North Korean Economy Watch

By Michael Rank

No money was paid for the freeing of a Dutch stamp dealer who went missing in North Korea and is now back home after signing a confession, a local radio and television station reports (in Dutch).

RTV Utrecht said Willem van der Bijl had spent two weeks in solitary confinement in North Korea and that officials had closely examined his laptop and had detailed records of his previous visits to the country.

According to a purported interview van der Bijl gave to the Pyongyang Times before his arrest, this was his 24th visit to North Korea. He visited a polling station during last month’s elections and was quoted as saying, “Looking round the poll, I have been greatly impressed by the free and democratic elections and I have had a better understanding of the DPRK’s reality.

“In the DPRK every citizen is eligible to vote and to be elected. Those who have worked a lot for the people are elected as deputies.

“The popular election system of the DPRK is really excellent.”

Surprisingly, van der Bijl is shown wearing a Kim badge in a photograph of him on the Pyongyang Times website. It’s rare for foreigners to be given a Kim badge and still rarer for them to be shown wearing one in the official North Korean media. It’s not clear where the photo was taken.

It isn’t entirely clear why he was arrested but part of the problem at least was that some of the photographs he had taken were deemed “dangerous and inappropriate,” Coen de Keuster, a friend of van der Bijl, told RTV Utrecht.

Two North Korean contacts of van der Bijl remain missing and are believed to remain in custody. The two North Koreans are said to have worked for him from an office in the city of Pyongsong [Pyeongseong], which is about 30 km northeast of Pyongyang, and has, or had, the country’s largest wholesale market. The market is reported to have been closed in 2009 but the closure could have been only partial. It is possible van der Bijl bought, or hoped to buy, stamps or other items in the market. He apparently also collects North Korean propaganda posters. Markets are highly sensitive in North Korea and foreigners are generally banned from visiting them.

On his website van der Bijl, who is from Utrecht, says he is “#1 in the World for North Korean stamps. Proofs, Postal stationary,Artwork and anything else you might think of !!”

RTV Utrecht said van der Bijl, 59, was not speaking to the media for fear of further jeopardising his North Korean contacts. There was no reply when NKEW tried to phone him, and a Dutch foreign ministry spokesman declined to answer questions about the case, confirming only that the stamp dealer had returned home.

The Dutchman was supposed to return home on July 30 and his family and friends raised the alarm when he did not arrive. He finally arrived back in Utrecht last Saturday.

In his Pyongyang Times interview he was quoted as saying, “I will come to the DPRK in 2012 to join the Korean people commemorating the hundredth anniversary of the birth of President Kim Il Sung”, but it’s not clear whether he still wants to go back or whether he would still be welcome in North Korea.

Pictured Above (Google Earth ): The initial phase of the Taedonggang Fruit Farm (대동강과일종합가공공장) in Samsok-guyok, Pyongyang.  See in Google Maps here.

KCNA recently published the following article on the fruit farm (2011-8-12):

The Taedonggang Combined Fruit Farm in Pyongyang attracts admiration from foreign visitors.

After visiting the farm, Martin Lotscher, chairman of the Switzerland-Korea Committee, said the farm is associated with benevolent politics pursued by leader Kim Jong Il and that such an amazing farm can never be found in other countries.

Anders Karlsson, chairman of the Communist Party of Sweden, said the farm offers a glimpse of Kim Jong Il’s strenuous effort for providing the people with a happy life, as well as advantages of the socialist economy.

It is incredible that this large and wonderful fruit farm was built in only three years.

Mamoru Kitahara, chairman of the Fukuoka Prefectural Association for Japan－DPRK Friendship, said he deemed it a great honor to visit the fruit farm at a time when the Korean people were striving hard to build a thriving nation.

He congratulated the Korean people on the tremendous achievements they made under the leadership of Kim Jong Il.

The North Korean media has reported on this farm dozens of times, but it has never mentioned that the apple trees in the Taedonggang Fruit Farm were supplied by a European company.  This same firm may have also supplied apple trees to similar new fruit farms in the DPRK (Kosan and Toksong fruit farms), though I am unsure of their direct involvement beyond the Taedonggang fruit farm.

