North Korean Economy Watch

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

This story is nearly impossible to verify, so take it with a grain of salt.

According to Choson Ilbo:

North Korea has been manufacturing banned substances on a state-wide level for years to help its athletes excel, according to a high-ranking defector from the communist state.

The shock announcement comes just days after five female North Korean athletes who competed in the 2011 Women’s World Cup in Germany tested positive for anabolic steroids.

“The Sports Science Research Institute under North Korea’s Physical Culture and Sports Ministry operates two plants in Pyongyang’s Potong and Sosong districts that produce drugs for athletes,” said the defector.

“They are disguised as tonics or nutritional supplements,” he said, adding that Pyongyang sent scientists to sympathetic communist countries decades ago to study up on the subject.

“North Korea sent Sports Ministry officials to East Germany during the late 1980s to learn about the latest drug manufacturing technology,” he said. “The drugs can make athletes strong, but they cannot be detected by most doping tests.”

“It is quite common for athletes in North Korea to take [performance-enhancing] drugs. When North and South Korea fielded a joint team during the 6th World Youth Soccer Championship [in Portugal] in 1991, Ri Myong-song, who headed the North’s sports delegation at the time, offered drugs to South Korean athletes but was turned down,” he said.

The North Korean military is also engaged in manufacturing such illegal drugs, he claimed. According to the defector, the regime’s armed forces began production in the 1970s at an army hospital in order to enhance the combat capabilities of its soldiers, but athletes in the military are now the main users.

The top officials tasked with overseeing the production of illegal substances are Physical Culture and Sports Minister Pak Myong-chol and First Vice Minister Jang Ung, he said.

Pak, the son-in-law of professional Korean-Japanese wrestling legend Rikidozan or Yok Do-san, is a childhood friend of North Korean leader Kim Jong-il. He is also a close confidante of Kim’s brother-in-law, Jang Song-taek, but found himself ousted in 2004 when Jang was accused of corruption. Both Jang and Pak were reassigned to their posts in 2006.

Jang Ung, who is also a member of the International Olympic Committee, handles the finances of the ministry in question. He apparently manages much of the valuable foreign currency wired from North Korean restaurants around the world that helps prop up the North’s cash-strapped regime. Those funds are then allegedly used to import the various ingredients needed to make performance-enhancing drugs and other illegal substances.

Regarding the latest doping scandal surrounding the women’s World Cup, North Korea has apparently claimed that its athletes accidentally ingested anabolic steroids while they were recovering from their injuries by taking oriental medicine containing musk.

The AP reported that the latest controversy is the biggest doping scandal in a major sports event since top soccer player Diego Maradona was kicked out of the 1994 World Cup in the U.S. after testing positive for banned substances.

Read the full story here:
N.Korea Manufacturing Banned Drugs for Athletes, Defector Claims
Choson Ilbo
2011-7-20

Picture above from the Daily NK.

According to the Donga Ilbo:

China has begun cracking down on North Korea`s narcotics trade in China along with South Korean intelligence, having seized 60 million U.S. dollars worth of drugs from the North last year, according to a South Korean government source Monday.

“It’s only a fraction. The volume of drug trafficking in China will be much greater than that,” the source said.

This is the first time for China to unveil the volume of narcotics made in North Korea.

Beijing had been reluctant to raise the matter in public though it found Pyongyang`s increased drug trafficking as a threat. China diplomatically protects the North in nuclear issues but started a crackdown with South Korea apparently because it can no longer tolerate the North`s narcotics, which threatened China`s three northeastern provinces bordering the North.

The drugs seized by Beijing are said to have the best quality, going beyond the level individuals can produce. So Pyongyang is considered to be manufacturing narcotics on the national level at factories.

“China is pretty much pissed off,” a diplomatic source said, adding, “China believes that North Korea’s drug trafficking has grown more serious since last year.”

Though Beijing did not specifically mention the North when it stressed a crackdown on drugs, it implied North Korean-made narcotics.

In a previous post, we linked to a Newsweek story on the Chinese crackdown:

Twenty years ago, Yanji had only 44 registered drug addicts. Last year, the city registered almost 2,100 drug addicts, according to a 2010 Brookings Institution report, with more than 90 percent of them addicted to meth or similar synthetic drugs. Local officials acknowledge that this is very likely a gross undercount and that the actual number may be five or six times higher. “Jilin Province is not only the most important transshipment point for drugs from North Korea into China, but has itself become one of the largest markets in China for amphetamine-type stimulants,” the Brookings report said.

