On Sept 23rd Koryo Tours’ staff were taken to the top of the enigmatic and oddly iconic 105 storey Ryugyong Hotel in Pyongyang – we were the first foreigners allowed to take pictures there and are able to print a handful of shots of the ground floor and the open air viewing platform more than 300 metres up.
The view was incredible and breathtaking indeed! The inside of the building still has substantial work to be done but the structure of the lobby and dining area and conference room (all on the ground floor) were visible, sources at the site suggest 2 or 3 more years until projected completion at which time hotel rooms, office space, and long term rentals will be available.
More on the Pyongyang Film Festival here, here and here.
Also…
Love North Korea Children Charity Event in Shanghai On September 25th, the UK-based charity Love North Korea Children will hold an event in Shanghai. Hannah Barraclough from Koryo Tours will also attend this event and will be able to answer any questions you may have.
Location: The Public
Address: Sinan Mansions Block 2 4/F, 507 Fuxing Zhong Lu, near ChongQing Lu
Date: 25th September
Starting time: 7PM (19:00)
Entrance: 150 CNY
For more information, please contact: LNKCShanghai@gmail.com
The official news website of the Yanbian Korean Autonomous Prefecture in Jilin Province reported on Thursday that the Yanbian Haihua Group inked a deal in Pyongyang on September 1 and established with its counterpart a $7.83 million joint venture company.
Under the deal, Haihua Group holds a 60.46 percent stake while the North Korean side owns the rest, to operate the Chongjin port’s No.3 and 4 wharves for 30 years.
The ports will be capable of processing 7 million tons of cargo a year and be put into use this year.
…
The prefecture’s public relations department and the Yanbian Haihua Group did not comment on the joint venture when contacted by the Global Times yesterday.
Although the Global Times reports a $7.83m price tag, the actual size of the deal appears much larger. According to the Donga Ilbo:
The North Korean regime has received 6.12 million euros ($7.82 million) of rental charges for the 3,180 square-meter (34,229 square-feet) piers and a 4,000 square-meter cargo yard from the Chinese company and paid the money to fund the newly-built joint venture, the newspaper said.
The Chinese company will invest a total of 13 billion won (USD $12m) on developing the port, such as building new equipment and facilities, which accounts for about 60 percent of the entire capital spent on the project.
According to the daily, they have already set up a series of detailed regulations on employment management, profit distribution and the formation of a new board with a goal to raise cargo traffic to one million tons by 2015.
The Yanbian group already spent 60 million yuan ($9.47 million) on manufacturing cranes and building necessary equipment, the newspaper said, and also completed work on stabilizing the 36,000-square meter grounds of the construction site.
They are scheduled to finish manufacturing cranes within the year to begin a full-fledged plan for domestic and international transportation through the port.
Yonhap and the Daily NK reported back in 2010 that this very same Chinese firm had leased the Chongjin Port for exports to South Korea and other parts of China:
The report, citing an anonymous government official from Tumen in China’s far northeast, across the Tumen River from Namyang in North Hamkyung Province, said that the usage rights have been sold to a “Chinese state company, Yanbian Haihua Import-Export Trade Company.”
He predicted, “Yanbian Haihua Import-Export Trade Company will start shipping between Chongjin port and Busan by container ship in September, and will start shipments to southern regions of China soon.”
The anonymous official also revealed that North Korea has agreed to allow the Chinese company to use the railroad between Tumen and Chongjin as part of the deal. The deal, the official said, will “facilitate trade from Tumen,” and added that the Chinese company which inked it is planning to use it to fulfill shipping contracts with three other Chinese companies.
The Chinese company is reportedly investing 10 million Yuan ($1.48 million approx.) in shipping cranes and other construction at Chongjin, and is having 150 freight cars produced to add to 50 already sent.
It would be interesting to know if the fiasco surrounding the Xiyang contract let to a renegotiation of terms of this deal in any way: Either by altering the ownership shares, time horizon, or if greater assurances against ex post expropriation were added. Since the contract is not ever likely to be made public, we may never know.
UPDATE 1 (2012-9-18):The Hankyoreh reports that quite a few ports on the DPRK’s eastern shore are being renovated by the Chinese. According to the article:
North Korea and China will develop 4 or 5 ports in the eastern coastal area of North Korea.
