Archive for the ‘Trade Statistics’ Category

Inter-Korean trade up by 300%

Tuesday, June 19th, 2007

Joong Ang Daily
Hwang Young-jin
6/19/2007

graph.jpgTrade volume between North and South Koreas has increased more than threefold since the historical June 15 Declaration in 2000.

With an average increase of 24.3 percent, annually, the total amount will reach $1.7 billion by the end of the year, according to the report on inter-Korean Trade from the Korea International Trade Association, also known as KITA.

Annual trade volume in 2000 was $425 million, which increased to $1.3 billion last year. Trade volume so far this year until May has already reached $563 million, which is a 31.3 percent increase year-on-year.

Besides the overall growth, what is healthy about the trade quality is that commercial trade accounts for almost 70 percent of the total trade. That figure was below 60 in 2000, according to the report. Non-commercial trade refers to aid including items such as rice, clothing and fuel. In other words, they are products that were sent to North Korea free of charge.

“The success of the Kaesong Industrial Complex is the biggest reason [for the rise],” said Roh Sung-ho, head of the Inter-Korean trade support team at KITA. “We are accepting bids for additional space at the Kaesong complex, and three times more companies bid than there are lots available.”

With more and more companies establishing factories in Kaesong, more material is exported from the South, and more manufactured goods return, said Roh.

The value of goods leaving South Korea was higher than the value of goods returning. However, about 30 percent of those goods were aid and were given free of charge. When that is taken into account, the North made more money from its exports to the South than the South made in exports to the North.

This allows the North to record a profit in trade account books.

“The nuclear incident last year, didn’t affect inter-Korean trade. There might be minor falls, but I expect trade volume between the two Koreas to increase for the time being,” Roh said.

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Overview of the Inter-Korean Exchanges & Cooperation for April 2007

Saturday, June 9th, 2007

South Korean Ministry of Unification

Exchange of People
Visits to North Korea

During the month of April, the total number of accomplishments for visits to North Korea was 3,281, an increase of 99% from 1,648 in the previous month. It included 3,136 for economic exchanges, 60 for social and cultural exchanges, 81 for humanitarian aid and 4 for family reunion.

The number increased by 222% from 1,019 in April 2006.

The total number of actual visits made during this period was 13,250 an increase of 40% from 9,894 in the previous month. It included 9,886 for economic exchanges, 1,411 for social and cultural exchanges, 1,807 for humanitarian aid and 146 for family reunion.

The number increased by 39.5% from 9,495 during the same period last year.

The total number of Mt. Geumgang tourists during April was 17,805 in 30 trips altogether, an increase of 1.1% from 17,610 in previous month and a 35% decrease from 27,404 during the same period last year.

Contacts with North Koreans

During the month of April, the total number of the accomplishments for inter-Korean contacts was 72, a decrease of 17.2% from 87 in the previous month. It included 46 for economic exchanges, 23 for social and cultural exchanges, 1 for humanitarian aid and 2 for family reunion.

The number increased by 111.8% from 34 during the same period last year.

The total number of actual contacts made during this period was 229, an increase of 1.3% from 226 in the previous month, It included 69 for economic exchanges, 151 for social and cultural exchanges, 2 for humanitarian aid and 7 for family reunion.

The number increased by 218% from 72 during the same period last year.

In April, a total of 178 North Koreans visited to South Korea, including 72 for participating in ITF(International Taekwondo Federation) founding ceremony of Seoul chapter, 72 for Inter- Korean Worker’s Unification Convention on May Day, 32 flight attendants of Koryeo Air.

Inter-Korean Trade

The total volume of inter-Korean trade during April 2007 was $132,869 thousand, showing an 98.5% increase from $66,952 thousand during the same month last year(a 28.8% increase from $103,151 thousand during the previous month).

Trade Type

The total amount of Commercial Transaction were $86,052 thousand (64.8%), showing an 52.9% increase from $56,275 thousand(84.1%) during the same month last year.

The total amount of Non-Commercial Transaction were $46,817 thousand(35.2%), showing an 338.5% increase from $10,677 thousand(15.9%) during the same month last year.

table 1.bmp

Import & Export Status

Import from North Korea totalled $46,028 thousand, an 51.5% increase from $30,388 thousand during the same month last year(a 21.5% decrease from $58,637 thousand during the previous month).

  • Composition by Items (Unit : %)

Agricultural and aquatic products    21
Minerals                                       19.6
Textile products                            28.5
Steel and metal products               18.1
Livlihood supp                              4.5

Export to North Korea totalled $86,841 thousand, an 137.5% increase from $36,564 thousand during the same month last year(a 95.1% increase from $44,514 thousand during the previous month).Composition by Items (Unit : %)

Agricultural and aquatic products 48.7
Textile products 8.8
Steel and metal products 7.9
Machineries 16
Electric and products 7.5

The total volume of General Trade during April 2007 was $26,850 thousand ,a 61.9% increase from $16,589 thousand during the same month last year(a 23.9% decrease from $35,265 thousand in the previous month).The volume of import in General Trade was $25,450 thousand, export was $1,400 thousand and had 94.8%, 5.2% each other.

