North Korean Economy Watch

According to Yonhap:

South Korea said Tuesday it will send 1 billion won (US$866,000) worth of hand sanitizer next week to North Korea to help the impoverished neighbor combat the spread of the H1N1 flu virus.

The shipment of 200,000 liters of sanitizer, scheduled for next Monday, comes after South Korea delivered some $15 million in anti-viral medications to the North in December in the first state-level cross-border humanitarian aid in nearly two years.

North Korea first acknowledged cases of Influenza A virus infection on Dec. 9, but it has yet to report any flu-related deaths.

The hand sanitizer will be transported to the North Korean border town of Kaesong on South Korean trucks across the military demarcation line and handed to the North there, Unification Ministry spokesman Chun Hae-sung said.

“North Korea agreed to accept the aid on Feb. 22,” he told reporters, adding about 20 25-ton trucks will likely be mobilized to deliver the aid.

The Tamiflu aid in December marked the first humanitarian assistance provided by the South Korean government to North Korea since conservative President Lee Myung-bak took office in Seoul in early 2008. Lee cut off the unconditional aid that his liberal predecessors had shipped to the North over the past decade, conditioning exchanges on progress in the North’s denuclearization.

Read the full story here:
S. Korea to deliver anti-viral sanitizer to N. Korea next week
Yonhap
2/16/010

UPDATE: The shipment has been delivered

SKorea sends 2nd batch of swine flu aid to NKorea
AP via Business Week
2/23/2010

South Korean trucks have crossed the border into North Korea to deliver a second batch of swine flu aid.

Unification Ministry spokeswoman Lee Jong-joo says South Korea sent 52,840 gallons (200,000 liters) of hand sanitizers to North Korea on Tuesday.

South Korea sent enough doses of the antiviral drugs Tamiflu and Relenza for 500,000 North Koreans in December in its first direct humanitarian aid to the communist country in nearly two years. North and South Korea have remained in a state of war since 1953.

North Korea acknowledged in December that swine flu had broken out in the country though hasn’t mentioned any virus-related deaths.

Tamiflu is made by Switzerland’s Roche Group. Relenza is a procuct of GlaxoSmithKline.

According to this SDC web page:

Following a decision made by the Swiss Parliament, the SDC’s special programme in North Korea will be discontinued at the end of 2011.

There was not much in the media on this, but a reader pointed me to this article:

Switzerland is standing by a decision to stop development aid to North Korea, which has focused on improving food security in the internationally isolated country.

The foreign ministry says it now has a strategy for the withdrawal of Swiss development workers from the communist country by the end of 2011.

In 2008 the government approved a motion by parliamentarian Gerhard Pfister demanding a halt to development aid in response to North Korea’s continuing nuclear ambitions.

“The atomic weapon programme violates international agreements. North Korea has shown itself to be utterly uncooperative, despite international efforts. It threatens to destabilise the region,” the motion said.

Although Switzerland has no official representation in the communist country, diplomatic relations were established in 1974.

The Swiss Agency for Development and Cooperation (SDC) has had an office in the capital, Pyongyang, since 1997 [Possibly located here]. According to the motion, the SDC justified its work there by saying that “supporting the reform process” should improve food security. The SDC cited a “tentative opening” of the country as a success.

Pfister maintains that today North Korea is no longer showing a “tentative opening” – rather the opposite.

The SDC’s main priority in the country has been aid projects aimed at improving the efficiency and sustainability of North Korean agriculture.

Consistent policy?

The central question is whether it is wiser to isolate a totalitarian regime or to cooperate with it. The attitude of the Swiss parliament and government is clear: stop development aid.

But is the issue simply black and white? On December 21 Switzerland celebrated – in the presence of the North Korean foreign minister – the 35th anniversary of diplomatic relations.

On December 28 Blaise Godet, the Beijing-based Swiss diplomat responsible for North Korea, told the Neue Zürcher Zeitung that Switzerland had nurtured a consistent policy of engagement and political dialogue. “We want to contribute to solutions,” he said.

