North Korean Economy Watch

I do not usually enjoy reading about people’s visits to the DPRK, but I actually learned a few details from this one.  According to the Wall Street Journal:

For all that, Pyongyang doesn’t actually shut down when the sun sets. To serve its trickle of visitors, the city offers its own version of nightlife. Besides foreign envoys shuttling in for nuclear discussions and businesspeople looking to make deals, about 2,000 Western tourists come to Pyongyang each year, many, like me, to attend the famous, stadium-size show called Arirang. It’s a spectacle of mass gymnastics, dance, military marching and incredible animated pictures created by thousands of people flipping colored cards.

The number of visitors could edge up. According to Koryo Tours, a Beijing-based agency specializing in trips to North Korea, the government has notified it that more Americans will be let in during the non-Arirang season (the show generally runs from August to October).

For tourists, the days are filled with sights that have what ruler Kim Jong Il calls “high ideological content.” (A government-supplied guide and minder comes along, day and night.) High on the list is the Mansudae Grand Monument, boasting a massive statue of the country’s late founder, Kim Il Sung, where visitors lay flowers and line up to bow in an orderly fashion. Another must-see is the USS Pueblo, a U.S. Navy intelligence ship captured off the coast of North Korea in 1968; conducting the tour the day we visited was an elderly man dressed in navy whites who was one of the sailors in the original boarding party. And then there’s the underground train system, with its mosaics of peasants revolting and huge chandeliers meant to look like stars.

But there’s also the unexpected, like the Pyolmuri Teahouse, a Western-style cafe whose name translates roughly as “constellation of the stars.” Opened in 2005 with the help of the nonprofit Adventist Development and Relief Agency, the cafe — equipped, as it proudly points out, with German-made ovens and Italian pasta-making machines — offers a tasty apple pie, a surprisingly decent cappuccino and a great chance to people-watch. Egyptian telecommuncations provider Orascom brought mobile technology to North Korea last year, and now demurely dressed teenage girls are accessorizing their hanboks, or traditional Korean dresses, with platform shoes and colorful, decorative, straps on their cellphones. (We tourists had surrendered our phones at the airport, along with our passports; they were returned just before we boarded the return flight.)

As evening approaches, take a stroll (minder in tow) along the deserted embankment of the Taedong River to Kim Il Sung Square. From this vantage point, you can photograph some picture-postcard views while it’s still light. An ideal place to watch the sunset is from the Tower of the Juche Idea, named for the country’s official ideology, a word typically translated as “self-reliance.” The 170-meter tower, built on the occasion of Kim Il Sung’s 70th birthday, is said to contain one white stone block for each day of his life to that point. (He died in 1994, at the age of 82, and while his son is now ruler, the elder Kim is “eternal president.”)

From the top there’s a panoramic view over the capital out to the surrounding mountains. The lack of cars on the roads — vehicles aren’t freely available for purchase — and scarcity of heavy industry means the air is remarkably clear.

Then it’s time to think about where to have dinner. Don’t dawdle; most Pyongyang eateries generally close by 9 p.m. The choices range quite widely, from hot pot at Chongryu Hot Pot restaurant to roast duck at Pyongyang Duck Barbeque Restaurant No. 1to Macanese fare such as egg tarts at the imaginatively named Macau Restaurant.

Whatever you pick, forget dining by candlelight. Here, it’s more likely to be by flashlight. On my first night, just as my tour group was tucking into a typical Korean meal of naengmyon (cold noodles) and bulgogi (barbecued beef) at Mangyongdae KITC restaurant, the lights went out. But the waitresses have come to expect power outages, and before we knew it they were coming around with huge flashlights, one for each table. The room lights still hadn’t come back on by the time we left about an hour later.

Checking out the city’s after-dinner scene is easy: There’s one nightclub and one casino, both located in the same place, the 1,001-room Yanggakdo Hotel, one of about a dozen hotels where foreigners are allowed to stay. (All the tourist hotels do offer some evening activities — like a karaoke bar — but the Yanggakdo is the place to be.) You won’t see any locals here; the entertainment venues are off limits to North Korean citizens.