The composition rate by items had a great part of Minerals(33.8%), Agricultural and Aquatic Products(33.1%), Steel and Metal products(29.3%), Electric and Electronic Products(1.5%)

table 2.bmp

The total volume of Processing-on-Commission Trade during April 2007 was $19,992 thousand, a 38.8% increase from $14,402 thousand during the same month last year.(a 15.4% decrease from $23,629 thousand in the previous month)

The volume of import in Processing-on-Commission Trade was $14,063 thousand, export was $5,929 thousand and had 70.3%, 29.7% each other.

The composition rate by items had a great part of Textiles(79.6%), Electric and Electronic Products(8.8%), Agricultural and Aquatic Products(8.7%)

table 3.bmp

The total volume of Economic Cooperation Project during April 2007 was $39,210 thousand, a 55.1% increase from $25,284 thousand during the same month last year(a 12.4% increase from $34,881 thousand in the previous month).

The volume of import in Economic Cooperation Project was $6,513 thousand, export was $32,697 thousand and had 16.6%, 83.4% each other.

The composition rate by items had a great part of Machineries(29.0%), Steel and Metal Products(16.2%), Electric and Electronic Products(14.5%), Livelihood supplies(9.2%)

table 4.bmp

The total volume of Aid to N.K. during April 2007 was $46,815 thousand, a 338.5% increase from $10,677 thousand during the same month last year(a 399.5% increase from $9,373 thousand in the previous month).

The volume of export was $46,815 thousand.

The composition rate by items had a great part of Chemical Products(84.7%), Machineries(8.3%), Plastic rubber and Leather(2.3%), Agricultural and Aquatic Products(1.2%).

Humanitarian Projects

A. Separated Families

Exchange: # of casses(#of people)

Application for contact 9(14)
Address check 2(7)
Reunion 6(25)
Exchange of letters 36

table 7.JPG

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Despite Nuclear Tests North Korea-China Trade Continues to Rise

Tuesday, June 5th, 2007

Daily NK
Kim Yong Hun
6/5/2007

table 5.jpg

Despite the nuclear test last October, trade between North Korea and China has increased steadily. Rather, signs of North Korea’s economic dependence on China is becoming more obvious.

According to statistics recently released by the Ministry of Unification, “2007 1st Quarter, North Korea’s trade status with China,” trade between the two countries recorded $330mn, a 13.8% increase compared to 2006. While North Korea exported $130mn worth of commodities, an increase of 45% compared to the previous year, imports equaled a total of $200mn, a small decrease of 2.4%.

Last year, trade between both North Korea and China totaled $1,699.6mn recording the highest amount of trade ever in history and even this figure had risen 7.5% compared to the year before.

Analysts argue that North Korea’s economic dependence on China is increasing as a result of sanctions implemented by the international community and delay of the February 13 Agreement.

Even until last year, the trade deficit had increased to $764.17mn, an increase of 29.9% compared to 2005. However, in the first quarter of 2007, the trade deficit seems to have taken a major plummet of 61.3% down to $74mn.

North Korea’s main trade commodities are fuel based including coal and minerals, accounting for $45mn (49% increase to 2006) of exports to China, and 34.7% of total exports. In detail, $33mn of minerals, $12mn of medicine, $7.7mn of steel and $6.2mn of fisheries are exported also.

On the other hand, goods imported into North Korea are again fuel based including petroleum and crude oil and account for $31mn (42.5% decrease to 2006) of imports. Further, machinery equates to $17mn of imports, electric appliances $16mn and filaments $11mn.

In the report, the Ministry of Unification indicated North Korea’s major export to China as coal and minerals and analyzed, “This is the result of China’s increased demands for economic growth.”

The Ministry reported, “The majority of imported goods are energy, electric appliances and machinery” and added, “Demand for these light industry goods have increased from an expansion in North Korea’s consumer market. Imports have risen as a result of materials necessary for industrialization.”

According to a report recently released by the U.S. Congressional Research Service (CRS) “North Korea’s Economy,” the amount of trade that occurred between the U.S. and North Korea barely reached $3,000 in 2006, the lowest figure ever recorded since 1990. The only items exported to North Korea were books and newspapers and no imports were received by the U.S, revealed the CRS.

Furthermore, 2006 recorded an all time low of $130mn trade between Japan and North Korea, undoubtedly a reflection of Japan’s strong implementation of economic sanctions on North Korea. Since 1995, Japan has been supporting North Korea with a total of 1.2mn tons of food aid but suspended the aid relief in late 2004 following the issue of Japanese abductees.

Russia’s exports of minerals and coal to North Korea surged dramatically in 2003 and in 2006, total trade with North Korea recorded $220mn. Hence, Russia became now one of the big three trading partners of North Korea with China, South Korea, the CRS reported.

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China’s grain exports to N. Korea remain flat in Jan.-April

Friday, June 1st, 2007

Kyodo (Hat Tip DPRK Studies)
6/1/2007

China, North Korea’s major food supplier, exported roughly the same amount of grain to the country in the first four months of the year as it did a year earlier, according to recently released Chinese customs figures.

