North Korean Economy Watch

On October 8, 2010, the DPRK held a large-scale fireworks show on the Taedong River.  The current Google Earth imagery of Pyongyang, taken on October 6, 2010, shows the infrastructure used in the fireworks show:

Click the image to see a larger version in a different window. On the left side of the river near Kim Il-sung Square is a series of new water jets (water cannons) these are used to shoot decorative patterns of water through the air (accompanied by colorful lasers!). The system is approximately 117 meters long, and according to satellite imagery, was installed sometime between December 19, 2009 and October 6, 2010—though footage on Youtube dates to July 18, 2010).  It appears to be a permanent installation which supplements the previously-built dual water cannons that were already in the Taedong River.

In addition to the new water jets, we can see three floating platforms (barges) from which the fireworks were launched. These are temporary structures which can be assembled and disassembled with relative ease. Each platform is approximately 119 meters long. Given available satellite imagery it is unclear where these barges are kept for the remainder of the year.

If any readers have the time or interest in finding out what this kind of hardware would cost in the US, I would be interested in knowing.

This new fireworks system is apparently made possible by the productive powers of CNC technology.  According to KCNA:

New Fireworks Developed

Pyongyang, October 6 (KCNA) — More than 100 kinds of new fireworks have been developed in the Democratic People’s Republic of Korea.

They, based on the three elements of the modern fireworks technology — software, ignition control device and firecrackers — have reached a high level in color, brightness and formative artistry.

All the technologies and materials needed for the new fireworks have been developed and made in Korea.

The fireworks, multi-dimensional in fire cycle, rhythmic display and bursting point and scope in the air, fully represent the feelings of the Korean people.

Meanwhile, a CNC-based fireworks displaying system has been established and a device developed to definitely guarantee fireworks display in any atmospheric conditions.

The new fireworks, which have been successfully tested on several occasions, will make their debut in the forthcoming holiday of the Korean people.

Here is what KCNA had to say about the fireworks show which tookplace two days after this picture was taken:

Firework galas celebrating the 65th anniversary of the founding of the Workers’ Party of Korea were held here Friday evening.

The bank of the River Taedong facing the Party Founding Memorial Tower and the plaza of the Mangyongdae Schoolchildren’s Palace, the venues of the firework galas, and other areas of Mangyongdae District and different parts of the capital city were crowded with Pyongyangites who came to watch the nocturnal sky in October to be beautifully decorated with fireworks.

Speeches were made by Kim Ki Nam and Choe Thae Bok, who are members of the Political Bureau and secretaries of the Central Committee of the WPK.

The speakers said that the firework galas would be a festival of glory in glorifying the long history and immortal exploits of the party and a grand canvas of victory stirring up the pride and self-esteem of the service persons and people of the DPRK working fresh miracles and exploits in the era of Songun as befitting the descendants of President Kim Il Sung.

They noted that the firework galas would be held by use of Korean style modern means for displaying fireworks developed in such a unique manner as to ensure formative artistic effect as required by the Korean people’s ideological and emotional desire and sentiment.

Fireworks were displayed in succession in the air over the Party Founding Memorial Tower and the Mangyongdae Schoolchildren’s Palace, gorgeously adorning the nocturnal sky of the capital city while songs “Long Live the Workers’ Party of Korea” and “Under the Banner of the Party” reverberated far and wide.

The spectacular sceneries presented by fireworks in the sky represented the highest glory extended by all the servicepersons and people to General Secretary Kim Jong Il.

An endless fire went up depicting the logo of the WPK to the tune of songs including “We Sing of the Party” and “The Care of the Party Is the House We Live in,” “The Workers’ Party Is Our Guide”.

Fireworks were ceaselessly displayed in the sky presenting fantastic sceneries demonstrative of the high level of formative art, adding to the festive atmosphere.

Watching the firework galas were senior officials of the party, army and state, chairpersons of friendly parties, delegates participating in the national celebrations of the 65th birthday of the WPK, anti-Japanese revolutionary fighters, officials of the party, armed forces and power bodies and working people’s organizations, servicepersons of the Korean People’s Army and the Korean People’s Internal Security Forces, officials in the fields of science, education, culture and arts, public health and media, heroes and heroines, those related to the anti-Japanese revolutionary struggle, bereaved families of the revolutionary martyrs, persons of merit and other working people.