As for the ending of aid at the end of 2011, foreign ministry spokesman Erik Reumann told swissinfo.ch that “the SDC would follow the decision of the government and parliament. A dismantling plan exists that will guarantee a well-organised withdrawal from North Korea”.

Similarities with Switzerland

While the Swiss government and parliament want to end development aid to North Korea, former justice minister Christoph Blocher, a leading figure in the rightwing Swiss People’s Party, has written in detail about his visit to the country – on a hiking holiday.

The self-confessed anti-communist noted in the Weltwoche weekly magazine in November that “one thing North Korea and Switzerland have in common is that both countries want to keep their autonomy and are working for a safe future”.

In Pyongyang Blocher said he came across “normal conditions”, but admitted that “we only had access to those areas and streets considered presentable”. Nevertheless, he continued, “the streets are tidy and the Korean people are all clean and decently dressed, and go everywhere on foot. People walk”.

But Blocher agreed that the food situation was unsatisfactory.

The Swiss Agency for Development and Cooperation (SADC) web page is here.Here is a report they helped produce: Tools for building Confidence on the Korean Peninsula.

According to Yonhap (1/15/2009):

North Korea told South Korea on Friday that it will accept the 10,000 tons of corn aid that South Korea offered in October, Seoul’s Unification Ministry said.

North Korea sent a fax message to the South, saying it “will receive the corn aid,” said ministry spokeswoman Lee Jong-joo.

According to an AFP report that cites Good Friends:

Good Friends, citing its own contacts in the reclusive North, said prices for rice and corn doubled last week at markets in the capital Pyongyang and in the eastern port city of Chongjin.

Rice prices ranged from 120-150 won per kilogramme (2.2 pounds) in Pyongyang and 110 to 140 won in Chongjin last week — up from 40 to 50 won reported on December 30, the group said.

Corn also traded higher at 70-75 won last week — up from 20-25 won on December 30 in the areas, it added. Seoul’s unification ministry, handling cross-border issues, could not confirm the data.

The official exchange rate is 135 won to the dollar but the black market rate is between 2,000 and 3,000 won.

The report came as the World Food Programme struggles to raise relief funds for the food shortage-hit North.

Major donors — including South Korea and the United States — refuse to help in protest at its second nuclear test in May last year.

Statistics available at the WFP website display it raised 89.8 million dollars as of late last month, around only 18 percent of its target of 492 million dollars in relief funds for the communist North.

Read the full article here:
Food prices soaring in N. Korea: group
AFP
1/10/10

According to the AFP:

South Korea said Monday it would provide 26 billion won (22.2 million dollars) for humanitarian projects in North Korea, the second donation this month to its communist neighbour amid easing relations.

The unification ministry said it would donate 15.2 billion won to the World Health Organization’s programme for malnourished children and 4.7 billion won to the UN Children’s Fund UNICEF.

Spokesman Chun Hae-Sung said some six billion won has been allocated for a variety of other projects run by private groups.

“We decided to assist North Korean infants and children through private and international organisations, after considering the urgent situation in North Korea,” he told a briefing.

On December 18 the South shipped swine flu medication worth 15 million dollars to the North.

It was the first direct aid to Pyongyang from Seoul’s conservative government since it took office in February 2008.

Relations between the two Koreas have been interesting recently.   Official assistance from the South Korean government is at a near-term low, and the South Korean government spent little of the funds it appropriated for inter-Korean projects this year (See: here, here, and here).  South Korea has also tightened import rules for a number of North Korean goods (to protect local businesses), halted the export of luxury goods to the DPRK, and blacklisted DPRK businesses sanctioned by the UNSC. In addition, 2009 saw turmoil in the Kaesong Industrial Zone and a (predictable) naval clash along the NLL.

“Economic relations,” however, seem to have turned the corner recently.  Despite several months of decline, inter-Korean trade increased in the past two months.

