North Korean Economy Watch

Pictured Above (Google Earth): The Taedong Credit Bank offices at the Potonggang Hotel.  See in Google Maps here.

London UK/Pyongyang DPRK, 26 August 2011
The Board of Daedong Credit Bank is pleased to announce that the foreign shareholding in Daedong Credit Bank has been sold to a Chinese based corporate entity, the “Nice Group”.

The foreign-appointed directors on the Board of Daedong Credit Bank have resigned with immediate effect, and have no further interests (financial or fiduciary) in the company.

Outgoing CEO of Daedong Credit Bank, Nigel Cowie noted:

“I am now heavily involved with a second joint venture company in the DPRK, Hana Electronics JVC. Established in 2003, this company has enjoyed solid commercial success and has recently opened its new headquarters building, together with the expansion of its business lines.

The success of both ventures has been such as to necessitate a decision to focus on one or the other, and a commercial decision had to be made.

The bank is continuing to enjoy the commercial success it has seen for the past 16 years, but ironically the decision has been made easier by the general sanctions-laden environment in which financial business here is framed these days.

As to the possibility of ever re-entering the bank, any decision we make will be based purely on commercial considerations.”

Both Hana Electronics and Phoenix Commercial Ventures bank with DCB, and will continue to do so.

About Daedong Credit Bank

Daedong Credit Bank is a joint venture retail bank based in Pyongyang. It was established in 1995 as “Peregrine Daesong Development Bank”. The Bank underwent a change of name and foreign ownership in 2000.

The wealth of experience garnered over Daedong Credit Bank’s 16 years of successful operation is unrivalled.

Daedong Credit Bank was the first, by fifteen years, foreign majority held bank in the DPRK. DCB is proud to be regarded as a flagship successful joint venture in the DPRK, and a key part of the infrastructure needed to assist the foreign-invested joint ventures, which contribute to the country’s economic development.

The bank’s principal function is to offer normal “high street” banking facilities in hard currency to foreign companies, joint ventures, international relief agencies and individuals doing legitimate business in the DPRK.

Daedong Credit Bank was the first bank in the DPRK to introduce, and vigorously implement, a comprehensive set of anti-money laundering procedures. DCB’s anti-money laundering procedure manual was introduced eight years ago, and subsequently updated based on anti-money laundering guidelines provided by the Asian Development Bank. The manual has been sent to, and accepted by, DCB’s international correspondent banks.

Daedong Credit Bank also maintains strict procedures for the detection and rejection of counterfeit bank notes; it uses regularly updated note checking machines, and has personnel with over 15 years of experience of handling notes.

Daedong Credit Bank is strongly positioned in relation to the future economic development of the DPRK, and, being the oldest established foreign invested commercial bank in the DPRK, it is the intention of the bank to capitalise on these advantages.

CONTACT INFORMATION
Daedong Credit Bank office address in Pyongyang is:
Daedong Credit Bank
Suite 401, Potonggang Hotel
Ansan-dong
Pyongchon District
Pyongyang
Democratic People’s Republic of Korea
www.daedongcreditbank.com

Institute for Far Eastern Studies (IFES)
2011-8-24

Kim Jong Il’s visit to Moscow on August 20 is sparking interest for the future of economic cooperation between the two countries.

According to the KCNA, Russian President Dmitry Medvedev expressed interest to increase trilateral cooperation between the ROK-DPRK-Russia in the gas, energy, and railroad sectors. In the message sent from Medvedev to mark the 66th anniversary of independence from Japanese colonial rule, “plans to expand cooperation with the DPRK and the ROK in gas, energy, and railroad industry” were emphasized.

The cooperation projects are evaluated to have “great economic and political significance contributing to the stability in Northeast Asia and denuclearization of the Korean peninsula.”

In July 4, the KCNA reported that the delegates from the Russian energy giant Gazprom headed by Chairman Alekhsandr Ananenkov visited Pyongyang to discuss energy cooperation, although details of the visit was not elaborated. Ananenkov was reported to have met with North Korean officials in gas and oil industriesto discuss bilateral cooperation in these areas.

Russia has also expressed interest in linking gas pipelines to export natural gas to South Korea via inter-Korean railroad system.

