North Korean Economy Watch

According to Yonhap:

South Korea has significantly reduced import quotas for eight North Korean agricultural goods, government officials said Sunday, amid the enforcement of strong U.N. economic sanctions on the communist nation.

According to a public notice posted by the Unification Ministry, the amounts of six North Korean goods allowed to be shipped to the country, including crab, shrimp and peanut products, have been reduced to half from those of last year while the import quota for sesame seed has been reduced from 300 tons to 100 tons.

An official at the ministry, Seoul’s key office on North Korean affairs, said the move had little to do with the U.N. sanctions that were imposed shortly after the North’s second nuclear detonation test last year.

“The items, whose import quotas have been reduced this year, are the ones we had little imports of in the past five years,” the official said, asking not to be identified. “The change was only to reflect the actual amount of imports.”

The import quota for mung beans doubled from 1,000 tons last year to 2,000 tons while that of soybeans also increased from 2,000 tons to 3,000 tons, according to the official.

The government places import quotas on certain items to protect domestic markets and producers, he noted.

This comes as South Korea ends imports of North Korean sand.

According to the Financial Times:

South Korea is to phase out its main import from North Korea, delivering a heavy blow to an impoverished regime already reeling economically from confiscated arms shipments and bungled currency reforms.

Sand was the biggest export to South Korea from the north in 2008, earning Pyongyang $73m (£47m). That represents about twice as much as it gains annually from wages at factories in Kaesong, a cross-border industrial zone for South Korean companies.

South Korean officials told the Financial Times that Seoul would phase out sand exports when existing contracts with its northern neighbour expired.

“Once those companies receive their sand, for which they have already paid, that will be the end,” a senior South Korean security official said.

It could have a profound political impact – but South Korean officials insist the decision was taken because Seoul increasingly dredges its own sand domestically.

Officials admit that South Korea has long worried that money paid for sand goes to the military, but they say increased dredging and the imminent conclusion of numerous outstanding contracts have given it the opportunity to end the trade.

…

North Korea is trying to compensate for South Korea’s decision by seeking alternative sand markets in Russian construction projects.

Russia’s Itar-Tass news agency reported late last year that North Korea would ship sand to Vladivostock for use in building projects for the Asia-Pacific Economic Co-operation summit in 2012.

Sand shipments to South Korea started in 2002 amid inter-Korean rapprochement – but were suspended last March while North Korea prepared to fire a long-range missile over Japan.

Pressed by construction companies that have been affected by the import ban, Seoul resumed imports from North Korea in November. The current flow, however, is less than one-fifth of previous levels.

In an effort to salvage the trade with South Korea, Pyongyang has offered to provide sand to South Korean companies in exchange for other building materials and fuel.

But the South Korean unification ministry said domestic companies were not interested and had not applied for export licences to conduct such swaps.

Previous posts on North Korean sand can be found here. 

Read the full story here:
North Korea hit by Seoul move to end valuable sand imports
Financial Times
Christian Oliver and Song Jung-a
3/19/2010

According to the Associated Press (via Los Angeles Times):

The North Korean’s note, scrawled in pen, was simple: “I want to go to South Korea. Why? To find freedom. Freedom of religion, freedom of life.”

The ex-logger, on the run from North Korean authorities, handed the note over to a South Korean missionary in the Russian city of Vladivostok last week in hopes it would lead to political asylum.

Just before he was to meet Thursday with the International Organization for Migrants, a team of men grabbed him, slapped handcuffs on him and drove off, rights activists in Moscow said Friday. He was spirited away to the eastern port city of Nakhokda, where he is sure to be handed back over to North Korean officials and repatriated to his communist homeland, activists said in Seoul.

Police in Vladivostok refused to comment. A senior South Korean diplomat in Vladivostok said he had no information. Officials from the U.S. consulate in Vladivostok could not be reached for comment.

The 51-year-old would be the third North Korean logger in Russia in a week to make a bid for asylum. On March 9, two other North Koreans who had fled their jobs as loggers managed to get into the South Korean consulate in Vladivostok.

