North Korean Economy Watch

UPDATE 1 (2013-3-28): NK News reports that Kempinski has officially pulled out of the deal:

“Kempinski Hotels confirms that KEY International, its joint venture partner in China with Beijing Tourism Group (BTG), had initial discussions to operate a hotel in Pyongyang, North Korea, however no agreement has been signed since market entry is not currently possible”, Regional PR Director Hilary Philpott told NK NEWS by email.

ORIGINAL POST (2012-11-1): According to Bloomberg:

The 105-story, pyramid-shaped Ryugyong Hotel, whose foundations were poured almost three decades ago, will open partially in July or August, Kempinski AG Chief Executive Officer Reto Wittwer said today at a forum in Seoul. The German luxury-hotel manager will be the first western hospitality company to operate in North Korea, he said.

…

“This pyramid monster hotel will monopolize all the business in the city,” Wittwer said. “I said to myself, we have to get this hotel if there is ever a chance, because this will become a money-printing machine if North Korea opens up.”

Kempinski, based in Munich, is handling management while Egypt’s Orascom Telecom Media & Technology Holding SAE (OTMT) funds the hotel as part of a $400 million mobile-phone license it won from the North Korean government in 2008, he said. Cairo-based Orascom has spent $180 million on completing the hotel’s facade.

…

The top floors of the hotel will house guests in 150 of the originally planned 1,500 rooms, which “will be developed over time” to remodel the insufficiently designed spaces, Wittwer said. Shops, restaurants, a ballroom and Orascom’s offices on the ground and mezzanine floors will also open next year.

Additional Information:

1. Koryo Tours published the first photos taken inside the building.

2. The Choson Ilbo reports that the South Koreans tried investing in the hotel during the Noh Administration.

Read the full story here:
Kempinski to Operate World’s Tallest Hotel in North Korea
Bloomberg
Sangwon Yoon
2012-11-1

Institute for Far Eastern Studies (IFES)
2013-3-21

North Korea announced that it has instituted a new law to begin levying tax in the Mount Kumgang Tourist Zone which has been — until now — a tax-free zone. In addition, a personal protection regulation for tourists was also added to its tourism regulations. North Korea has been modifying laws pertaining to the Mt. Kumgang area in order to develop it as a special tourism zone.

Last week, Yonhap News reported that it had obtained from North Korea a book that was released last November on North Korea’s laws and regulations on international economic policy. According to the book, North Korea adopted in June 2012 a new tax regulation for the Special Zone for International Tour of Mount Kumgang. The law was passed by the Presidium of the Supreme People’s Assembly.

The new tax regulation stipulated that any companies or individuals (foreigners and oversees Koreans) who conduct business transactions or make profit from the Special Zone for International Tour of Mount Kumgang are subjected to tax.

The business income tax applied in the Mount Kumgang zone are on average about 14 percent of one’s yearly profit (infrastructure projects including airport, railways, roads, and port construction only pay 10 percent) and individual income tax ranges from 5 to 30 percent when monthly income is 300 euros (approximately 430,000 KRW).

The tax regulation also covers property, inheritance, transaction, business, and local tax. This comes as a subordinate law under the Special Law for International Tourism in Mount Kumgang, which was enacted in May 2011 and subsequently revoked the monopoly rights of Hyundai Asan.

As such, this law likely will impact South Korean investment in the Mount Kumgang tourism industry.

In the past, working closely with Hyundai Asan, North Korea designated the tourist area as a tax-free zone. There were also no separate laws regarding the levying of taxes on foreigners except for South Korean tourists, who were required to pay 50 USD per person.

In the ‘Tourism Regulations of Mount Kumgang International Tourism Zone,’ a clause was added that specified the special travel bureau for international tourism was responsible for the protection of personal safety and property of tourists in Mount Kumgang. The special travel bureau for international tourism is under the jurisdiction of the Guidance Bureau of the Special Zone of Mount Kumgang International Tourism.

North Korea’s decision to insert a clause ensuring the safety of tourists is likely due to the fact that this issue has continually been raised as a main concern since the death of a South Korean tourist in the zone in July 2008 and subsequent halt of inter-Korean cooperation in the Mount Kumgang project.

In addition to the new tax and tourism regulations, North Korea also made new regulations pertaining to the foundation and management of enterprises; customs; access, visitation, and housing; insurance, and environmental protection, among others.

