North Korean Economy Watch

UPDATE: DPRK to Set Up Special International Tour Zone at Mount Kumgang
Institute for Far Eastern Studies (IFES)
NK Brief (11-05-2)
2011-5-3

According to KCNA news agency, the Presidium of the DPRK Supreme People’s Assembly issued a decree on April 29 to set up a special zone for international tours at Mount Kumgang. It reported the special zone in Kangwon Province would include Kosong-eup and Onjong-ri of Kosong County; Samil-po, Hae-Kumgang, and Nae-Kumgang areas in Kumgang County, and Thongchon County.

The Central Tourist Guidance Agency expressed its intentions of increasing new tourist destinations depending on the progress made in the special zone. In addition, it also announced the annulment of October 2002 decree on the Kumgang Special Tourism Zone, which rescinded the exclusive rights of Hyundai Asan.

Previously on April 8, the DPRK’s Korean Asia-Pacific Peace Committee (KAPPC) informed Hyundai Asan that it would retract the monopoly rights of Hyundai. Instead, it expressed plans of entrusting the tours from the North through foreign businesses while Hyundai will continue to lead the tours from the South. The North announced the Mt. Kumgang tours will be renewed through appropriate national measures.

The KCNA explained, “The DPRK’s sovereignty will be exercised in the special tour zone.” Additionally, the DPRK is encouraging free investment in the special zone by corporations, individuals and other economic bodies and such investments are protected by law.

On the May issue of South Korean monthly magazine Minjog 21, the Committee of Investment and Joint Ventures of the DPRK and Kempinski Group was reported to have reached an agreement on its entrance into the Kumgang tourism project. The magazine also reported the Kempinski Group’s plans of modernizing the Wonsan Airport, development of Wonsan City into a resort town, and building roads connecting Wonsan with Kumgang.

Kempinski Hotels is a luxury hotel group known for its five-star hotels and resorts and recently expanded into Asia with current projects underway with India and China. Kempinski is majority owned by the Crown Property Bureau of Thailand and the royal family in Bahrain. Once the Kempinski Hotel is completed in Wonsan, it is expected to become an international resort town linked with Mt. Kumgang Special Zone.

The Mt. Kumgang tours from the North are expected to be managed by the Kempinski Hotels while the tours from the South will be still managed from Hyundai. An interview on April 13 by Ri Jong Hyok, vice-chairman of the KAPPC commented, “The buildings and facilities built by Hyundai will come to ruins if left at its current unoccupied stage. This is the reason why we are attempting to restart the tours, but only until the South decides to resume the tours.”

The Committee of Investment and Joint Ventures was upgraded from Joint Venture and Investment Guidance Bureau last July, becoming a central state organization in charge of all projects related to investments and joint ventures from overseas.

ORIGINAL POST: According to Yonhap:

North Korea’s rubber-stamp parliament said Friday that it will set up a special zone for international tours of the country’s troubled mountain resort in an apparent move to induce foreign investment.

The North “will encourage free investment in the development of the special zone by corporate bodies, individuals and other economic bodies and will protect by law the invested capital and properties and income and other profits to be gained through business,” the North’s Supreme People’s Assembly said in a decree carried by the country’s official Korean Central News Agency (KCNA).

The legislature said North Korea’s sovereignty will be exercised over the zone that includes several areas on Mount Kumgang, a scenic resort on the country’s east coast.

It also said the agency in charge of tourism will take relevant measures to increase new tourist destinations, depending on the progress in the special zone development. No details were provided.

Lee Jong-joo, a spokeswoman for South Korea’s Unification Ministry handling inter-Korean affairs, said the North’s move appears to be aimed at attracting foreign capital to develop the resort.

A spokesman for Hyundai Asan, a key South Korean tour operator in the mountain resort, said his company had no immediate comment on the North’s announcement. He asked not to be identified as he was not authorized to speak to media.

The decree came weeks after Pyongyang terminated exclusive tourism rights for Hyundai Asan, citing skepticism over the resumption of the joint venture.

The two Koreas launched the joint tour program in 1998 as part of moves to boost cross-border reconciliation and cooperation, providing a legitimate source of hard currency to the cash-strapped North.

However, Seoul suspended the tour program in 2008 when a female South Korean tourist was shot dead after straying into an off-limits military zone near the resort.

Pyongyang claims it has done everything to shed light on the shooting and guarantee the safety of future tourists, but Seoul says it has yet to receive a formal apology for the shooting or government-to-government promises to enhance safety.

Here is the KCNA statement:

Pyongyang, April 29 (KCNA) — A special zone for international tour of Mt. Kumgang will be established in the DPRK.

A decree on this decision was issued by the Presidium of the DPRK Supreme People’s Assembly on Friday.

According to the decree, the special zone is to be set in the area of Mt. Kumgang in Kangwon Province and the zone will include the township and some areas of Onjong-ri in Kosong County, Lagoon Samil, Sea Kumgang area, Inner Kumgang area of Kumgang County and some areas of Thongchon County.

