North Korean Economy Watch

The Daily NK reports that construction is afoot at numerous DPRK leadership compounds.

Residence 15 in the Central District (중앙구역):

The residence is located at 39° 0’56.39″N, 125°44’45.45″E.  The first photo is dated March 23, 2009.  The second is dated December 20, 2009.  The third image is from the Daily NK story overlaid onto Google Earth.

Onpho Spa in Kyongsong County (경성군):
The Daily NK also provides a new image of the elite compound at the Onpho Spa.  Here is the original low resolution image from Google Earth and the new high resolution image:

This compound is located at 41°39’26.91″N, 129°30’29.57″E.  Even though the “before” image is in low resolution, we can see that the compound has been drastically rebuilt.  It bears resemblance to the Sinchon Elite Compound (satellite image here) which also is built on a spa.    Barbara Demick mentioned this facility in her recent Nothing to Envy.

The Daily NK also mentions that here is construction taking place at the leadership compound in Songdowon, north of Wonsan. Satellite image here.

The reconstruction of leadership compounds has been underway for some time.  I blogged about some other projects in February 2009. Read about them here.

Here is the text from the Daily NK story:

An unusual level of remodeling and reconstruction of official buildings and special villas is going on across North Korea, according to sources.

One such source inside North Korea reported today that after demolishing the No. 15 Official Residence, located in vicinity of Kim Jong Il’s current office in Pyongyang, the authorities began construction of a new building in July, a claim which has been confirmed by satellite images.

The No. 15 Official Residence was where Ko Young Hee, Kim Jong Eun’s mother, used to live. The location is linked to Kim Jong Il’s office and other official buildings by underground tunnels fitted with an electronic train. When Kim Jong Eun was a child, he also lived there.

However, the source said he believes that the prime real estate may be undergoing a change of use.

The source also reported that in December, 2009, Kim Jong Eun ordered the destruction of another special villa in Kyungsung, North Hamkyung Province, a place famous for hot springs, and the building of a new conference hall and villa with imported construction materials in its place.

Approximately ten kilometers of road and rail construction has also been going on so that the area can be reached more conveniently, the source added.

According to the source, around 1,200 soldiers have been mobilized alongside residents of Chongjin and Hoiryeong for the work. In addition, each household in the area has had to provide ten buckets of rocks for construction and pay 500 won for their delivery.

Regarding this work, North Korea Reform Radio reported in July, “During construction of Kim Jong Eun’s special villa in Kyungsung, the authorities diverted the flow of a stream flowing through Haonpo-ri in Kyungsung, burying farms and angering residents.”

Reconstruction of another villa and conference hall at the coastal Songdowon Resort in Wonsan, Kangwon Province is also ongoing. This construction is reportedly a gift for Kim Jong Il on the orders of Kim Jong Eun.

The construction consists of two large, circular buildings. One of them has a lot of separate rooms, while the other has just one big hall, according to rumors.

Therefore, the source assumed that the finished building might be a similar to Kim Jong Il’s Seoho Villa, the No. 72 Villa in Nakwon, South Hamkyung, which is rumored to have one room extending 100m below the ground.

A South Korean architect estimates that the construction of the three facilities and railroad will cost a total of around $180 million dollars, an amount which, according to the current international market price of corn, $300/ton, is enough to buy 600,000 tons of corn, enough to feed 2.3 million North Koreans for two months.

According to documents the South Korean military and intelligence authorities provided for submission to a hearing of the Diplomacy, Commerce and Unification Committee of the National Assembly by lawmaker Yoon Sang Hyun, there are 33 luxurious villas in beautiful mountainous areas and along the coasts of North Korea. Since 2008, 13 out of 33 sites have been under maintenance work, according to intelligence.

There are also 28 stations for the exclusive use of Kim Jong Il across North Korea.

In North Korea, in general, around two or three facilities are remodeled per year, but the current degree of widespread construction and remodeling suggests that Kim Jong Eun may be set to use the villas in the future.

On this, an anonymous expert with a national policy institute suggested that it does not portend a scaling back of the Kim family ruling style. “Seeing Kim Jong Eun’s luxurious life pattern,” he said, “he seems set to follow his father’s conventional method of dictatorship.”

You can see satellite imagery of 19 leadership  train stations here.

Read the full sotry here:
Luxury Villa Construction Booming
Daily NK
Kim Tae Hong
10/26/2010

According to the Daily NK:

In Dandong, the number of people studying the Chosun language (Korean) is increasing, while real estate prices are rising on the back of rumors that Shinuiju, just across the North Korean border, will soon be opened up to trade and investment.