Chinese authorities recently conducted a provincewide crackdown, code-named Strong Wind. But for law enforcement, the drug presents a particular problem. Unlike other drugs, it’s nearly impossible to trace the origin of meth. Still, officials, residents, and experts believe that much of the methamphetamine consumed in this Chinese region is manufactured across the border in North Korea, a longtime exporter of drugs. “Clearly,” the Brookings report said, amphetamine-type stimulants “from North Korea have become a threat to China in recent years.”

In an article published last year, Cui Junyong, a professor at Yanbian University’s School of Law, posited that a large amount of the illegal drugs ingested in Yanji came from North Korea. Supporting his point, the border patrol last year arrested six North Koreans in a high-profile bust, including a dealer named “Sister Kim.” Although sources estimate that a gram of meth in North Korea costs roughly 10 times the price of a kilo of rice—about $15—it’s still much cheaper than in China.

“Selling ice is the easiest way to make money,” says Shin Dong Hyuk, who was born in a North Korean concentration camp in 1982 and escaped to South Korea in 2005. Every defector, he added, “knows about ice.”

Perhaps because of its alliance with its benighted neighbor, the Chinese government has been extremely careful about pointing its finger at North Korea; reports on drug busts in Jilin province euphemistically refer to the drugs as coming from a “border country.”

“We don’t publicize” the drugs coming from North Korea because it would touch on “the good relationship between China and North Korea,” an official, requesting anonymity, from Jilin’s anti-drug unit says. But he adds, “Of all the drugs we’ve seized this year, it’s mostly been ice, because that’s our main drug here.”

…

According to Yun and others, North Korea’s methamphetamine production is centered in Hamheung, the site of a chemical-industrial complex built by the Japanese during World War II, which has a high concentration of chemists and was reportedly one of the worst-hit cities during the famine.
…

Earlier this year, a US Department of State report to the Congress alleged that the DPRK’s state-sponsored drug production was on the wane–though “private” production and trade along the Chinese border remained a problem.  According to one report:

In an annual report submitted to Congress, the US State Department said “no confirmed instances of large-scale drug trafficking” involving the North Korean state or its nationals were reported in 2010.

It said there was not enough information to confirm that the communist state was no longer involved in drug manufacture and trafficking “but if such activity persists, it is certainly on a smaller scale”.

This is the eighth consecutive year that there were no known instances of large-scale methamphetamine or heroin trafficking to either Japan or Taiwan with direct North Korean state involvement, it said in the 2011 International Narcotics Control Strategy Report.

“The continued lack of public reports of drug trafficking with a direct DPRK (North Korea) connection suggests that such high-profile drug trafficking has either ceased or been sharply reduced,” the report said.

The report said, however, that trafficking of methamphetamines along the North Korea-China border continues and press reports about such activities have increased in comparison to last year.

“These reports… point to transactions between DPRK traffickers and large-scale, organised Chinese criminal groups” in locations along the border.

“Press reports of continuing seizures of methamphetamine trafficked to organised Chinese criminals from DPRK territory suggest continuing manufacture and sale of DPRK methamphetamine,” the report said.

This and continued trafficking in counterfeit cigarettes and currency suggests that “enforcement against organized criminality in the DPRK is lax”, it added.

Additional Information:
1.  Back in March, Andrei Lankov wrote about this situtaion.

2. Earlier this year, the DPRK arrested some Japanese men in Rason for “trafficking and counterfeit”.

3. In June, China intercepted a meth shipment from the DPRK.

4. Marcus Noland also has posted on this topic.

Institute for Far Eastern Studies (IFES)
NK Brief 2011.06.30

North Korea designated this year as the “year of light industry” in an effort to increase consumer goods production and enhance the lives of the people. In addition, a June 23 editorial in the Rodong Sinmun reiterated the importance of science and technology for building a strong and powerful nation and improving the lives of citizens.

Science and technology was mentioned as one of the three pillars for building a strong and powerful nation — the other two being ideology and advanced weaponry.