UPDATE 1 (2013-3-11): Koryo Tours reports that the mass games will take place this year…and it will be “Arirang” themed.  The DPRK had earlier reported that Arirang had been consigned to history.  So it appears that management of the mass games is handled in much the same way as the management of economic policy. Here is what the Koryo Tours email had to say:

Today, Koryo Tours received confirmation of the mass games dates for this year. They are scheduled to run from JULY 22nd to SEPTEMBER 9th. These dates incorporate two of the biggest holidays in the DPRK this year – the 60th anniversary of the end of the Korean War on 27th July (Victory Day) and the 65th anniversary of the founding of the DPRK on September 9th (National Day) .

Despite claims last year that 2012 would be the last ever Arirang-themed performance, it seems that this is not the case and this year the theme will again be Arirang but we expect to see new scenes added in to make it bigger and better than ever before.

ORIGINAL POST (2012-7-11): I have relocated to the DC area and have begun clearing out the backlog of posts and emails. I should be caught up by the end of the week.

This morning, however, I wanted to point out a marketing email sent out by Koryo Tours:

Word from our sources in Pyongyang is that the Arirang Mass Games of 2012 will be the last – so we suggest you sign up now to ensure that you can see this remarkable event while it is still running。

While mass games have been performed since the 1940s in the DPRK the Arirang show is the largest and most impressive they have ever produced. Born in 2002, since 2007 it has been an annual event, but 2012 will be Arirang’s 10th anniversary, and it seems the powers that be have decided to close the curtain. As for the reason, our Korean partners suggest that the narrative needs to change with the times. Combining dance, gymnastics, propaganda, politics, music, and even unicycling, this spectacular performance chronicles the struggles of the Korean people suffering under Japanese occupation, moving into the independent era and building a modern country – basically the period linked to the first 100 years since the birth of North Korea’s Eternal President Kim Il Sung.

However, since 2013 marks the 65th anniversary of the foundation of the republic (Sept 9th) as well as the 60th anniversary of the signing of the armistice that ended the Korean War (July 27th), organisers are reportedly planning a whole new performance for next year – for more news on this, please stay on our mailing list!

So if you haven’t seen Arirang yet, or if you want to see it one last time, this is your chance.

Koryo Tours is also repeating its Ultimate Frisbee Tour and Pyongyang’s first ever DJ set! Email them at info@koryogroup.com if you are interested.

You can read the full Koryo Tours newsletter here.

Institute for Far Eastern Studies (IFES)
2013-2-27

North Korea is recently expanding its tourism industry, one of its major foreign currency earners.

North Korea is improving its tourism infrastructure to attract more foreign tourists, and recently introduced a new cruise ship to bring in tourists from China and other countries.

Workers’ Party of Korea’s mouthpiece Rodong Sinmun reported on February 21 that an opening ceremony for a Singapore cruise ship called the Royale Star was held at Rajin Port. The Rajin Port staff and government officials in the tourism sector from North Korea and China were in attendance. The new cruise ship is expected to revitalize the tourism in Rason and Mount Kumgang and the Rason Economic and Trade Zone.

Royale Star is expected to attract a large number of Chinese tourists.Although further details were not specified, Royale Star is also likely to travel between Rajin Port and Mount Kumgang in the Gangwon [Kangwon] Province, given the emphasis placed on Rajin-Mount Kumgang tours.

After a South Korean tourist was shot by a North Korean soldier at Mount Kumgang in July 2008, South Korean tours to the mountain resort came to a halt. Since then, North Korea has turned its attention to attracting Chinese and other foreign tourists. In August 2011, North Korea resumed operation of the Mangyongbong cruise ship (which was used to repatriate ethnic Koreans in Japan to North Korea in the late 1950s) as a pilot test for the operation of marine tourism to Rajin and Kumgang.

However, the pilot tour was rated poor due to the cruise ship’s old and substandard facilities. Passengers on the Mangyongbongfor the tour included foreign journalists from China, Russia, and the United States, and Chinese businessman. The ship set sail four times in 2011 from August to October. Four hundred Chinese tourists were said to have taken the tour. However, the cruise failed to attract tourists to operate on a regular basis.

North Korea explored the use of other luxury cruise ships from Hong Kong, as reported by Chinese media last year. North Korean authorities and Chinese travel agents seemingly came to the conclusion that cruise facilities and services must be drastically improved in order to attract more customers,and this has likely led to the recent introduction of the Singaporean cruise ship, Royale Star.

Royale Star is 138m in length and 28m in width, comprising a total of eight floors, and is supposedly equipped with a variety of facilities and services, including luxury rooms and bars, duty-free shops, a hair salon, lounge, and dining halls with live performances.A crew of more than 150 people was hired, including nationals from Singapore, Malaysia, India, Myanmar, Cambodia, Russia, Ukraine, and North Korea.