One anonymous Korean-Chinese trader who already engages in business with North Korea in the area told The Daily NK on the 15th, “The rumor among Chinese traders who have recently been in North Korea has it that ‘The North Korea authorities will open Shinuiju sooner or later.’”

As a result, he said, “There is currently an upsurge in the price of apartments and shops in Dandong, while the number of people wanting to learn the Chosun language is increasing.”

The trader explained that for the last three or four years the real estate market in Dandong has been flat. However, with reports of Kim Jong Eun’s internal appointment as the successor spreading earlier this year, the price of Hanquosheng, Dongfang Minzhu, Taiyang Dasha and other luxury apartments has increased by more than ten percent over the course of the summer.

The source pointed in particular to the fact that the price of apartments under construction in the Langtou Port area has gone from 2,000 Yuan/m² (approximately $300) in May to 3,200 Yuan/m² (approximately $480) in October. The neighborhood has particularly bright prospects as it is the location for the planned Second Yalu River Bridge under an agreement made during the visit to Pyongyang of Chinese Premier Wen Jiabao in 2009.

The Daily NK’s Korean-Chinese source explained that those primarily responsible for fuelling the real estate gains are Korean-Chinese from the Northeastern provinces of China.

He reported, “Since Dandong has geographical advantages, being cool in summer and warm in winter, as well as being able to provide for North Korea’s development of Shinuiju, the city has emerged as the best investment location for Korean-Chinese people.”

“The expectation that Kim Jong Eun is still young and has experience of life in Switzerland; therefore he knows well the need to develop the country and will have no choice but to make that decision, is driving the investment by Korean-Chinese,” the source added.

Naturally, the presumption that Shinuiju will soon offer some new opportunities for business is producing a new trend for learning the North Korean language.

Wang, a 21 year-old student from a university in Dandong said, “Chinese students know that South Korean is different from Chosun,” and went on, “Until now, South Korean has been all the rage thanks to Hallyu (as the South Korean cultural influence in wider Asia is known), but recently the number of students wanting to learn Chosun has been drastically increasing.”

There are presumed to be roughly 3,000-4,000 North Koreans residing in Dandong, including students. Some of them exchange languages with Chinese students, while some others give private classes for between five and ten Yuan an hour.

Alongside which, private Korean language institutes in Dandong are enjoying increased demand.

One South Korean who manages a Korean language institute in Dandong told The Daily NK, “In the case of Korean language institutes in downtown Dandong, each class has seen an increase of four or five students for this fall semester. Alongside Hallyu, the expectation that Shinuiju will open up has meant that the number of Chinese young people wanting to learn Korean is steadily increasing.”

Read the full story here:
Shinuiju Development Making Waves in Dandong
Daily NK
Park In Ho
10/18/2010

Pictured Above (Google Earth):  State (Drama) Theater before its most recent renovation

According to KCNA:

Pyongyang, October 8 (KCNA) — General Secretary Kim Jong Il gave on-the-spot guidance to the newly built State Theatre and visited artistes’ new flats.

He provided on-the-spot guidance to the newly built State Theatre.

The more than 620-seater theatre has all facilities necessary for art creation, performing activities and audience ranging from stage, latest sound and lighting facilities, rehearsal rooms, make-up rooms to an annex and welfare and service amenities.

He went round the exterior and interior of the theatre to learn in detail about its construction.

The theatre good in its interior structure and built on a high level is flawless in its architectural substance and style as a cultural and art edifice, he said, highly appreciating the feats performed by soldier- builders in successfully building the theatre of eternal value and extending thanks to them.

Noting that it is an astonishing miracle indeed that they completed the construction of such modern theatre to be proud of in a matter of little over four months, he stressed that this signal success is a striking manifestation of the inexhaustible mental power of the soldiers of the Korean People’s Army, the creators of the revolutionary soldier spirit.

The theatre which is a good combination of national and classical beauty and contemporary beauty and looks elegant, magnificent and exquisite is an excellent cultural edifice meeting the need of the new century, he noted, expressing great pleasure over the fact that it has become possible to hand one more valuable treasure to posterity.

He set forth tasks to be carried out to manage and operate the theatre.

He visited the families of the artistes who have just moved to the new apartment houses on the bank of the River Taedong.

He looked round the exterior and interior of the flats for hours to acquaint himself in detail with their construction.

