North Korean Economy Watch

According to Choson Exchange:

In August this year, Choson Exchange, a non-profit focused on economic policy, business and legal knowledge exchange with North Korea (DPR Korea), implemented a study trip for DPRK policymakers to exchange policy ideas and experience in Singapore with policymakers. Thanks to the sponsorship of the Swiss Cooperation Office DPR of Korea, we were able to implement an insightful and engaging series of discussion with participating Koreans. We focused our program on younger Koreans, with 6 of the 7 North Koreans being under 40 years old, out of which 2 were under 30 years old. 3 institutions were represented in the visit, which involved 10 intensive days of meetings and discussions.

In particular, some of the young participants we selected for the program were able to ask astute questions on development issues and coordination among economic agencies. During the post-trip debriefing, participants highlighted specific aspects of Singapore’s economic development experience which they found particularly interesting and relevant for their country. They also gave feedback on policy ideas which they believe could be adapted to their country. Choson Exchange followed up on the discussions with consultations in Pyongyang 5 days after the program ended.

We would like to thank speakers who volunteered their time and experience at this event in their personal capacities. Speakers included:

– The former Chairman of Singapore Airlines, Singapore Stock Exchange, Temasek Holdings, Development Bank of Singapore, Nepture Orient Lines and Permanent Secretary at various Ministries

– The former Minister for Finance and Minister in the Prime Minister’s Office

– The Chief Economist for Bank of America Merrill Lynch in Southeast Asia

– The CEO of Centennial Asia Advisers and former Chief Economist for SocGen Asia-Pacific

– Directors and Economists at various Ministries in Singapore

– Private sector speakers or hosts from McKinsey & Co., Bain & Co., Goldman Sachs and Capital Group

We would also like to thank Member of Parliament Lily Neo for hosting dinners for the visiting delegation.

Institute for Far Eastern Studies (IFES)
2011-10-5

Dai Yulin, secretary of the Dandong Committee of the Communist Party of China, said in his interview with the China Daily on September 28 that concrete plans for the joint development projects between China and North Korea in the Hwanggumpyong and Rajin-Sonbong regions will be announced at the end of the year.

This past June, Dai stated both countries agreement to jointly develop Hwanggumpyong and Rajin-Sonbong as an economic development zone and reported smooth progress in its plans.

According to Secretary Dai, “The joint management committee between China and North Korea has already been formed to promote the Hamggumpyong development project. Both countries are getting up steam to advance the project.”

In addition Dai explained, “China has secured 10 square kilometers of national land to be used to support the joint development of Hamggumpyong.” He also added, “A think tank comprised of 72 experts was also established to advise and buttress the project.”

When DPRK Cabinet Premier Choe Yong Rim visited China last month, Dai commented, “Choe’s visit to China is underlined with North Korea’s strong interest in economic reform. All the high level officials in the economic sectors accompanied him on the trip.”

While visiting China for five days, Choe met with Premier Wen Jiabao and expressed strong motivation for strengthening trade and cooperation with China, especially to improve its infrastructure. He stated, “For those Chinese companies investing in North Korea, we will provide special accommodations to encourage more investments.” In response, Wen Jiabao commented, “China will do all it can to support North Korea, so that they may seek development method most appropriate for them.”

After the meeting between the two top officials, the two nations came to an agreement to cooperate in trade, investment, and infrastructure, resources and agriculture development.

Prior to meeting with Wen, Choe visited Lanxing Chemical Industrial Machine Co. After he paid his courtesy visit to President Hu Jintao of China in Beijing, he continued to make economic related visits to Baoshan Steel Group, Bailian Xijiao Goods Purchasing Center, and industrial facilities in Jiangsu Province.

After North Korea designated Hwanggumpyong Island as a free trade zone, China has signed a 50 year-lease agreement to develop the island. Despite being a “joint development” in name, in actuality, China has the exclusive development rights based on Chinese capital.

However, North Korea is requesting for revision of the name to “co-development between China and the DPRK,” a request that China is expressing some uneasiness over. The initial agreement was to “lease Hwanggumpyong Islands to China,” which gave exclusive and autonomous development and management rights to China in the zone.

China has articulated on many occasions the Hwanggumpyong project must be strictly based on market principles and expressed apprehension that Chinese businesses may be unwilling to invest in the area if North Korea continues to pursue to change it as a joint development.