A spokesperson of the foreign ministry of the DPRK reported on the recent visit from the vice-foreign minister and chief representative of Russia on Six-Party Talks, Aleksei Borodavkin, this past March. In the statement, the Russian government expressed concerns for improving inter-Korean relations and stressed prospects of the tripartite economic cooperation projects with North and South Korea including the construction of railways, gas pipeline, and a transmission line linking the three countries. The DPRK also expressed support for the upcoming economic cooperation projects.

In result, the main agenda in the bilateral economic cooperation between Russia and North Korea entails railway, gas pipeline, and transmission line construction.

President Lee Myung-bak has met with the Russian president Medvedev in September 2008 in Moscow. At the summit, the two presidents reached an agreement to pursue projects to export Russian PNG or pipeline natural gas to South Korea through a pipeline via North Korea from 2015.

Immediately following the summit, South Korea’s Korea Gas Corporation (KOGAS) and Russia’s Gazprom signed a memorandum of understanding (MOU) to jointly study the possibilities of constructing a long-distance pipeline running from Vladivostok. Under the contract, Russia will send at least 7.5 million tons of natural gas annually for a period of 30 years through a pipeline to South Korea via North Korea.

This joint study between ROK-Russia is expected to serve as a momentum in bringing diverse economic cooperation between North and South Korea as well.

While it is still premature to judge the long-term outlook for such trilateral economic cooperation, its effects are anticipated to contribute to stability and peace in the Northeast Asian region.

Additional Information: here is a summary of the recent Kim Jong-il — Medvedev summit.

Pictured Above: Love North Korean Children Bakery (Sonbong, DPRK)

According to the Korea Herald:

When Seoul votes on whether to provide free lunches for school kids here on Aug. 24, many of the 50,000 children living in the North Korean city of Sariwon will likely be skipping their midday meal.

That’s what they are obliged to do most days, says George Rhee, the South Korean minister trying to raise 500 million won ($466,500) to feed them. Rhee, whose father fled the North during the Korean War, already runs three bakeries in the impoverished country, feeding 10,000 children a day through his charity Love for North Korean Children (LINK).

“I have thought of my family in North Korea so many times,” said Rhee, who is now a minister for a South Korean church in London.

“When I got British citizenship in 2002, I visited North Korea for the first time. It was very shocking. There were many children around me begging uncle, uncle give me some food. I am so hungry. I was thinking ‘how can I help such poor children?’

“First of all I was thinking of building an orphanage in North Korea but they said that there are no orphans there because Kim Il-sung is the father of all the children. They disagreed with an orphanage but they suggested a bakery.”

The traditional steamed wheat flour rolls now made at Rhee’s three successful bread factories, located in Pyongyang, Ranjin and Hyangsan, are a perfect product to feed children in a country where even food aid is often suspected to be misappropriated.

“The bread has a very short shelf life compared to baked rolls so they have to be eaten straight away. They cannot be stored and sold on,” he said.

“I have been to North Korea many times and I know that the bread in my bakeries is going straight to the children’s mouths at lunchtimes. I am very proud of that fact.”

On his last trip to the North in June, Rhee visited Sariwon city, around 100 kilometers south of Pyongyang, to view a disused building he wants to turn into his next bread-making project.

The communist country’s Korea Education Fund, called a “non-profit non-governmental funding association” by officials there, has asked Rhee to open the bakery in the city of 200,000 people in Hwanghaebuk Province, requesting a facility big enough to feed all 50,000 children living there.

While he cannot foresee producing so much bread in the near future, he does think he could supply materials for a 250 million won project to transform the derelict site. His charity would then raise 250 million won a year to provide flour to make the 5,000 rolls a day, providing a school meal for all children aged four to seven there.

“We are trying to help them develop the food infrastructure in these small communities. They don’t have anything to feed their ordinary children. We are trying to help them,” said Rhee.

“We can use this 60-year-old building that was used to provide some sweets and milk for children until about 10 years ago, but that work has been stopped now. They are using old buildings for a lot of different purposes, for example they are trying to extract sugar from seaweed they are doing a lot of different things.

“They wanted our ministry to be able to establish a bakery providing their own people with work and help their economy.”

As with the other bakeries LINK has already established in the country, the facility would have flour delivered from China and employ around 15 local staff.

International sponsorship manager Dr. Shirley Vander Schaaf said: “In a lot of ways it is very good because they are trying to decentralize the distribution of food, bringing it down to a community level.