Some other interesting gossip about the area:

1. The farm is probably the best-defended in the world.  It is surrounded on all sides by dozens of KPA units, HARTs, and anti-aircraft positions.  Looking at the level-1 roads in Pyongyang, it is also likely that Kim Jong-il drives through the farm every time he commutes from downtown Pyongyang to his Kangdong residence.

2. The farm is located just north of Wonhung-ri (원흥리).  There are some villas hidden back in the woods (to the south of the farm) and I believe that Shin Sang-ok and  Choi Eun-hee spent some time here.  If a reader in South Korea could get Ms. Choi to confirm, I would appreciate it!

According to Yonhap:

North Korea imported more corn and less rice from China in the first half of this year than in the same period a year ago apparently due to a lack of foreign cash, a study showed Sunday.

North Korea’s grain imports from the neighboring country in the six-month period consisted of 38.2 percent corn, 37.5 percent flour, 16.9 percent rice and 7.2 percent beans, according to an analysis of the two countries’ trade by Kwon Tae-jin, vice president of the Korea Rural Economic Institute.

Last year, the figures stood at 34.2 percent flour, 28.8 percent corn, 19.3 percent rice and 16.4 percent beans, indicating an overall increase in imports of cheaper grains such as corn and flour this year, according to the study based on data from the Korea International Trade Association. Imports of rice and beans, meanwhile, fell from the same period last year.

This year, imports of beans cost $661 per ton on average, while a ton of rice, flour and corn sold for $538, $395 and $304, respectively.

The total amount of grain imports rose 5.5 percent to 149,173 tons, up from 141,395 tons in the first half of last year, apparently reflecting food shortages in the impoverished nation, the study said. Grain imports cost US$404 per ton on average, up 8.6 percent from $372 last year, bringing the total cost to $60.3 million, or 14.4 percent more than last year.

“The amount of grain imports last year was larger than in most years, but the fact that (North Korea) imported even more this year seems to indicate a shortage of food,” Kwon said in his study. “The larger imports of corn than beans or rice appears to be the result of a lack of foreign currency.”

Meanwhile, North Korea also boosted its imports of fertilizers by 91 percent in the first half of this year, buying a total of 190,396 tons compared with 99,588 tons in the same period last year. The country bought more than 164,000 tons of ammonium sulfate, which is sold at $188 per ton, while only importing some 25,000 tons of urea for $346 per ton.

“It seems like either fertilizer production in North Korea has dropped significantly, or they are aiming to boost their food production by a large amount,” Kwon said.

The Daily NK also published a story on these findings.

Read the full story here:
Lack of foreign cash forces N. Korea to buy more corn, less rice
Yonhap
2011-8-14

According to Reuters:

North Korean trade officials visited Myanmar this week to discuss a possible deal to import Burmese rice to ease major food shortages at home, a government official said on Wednesday.

A meeting was held on Tuesday in the country’s biggest city, Yangon, but the terms of the agreement and how North Korea planned to pay for the rice were not known, the official told Reuters, requesting anonymity.

A North Korea-flagged cargo ship named Tumangang has been docked in the port city since Monday. Witnesses and a Reuters photographer said the vessel appeared empty and no cargo was seen being loaded or unloaded.

Myanmar was once the world’s biggest rice exporter and has shipped 450,000 tonnes of the grain so far this year, up from 440,000 tonnes for the whole of 2010. It exported 1.1 million tonnes in 2009, mostly to markets in Africa and the Middle East.

…

The Burmese official said the North Koreans who visited Yangon on Tuesday dealt directly with the military-owned Myanma Economic Holding Ltd (MEHL), one of the country’s biggest firms. MEHL enjoys a monopoly of many of the country’s most lucrative import and export produce.

A senior member of from the Myanmar Chambers of Federation of Commerce and Industry said it was likely North Korea would try to import more than just rice, noting that it previously bought Burmese rubber.

Ties between the two reclusive countries were restored in 2007 after a 24-year freeze that followed the failed assassination attempt by North Korea agents on then South Korean President Chun Doo-hwan during a visit to Myanmar.

The revived ties have worried the United States, which believes Myanmar’s military has sought to develop its own nuclear weapons technology using North Korean expertise.

The DPRK recently engaged Cambodia for a barter food deal.

Here is a compendium of stories related to the DPRK’s alleged food shortage this year.