Dr. Bernhard Seliger of the Hanns Seidel Foundation writes in to notify us about the DPRK’s new Koryo Bank (고려은행) debit card.

Click image above to see the front and back of the card.

There is an information flyer available in the DPRK:

According to the translator this is what it says:

Electronic Paying Card (Debit Card)

1. Introduction
* Electronic Paying Card is a cash card with which cardholders can make a payment when buying a merchandise or receiving a service instead of money. We provide the very best customer service, convenience and security.
* Cardholders (including foreign cardholders) can freely make a payment in foreign currency at electronic paying card affiliates.

2. Instruction
*Issuing a card and making a deposit: Card is issued at Koryo card issuing branches. Foreign currency is converted into equivalent North Korean won at a current exchange rate (purchasing price) when cardholders or to-be make a deposit. Issuing a new card is free of charge. Issuing a card, cardholders should register a private password to prevent use of a third party. Using the card cardholders should remember the password to verify identity.

*Procedure of the payment: Card holders are allowed to purchase goods and services within the available balance of the account. Card payment machine verifies identity by crosschecking with the password you enter. If the information is confirmed to be correct upon identification, merchants or acquirers proceed to make the payment. After purchasing, the balance is diminished by the payment.

*Cash Withdrawal: Cardholders who want to withdraw a part or the entire of the remaining balance can be served at Koryo Bank Card issuing branches. The exchange rate is the current selling price.

3. Notice: Cardholders observe the followings as regards to using the card.
*Due to its delicate electronic procedure while the card is to be used, it is recommended not to damage the electronic part of the front.
*Remembering and entering the password correctly is important, since the payment procedure is suspended after 3 times of password errors.
*If the card is destroyed or lost, cardholders should go to the Koryo bank where the card is issued and report the loss and the damage.
*With verifying identity and the balance of the card, a new card is issued.
*Cardholders shall remain liable for the loss incurred by their negligence.

4. Questions and hot line
*When there is a question, a loss, duplication or a lost electronic paying card, Call 462-6315.

Koryo Bank

This is not the only debit card available to foreigners in the DPRK. Dr. Seliger also wrote in earlier this year to inform us of the DPRK’s Narae (나래) debit card.

Here are previous posts on Koryo Bank.

In an email from Paul Tija:

In the current financial and economic situation, companies face many challenges. They must cut costs, develop new products and find new markets. In these fields, North-Korea could be an interesting option. It is opening its doors to foreign enterprises, its labor costs are the lowest of Asia, and its skilled labor is of high quality. It established free trade zones to attract foreign investors and there are several sectors, including textile industry, agro business, fishing, shipbuilding, logistics, mining/rare metals and Information Technology that can be considered for trade and investment. Most of the North-Korean trade is currently taking place with its neighbours and the amount of production of the South-Korean factories in North-Korea continues to increase. The trade between North-Korea and China jumped from US$1,97 billion in 2007 to $3,47 billion in 2010. A growing number of European firms are exploring the country as well – for example companies currently producing in China, and where the wages are rising fast.

In early November, I will lead a Dutch business mission to North-Korea (already fully booked), but a second mission will take place as well, from 13 – 19 November. Do you want to explore new business opportunities for your company? Then join me on this unique trade and investment mission. The program includes individual matchmaking, company visits, network receptions and dinners. Furthermore, we will meet European business people who are working and living in North-Korea. At the beginning of the tour, in Beijing, we will take part in the seminar: “Doing business with DPRK” (tentative). After the trip to Pyongyang, we will return to Beijing, where you can take a connecting flight or extend your stay in China.

The program of this mission has been attached. In case you are interested to participate: please contact us as soon as possible, so we can start the visa-application procedure. If you are not able to join, then it is also possible for us to do marketresearch and to take part in local meetings in Pyongyang on your behalf.

See the Brochure and itinerary here (PDF).

With best regards, Paul Tjia (director)
GPI Consultancy, P.O. Box 26151, 3002 ED Rotterdam, The Netherlands
E-mail: paul@gpic.nl
tel: +31-10-4254172
fax: +31-10-4254317
Website: www.gpic.nl
Twitter: twitter.com/PaulTjia
LinkedIn: nl.linkedin.com/pub/paul-tjia/1/445/958

Institute for Far Eastern Studies (IFES)
2011-9-29

This year’s trade volume between China and the DPRK reached an all time high.

