North Korean Economy Watch

Yonhap
Sohn Suk-joo
9/6/2007

North Korea has restored an expressway linking its capital and the border town of Kaesong, paving the way for an overland trip to Pyongyang by South Korean President Roh Moo-hyun for the inter-Korean summit early next month, North Korean officials said Thursday.

“Our ministry has fought an audacious battle to realize restoration as soon as possible by mobilizing all resources available, so normal operations are now ensured for the tourist road between Pyongyang and Wonsan, the expressway between Pyongyang and Kaesong and the tourist road between Pyongyang and Hyangsan,” said Pak Chong-son, a deputy bureau chief at the North’s Environment Ministry.

Last month, South and North Korea agreed to hold their second-ever summit in late August in Pyongyang, but just five days later, the North asked to postpone the meeting, citing severe damage from floods. Roh is to travel to Pyongyang by car through Kaesong in the western section of the Korean Peninsula for the Oct. 2-4 summit.

“No matter how big and formidable the damage is, we are not afraid at all and are making efforts to ensure that the country will suffer no damage from flash floods,” Pak said in an interview with the Korean Central Broadcasting Station.

The most authoritative, publicly available map of North Korea
Version 4: August 29, 2007

Download it here 

This map covers North Korea’s agriculture, aviation, cultural locations, manufacturing facilities, railroad, energy infrastructure, politics, sports venues, military establishments, religious facilities, leisure destinations, and national parks. It is continually expanding and undergoing revisions. This is the fourth version.

Additions to the latest version of “North Korea Uncovered” include the city of Manpo along the Chinese border, KEDO, Kumgang Resort expansion, Kaesong Industrial Zone, as well as a few more parks, antiaircraft sites, dams, mines, canals, etc. I have also added more links in the menu which will tell the viewer a bit about the locations themselves. I have also changed the color scheme to make the collage easier to view.

Disclaimer: I cannot vouch for the authenticity of many locations since I have not seen or been to them, but great efforts have been made to check for authenticity. These efforts include pouring over books, maps, conducting interviews, and keeping up with other peoples’ discoveries. In many cases, I have posted sources, though not for all. This is a thorough compilation of lots of material, but I will leave it up to the reader to make up their own minds as to what they see. I cannot catch everything and I welcome contributions.

I hope this map will increase interest in North Korea. There is still plenty more to learn, and I look forward to receiving your additions to this project.

Yonhap
8/29/2007

The labor union of Hyundai Motor Co. decided to provide aid to North Korea to help a South Korean humanitarian group expand a corn-noodle plant in North Korea, union officials said Wednesday, despite the union’s steps to stage a possible strike next week.

The workers at Hyundai, South Korea’s largest automaker, are scheduled to vote Thursday on whether to launch a walkout over higher wages and better working conditions, almost an annual ritual for the 44,000-strong union.

In a statement, the union said it will provide the aid worth 500 million won (US$530,786), including noodle-processing machines, a minibus, a truck and a power generator, to the corn-noodle plant in the North Korean capital of Pyongyang.

The aid will be provided via the Seoul-based humanitarian group Movement for One Korea, an official at Hyundai’s union said by telephone from Ulsan, a port city on the nation’s southeast coast where Hyundai’s main plant is located.

“We decided to provide the aid to help North Korea recover from its food shortage and to implement the union’s corporate social responsibility,” said the official, refusing to give his name.

The timing and other details have yet to be decided, he said.

It is the first time that a union of a private company has decided to give aid to North Korea.

The North has had to rely on international humanitarian aid for the past decade, due to floods, drought and economic mismanagement.

Earlier in the day, conservative newspapers questioned the Hyundai union’s rationale, criticizing it for deciding to give aid to the North as the strike looms.

“It’s an inappropriate time for Hyundai Motor’s union to do this as public criticism is mounting over its 13th consecutive annual strike,” Bae Son-geun, a professor at Korea University, was quoted as saying by the daily Dong-a Ilbo.

Hyundai and its union have had 10 sessions of formal negotiations. The union is demanding an 8.9 percent increase in monthly basic salary, after rejecting the company’s offer of a 5.4 percent rise.

The strike vote will be held on Friday and the outcome is to be announced later in the day or early Saturday, union officials said.

So far this year, Hyundai workers staged a 13-day partial strike over a bonus dispute and a proposed free trade agreement with the United States which they argued could hurt the livelihoods of farmers and factory workers.