The apartment houses for artistes are ultra-modern flats built according to the party’s plan and intention to provide the people with the best living conditions, he said, adding that these flats are a model and standard for the construction of the houses to be used by all the people in a thriving nation.

Noting that the flats for artistes were designed well and built on the highest level, he highly appreciated the feats performed by the soldier-builders in completing them in a short span of time and extended thanks to them.

Then he visited the families of Paek Sung Ran, Choe Kum Hyang and Kim Chol Jin, actresses and actor of the State Theatrical Troupe, and Ri Ji Yong, head of the troupe, who have just moved to the new flats.

After congratulating them on their moving to the new flats and having cordial talk with them, he took deep care of every aspect of their living as a real father would do. He bestowed upon them such great benevolence as presenting them with household articles in token of his visit.

He praised the artistes, noting that the artistes intensely loyal to the Party and the leader are the reliable sentinels standing on the ideological front to powerfully encourage the masses in the drive to implement the Party’s policies.

Noting that the Korean people’s age-old ideal and wishes are becoming a brilliant reality thanks to the high-pitched drive for effecting a great surge, he said that this stirring event in the era of the Workers’ Party has put on the horizon a rosy future of a thriving nation of Juche which will stand imposingly on this land.

Making the rounds of streets of the capital city taking on new looks day by day on the same day, he advanced highly important tasks which would serve as guidelines for turning Pyongyang into a more magnificent and beautiful city.

Noting that housing construction is of very weighty significance in settling the issue of the people’s living, he stressed that as an immediate task it is necessary to complete in the shortest possible period the construction of flats for 100,000 families in the city as modern as the apartment houses now standing in Mansudae Street and the newly built apartment houses for artistes.

He expressed great expectation and conviction that all the builders of the capital city would work new miracles in its construction in the new century and thus once again demonstrate the revolutionary spirit of the service persons and people of the DPRK, the successors to the great history and tradition.

He was accompanied by Kim Yong Nam, Choe Yong Rim, Ri Yong Ho, members of the Presidium of the Political Bureau of the WPK Central Committee, Kim Yong Chun, Kim Ki Nam, Choe Thae Bok, Yang Hyong Sop, Kim Kyong Hui, Kang Sok Ju, Ju Sang Song and Hong Sok Hyong, members of the Political Bureau of the WPK Central Committee, and Jang Song Thaek, Kim Yang Gon, Kim Yong Il, Pak To Chun, Choe Ryong Hae, Ju Kyu Chang, Ri Thae Nam, Thae Jong Su, Kim Phyong Hae, U Tong Chuk, Kim Jong Gak, Kim Chang Sop and Mun Kyong Dok, alternate members of the Political Bureau of the WPK Central Committee.

Before this news release, the theater was known as the “State Drama Theater”.  KCNA reports only two performances here since 1996: here and here.

What is strange is that this is the second major renovation of the rarely-used theater in a decade.  Below is a satellite image of the theater’s first renovation in June 2000 (Google Earth):

Here is a picture of the facility as it appears today (Daylife.com):

The new housing for the theater’s “artistes” does not appear on available satellite imagery, but its location is easy enough to determine using KCNA photos.  Below is a picture of the new buildings as well as a photo of the location next to the Pyongyang’s central district market:

For the same reasons that President Obama has a tendency to take visiting dignitaries to my favorite hamburger restaurant in Arlington, VA, the North Koreans have designated “friendship farms” for countries the North Koreans enjoy or expect to enjoy cozy relations.  Below I have identified a few for you to check out on Google Earth.

DPRK-Iran Friendship Ripsok Cooperative Farm

Coordinates: 39°28’34.69″N, 125°29’48.92″E
This farm has been mentioned in this capacity in KCNA four times: here, here, here, and here.
Date first mentioned: May 17, 2007

DPRK-Russia Friendship Kochang Cooperative Farm

Coordinates: 38°58’3.82″N, 125°36’4.67″E
It has been mentioned in KCNA at least 26 times.  See here.
Date first mentioned:  June 23, 1999

DPRK-China Friendship Thaekam Cooperative Farm

Coordinates: 39°15’4.41″N, 125°41’53.06″E
This farm has been mentioned at least 29 times in KCNA.  See here.
Date first mentioned: June 1, 1997

I have also located friendship farms for: Laos, Poland, Cuba, Bulgaria, Vietnam, Malaysia,  Indonesia, Germany, Palestine, Cambodia, Mongolia, India, Syria, Nigeria, Libya, Egypt, New Zealand, Yugoslavia, and Pakistan.