According to the (South) Korea Trade Investment Promotion Agency, the trade volume between China and North Korea between January and July of 2011 recorded 3.097 billion USD, surpassing last year’s 3.472 billion USD by 88 percent.

This is the second year since 2008 for the yearly trade volume to continue to break the record of the previous year.

During the same period, China exported 1.783 billion USD and imported 1.314 billion USD to North Korea. Compared to the same period last year, exports increased by 53.3 percent while imports increased by 169.2 percent, and its trade surplus decreased by 30.4 percent.

The main exports of China are oil, diesel freight vehicles, nitrogenous fertilizers, and grains while the top imports were anthracites, steel, and non-alloy pig irons.

The total amount of fertilizer North Korea imported between January and June totaled 193,960 tons (equaling about 39.88 million USD), a hike of 91 percent against last year’s 99,588 tons (25.4 million USD).

The price per ton of imported fertilizers was 188 USD for ammonium sulfate fertilizer (164,456 ton) and 346 USD for urea fertilizers (25,577 ton). Last year, 59,110 tons of ammonium sulfate fertilizer and 45,310 tons of urea fertilizer were imported. A drastically higher amount of ammonium sulfate fertilizer was imported this year compared with the previous year, the cause of which is speculated to be either a radical decrease in the fertilizer production in North Korea or an attempt to improve the country’s food production.

The total amount of grains imported from China from January to June totaled 149,173 tons, a boost of 5.5 percent from the previous year. The price of grain per ton went up from 372 USD to 404 USD, a rise of 8.6 percent. The cost of imported grain increased 14.4 percent against last year, an increase from 52.7 million USD to 63.1 million USD.

The grains imported were corn (38.2 percent), flour (37.5 percent), rice (16.9 percent), and bean (7.2 percent). Compared to last year, corn and flour imports rose while rice and bean slightly decreased. This year’s average price per ton of grain was 661 USD for bean, 538 USD for rice, 395 USD for flour, and 304 USD for corn.

Pictured above (Google Maps): Pyongyang International Cinema Hall, home of the Pyongyang International Film Festival.

Koryo Tours sent out the following press release today:

Dates announced for the 13th Pyongyang International Film Festival – Pyongyang, DRPK (North Korea), 20th – 27th September 2012.

Koryo Tours has been the official Foreign Representative for the biennial Pyongyang International Film Festival since 2002 when they first submitted their film on the North Korean World Cup football team of 1966 The Game of Their Lives to a packed North Korean audience. “It was the first time that the North Koreans had seen just how their fans were received in 1966 – and the first foreign-made documentary about their country to be shown in their country. Myself and director Dan Gordon were pinched by the girls in the hotel restaurant as they wanted us to help get tickets to the best screenings” said Nicholas Bonner, co-producer of the film. “It will be some time before the festival becomes the Cannes of the East but we hope to get one or two film stars for the experience of a lifetime… probably one of the few places they can avoid being mobbed. The motto of the festival is independence, peace and friendship and is a great way of showing locals what is going on in the world of cinema.”

Perhaps the festival’s biggest achievement was the screening of the British Film Bend It Like Beckham at the festival in 2004 (seen by an audience of 12,000 locals) which cleared the path to make it the first western film to be broadcast nationwide on December 26th 2011. “We spoke to Gurinder Chadha, the Director, who was thrilled her film had been seen by a country who just adore football and of course it was the ideal film to show, full of hope – it has become unbelievably popular in the country and a talking point for everyone.

Koryo Tours director Nicholas Bonner is asking for submissions:

“Ealing Studios, The Goethe Institute and various embassies have all presented films but there is always room for more. Romantic comedy and period dramas are popular and we have managed to show films as diverse as Mr. Bean, the Swedish horror comedy Frostbiten to the South African drama Cry, The Beloved Country and UK’s Elizabeth I: The Golden Age.”

Koryo Tours will run an exclusive tour for tourists during the festival and will include screenings of North Korean films such as the classic Flower Girl (very popular in China during the 1970’s), a visit to the North Korean film studio with mock up streets and meeting various North Korean film celebrities.