“This would be a change from having it administered from Pyongyang. They seem to be putting the ownership and responsibility back into the communities, which makes sense. They are utilizing the funding and their resources from the NGOS to help them do this.”

The charity which has been registered in the U.K. since 2003 and in Korea since 2006 already has many regular international donors, but is far short of its 500 million won fundraising target to get Rhee’s Sariwon project off the ground and running for one year.

The charity is hoping to hold an 80 km bikeathon from Seoul to the DMZ in October and is asking anyone who is interested in taking part and raising sponsorship to get in touch.

“I think there are a lot of foreigners here who want to do something to help North Korea but don’t know what to do. If they come to us with ideas for fund raising we can work with them to get their ideas off the ground,” Vander Schaaf said.

She is looking to create a fundraising team to help the charity meet its goal to eventually open a bakery in every province in North Korea, making sure fewer children there will have to go without lunch each day.

Michael Rank wrote a story about the Love North Korean Children Bakery in Rason.  See it here.

Read the full report here (PDF).

According to the Daily NK:

North Korea’s rapidly burgeoning cell phone user numbers have surpassed 660,000, according to Egyptian operator Orascom Telecom’s half-year earnings report for January-June, 2011.

As of March, the last time Orascom released a similar report, the number of subscribers stood at 530,000, meaning that the company has officially added 130,000 additional users in just three months, an extraordinary performance given prevailing economic conditions, the price of phones and official controls.

The figures look even better over a 12 month period; at the same point last year, there were just 184,531 subscribers. Although things are likely to slow as time passes, this still puts the era of a million subscribers, which would represent around 4% of the population, within sight.

The causes of the rapid increase in user take-up include a rapidly expanding network, that the authorities encourage Party cadres to make use of the phones, and that they are of increasing importance to those doing business in the market. In addition, the company has been working to target young people with a number of additional services including MMS and Video Call.

According to the earnings figures, as a result of these efforts Orascom made $61 million from its North Korea venture in the first half of the year, an increase of 160% on last year.

Commenting on the success, company CEO Ahmed Abou Doma noted, “Our operation in North Korea continues to display tremendous growth with a subscriber base that has more than tripled compared to the first half of 2010, the growth of which impacted revenues which increased 164% year-on-year.”

However, there is another story behind the official earnings that could serve to give investors pause. First, the earnings are based on the official USD exchange rate, 135 North Korean won, instead of the market exchange rate, which stood at far removed at 2540 North Korean won in Pyongyang on August 2nd.

Second, the report notes the introduction of what it calls the ‘Euro Pack’, a bundle which offers new subscribers “voice minutes and VAS in return of fees that could only be paid in Euros”, a concept which Orascom says is proving popular, but which certainly reflects the uncertainty inherent in dealing with the North Korean currency.

Martyn Williams has more here.

At least one report claims that the older mobile phone network (pre-Orascom) has finally been closed down.  Now Orascom is the sole mobile phone provider.

Read the full story here:
Orascom User Numbers Keep Rising
Daily NK
Chris Green
2011-8-11

Chronicle of Higher Education
Geoffrey See (Choson Exchange)
2011-7-28

In the early 1980s, Theodore Schultz, a Chicago economist and Nobel laureate, visited a China that was just opening up. Impressed by his translator during the trip, he offered the young man an opportunity to attend the University of Chicago’s doctoral program in economics. Thirty years later, the young man, Justin Lin, who helped built one of the top economics department in China at Peking University, became the first chief economist of the World Bank from Asia. Without that scholarship, things might have turned out very differently for Justin Lin, Peking University, and the World Bank.

Today, we have North Korea, an isolated country with young people equally curious about business, finance, and economics, and in a system similar to China’s in the 70s or 80s. On my first trip to Pyongyang, in 2007, a student from Kim Il Sung University, North Korea’s leading university, told me that she wanted to join a trading company to prove that women can be great business leaders. She asked if I could bring economics or business textbooks for her the next time I visited the country. Her example shows there is a hunger for knowledge in the isolated country. And with international-education opportunities, some of these people could become globally integrated and enlightened leaders.

For universities that seek to educate the leaders of tomorrow who will have an impact on the world, supporting North Korean students contributes immensely to this mission. By equipping intelligent and dynamic North Koreans with knowledge and networks, universities can give them an enormous head start in shaping the future of their country.