The United States does not yet have a friendship farm in the DPRK, but maybe someday it will be Osan-ri in Sunan-kuyok, Pyongyang. This is where the Fuller Center plans to launch a housing project. Their planned location and site plans are posted below.

Jimmy Carter, who founded Habitat for Humanity, has recently endorsed this project. (UPDATE: more here and here)

Thanks again to Google Earth and GeoEye.

The German version of the Financial Times has published an interview (of sorts) with Volker Eloesser and his DPRK JV technology firm, Nosotek. Below I have posted an English translation of the article.

FT: You think the economy in North Korea is starving. That is right! Nevertheless, it attracts entrepreneurs there like Eloesser Volker from Germany. He tells Anna Lu the story of his life in the land of Kim Jong-il.

North Korea is one of the most isolated and inaccessible countries in the world. Nevertheless, there are millions of university trained Koreans and entrepreneurs living in the country. Volker Eloesser is one of the entrepreneurs. Eloesser runs a company in Pyongyang. The IT company is known as Nosotek and is a joint venture with the North Korean state. It is not very simple to talk to Eloesser about his life and work in North Korea. The lines are too unstable to North Korea, with numerous eavesdroppers. Not everything can be talked about openly. The following article is the outcome of countless emails between Pyongyang and Hamburg.

VE: “Why do we work in North Korea? There are signs that the country can develop into a booming region. Recently, a short report about the iPad was broadcast. Videos from South Korea are widely circulated amongst students. The policy change may not be imminent, but it is unstoppable. Once that happens, property prices will increase.

This is the strategy of most foreign companies here: Real estate speculation, even if the permits for foreigners are only granted in a joint venture status. Many of the companies produce products as a matter of form and do not make any significant profits. Other opportunities include buying up restaurants, shop buildings and swimming pools. Just imagine if someone would have built a restaurant in China in 1985 in Tiananmen Square. Or at Alexander Platz in East Berlin. Opportunities like these do not happen often in the world.

FT: Volker Eloesser operates an IT company in Pyongyang, North Korea and hopes the country develops into a booming region.

VE: Naturally, we only invest very little into production. Nosotek develops software and apps for the iPhone. We are quite successful. One time, we were even in the top ten in the App Store. Our customers do not want us to mention the name of our company or our employees’ names on the product. Although it is going well, we do not generate profits yet. Our headquarters is located in one of the most sought after residential areas in Pyongyang, not far from the center. The area boasts multi-story, stucco houses and easy metro access. These are some of the best conditions possible, so we are optimistic.

Unfortunately, many things are expensive here. The bulk of the goods are imported and therefore, cost twice as much as they would in China. Power, logistics and communications are almost prohibitive. However, wages are way below Chinese standards, which is a key benefit if you get good people. There are plenty here, all with a university degree in computer science or mathematics, some have doctorates. They seem to wait for an announcement of a job opening. I only have to ask my Korean partner and 14 days later new people are coming in for a trial. I can say nothing about the wages.

FT: In fact, the average salary in Pyongyang is around 3,000 Won a month. After a devastating currency reform and crop failures in recent years, this affords an employee about three kilos of rice. Eloesser does not say it, but we hear such things from aid workers in the region. The aid workers do not wish to be identified. Eloesser further:

Eating together in the common area.

VE: “In total we have 45 Korean employees, including five women. I, am the only European. We all eat in the company common area every single day. I particularly like the octopus salad and will miss it if I relocate. After work, colleagues remain a little longer and often sing songs to the guitar. The atmosphere is friendly. Nevertheless, it is not always easy. Koreans are very proud people who love their country and their culture and know nothing else.

It is not easy to convince them to do something differently. For many it is difficult to recognize a foreigner as an authority, and if they do not understand the meaning of a statement it is often not performed. However, the biggest difficulty is much different: We have an IT company without access to the internet. We solve this problem by delegating the development of online components to partner companies in China. Here in North Korea you can only do things offline. At home I have true internet access, but it is very slow and rather expensive.”

FT: In fact, one can only get on the internet via a satellite dish in North Korea. The acquisition cost to use the internet according to a local charity is the equivalent of 11,000 euros. The monthly expense may be up to 700 euros, depending on how many users share the connection.

VE: “Pyongyang itself has changed in the last few years. Since 2005, the first time I was here, the traffic has doubled. The days of empty roads are long gone, such images only haunt the internet. Instead of old taxis or Ladas, North Korean Pyonghwas and Malaysian Proton sedans are on the road now. Bicycles are hardly center. They may only drive on the sidewalks. There are lots of military jeeps or SUVs from Russian, Chinese and local manufacturers.