UPDATE:  According to AFP:

South Korea is preparing to ship medical supplies worth more than 15 million dollars to help North Korea fight an outbreak of swine flu, officials said Monday.

The unification ministry, which handles cross-border ties, said the shipment would include antiviral drugs for 500,000 patients — Tamiflu for 400,000 and Relenza for 100,000 — and sanitation supplies.

The aid will cost an estimated 17.8 billion won (15.3 million dollars), which will be financed by a state fund for inter-Korean cooperation, it said.

Spokesman Chun Hae-Sung said Seoul would send the shipment as soon as possible, and definitely by the end of the year. But the North, which had accepted the offer, had not yet set a firm date.

The drugs shipment will be the first direct South Korean government aid since relations soured last year, although Seoul has funded assistance to Pyongyang through private groups.

North Korea Wednesday reported nine cases of (A)H1N1 in the capital Pyongyang and the city of Sinuiju bordering China. No death toll was given.

Observers say the virus could pose a particular threat to the North because of malnutrition amid persistent food shortages and a lack of drugs such as Tamiflu.

Good Friends, a Seoul-based welfare group with cross-border contacts, quoted an unidentified Sinuiju city official as saying more than 40 people had died of the swine flu in the border city alone.

The World Health Organization, however, told Yonhap news agency that all nine North Korean patients have recovered.

Yonhap quoted Suzanne Westman, coordinator of outbreak alert and response at the WHO’s New Delhi office, as saying no additional cases were reported in the isolated communist country.

The first of the patients, all children aged between 11 and 14, was discovered on November 25 and the last case on December 4, she said, adding that three of the infections were in Pyongyang with the other six in Sinuiju.

“All contacts have been identified, put in isolation and treated,” she told Yonhap, adding that North Korea had a solid surveillance system and a sufficient number of physicians is believed to be able to handle the outbreak.

ORIGINAL POST: According to KCNA:

Anti-A/H1N1 Flu Campaign Intensified

Pyongyang, December 9 (KCNA) — New Influenza A/H1N1 broke out in some areas of the DPRK amid the growing of its victims worldwide.

According to the Ministry of Public Health, nine cases were reported from Sinuiju and Pyongyang.

The relevant organ is further perfecting the quarantine system against the spread of this flu virus while properly carrying on the prevention and medical treatment.

The State Emergency Anti-epidemic Committee has taken steps to enhance the role of prevention and treatment centers at all levels and increased checkup stations across the country while directing efforts to the medical treatment of its cases.

According to Yonhap:

The World Health Organization (WHO) is working “closely” with the North Korean government to help stem the spread of an Influenza A outbreak there and assess the scope of flu infections among North Koreans, a WHO spokesperson said Wednesday.

North Korea said earlier in the day that it has confirmed nine domestic cases of H1N1 virus infections. The highly infectious disease may be particularly dangerous to the North Korean people, who are mostly undernourished and may have weakened immune systems.

“We are working closely with the (North Korean) government to see what is required and if they need any assistance from WHO,” Aphaluck Bhapiasevi, a WHO spokeswoman on the H1N1 pandemic, said over the telephone.

Bhapiasevi also said there are likely more cases of the H1N1 virus than announced, as people who have mild symptoms are not tested.

“In any country, there may be more cases than have been laboratory-confirmed,” she said. “They may not reflect actual number of the cases.”

In May, WHO provided 35,000 Tamiflu tablets each for North Korea and about 70 other underdeveloped countries to help fight possible outbreaks. Seoul officials say the North would need millions of tablets to safeguard its 24 million people.

Through its office in North Korea, the world health body has been making “preliminary assessments” of the scope of the outbreak, she said. “We have been discussing support that would be required.”

According to the AP, the DPRK will accept ROK assistance as well:

North Korea agreed Thursday to accept medicine from South Korea to fight an outbreak of swine flu, a Cabinet minister said, in a development that could improve relations between the nations after a deadly maritime clash.

“Today, the North expressed its intention to receive” the medical aid, Unification Minister Hyun In-taek told reporters.