Invited there were members of congratulatory groups of overseas compatriots, delegations and visiting groups of Koreans from different parts of the world including the congratulatory group of Koreans in Japan, the chief of the Pyongyang mission of the Anti-Imperialist National Democratic Front, delegations and delegates of groups for the study of the Juche idea and diplomatic envoys of different countries, representatives of international organizations, members of the military attaches corps and other foreign guests here.

North Korean Fashion Archives

Choson Exchange posted the following on their web page:

During our last trip, we met with Korea Daesong Bank, which kindly provided a product catalog from the 80s/90s of their parent company – Korea Daesong Economic Group (KDEG). While fashion definitely has moved on in Pyongyang, we thought that it might be good to share some of the products they display in their catalog – for old times sake. In case you decide that the retro look is for you, do note that KDEG is currently under international sanctions.

Choson Exchange posted the pictures to their Facebook Page, but since there are many people who cannot (or do not) access Facebook, I thought I would post the pictures here:

American beer popular in the DPRK?

Pictured above (left) is a bottle of Budweiser served with dry fish aboard the recent Mangyongbong-92 “cruise” from Rason to Kumgangsan.  Learn more here. Pictured above (right) is a can of Pabst Blue Ribbon (PBR) which has been converted into a candle holder and placed next to a bottle of “domestic” Taedonggang Beer. Click image for source. Maybe the number of hipster visitors to the DPRK has increased?

Coca Cola
Forbes Magazine has a very interesting article on talks between the North Koreans and Coca-Cola! Read the full article here.  I thought this would be a good time to remind readers about the DPRK’s indigenous cola:

Image source here

The soda is “Crabonated” which is a pretty funny typo. Also worth noting are the lengths they have gone through to copy the Coca-Cola brand–as if they are trying to win back market-share from the firm. The colors, red, black, silver and white are the same. The familiar cursive English “C” at the beginning of the word is a close copy. They even tried to replicate the Coke “wave” by adding a literal wave in a similar curve along the bottom of the advert.

Pictured above (Google Earth): 1.18 Factory (January 18 Factory), which I am told manufactures tanks

According to Yonhap:

According to the Joint Chiefs of Staff (JCS), North Korea added about 300 tanks and 1,200 artillery guns over the past decade. The report comparing the armed forces of the two Koreas was submitted to the National Assembly ahead of the annual parliamentary inspection.

The report claimed that over the same period, the number of North Korean troops went up from 1.17 million to 1.19 million. The JCS noted that financial difficulties haven’t prevented the North from bolstering its military.

On the other hand, North Korea slashed the number of its vessels from about 900 to 740, and its submarines from about 90 to 70. There were 870 fighter jets in the North in 2000, but 820 last year.

You can read the full article here.

According to the Choson Ilbo:

According to the Unification Ministry, 123 firms were operating in the industrial park as of July, with combined production output amounting to US$34.87 million in May, up 25 percent from $27.79 million year-on-year.

The total volume of inter-Korean trade through the industrial park reached $825.88 million in the first half of this year, up 19.5 percent from last year and a whopping 135.8 percent from 2009.

South Korean staff dwindled from 1,461 in 2008, when inter-Korean trade was at its height, to 801 in May this year, but the number of North Korean workers rose from 36,650 to 47,172. And some 3,700 more North Korean workers were hired even since May last year when the South banned new investments there after the North sank the Navy corvette Cheonon in March.

At the moment, the regime is unlikely to shut down the industrial park, since nearly 50,000 North Koreans are working there. But experts stress that the government should take the seizure of the properties in the resort as a warning and be prepared for anything that the regime could do.

“There’s nothing we can be sure of in inter-Korean relations,” said Dong Yong-seung, a researcher at the Samsung Economic Research Institute. “Risk factors always exist because the government launched the Kaesong project without providing any safety net to protect its people and properties, as in the case of the Mt. Kumgang tour project.”