Russia’s RIA Novosti news agency reported last week that two North Koreans climbed a fence, ran past the guards and entered the consulate, saying they wanted political asylum. ITAR-Tass carried a similar report.

The incidents focused attention on the precarious existence of tens of thousands of North Koreans sent by the impoverished regime to work in neighboring Russia.

Russian government figures from 2007 put the number of North Korean laborers at 32,600, most of them working in logging in the remote east.

The Rev. Peter Chung, a Seoul-based activist, said there are about 40,000 North Korean loggers in Russia, but that some 10,000 of them have fled their work sites. Some are finding work as day laborers while others are in hiding as they try to map out how to win asylum in foreign diplomatic missions.

The North Korean described the conditions as unbearable. His government took half his meager wages, while the North Korean company operating the logging camp took 35 percent. He kept just 15 percent — about $60 a month — an arrangement that rendered him “virtually a slave,” he told activists.

He eventually fled the logging camp, taking odd jobs to survive. He also became a Christian, Chung and Kim Hi-tae said, which could draw severe punishment, even execution, back home.

The successful asylum bid of two other former North Korean loggers inspired Kim to make a similar attempt, Chung said.

Previous posts on the North Korean loggers in Russia can be found here. More here. And here. And here.

Read the full story below:
3rd North Korean logger attempts to defect in Russia, propelled by dream of ‘freedom of life’
Associated Press (via Los Angeles Times)
Kim Kwang Tae
3/19/2010

According to Yonhap:

The chief of Hyundai Asan Corp., a South Korean firm that runs tours to North Korea, expressed his intention to step down on Thursday to take responsibility for failing to resume the inter-Korean tour business.

“(I) couldn’t settle them even after running to revive tours (to Mount Kumgang and Kaesong) and normalize business,” Hyundai Asan President Cho Kun-shik said in an e-mail sent to company employees. “I thought taking clear responsibility for results as a president was critical for the firm and the business”.

He intends to resign after a shareholder meeting scheduled for next Wednesday.

Hyundai had been operating tourism projects to the scenic Mount Kumgang on North Korea’s east coast and Kaesong, the ancient capital of the Goryeo Dynasty (A.D. 918-1392).

Cho, a former vice minister with the Ministry of Unification, took the company’s helm in August 2008, a month after tours to the famed mountain resort were suspended following the shooting death of a South Korean woman in the area. Visits to Kaesong were stopped in December of the same year.

He took office vowing to reopen the tour programs, which remain on hold as the two Koreas have yet to reach an agreement over terms for their resumption.

The postponement in relaunching the tours has prompted almost 70 percent of the company’s employees to leave the firm. “I felt regretful for not having reinstated those who had left,” Cho said.

Last week, North Korea accused the Seoul government of effectively blocking South Koreans from visiting its tourist attractions and warned it could revoke all deals covering inter-Korean tours.

But Seoul has demanded an official apology for the shooting death and a pledge that such an incident will not occur in the future, while saying a formal investigation must be carried out to determine why the shooting occurred.

As of February, Hyundai Asan suffered a loss of 257.9 billion won (US$228.1 million) in sales stemming from the travel suspension, according to the company.

Amid growing losses, the firm sold off part of its assets, previously used for the tour program, including 51 tour buses and 41 heavy vehicles.

Mount Kumgang had been a popular tourist spot for South Koreans since it was opened to them in 1998 as a symbol of inter-Korean rapprochement spearheaded by the liberal government of Kim Dae-jung at that time.

Read the full story here:
Hyundai Asan chief offers to resign over suspended inter-Korean tour program
Yonhap
3/18/2010

According to Yonhap:

Inter-Korean trade soared 52.1 percent from a year ago to US$153.49 million in February, according to the report by the Korea Customs Service.

South Korea’s outbound shipments came to $77.14 million while its imports from the communist country amounted to $76.35 million for the South’s trade surplus with the North reaching $792,000, the report said.

The surge came as the global economy is on the road to recovery. Inter-Korean trade is expected to soar this year thanks to rising demand amid an economic turnaround, the customs office said.

Nearly half of the companies participating in inter-Korean trade responded that two-way trade will increase this year, according to a survey by the Korea International Trade Association.