The editorial emphasized, “We must construct a self-reliant economy and stand on our own two feet no matter what,” and stressed that production system of Juche steel and Juche fertilizers is a victory for the Juche ideology and the science and technology policy of North Korea.

In addition, the column highlighted the importance of promoting Juche, modernization, and informatization in all sectors. “Modern successes in science and technology must be fully adopted and institutionalized in order to enhance production and economic effectiveness. To do so, we must engage in the fight for conserving energy, fuels, materials and national resources.”

The role of scientists and technicians was also accentuated. The future development of science and technology and construction of a strong and powerful economy was depicted to be in the hands of this group. In particular, importance for science research in light industry, agriculture, people’s economy, and modernization for industries was further highlighted.

“To meet the demand of modern times of integrating science and technology and production, technological revolutionary movement must be started and combine the collective knowledge of producers and masses.” It was said that the core and fundamental technology (information, nano, and bioengineering technologies) along with cutting-edge technology (new materials, energy, and space science technologies) must be incorporated to fully contribute to the building of a powerful socialist state.

This editorial appears as an attempt to encourage the growth of production in light and agriculture industries in order to meet the goal of reaching the “strong and powerful nation” by 2012. In this year’s New Year Editorial, revolutionary development in science and technology, tight integration of science and technology with production, revolution of light industry and development of people’s economy through science research were mentioned as chief objectives of the year. It was said that significant weight will continue to be placed on the economy and technology including “integration of science and technology and production” and “technological revolutionary movement of the masses.”

1. Google has uploaded some beautiful new satellite imagery of Pyongyang. Some parts of it are easier to see than others, and I have not gone through it all, but here are some fun, quick discoveries:

1. There appears to be a new aircraft runway in Ryongsong-guyok (룡성구역, 39.127835°, 125.777533°).  Maybe not, but maybe.

2. The Ryugyong Hotel is looking more and more like a space ship:

3. We can see 2012 building construction all over the place.  Below are the new apartments Kim Jong-il recently visited (L) at the foot of Haebang Hill and (R) behind the Central District Market (for artists).

Here and here are the KCNA stories about Kim’s visits to the sites.

Here is a photo of the artist-housing under construction.

The Haebang Hill apartments are built on the former location of the “Monument to the Fallen Fighters of the Korean People’s Army”.  See a picture of this former monument here.

2. DPRK TKD in USA. As I mentioned a couple of days ago, a North Korean Taekwondo team toured the northeastern US this week.  I wish I could have seen one of the shows…but here are some clips from the New York show on Youtube: Part 1, Part 2, Part 3, Part4.

They did a great job and are tremendous athletes.  I hope they are able to return soon–and make it a little further south.

3. DPRK sand animation. This week KCNA posted some very interesting video of a “sand art” demonstration.  Very skilled performance. A viewer was able to rip the video and post it to YouTube.

Pictured above is the “Ryugyong Hotel fireworks” part of the performance.  Part 1 of the piece is here.  Part 2 of the piece is here.  The whole performance is well worth watching. If I could ever be a tourist to the DPRK again, I would want to see one of these performances.

UPDATE: A special thanks to Prof. Stephan Haggard for offering a helpful explication of the piece.

In a similar vein, this piece remains my favorite of the genre (from Ukraine).

2. Kim’s Train (Retro). Last week I posted recent video footage taken from inside Kim Jong-il’s train.  This week I post some retro footage taken in the 1970s(?):

You can see the video here.  The room set up is essentially the same, though Kim’s tastes have obviously changed!

3. The CNC backpack.

Here is the source.  Learn more about CNC here.

4. A North Korean artist reproduced da Vinci’s Last Supper for an art show in Russia. See the Russian-language version of the BBC here (picture-8 ). (h/t L.P.)

According to Yonhap:

A China-North Korea joint venture maker of food additives, have been operating smoothly in a display of close ties between the two countries, China’s state-run Xinhua News Agency said Monday.

China’s Liaoning Wellhope Agri-tech Co. and North Korea’s Unpasan General Trading Company set up a joint venture, (North) Korea Unpung Joint Operating Company, in 2006, in Pyongyang, the North Korean capital city.

Liaoning Wellhope Agri-tech holds a 55 percent stake in the joint venture, while the North Korean trading firm has a 45 percent stake.