Read the full story here:
North Korea seeking rice deal with Myanmar
Reuters
Aung Hla Tun
2011-8-10

Pictured Above (Google Earth): Tynda Logging Camp in Russia. See in Google Maps here.

According to the Daily NK:

Kim, a defector who arrived in South Korea in 2008 after working for 30 years in the North Korean forestry sector, explained to The Daily NK on the 5th, “North Korea’s operations in Russia are now just enough to send timber to North Korea on the birthdays of Kim Il Sung and Kim Jong Il; they provide little real benefit in terms of foreign currency earning.”

In essence, Kim went on, “North Korea is just running the Forestry Mission to maintain its relationship with Russia.”

Following a 1967 agreement between the two countries, logging has at times played a key role in North Korea’s hard currency earning efforts, with more than 20,000 North Korean laborers being involved in forestry operations in Russia by the start of the 1990s.

Under the agreement, Russia agreed to provide the trees, equipment and power, while North Korea would provide the labor, and both countries shared the timber.

However, the deal is no longer beneficial to the North Korean state, as Kim explained in more detail, saying, “At the moment, Russia takes 72% and North Korea 28% of what is felled by these North Korean laborers, but most of the money North Korea earns from selling it on to Chinese trade companies goes on the laborers’ wages, accommodation, food and administration of the Forestry Mission. Now that Russia is a market economy with constantly rising prices, there is hardly any hard currency left to send back to the North Korean authorities.”

“Recently, China has been offering the Russians more money for these felling operations, so the North Korean laborers have no choice but to go home,” Kim added, continuing, “In addition, the scale of the workforce and operations has been decreasing recently partly because those groups of workers who protest about wage delays and whatever else are all dispatched back to North Korea.”

“In the past there used to be trade missions in Tynda and Khabarovsk, but now they is only the one in Tynda, with seven logging businesses underneath it,” he said. “The Khabarovsk trade mission has recently been closed down, and there are now a total of just nine logging operations underway in all of Russia.”

The numbers of loggers has shrunk to “4,000 in Khabarovsk and 2,000 in other remote areas; a total that does not exceed 6,000,” Kim stated.

Even the remaining forestry mission in Tynda is not large, with a president, chief engineer and vice-director working in parallel with a Party chief secretary, organizational secretary and propaganda secretary. Although each secretary has two or three workers under him, even with the National Security Agency staff that keeps tabs on the activities of the workers included in the total, the mission remains small.

Elsewhere, however, there are actually tens of thousands of North Korean laborers in Russia working in fields including construction, agriculture and mining, including around 30% of the 6,000 nominally said to be involved in logging.

The activities of military-run enterprises are on the increase, too. Kim explained, “Following cooperation between the Russian Air Force and the North Korean Air Force Command, there are now farming operations going on around air fields. If you include the General Reconnaissance Bureau, North Korea has sent at least a few tens of thousands of people to Russia.”

Given the ever increasing number of laborers running away from their assigned workplaces, Kim speculated there could also be as many as 600 or more defectors residing in Russia.

“In 2006 the Ministry of Forestry sent some cadres all over Russia to try and lure defectors back home, but these people had grown accustomed to living in Russia and nobody listened. There were 598 at that time, so it’s probably even higher by now,” Kim said.

One other key reason why North Korea has been unsuccessful in its attempts to retrieve the defectors is that the Russian authorities take a sympathetic view of their plight. According to Kim, “Russia does not forcibly repatriate defectors in the same way as China, so they are able to marry and work there. The Russian police have been treating defectors as humanitarian refugees since 2005, aware that forcibly repatriated defectors risk public execution and that their families face punishment, too.”

Naturally though, surveillance and control of the laborers is as severe as it has always been at the logging sites. Every week the workers are forced to participate in Party-led activities including mutual criticism sessions. The authorities are trying to limit the number of defectors by encouraging them to spy on one another, and the NSA has an intricate system of investigation to maintain order. Nevertheless, workers are sufficiently unhappy with their situation that defections continue to occur.

According to the Russians, there were 32,000 North Koreans working in the country in 2010. Here is a link to the source of this number and previous posts on North Koreans logging in Russia.