Start at the aptly named Revolving Restaurant, also known as the Swivel Restaurant, on the 47th floor. It has all the glamour of a 1980s airport lounge, but still attracts businesspeople and Russian exchange students. Grab a seat by the window and admire the lack of city lights as you circle around. Order a serving of soju. Traditionally made from rice, although sometimes also from acorns, it’s the national liquor.

Less-adventurous travelers could sample some of the country’s homegrown beer. The best-known brands are Ryongsong, Ponghak and Taedonggang. Taedonggang, which last year was bizarrely the subject of an advertisement on state TV, is made using equipment that once produced the likes of Brown’s Bitter and Mann’s Best Ale in Trowbridge, England. North Korea bought the shut-down brewery from its U.K. owner and had it dismantled and shipped over in 2000. The restaurant stays open until 1 a.m. or 2 a.m, or when the last customer leaves.

Sufficiently mellowed, head for the nightclub on the lower ground floor. You can groove to the beat of familiar pop tunes from the ’70s and ’80s (was that the Bee Gees'[nbsp ]”Stayin’ Alive,” or too much soju?) until about 3:30 a.m. if there’s enough business; otherwise the staff close the doors at about 1:30 a.m.

If you’re still not ready to call it a night and you’re feeling lucky, pop next door to the Egypt Palace casino. Replete with slot machines and tables for card games including blackjack, the casino is generally open until 4 a.m. But if you aren’t staying in the hotel, how long you can play depends on what kind of deal you can strike with your minder.

After that, there is only the 7 a.m. “workers’ siren,” a citywide wake-up call. It might serve to tell you whether you had too much soju.

On your last day in Pyongyang, by the way, brace yourself for one final, unexpected spending opportunity, befitting a state eager for hard currency. We’d already experienced one big earner, the shop selling souvenir stamps (such as an envelope bearing a Mona Lisa stamp, postmarked on the day of issue, about $7) and hand-painted propaganda posters (such as one showing flying pens attacking former U.S. President Richard Nixon). Now some tourism officials rushed onto our airport-bound bus with something more modern: videos of our three-day stay, going for just under $30. I couldn’t resist.

Courtesy of the advertising department of Korea International Travel Co., the 45-minute video compact disk features me and my 24 traveling companions as we played tourist, drinking beer at lunch and riding the escalators of the underground-train stations. These scenes are interspersed with footage of 80,000 performers at the Arirang mass games, and the whole thing is set to a rousing soundtrack mixing modernized folk songs, swelling orchestral passages and the worst elevator music I’ve ever heard.

Thankfully, there is no record of my night out. At least some things that happen in Pyongyang, stay in Pyongyang.

Couple of extra notes:

1. The Pyolmuri Cafe is the first place in Pyongyang to offer pizza.  They were delivering to the Koryo Hotel before the much publicized Italian Food Restaurant opened on Kwangbok Street.

2. Were is the Macao Restaurant?  Is that in the Yangakdo Hotel?

3. Where is the Mangyongday KITC restaurant?

According to a press release from Koryo Tours:

Koryo Tours has been informed that a more general opening of the DPRK (North Korea) to US tourists is likely to take effect in 2010. It is expected that American citizens, who had previously been restricted to visiting North Korea only during the annual Arirang Mass Games festival which runs from August to October may now be permitted to enter the country year-round. Normal restrictions on American tourists also include staying in North Korea a maximum of 4 nights and only being permitted to enter and exit the country by plane from China, there is also a 4 times weekly train that runs from Pyongyang to Beijing, as yet it is unclear whether these restrictions will also be dropped but a decision is expected before too long.

Koryo Tours has been operating trips to North Korea since 1993 and is universally recognised as the only specialist/expert in this unique area. Unlike the competition, we are also regular visitors; rather than ship our clients off and hope for the best, we work in conjunction with the Korean tour guides as cultural conduits. ensuring everyone has the optimum experience from this journey of a lifetime. Recommended by all the North Korean guidebooks, we consult with international media regarding information and analysis on DPRK tourism and have produced three award winning documentaries on North Korea in association with the BBC (www.koryogroupcom). There’s more to see in North Korea than most people imagine, and with this new policy it seems likely that Americans will now have the opportunity to see more than ever.