Hyundai’s union has held walkouts every year except 1994 since its foundation in 1987. In the past 20 years, the union has gone on strike for 313 days, costing the company 8.94 trillion won (US$9.53 billion) in total lost sales, according to the automaker.

Joong Ang Daily
You Sang-won
8/27/2007

GS Caltex Corp., South Korea’s second-biggest oil refiner, plans to open a gas station near the Kaesong Industrial Complex as its first North Korea project.

To that end, the company signed a memorandum of understanding with Jiudau, a South Korean firm that has received the right to use land in Kaesong from the North Korean government, Jiudau said.

According to Jiudau, a service company specializing in events for inter-Korean cultural and sports exchanges, GS Caltex will spend 17 billion won ($18 million) to build a gas station in the 6,611 square meter (71,160 square feet) site.

Jiudau said North Korea had approved the gas station plans. After approval from South Korea’s Unification Ministry set for next month, Jiudau and GS Caltex will begin construction and open the station in the first half of next year.

Kim Kwang-soo, managing director of GS Caltex, only said, “We are considering a gas station near the Kaesong Industrial Complex as our first North Korea business project.”

Jiudau said that once the Kaesong station is running well, GS Caltex will open stations in other North Korean cities, including Pyongyang.

Hyundai Oilbank, another South Korean oil refiner, is already operating a gas station in the Kaesong Industrial Complex and selling gasoline at $1 per liter.

Institute for Far East Studies (IFES)
NK Brief No. 07-8-22-1

The Bank of Korea released a report on August 17 that details economic estimates on a variety of sectors in North Korea. Overall, North Korea’s Gross Domestic Product (GDP) fell 1.1 percent during 2006, the first time since 1999 that the North has failed to increase its GDP. Inclement weather was one factor that played into a fall in agricultural production, and there also appears to have been little progress in the construction of public works in the country. Overall, North Korean GNI was 2.9 percent of that in the South, with per capita GNI at 1,108 USD, 6 percent of the 18,372 USD per capita GNI in South Korea.

The entire economy of the DPRK is approximately 1/35th that of the South, with the Gross National Income (GNI) a mere 1/17th the level seen in the ROK. This shows a growing divide between the two Koreas, as the comparisons in the previous year were 1/33rd and 1/16th, respectively. Due to the North Korean nuclear issues and other foreign relations problems faced during 2006, a worsening of diplomatic relations with other countries, energy shortages and other economic woes befell the North, putting the entire economy in a difficult situation.

The North showed a weakening of the agricultural and forestry industries, increasing production by a mere 2.4 percent, 2.6 percent down from 2005. Corn and other cereal production grew by 7 percent, but rice was down 6.4 percent, and bean production was down 6.6 percent from the year before, leaving overall grain output down 3.6 percent. On the other hand, shellfish and crustacean harvests grew by 1.5 percent, while timber and livestock harvests remained unchanged.

On the mining front, coal and other non-metal mined resources showed promising increases, but production of lead, zinc, and copper fell by 1.7 percent, compared to the 3.5 percent growth posted in the previous year. Despite promising increases in production of manufactured goods and growth in the chemical and heavy industries in 2005, last year North Korean production growth rates in these fields fell flat at a mere 0.4 percent, increasing production rates of fibers, clothing and shoes, but turning out less kitchenware and food-related products. Coal and fuel products looked favorable, but fabricated metals and machine parts, as well as nonferrous metal products grew at a rate of 1.1 percent, down from 5.4 percent.

Gas-fired electrical generation was up 17 percent, while hydroelectric power grew only 2.7 percent, falling from 4.4 percent in 2005. Other infrastructure projects were also on the decline, with only 49 km of road paved in 2006.

The number of foreign tourists declined, with visitors to Kumgang Mountain falling from 366,000 in 2005 to only 265,000 last year, adding to the 21.8 percent decline in the food and lodging sector, but the transportation and communication sector grew by 5.1 percent, leading to an overall gain of 1.1 percent in the service industry.

The gap in overseas trade between the two Koreas increased from 182-fold to 212-fold as North Korean foreign trade fell off 5.2 percent. Imports in the North were up 2.3%, although seafood imports were down 48.4 percent. The slack was made up by a 34.1 percent increase in the import of plastics, a 31.2 percent increase in imported chemical goods, and a 12.4 percent increase in imported machinery.

