered: Version 6
Download it here

This map covers North Korea’s agriculture, aviation, cultural locations, manufacturing facilities, railroad, energy infrastructure, politics, sports venues, military establishments, religious facilities, leisure destinations, and national parks. It is continually expanding and undergoing revisions. This is the sixth version.

Additions to the newest version of North Korea Uncovered include: Alleged Syrian nuclear site (before and after bombing), Majon beach resort, electricity grid expansion, Runga Island in Pyongyang, Mt. Ryongak, Yongbyon historical fort walls, Suyang Fort walls and waterfall in Haeju, Kaechon-Lake Taesong water project, Paekma-Cholsan waterway, Yachts (3), and Hyesan Youth Copper Mine.

Disclaimer: I cannot vouch for the authenticity of many locations since I have not seen or been to them, but great efforts have been made to check for authenticity. These efforts include pouring over books, maps, conducting interviews, and keeping up with other peoples’ discoveries. In many cases, I have posted sources, though not for all. This is a thorough compilation of lots of material, but I will leave it up to the reader to make up their own minds as to what they see. I cannot catch everything and I welcome contributions.

Version 5: Download it here (on Google Earth) 

This map covers North Korea’s agriculture, aviation, cultural locations, manufacturing facilities, railroad, energy infrastructure, politics, sports venues, military establishments, religious facilities, leisure destinations, and national parks. It is continually expanding and undergoing revisions. This is the fifth version.

Additions to the latest version of “North Korea Uncovered” include updates to new Google Earth overlays of Sinchon, UNESCO sites, Railroads, canals, and the DMZ, in addition to Kim Jong Suk college of eduation (Hyesan), a huge expansion of the electricity grid (with a little help from Martyn Williams) plus a few more parks, antiaircraft sites, dams, mines, canals, etc.

Disclaimer: I cannot vouch for the authenticity of many locations since I have not seen or been to them, but great efforts have been made to check for authenticity. These efforts include pouring over books, maps, conducting interviews, and keeping up with other peoples’ discoveries. In many cases, I have posted sources, though not for all. This is a thorough compilation of lots of material, but I will leave it up to the reader to make up their own minds as to what they see. I cannot catch everything and I welcome contributions.

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