A source in Beijing said on Sept. 17 that it was confirmed through a Chinese government official that “4 to 5 ports in the eastern coastal area of North Korea in locations such as Seon-bong, Rajin, Cheong-jin, Gim-chaek, Dan-cheon, Heung-nam and Won-san are being jointly developed by North Korean and Chinese companies.” The source added that in addition to the two ports that are being developed in Rajin and Chongjin currently, businesses in the two countries are discussing specific conditions for development in the other areas. This is the first time that this information has been confirmed by a Chinese government official.
North Korea is exerting efforts in pulling Chinese investments into its special economic zones (SEZs).
On September 7, the 8th Jilin, China-Northeast Asia Investment and Trade Expo was held in Changchun, China as well as the 6th high-level forum for Northeast Asian economic and trade joint venture to promote the joint investment projects of Rason and Hwanggumpyong special economic zones.
At the event, North Korean officials focused on explaining the advantages and favorable conditions for foreign investors, including the joint management committee to be operated by both countries and laws and regulations installed for investment protection.
In the past, North Korea mainly focused on Rason SEZ but this time around, the spotlight was turned to Hwanggumpyong. Chinese officials went on to explain the details of 14.4 square-kilometer Hwanggumpyong SEZ, where five major industries – textiles, modern agriculture, electronics and communications, culture and industrial and trade services – with industry, culture, and service serving as the three major functions of Hwanggumpyong.
Furthermore, the tariff, tax and other benefits will be provided to various industries. The processing trade industry will be exempt from tariffs, and those companies operating for more than ten years will be granted tax exemptions, while those companies contributing to the infrastructure construction, tourism and hotels will be given priority and other favorable conditions. Last year, North Korea only centered its attention to Rason SEZ, with no mentioning of Hwanggumpyong.
Out of the thirty companies that participated at the North Korean exhibit, were from Rason SEZ. These companies represent the successful cases of Rason, recognized for abundant seafood, processed foods, and textile production.
One company from Rason stated, “repair and expansion project for the road connecting Hunchun with Rason will be completed by the end of this year, which will stabilize power supply that can attract more foreign investment from China.” According to a North Korean businessperson, there are 216 companies currently operating in Rason and over 80 percent are joint venture through foreign capital.
Since January 2010, the city of Rason received the designation as the metropolitan city and has improved the business conditions. Foreign companies inviting their business partners from home to Rason became easier, where visas were processed efficiently, as quickly as a day.
There are plans of more briefing sessions for North Korean SEZs to be held in Beijing, later this month. It is planned to be held from September 26 to 27 with over 30 state managed companies and over 100 representatives participating to explain 50 new investment projects.
The invitation of this event reiterated, the purpose of this briefing session was to attract Chinese investment for North Korean companies, for the contribution of economic development and improvement of people’s lives in North Korea.”
The Unification Church also launched Pyeonghwa Motors in the DPRK.
Pyeonghwa Motors was the first firm allowed to put up billboard advertisements in the DPRK. Here are links to images of most of the billboards: Link 1 (Images also say where they are located), Link 2, Link 3, Link 4, Link 5.
Pyeonghwa Motors has several assets in the DPRK, the status of which remains a bit unknown:
There is of course the Pyeonghwa Motors Assembly Factory in Nampho, which I first identified on Google Earth years ago. It has seen some minor expansion between 2009 and 2011:
You can see a Pyeonghwa Motors advert here which features the factory:
Pyeonghwa Motors also built a gas/petrol station in Pyongyang:
Although this facility is listed as operational on the Pyeonghwa Motors web page, recent tourist video shows that at some point before April 2012 this building has become a humble flower shop (꽃상점):
Noa Sharabi at the Hanns-Seidel-Foundation Korea office has written up a quick comparison of the 2010 and 2011 Law of the DPRK on the Rason Economic Trade Zone.
UPDATE 5 (2012-8-28): Thanks to a valued reader, I have posted a marketing flyer for the Rason International Commerce and Trade Center (AKA Rason International Business Trade Center) which is currently under construction in Rajin City (though it is too new to appear on satellite imagery). According to the front page of the flyer, caucasians will live in the complex, enjoying contemporary housing furnished by Pottery Barn and Oneida.