China’s January-April exports of maize, rice and wheat flour to the country totaled 55,446 tons, up 0.6 percent from the same period in 2006, according to the figures.

When compared to 2005, exports were down 66.7 percent.

The World Food Program warned earlier this year that the food shortage in North Korea is worsening.

While North Korea has faced a chronic food shortage, the shortfall had been made up in the past by multilateral aid channeled through the WFP as well as bilateral shipments from countries such as China and South Korea.

But external food aid has gone down recently, leaving the North with a huge food deficit.

China does not explicitly reveal its food assistance to North Korea, and analysts rely on export figures to assess the amount of aid Beijing gives Pyongyang.

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Inter-Korean railway test

Thursday, May 17th, 2007

There has been a plethroa of articles on the ROK/DPRK train crossing.  Here is a grab-bag of facts and sources:

17korea337.jpg

Joong Ang Daily
5/15/2007
Unification Minister Lee Jae-joung expressed hope that regular inter-Korean rail services would transport workers to an industrial complex in the North’s city of Kaesong as well as serve as a mode of transportation for South Korean tourists at the Mount Kumgang resort.  However, North Korea has only agreed to one test run.

The sticking point was the number of passengers aboard the trains. South Korea stressed the need for an equal number of North Koreans, but North Korea declined the offer, citing unspecified reasons, ministry officials said. The two sides will exchange passenger lists via an inter-Korean economic office in Kaesong tomorrow.

The two Koreas are set to conduct test runs on a 27.3-kilometer (17-mile) line between Munsan Station and Kaesong Station in the western section, and on a 25.5-kilometer line between Jejin Station and Kumgang Station in the eastern section.

Rare experience aboard N. Korean train across the border
Yonhap
Sohn Suk-joo
5/17/2007

At the urging of North Korean conductors, 100 South Koreans and 50 North Koreans boarded a five-car train at 11:25 a.m. With no speaker system at Kumgangsan Station at the North’s scenic mountain along the east coast, conductors repeated “Please board the train” through a loudspeaker mounted upon a South Korean-made Hyundai Starex utility vehicle.

Painted green on the main body and the roof a faint gray, the facade of the train was far from modern. “The train looks like South Korea’s obsolete third-class train, but its ability is better than that,” said Lim Jong-il, a South Korean official at the Ministry of Construction and Transportation.

South Korean Construction Minister Lee Yong-sup, Kim Yong-sam, the North’s railway minister, and some 20 South and North Korean journalists crowded into the second car of the train. The smell of new paint assailed the nostrils upon ascending the steps, while a pair of portraits of Kim Il-sung and his son Kim Jong-il hung on the wall above the door.

The seating arrangement was face-to-face, and refreshments for passengers were set on a small table in front of the window — one lemon-lime soda, one strawberry juice, one bottled water, two apples and a pear. North Korean female attendants served a cup of ginseng tea for passengers later.

The upright, ivory-colored vinyl seats were a little bit uncomfortable and did not recline, but the cushions were softer than they appeared to be.

Outside the window, a uniformed North Korean conductor waved a red flag and goose-stepped past the train, which signaled the impending departure. A few North Korean security officers came inside to check the number of passengers and asked journalists jostling for position to sit down.   

At 11:27 a.m. a long whistle sounded, reminiscent of an old-time steam locomotive. The train spluttered back and forth several times and then slowly started forward. “North Korean trains usually whistle a lot,” a South Korean transportation official said. 

North Korean middle school students, who attended a ceremony, started to wave their hands, and South Korean passengers responded in kind. The train moved out of Kumgangsan Station at the speed of 10 kilometers per hour, and North Koreans working nearby just looked at the train without reacting in a friendly manner.

Some 50 meters away from the railway on the right side, a paved road appeared as the scenic Mount Geumgang faded from sight. Rice paddies were waiting for rice seedlings to be planted, but no peasant was seen working outside.

Unexpectedly, well wishers were South Korean tourists traveling to the Mount Geumgang resort in a convoy of eight buses. “At this time of the day tourist buses go to the resort,” a South Korean official said.

At 11:30 a.m. the stretch of hills and mountains continued, and the clouds moved quickly against the blue sky, cleansed from the previous day’s rain.

A few Toyota jeeps driven by soldiers, military jeeps and trucks drove parallel with the train and then fell behind. North Korean soldiers were stationed at the checkpoints of major intersections.

Then the track turned sharply, a rare occurrence on South Korean track. The sharp turns came again and again, and a woman peeked outside the window at a nearby village.

The overall atmosphere was friendly, a throwback to a picnic in the 1970s-80s on a slow, squeaking train. Hills and mountains passed by, and splendid pine trees of all kinds of shapes. After awhile the Nam River appeared on the right side of the train. At one village, some 10 residents came out and looked over the communal wall to watch the passing train.

At 11:50 a.m. the train passed Samilpo Station. The painted name on the station was very small, like Kumgangsan Station, and an oversized portrait of Kim Il-sung hung on the front of the station, along with pro-communist and cult propaganda slogans.