I have visited the DPRK twice (though not wth Koryo Tours) and I recommend the trip. Koryo’s tour dates can be found here—although the dates for American tourists will likely be expanded.

According to ABC News:

North Korea has banned the use of foreign currency, another sign its hard-line communist government is intent on reasserting control over the country’s nascent market economy.

Reports say the decree warns of severe punishment for anyone using U.S. dollars, euros, yuan and other non-North Korean currencies. Foreign currencies previously were accepted in some shops, restaurants and other outlets, particularly those catering to foreigners.

The order, issued by North Korea’s state security bureau and going into effect Jan. 1, aims to “forbid the circulation of foreign currency,” China’s state-run CCTV television said in a brief report late Wednesday.

The Daily NK, a Seoul-based online news outlet, said the order prohibits all individuals and organizations apart from banks from possessing foreign currency. It said the decree was posted in public and at workplaces, and went into effect Dec. 28.

There was no mention of the new ban Thursday in official North Korean state media. In Seoul, a South Korean official confirmed the ban, speaking on condition of anonymity because he was not authorized to speak to the media on intelligence matters.

The order comes weeks after the government redenominated North Korea’s currency, the won, as part of a far-reaching currency overhaul aimed at curbing runaway inflation and reasserting control over the economy.

The latest currency decree gives businesses 24 hours to deposit all foreign currency in banks. “When it is needed for trade, it can be withdrawn after obtaining approval,” it said, according to the Daily NK.

The ban is aimed at seizing foreign money tucked away by those still engaging in private market commerce, analysts said.

“North Korea has a problem with people trying to exchange their money for foreign currencies, and then storing the savings in their cabinets since they don’t know how the value of the local currency might change, said Jeong Kwang-min, a research fellow at the state-run Institute for National Security Strategy in Seoul.

The new ban shows the regime’s intention to “firmly” resolve and bring the black market under control, Jeong said.

“The ban is meant to root out people still trading at markets,” said Yang Moo-jin of Seoul’s University of North Korean Studies. “More broadly, it’s aimed at smoothly completing the currency reform by restricting the use not only of local currency but also foreign currency.”

The latest ban also applies to foreigners, who must exchange foreign bills into North Korean won in order to purchase items, reports said.

Sweden’s ambassador to North Korea, Mats Foyer, said by e-mail Thursday that he had received no official notification of the decree.

If this policy change does take effect, it will represent the republic’s third foreign exchange management regime.

Initially, the DPRK (like most communist countries) used Foreign Exchange Certificates (FECs) to control the circulation of foreign currency.  When foreigners arrived in Pyongyang, they changed their local money for FECs which could be spent in various sanctioned retail outlets. The DPRK’s Foreign Trade Bank issued FECs which were different from local North Korean won (issued by the central bank) in both color and and purchasing power.  Capitalist Westerners received green FECs and expats from fraternal socialist governments received red FECs.  Coins were also differentiated.

Shopping could be a bit confusing, however.  Price tags could potentially hold three numbers: the green FEC price, the red FEC price, and the won price.  I believe that shops that catered to repatriated Japanese Koreans (such as the Rakwon Department Store near the Changwang Health Complex) were priced in actual yen, but it is possible these individuals were forced to exchange their yen into green FECs.  Expats from fraternal socialist countries reportedly complained because although their governments were underwriting the DPRK, the red FEC prices in department stores were often higher than the green prices.

As in China, FECs were eventually abandoned and hard currency shops and state-owned retailers began accepting hard currency directly. I am not sure how, why, or when this transition occurred, but it was in effect until this week.  Under this regime, tourists, diplomats, business persons and other visitors spent their dollars, euros, yen and yuan directly on goods and services in the DPRK, but the retail outlets in which they were allowed to make purchases were severely limited.  Prices were originally denominated in dollars but in 2004 they were changed to euros (though dollars remained just as acceptable).