Choson Exchange, an academic-exchange organization I started, recently selected three talented North Koreans under 30 years of age for scholarships to study business, finance, and economics overseas through a rigorous process. We brought in a managing partner from a top-tier management-consulting company to conduct due diligence to first select high-quality financial, policy, and other institutions with clear emphasis on training young employees. We asked these institutions to nominate young candidates for a scholarship program, and we put the nominees through several rounds of interviews. We were surprised at the quality of the candidates. All three recipients we selected spoke excellent English, and were able to discuss in English the merits of different fiscal incentives and legal structures, or the need for legal reforms in tackling corruption. Two of them spoke other foreign languages.

Perhaps we should not be surprised. North Korean students benefit from a cultural and political emphasis on education. In addition, the dearth of opportunities for North Koreans to study overseas allowed us to pick from a pool of incredibly bright students. For universities competing to lure in high-potential individuals, North Korea provides low-hanging fruit. Unfortunately, many administrators at universities believe, without bothering to meet candidates, that no North Korean could be good enough for their programs.

North Korean candidates will need scholarships. And universities, in this period of cost-cutting, are understandably hesitant in providing scholarships to candidates from a country most people have little interest in. But the two or three places a university can provide amount to an insignificant cost. Even if universities could not care less about North Korea, they should recognize the potential for such a program to attract donor, academic, or corporate interest from South Korea when the political relationship between the two Koreas improves.

Universities undoubtedly will have concerns about such a program. North Koreans are unlikely to be able to apply to universities through the usual process, which will require flexibility on the university’s part in devising an alternative but equally rigorous process. This will probably require creative partnerships with nonprofits or companies in Pyongyang.

Universities are also rightfully concerned that such opportunities will disproportionately benefit the progeny of the North Korean elite, who they might not believe deserve such opportunities. While candidates will likely be upper- to upper-middle class Koreans who have access to the best educational resources in the country, this is not necessarily incomparable to students coming from other developing countries where getting high-quality English education is often the preserve of those with resources. The very richest and most elite of North Koreans (a small pool) do not require scholarships for their sons and daughters. They already send their progeny to France or Switzerland for education.

With a combination of luck, good processes, and a supportive university, perhaps sometime down the road, the next chief economist for the World Bank could come from North Korea. And the person would be able to tell you how he or she changed how business and economics is studied in the country.

Evan Ramsatad writes in the Wall Street Journal’s Korea Real Time Blog:

Choson Exchange, which has previously concentrated on academic avenues into North Korea, this week published a report on the legal framework North Korea has developed for accepting foreign direct investment.

It resembles China’s structure to a large degree, including requiring that outsiders work with a local business to make an investment and are subject to review by a special commission and potentially other government bodies.

The 14-page report is based chiefly on research from a recent trip to Pyongyang. There, they listened to government officials explain the structure they’ve set up and the places they’d most like to see be developed by foreign investors.

At the top of the list: Rason, the port city in the northeast part of the country that Russia has built a rail line to and China is building a four-lane highway to. Already, Switzerland has reportedly invested in a berth at the city’s port and Norway and other countries helped develop a wind energy project just outside the city.

The report’s conclusion is that North Korea’s foreign investment laws “provide a logical if bureaucratic framework” for foreigners to approach the country. But Choson Exchange said a big ambiguity remains: will North Korea be fair?

To get investor confidence, the group said North Korea “will need to establish a practice of applying and enforcing its laws fairly and consistently, even where the result is not always in the best interest of the DPRK or its state-owned entities.”

The full report published by Choson Exchange can be found on their web page here (PDF).  According to the summary:

In June, Choson Exchange took a fact-finding and training needs-mapping trip to Pyongyang. The main impetus for the trip was to get a better understanding of the legal structure that the DPRK has in place to govern inbound foreign investment. We found a legal structure that draws heavily on China’s experiences. Our full findings are in this report.

Key points include:

– Investment projects categorized into encouraged, permitted, restricted and prohibited categories.

– As in China, foreign enterprises require a local business vehicle to conduct FDI; the primary business vehicles available in the DPRK are limited liability corporate bodies and representative offices.

– The JVIC (Joint Venture and Investment Commission) and other government bodies (if applicable) will review the business scope, capitalization and other aspects of a proposed corporate body prior to incorporation.