Read the full story here:
Logging in Russia: Not What It Used to Be
Daily NK
Kim Yoinh-hun
2011-8-8

According to Yonhap:

Trade volume between South and North Korea reached US$825 million in the first six months of the year, up 19.5 percent compared to the same period last year, the Unification Ministry said Wednesday.

The cross-border trade volume jumped more than 135 percent compared to the January-June period in 2009, the ministry said.

The figure suggests that a joint industrial complex in the North’s border city of Kaesong, a key source of inter-Korean trade, has not been affected by South Korea’s sanctions imposed on the North for its two deadly attacks on the South last year.

The industrial complex, an achievement of the first-ever inter-Korean summit in Pyongyang in 2000, combines South Korea’s capital and technology with the North’s cheap labor.

More than 47,000 North Koreans work at about 120 South Korean firms operating in the industrial zone to produce clothes, utensils, watches and other goods.

South and North Korea have recently raised the minimum monthly wage for the North Korean workers by 5 percent this year to US$63.814, according to the ministry.

Previous posts on the Kaesong Industrial Zone can be found here.

Read the full story here:
Inter-Korean trade via joint industrial zone increases 19 pct in H1
Yonhap
Kim Kwang-tae
2011-8-3

Pictured above (Google Earth): Kumsong Tractor Plant (금성뜨락또르공장).  See in Google Maps here.

According to Reuters:

North Korea wants to import Cambodian rice to try to ease food shortages and has offered in return to provide machinery and expertise to develop Cambodia’s fledgling mining and energy sectors, a Cambodian official said on Wednesday.

A North Korean delegation led by Deputy Trade Minister Ri Myong-san visited Cambodia this week and the country is keen to import rice as soon as possible, said Ouch Borith, Cambodia’s secretary of state for foreign affairs.

It would help Cambodia develop its mining sector and invest in hydropower dams.

The amount of rice North Korea wanted to import was not disclosed, he said. Further specific details, such as how North Korea would fund its purchases and investments, were not available.

Cambodia is the world’s 15th biggest producer of rice and has set a target of exporting 1 million tonnes of the grain within the next four years.

According to the Economic Institute of Cambodia (EIC), an independent think tank, the country is expected to ship about 100,000 tonnes of milled rice this year, up from 50,000 tonnes in 2010. More goes to Vietnam to be milled and shipped from there.

North Korea is one of the world’s poorest countries and it rarely produces enough food to feed its 24 million people, often as a result of bad weather affecting harvests.

International sanctions over its nuclear weapons programme combined with neighbouring South Korea’s refusal to provide help have led to a substantial decline in food aid from its traditional donors.

Although Cambodia and North Korea have no trade ties, they have a diplomatic relationship. Cambodia’s former King Norodom Sihanouk has a house in North Korea and was once a special guest of the country’s late ruler, Kim Il-sung.

Ouch Borith said North Korea had offered to sell agricultural machinery to Cambodia, such as tractors, at cheaper prices than Western countries and wanted to provide expertise in developing mines.

“We have only small and medium-sized enterprises, not big industries, but Cambodia’s natural resources are huge, such as minerals, gold, iron and aluminum,” he told reporters.

“Our friends the Koreans said they would do studies and use their experience to help Cambodia make an industry from these natural resources.”

Agriculture forms the biggest part of Cambodia’s $10 billion economy, followed by tourism and garment manufacturing, but it is also trying to develop its energy and mining sectors.

Read the full story here:
N. Korea wants to buy Cambodian rice, invest in mining
Reuters
2011-7-27

According to Xinhua:

A trade delegation of Democratic People’s Republic of Korea (DPRK) led by Vice Minister of Foreign Trade Ri Myong San on Tuesday started a visit in Cambodia in order to commence trade and investment ties with the country.

During a meeting with Cambodian Deputy Prime Minister Hor Namhong, who is also the Minister of Foreign Affairs and International Cooperation, on Tuesday, Ri Myong San said the visit was to find possibility to start economic relations with Cambodia, especially on the development of agriculture, trade and investment.

Meanwhile, Hor Namhong said that Cambodia welcomed DPRK in starting trade ties with Cambodia for mutual interests of the two peoples.