Under this regulatory regime, most visitors to the DPRK could arrive and leave without ever seeing any local currency.  Some percentage of the foreign exchange undoubtedly ended up in KWP, KPA, and state coffers, however it is likely that quite a bit was skimmed off the top, legally or otherwise, in the process.  This would explain the shift to the new regime.

This third foreign currency management regime is interesting but not for the reasons cited in the media. In addition to striking a blow at the country’s markets, which it most definitely will, this policy brings all of the overseas trading companies operating under the protection of the KWP, KPA, and select ministries, under the indirect control of the Foreign Trade Bank. Whereas these organizations were previously allowed to hold some level of foreign currency on site for discretionary purposes, they will now be forced to deposit these funds in a Foreign Trade Bank branch or exchange them for won at the official rate. Additionally, all of the future earnings that these organizations generate abroad will need to be handed over for won when their agents return from assignments overseas.  It is highly likely that these companies will choose to keep their earnings overseas rather than repatriating them, or use their earnings to purchase cheaper goods which they can import into the DPRK (while pocketing the difference and keeping it in a foreign bank account).

The implications for tourists, visitors, and expats are also interesting.  This new policy would imply that the Korea Trade Bank will set up currency exchange kiosk at the airports, border crossings, retail outlets, and hotels for foreigners to swap their currency for local won.  Although we will have to declare our hard currency when entering the country, the fact that we are carrying local currency makes it easier for us to take advantage of spontaneous purchases–even potentially from private merchants and restaurants.  In other words, knowing that locals will not come into possession of hard currency, the North Korean government might give us more “economic freedom” in our time there.  Of course this is probably just wishful thinking.  The gap between the official and market exchange rate will also give rise to black market currency traders who will seek out foreigners to the best of their abilities.

Overall, it is difficult to see this policy as anything but a power grab.  Foreign exchange will become more difficult to obtain and so will the goods manufactured or grown overseas (including China). North Koreans will be left with fewer choices and as a result will  come under greater control of the state.  I am willing to believe that most North Koreans have enough sense to predict this outcome as well.  It will be interesting to see how well this policy sticks or whether entrepreneurial North Koreans will find ways to evade the new rules as they have done countless times before.

Additional Links:

1. Here is a link to the original ABC story.

2. Here is a wikipedia page about the DPRK’s monetary history.

3. Here is the Daily NK story mentioned above.

4. Here are previous posts related to the DPRK’s currency revaluation.

5. This Reuters article adds additional information.

6. Here is a report by the Institute for Far Eastern Studies (IFES)

7. Here is a rather humorous report on the “benefits” that the currency fiasco is bringing the North Korean people.

By Michael Rank

China is planning cruises to North and South Korea, Russia and Japan from the northeastern border city of Hunchun 珲春, according to a Chinese-language report.

Ports of call will include Raseon (Rasŏn/Naseon/Nasŏn) 라선 on North Korea’s northeast coast, Sokcho 속초 in South Korea, just south of the DMZ, and Vladivostok, the report says, quoting Jilin province officials.

“There are still a number of questions to be resolved concerning the cruises, such as different visa requirements among the five countries concerned,” it quotes a Jilin  tourism official as saying. But he also says tourism officials from the five countries have “decided to take joint action and are making great efforts to open this tourist route.”

The head of the Jilin tourism bureau, He Baiping, is quoted as saying Jilin has seven border crossing points and that the number of tourists visiting Russia and North Korea is on the increase, which is good for the local economy.

The report gives no more details, but notes that Hunchun is close to the borders with North Korea and Russia and says the cruises will promote tourism in northeast Asia.

UPDATE: The South Korean government is showing no eagerness to resume tours to Kumgnagsan.  Its list of conditions for doing so are listed below in the original post.  The last item in the list (The DPRK needs to provide more transparency about how it spends the money it receives from the Kumgang resort) seems to be the most important to the South Korean government at this point.  According to the Joong Ang Daily:

While it appears intent on improving inter-Korean ties at Kaesong, Seoul is in no hurry to resume suspended tourism to the North’s Mount Kumgang. The South Korean government for the first time tied the Mount Kumgang tours to international sanctions, saying providing cash payments for the program would run counter to an existing United Nations Security Council resolution.