In January, the country ran a deficit of $9.55 million from its trade with the North after posting a surplus of $23.91 million in December 2009 for the first time in 16 months.

Bilateral trade has increased steadily over the past decade from $328.65 million in 1999 to $651.68 million in 2002 and surpassing the $1 billion mark for the first time in 2005.

Inter-Korean trade reached $1.79 billion in 2007 and peaked at $1.82 billion the following year. But it fell slightly last year to $1.66 billion.

Read the full article here:
Inter-Korean trade jumps 52 percent in Feb.
Yonahp
3/17/2010

According to Yonhap:

North Korea brought in 13,834 tons of grain from the neighboring ally in January, a 3.6-fold increase from 3,869 tons in January last year, said Kwon Tae-jin, a senior researcher on the North’s agricultural sector at the South’s Korea Rural Economic Institute in a posting on his blog.

Rice accounted for about 61 percent or 8,425 tons of the North’s grain import from China, followed by corn with 3,448 tons, beans with 1,553 tons and wheat with 304 tons, Kwon said, citing data from the Korea International Trade Association.

“The big rise in imports of corn and beans, which the North didn’t bring in last year, appears to be not only because corn harvests were not good, but it also suggests the North increased imports over concerns about possible food shortages,” he said.

Kwon also said that the North’s regime could have increased imports to enlarge state food rations after last year’s currency reform caused strains on the country’s food supply system.

North Korea has relied on foreign handouts to feed its 24 million population after natural disasters and mismanagement devastated its economy. The situation worsened in recent years as South Korea halted regular food aid to the North after President Lee Myung-bak took office in early 2008 under a policy to link aid to Pyongyang’s process in ending its nuclear weapons programs.

… 

The U.N. food agency, Food and Agriculture Organization, said early this month that the North is expected to be short of about 1-1.2 million tons of food this year.

I think the data for this story came from this KITA web page, but I can’t be sure since my Korean is exceptionally limited. Here is a description of the KITA page in English.

On a personal note, I wish the major South Korean media outlets  would get into the habit of posting links to their sources.  It is not difficult to do this.  

Read the full article here:
N. Korea’s food imports from China more than triple in January: expert
Yonhap
3/12/2010

According to Yonhap:

North Korea’s trade appears to have dropped for the first time in 11 years in 2009 as its trade with China, South Korea and other major business partners declined, a South Korean state-run think tank said Wednesday.

The Korea Development Institute said in a report that Pyongyang’s trade with foreign countries were projected to have contracted “at least” 5 percent last year compared with a year earlier, citing statistics provided by China’s customs authorities.

“North Korea’s trade data have yet to be officially compiled but its trade with China and South Korea, its two major business partners, shrank last year (based on China’s statistics),” the report said. “Trade with the European Union also declined. Based on the statistics, its total trade is sure to fall last year.”

North Korea’s trade with China, its biggest business partner, amounted to $2.68 billion last year, down 4 percent from a year earlier, while its trade with South Korea dropped 8.4 percent, the report showed. The two nations accounted for 81.7 percent of Pyongyang’s annual trade.

“Even if its trade with all other nations held unchanged, North Korea is expected to see a decline considering trade figures with China and South Korea,” the report said. “This would mark the first contraction in 11 years since 1998.”

North Korea’s trade has been on a steady increase over the past decade with the amount estimated at $5.64 billion in 2008, up from $2.39 billion in 2000, the report showed.

The Korea Development Institute regularly publishes analysis of the North Korean economy—in Korean. I believe the data cited in this story comes from this February 2010 report, however I am not exactly sure. If any Korean readers can confirm this, I would appreciate it.

UPDATES in the comments.

Daily NK
Jin Hyuk Su
3/8/2010

Rice price inflation, a key indicator of the spiraling inflation which has beset the North Korean economy as a whole since the November, 2009 redenomination, shows no signs of slowing down, with the price in North Hamkyung Province reaching 1,500 won per kilo as of the 7th.

A source from North Hamkyung Province told The Daily NK the news by phone yesterday, saying, “In the Nammun jangmadang, in Hoiryeong, at around 2PM this afternoon, the rice price per kilogram was more than 1,500 won.”