The train crossed the river on a bridge restored with steel plates provided by South Korea. Outside the window, North Korean tourist attractions such as Haegumgang and Samilpo were seen a little farther away.

At 11:50 a.m. some passengers pushed up the windows, and the unpolluted air coming through the open windows refreshed them. A group of 10 North Korean soldiers stood guarding a storage house of diesel engine trains built for the railway test run. There was no other train in sight.

The train slowed down at Kamho Station, where North Korean customs officials were stationed. It was 11:55 a.m.

Around 12:00 p.m. four customs officials and two conductors boarded each car of the train. One of them shouted, “We fervently welcome you who have become the first passengers of the train! Now we will start customs clearance procedures.”

Conductors checked the identities of the passengers and digital cameras. They asked a passenger to delete a photo of portraits of Kim Il-sung and Kim Jong-il that had been blurred from the shaking of the camera.

At 12:15 p.m. the conductors suddenly moved to the exit and disembarked. They must have gotten orders to let it pass, as the inspection took longer than expected. The train started to move again right away.

“Now you will see an outpost about 200 meters. It is the Military Demarcation Line,” said Kim Kyong-jung, chief of the inter-Korean railway team at the Ministry of Construction and Transportation.

A sharp whistle blew, and the train picked up speed, double its previous pace. The shaking was palpable, but not enough to affect the bottles on the small table. With the speed increasing, the frequency of the whistle’s call also increased.

In five minutes, the train passed the Northern Limit Line and went into the Demilitarized Zone. At 12:21 p.m., it passed the Military Demarcation Line to roars of applause. The train slowed a bit and the passengers became quiet, awaiting arrival.

At 12:25 p.m., a South Korean tourist observatory appeared, and some 200 tourists on the porch waved their hands eagerly, welcoming the North Korean train. Wide paved roads came into view and the train arrived at Jejin Station five minutes later. Amid the loud sound of a welcoming brass band and the cheering crowd, the train stopped at a South Korean station for the first time in more than half a century.

Trains cross inter-Korean border for first time in over 50 years
Yonhap
5/17/2007

A North Korean train traveling on reconnected track along the east coast of the Korean Peninsula on Thursday crossed the heavily armed border to return to its point of departure after a brief stay here.

At the same time, a South Korean train returned to the South in the west of the Korean Peninsula.

Earlier in the day, the two trains, one carrying 100 South Koreans and the other 50 North Koreans, crossed the Military Demarcation Line (MDL) dividing the two countries for the first time in more than half a century.

“It took more than half a century to cross this short, approximately 20-kilometer distance. We have to prevent anyone from blocking the railways. They were so hard to reconnect,” Kim Yong-sam, North Korea’s railway minister, said in a luncheon speech after arriving here.

In response, South Korean Construction Minister Lee Yong-sup hailed the test run of the cross-border railways, suggesting South and North Korea cooperate in promoting the mutual interest and prosperity of the Korean people.

At 11:30 a.m., Lee, who led the 100-member delegation to North Korea Thursday morning, boarded the North Korean train in Kumgangsan Station near the scenic Mount Geumgang resort for a test run on a 25.6-kilometer track in the eastern section of the peninsula.

At the same time, Kwon Ho-ung, chief councilor of the North Korean Cabinet, who had led the 50-member delegation to the South, boarded the South Korean train at Munsan Station in the western side of the peninsula on a restored 27.3-kilometer track, along with his South Korean counterpart, Lee Jae-joung.

Before the trains departed, South and North Korea held ceremonies to mark the historic event at Kumgangsan and Munsan stations, respectively.

“I hope it will contribute to forming a joint economic community and making balanced development on the Korean Peninsula. A new curtain of peace has been raised on the peninsula,” Lee said in a commemorative speech.

In his speech, Kwon said that North Korea will make every effort to make sure that the “train of unification” runs along a “track” of inter-Korean collaboration, with its emphasis on peace and understanding.

“Right at this moment, however, the challenge from divisive forces inside and outside is continuing. We should not waiver or be derailed from the track of national sovereignty and inter-Korean collaboration,” Kwon said.

The one-time test run came only after North Korea reluctantly agreed to provide military security arrangements last week. The tracks have been set to undergo tests since they were restored in 2003, while a set of parallel roads has been in use since 2005 for South Koreans traveling to the North.

In May 2006, North Korea abruptly called off the scheduled test runs, apparently under pressure from its hard-line military. The cancellation led to the mothballing of an economic accord in which North Korea would receive US$80 million worth of light industry raw materials from the South in return for its natural resources. North Korea’s subsequent missile and nuclear weapons tests further clouded hopes of implementing the agreement.

The reconnection of roads and train lines severed during the 1950-53 Korean War was one of the tangible inter-Korean rapprochement projects agreed upon following the historic summit between then South Korean President Kim Dae-jung and North Korean leader Kim Jong-il in 2000.

South Korea hopes to use the restored railways to help North Korean workers commute to a joint industrial complex in the North Korean border city of Kaesong as well as to transport South Korean tourists to the North’s scenic Mount Geumgang.