At the opening ceremony, the captain of the Royale Star announced, “We will accommodate our guests from many countries as a marine hotel. We will operate three days a week to allow our guests to enjoy the beautiful and unique scenery that North Korea has to offer and also sail to Mount Kumgang the last week of every month.”

Authorities also plan to open a hotel in Rajin Port to address the current lodging shortages in the Rason Special Economic Zone, which is under joint North Korea-China development. Last year about 600 to 700 Chinese visited the area during the peak season for tourism and business purposes,but reported to have experienced great difficulty finding accommodations.

As tourism to North Korea is gaining popularity in China, additional tours to Pyongyang, Kaesong, Panmunjeom, and Mount Kumgang are being considered, and new tourism infrastructure is being constructed in the border cities of Dongrim [Tongrim] (North Phyongan Province)and Kyongsong (North Hamgyong Province).

Comrade Kim Goes Flying
“Comrade Kim” can now be seen in the USA. According to a Koryo Tours email:

Miami International Film Festival (screening dates: 8th and 9th March 2013)
San Francisco CAAM Festival (screening dates: 16th, 23rd and 24th March 2013)

Nicholas Bonner (co-director/co-producer of the film) will be at the Miami screenings and the San Francisco screening on 16th March – and would love to see you there.

The film will also be shown at various other festivals throughout the US later in the year – we will add the screenings to our website: www.comradekimgoesflying.com

For press please contact the film’s publicist:
David Magdael
dmagdael@tcdm-associates.com
Phone (+1) 213 624 7827

Pyongyang Charity Fun Run!

According to a Koryo Tours email:

Koryo Tours are proud to announce the very first charity Fun Run to be held in DPRK (North Korea) on May 1st 2013.

The Fun Run is open to any tourists in Pyongyang at the time so if you’re on the May Day Long Tour or the May Day Short Tour then you can join in! There will be a 5km route as well as a 10km one for those who are up for more of a challenge – we will be running (or jogging/ walking/ limping – delete as applicable) in the Manyongdae District in Sports Street. Tourists taking part in the fun run won’t miss out on any of the other activities – after the run we’ll return to the hotel to freshen up before starting the day’s sightseeing itinerary kicking things off with a visit to the Mansundae Grand Monument before heading to Taesongsan Park where the locals hold May Day celebrations.

The aim of the run is to raise money to buy milk powder for the children in the Nampo Orphanage on the west coast, a place we’ve worked with regularly. There will be a minimum donation of EUR 20 per runner but if you’d like to try and raise more we of course encourage you to do so – and please note that donations from non-participating tourists are also greatly received by us and the children!

The weather on the morning of May 1st should be pleasantly cool, we’ll provide water and a FUN RUN T-shirt so all you need is some suitable footwear/ clothing.

If you’d like to be part of the first ever Fun Run in North Korea or need any more information about our May Day Tours then please send an email to info@koryogroup.com

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Pictured Above (Google Earth): The location of the Singaporean ship at Rason Port (in Yellow). The pier to the right is rented by the Chinese.  The pier to the left is rented by the Russians.

UPDATE 2 (2013-5-19): The Royale Star has made its maiden DPRK voyage. Here is footage from KCTV. Here is footage from KCNA. Here is text from KCNA:

A departure ceremony of tour boat Royale Star for the first batch of Rason-Mt. Kumgang international tour makers took place at Rajin Port Saturday.

Present there were officials and other personages of the DPRK and Chinese institutions related to tourism, tourists and people in Rason City.

Jon Tong Chol, director of the Rason City Tourist Administration Bureau, and Zheng Yuanhui, owner of the boat, made speeches there.

The speakers congratulated the guests on having an opportunity to tour Mt. Kumgang, world famous mountain and a superb scenic beauty, as the first batch of makers of Rason-Mt. Kumgang international tour by the boat.

They wished the guests pleasant and happy days.

At the end of the ceremony the boat left the port.

UPDATE 1 (2013-3-6):  Yonhap offers more details on the ship and its mission in the DPRK:

Beijing-based Young Pioneer Tours said Pyongyang has authorized seven, four-day tours to the port and resort on its east coast from late April though mid October.

The Royale Star, a small cruise ship owned by a Singaporean shipping company, will be used to ferry foreign tourists, with the company claiming passengers will get a chance to see unique marine vistas off Rajin and Mount Kumgang, one of the top natural tourist destinations in North Korea.