South Korean investments in the industrial park amount to W920 billion (US$1=W1,079) — W540 billion invested by the 123 firms, and W380 billion from the government and public corporations to lay the infrastructure, including electricity and communications facilities, and landscaping.

If the regime shuts down the industrial park, the South would suffer double the losses it incurred from the regime’s seizure of the properties in Mt. Kumgang, which are worth W484.1 billion.

Read the full story here:
Kaesong Firms Worry as N.Korea Seizes Mt. Kumgang Assets
Choson Ilbo
2011-8-24

According ot the Choson Ilbo:

In the scorching afternoon heat last Thursday, two Asian laborers sat in front of a grocery store near a building site in Vladivostok, Russia, cooling themselves with mugs of draft beer. When asked if they were North Koreans, the men asked, “Are you from South Korea?”

One of the laborers, who was in his 40s, then said there were around 50 workers from all over North Korea, including Pyongyang and Nampo, at this particular site alone, and they can be seen at practically every construction site in Vladivostok.

The entire Siberian city has turned into a building site in preparation for the 2012 APEC Summit as roads are being widened and hotels and apartments built. The projects have created booming conditions for North Korean laborers. They can easily be spotted at practically any construction site, cheap restaurant or near housing projects. One North Korean laborer in his 50s said, “We earn US$500 a month if we work from 7 a.m. until 10 p.m. Aside from missing our families, things are not that difficult.”

There are an estimated 3,000 North Korean laborers in Vladivostok. One source there said, “In the past, most of the North Korean laborers worked at logging sites near Khabarovsk, but now most of them work at building sites here.” City officials expect around 3,000 more North Koreans to arrive.

But they are getting stripped of their hard-earned money by the regime. They are sent to Vladivostok by North Korean companies tasked with raising foreign currency and must send a set portion of their earnings back to the North. When their three- to five-year contracts expire, they return home.

One South Korean resident in Russia said, “Even in winter, when there is no work, North Korean workers are threatened by their government minders, who extort money by telling them it is up to them whether they want to stay in Russia or go back to the North and starve.”

For these laborers, money comes before loyalty to the regime. Some with more experience working abroad earn extra cash on the side by working as handymen in Russian homes after they make their payments to North Korean officials.

Recently, there have been rumors that North Korean workers are having to be especially careful. Seven North Koreans working in Vladivostok were apparently sent back to the North after they were caught watching South Korean movies on DVD. One South Korean resident in the city said, “North Korean laborers are allowed to watch porn, but they get in big trouble if they watch South Korean movies.” The resident said North Korean laborers refused to watch South Korean movies even if they are free.

“North Korean laborers send back up to $1,000 a month,” an ethnic Korean merchant in China said. “Things must be better than living in North Korea, but they don’t seem to make enough money compared to the hard work they do.” He said North Korean workers are notorious for never buying anything.

Read the full story here:
Vladivostok Teeming with N.Korean Laborers
Choson Ilbo
2011-8-18

Pictured Above: The Taesung Machine Factory featured in the most recent issue of KPA Journal.

I have been pretty busy this week, but I wanted to put up a quick link to the latest issue of KPA Journal. This issue focuses on the Tae-sung Machine Factory. The issues also contains addendums, corrections and other publications of interest.

Have a good weekend!

Institute for Far Eastern Studies (IFES)
2011-8-10

Kim Jong Il is stressing the importance of the production of commodities for the North Korean people through upgrading the country’s light industry.

On August 1, an editorial in the Rodong Sinmun, “Let’s Go Full Speed Ahead with the Light Industry to Maximize the Production of Commodities,” mentioned the second product exhibition at the Pyongyang Department Store No. 1 as an exposition of “the growing development of light industry.”

The article emphasized Kim Jong Il’s second visit to the exhibition of commodities at the department store, “With the 100th anniversary of the birth of Kim Il Sung, our fatherly leader, revolutionary transition to improve the production of daily commodities must be put into full effect.” Kim’s recent field guidance at the exhibition hint at the state’s increasing efforts to improve the living standards of the population.