The DPRK sovereignty will be exercised over the zone.

The DPRK will encourage free investment in the development of the special zone by corporate bodies, individuals and other economic bodies and protect by law the invested capital and properties and income and other profits to be gained through business.

The Central Tourist Guidance Agency shall take relevant measures to increase new tourist destinations, depending on the progress made in the SZ development.

The decree of the SPA Presidium on “Setting Up Mt. Kumgang Tourist Zone in the DPRK” issued on Oct. 23, 2002 is no longer valid.

Aside: So there are two DPRK agencies that deal with tourism: KITC and the “Central Tourist Guidance Agency”?

Historical information:

The Kumgangsan resort was the scene of a terrible tragedy, the shooting of a South Korean tourist.  Allowing a joint-Korean investigation of the murder became a precondition by the South Korean government for resuming tourism to the resort.

On March 4th 2010, the DPRK first threatened to revoke contracts with the South Korean Hyundai-asan stating that a future guarantee of safety was sufficient for resuming tourism.

Later in th month, Hyundai-asan’s chief offered to resign.

In April 2010, the DPRK “seized” the Hyundai properties in the Kumgangsan resort.

Shortly afterwards, Chinese tourists began arriving at the resort (here and here).

The Donga Ilbo reported that the NDC took over the properties and put them in the Korea Taepung International Investment Group portfolio.  If the property was under Taepung control and has now been put under normal ministerial control, then this signals that Taepung’s sun might have set.

If possible, I would expect that Hyundai-asan will attempt to bring suit in South Korea against whichever company chooses to set up in the zone.

Read the full sotry here:
N. Korea to set up special int’l tour zone at Mount Kumgang
Yonhap
2011-4-29

According to Yonhap:

The number of North Koreans officially visiting China reached 28,600 in the first three months of the year, up 35 percent from the same period last year, a news report said Wednesday.

More than half of them visited China to work in either factories or restaurants, while 6,000 people visited China for conferences or businesses, the Voice of America reported, citing Chinese government data.

The VOA also said 700 North Koreans toured China for sightseeing, while fewer than 100 North Koreans visited China to meet relatives or friends and 7,300 visitors had other purposes. The report did not elaborate.

The data did not include information on North Koreans staying illegally in China after defecting, the VOA said.

Tens of thousands of North Korean defectors are believed to be hiding in China, a major land route through which many North Korean defectors travel to Thailand and other Southeast Asian countries before resettling in South Korea.

According ot the Choson Ilbo:

Chinese tourists will start visiting Russian and North Korean cities without visas on Wednesday under a formal agreement between Beijing and the two countries. The tour course starts in the Chinese border city of Hunchun in the lower reaches of the Duman (Tumen) River and goes on to eastern Russia and the Rajin-Sonbong special economic zone in North Korea.

A group of 21 tourists left Changchun, the capital of northeast China’s Jilin Province, on Tuesday for the Hunchun. Travelers will then visit Slavyanka, Vladivostok and Khasan, the official Xinhua news agency said. They then go to North Korea by train and tour the cities of the Duman River and the Rajin-Sonbong area.

The four-day tour starts every Wednesday and costs 2,300 yuan (approximately W390,000). Only Chinese travelers are eligible for the visa-free arrangement.

Read the full stories below:
Number of N. Korean visitors to China rises in first quarter
Yonhap
4/27/2011

Chinese Tourists Visit Russia, N.Korea Visa-Free
Choson Ilbo
4/28/2011

Accoridng to the Borneo Post:

Kuala Lumpur International Airport (KLIA) announced the arrival of another new airline as Air Koryo, the national carrier of the Democratic People’s Republic (DPR) of Korea recently made its maiden landing at KLIA.

The inclusion of Air Koryo took the total number of airlines operating at KLIA to 58. Air Koryo became the first airline to introduce direct schedule flights to Pyongyang from Kuala Lumpur.

Air Koryo will fly twice weekly to KL from the capital city of Pyongyang, on Mondays and Thursdays, utilising a TU-204 Next Generation Tupolev type of aircraft, with 142 seating capacity.

“Malaysia Airports welcomes Air Koryo’s schedule operations to KLIA and wishes them all the best for this service. Its presence will not only increase the connectivity at KLIA but also establish a new direct service between DPR Korea and Malaysia,” said Malaysia Airports managing director Tan Sri Bashir Ahmad in a press statement.

“Air Koryo has been operating charter flights to KLIA for the last few years. Now it has created sufficient market strength to start schedule operations and we are very happy with the new development,” he added.

General manager of Air Koryo in KL said, “This new destination will be a welcome addition to Air Koryo’s route expansion. Kuala Lumpur has been a much-anticipated destination and I am confident it will be a fruitful service for Air Koryo. Malaysians and Koreans alike can now enjoy the best of both countries through Air Koryo’s service.”