North Korean state media reported Wednesday that there were nine confirmed swine flu cases in the country. South Korea plans to send the antiviral Tamiflu to the North, Health Ministry spokesman Lee Dong-uk said, without giving specifics.

South Korea’s Yonhap news agency said South Korea plans to send enough doses of Tamiflu for about 10,000 people. It cited a government official it did not identify.

The move came two days after South Korean President Lee Myung-bak offered unconditional aid to North Korea to help contain the virus — the government’s first offer of humanitarian aid since Lee took office in early 2008 with a hard-line policy toward the North.

(h/t NK Leadership Watch)

Korea Business Consultants has published their October 2009 newsletter.  You can read it here.

Here is the newsletter table of contents:

COVER
– China eyes DPRK’s mineral wealth
– SinoMining acquires 51% of DPRK’s Hyesan Copper Mine
– Transformation and Modernization of North Korea
– DPRK sees peace pact with US as key to disarmament
– US “willing to engage DPRK directly”
– “DPRK Energy Sector Assistance to – Accompany Progress in… Discussions”
– Billy Graham’s son visits DPRK to deliver aid
– Lang visits Seoul

ECONOMY
– DPRK vows to expand trade
– China poised to give substantial aid
– DPRK films looking for joint producers

INTER KOREAN
– Buddhists from south, north call for reopening of Mount Kumgang tour
– Kaesong factory recognized for quality
– Frayed relations hindering development of mineral resources
– ROK aid to north falls
– Lawmakers call for use of rice surplus as DPRK aid
– Farmers demand rice price stabilization

POLITICAL
– Kenya establishes diplomatic relations with DPRK

CULTURE & SPORTS
– Eriksson to coach DPRK?
– DPRK’s Hong battles for gold at World Gymnastic Championships
– DPRK begins preparations for World Cup

KOREA COMPASS
– Mangyongdae
– Korean Proverb

1. Dutch import DPRK clothing and machinery (via Yonhap):

Dutch companies gave purchase orders to clothing and machinery firms in North Korea following their visit there organized by the Chamber of Commerce of the Netherlands in September, said the Japan-based Choson Sinbo in a dispatch from Pyongyang.

“Exchange and cooperation projects that were agreed to in meetings between the Dutch business delegation and the DPRK Commercial Office are entering the stage of implementation,” the report said. DPRK is short for the North’s official name, the Democratic People’s Republic of Korea.

“Production by the (North) Korean clothing and machinery trade firms is underway according to the agreements,” it added.

Dutch businesses along with firms from 14 other countries participated in the Pyongyang Autumn International Fair held Sept. 21 to 24. North Korea holds a trade fair twice a year to draw foreign investment and boost technology exchanges.

The Choson Sinbo said the Dutch firms then showed interest in the information technology area, machinery parts and clothing goods and held talks with pertinent North Korean companies, such as the Joson Computer Center and Unha Clothing Company.

After returning home, the Dutch produced a report on North Korea’s international economic relations for distribution at home and in other Western European countries, the newspaper said.

2. Seoul sets DPRK official assistance budget.  According to Yonhap:

According to its 2010 budget plan submitted to the National Assembly unification, foreign affairs and trade committee, the Unification Ministry allocated 1.18 trillion won (US$1.02 billion), about the same as the earmarked budget for this year, for inter-Korean relations and exchanges.

“The ministry has reflected the government’s policy to continue to proceed with humanitarian projects despite the strained phase in inter-Korean relations,” the ministry proposal said.

Broken down to specifics, 616 billion won has been set aside for the possible resumption of rice and fertilizer aid that was suspended after President Lee Myung-bak took office last year. The sum is slightly less than the 718 billion won for this year but remains mostly untouched. The ministry cited the fall of grain prices as the reason for adjustment.

The amount will be worth 400,000 tons of rice and 300,000 tons of fertilizer that had been annually provided to the North over the past decade. But Seoul officials have said they there is no immediate plan yet to resume the rice and fertilizer aid.