During 2006, inter-Korean exchanges grew 27.8 percent, reaching 13.5 billion USD. South Korean exports to the North grew 16 percent as Seoul increased rice and fertilizer aid, and exports to the Kaesong Industrial Complex grew. On the other hand, North-South cooperative projects grew 52.7 percent as South Korea increasingly imported North Korean zinc, sand, and other natural resources.

In order to give some perspective to the North Korean economic data, the Bank of Korea offered the following comparisons:

DPRK/ROK/Ratio
Population (thousand) 23,079/48.297/2.1
Economic Growth (2006) -1.1%/5.0%
Nominal GNI (100 million USD) 256/8,873/34.7
Per Capita GNI (USD) 1,108/18,372/16.6
Exports (100 million USD) 9.5/3,254.6/343.8
Imports (100 million USD) 20.5/3,93.8/151.0
Coal Production (10,000 tons) 2,468/280/0.11
Electrical Use (10,000 kW) 782/6,551/8.4
Electrical Production Capacity (100 mill. KW) 225/3,812/16.9
Petroleum Imports (10,000 bbl) 384/88,843/231.4
Cereal Production (10,000 tons) 448.3/530.0/1.2
Rice Production (10,000 tons) 189.4/468.0/2.5
Seafood Harvest (10,000 tons) 92.3/303.3/3.3
Iron Ore Mining (10,000 tons) 504.1/22.7/0.05
Nonferrous Metals Mining (10,000 tons) 8.6/187.7/21.8
Automobile Production (10,000) 0.44/384.0/872.8
Steel (10,000 tons) 118.1/4,843.3/41.0
Cement (10,000 tons) 615.5/4,920.9/8.0
Fertilizer (10,000 tons) 45.4/318.3/7.0
Chemical Products (10,000 tons) 2.9/145.7/50.2
Railways (km) 5,235/3,392/0.6
Roads (km) 25,544/102,061/4.0
Port Loading Capacity (10,000 tons) 3,700/69,213/18.7
Shipping Capacity (10,000 tons) 90.4/1,180.2/13.1

Daily NK
Han Young Jin
8/7/2007

Defector Choi Young Lim [pseudonym] who entered South Korea this past January was a “broker” in North Korea who would receive money from defectors and deliver it to family members in North Korea. He was exposed while mediating money and arrested but was released after giving bribes.

Choi said, “Previously, even with just evidence that there was a connection to a South Korean, you were dragged to a political prison camp and your family members were exiled. However nowadays, even if it is exposed that a defector who entered South Korea sent money, the family members aren’t severely punished.”

“These days, even if there is evidence that you received wired money, unless there is hard evidence of ties to the National Intelligence Service in South Korea the national security agents just impose a fine and release you,” he said.

According to Choi the fine is around the range of USD $2000.

Most of the foreign currency that enters North Korea these days is done through wired transfers from defectors in South Korea to family members. The money that Korean defectors send to family in the North undergoes a 20-30% processing fee and is finally delivered to the individual. The process is from the defector in South Korea through Chinese exchange broker to North Korean broker.

If USD $100 is sent from South Korea, the brokers share $30 and the remaining $70 is delivered to the family.

Until the mid-1990s, regardless of reason, North Korean authorities would take any monetary matter related to South Korea and punish them as “spies”. However, as the number of defectors concentrated in the North and South of Hamkyung increased after the food crisis, a uniform punishment became difficult to impose.

Choi said, “Even the National Security Agency doesn’t consider receiving money from family in South Korea as a spy activity. If they punish everyone, there is a side effect that even their own personal connections will be made adversaries. Thus, they can’t touch this issue.”

The emergence of taxis targeting large city wealthy classes

Trader Hwang Sang Do [pseudonym] who had traveled Chongjin, Hamheung and Shinuiju to collect trade items to export to China entered the South Korea this March.

Hwang introduced a variety of daily activity that he experienced in North Korea. “Even in Hamheung and Chongjin, taxis are operated. The base fare is around 3,000 won. Some cars have the mark that says, ‘taxi’ but some operate as passenger cars without such marks,” he said.

In the North Korean black market 1kg of gasoline (North Korea ordinarily uses kg) costs around 2,000 won. Hwang says, “There are drivers who solicit customers in front of the Chongjin Station or Hamheung Square Station. There aren’t many customers so when veering outside of central city, they receive the round trip fare.” The customers are mainly trade workers, overseas Chinese emigrants or the wealthy class.