Air Koryo was founded on Sept 21, 1955 with the name Chosonminhang. It was renamed to Air Koryo in March 1992. Air Koryo’s networks cover Beijing and Shenyang in China, Vladivostok and Moscow (Russia), Bangkok (Thailand) and now Kuala Lumpur.

The Inter governmental Air Route Agreement was signed between DPR Korea and Malaysia 20 years ago. The airline became an affiliate member of the International Air Transport Association (IATA) on October 21, 1996.

Read the full story here:
Air Koryo makes debuts at KLIA
Borneo Post
2011-4-20

UPDATE 4 (2011-11-16): An American magician performed in the magic show.  According to Foreign Policy:

An English literature professor from Southern California by day and a world-class magician by night, Dale Salwak holds the distinction of being the only American invited to perform his act in North Korea. At SAIS recently, Salwak chronicled his experiences in Pyongyang in 2009 and this past April for the Grand Magic Show, the largest ever in the country’s history. His perspective on North Korea offered a look beyond stereotypes of a totalitarian system, mass famine, and nuclear proliferation, and focused instead on magic as a great leveler which emphasized entertainment value before political differences between two countries.

–Magic, as a trade, is taken very seriously in North Korea. Similar in structure to the Chinese system, admission into its exclusive society is followed by a father-son bond of lifelong apprenticeship. Isolated from the West and having limited or no access to DVDs, books and the Internet, North Korean magicians have devised their own methods to magic that have long been known to performers like Salwak. A typical range of acts includes balancing telephones on handkerchiefs and life-sized dolls performing choreographed dance routines to traditional music. The local performers Salwak encountered on his trips cherished every new trick acquired and pleaded with him to share current “world trends” on magic.

–The culmination of Kim Jong Il’s investment in the arts took place this past April at the Grand Magic Show, a tribute to the late Kim Il Sung. Like his father, Kim Jong Il appears to hold a great interest in magic and the circus, dating back to the country’s early history of Soviet influence. In a place where high-tech entertainment is hard to come by, the Grand Magic Show dazzled a crowd of 150,000 at May Day Stadium, which is the site of the Arirang Games, an annual two-month-long gymnastics festival also in honor of Kim Il Sung. As a spectator at the Grand Magic Show, Salwak watched as the country’s most famous magician, Kim Chol, appeared in a cloud of smoke and fireworks, forcing a bus full of giddy local residents to levitate several feet above the ground, and later, make a horse, an elephant and a helicopter materialize out of thin air. What would have otherwise invoked a roaring response from a typical American audience, the crowd respectfully cheered with subdued, tepid applause.

UPDATE 3 (2011-4-18): The DPRK has finally put on the long anticipated magic show.  According to the Associated Press (via ABC News):

Amid a burst of fireworks and a haze of smoke, a burly showman in a white sequined suit and gold lame cape appears with a flourish. Over the next 45 minutes, he appears to make a Pyongyang bus levitate and wriggles free from a box sent crashing to the stage through a ring of fire.

This is magic North Korean-style performed in a show touted as the country’s biggest ever and mounted in a city where good, old-fashioned illusion, a dancing bear and a dose of slapstick comedy can still command the biggest crowds of the year.

The country’s love for magic is a legacy of the circus traditions they inherited decades ago, during an era of Soviet influence.

North Korean founder Kim Il Sung ordered the creation of the Pyongyang Circus in 1952 in the middle of the Korean War. The tradition of highly technical stagecraft — including the Arirang mass games, where 100,000 performers move in sync in a feat that has come to embody North Korean discipline and regimentation — still dazzles in a country where high-tech entertainment is scarce.

“They love magic shows, together with the circus,” said Tony Namkung, a scholar who often serves as a liaison between North Korea and the U.S. and other governments. “Like so many other things, it harkens back to a pre-electronic past when things were much simpler.”

In fact, North Koreans so love magic that two diplomats dispatched to the United Nations had a special request in 1995 of their American hosts: They wanted to go to Las Vegas to see David Copperfield.

Wowed by the world-famous illusionist, the diplomats were determined to bring Copperfield to Pyongyang. But politics and finances trumped entertainment, and plans to bring the American magician to a nation still technically at war with the United States vanished in the haze of diplomatic tensions.

Undeterred, North Korea has kept putting on shows of its own, and it unveiled a massive one Monday at the capital’s May Day Stadium. It was designed by Kim Chol, dubbed the “David Copperfield of North Korea,” and will include seven performances in all.

The show stars Ri Thai Gum, a beefy showman with the extravagant flair — and physique — of a pro wrestler and the skills of Houdini. He whips off his white suit with silver-sequinned lapels to reveal a tank top and then straps on a gold-appliqued cummerbund onto his hefty waist.

The event was a highlight in a week of festivities surrounding Kim Il Sung’s April 15 birthday. Many of the women turned out in festive traditional Korean dresses reserved for special occasions, sparkles sprinkled into their hair and wearing fur-lined vests to keep warm in the spring chill. Outside, pink and yellow lights illuminated a fountain as music played to crowds enjoying an evening out.