Below I have posted the marketing flyer featuring Pottery Barn on the cover. If a reader out there can translate Chinese, I would appreciate some assistance:
I hope that one day all North Koreans have the opportunity and the means to shop at Pottery Barn, but I am fairly confident that the company has no plans to open a branch in the DPRK for the foreseeable future.
On page 5 of the flyer, an artist impression is given of what the trade center will look like. It is slightly different from the model of the complex which appeared in KCNA yesterday and which was also on display at the second annual Rason International Trade Fair:
Here is what KCNA had to say about the complex:
Int′l Commerce and Trade Center to Be Built in Rason City
Pyongyang, August 28 (KCNA) — The development of the Rason Economic and Trade Zone is in full in the Democratic People’s Republic of Korea.
Among the development projects is the Rason International Commerce and Trade Center.
The construction, jointly funded by the Rason Paekho Trading Corporation of the DPRK and a real estate development company in Qin Huangdao, China, began in April this year.
It covers an area of some 40 000 square meters, with a total floor space of 88 000 square meters.
The first-stage construction will be finished in mid-October this year to cover seven buildings for storehouses and wholesale market.
The second stage, to be completed in October next year, will include nine buildings for shops, restaurants and hotel.
The construction is now under way as scheduled.
Song Ryang Dok, manager of the Rason Paekho Trading Corporation, told KCNA that the center is one of the big development projects in the zone.
“There were cases in which North Korea allowed foreigners to invest in factories and commerce centers, but no official case of home sales has been reported,” said Im Eul-chul, a research professor at Far Eastern Studies at Kyungnam University. “It can be seen as (the North) making another step forward in its efforts to attract foreign investment.”
UPDATE 5 (2012-8-22): Here is a video of the investment forum that was held at the zone. It features another architectural vision for the city which differs from the previously released video:
Some 110 companies from 11 countries have booths at the four-day event, Rason’s second international trade fair, organizers told The Associated Press. Chinese companies dominate the exhibition hall.
While the big goods are parked outside, exhibitors inside are showing off everything from toys to medicine, clothes to household appliances made in countries as far as the Czech Republic and France and as close as factories in Rason. One American is selling T-shirts not far from a North Korean clothing company.
“All these products you see are made or manufactured by our company. And they now are exported to more than 13 countries around the world,” said Pak Kyong Ok, a Rason Hyesong official. “Our products are popular.”
Bob Granger, a British entrepreneur, had something else in mind: a coffee shop in Rason.
“We would like to open in this area, not in the capital, Pyongyang,” said Granger, managing partner of the Green Apple cafe in Tumen, China, as North Koreans sampled his coffee. “We’d like to be bit out in the country meeting the people.”
UPDATE 3 (2012-8-20): Here is the official KCNA video of the opening of the Rason Trade Fair:
UPDATE 2 (2012-8-20): The Exhibition has opened. According to KCNA:
Second Rason International Trade Fair Opens
Pyongyang, August 20 (KCNA) — The Second Rason International Trade Fair opened with due ceremony in Rason on Monday.
The participants laid a floral basket before portraits of smiling President Kim Il Sung and leader Kim Jong Il in the venue and paid tribute to them.
Present there were Jo Jong Ho, chairman of the Rason City People’s Committee who is chairman of the organizing committee of the fair, officials concerned, officials in the city of Rason, scientists and technicians, representatives and exhibitors of different countries and regions, foreigners active in the Rason economic and trade zone and the consuls general of China and Russia in Chongjin.
An opening address and a congratulatory speech were made there.
The speakers referred to the fact that the fair would contribute to bringing about economic development and common prosperity of different countries of the world.
They expressed belief that the participants would conduct positive and wide-ranging dialogue and multi-faceted commercial and trade activities.
At the end of the ceremony the participants looked round electrical and electronic products, vehicles, light industry goods, medicaments and other commodities presented by more than 110 units of different countries and regions including the DPRK, China, Russia, Sweden, the Czech Republic and Taipei of China.
A reception was given on the same day in connection with the inauguration of the fair.
The second Rajin-Sonbong (Rason) International Product Exhibition is scheduled to be held from August 20 to 23, 2012.
The Korean Central News Agency (KCNA) announced on Aug. 2 that participants from North Korea, China, Russia, France, Switzerland, Australia, Czech Republic, Taiwan and other nations will be attending this exhibition, with electronic, machineries, light industry, and medical products on display.