Speaking to reporters late Wednesday, a high-ranking Unification Ministry official said Seoul was reviewing the possibility of replacing cash with goods to pay North Korea for tours to Kumgang. “The issue of compensating the North for the tourism is related to UN Security Council Resolution 1874,” the official said.

He was referring to the resolution adopted in June, following North Korea’s second nuclear test in late May. The resolution states that member states must not provide financial assistance to North Korea, except for “humanitarian and developmental purposes directly addressing civilian needs.” The resolution also says that UN members must not provide “public financial support” for North Korea where such aid “could contribute to the country’s nuclear-related or ballistic missile-related or other [weapons of mass destruction]-related programs or activities.”

The Kumgang tours have been suspended since July of last year after a female South Korean tourist was fatally shot by a North Korean soldier in a nearby restricted zone. Last week, the North sent a message through Hyundai Group, the South Korean operator of the tours, that it wanted to talk to the South about the resumption of the tours, but Seoul has been lukewarm to the overture. The Mount Kumgang tour had been regarded as a major cash cow for North Korea. Since it is difficult to verify the use of cash in the North, the question of the program’s possible violation of the resolution has been raised in the past.

When the North made the proposal through Hyundai, one government official said he was “none too pleased” with the North because it could have sent its message through official channels.

I expressed some skepticism for “alternative payment mechanisms” below.

ORIGINAL POST: The South Korean government does not plan to allow South Korean tourists to return to Mt. Kumgang until the DPRK:

1. Cooperates in an investigation of the shooting of a South Korean tourist last year.

2. Implements measures to prevent a recurrence.

3. Guarantees tourist safety.

Recently, however, the South Korean government added another item to the list:

4. The DPRK needs to provide more transparency about how it spends the money it receives from the Kumgang resort.

According to the Hankyoreh:

The government’s attitude is in line with a statement given by President Lee Myung-bak in an interview with European news channel EuroNews on July 7, in which he namely said that there are suspicions that the massive aid given to North Korea over the last decade had been used to develop nuclear weapons. A government official said they were unable to block all of the cash entering North Korea from tourists spending money at Mt. Kumgang, but the government has concluded that at least the tourism fees should be transparent. Up until the project was suspended last July, Hyundai Asan, the company that operates the Mt. Kumgang tourism project, had sent North Korea 30 dollars per person for same-day tours, 48 dollars for two-day, one-night tours and 80 dollars for three-day, two-night tours. In total, Hyundai Asan had given North Korea an estimated 15 million dollars per year.

How can they achieve “transparency”? The Hankyoreh reports on a couple of ideas:

1. Pay North Korea in goods such as grain or sugar.

2. Open up an escrow account for North Korea that would limit the DPRK government to transferring money only for the import of specific non-military-use items.

I am skeptical that these latter two ideas could accomplish their goal.  If South Korea paid the DPRK in goods (food, fertilizer, equipment), these could simply be resold to China for cash–as previous aid has been.

If South Korea set up an escrow account for the North Korean government which would be restricted somehow, such as prohibitions on the purchase of dual-use technologies, (would I be too cynical to predict that funds in the account would be limited to purchases of goods made in South Korea?) not much changes from the example above–although now there is a greater opportunity for the DPRK to engage in strategic arbitrage.  If I was the DPRK official in charge of the escrow account, I would look for price differences in commodities and capital between South Korea and China.  When I saw a price differential, I would buy the cheap goods in South Korea using the escrow funds and sell them for a profit in China. This could potentially net the DPRK more money than the previous policy proposal, but it does bring the DPRK one step closer to trading futures contracts!

Even if the DPRK did not get into the arbitrage game, there is no getting around fungibility.  For example, if the DPRK spent the entire escrow account on food, it could  steer domestic resources towards more profitable exports and get the cash that way.

Either way, most of the money goes where the leadership wants it to go.

Korea Business Consultants has published their October 2009 newsletter.  You can read it here.