You meet uniformed people everywhere in North Korea, but not all are military. Civilians bear just as many olive green suits with no weapons or rank insignias. The rest are soldiers. Soldiers are often used to harvest and help with road and house construction. I never feel threatened by the military presence as a foreigner. I feel I am treated with respect. People think; if he was not important for our country, he would not be here. Nevertheless, I am of course aware that somebody writes reports about me. Wherever I go, if I am at a restaurant or at work, somebody knows me. He notes when and where I parked my car and statements like this interview will be read by the authorities. At first I thought they listened to me at my apartment. However, even if they have actually done this, I think it has become boring for them.

Sometimes I can understand their suspicions; the reports by many Western media outlets are biased. Recently, the North Korean government printed a picture of children splashing around in Wonsan. People abroad believed the picture was staged, but this type of activity is common in the summertime heat.

FT: Sense of unwritten prohibitions

VE: The authorities are particularly suspicious of journalists and tourists because they do not know their true intentions. We are entrepreneurs and largely left alone. We are not required to go to political events or memorials. As a business man you have one clear goal, business. It is understood and supported. Life would be easier if we knew what we can and cannot do. Unfortunately, this is not written anywhere. It is better to hold back. Over time, you develop a sense of unwritten prohibitions. I have my own opinion about the policy, but I will keep it to myself. I make sure I never have a camera with me, not even on my phone. I do this so no one thinks I want to photograph something without permission. I live in the Bulgarian Embassy because there are no mixed residences. I never visit North Koreans at home and do not talk to them on the street. I do talk to children occasionally. They are not afraid of foreigners and like to try out their English vocabulary. They will say things like; “How old are you?” Where do you come from? Bye-bye.” Then they run away giggling.

Basically, I lead a fairly normal life here. I can move around in my free time and go to the mountains and play golf or tennis. There is a night life in Pyongyang with bars and karaoke. More precisely, there are two types of night life, one for locals and one for foreigners. For example, I do not get tickets to the local cinema. Today I went to an amusement park that many North Koreans visit. The park was built in 2010 and is equipped with fair attractions like the kind they have once a year in small German towns.

Shopping is not a problem. There are no signs of a food shortage as the shops are packed. Curiously, a kilo of chicken on the market is often cheaper than a kilo of vegetables. This may be because chickens can live in backyards and on balconies. Vegetables cannot, that would require offseason greenhouses, which are not found in North Korea. Imported goods usually have astronomical prices. For example; a Hungarian salami costs the equivalent of 42 euros. Other products like yogurt cannot be found in the summer because the refrigeration is inadequate. Sometimes I shop at the diplomatic supermarket and buy things like Haribo, Mosel wine and milk chocolate.”

FT: Of course, the well-equipped shops have a catch; purchases must be paid for in euros.

VE: “By the way, last Saturday night something strange happened. I had an accident. A man ran out in front of my car. He was in dark clothing and came out of nowhere across the eight-lane main road. I slammed on the brakes, but the car hit him, and he fell onto the road. When someone came to help him up, he quickly departed from the scene of the accident. You call that a victim’s escape?

A short time later, three police officers arrived on motorcycles. They were friendly and professional, and they even offered me a cigarette. In some other countries, I would have been imprisoned or would have been asked to pay an exorbitant bribe. Here I was only given a warning, because I had forgotten my passport and driver’s license and the technical inspection (also here) was outdated by nine months. That was all. There was not a victim. Only screeching tires in the night.”

The original German verison can be found here:
Unser Mann in Pjöngjang
Financial Times (German edition)
9/12/2010

According to the Daily NK:

North Korea is a “Tax-free country,” according to one of its many propaganda slogans, but this is contradicted by defector testimony, which suggests that residents carry a very heavy burden. According to defectors leaving the country after the North’s currency redenomination, North Korean people pay at least 20 to 30 percent of their monthly living expenses in the form of quasi-taxes to the state.

Since the redenomination, the minimum cost of living for a family of four has been in the vicinity of 50,000 to 60,000 won: around 35,000 for food and some 10,000 for other day-to-day necessities.

Next, North Korean residents pay at least 15,000 won for electricity and other utilities to the state.