The vessel is 138-meters-long, has a beam of 28 meters and is able to carry a large number of passengers and crew. The ship has a duty-free shop, hair salon, bar, rest areas and a restaurant-theater.

ORIGINAL POST (2013-2-26): According to KCNA:

Singaporean Tourist Ship Opens Business at Rajin Port of DPRK

Pyongyang, February 20 (KCNA) — The Singaporean tourist ship “Royale Star” opened its business with due ceremony at Rajin Port in the northeastern DPRK on Feb. 20.

Present at the ceremony were officials and other people of DPRK and Chinese institutions related to tourism and people in Rason City.

Kim Chun Hwa, director of the Rason International Travel Company, the director of the Yanbian Tianyu International Travel Company of China, and Zheng Yuanhui, owner of the ship, made speeches at the ceremony.

They said the start of business by the ship is of great significance in developing tourism in the Rason Economic and Trade Zone, adding it will contribute to bringing about a turn in the services for tourists.

They expressed thanks to the DPRK for its cooperation in the preparations for the start of the ship’s business.

They stressed the need to improve the services and inject fresh energy into Rason-Mt. Kumgang tour and the businesses in the zone.

At the end of the ceremony its participants toured cabins and other facilities of the ship.

A reception and an art performance were given on the same day.

Here is footage from KCNA:

UPDATE 3 (2013-3-22): Koryo Tours employee, Hanna Barraclough, has been posing Instagram photos from her most recent trip to the the DPRK. You can see the photos here. She also wrote this blog post about her most recent trip. In the report, she dropped some notable information in the last paragraph:

In other news from the trip – the 3G access for foreigners has now been restricted to long term visitors/residents of Pyongyang only and tourists are not permitted to use this service. They can still buy simcards to make calls but no internet access available.

Hanna, Jean Lee, and David Guttenfelder are the only individuals of whom I am aware that have used Instagram/Twitter from inside the DPRK. Since they regularly enter and DPRK, they might get a pass as “long-term visitors”. It looks like the idea of thousands of tourists instantly uploading images to the web was a little more than Pyongyang could handle for the time being.  Still, we know the capacity is there, we just have to wait for them so flip the switch again.

UPDATE 2 (2013-3-7): Here is CCTV (China) coverage (in English) of the new cell phone policy:

UPDATE 1 (2013-3-4): Koryo Tours has posted all the details about mobile phone use in the DPRK.

ORIGINAL POST (2013-2-26): In January the DPRK began allowing foreigners to bring mobile phones into the country. These cell phones were not compatible with the DPRK mobile  network (Previously, foreign VIPs could only make mobile phone calls through the old Loxley network).  However, it later emerged that visitors could buy SIM cards which would allow compatible mobile phones to make international phone calls–but not domestic calls.

Last week, Jean Lee (Assiciated Press) reported that international visitors/expats will soon have access to the internet through their mobile phones with KoryoLink SIM cards:

North Korea will soon allow foreigners to tweet, Skype and surf the Internet from their cellphones, iPads and other mobile devices in its second relaxation of controls on communications in recent weeks. However, North Korean citizens will not have access to the mobile Internet service to be offered by provider Koryolink within the next week.

Koryolink, a joint venture between Korea Post & Telecommunications Corporation and Egypt’s Orascom Telecom Media and Technology Holding SAE, informed foreign residents in Pyongyang on Friday that it will launch a third generation, or 3G, mobile Internet service no later than March 1.

The announcement comes just weeks after North Korea began allowing foreigners to bring their own cellphones into the country to use with Koryolink SIM cards, reversing a longstanding rule requiring most visitors to relinquish their phones at customs and leaving many without easy means of communication with the outside world.

The two changes in policy mean foreigners in North Korea will have unprecedented connectivity while living, working or traveling in a country long regarded as one of the most isolated nations in the world.
However, wireless Internet will not yet be offered to North Koreans, who are governed by a separate set of telecommunication rules from foreigners. North Koreans will be allowed to access certain 3G services, including SMS and MMS messaging, video calls and subscriptions to the state-run Rodong Sinmun newspaper — but not the global Internet.

…

Chinese-made Huawei cellphones sold by Koryolink are not cheap, with the most basic model costing about $150, and the governments restricts North Koreans from phoning abroad or foreigners from their cellphones. Still, mobile phones have become a must-have accessory among not only the elite in Pyongyang but also the middle class in cities such as Kaesong and Wonsan.