An advertisement boasts that the show features “aircraft and a large bus appearing and then suddenly disappearing, elephants and other heavy animals appearing mysteriously, a motorcyclist performing fantastic skills, magicians floating in the air as if in a gravity-free space.”

And it does, adding in a healthy dose of slapstick comedy.

The tricks are simple crowd pleasers: A Pyongyang city bus filled with waving passengers appears to levitate and then disappear; an acrobat seems to float through a magical skyscape of clouds.

There’s the classic magician’s assistant dressed in traditional Korean dress who gets into a box and reappears halfway across the stadium.

In another trick, a man goes into a box but after a wave of the Korean Houdini’s hand, out comes a girl in a short, spangly miniskirt with a prancing baby bear on a leash bowing hello to the audience

The highlight involves a helicopter and a ring of fire that aim to have the clapping audience, mostly Koreans and a smattering of tourists and foreign dancers and musicians visiting the city for an arts festival, on edge.

“I thought it was great. The quality of the tricks that they pulled off was really high,” said Chris Andrews, a tourist from Sydney, Australia. “That bear trick I thought was one of the coolest things I’ve ever seen.”

Current leader Kim Jong Il is said to have inherited his father’s love of the circus and is thought to be the one to push to bring Copperfield to North Korea.

Copperfield’s stage manager once called North Korea’s staging technology “among the most sophisticated in the world,” according to Namkung.

Namkung, who took the North Korean diplomats to Vegas and later brought a Copperfield delegation to Pyongyang to discuss a visit, recalled that the time was ripe to bring a big American star to the North Korean capital.

The U.S. and North Korea had just signed an agreement for Pyongyang to freeze its nuclear power plants and to replace them with light water reactors less prone to weapons proliferation as part of a plan to normalize relations between the longtime enemies.

There were high hopes that Copperfield’s show — to be broadcast live on state TV in North Korea — could pave the way for a new era in relations between the bitter wartime foes. And in a symbolic show of support for reunification, Copperfield agreed to travel through the Demilitarized Zone dividing the two Koreas and perform for the South Koreans as well.

“This was right after the ‘agreed framework’ signing at a time when it looked as if the two nations would go down an entirely new path, and the atmosphere in Pyongyang was giddy,” said Namkung, who also serves as a consultant to The Associated Press.

Copperfield himself was game, promising to make the city’s iconic Juche Tower disappear, just as he did the Great Wall of China and the Statue of Liberty.

So seriously did the North Koreans take Copperfield’s visit that they staged a private viewing of the circus for his production team’s visit to Pyongyang and promised to give the illusionist a vast suite once used by former President Jimmy Carter on his visit in 1994, Namkung recalled.

But the State Department thought it was too early to back the venture, and the plan eventually foundered over how to finance the trip.

The AP was not allowed shoot video of the performance, but here is the AP’s video coverage of the event.

UPDATE 2 (2011-3-14): KCNA reveals a little more information about the DPRK’s upcoming magic show:

A large-scale magic performance will take place in Pyongyang, the capital of the Democratic People’s Republic of Korea.

The program will include appearance and disappearance of aircraft, large bus with full passengers and big animals like elephant, as well as a motorcyclist’s fantastic skill and the magician’s floating in the air as if in a gravity-free space.

The aircraft, large bus and elephants are all real ones.

The spectators will enjoy a new form of magic show with several numbers connected with each other.

The performer is Kim Chol (50), a vice-chairman of the Magicians Association of Korea and head of the magic creation group of the Pyongyang Circus.

His father Kim Thaek Song and his younger brother Kim Kwang Chol are also talented magician.

He became an eye-catcher already in his teens, drawing the limelight of the magic circles.

He began to distinguish himself with his marked individuality at international magic festivals from the 1980s.

His masterpieces are “Girls Reflected in a Mirror” and “A Rich Catch of Catfish”.

Magic pieces of the DPRK won more than 20 top prizes at international magic festivals..

Founded in Juche 41 (1952), the Pyongyang Circus has produced 1,200 acrobatic works, winning more than 70 awards including 36 gold prizes at 38 international circus festivals.

The circus has performed on 35,000 occasions in total at home and abroad, including 250 tours around the globe, earning international prestige.

The premiere of the magic show will be given on April 18, a day of the 27th April Spring Friendship Art Festival.

The performance will be staged about six times, twice a week.

Its venue is May Day Stadium, well known for the grand gymnastic and artistic performance “Arirang.”

Many local and foreign people have booked tickets for the spectacle.

UPDATE 1: Xinhua (PRC, 2011-3-9) offers some more information on the DPRK’s upcoming magic show mentioned in the Koryo Tours newsletter below:

According to the KCNA, the performance will include the appearance and disappearance of an airplane, bus and elephant, and a magician floating in a weightless state.