– Investment in Rason will be particularly encouraged. According to JVIC, corporate bodies established in Rason can also apply to do business elsewhere in the DPRK.

– The operations and governance of DPRK corporate bodies are set out in law, including scope of activities, investment scale, limited liability, location, management, staffing and repatriation of profits.

– Domestic and Foreign arbitration is the primary mechanism for resolving commercial disputes between DPRK and foreign parties.

– Some ambiguities remain. Will laws be enforced uniformly and consistently?

Institute for Far Eastern Sudies (IFES)
2011-7-19

Kim Jong Il has made a total of 63 official activities in the first half of 2011, focusing mainly on providing field guidance at economic related facilities. On contrast, only one onsite inspection was given at a military base.

According to an official report from the Ministry of Unification, Kim Jong Il was witnessed to have made 63 official appearances this year thus far, already reaching 80 percent of total activities made last year, a record all-time high in the number of official activities for Kim

Specifically, he has made 28 economic related activities which encompassed 45 percent of the entire official activities. Only 14 military related activities were made, the lowest number ever recorded. Out of the 14 military activities, 9 consisted of attendance at military performances and only one trip was entirely associated with military inspection. Alongside these inspections, Kim also made 7 foreign-related activities.

The monthly breakdown of Kim’s official activities was 15 in January, 11 in February, 9 in March, 13 in April, 10 in May and lastly, 5 in June.

Since 2009, Kim made consistent official appearances and the reports of his official activities were found regularly on a bi-weekly basis, except for June when his activities were not reported for two weeks between 14th to 30th.

Kim is accompanied by several officials on his official activities, in which 54 officials were recorded to have accompanied this year. Kim Kyong Hui escorted Kim the most at 48 times. Following Kim Kyong Hui; Jang Song Taek, vice chairman of National Defence Commission (NDC) accompanied 45 times; Kim Ki Nam, secretary of Workers’ Party of Korea (WPRK) accompanied 43 times; Tae Jong Su, secretary of WPK made 43 trips; Ju Kyu Chang, Director of WPK 38 times; Kim Jong Un, vice chairman of Central Military Committee of WPK 35 times; Park Do Chun, secretary of WPK 29 times; Choi Tae Bok, secretary of WPK, 27 times; Hyun Chul Hae, director of Korean People’s Army 26 times; Moon Kyong Duk, Pyongyang, secretary of Pyongyang City Party Committee 25 times; and lastly, Lee Myong Su, director of People’s Safety Ministry made 25 trips.

After making his appearance at the KWP Convention on September 28, 2011, Kim Jong Un has made a total of 73 official activities, and 35 of these activities took place this year.

In detail, Kim Jong Un made 20 military, 18 economic, and 7 foreign-related activities. Monthly breakdown of activities are 2 times in September, 16 times in October, 11 times in November, 9 times in December, 5 times in January, 9 times in February, 8 times in March, 7 times in April, 4 times in May and 2 times in June.

Kim Jong Un’s activities were chiefly military related in which 86 percent comprised of accompanying senior Kim on his visits to political and military sectors. This is a natural outcome, considering his official position as the vice-chairman of Central Military Committee of WPK. The high number of military activities is in sharp contrast with his father, who began to focus mainly on economic activities since 2008.

The New Year’s Message delivered at the beginning of this year placed “improvement of North Korean people’s lives and development of light industry” as the top agenda for the nation. Correspondingly, Kim Jong Il official activities were mainly economic-related to light industry and agricultural sectors.

Kim Jong Il’s official activities are noteworthy indicator which exhibit the direction of leadership and the changes occurring amongst the main elites

UPDATE 2 (2011-9-2): According to KBS:

The Voice of America (VOA) reported Friday that the International Committee of the Red Cross (ICRC) has confirmed that North Korean universities were ordered to suspend studies.

In a report on North Korea covering the first half of 2011, the International Red Cross said that all universities in the Communist nation had been on leave since June to work on construction sites in regions including Pyongyang. The report said the enforced leave of absence will likely continue into April next year during the centennial celebration of the birth of late North Korean founder Kim Il-sung.

VOA said the report appears to have been confirmed by a North Korean authority, as it contained the contact number of a North Korean Red Cross official.