Here is the newsletter table of contents:

COVER
– China eyes DPRK’s mineral wealth
– SinoMining acquires 51% of DPRK’s Hyesan Copper Mine
– Transformation and Modernization of North Korea
– DPRK sees peace pact with US as key to disarmament
– US “willing to engage DPRK directly”
– “DPRK Energy Sector Assistance to – Accompany Progress in… Discussions”
– Billy Graham’s son visits DPRK to deliver aid
– Lang visits Seoul

ECONOMY
– DPRK vows to expand trade
– China poised to give substantial aid
– DPRK films looking for joint producers

INTER KOREAN
– Buddhists from south, north call for reopening of Mount Kumgang tour
– Kaesong factory recognized for quality
– Frayed relations hindering development of mineral resources
– ROK aid to north falls
– Lawmakers call for use of rice surplus as DPRK aid
– Farmers demand rice price stabilization

POLITICAL
– Kenya establishes diplomatic relations with DPRK

CULTURE & SPORTS
– Eriksson to coach DPRK?
– DPRK’s Hong battles for gold at World Gymnastic Championships
– DPRK begins preparations for World Cup

KOREA COMPASS
– Mangyongdae
– Korean Proverb

UPDATE: According to Yonhap:

North Korea has wrapped up its Arirang festival, a two month-long mass gymnastics extravaganza, media outlets reported Tuesday.

The festival drew about 1.4 million people from home and abroad since it opened in August at the May Day Stadium in Pyongyang, according to the Korean Central Broadcasting Station, a North Korean radio network.

The 80-minute show was held daily except on Sundays after opening on Aug. 10.

North Korea has held the festival, named after the famous Korean folk song, almost annually since 2002. It features synchronized acrobatics, gymnastics, dances and flip-card mosaic animation. Performed by about 100,000 people, it is believed to be the largest gymnastics show in the world.

Read the full story below:
N. Korea wraps up Arirang gymnastics festival
Yonhap
10/20/2009

ORIGINAL POST: North Korea’s Mass Games (100,000 person gymnastics spectacle) began yesterday.

Mass Games used to be held only on special anniversaries (5, 10, 15, 60, etc.) of special holidays such as the end of the Korean War (Victory in the Fatherland Liberation War), Founding of the Worker’s Party, etc.  Since 2005 (when yours truly watched the show with Kim Jing il), however, the games have been hosted annually.

Although the themes and names of Mass Games performances have changed over the years, this specific performance called “Arirang” has been running since 2002—with slight modifications.

According to the AFP, this year the theme Kangsong Taeguk  (powerful and prosperous nation) was added to the performance. This of course reflects the policy goals the government hopes to achieve by 2012, Kim Il sung’s 100th birthday.

According to KCNA:

Extravaganza “Arirang” Starts

Pyongyang, August 11 (KCNA) — The grand gymnastic and artistic performance “Arirang” for this year started at the May Day Stadium Monday.

The creating staff and performers succeeded in re-representing the extravaganza in a brief span of time; they newly created Scene I of Act III and enriched it with fresh contents more truthfully representing the great mental power and skills of the Korean people and the appearance of the country that has undergone tremendous changes.

Among the audience were servicepersons and people from all walks of life, diplomatic envoys and representatives of international organizations here, foreign guests and overseas Koreans.

The performers made an impressive grand epic representation of Juche Korea that has risen high as a dignified sovereign power after putting an end to the history of the nation’s sufferings under the leadership of President Kim Il Sung and the unshakable faith and will of the army and people of the DPRK to build a great prosperous and powerful socialist nation guaranteeing the eternal prosperity of the nation under the Songun leadership of Kim Jong Il.

The performance was highly acclaimed by the audience for presenting fantastic scenery with a good combination of dynamic mass gymnastics and graceful artistry, ever-changing peculiar background scenes, stage decor and a variety of electronic displays.

Further thoughts:
1. This is one of the few times American tourists are able to visit the country. I recommend as many Americans as possible do so.  Based on personal experience, I know that many in the DPRK do not believe the propaganda they are told about Americans.  North Korea’s third generation is now coming of age and these individuals have neither seen a military conflict with the US nor personally known a relative killed in the Korean War.  The kids in particular are very curious.