Kim Chol, the performer, is a magician with the Pyongyang Circus, according to the report.

It would premiere on April 18 at the stadium, which was also the venue for the grand gymnastic and artistic performance “Arirang,” the report said. There would be six performances in total, given twice a week.

ORIGINAL POST:

Koryo Tours is the leading DPRK travel coordinator.  The company is operated by some very pleasant Brits based in Beijing.  Each year they expand the range of options available for visitors to the DPRK, and this year seems to be no exception.  According to their most recent email newsletter they are offering trips to the DPRK’s first ‘Grand Magic Festival’, the Tax Abolition Day tour, and resuming the fascinating Tumen Triangle tour.  See excerpts from their email below:

Grand Magic Festival in May Day Stadium
This is an all new event that is taking place for the first time this year between April 18th and May 9th in the massive May Day Stadium in Pyongyang. The exact nature of the event is thus-far unclear so we cannot confirm or deny that any actual ‘magic’ will take place but suffice to say it will be an event on a very large scale comparable to the Arirang Mass Games (running this year from Aug 1st – Sept 10th). We Will be able to take anyone who visits DPRK during this time to the event which is running every Wednesday and Saturday night.

This should be something not to miss and anyone who goes will be seeing one of North Korea’s trademark spectacular events for the first time, something to make all your friends jealous!

Our full tour list is online here and any tour during that date will get you to the Grand Magic Festival!

No tax on the March tour!
Our March Madness tour this year is closing fast but we still have time and space to add more people to this economically priced but amazing trip. The full details are online here and we’re accepting applications until the end of this month. The chance to be in North Korea on the anniversary of tax abolition is priceless indeed!

Tuman Triangle May Tour
For the second year running Koryo Tours is proud to run this utterly unique tour, something available only through us and we would love you to come along and join us on this amazing trip that goes from North East China into the obscure and little-known North Korean free trade zone of Rason, then to become only the second ever tour group (our group last year being the first) to cross into Russia by train, we enjoy sometime at and around a local beach there before heading to Vladivostok, the main city of far-eastern Russia to see what this previously-closed city is all about.

The full details for this tour are online here. Please ask us any questions about this tour, if you ever wanted to do anything completely unique then this is your chance. It’s an amazing trip and something truly memorable!

Although I have never traveled with Koryo Tours to the DPRK, I have traveled with them to Turkmenistan and that was an amazing trip.

Also, “Magic” seems to be popular in the DPRK.  A quick search through YouTube finds lots of North Korean magic shows.  I even posted a North Korean magic show that aired on TV earlier this year.  You can see it all on YouTube starting here.

UPDATE 2 (2011-4-11): South Korea has declared the move illegal.  According to the AFP:

South Korea Monday criticised North Korea’s threat to strip a Seoul firm of its exclusive right to run tours to a mountain resort in the communist state, calling the move illegal and unacceptable.

The North said Saturday it may deprive Hyundai Asan of its monopoly over tours to scenic Mount Kumgang, where the firm has invested millions of dollars and has a 50-year agreement reached in 2000.

“The North’s claim… is in violation of agreements made at business and government levels as well as international customs,” said Chun Hae-Sung, a spokesman for the South’s unification ministry that handles cross-border affairs.

“The decision is absolutely illegal, illegitimate and unacceptable and should be withdrawn immediately,” Chun said.

UPDATE 1 (2011-4-11): The DPRK has formally ended Hyundai’s contract.  According to the Choson Ilbo:

North Korea has unilaterally ended a long-standing agreement that gave South Korea’s Hyundai Asan the sole rights to operate package tours to Mt. Kumgang. The tours have long been suspended, but Hyundai Asan has put a significant amount of money into accommodation and other infrastructure in the scenic resort.

In a statement on Friday night, the North’s Asia-Pacific Peace Committee said, “We’re invalidating the clause on the exclusive right given to Hyundai in the agreement on Mt. Kumgang tourism that we concluded with the company.” It said Hyundai Asan may continue to operate tours from the South Korean side, but the committee “will take care of the tours arranged through the North Korean side.”

A Hyundai Asan spokesman said the following day North Korea should withdraw the decision “since no terms of the agreement can be canceled or invalidated unilaterally by either side.”

Unilateral Decision

The two sides signed an agreement in October 1998 giving Hyundai Asan, a subsidiary of the Hyundai Corporation not to be confused with Hyundai Motor Group, the exclusive right to operate the tours.

In 2002, the regime granted Hyundai Asan the right to use of land in the Mt. Kumgang area until 2052, but it confiscated the property after South Korea suspended the tours following the shooting death of a tourist in July 2008.

According to Hyundai Asan, North Korean officials summoned staff to Mt. Kumgang on March 15 and 30 and told them the North would now promote tours on its own. On March 30, the North Korean also proffered a written document to a Hyundai Asan staffer, who refused to accept it saying it contravenes the original agreement.