The Gyeongui (Seoul-Sinuiju) line cutting across the western section of the border was severed on June 12 in 1951, while the Donghae (East Coast) line crossing the eastern side was cut shortly after the outbreak of the Korean War.

South and North Korea used radio communication between Dorasan Station in the South and Panmun Station in the North for the western rail line, and between the South’s Jejin Station and the North’s Kamho Station for the eastern one. The stations are closest ones to the border on both sides.

In March, the two Koreas agreed to put humanitarian and economic inter-Korean projects back on track just days after North Korea promised to take the first steps toward its nuclear dismantlement in return for energy aid and other concessions from the other five members of the six-party talks.

South and North Korea are still technically at war, as the Korean War ended in an armistice, not a peace treaty.

Korean Train Crossing Seen as Sign of Progress
New York Times

Choe Sang-Hun
5/17/2007

[excerpts]

South Korea has long dreamed of building a trans-Korea railroad that would connect its train network to China and to the Trans-Siberian Railway in the former Soviet Union, creating a so-called Iron Silk Road.

North Korea blocks overland access to Asia, which makes South Koreans “feel as if we live in an island,” the South Korean transportation minister, Lee Yong Sup, said yesterday.

A trans-Korea railroad would offer a faster and cheaper way for South Korea to bring exports that are now shipped by sea to China and Europe. It would also provide a shortcut for Russian oil and other natural resources transported to South Korea. Such a rail system would save South Korea $34 to $50 a ton in shipping costs, said Lim Jae Kyung, a researcher at the Korea Transport Institute.

But before the dream of a trans-Korea rail system comes true, transportation analysts and government officials say, years of confidence-building talks and billions of dollars in investment in North Korea’s decrepit rail system will be needed.

Officials acknowledge that such a dream will not be made real until after North Korea gives up its nuclear weapons and improves its human rights record. Those moves would help build public support in South Korea for large investments across the border and would open the way for international development aid.

South Korean officials say a trans-Korea railroad would invigorate inter-Korean trade, which tripled from $430 million in 2000 to $1.35 billion last year.

It would also bring cash to North Korea, which could collect an estimated $150 million a year in transit fees from trains that pass through its territory, according to some estimates.

But it is unclear whether or when North Korea might agree to regular train service across the border.

Procuring international aid to renovate the rail network and letting trains from one of Asia’s most vibrant economies, carrying exports and tourists, rumble through its isolated territory could threaten the North Korean regime, analysts and others say.

The agreement came after South Korea promised to send North Korea 400,000 tons of rice, as well as $80 million worth of raw materials for shoes, soap and textiles.

South Korea has spent 544.5 billion won, or $589 million, on reconnecting the rail system, including 180 billion won in equipment, tracks and other material loaned to North Korea.

South Korean policy makers have called for patience in working toward reconciliation with the North. They have often been accused by conservative politicians and civic groups of giving in to North Korea’s strategy of extracting economic aid for every step toward reconciliation.

“This is a precious first step for a 1,000-mile journey,” Mr. Lee, the unification minister, said today.

South Korea has seen some tangible results in its overtures to the North in recent years.

The North Korean military cleared mines and moved some of its weapons to make room for the rail system and the Gaesong industrial complex. In addition, South Korean factory managers commute from Seoul to Gaesong using a road that was reconnected in 2004, and South Korean buses regularly take tourists to the Diamond Mountain resort in the North.

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Aftereffects of Nuclear Test, Reduction in Foreign Trade

Tuesday, May 15th, 2007

Daily NK
5/15/2007
Yang Jung A

KOTRA “Last year trade deficit $110mn.”

In 2006, North Korea’s trade deficit was over $110mn.

On the 14th, the Korea Trade-Investment Promotion Agency released a report on North Korea’s foreign trade stating, “Last year, North Korea’s imports totaled $2.049bn, an increase of 2.3% compared to 2005. However, exports decreased 5.2%, approximately $1.102bn worth of trade deficit.”

North Korea’s total foreign trade figures were close to $2.996bn, a decrease of 0.2% compared to the previous year.

KOTRA analysts said North Korea’s foreign economic situation worsened following the world attention it caused by its long range missile test last July and the subsequent October nuclear test.

Following the 2002 July economic reforms, North Korea’s foreign trade steadily increased, even peaking at $3bn, a considerable achievement compared to the early 90s. However, a sudden decrease in Western investment led to a significant reduction in overall trade.

Furthermore, North Korea’s number 1 trading partner is China with 56.7% of the total trade. That is followed by Thailand, the EU, Russia and Japan. Then again, trade by these countries including China cover 90% of North Korea’s total trade.

Whenever trade between North Korea, China and Thailand increased, there was a significant decrease in trade with Japan and the EU. Also, as North Korea’s foreign trade situation worsened, greater emphasis was placed on trade with China.

KOTRA’s report stated that a decrease in trade with the EU resulted from the implementation of economic sanctions by western countries which came about after North Korea launched a missile test that has the potential of hitting the United States and then tested a nuclear bomb underground several months later.