In a dispatch from Pyongyang, Xinhua said the total assets of Unpung have now reached 21 million yuan (US$3.24 million). During the six-year operation, the firm made a total pre-tax profit of 15.21 million yuan, and its cumulative sales of food additives reached 18,720 tons.

“At present, Unpung aims to become a first-class brand in the (North) Korean food additive industry,” the new agency said in a Chinese-language report.

“Recently, demand for food additives are rapidly rising in North Korea, and many companies need their employees to work overtime to meet the demand.”

Quoting the Chinese head of the joint venture, Xie Jingming, the report said the firm’s more than 5 years of business development and expansion can not be separated from the deepening economic cooperation between China and North Korea.

China-N. Korea joint venture maker of food additives operates smoothly: Xinhua
Yonhap
Kim Young-gyo
2011-6-6

According to Yonhap:

At least a decade has passed since North Korea’s official media began urging its people to quit smoking ahead of 2012, the year it aims to become a “great, prosperous and powerful nation,” but recent reports suggest the smoking rate among North Koreans remains high.

In a report marking World No Tobacco Day, which falls on May 31, Pyongyang’s official Korean Central Television reported Tuesday on the government’s anti-smoking campaign without mentioning its stated aim of lowering the smoking rate to 30 percent by 2010.

According to earlier North Korean media reports, 54.7 percent of the population smoked in 2008.

The North Korean regime, however, has been persistent in its efforts to reach its goal, enacting a law in 2005 to restrict smoking and banning advertisements in public places that relate to smoking.

These actions came after Korean Central Television made a broadcast in June 2000 that called on the North Korean people to give up smoking and contribute with their healthy bodies to building a “great, prosperous and powerful nation.” The year 2012 marks the centenary of the birth of North Korea’s late founder, Kim Il-sung.

Here is the previous KCNA coverage of “World No Tobacco Day”: 2003, 2004, 2005, 2006-A, 2006-B, 2007, 2008, 2009-A, 2009-B,  2010, 2011-A, 2011-B.

The DPRK has a tobacco factory in Pyongyang, Hoeryong and commissioned a tobacco JV company in 2008.

Martyn Williams reports in PC World (2011-5-25):

North Korea might be an unlikely place to find a PC factory, but the country has started manufacturing three models of computers, according to a recent state TV report.

…

The three computers consist of two for educational use and one for office use.

The educational computers each run the same custom software and come in two versions: one is a netbook-sized laptop, and the other is a bland-looking box with a keyboard and mouse, that’s designed to be connected to a television.

“You can use multimedia educational materials,” said Pae Myong-sok, a factory representative interviewed in the TV report. “For example, you can view elementary and middle schools textbooks, do intellectual training exercises, view various types of dictionaries, edit documents and even learn foreign languages.”

The office computer is a laptop and runs productivity software and includes a web browser, Pae said. It’s also netbook-sized and has dual USB ports — something that’s not included on the educational machines — for data transfer. The battery lasts about two and a half hours, the report said.

No other specifications or details were offered in the report. The operating system was unclear from the TV images, but it didn’t appear to be Windows. North Korea has developed its own version of Linux called “Red Star” and it’s possible the computers are running that.

“The devices and programs of these computers were designed and developed purely using our own expertise,” said Pae. “These computers have low prime cost but are designed to carry out all the necessary functions without difficulty.”

The factory was identified as belonging to the “Information Technology Institute.” No other affiliation was provided, but the name matches a unit of Pyongyang’s Korea Computer Center (KCC). The KCC is one of North Korea’s centers for information technology study and learning and has successfully marketed a handful of software applications overseas.

I have posted the segment from the North Korean evening news that features the computers to YouTube.  You can watch it here (2011-3-10).

A reader later pointed out on Martyn’s blog that the DPRK computer is identical to a discount computer sold in the USA. According to Martyn:

Son has posted a comment noting the similarity of the office laptop to a $99 netbook sold in CVS stores in the U.S. The netbook carries the Sylvania brand of Siemens.

From the looks of the two machines, they are identical. It’s either the same or similar basic hardware.

The North Korean manufacturer could be supplying them to Sylvania, or both companies could be buying the laptops from another manufacturer, likely in China, and customizing them. (Just because the Sylvania model runs Windows CE, it doesn’t necessarily mean the North Korean laptop has the same software.)