The decision to cancel the deal nonetheless shows how desperate the North is to earn hard currency, since the apparent aim is to promote tours for Chinese visitors instead or indirectly pressure the South Korean government into resuming the tours.

Seoul says it will not resume the tours until the North allows an investigation of the shooting, gives firm safety guarantees, and promises to prevent similar incidents. There have been talks about their resumption, but the North’s sinking of the Navy corvette Cheonan in March last year and shelling of Yeonpyeong Island in November effectively strangled them at birth.

Chinese Tourists

It is unlikely that the North can plug the gap with revenues from Chinese tourists. Hyundai Asan says about 1.96 million tourists visited Mt. Kumgang over the past 10-odd years, but a mere 12,000 came from countries other than South Korea.

It remains to be seen whether the North will use the Hyundai-owned facilities to accommodate Chinese visitors.

Hyundai Asan has spent a total of W754.1 billion (US$1=W1,084) on developing nearby land and building facilities such as a power plant and a hotel. Other South Korean agencies and companies, including the Korea Tourism Organization and the National Agricultural Cooperative Federation, invested W133 billion. After tours were suspended, Hyundai Asan left 16 staffers behind at Mt. Kumgang to look after its properties.

ORIGINAL POST (2011-4-9): According to Yonhap:

Apparently growing impatient with South Korea’s lukewarm response to its dialogue offer, North Korea announced Friday that it could terminate an exclusive contract with a South Korean conglomerate for tourism at Mount Kumgang, a resort along its east coast.

In a statement carried by the official news agency KCNA, the Asia Pacific Peace Committee, a state organ in charge of inter-Korean relations, said, “There is no more prospect of resuming the tour of Mount Kumgang.”

“In this regard it informed the Hyundai side of its stand that it may terminate the validity of the provision of the agreement on tour of Mount Kumgang signed with the Hyundai side which calls for granting it monopoly over the tour,” it said, referring to Hyundai Asan, the South Korean operator of Mount Kumgang tourism program.

The statement also added Hyundai could continue conducting tours for South Koreans but that Pyongyang “may” take charge of tours to Mount Kumgang and elsewhere for North Koreans and also entrust an overseas business professional with such tours.

South Koreans’ tours to Mount Kumgang, once a cash cow for the impoverished North, have been suspended since the summer of 2008, when a female South Korean tourist was shot dead after straying into an off-limits military zone.

Pyongyang has been seeking to resume the joint venture, but Seoul has demanded a formal apology for the killing of the housewife, along with measures to prevent a recurrence of such an incident and a guarantee of tourists’ safety.

Friday’s announcement was viewed as aimed at putting pressure on the South to restart the tourism business.

Hyundai Asan said it was working to identify North Korea’s true intentions.

“The company is working to find out at the earliest possible date what the North’s true intentions are,” a Hyundai Asan official said, asking not to be identified.

North Korea froze Hyundai Asan’s assets at Mount Kumgang last year in an apparent attempt to pressure South Korea to resume tours to the mountain, a spiritual destination for Koreans on both sides of the border.

After years of threats and provocative acts, highlighted by two deadly attacks in 2010, Pyongyang has been appealing to Seoul for talks. Conservatives here say the North wants aid from the South and a dialogue with the United States.

Here you can see more of Seoul’s demands for resuming Kumgang tours.

Here and here you can find more information on Seoul’s demands for resuming Kumgang Tours.

Previous posts about the Kumgang Resort can be found here.

UPDATE 5 (2012-7-3): Some time has passed since Narae’s launch, and Dr. Seliger reports that use of the debit card in Pyongyang is growing. As evidence he sends along a list of Pyongyang establishments that are accepting the card.

You can see a rough English translation of the names of these shops and hotels here (doc).

It is worth pointing out, again, that the Narae card stores balances in hard currency.

UPDATE 4 (2011-9-22): A recent visitor to the DPRK has posted a picture of the front and back of a Narae card:

UPDATE (2011-3-24): Bernama (Malaysia) offers some more information on the DPRK’s electronic payment system:

An electronic system for settlement with the use of debit cards has been for the first time introduced at the international communications center, in major department stores, hotels, and restaurants of North Korea.

The debit card dubbed Narae (wing), can be used both by the citizens of North Korea and by foreign diplomats and representatives of humanitarian organizations working here, according to Russian news agency Itar-Tass on Tursday.

It takes only several minutes to issue the cards to foreigners. The card’s cost is $3. Not more than $1,000 may be placed in an account.

In case of settlement, the money is automatically converted in to the North Korean won in accordance with the official rate of exchange.

The card bears an inscription indicating a date of issue, a card number, and a bank code.

In the interest of financial safety, a user enters a personal four-digit code of his own.

Most foreigners have acquired such cards, pointing out the convenience of using them, first of all because cash register operators in local shops quite often lack small denomination coins to give change to customers who pay cash in US dollars or Euros.