UPDATE 1 (2011-7-11): According to the Daily NK:

Large numbers of additional soldiers and students have been mobilized to try and address the slipping schedule for the construction of 100,000 homes in Pyongyang by 2012, with universities in the capital and some bigger local universities having received a ‘socialist construction mobilization order’ in mid-June.

A Pyongyang source, explaining the situation today, said, “I know that students from universities in Pyongyang like Kim Il Sung University and Kim Chaek University of Technology have been sent to the construction of 100,000 houses. I hear that they will be at the construction site for at least two months or more.”

The mobilization could easily be extended depending on the status of the construction project, he further added.

Another source from North Hamkyung Province reported similar news on the 7th, saying, “Since July, juniors and seniors from No. 1 and 2 Colleges of Education in Chongjin have been mobilized for construction projects under the ‘socialist construction mobilization order,’” and confirming that the students have been sent to Pyongyang.

He went on, “I hear that the center (meaning Party central authorities) notified each university of the number of people required for the Pyongyang construction work. Accordingly, each university selected a certain number of students and sent them to Pyongyang.”

However, the order does not appear to amount to a full, nationwide shutdown of universities. For example, certainly some universities in Yangkang Province have evaded the mobilization order. One college student living in Hyesan, the provincial capital said, “There has been no ‘socialist construction mobilization order’ handed down. We are going on summer vacation in late July.”

Mobilized personnel are reportedly working primarily on construction in neighborhoods where major public works idolizing the Kim family are to be found.

The Pyongyang source reported, “Construction of houses in Changjeon Street, where the Suryeong’s statue is, started in early May. Soldiers have been mobilized to this construction site in large numbers; even some previously involved in construction in the Hyeongjesan district have been in that region for about a week.”

He added, “Equally, the Mansudae region (Kim Il Sung’s birth place) is another place where ‘construction must be completed even if it is not completed elsewhere’, so they have mobilized people from construction sites in other regions.”

According to sources, the pace of construction in those places where soldiers have been mobilized is markedly quicker than elsewhere, although interior construction remains problematic because it calls for special materials.

One source reported, “In Seopo and Hadang 2-dong, where there are soldiers, buildings have already been erected, so people can move in there in August. However, the interiors have not been completed, so people don’t actually want to move in.”

However, on those sites staffed by people from enterprises, events are characterized by a lack of basic materials and the siphoning off of what is available.

The source said, “They are short of materials, while individuals are selling off existing materials and cement to buy rice because the authorities are not providing them with any support. Of the construction overseen by enterprise work units, almost none have been erected. In Hyeongjesan district, with the exception of those sites for which soldiers are responsible, they have only erected the bottom floor.”

According to one source, on April 1st the National Defense Commission ordered, “Complete the construction of 100,000 homes by April 15th, 2012 and get people to move into the new homes without condition.”

However, reports suggest widespread skepticism of this, with one source saying, “According to rumors, there was even a threat, ‘Those in charge of construction who cannot complete it must prepare to leave their posts.’ However, there are many people saying that the 100,000 houses won’t even be done by 2017.”

See more on the priority construction projects here.

ORIGINAL POST (2011-6-30): According to the University World News (thanks to a reader):

Close watchers of North Korean affairs were caught on the hop this week by reports that universities in the hermit kingdom would be closed from 27 June for up to 10 months while students are sent to work on farms, in factories and in construction.

Diplomats in Pyongyang confirmed that students were being drafted into manual labour on the outskirts of the city until April next year to prepare for major celebrations to commemorate the centenary of the late leader Kim Il Sung’s birthday. But they said this did not mean the closure of universities.

Reports originating in South Korea and Japan suggested that the Pyongyang government had ordered universities to cancel classes until April next year, exempting only students graduating in the next few months and foreign students.

The reports said the students would be put to work on construction projects in major cities and on other works in a bid to rebuild the economy. This could indicate that the country’s food crisis and economic problems are worse than previously thought.

Experts on North Korea said full-scale university closures would be unprecedented. However, it was not unusual for students to be engaged in manual labour, with the academic year sometimes shortened in order to send students onto farms and construction sites.

Peter Hughes, British Ambassador to North Korea, told University World News by email from Pyongyang: “There has been no official announcement in DPRK [Democratic People’s Republic of Korea] about university students being sent to carry out manual labour for the next 10 months, but I can confirm that students from all the universities in Pyongyang have been mobilised to work at construction sites in the outskirts of the city until April 2012.