The KCNA also reported the exhibition will contribute toward trade, economic, and science and technological development and enhance cooperation and exchange with neighboring countries. During this period, North Korea is also planning to hold briefing sessions for investments and visits to Rason Special Economic Zone (SEZ) for companies.
The first international product exhibition at Rason was held last year in August. The Chinese and Russian consul generals of Chongjin attended the opening ceremony with products from over 110 companies from North Korea, China, Russia, Australia, Italy, the United States, and Taiwan.
North Korea continues to expand the joint development of Rason with China, although it is also attracting investments from other countries such as Russia, Australia, and Italy.
In addition to Rason SEZ, North Korea is also promoting tourism. International routes to Pyongyang have increased. From Shanghai, regular flights are scheduled for Tuesdays and Fridays. Since April, chartered flights have been running from Harbin, and since July, from Xian. Other international travelers are visiting Pyongyang via Beijing, Shenyang, and Kuala Lumpur.
The KCNA reported that tourists are visiting Pyongyang and Kaesong on four-to-five day tour packages, touring many historical and cultural attractions including Myohyang and Mt. Kumgang.
With the opening of the Arirang Mass Games from August 1, more foreign tourists are expected to visit.
ORIGINAL POST (2012-5-16): The Hanns Seidel Foundation has made available the marketing and information flyer for the second Rason International Trade Exhibition (RITE) which will take place from August 20 – 23, 2012.
The marketing and information flyer is in a three-part PDF which you can download here: Part 1, Part 2, Part 3.
It is getting harder to know specific information about the DPRK’s mobile phone network…such as how many subscribers have signed up or how revenues/profits are doing.
Under the terms of the VimpelCom transaction, VimpelCom, Weather II and OTH agreed on a demerger plan (the Demerger”) pursuant to which the Company‟s investments in certain telecom, media and technology assets (the “SpinOff Assets”), which were not intended to form part of the VimpelCom business going forward, would be transferred to a new company, Orascom Telecom Media and Technology Holding S.A.E. (“OTMT”). The Demerger was performed in accordance with the guidelines of the Egyptian Financial Supervisory Authority and in particular decree no. 124 of 2010 and was completed in December 2011. The split of OTH shares by the way of the Demerger resulted in OTH shareholders holding the same percentage interest in OTMT as they held in the Company. The Demerger plan was initially approved in a shareholders meeting dated 14 April 2011 and subsequently on 23 October 2011. Approval from the Egyptian Financial Supervisory Authority was received in December 2011.
As a result of the Demerger, during November and December 2011, ownership of the following Spin-Off Assets was transferred from the Company to OTMT:
[…]
75% ownership in CHEO Technology Joint Venture Company, together with all other assets and businesses located in
North Korea;
95% ownership in Orabank NK;
[…]
Other than the reference above, the Q1 report does not mention KoryoLink or even the DPRK. As you would expect, KoryoLink is not mentioned in Orascom’s Q2 2012 Shareholder Report either.
A joint venture between OTH [Orascom Telecom Holdings] and the state-owned KPTC [Korea Post and Telecommunications Company] and included as part of the assets held by OTMT following the demerger. OTMT holds, a 75% stake in [Cheo Technology Joint Venture Company] with KPTC. The company is North Korea’s only 3G Mobile operator. By June 2011, Koryolink’s network covered more than 75% of North Korea’s population (estimated at 24.5 million).
Being the first company of its kind and scale in North Korea, koryolink established many precedents; a first of its kind call center to provide customer service; a launch announcement in major newspapers and on radio despite almost non-existent marketing and advertising industries; and the implementation of a koryolink advertising billboard, the first of its kind in Pyongyang.
KPTC is the “Korea Post and Telecommunications Company” which is nominally controlled by the DPRK’s Ministry of Post and Telecommunications.
The OTMT web page does not mention OraBank at all. According to this organization chart, however, it appears to be held by a separate holding company under the OTMT umbrella, the Oracap Holding Co./Oracap Far East Ltd. I have not been able to find out much more than that.
Pictured above (Daily NK): The 2012 Won / US$1 exchange rate up to 2012-7-13.