This story confused me because there are a couple of notable differences between the official information posted in Pyongyang last January (see ORIGINAL POST below) and the facts laid out in the above article.

First, Bernama claims that there is a $1,000 limit to the value that can be prepaid to the Narae card, yet according to the informational flyer posted in the Potonggang Hotel, there is no limit to the balances that can be prepaid. From the Narae issuer’s financial perspective, it does not make sense to apply a limit.  Placing a legal limit to prepaid quantities limits the issuers own income. This is because issuers of prepay cards earn interest income (float) on the deposited funds as long as the balances remain on the card (before the ultimate consumer spends the funds).  The larger the amount of funds prepaid and the slower they are spent, the more float the issuer earns (we are assuming a monopoly issuer here–competition would reduce these profits if allowed).

It could be, however, that the issuers are not profiting from interest income earned by floating deposits since Pyongyang does not have a legitimate money market (Though it would not be too difficult to move most of these funds to Singapore or Hong Kong where they could earn interest while keeping a small % in Pyongyang to clear payments each month). This would imply that the electronic payment system is valuable to the regime for control purposes—because it mops up hard currency from the individuals who regularly come into contact with foreign exchange and prevents dollars, yuan, yen, and euros from trickling into the black markets.  In this sense, the prepay cards works much in the same way as the old foreign exchange certificates (FECs) did.  Remember when the DPRK had three different colored currencies depending on where you were from (Capitalist country, socialist country, or local)?  Theoretically, with the new prepay card North Koreans and foreigners could deposit their hard currency when they arrive at a North Korean customs office (airport) and spend the balances in approved locations.  The government gets the hard currency, the customer gets the goods, and low-level employees and managers are never tempted to accumulate forex.

ORIGINAL POST (2011-1-27): Dr. Bernhard Seliger of the Hanns Seidel Foundation writes in with information on the DPRK’s new “Narae” (나래) debit card system:

Pictured above: “Narae” flyer at the Potonggang Hotel

Dr. Seliger provided an English translation of the flyer:

1. Debit card “Narae” is an electronic payment system used to pay for goods and service in service units where foreign currencies are used. It makes payment process fast and accurate without cash. “Narae” means “wings” and spirits of Songun Cheollima flying fast and high into the homeland’s sky.

2. A card is issued at exchange office of foreign banks and an issued card can be used in service units using foreign currencies without limit.

3. Exchange offices receive foreign cash from guests (including foreigners) and deposit cash into a card according to the exchange rate on that day. Fee for a card itself is paid separately or deducted from money in a card.

4. There are 4 numbers in 4 bundles on the front of card. The first bundle means the bank of issue, the second is the date of issue and the third and fourth bundles means card numbers of the card owner.

5. For security a guest should enter his own pin number under the instruction of clerks.
You approve payments using numbers you already entered so you should remember your own pin numbers.
*If you enter wrong numbers 3 times consecutively payment process is stopped.

6. You can pay only within your balance in a card.

7. If you want to supplement balance you have to pay cash and it will be exchanged into Korean won at the exchange rate on that day and deposited to your card.

8. If you want to take your cash back you can get this service at bank of issue. The exchange rate on that day is applied.
Foreigners can get this service at hotels and airports.
*Fee for cards is not returned.

9. You have to follow those things regarding using a card.
-You should keep a card well not to be broken or damaged. Especially be careful not to damage electronic factor on the card.
-If a card is damaged or missing you should report it to exchange office.

10. Your confidentiality regarding a card is completely assured and money in your card is protected legally.

A PDF of the flyer in English and Korean is here.

By chance, the Russian blog “Show and Tell Pyongyang” (Translated to English here) also posted some information about Narae.  Below is a picture of a Narare card and a list of locations where it is accepted. Click images for larger version.

In the chart above, the first column is apparently bank names. The second column is where people can go to buy the card and deposit money. The third and fourth columns are “Current volunteers/volunteered places that have started card service”.

Thanks to a friend for the translation.  If you recognize any specific institutions on the list, please let me know.

Koryo Tours plans to launch the first ever bicycle tour of the the DPRK in September 2011.

According to the Wall Street Journal’s Korea Real Time:

North Korea may not be at the top of most vacation destination planning lists, but it’s relatively easy to visit and safe. A number of tour companies run trips through much of the year, including for the Mass Games during late summer. There are no limitations on US citizens joining tours inside the country.

One of the tour operators, Koryo Tours, has lined up something a little different for 2011: a cycling trip through the country in September.

According to Koryo, this will be the first ever cycling tour around the communist nation. Participants on the trip will be in the saddle for around 4-8 hours a day over the course of a week, pedaling to Nampo on the west coast, through the ancient capital of Kaesong and with an option to head up into the mountains around Mt. Paekdu.

The company is planning to bring in mountain bikes from Beijing for the trip and will carry spare parts in a support vehicle, where the saddle-sore can take a break. All the cycling will be on tarmac roads.