“Some two years ago the DPRK announced that it would build 200,000 units of accommodation in the city to ease the chronic housing shortage. To date only some 10,000 units have been built, so the students have been taken out of universities in order to speed up the construction of the balance before major celebrations take place in April 2012 to commemorate the 100th birthday of the founder of the DPRK, Kim Il Sung.”

Universities are not closed as lecturers and postgraduate and foreign students remain on campuses, Hughes said on Thursday.

“The UK has an English language teacher training programme at three universities in Pyongyang. The mobilisation of the students should not affect this programme as the majority of activity is focused upon teacher development and not teaching students.”

Charles Armstrong, Director of the Centre for Korea Research at Columbia University who returned from Pyongyang earlier last week, said he had visited two state-run universities, Kim Il Sung University and Kim Chaek University of Technology in Pyongyang, as well as the private Pyongyang University of Science and Technology (PUST) in the last few weeks.

At the two public universities the vast majority of students were not present, Armstrong told University World News. “It is also a very busy time for rice transplanting and you see a lot of young people in the fields.”

However, students were studying as normal at PUST, a postgraduate institution funded by Korean-American and South Korean philanthropists that teaches mainly engineering.

“It is very hard to get information in and out of the country and there may be some confusion because every summer students have to go down to the fields to help with the rice planting. It is not the first time that I have heard reports that universities have shut down for a period,” Armstrong said.

“My impression is that there is not a lot going on in terms of teaching and studying in public universities and student time is taken up with ‘extra curricular’ activities including political education. This is a regular part of university life but I have not heard of the universities being shut down completely except for a short while during the 1990s [famine],” he added.

A major famine and economic crisis in the late 1990s meant that much farm equipment went unused and simply rusted in the fields, so the need for manual labour has grown. Students and army recruits are mobilised to help, often having to travel far from where they live.

“My understanding of the university system is that it is largely dysfunctional. Resources are lacking, many professors spend their time earning from private tuition – so my impression is that it would not make a great deal of difference if they are shut down,” said Armstrong.

Aidan Foster-Carter, a writer and researcher on North Korea, formerly at Leeds University in England, said: “North Korea sets great store by these anniversaries. They decreed a few years ago that 2012 would be their date for becoming a great and prosperous nation defined in economic terms. It would make sense having extra persons out there to help with construction, though normally it is the army that does it.”

But any mass use of student labour for longer than the summer vacation months would mean a trade-off against achieving economic goals that required educated workers, he said.

“North Korea’s is a strange and broken economy but they also need educated people to pull them out and it would be a major precedent to close the universities. It could be a sign that they are in a worse mess than we thought.”

Hazel Smith, professor of security and resilience at Cranfield University who also lectures at Pyongyang’s Kim Il Sung University, said North Korean universities were operating as usual in and outside the capital when she was there in May.

She said it would be counterproductive for the regime to close universities. Despite huge labour shortages throughout the country, the regime is “fully aware that people need to be taught IT and technology and of course nuclear [engineering].

“They are dependent to fulfill their economic goals on people who are computer literate and engaged in advanced science. I don’t think [closures] will last very long. There are too many other priorities to deal with.”

Analysts in Japan and South Korea suggested there could be other reasons behind the decision to disperse the students across the country, including the possibility of demonstrations at campuses inspired by the Arab Spring uprisings, which began at universities.

They noted that North Korea had purchased anti-riot equipment from China in recent months, including tear gas and batons, while there has been an increased police presence at key points in Pyongyang in recent weeks.

Foster-Carter said North Korea watchers have been closely monitoring for signs of unrest since the spring, but there had not been any.

“The amount of information from the Middle East reaching the ordinary citizen is very, very limited and there has been nothing at all in the official media,” Armstrong said. “There has been no student unrest that we know of for the last 50 years.”

According to North Korea analysts, party controls are in place to prevent student uprisings, including political indoctrination and strong surveillance. Some analysts said surveillance on campuses had relaxed in recent years because many party officials had not been paid.

However, experts agreed that the possibility of universities being shut would be an ominous sign of tension. “The most likely reason [to shut universities down completely] would be for military mobilisation if they thought they were going to be attacked,” Smith said.