2. The western media tends to assume the motivation for the mass games is pure propaganda for both a domestic and international audience–“come and see how united our people are”.  Although this might be compelling strategy, I can’t help but to be reminded of the great economic history book by Fogel and Engerman, Time on the Cross, about slavery in the Southern United States.

In the book, the authors discuss the strategy of plantation owners to create a number of cottage industries and tasks which were not terribly economical, however, they kept the slaves occupied so they did not have time to organize or pursue other sorts of goals that could lead them to “trouble”.  I am beginning to feel the same way about the Mass Games.  Kids who are not in school are ripe for trouble-making and the development of individual pursuits, so why not keep them busy all summer producing “wholesome” goods like the mass games?

By Michael Rank

North Korea is spreading its net wider in its quest to attract more tourists from China, and now has its eye on the southern province of Guangdong as well as Shanghai.

A Chinese website (link here) reports that a delegation of North Korean travel agents is expected to travel to Guangzhou next month and that local tour operators in Guangzhou and nearby Shenzhen, on the Hong Kong border, are eager to do business.

Tourists will have a choice of two routes to North Korea – they can either fly to Shenyang or Dalian in northeast China and then take the train to Pyongyang via Dandong, or they can fly to Pyongyang via Shenyang. It puts the price at 5,000 yuan ($730) but doesn’t say how many days the tours last or any further details. It says the main attractions will be the usual ones of Pyongyang, the DMZ at Panmunjom, the Myohyang mountains and the annual Arirang pageant.

As NKEW reported in July, North Korea is also targeting Shanghai as a source of tourism revenue, and there is further talk of charter flights from Qingdao in Shandong province to Pyongyang.

Quite apart from the question of how many Chinese are likely to be tempted to visit a Cultural Revolution-type theme park like North Korea, there are also bureaucratic hurdles to overcome. North Korea does not have “approved destination status” for Chinese tourists, which means in theory at least that travel there is restricted to business groups and official delegations. (Incidentally, South Korea doesn’t seem to be an ADS country either).

As the website notes, “An important issue within ADS is to avoid possible illegal immigration through tourism channels. All tourism groups travelling within the ADS framework are supposed to be monitored by both Chinese and foreign authorities to ensure they return to China. Embassies and consulates apply different methods to monitor the return of the Chinese tourists. Whenever a tourism group member does not return to China, the local travel agency is held responsible and sanctions are applied.” Not that there is much likelihood of Chinese tourists defecting to North Korea.

Furthermore, China is encouraging tourists to counter the world recession by spending their money at home, and although this is China-DPRK year marking the 60th anniversary of diplomatic relations, a further obstacle is the fact that Chinese citizens now need a passport to travel there, not just a border pass that was all that was needed previously to cross into the country at Dandong by train.

Nick Bonner of Koryo Tours says: “We have noticed a sharp drop in Chinese tourists visiting DPRK in comparison to this time last year – even though the spectacle of the 100,000 strong performance of the mass games is still going on and has been extended to October 15th.

“I think next year Chinese tourism will be coming back strong – there is a certain ‘busman’s holiday’ attraction for Chinese tourists to visit DPRK.”

Tour Company Remote Lands has launched a luxury travel package to North Korea that is private jet optional.  According to Reuters:

“We love learning first-hand about the cultures of the world`s most remote places,” said Catherine Heald, Co-Founder & CEO of Remote Lands. “We do not engage in politics of any kind; we simply believe that tourism can promote peace and understanding between peoples at a grassroots level. North Korea is one of the most mind-blowing places I have ever been, and visiting the country is an incredibly stimulating and enlightening experience that I can`t recommend highly enough to our most intrepid clients.”

Remote Lands (www.remotelands.com) will design customized itineraries that originate at a five-star hotel in Beijing, and clients can fly either privately or commercially into the capital city of Pyongyang. They can travel all over North Korea from the gorgeous mountains in the north, where they can hike to remote Buddhist temples, to the lovely beaches of the east to the DMZ on the southern border with South Korea. They will visit awe-inspiring architecture and monuments, and attend the dazzling Mass Games extravaganza with 100,000 synchronized performers/dancers/gymnasts, held every August and September. They can also go off the beaten track and visit schools, hospitals, orphanages, farms and factories and spend time with some of DPRK`s many warm and friendly people.