Foreigners, meanwhile, can now purchase SIM cards at the airport or at Koryolink shops for 50 euros ($70). Calls abroad range from 0.38 euros a minute to Switzerland and France and more than 5 euros a minute to the U.S. Calls to South Korea remain prohibited.

Starting next week, foreigners will be allowed to purchase monthly mobile Internet data plans for use with a USB modem or on mobile devices using their SIM cards. Prices for the service haven’t been announced yet.

It now appears that the service has been activated. Jean Lee, who wrote the article above has been tweeting and using Instagram (and here)and Loopcam. She may be the first customer to use the service.  Dennis Rodman may be the second.

Xinhua (Via North Korea Tech) has some financial details on the new project:

“We will provide both a USB modem and your current own SIM card to get access to Internet, respectively costs 75 euro and 150 euro upon registration, with different levels of charge standard, from 400euro/10G, 250euro/5G, to 150euro/2G for USB and 10 euro for SIM card per month,” he said.

The Xinhua article also claims the number of domestic mobile phone users has increased to 1.8 million. The Daily NK offers interesting information on how all these users are able to power their phones.

Choson Exchange first reported on the development of this technology back on 2011-10-16!

According to Yonhap:

According to the data compiled by the U.S. State Department, a total of 87 visas were issued for North Koreans in the 2012 fiscal year running from October 2011 to September 2012. This represents a 22 percent decrease from a year earlier.

The drop is mainly attributed to the soured relations between Washington and Pyongyang after the communist country launched a long-range rocket last April in breach of an earlier agreement to stop nuclear tests, uranium enrichment and long-range missile launches.

North Koreans were issued more than 200 visas per year during 2003-2005, but the figure has been on a downward trend since then, with 148 cases in 2006, 150 in 2007, 137 in 2008, 76 in 2009 and 53 in 2010, according to the official data.

The notable falls in 2006 and 2009 show a correlation with Pyongyang’s first and second rounds of nuclear tests, experts say.

By type of visa issued in fiscal 2012, short-term business and travel visas of B1 or B2 took up the largest share with 50 cases, followed by 32 G-type visas for representatives of international organizations and their immediate family members. There were also three F-type visas for students and two C-type visas issued for short-stay visitors, the data showed.

Meanwhile, the U.S. government issued a total of 90,927 visas to South Koreans in fiscal 2012, down 15 percent, the data showed.

Read the full story here:
U.S. visa issuance to N. Koreans drops last year
Yonhap
2013-2-20

According to the Daily NK:

The number of North Koreans visiting China legally reached a record high of 180,600 in 2012, an 18% increase over the 2011 figure of 152,300.

Radio Free Asia released the news today, citing Chinese statistics. According to the report, the most common reason for the visits was ‘employment’ (79,600, 44%) followed by ‘business’ (55,200, 31%).

The number visiting China for ‘business’ increased by roughly 10,900 over the 2011 figure, while the number of those visiting for ‘employment’ increased by 4,300.

According to RFA, “This is because of the greater number of exchanges and joint ventures going on between North Korea and China in the economic sector.”

…

Elsewhere in the statistics, 4,500 (2.5%) North Koreans also visited China last year for purposes of tourism and leisure, and 200 (0.1%) went to visit friends and relatives.

Read the full story here:
Legal North Korean Visitor Numbers Rise
Daily NK
Jeong Dae Sung
2013-1-18

Pictured Above (Google Earth): The approximate location of the Tongrim Waterfall in Kogunyong-ri, Tongrim County

According to Sina English:

The Democratic People’s Republic of Korea said it will open a village famous for a scenic waterfall in the northern part of the country to Chinese tourists from July.

The report by the China News Service said the tourist department of China’s Dandong city government will begin a two-day travel program on the route linking the Chinese city of Dandong to the North’s Donglim County, about 40 kilometers southeast of the border city of Sinuiju.

The news outlet said the Chinese travel department has been operating a one-day Dandong-Sinuiju travel route.
A four-star hotel is under construction as well as other amenities for travelers in the DPRK village in the North Pyongang Province, according to the report.

The village is most famous for its Donglim waterfall, a popular tourism location. The area near the waterfall is also well known for its scenic landscape.

The media report added that when the North opens the route in July, about 100 tourists will likely sign up for the tour program every day, whose two-day itinerary will cost about 1,000 Chinese yuan (US$160.9).

China’s tourist industry estimated that about 10,000 Chinese people visited the North on the Dandong-Sinuiju tour program in 2012.

Read the full story here:
DPRK to open waterfall village to Chinese tourists
Sina English
2013-1-11