As with all trips to North Korea, the group will be chaperoned by local guides. Hannah Barraclough at Koryo says the guides have been in training for the trip and have been cutting back on smoking in preparation. While there will be limitations on where photographs can be taken, regular stops for picture-taking are planned.

Ms. Barraclough says Koryo is planning to take around 20 people on the trip and initial interest has been good.

At the end of the trip, the company plans to donate the bikes to the local people.

The Koryo Tours web page is here.

Read the full story here:
Tour De Corée du Nord
Wall Street Journal Korea Real Time
Alastair Gale
12/3/2010

According to the Donga Ilbo:

North Korea has re-frozen and re-seized South Korean facilities at the Mount Kumgang resort that were reopened in the latest reunions of inter-Korean separated families.

An official at the South Korean Unification Ministry said Sunday that the North attached “frozen” labels on dining and container-type lodging facilities and a vehicle maintenance plant at the resort owned by Hyundai Asan Corp. of South Korea.

Pyongyang will also likely attach “seized” labels on a family reunion center owned by the South Korean government where the reunions took place.

You can read about the family reunions here.

Read the full story here:
NK Re-freezes S. Korean Facilities at Mount Kumgang
Donga Ilbo
11/15/2010

Koryo Tours continues to expand tourism opportunities in the DPRK and confirms the mass games will take place in 2011. According to their newsletter:

1. Mass Games (August 1 – Spetember 9, 2011): The performance will take place in the giant May Day Stadium in Pyongyang, DPRK (North Korea). We do not yet know if the show will continue on into October as it usually does so we advise anyone who is keen to see and experience this unique and spectacular show to aim at booking a tour within these dates in order to have a travel experience like no other. TOUR LIST.

2. Hamhung, Rason: We have some very special tours in 2011 we are able to offer to all tourists including those from the US. Hamhung – DPRK’s industrial 2nd city on the east coast Rason – North Korea’s free trade zone with a train exit to Vladivostok.

3. 16 Day Tour: Our new ultimate tour taking in pretty much everywhere it is possible for tourists to visit in North Korea.

4. Cycling Tour: Experince the DPRK by bike.

5. Madagan, Russia: In June we will offer a trip to the Russian province of Magadan, a place so remote that the locals call the rest of Russia ‘the mainland’.

Here is a full list of 2011 tours.

According to the Daily NK:

A source has reported that the North Korean authorities are allowing ordinary people to visit China again, while claiming it as an example of “Kim Jong Eun’s consideration” for the people.

A lengthy ban on cross border visits was imposed in late August to cover the anniversary of the regime founding on September 9th, Party Delegates’ Conference on September 28th and anniversary of the Workers’ Party founding on October 10th. This has now been lifted.

The source said, “Visiting relatives in China has been allowed since the 5th.“ According to his explanation, the propaganda department of provincial committees of the Party held a lecture on the 5th targeting those requesting permits to visit China so as to educate them on things to keep in mind. During which, a cadre in one lecture reportedly claimed, “Thanks to the consideration of Comrade Youth Captain, private tours to China are to be allowed, and in future will progress in the form of state business.”

The National Security Agency is responsible for preparatory lectures for would-be North Korean tourists; the NSA makes them sign an oath not to reveal any national secrets, not to have any connection with South Koreans or Chinese religious organizations in China, and to submit items that they cannot bring back into North Korea.

However, the source sought to emphasize, “The propaganda department of the Party has carried this out this time in an attempt to let the North Korean tourists know that it is part of “Kim Jong Eun’s consideration.”

Additionally, the source said that the lecturing cadres were keen to encourage tourists to “receive actively and willingly help from Chinese relatives” and told them “there is no limit, so bring as many products and as much money as you want.” However, there was one limitation, “You should not meet South Chosun people or bring South Chosun products.”

The source added also, “The department demanded that would-be tourists offer donations,” saying, “Since the Comrade Youth Captain has done you a special favor, it is reasonable for you to prepare the necessary goods for local kindergartens, schools or other social facilities.”

Interestingly, the process of issuing passports, visas and permits has apparently been significantly quickened.

Normally, when a North Korean who has relatives in China submits an application form to a municipal or provincial office of the National Security Agency, the application goes to Pyongyang NSA via the foreign affairs section in each city or province. The NSA confirms that the applicant has relatives in China through the Chinese authorities, and then the authorities issue permits and visas.

Going through the whole process generally takes between three and six months. Of course, bribes are needed to keep an application moving along, and the process can be expedited depending on the value of the bribe.

However, this time the process, from submitting the application form to receiving the permit, is only 15 to 20 days.

Looking at the situation, the source added wryly, “Since the authorities are encouraging people to take trips to China and therefore tourist numbers will increase, cadres in foreign affairs sections of the local NSA will be in a favorable situation.”

Read the full article here:
North Korean Tourists Back in China
Daily NK
Im Jeong Jin
11/10/2010