Water and sewage and electricity cost, in total, around 1,000 won. Additionally, people have to give 30 percent of the earnings from their private fields every year. For a private field of around 40 pyeong (approximately 132m²), which is the general area for a single household, the farmer of the land has to pay around 3,000 won on average per month in usage fees, according to defectors.

In addition, if one adds other kinds of funding such as that for various kinds of local construction, military aid, fees for child education etc, the sum easily surpasses 10,000 won.

One defector, who arrived from Onsung in North Hamkyung Province in July of this year, said, “An elementary school in Onsung is instructing students to collect 10kg of apricot stones. If they cannot do that, the school forces them to give 5,000 won in cash. There are many cases of students who are unable to provide the apricot stones quitting school since they do not want to suffer under the burden.”

Another defector, who escaped from Hoiryeong in December last year, said, “Kim Ki Song First Middle School students had to pay 30,000 won every each three months for a school beautification project. However, many workers’ children were not able to tolerate that situation and quit.”

Another, who arrived in June from Hoiryeong, explained, “Even though the people were having to get food for themselves because of the absence of food distribution, the authorities took dogs, rabbits, leather or scrap from us all the time and, in addition, for the construction of a road, they pushed us to provide them with cement and bricks, so we had to offer all our income for several days.”

Besides all of this, the around 30 percent of people who do not have their own house have to pay at least 30,000 won in monthly rent.

Then, those who do businesses in the jangmadang have to pay between 300 and 2,000 won for each stall per day.

A defector, who did business in Chongjin until she defected in July last year, said, “The Provincial Committee of the Party took 300 won from each stall every day, and used 60,000 won of that for official expenses, gas for cars and entertainment for other cadres.”

Defectors say that the reason why the number of vagrants, so called kotjebi, has been increasing is also that they cannot afford to pay those fees.

Needless to say, while general people are weighed down by this heavy burden, high cadres in the Party, military or foreign currency earning bodies accumulate property through corruption, privilege, access to foreign currency earning businesses and the like, and enjoy their luxurious lives in high-class apartments in Pyongyang.

One defector who escaped from Pyongyang in February this year explained, “Since the currency redenomination, the preference for products rather than cash has been striking, so the price of apartments has risen a lot. In 2007, an apartment by the Daedong River was around $60,000, but now it is around $80,000 or $90,000.”

“While running errands, I visited one such apartment where high officials lived several times. It was amazing. They had foreign TVs, refrigerators and many other appliances. They used Korean or Japanese cosmetics and their shoes were all designer.”

A diplomat from the U.K. who visited Pyongyang in April, recently told the media that when he dropped by a fast food restaurant in Pyongyang most of the guests were students and some of them were wearing blue jeans and carrying cell phones.

The defector from Pyongyang criticized, “Newly built pizza or fast food restaurants in Pyongyang are like a playground for high officials’ children,” and concluded, “General local people are now struggling to feed this privileged class.”

The Daily NK conducted the interviews with defectors in this article with people who had just passed through the education course at Hanawon (the South Korean resettlement education center for North Korean defectors).

Read the full story here:
Tax Free North Korea Exists Only on Banners
Daily NK
Shin Joo Hyun
9/2/2010

According to the Daily NK:

There have been grievances reported amongst residents of provincial areas that are part of North Korea’s renovation efforts to become a “strong and prosperous state” by 2012.

North Korean authorities announced a plan last September to reconstruct old houses in regional cities. However, a lack of construction materials and electricity has pushed back the start date. After the currency redenomination last November, rumors amongst residents suggest that construction could end before a single plough dug into the ground.

Construction efforts were revitalized in April this year as authorities set specific targets for city construction teams and state owned enterprises to build large residential buildings holding ten to thirty households. October 10 was set as the deadline before which all construction was to be complete, the same day as the founding date of the Chosun Worker’s Party.

However without sufficient resources, including labor, it remains to be seen whether the project will finish. Furthermore, large and small accidents have raised some concerns amongst local populace.

On July 12 a three-story brick building at Sariwon, North Hwanghae Province, collapsed in the middle of construction. Seven workers were injured by the accident. A source cited the mixing of excessively brackish sand with cement was the reason behind the collapse.

North Korea is currently suffering from a lack of cement. Not only is supply from the authorities non-existent but following the construction of 100,000 houses in Pyongyang, the market no longer has any consistent supply. With prices rising, cement is being smuggled from regional construction sites and sold in markets. This is one another key reason for the shoddy construction.

A source stated that, “Construction workers pretend to work,” because there is no payroll to even feed them. This creates serious obstacles for workers, forcefully mobilized for construction, who cannot provide for their families.