Ouch Borith, a secretary of state for the Ministry of Foreign Affairs and International Cooperation, told reporters after the meeting that the DPRK delegation would hold the first-ever Cambodia and DPRK Joint Committee meeting on July 27 in order to discuss and explore trade and investment opportunities between the two nations.

“It will be the first meeting since the two countries signed the agreement in 1993 to establish the Cambodia-DPRK Joint Committee,” he said. “So far, the trade exchange between Cambodia and DPRK is zero.”

According to the trade statistics from the Ministry of Commerce, there is no any record of trade transaction between the two countries.

On the investment side, earlier this year, the DPRK’s Mansudae New Tech Corporation has invested 17 million U.S. dollars to build an e-museum in Siem Reap province, according to the figure from the Council for the Development of Cambodia.

The DPRK delegation arrived here on Monday and will leave here on Thursday.

Read the full story here:
DPRK trade delegation visits Cambodia to start economic ties
Xinhua
2011-7-26

UPDATE 3 (2011-9-27): The Center for Nonproliferation Studies hosted a panel discussion on Mr. Pollack’s report.  You can see all the presentations here.

UPDATE 2: The Washington Post has recently covered this study.

UPDATE 1: 38 North has published an article by Mr. Pollack which provides an interesting narrative of the market for North Korean missiles.

ORIGINAL POST: The Choson Ilbo published the following:

Forty percent of ballistic missiles developing nations have imported since 1987 came from North Korea, VOA reported Thursday.

The claim comes in a report titled “The Evolution of North Korea’s Ballistic Missile Market” by Joshua Pollack, a nuclear proliferation expert at the U.S. Science Applications International Corporation, who says, “More than 40 percent of the roughly 1,200 theater ballistic missile systems supplied to the developing world between 1987 and 2009 came from North Korea.”

During this period Iran, Egypt, Syria, Libya, Yemen, the U.A.E., and Pakistan imported missiles from the North. The North topped the list of ballistic missile suppliers, followed by Russia (400) and China (270).

But the North’s missile export began declining rapidly in 1994.

North Korea’s time as supplier of “complete missile systems” to the Middle East at large ended because the Middle East no longer had the need for rapid arms buildup and missile stockpiles after the end of the Iran-Iraq War, Pollack said.

The North proved “adaptable to shifting market and security environments” by “turning instead to the export of missile components and materials.” But missile importers had less demand for North Korean missiles as they built their own production capabilities, he added.

Pollack’s report was carried in the July issue of The Nonproliferation Review published by James Martin Center for Nonproliferation Studies at Monterey Institute of International Studies.

Mr. Pollack’s full report can be found here (PDF). It is well worth reading. Mr. Pollack is also a blogger at ArmsControlWonk.com.

According the Hankyoreh:

South Korean businesses engaged in economic cooperation with North Korea who have incurred major losses due to sanctions are showing signs of working together in response to their predicament, including suing the government for compensation. The South Korean government imposed the sanctions on North Korea in connection with the sinking of the Cheonan.

Around 10 heads of businesses investing in tourism at Mt. Kumgang, businesses planning to move in to Kaesong Industrial Complex, and businesses trading with other parts of North Korea are known to have gathered in central Seoul on July 19 and agreed to embark jointly on responsive measures, including taking legal action against the government.

“In a situation where there is no sign of an improvement in inter-Korean relations, businesses cooperating with North Korea are going beyond the limits of their tolerance,” said one official working in a field related to inter-Korean economic cooperation during a telephone interview with the Hankyoreh on July 20. “Those taking part in the meeting easily agreed to respond as a group, including by suing the Ministry of Unification for damages. They decided to meet once more some time around next week and decide upon a specific plan. Around ten businesses are currently preparing to sue.”

The affected businesses have decided to demand that the government withdraw the Cheonan sanctions while urging it to provide systematic guarantees that North-South economic cooperation can continue in a stable manner regardless of the political situation. They are also known to be considering plans such as one-man protests, returning their business licenses and issuing a statement.

Two materials processing companies, including CEO Kim Chan-ung’s NFN, have sued individually for damages, but this is the first time since the sanctions were imposed, on May 24 last year, that businesses dealing with North Korea have acted together against the government in an organized manner.

Read the full story here:
S.Korean businesses to sue for losses from sanctions
Hankyoreh
Kim Jong-cheol
2011-7-21