He also reported, “I called a friend of mine who lives in the Songpyung-district of Chongjin, and he said that the rice price per kilogram in the Sabong jangmadang there had gone over 1,450 won.”

The source added, “Although the Hoiryeong food distribution situation is actually better than elsewhere because this is Kim Jong Suk’s home town, since the value of the new money is continuously deteriorating and the exchange rate has skyrocketed, the prices of all products, as well as rice, have continued to soar.”

The source also noted that promised food distribution had failed to materialize. According to his friend, when Kim Jong Il went to Kim Chaek Steel Mill in Chongjin on the 5th, he told them that food distribution would soon be released. But, that has yet to happen; “just words,” as the source put it.

He went on, “The value of the dollar is rising uncontrollably. Since the economy is in such a mess, the dollar’s value cannot stabilize, only fluctuate.”

“Residents in Hoiryeong and Chongjin expected that when Kim Jong Il came to their Province, maybe to the steel mills, food distribution would be released, but there have been no practical moves on that.”

Exchange rates have also been soaring erratically, the source reported; as of today one dollar is being traded for 1,750 won and one Yuan for 250 won.

With a kilo of rice now costing an unaffordable 1,500 won, residents are growing more and more incredulous, not to mention pessimistic, about the future; “Suicides are increasing,” the source asserted.

“Last year, elderly people committed suicide because they were pessimistic about their lives, but these days, more than a few young people are doing it too.”

According to Yonhap:

South Korea’s planned shipment of its first food aid to North Korea in years has hit a snag due to sourcing difficulties, an official said Saturday.

The South has been preparing to send 10,000 tons of corn to the impoverished neighbor since mid-January, right after Pyongyang accepted its aid offer made months earlier. The shipment would mark Seoul’s first food assistance to the North since President Lee Myung-bak took office in early 2008.

The government has since approved a 4 billion won (US$3.5 million) budget to fund the assistance and notified the North of a shipping route, based on a plan to buy corn in China and ship it directly to the North from there.

“Considering shipping costs, it would make the most sense to send Chinese corn” to the North, a government official said on customary condition of anonymity.

The official said, however, that the plan has faltered because of China’s “grain export quota,” which places restrictions on food exports in order to meet the country’s rising domestic demand.

The delay has raised concern that the planned aid may not be delivered by the time the North needs it the most — usually between March and May when food shortages in the country worsen — because it usually takes at least a month after the purchase is made for such to be delivered.

But the government official said that he believes the problem will be resolved soon, though he did not elaborate.

Read the full article here:
South Korea’s planned food aid for North Korea hits snag
Yonhap
3/6/2010

According to the Associated Press (via the Washington Post):

North Koreans are getting better medical treatment as the result of a joint program between the two Koreas that has trained thousands of doctors, provided modern equipment and renovated hospitals, the World Health Organization said Thursday.

Maternal mortality has declined by over 20 percent since 2005, and diarrhea cases and deaths in operations have also dropped, said Dr. Eric Laroche.

The World Health Organization has helped in the wide-ranging program, which started in 2006 and is funded by South Korea. It has cost a total of $30.2 million so far.

The program has trained more than 6,000 doctors and nurses in emergency obstetric care, newborn care and child illnesses, said Laroche, who assessed its progress in a four-day visit to North Korea.

The specialization marks a change in health strategy in North Korea, which has about 90,000 family doctors who care for about 130 families each, according to Laroche.

“They know each family one by one,” he said. But, he added, “they’re extremely keen to be trained.”

…

Laroche said hospital staff have been trained in hygiene and clinics have received better material for operations, blood transplants and other medical interventions.

Numerous hospitals have been renovated, and material has also been distributed to 1,200 rural clinics.

Between 2007 and 2009, the number of patients dying in operations fell 73.4 percent, said Laroche, citing a study by the University of Melbourne.

He declined to give an overall view of the health system in the isolated communist nation. But he said services were well-spread among cities and communities.

Read the full article here:
WHO: Korean cooperation boosting health in north
Associated Press (via Washington Post)
Elaine Engler
3/4/2010