The source added, “In a situation where selling on the jangmadang is a prerequisite to earning a living, you can only suffer losses if you are chosen to work on construction sites.”

Accidents arising from a lack of safety precautions are also a concern. A source said, “Many people that are brought to work become ill due to dust particles. When this is ignored, they end up coughing blood and taken to hospital.” With a chronic scarcity of medicine there is no cure for those suffering from respiratory illnesses.

Basic safety is also not being met due to lose security at construction sites leading to a passer-by being struck by a falling brick and injured.

Local residents have voiced their discontent regarding prolonged construction projects due to their relocation to neighboring households since April. At the time, North Korean authorities had promised to assign new houses to both the residents who were forced to move and the neighbors who had accommodated them but with no end of construction in sight, tensions between families are rising to the point where the People’s Safety Ministry has to intervene. The winter season will only add to the collective anxiety.

To make matters worse, residents living near construction sites must pay money for project support. Members of the people’s unit must always have 100 to 500 won on hand for project funding.

Local residents are increasingly worn out by the construction that has spanned for over twelve months, since last year’s 150-day Battle. Their suffering has increased due to the unsuccessful nationwide economic and social plan, implemented from April to September of last year by North Korean authorities to revive the failing and chaotic economy.

Read the full story here:
Residents Anxious of Accidents on Construction Sites
Daily NK
Park In Ho
7/29/2010

According to the Daily NK:

The gap between the rich and poor in North Korea is growing as the number of people trying to sell their family home to buy food expands in the aftermath of last November’s currency reforms, according to a source from inside the country.

The source from South Pyongan Province told The Daily NK on Thursday, “An increasing number of homes are being sold to buy food, and now it seems like about two out of every ten people around here have lost their home.”

According to the source, the rich buy up the houses, demolish them and build new ones to sell for a profit. Those who have amassed dollars or Chinese Yuan from trading are now turning to the housing market.

Even in Pyongyang, where the public distribution system continues to function, there are homeless people on the street, according to the source, who added, “When I was in Pyongyang, there were homeless people sleeping in the subway in large numbers.”

The source went on, “People’s lives are very difficult. There are even some who rely on digging up 5kg of wormwood, walking three hours to sell it, and only getting 100 won per kg.”

Currently, 1kg of rice sells for 400 to 500 won in Pyongyang, and 500 to 600 won in other areas.

The source also explained, “While public distribution still functions in Pyongyang, there are strict restrictions on movement, and even with our salaries we can’t buy food because there is too little.”

Since the economy is so bad, the crime rate is also going up, he added, “There are now more and more pick pocketing cases, and these days, they not only use small knives to steal purses, but even tweezers to pick stuff from pockets.”

The source’s assertion that there was public distribution until mid-June contradicts the claim of one NGO, which said that on May 26 the authorities ordered each area to look out for its own food supply. The source, when asked about the decree, said he was unaware of its existence.

Read the full story here:
Life Even Tough in Pyongyang
Daily NK
Kim So Yeol
7/2/2010

According to the Joong Ang Daily:

Two men near the top of the North Korean power structure are competing against each other to become foreign investment czar for the cash-strapped country, according to sources with knowledge of North Korea.

North Korea experts say the contest could influence who eventually succeeds Kim Jong-il.

The sources told JoongAng Ilbo yesterday that Jang Song-thaek and O Kuk-ryol, both vice chiefs of North Korea’s National Defense Commission, are competing over who can attract more foreign investment to the North. The National Defense Commission, the country’s top state organization, is chaired by Kim.

“O Kuk-ryol dominated the foreign investment coming into the North because of his military power,” said one of the sources, “but he is in a hegemony struggle in that area with Jang Song-thaek, who thrust himself into foreign investment promotion later than [O Kuk-ryol].”

Jang is the husband of Kim Kyong-hui, Kim’s younger sister, and is one of Kim’s close confidants. Jang was also promoted to vice chairman of the National Defense Commission on June 7 at the Supreme People’s Assembly.

The sources said O, since being appointed a vice chairman of the National Defense Committee in February 2009, has capitalized on his position to expand his influence in attracting foreign investment.

O and his aides established Choson Kukje Sanghoe (Korean International Trading Company) as the organization solely responsible for foreign investment promotion and received approval for the organization from the presidium of the Supreme People’s Assembly on July 1, 2009.

Meanwhile, Jang named Park Chol-su, a Korean-Chinese businessman, president of Korea Taepung International Investment Group, which he re-purposed to attract foreign investment.