Accommodations are arranged in the best hotels available, with suites specially enhanced by Remote Lands with European linens, feather pillows and duvets and other exceptional amenities. Fine food and wine will be brought in, and the best chefs will be on hand to create the most delicious Korean, Japanese, Chinese and Continental cuisine. North Korea is not for everyone, but for those adventurous few who have been almost everywhere else in the world, it is the last frontier and a real eye-opener to witness in person.

Prices for a Remote Lands luxury bespoke holiday in North Korea/China start at $1,000 per person per day.

According to their web page:

Catherine Heald just returned from a reconnaissance to North Korea that she describes as mind-blowing. She found it quite different from what she expected – much more beautiful and many of the people were very warm and friendly (although others were clearly just baffled that a blond American woman was there in their midst, for example going for a morning run with them along the lovely riverside in Pyongyang). She drove all around the country and saw villages, farms, schools, hospitals and even an orphanage. She saw the Mass Games, a dance/gymnastics extravaganza, which was a truly dazzling performance. She visited the DMZ border with South Korea, the War Museum and the USS Pueblo ship and learned a lot about the Korean War. The Democratic People’s Republic of Korea (DPRK) is the ultimate remote land, and Catherine found it to be one of the most fascinating places she has ever been.

Also Koryo Tours has sent out a newsletter with the following:

Insider information from Pyongyang tells us that the mass games – originally scheduled to finish on Sep 30th – will now be running to October 17th. This is the only time of year that Americans are able to visit the DPRK and the mass games is an event that no-one should miss! We are therefore offering our popular mini-break a third time round (3 days, 850 Euros). This is an amazing opportunity to experience the Arirang Mass Games as well as the highlights of the capital city of Pyongyang. We guarantee this will be an experience you will never forget. Koryo Tours has been running trips to North Korea for over 16 years now and is the only expert in the field.

UPDATE 9/2/2009: According to the Koryo Tours newsletter, the mass games will be extended to the 10th October–so an extra 2 weeks for Americans to visit DPRK this year.  Also, a quick mass games tour for 850 Euros will be repeated Sept. 24-26. Finally, Koryo Tours is resuming a tour of Turkmenistan this November.  I took this trip and recommend it.  Learn more about travel to Turkmenistan here.

ORIGINAL POST: Koryo Tours sent out  a newsletter highlighting an affordable trip to see the Mass Games in Pyongyang this year:

Following on from the success of our first ever mini-break, we are pleased to be able to offer you a re-run of the most affordable trip we have ever run to North Korea. This is an amazing opportunity to experience the Arirang Mass Games as well as the highlights of the capital city of Pyongyang, see what all the fuss is about this August on a journey we guarantee you will never forget. Koryo Tours has been running trips to North Korea for over 16 years now and is the only expert in the field.

-only 850 Euros all inclusive from Beijing
-3 days in North Korea
-package includes return flights from Beijing, deluxe accommodation, transportation in North Korea, entry fees, guides services, etc
-2 opportunities to see the Arirang Mass Games, literally the most amazing spectacle you will ever witness
-full itinerary in Pyongyang city, including the Juche Tower, Korean War Museum, Kim Il Sung Square, Pyongyang Metro, and much more
-meals in local restaurants
-US citizens welcome to join this tour also
-accompanied by our expert British staff and the best Korean guides available
-the maximum experience for the minimum cost
-discounts available for students, children, and groups of 3+ booking together

This tour will take place from September 24th – 26th and the deadline for booking is Monday September 14th, please get in contact if you are interested in being part of this journey of a lifetime to the country that makes the most news but still has only a trickle of western visitors per year. See it for yourself a mere 90 minutes from Beijing by plane. A fascinating, safe and unique experience is guaranteed.

Check out Koryo Tours’ web page here.