For further information and images contact: info@koryogroup.com
Tel: +86 (10) 6416 7544
Website: www.pyongyanginternationalfilmfestival.com

Only weeks after helping launch the DPRK’s first Ultimate Frisbee tournament (see here and here), Koryo Tours launched the first bicycle tour of the DPRK. According to the Telegraph:

Beijing-based Koryo Group took 24 tourists from 10 nations on a 10-day tour of the most isolated nation on Earth.

The cyclists pedalled as far as 30 miles a day, often along dirt tracks in some of the most remote parts of the country, but also journeyed along the 10-lane Youth Hero Highway from Pyongyang to Nampo, on the west coast.

The itinerary is here. The Telegraph has a video of the tour here, and Koryo Tours has posted additional pictures here.

KCNA even gave an “interesting” shout out to the bike tour:

DPRK Directs Effort to Developing Tourism

Pyongyang, September 27 (KCNA) — The DPRK is directing much effort to developing tourism, with an eye to promoting the understanding, harmony, friendship and cooperation among nations and people of the world.

The country joined the United Nations World Tourism Organization (UNWTO) in September Juche 76 (1987) and the Pacific-Asia Tourism Association (PATA) in April 1996.

On September 27, World Tourism Day, Hong In Chol, a department director of the State General Bureau of Tourism, told KCNA:

The number of travel companies and people interested in the DPRK tourism is steadily increasing in Asian and European countries.

In particular, many tourists have visited the DPRK in the period of the grand gymnastic and artistic performance “Arirang” through international air routes and chartered flights from Shanghai, Xi An and Haerbin of China and Kuala Lumpur of Malaysia.

We have travel offices in China, Malaysia and Germany and plan to open such offices in other countries.

The bicycle tourism which took place in the DPRK some time ago under the sponsorship of the “Koryo Tours”, a British tourist agency, was very interesting.

The country’s tourist destinations have taken on a new look under the deep care of the Workers’ Party of Korea and the government, while the project for modernizing the infrastructure of tourism is progressing apace.

We will diversify the tourist program with cultural, sports, bicycle, golf and treatment tourism and improve all services.

Institute for Far Eastern Studies (IFES)
2011-9-7

An article entitled, “Joint energy project on the agenda” was featured in the KCNA on August 31, which elaborated on the agreement reached between the DPRK and Russia on August 24 for the construction of a gas pipeline. The joint project is also inclusive of South Korea.

The KCNA said in the article, “The three countries have explored various options in transporting gas and have reached a consensus on building a gas pipeline running through North Korea will be the most cost-effective option.”

It also stressed this project will be beneficial for all three parties. In addition, Russia was commended as the major world power in natural gas and oil reserves and production and stressed Russia is turning its attention to expanding the energy sector.

When the Sakhalin – Komsomolsk – Khabarovsk pipeline that began construction in 2009 is completed, it will be equipped to provide enough gas not only domestically but across the Pacific-Asia region, producing a capacity of 30 billion cubic meters of gas per year.

The news also covered the specific plans of the Russian government to expand its energy supply; to boost the exports of oil and gas from three to thirty percent and five to twenty-five percent respectively, until the year 2020.

Therefore, the inter-Korean gas pipeline construction between the DPRK and Russia will be a vital project for Russia.

On August 30, the ROK’s Grand National Party (GNP) chairman Hong Jun-pyo declared, “The trilateral negotiation will be expected to take place sometime in November on the inter-Korean gas pipeline project.”

Hong also stated, “The ROK-Russia and the DPRK-Russia bilateral agreements have already been reached. Once the three parties meet to sign the tripartite agreement, the project will soon take off.” He also added, “President Lee Myung-bak has quietly pushed forward with the gas pipeline project since he first took office and it will be his major accomplishment.”

After the bilateral summit was held between the two leaders of Russia and the DPRK on August 24, the two nations have consented to establish a special commission to work cooperatively on the gas transit project running through the territories of North Korea to South Korea.

UPDATE 9 (2011-9-6): South Korea is slated to deliver flood relief assistance next week.  According to Yonhap:

South Korea’s Red Cross said Tuesday it will send baby food to North Korea across their heavily fortified border next week as its first batch of its emergency aid to North Korea’s flood victims.

The move came a month after Seoul offered to send 5 billion won (US$4.7 million) worth of emergency relief aid, including baby food, biscuits and instant noodles, to North Korea.