The newspaper also reiterated the significance of the exhibition stating, “The second exhibition of commodities at the Pyongyang Department Store corroborated the policies and the legitimacies of the Workers’ Party of Korea (WPK), aimed at improving the living standards of the people through continuous revolution and progress in the light industry of the country.”

In addition, the news mentioned, “Under the leadership of the WPK, the light industry products at this exhibition displayed the spirit of Juche and modernization at the forefront in building an economically powerful nation.” It also explained a variety of about 1,400 “high quality” light industry products were manufactured by 350 central and regional light industry factories, companies, affiliated units, department stores in Pyongyang, and comprehensive industrial product shops.

The newspaper also praised the exhibition to provide an, “Important opportunity to improve the lives of the people while parading the great national spirit, creativity, and ability.” It added, “The product exhibition has become an important turning point to revitalize the production of daily commodities of the people and revealed brilliant prospects for the future development of the light industry of our country.”

Thus, this year was depicted as an important year for light industry. The development of light industry was described as an unwavering goal of the workers and the party members to succeed in the march for improving the lives of the people by 2012 and celebrate the 100th anniversary of the DPRK founding leader’s birthday.

Institute for Far Easter Studies (IFES)
2011-8-10

The minimum wage for North Korean workers at the Kaesong Industrial Complex (KIC) has risen annually at a rate of 5 percent since 2007. The year 2011 stands to mark the fifth consecutive year that such an increase has occurred.

Recently, the steering committee for the KIC and South Korean and North Korean authorities reached an agreement to accept a 5 percent wage hike for North Korean workers at the complex. Accordingly, as of August 1, 2011, North Korean workers at the KIC should earn USD 63.814 rather than USD 60.775 in monthly wages. South Korean authorities, as an exchange for accepting the North Korean demand for a wage increase, requested that productivity be elevated via the adoption of a more efficient method of worker placement.

At the meeting, the Kaesong Industrial District Management Committee, representatives of companies in the complex, and the head of corporations were in attendance and reached an agreement to form a task force specifically for the improvement of productivity of workers. While the overall output of the KIC has increased, the output per worker has not improved, leading to the decision to establish the task force, with the goal of enhancing the competitiveness of the complex.

The minimum monthly income of USD 60.775, which kicked in last August, remained in effect until July 31 of this year. The Labor Law of the KIC caps the wage increase at 5 percent; a 5 percent increase to the minimum wage this year would elevate the minimum monthly wage for workers to USD 63.814.

At the meeting, North Korea mentioned international wage levels and made demands for a wage hike of more than the upper limit. However, most of the companies that operate in the KIC adamantly oppose such demands.

Despite the May 24 sanctions implemented by the South Korean government after the March 2010 sinking of the ROK navy corvette Cheonan, the growth of the KIC has continued. The trade volume has increased by 24.23 percent while the production output has increased by 26.1 percent compared to the same period last year.

Although the eight-year old Kaesong Industrial Complex boasts its competitiveness against other industrial complexes in China and Vietnam, it still has many challenges that must be resolved, including employment flexibility and incentive system.

From the institutional perspective, there are many tax benefits that Kaesong offers that industrial complexes in China and Vietnam do not. For example, the enterprise profit tax in Kaesong is at 14 percent. In contrast, China and Vietnam abolished the preferential treatment for foreign companies in 2008 and 2009, respectively; they currently apply a 25 percent of enterprise profit tax to both domestic and foreign companies. Even in terms of labor and wages, the KIC would appear to offer better quality of labor. In addition, the labor productivity of the KIC is comparable to 71 percent of South Korea, which is much higher than that of China’s Qingdao Industrial Complex (60 percent) and Vietnam’s Tanttueon Industrial Complex (40 percent).

Another advantage is the KIC’s favorable geographical proximity to South Korea, which helps reduce distribution costs and time. This advantage helps to reinforce the sales competiveness of the companies in the complex. In addition, the KIC has sufficient potential for expansion into markets in China, and domestic markets in South and North Korea.

On the other hand, Kaesong has relatively low flexibility of employment due to the principle of indirect recruitment. Difficulties in applying an incentive system are also a disadvantage of the KIC.

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