The ministry also set aside 18 billion won and 25 billion won to assist North Korea through non-governmental organizations or international agencies like the World Food Program.

For economic projects, including a joint industrial park in the North’s border town of Kaesong, the proposed budget earmarks 144.8 billion won, up 17 percent from the previous year.

“Massive economic cooperation projects were considered in preparation for the possibility of progress in the North Korean nuclear issue,” the ministry said.

It should be pointed out that Seoul has hardly touched its current inter-Korean assistance budget (here and here).  These sorts of policy moves are intended to offer Pyongyang a highly visible carrot.

3. Pyongyang’s 2009 Kaesong antics have unfortunately scared away more foreign direct investment from the Kaesong Zone, despite significant South Korean subsidies.  According to Yonhap:

Romanson Co., a South Korean watchmaker, said Thursday it has no intention to further invest in an inter-Korean industrial complex because of the political risks.

Romanson operates a plant in the industrial park in the North Korean border town of Kaesong, which turns out 40,000 watches per month. In 2005, the company invested 6.1 billion won (US$5.3 million) to build the factory.

4. And the first shipment of NOKO Jeans have arrived in Europe!  Learn more at their Facebook Page.  Here is a photo of the shipment on Flickr.

Institute for Far Eastern Studies (IFES)
NK Brief No. 09-10-19-2
10/19/2009

As concerns over lean harvests and food shortages grow, North Koreans are growing more worried as rumors over worsening conditions next year make their way through North Korean communities. Temperatures in North Korea dropped sharply in July, leading to freezing that impacted the agricultural sector. From September 8-12, the temperature dropped so drastically that areas of North Korea frosted over. Mid-September temperatures then suddenly rose to levels well above average, leading fruits and vegetables to sprout new flowers.

Especially in the northern areas of the country, the strange weather patterns have led to widespread rumors of food shortages by the end of the year and beyond. While the North recorded average harvests this year, avoiding mass famine, the recently ended ‘150-day Battle’, market restrictions, and other controls have led to rampant concerns of starvation, flood, and other threats.

North Korean Central Broadcasting reported on September 25 that Russia had provided rice aid, and again on September 28 that Vietnam had sent food aid. It appears that the food crisis has reached such proportions that the government is no longer attempting to cover it up. With the majority of people believing that they will face widespread food shortages this year, many rumors are circulating that the North Korean authorities have decided to accept food aid from abroad. As fall has already arrived, there is talk of a ‘second arduous march’ having begun, and there are reports of rice traders travelling around the country and buying up all the supplies.

On October 11, prices in the Yanggang Province city of Hyesan were continuing to rise, despite it being autumn. Chinese rice was being sold for 2,500 won per kilogram, and North Korean rice was going for 2,700 won. After the first ‘arduous march’ (mid to late 1990s), North Korean authorities supplied some limited rations after the fall harvest in order to ease food shortages. However, this year, not even these rations are available, and authorities are calling on people to provide for themselves.

This year’s rice and corn harvests were smaller than previous years, and last month, the UN FAO predicted that the North would need 1.7-1.8 million tons of food aid from abroad. Kim Soon-kwon, director and founder of the International Corn Foundation, reported after a recent visit to North Korea that the country’s food supplies would fall one million tons short this year. The South Korean Ministry of Unification predicted earlier in the year that without outside aid, North Korea would be 1.17 million tons short of food. North Korean citizens need 5.48 million tons of food, and as previous harvests have been around 4.31 tons, the shortage is obvious.

Yonhap anounces two new aid projects aimed at the DPRK.

First,  the International Federation of Red Cross and Red Crescent Societies (IFRC) has earmarked US$17 million for humanitarian aid to the DPRK over the next two years. This is to cover medical services for 8.5 million vulnerable people and improve water supply services in North Korea from 2010-2011.

Second, South Korea on Monday offered the North 10,000 tons of corn and other small-scale humanitarian aid, responding to a rare official request for assistance from Pyongyang.