South Korea’s Red Cross said in a message to its North Korean counterpart on Tuesday that it will truck 200,000 packs of baby food in the eastern and western sections of the border next Thursday.

The Red Cross said it will send other relief items by the middle of October and it proposed holding consultations with North Korea to ensure Seoul’s aid to North Korea reaches the intended beneficiaries.

…

Last year, Seoul sent 5,000 tons of rice, 3 million packs of instant noodles and 3,000 tons of cement to North Korea to help it recover from devastating floods.

UPDATE 8 (2011-9-4): The US Government has send flood relief supplies to the DPRK. According to CBS News:

State Department spokeswoman Victoria Nuland says the plane is carrying blankets, soap and hygiene kits. It will arrive in Pyongyang this weekend.

The U.S. has said it will provide North Korea $900,000 in emergency aid through U.S. charities.

On September 4th, KCNA posted video of the plane arriving.  See it here (if you are allowed).

Samaritan’s Purse also posted two videos of their departure to and arrival in Pyongyang.

According to the Associated Press:

Samaritan’s Purse said it has pledged $1.2 million in addition to the $900,000 that the U.S. government has allocated for aid to North Korea through U.S.-based charities.

Ken Isaacs, a Samaritan’s Purse vice president, said the group has worked with the U.S. government and several other Christian organizations to send the aid as they try to “continue gaining humanitarian access into North Korea.”

Here is a list of US-DPRK engagement in 2011.

At least one report from Rason seems to indicate that the DPRK’s impending food shortage is not so severe of a problem.

UPDATE 7 (2011-8-23): United Grain Sends First Wheat Shipment to North Korea as Aid. According to the San Francisco Gate:

United Grain Co., Russia’s state grain trader, sent its first shipment of 3,560 metric tons of milling wheat to North Korea as humanitarian aid, the company said in an e-mailed statement today.

The ship arrived at the North Korean port of Hynnam, from Russia’s Vladivostok port on Aug. 20, the company said. It was the first of several shipments.

United Grain will send 50,000 tons of wheat from ports in Vladivostok and Novorossiysk to North Korea, the statement said.

UPDATE 6 (2011-8-22): According to this article in The Telegraph, the North Korean Red Cross has launched a £2.7m emergency appeal to help the victims of a series of floods and storms.  More information can be found here and here.

UPDATE 5 (2011-8-19): The IFRC has posted a map of the counties in which they are involved in flood relief.  See it here. The IFRC has also posted an emergency appeal for assistance.  You can see it here.

UPDATE 4 (2011-8-18): US to provide $900,000 in emergency relief supplies to North Korea after devastating floods. Read more at the AP (Via Washington Post) and Reuters.  Here is a collection of stories related to the DPRK’s alleged food shortage this year.  Here is a list of DPRK-US engagement events this year.

UPDATE 3 (2011-8-10): ROK lists food items it will donate to the DPRK in the wake of flooding. According to the Daily NK:

The South Korean government today transmitted to the North a list of the aid items it will deliver in response to recent flooding.

A spokesperson for the Ministry of Unification reported the news this afternoon, saying, “We transmitted a communication containing a concrete list of aid items to the North this afternoon in the name of the president of the Korea National Red Cross.”

The aid includes; 1.4 million units of high protein food, 300,000 units of snacks, 1.92 million Choco Pies and 1.6 million units of instant noodles, but, as previously reported, does not include rice, wheat flour or building materials.

The aid is expected to be conveyed overland along the west and east coasts to areas of Hwanghae and Gangwon Provinces.

“We excluded North Korea’s requested food and cement, but with the exception of medicines the emergency aid was modified mostly as per the North’s request,” the spokesperson explained.

UPDATE 2 (2011-8-10): ROK offers to send relief items to flood-hit DPRK.  According to Yonhap:

South Korea sent North Korea a list of relief items it is willing to deliver to flood victims in the impoverished nation, an official said Wednesday.

The South’s Red Cross delivered the message to the North earlier Wednesday, offering 5 billion won (US$4.6 million) worth of emergency staples including nutritional foods for infants, biscuits and instant noodles, according to the official from the Unification Ministry.