Below are pictures of the two computers via North Korea Tech:

Pictured above (Google Earth): Pukchang Thermal Power Plant (북창화력발전련합기업소)

According to the Daily NK:

A source from Pyongyang reported the latest on the 14th, saying, “From April the electricity situation got a bit better, so now between 8 in the morning and 5 in the afternoon the electricity goes on and off repeatedly.”

But, the source added, “Between 10 at night and 5 in the morning, it is provided stably.”

According to the source, in the winter period from January to March, electricity was only supplied at all between midnight and 4 or 5 in the morning.

Residential areas of the city receive their electricity mostly at night because factories and official buildings are prioritized during daylight hours.

However, if, for instance, from 8 A.M. to 12 P.M. electricity goes to a shoe factory, and then from 12 P.M. to 5 P.M. it goes to a fabric factory, people in the neighborhood of those factories might be able to charge batteries or watch DVDs during that time.

However, outside the capital things are worse, as usual. In the case of Nampo on the West Sea coast, there is almost no daytime electricity supply at all. According to a source from the city, “In general there is no electricity. It comes around two days in ten, but even at those times it doesn’t usually work for longer than two hours.”

“The electricity situation is getting worse, and people say this is because electricity generated at Bukchang [Pukchang, 북창] Power Plant is all sent to Gangsun Steel Mill,” the source added.

Hyesan in Yangkang Province is in much the same boat. When Kim Jong Il conducted an onsite inspection at Hyesan Youth Mine in April the authorities provided the area with electricity, but now it never comes.

A Hyesan source explained, “They send electricity for 24 hours on Kim Il Sung and Kim Jong Il’s birthdays, but this year it was unstable even then. When May came, they started to give us electricity from 6 to 10 in the evening, but it is unstable so for houses with no transformer this electricity is useless.”

The source from Nampo reported that some wealthier people apparently used to get electricity by offering money to local factories, approximately 15,000 won per month, but that this avenue has also been closed off.

The practice stopped when a decree was handed down stating, “Those who use stolen electricity will be exiled.”

There is also the ongoing problem of copper theft, the Nampo source revealed, explaining, “Before April 15th this year, electrical cables were stolen from Nampo Samcheon-ri Chosun-China Joint Factory (a clothing factory), so for five days the factory couldn’t operate. The workers chipped in with around 300 to 500 won each from their wages to purchase cables so that electricity could come again.”

Since electricity does not flow in most cables continually, it is easy to sever them to obtain the saleable copper inside. This copper, which is relatively expensive, is then sold to smugglers who sell it in China.

The “Gangsun Steel Mill” (Kangson Steel Mill) is now the “Chollima Steel Mill” and it was home to the Chollima Movement (learn more here).  It is true that the DPRK has been recently emphasizing steel production (via recycling of scrap), but it is strange that people would literally think it is draining all the power from the Pukchang Thermal Power Plant since the two facilities are not directly connected on the power grid (or even close to each other).  It is pretty obvious from Google Earth imagery that the steel mill receives its power from the Pyongyang and East Pyongyang Thermal Power Plants.  It could be that the reference to the “Kangson Steel Mill” (which is itself interesting since the factory has not gone by that name in years) is a generic reference to the state’s prioritization of heavy industry over houshold electricity use.

Read the full story here:
Electricity Supplies Showing No Big Improvement
Daily NK
Lee Beom Ki and Jeong Jae Sung
2011-5-16

According to Yonhap:

A daily average of more than 600 South Korean workers are currently staying at the Kaesong Industrial Complex in North Korea, up from the 500-level in the past several months, according to a Seoul ministry Sunday.

The increase reflects a reduction in military tensions between the two Koreas, officials at the Unification Ministry that handles inter-Korean affairs said.

The ministry’s data showed that around 650 South Koreans stay at the industrial park, located just north of the inter-Korean border, per day starting last month.

“With regard to the number of production-related manpower, we are granting permission to stay (there) with more flexibility starting in the middle of April,” a ministry official said, requesting anonymity. “The number is expected to gradually increase down the road as well.”

He said the ministry’s flexible stance is attributable to petitions from companies in the Kaesong complex and the alleviation of security concerns of South Korean workers as inter-Korean tensions have eased a bit.

Read the full story here:
Number of S. Koreans at Kaesong rebounds amid letup in tension
Yonhap
2011-5-8