Consequently, there was an increase in trade with its traditional friendly nations, China and Thailand, KOTRA added.

KOTRA forecasts that as U.S.-North Korea relations improve, improvements in relations with the other nations will also occur providing a friendlier environment for North Korea’s economic situation. We may see reinvigorated North Korean foreign trade, however that will depend on how well the North Korean nuclear issue is resolved.

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China cushions the fall in North Korean trade

Tuesday, May 15th, 2007

Joong Ang Daily
Hwang Young-jin
5/15/2007

North Korean trade with the EU and Japan went into a free fall last year, but China helped pick up the slack.

Missile and nuclear tests interfered with North Korean trade in 2006, leading to the country’s first decrease in five years, a report from the Korea Trade-Investment Promotion Agency said. Decreases in trade with the West caused by political problems were the biggest culprit, the agency said.

North Korean exports to Japan fell 41 percent while imports from Japan dropped 30 percent. Trade with the European Union went down 23 percent in exports and 18 percent in imports. The European Union and Japan are the world’s first- and third-largest economies. Trade with the world’s second-largest economy, the United States, was practically zero.

But trade with China, the nation closest to the North politically and geographically, served as a buffer to reduce the impact of the large drops in European and American trade, so the North’s overall trade figures didn’t change much, the agency said.

Almost 60 percent of North Korea’s trade is conducted with China. The North’s next-biggest trade partner was Thailand, which accounted for 12.5 percent.

The communist country’s trade volume in 2006 fell 0.2 percent, with exports dropping 5.2 percent to $947 million and imports increasing 2.3 percent to $2 billion. Trade has been growing since the start of the new millennium. In 2005, the total trade topped a record $3 billion.

With an international economic blockade in place, trade relations with Japan and the European Union got worse.

The Kotra report said the Feb. 13 agreement reached during the six-nation talks in Beijing regarding the nuclear issue is a positive signal for the recovery of North Korean trade, but it is up to North Korea whether to act on its commitments and allow trade to recover.

Inter-Korean trade was not considered in yesterday’s report. Trade between the two Koreas reached $1.3 billion in 2006, a 28 percent rise year-on-year. The South sold $830.1 million and bought $519.5 million.

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Inter-Korean trade jumps 43 percent in Q1

Wednesday, May 9th, 2007

Yonhap
5/9/2007

Despite lingering tension over North Korea’s nuclear weapons program, inter-Korean commercial trade surged 43 percent in the first quarter of this year, compared with the same period a year earlier, the Unification Ministry said Wednesday.

Commercial trade between the two Koreas increased to US$346.99 million in the January-April period, up from $243.36 a year ago, thanks to an influx of zinc bullion, sand, fishery items, shoes and clothing into a joint industrial complex in the North Korean border city of Kaesong.

The industrial complex is the crowning achievement of a landmark summit between the leaders of the two Koreas in 2000. South Korean businesses use cheap North Korean labor to produce goods in Kaesong where 21 South Korean factories employ about 11,160 North Korean workers.

“Non-commercial trade between the two sides dropped 24 percent during the same time span, so the total inter-Korean trade rose 25.5 percent to $411 million,” the ministry said in a statement.

In late March, South Korea started to send fertilizer aid and flood relief supplies to the North.

The shipment came weeks after the two sides agreed to resume humanitarian aid and family reunion events, just days after North Korea promised to take steps to shut down its main nuclear reactor and eventually disable it in return for energy aid from South Korea, the United States, China, Russia and Japan.

Shortly after the North conducted missile tests in July, the South suspended food and fertilizer aid along with its emergency aid to the impoverished North. In retaliation, the communist nation suspended inter-Korean talks, family reunions and the construction of a family reunion center.

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Kaesong Site Expedites S-N Economic Integration

Monday, April 30th, 2007

Korea Times
Ryu Jin
4/30/2007

At a quarter to 7 a.m. on a normal weekday, a rush to work opens the morning of a North Korean town seated just minutes away from the heavily fortified border with South Korea.

Several blue commuter buses, just like ones that can be seen in downtown Seoul, stop in front of a sign reading, “Kaesong Industrial Zone’’ and spew out hundreds of North Korean workers.

As the working time draws near, they hasten their steps toward their respective workplaces, owned and managed by people from across the border. Some 13,000 North Korean workers, mostly women in their 20s and 30s, spend most of the daytime in the small capitalist enclave in the southwestern part of their Stalinist nation.

“Welcome!’’ “Good Morning!’’ Several South Koreans say as they greet their North Korean colleagues in front of the main gate of Shinwon Ebenezer. Hwang Woo-seung, director of the apparel company’s Kaesong branch, says that they have never skipped a day _ regardless of rain or snow _ without such greetings since the factory went into operation in 2004.

Closing hours are by and large around 5 p.m. But almost half of the 13,000 laborers work overtime until 7 p.m. in order to return home early on Saturdays. By the first half of 2008, the number of North Koreans working in the joint industrial park is expected to reach 100,000, according to South Korean officials.