According to data provided by the Daily NK, the won/dollar exchange rate fell (the won appreciated relative to the dollar) nearly 28.4% from 5,100W/US$1 in December 2011 (a high following Kim Jong-il’s death) to approximately 3,650W/US$1 in February 2012. Since February, however, the won has showed a steady depreciation and the exchange rate has risen 48% to 5,400W/US$1 as of July 13.
So as I sit here eating breakfast I am wondering what caused these swings in the exchange rate?
Firstly, what was behind the dramatic fall in the exchange rate (and food prices) in January and Febraury? A simple answer may be a decrease in uncertainty and risk. Following Kim Jong-il’s death, the DPRK did not repeat the mistakes made after the passing of Kim Il-sung. For the most part markets remained open and “regular” activities of the state were highlighted in the domestic media and reported to contacts overseas. It is also possible that Chinese intervention, particularly in the form of food assistance and trade facilitation, could have played a role.
Secondly, does this mean that the increase in the exchange rate and food prices is a result of growing uncertainty? I am not convinced. It is beyond the scope of a blog post to tease this kind of information out, but here are some other things to think about: Economic uncertainty (pending policy changes, inflationary public finance), balance of trade (fall in net exports/rise in net imports, aid), capital flows (investment, aid, remittances), weather (drought/floods), “lean times” leading up to the fall harvest.
Some of these things matter more than others but it is important to keep in mind that the North Korean won is worth about as much today as it was when Kim Jong-il died. Since the won/US$ exchange rate is highly correlated with the price of rice (a fact that can be visually confirmed on the Daily NK web page) this means that food prices are also pretty high at the moment.
Rice Prices and Exchange Rate on the Rise
2012-8-16
Since Kim Jong Un’s ascent to power, the rice prices and exchange rates are on the rise. Despite Kim Jong Un’s proclaimed priority in elevating the quality of life for the North Korean people, uncertainty are prevalent in the country as Kim Jong Un has yet to meet the expectations of the people for economic revitalization or reform.
Compared to last year, the prices of rice last September that ranged 2,400 to 2,500 KPW per 1 kg, has jumped to 4,500 KPW in December right after the death of Kim Jong Il and exchange rates that averaged 2,800 to 3,000 KPW against one USD soared to 5,000 KPW. Although the prices have stabilized since then, the prices are climbing once again, as the price of rice in February at 3,100 KPW has gone up to 3,600 KPW/kg and exchange rate of 3,700 KPW per dollar jumped to 4,800 KPW in June.
In some places, the price of rice is reported to be above the 5,000 KPW range. According to Daily NK, an internet news outlet, the prices of rice in major cities like Pyongyang, Haesan, and Sinuiju has steadily increased for the last four months.
The price of rice in Pyongyang was 2,600 KPW/kg in April but it has slowly climbed to 3,000 KPW in June 5 to 4,900 KPW in end of June and is 5,300 KPW as of July 13. In Sinuiju and Haesan, the rice prices in April were around 2,600 to 2,700 KPW but soared to 4,300 to 5,000 KPW in July 13.
Exchange rates are also unstable as exchange rate to one US dollar that averaged 3,700 KPW in March soared to 4,200 KPW in April 25, 4,400 KPW in July 14 to 5,400 KPW by July 13.
Seasonal factors are also adding to the price fluctuations. May to August is normally a difficult time for North Korea with frequent famine. Combined with extreme drought conditions in June, accelerating inflation, and people’s rising apprehension about the economy, some rice wholesalers are not withholding the sales of rice.
The rising rice prices and exchange rate is expected to continue for the time being. Flood damages and other natural disasters and the trauma from the failure of last currency revaluation in November 2009 are factors adding to the price escalation.
The first collaborative film project between the DPRK and western producers, Comrade Kim Goes Flying, will premier at the 2012 Pyongyang International Film Festival.
As the North’s first romantic comedy feature film, the movie was produced by the communist country in partnership with Belgian producer Anja Daelemans and British-run travel agency Koryo Tours’ official Nick Bonner. The film was shot in Pyongyang with North Korean cast and crew, according to the report.
The biennial festival also plans to screen feature films including “Mr. Bean,” “Elizabeth: The Golden Age,” and a South African movie titled “Cry, The Beloved Country,” the report said, citing Koryo Tours, which runs tour programs to the North for the film fest.
Without giving too much away, the plot of the film revolves around the daughter of a coal miner who wants to be a gymnast in Pyongyang.