Read the full story here:
North Korea: Learning stops as students sent to work
University World News
Yojana Sharma
2011-6-30

Pictured above (Google Earth): The recently completed Hana Electronics and restaurant building in Rakrang-guyok (락랑구역).  See in Google Maps here.

Phoenix Commercial Ventures has recently launched a new web page and issued the following press release on their latest projects in the DPRK:

FOR IMMEDIATE RELEASE:
Hana Electronics Opens “The Restaurant at Hana”
Pyongyang/London, July 8th 2011

Phoenix Commercial Ventures Ltd (www.pcvltd.com) is proud to announce that Hana Electronics JVC (a 50/50 joint venture based in the DPRK)  completed and moved into its new headquarters based near the T’ongil Market in Pyongyang in Q1 2011.

Having moved in and set up its production facilities, Hana has now opened a restaurant (“The Restaurant at Hana”) and related leisure facilities (swimming pool, sauna, hairdresser, bar, gym etc) in its headquarters.

The restaurant (which comprises a main dining room and several private ones) and leisure facilities are open to locals and foreigners alike. Food for the restaurant is sourced from local markets.

A video and photos of the restaurant can be viewed on the Phoenix website.

About Phoenix Commercial Ventures Ltd
Phoenix Commercial Ventures Ltd offers investors business and investment opportunities in the Democratic People’s Republic of Korea (DPRK), enabling them to take advantage of the economic reforms that are taking place there.

Phoenix Commercial Ventures Ltd maintains an office in Pyongyang, almost the only European company to do so, and operates with the following specific aims:

• Identify commercially viable investment projects in the DPRK, on a case by case basis

• Identify reliable local partners for all forms of business in the DPRK, either trade or investment

• Seek overseas investment sources for such projects

• Minimise the risk in such projects, by taking responsibility for supervision of the local set-up procedures and management of the projects

About Hana
Hana was established in May 2003. In 2004 it began manufacturing and selling DVD and VCD players, as well as pressing and selling CD’s.

When the company first began operations it employed barely a handful of people. Now it employs over 200 people, and has thus become a major employer with significant social responsibilities which it takes very seriously.

Hana have established a nationwide distribution network throughout the major cities in the DPRK. Whilst they manufactured and marketed CD’s, they had an exclusive long term contract with the Mansudae Arts Centre, which belongs to the Ministry of Culture, one of the partners in the JV, for 300 works including; movies, karaoke and other music.

They now produce and sell a range of DVD players, and will move into other consumer electronics products.

Hana is now ranked as one of the top three best performing joint ventures in DPRK, as assessed by the Ministry of Finance.

Hana is proud to have introduced a number of firsts, which show the evolution of the DPRK to a market economy. These include:

• Advertising – the Hana logo, together with the company’s telephone number, appear on every product and packing case

• Offering a guarantee – Hana has also introduced a six-month, no questions asked, guarantee on all products

• Distribution System – Hana have gradually established, from a zero base, a distribution system covering the whole country. They have set up sales offices – for example, in Chongjin, they now have one main office and 13 sub-branches; in Hamhung, they have one main office and 3 sub-offices, and also have offices in Nampo, Sariwon and Sinuiju. They plan to open more outlets, first in the other provincial cities, then in the smaller county seats

• Hana intends to diversify and expand their range of products.

• Hana moved into its newly constructed building, next to the T’ongil Market, in Q1 2011.

• Hana has also opened a restaurant (“The Restaurant at Hana”) and leisure facilities (including a swimming pool) in its new building. The restaurant and leisure facilities are open to locals and foreigners alike.

CONTACT INFORMATION:
Phoenix Commercial Ventures Limited
No. 901
International House of Culture
Ryonhwa-dong
Central District
Pyongyang
Democratic People’s Republic of Korea
Corporate Website www.pcvltd.com

Below are some very interesting reports and publications. All well worth reading:

Foreign Assistance to North Korea
Congressional Research Service (CRS)
Mark E. Manyin, Mary Beth Nikiti
Download here (PDF).  See other CRS reports on the DPRK here.

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U.S.-DPRK Educational Exchanges: Assessment and Future Strategy
The Freeman Spogli Institute
Edited by: Gi-Wook Shin, Karin J. Lee
Read the whole book  here (PDF)

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Beyond Good Intentions: The Challenges of Recruiting Deserving Young North Koreans
38 North
Goffrey See, Choson Exchange