UPDATE 1 (2011-8-9): EU provides resources for flood victims. According to the Korea Herald:

The EU, which shipped food aid to the impoverished state to feed its starving people last month, has donated 200,000 euros ($280,000) to the International Federation of Red Cross in flood aid, Voice of America reported, quoting an EU official.

ORIGINAL POST (2011-8-9): Relief Web has put together a compendium of stories and reports (DPRK, ROK, IFRC, and UN) related to recent flood damage in the DPRK (July and August). Below are links and descriptions:

Briefing kit 1: Situation reports (PDF) on the flooding:

1. DPRK affected by serious floods following torrential rains in July
2. GIEWS Country Brief: Democratic People’s Republic of Korea 08-August-2011
3. Democratic People’s Republic of Korea: Floods DREF operation n° MDRKP003
4. Heavy Rain Damage: Situation Report #2
5. Floods: Situation Report #1

Briefing kit 2: This report (PDF) is an update of the August 7 collection and features media clippings and situation reports:

1. Democratic People’s Republic of Korea – Flood Update
2. Russia to Send 50,000 Tons of Food Aid to N.Korea
3. DPRK affected by serious floods following torrential rains in July
4. GIEWS Country Brief: Democratic People’s Republic of Korea 08-August-2011
5. Flood Damage Gets Serious
6. Seoul Greenlights Food Aid for N.Korea, But Not Rice, Cement
7. Nationwide Relief Effort Launched for S. Hwanghae Province
8. Downpour Batters DPRK Again
9. Damage from Heavy Rains
10. Red Cross Relief Activities Launched in DPRK
11. S. Korea offers N. Korea flood aid
12. Floods (as of 29 Jul 2011)
13. Democratic People’s Republic of Korea: Floods DREF operation n° MDRKP003
14. N. Korea PM inspects flooded region: state media
15. N. Korea storm, rains ‘kill dozens’: state media16. N. Korea state media says China to send flood aid
17. Rain leaves trail of destruction in North Korea
18. Floods wash N. Korean landmines into S. Korea
19. DPRK Hit by Heavy Rain Again
20. S.Koreans on landmine alert after deadly mudslides
21. Floods – July 2011
22. Heavy Rain Damage: Situation Report #2
23. Floods: Situation Report #1
24. Coal Mines Damaged by Heavy Rain
25. Floods Hammer Homes And Fields
26. Heavy Rains Hit DPRK
27. DPRK Hit by Heavy Rainfalls Again
28. Some Areas of DPRK Hit by Heavy Rain

38 North
Andray Abrahamian
2011-8-29

A bus bumps and bruises its way along the unpaved road, carrying would-be investors to Rason’s First Rason International Trade Exhibition which ran from August 21-25, 2011, in Sonbong. The windows are open, until a crimson humvee barrels past, its powerful suspension dancing on the road, leaving behind a plume of beige dust. The bus windows snap shut, the still air quickly gets hot and more than one of the passengers wishes we were Chinese high-rollers, being whisked to the Emperor Casino and Hotel, which sits beautifully on Korea’s East Sea, overlooking Bipa Island and flanked by lush green mountains and crystal waters.

The passengers of the humvee-part of the casino’s fleet-will long be checked in and gambling their fortunes away by the time we complete our two and a half hour journey. However, it won’t always be this way. Rason’s 50km road to the border is finally being upgraded. Indeed, the 2.5 hour journey took 3.5 hours in June. Since then, the road has been widened, the first stage of the construction plan, allowing for traffic to flow both directions more easily and smaller passenger vehicles to overtake the more cumbersome truckers who ply the road.

Its construction is an important sign in the development of the Rason Special Economic Zone. Rason, an amalgamation of the names of the area’s two biggest cities, Rajin and Sonbong, could theoretically be a vibrant hub for both logistics and manufacturing. It is located in the far Northeast of the Democratic People’s Republic of Korea, bordering Russia and China. It has abundant, cheap labor and the region’s northernmost ice-free port. It has been a legal entity since the early 1991, but has struggled to reach its potential in the face of ambivalence from Pyongyang and difficult geopolitical circumstances.

Local administrators have bold plans for this experiment in economic opening-up and to develop as the Rason Municipal People’s Committee has imagined, an efficient road link with China’s Northeastern provinces is vital. For about a decade, improvements to the road have been “under discussion” and “coming soon,” but it is now undeniably underway. Work began in May of this year…READ MORE HERE