The company initially belonged to the cabinet, but Jang absorbed it into the National Defense Commission and announced the establishment of the re-purposed company in a January 20 report from the official Korea Central News Agency. The news report said Kim Jong-il issued an “order” that the state guarantee that Taepung be able to attract foreign investment.

“O Kuk-ryol is very displeased that Jang jumped into the foreign investment business that he led,” said the sources. “Currently, Choson Kukje Sanghoe and Korea Taepung International Investment Group are vying against one another.”

The sources said that the power struggle is already being watched with concern by the State Security Department, the North’s supreme intelligence agency.

The agency, the sources said, suspects that China is behind Taepung and is trying to control the North Korean economy by injecting capital through Park and the group. The sources said the agency is hesitant to report its suspicions to Kim, given his close relationship to Jang.

Jang has cultivated power through economic projects Kim has entrusted him with, such as a project to build 100,000 houses in Pyongyang. Since he was promoted to vice chairman last month by Kim, he is thought to have increased his political clout as well.

Ri Je-kang, a rival with Jang, also died in a mysterious, recent traffic accident.

“If a rivalry between Jang Song-thaek and O Kuk-ryol, both key axes of North Korean power, becomes a full-fledged power struggle, it could have a subtle effect on a North Korean succession scenario,” said Kim Yong-hyeon, professor of North Korean Studies at Dongguk University.

Read the full story here:
Bigwigs in North vie for power over investments
Joong Ang Daily
7/5/2001

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-05-19-1
5/19/2010

On November 11, 2009, North Korea enacted a ‘Real Estate Management Law’ consisting of six sub-sections and 47 articles. The new law revised the terms for sale and use of real estate, banning the unapproved rental of property and allowing the state to collect a ‘usage fee’ (rent). In addition to the law on real estate management, immediately after the North’s currency reforms at the end of last November, the government enacted or revised a total of 11 laws related to the economy, including the Food Administration Law, Agricultural Law, Goods Consumption Standards Law, and the Labor Law. This raises the question of whether the regime is strengthening its economic control mechanisms.

According to the Socialist Property Management Law of 1996, only ‘enterprises, institutes, and groups’ were allowed the use of properties, but the latest Real Estate Management Law includes individuals as those allowed to use property.

North Korea’s KCNA reported the enactment of the new law on real estate in the middle of last December, but only revealed that “basic issues of real estate’s registration and inspection, use and collection of rents are regulated,” while the more detailed contents were revealed in a three-part series of articles on the Real Estate Management Law that ran in the Minju Chosun, which was published by the Cabinet and Presidium of the Supreme People’s Assembly between March 17 and April 3.

In North Korea, where all real estate is property of the government, the sale or rent of properties between individuals or groups is, on principle, not possible, but after the July 1, 2002 Economic Management Reform Measure, the regime’s inability to provide housing led to significant growth in the size of the black market for real estate.

On a related note, during the 4th session of the 11th Supreme People’s Assembly, which opened in April 2006, a campaign to assess properties throughout the entire country and establish a system of rent was revealed, after which ‘property usage fees’ were included in the annual national budget.

Ultimately, the enactment of this law on real estate strengthens the state’s control over the socialist economy and over the country as a whole. From South Korea’s perspective, it appears the integrated land tax, property tax and other similar systems are North Korea’s attempt to prepare an important legislative precedent for expansion of the state coffers.

However, the portion of the newly-enacted Real Estate Management Law that really catches the eye is the authorization of ‘individuals’ to rent real estate. While it takes on the form of property leasing, it is also an expanded measure in that it permits individuals to use socialist property. Giving individuals the right to use real estate increases productivity and helps ease the North’s current economic woes.

According to the Minju Chosun, the new law “says one must not buy and sell real estate, and the nature and use of property cannot be changed without permission from the management authorities, so that property cannot be handed over to or lent to other organizations, enterprises, groups or individuals.”

The law also stipulates that a property rents will be paid to a ‘State Pricing Establishment Organization’, and that the intended use for the property must be registered, after which rents will be set in either goods or currency, and if rents are not paid in currency, they can be paid in kind.

In particular, this law stipulates, “Land is not to be abused or used in a way that makes it barren,” and that any historic or revolutionary landmark, or idolation of Kim Il Sung or Kim Jong Il must be thoroughly protected.

Through a special measure by the Cabinet, a National Real Estate Management Committee was established, and management offices and chains of command were established for the cabinet.