From Seeds to Young Plants

Launched three years ago, the Kaesong Industrial Complex has been a gauge of the situation on the Korean Peninsula, where hundreds of thousands of troops confront each other across the border, which remains as the last flashpoint of the Cold War era.

Operations, for example, had nearly stopped late last year in the wake of a nuclear test by the North. Since the Feb. 13 denuclearization agreement, however, businesses have gone back to normal.

A free trade agreement (FTA) struck in April between South Korea and the United States, which opened up the possibility of the Kaesong products being exported to America as “made in Korea’’ goods, also breathed a fresh enthusiasm into the industrial zone.

Foreign eyes watching the complex are also changing. A growing number of foreign delegates are coming to the zone, and their evaluation has been quite positive. Moody’s Investors Service analysts Thomas Byrne, who visited the site on Feb. 9, said Kaesong is the “optimistic future’’ of South and North Korea.

Currently, 22 firms _ mostly small- and medium-sized ones _ are making clothes, shoes, watches and kitchen pots in the 1 million-pyong (3.3 million-square-meters) pilot site of the Kaesong complex, which will sprawl over a total 20 million-pyong (66 million-square-meters) in the coming years.

Since the first products came out in December 2004, annual output has increased from $14.9 million (13.8 billion won) in 2005 to $73.7 million (68.4 billion won) in 2006.

Despite potential risks stemming from political uncertainty, the zone has an inescapable economic logic _ the cheap labor and land of the North combined with the capital and technology of the South.

Proximity also makes for an attractive alternative for South Korean firms looking to move their plants to China. The distribution cost in Kaesong is one-tenth that of China, land price one-fifteenth and the labor cost one-twentieth, according to statistics.

Some 300 companies are expected to fill up the whole first-stage experimental site by the first half of next year, hiring up to 100,000 North Korean workers.

“It means that an up-and-coming new city is being created in the border area with a total population of about 300,000 to 400,000, when the families of the workers are added,’’ says Kim Dong-keun, chairman of the Kaesong Industrial District Management Committee (KIDMAC).

Kaesong hopes to invite as many as 3,000 companies eventually, employing some 350,000 workers by the mid-2010s, when the fully-fledged complex (roughly the same size of Changwon) is completed with apartment buildings, hotels, shopping centers and even an amusement park and golf courses.

Way to Integration

North Korea, for its part, envisions Kaesong as its own version of Shenzhen, one of the first “special economic zones’’ in China, and hopes that the new industrial site could jump-start its near-bankrupt economy.

Since the mid-1990s, when it was severely hit by great famines amid the first nuclear standoff with the United States, North Korea has remained a wasteland plagued by the so-called triple distresses _ the shortage of food, cash (foreign exchange) and energy.

With the end of the Cold War, North Korea lost hefty aid from China and the now-defunct Soviet Union, which had propped up its flagging economy. In a desperate move, Pyongyang launched an experiment with the free market in July 2002, deregulating prices and hiking salaries.

North Koreans had also anticipated the businesses with South Korea, which started in the wake of the historic inter-Korean summit in 2000, to bring money into the cash-strapped country.

But the ambitious tour project at Mt. Kumgang above the eastern side of the border had been too fainthearted to turn profitable because it was limited only to tourists.

Kaesong was a different story. While South Koreans saw the tour project largely as symbolic, they were ready to offer more financial incentives for companies to invest in the border town.

For the South Korean decision-makers, Kaesong became the site of an experiment to transplant capitalism to the Stalinist state, plagued by an inefficient bureaucracy and pervasive malnutrition.

Of course, the venture poses risks for the tightly controlled hermit kingdom, which has been ruled by hereditary “monarchs’’ _ the late leader Kim Il-sung and his son Kim Jong-il _ for more than half a century. A major city with about 150,000 residents, Kaesong will inevitably be exposed to what the North Korean leadership calls decadent Western culture.

Suh Ye-taik, an executive director of Hyundai Asan, selected by the North as its major business partner, recalls that it was an offer that nobody expected when the North Koreans first proposed Kaesong. Pyongyang originally wanted to develop other places such as Shinuiju and Haeju.

“It was an unexpected offer in political terms,’’ he said. “But we decided to opt for Kaesong in consideration of the proximity and other conditions of location.’’

Kaesong, seated about 140 kilometers south of Pyongyang and some 60 kilometers north of Seoul, is on a point of strategic importance in the case of a military conflict between the two Koreas. North Korea even yielded some kilometers by withdrawing its conventional artillery.

Kim Jong-il, however, seems to be well aware of the fact that his own hold on power depends on reviving the economy. Kim Heung-kwang, a defector from the North who had worked as a professor at Pyongyang Computer Technology University, predicted in a recent thesis to the Korea Institute of Science and Technology Information (KISTI) that North Korea would open up the Internet to individuals as early as 2009.

“Security guarantees and restoration from the economic plight are the top priorities for the survival of the North Korean regime,’’ said Yang Moo-jin, a professor at the University of North Korean Studies in Seoul. “They realize opening is the only way out of their predicament.’’

While Kaesong is a touchstone for economic integration in the unification process, the workplaces in the industrial zone are test boards for cultural and societal assimilation of the two Koreas, which have walked different paths for the past several decades since the 1950-53 Korean War.

Shinwon is a good example. South Korean managers say they now see drastic changes in the attitudes of North Korean workers. People from across the border had kept an awkward silence in the first years. But smiles and small chatter has become part of the atmosphere.

“The quality of the products here is good because the Northern workers are very productive,’’ said Hwang, the head of the apparel company’s Kaesong factory. “They now learn skills much faster than they did in the initial years.’’

They are also getting familiar with dialects from the other side of the border. In the three-storied factory of Stafild that produces medical walking shoes by some 1,800 North Korean workers, visitors overheard “One for all, all for one’’ _ the motto of the Stalinist state.

For Brighter Future

While its ambition is grand and lofty, the Kaesong complex still faces major hurdles _ both from inside and outside. One of the biggest problems is the U.S. economic sanctions against North Korea, which ban the sale or shipment of key strategic goods such as high-tech computers.

Though the South Korean government is trying to attract the investment of some information-technology (IT) companies in the long term, no high-tech firms have so far advanced in to Kaesong.

So, what the zone really needs is a genuine political thaw between North Korea and the U.S., government officials as well as experts point out. A strong inter-Korean relationship is another important factor to affect the joint project.

Labor conditions in Kaesong are a problem of its own. The average wage is only $57.50 per month, which is not provided in cash. North Korean workers receive coupons to get the necessities of life, though their standard of living is much higher than those in other areas of the country.

Largely focused on red brick industries, which led the economic growth of the South until the 1980s, some workplaces in the zone are exposed to dangerous environments and workers are not entitled to the core labor rights, such as the right of collective action.

Foreign investment will be a touchstone of the venture’s success in the long term. South Korea plans to invite U.S. investors to the industrial estate in October in an effort to expedite foreign investment.

“Foreign investment will help stabilize the operation of the industrial complex and will be a good experience for the management of other firms,’’ said Kim Dong-keun, the KIDMAC chairman.

South Korean officials also expect that from now on some large South Korean enterprises will come into the zone to continue the development of the Kaesong industrial park.

“So far, the zone has been occupied largely by small- and medium-sized companies,’’ Unification Minister Lee Jae-joung said at a breakfast lecture late last month. “We expect the international credit rating of Kaesong will improve if leading enterprises move in.’’

On April 27, the National Assembly of South Korea passed a law that supports the industrial zone. Firms operating in Kaesong will be provided with the same benefits enjoyed by the small- and medium-sized companies in other areas such as a 7-percent tax exemption. South Korean workers in Kaesong will also be eligible for the Labor Standard Act and the country’s four major insurance policies.

“Kaesong Industrial Complex is a win-win situation for both the South and the North,’’ Kim said. “Both economies will complement each other through the project and will be the steppingstone to national unification and integration.’’

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Cable Cars to Run on Mt. Geumgang

Monday, April 30th, 2007

Korea Times
Kim Yon-se
4/30/2007

Hyundai Group is gearing up to activate its inter-Korean businesses as negative factors, such as North Korea’s nuclear test last October, have started to settle down.

As early as this year, Hyundai Asan, the group’s tourism unit, plans to operate cable cars on Mount Kumgang to attract more South Korean tourists. The company has been in talks with North Korea to run cable cars on part of the mountain.

“It usually takes about one year or more to complete the construction of a cable car system. We launched the construction last year,” a company official said, suggesting that tourists could enjoy the service in 2007 or early 2008.

He said cable cars will run between the mountain’s top and the Sejonbong ridge, one of Mount Kumgang’s peaks. As the peak is located near the East Sea, tourists will enjoy scenic views of the mountain and sea simultaneously.

Hyundai Asan has set the goal of attracting 400,000 tourists, including South Koreans and foreigners, to Mount Kumgang this year, compared with 234,446 last year.

Its rosy outlook comes largely from the six-party agreement to dismantle North Korea’s nuclear programs in February. Hyundai Asan officials say the event will help normalize inter-Korean businesses.

“The landmark accord will enable our inter-Korean projects, including Mount Kumgang tours and the Kaesong Industrial Complex, to get revitalized,” the official said.

Along with the scheduled opening of tours to inner Mount Kumgang from May 27, Hyundai Asan has decided to hire more than 10 fresh employees.

As the number of tourists fell to fewer than 250,000 in 2006 from 301,822 in 2005 and 272,820 in 2004, the company had to conduct layoffs and cut monthly payments to some employees amid deteriorating profitability last year.

Now the company plans to restore the salary level and pay delayed bonuses in a bid to encourage workers.

The tour project accounts for about 70 percent of Hyundai Asan’s total sales. It has set a sales target of 300 billion won for 2007.

Hyundai is also poised to push ahead with a plan to begin tours to Kaesong, a North Korean historical city near the border that is home to the South Korean-invested industrial complex. It plans to hold working-level meetings with the North in order to hasten the start of the tours.

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An affiliate of 38 North