It is known that taxi drivers refurbish used taxis or passengers cars that come in from China, then register it as an institution or business entity and start business activity. As there was an order earlier this year to remove all Japanese cars within 3 years, most of the cars that are on the street are manufactured in China.

Massage Parlors, Skincare Salons – Prostitution Secretly Going On

In large cities of North Korea, motels, massage parlors and skincare salons have been established and prostitution has been going on secretly.

Trade worker Hwang says, “There has been an increase of places in Hamheung motels that also function as saunas or skincare salons. A Chinese style massage at a massage parlor is 10,000 won (around US$3.4) per 60 minutes and there is instantaneous prostitution with female masseuse.” It is told that prostitution goes on for about 20,000 – 30,000 won.

With North Korean bathhouses, a service culture to put women at the forefront has taken place. The owners here use jargons such as “selling a bed” or “selling flowers” to feel out a customer’s intention for prostitution. There are cases where women find private homes to prostitute themselves. Hwang says that because it is easy to make money through prostitution, there has been an increase of female prostitutes.

Previously, if prostitution was exposed, you would be sentenced to forced labor. Even now, the authorities ban prostitution. However, the reality is that related entities have secretly been increasing.

On the other hand, there have been several luxury restaurants that opened in Wonsan and Hamheung. These places have implemented the Chinese service system, so the interior facilities are luxurious and female employees greet customers with a “Welcome” at the door.

Previously, only overseas Chinese emigrants or Chinese businessmen invested in such restaurants but recently, there are many cases where North Korean residents open large restaurants as well. Hwang says that as the Chinese restaurant culture that competes with taste and service infiltrated North Korea, North Korea has been undergoing a huge transformation to gain customers through service.

A service concept to “treat the customer as a king” has been emerging different from 1990s.

Institute for Far East Studies (IFES)
8/3/2007

Pyongwha Motors, the South Korean company producing automobiles in North Korea will expand into truck manufacturing from this year. According to an official from the company, the manufacturer, currently producing six models, plans to begin truck production within the year, and is working together with Hwacheon Motors and other enterprises in the Chinese city of Shenyang.

Pyongwha Motors currently manufactures three models in the ‘Bukkuki’ (Cuckoo) SUV series, a pickup truck, the mid-size sedan ‘Wuiparam II’ (Whistle II), and the minibus ‘Samchunri’ (Throughout Korea). As of yet, the company has not decided what type of truck it will produce. The company’s truck production is a result of demand in North Korea. Farms, organizations, factories and other consumers have been asking Pyongwha Motors to “produce a truck that will allow a little bit more to be loaded” onboard, and the company has been listening.

An official from the company stated, “if truck production gets underway, last year’s production of 600 to 700 vehicles will be surpassed and more than 1000 vehicles [will be produced] this year,” and went on to explain that the next step is to decide on an exact model through cooperation between North Korean and Chinese counterparts.

Pyongwha Motors, operated through an equity joint venture between South Korea’s Pyongwha Motors Group and North Korea’s Chosun People’s Leisure Group, first produced an automobile based on a model of an Italian Fiat, and in its second stage of operations, produced SUVs and pickup trucks. Today, the company is in its third stage of operations, producing minibuses, trucks, and mid-size sedans.

Daily NK
Kim Min Se
8/3/2007

“There is no better way to make a living than being a driver in North Korea. By delivering food, vegetables and even lumber for winter use to companies, one can take a portion as a driver too. Even when transporting radishes or cabbages for Kimchi (Korean cabbage pickles) one can always put aside the ones of best quality in a plentiful amount.”

Defector Kim Choong Il [pseudonym] who had come to South Korea due an unavoidable situation had worked in North Korea as a driver for a company. Reminiscing his days as a driver in North Korea he smiled and even said that he missed the life.

“People who need cars come ask and even bring gas so there are no expenses on my part. I just need to drive. I rarely even ate at home. Most of the time I was treated out. Because there are no means of transportation, everyone wants to use cars. I even make some business when I drive long distances for company-related work. Sometimes when I drive a couple merchants on the road because they beg me to give them a ride, I get drinks and cigarettes for free.”

In South Korea, any healthy adult - male or female - is eligible for driver’s license. However in North Korea, there are several classes of driver’s licenses and they limit the training of drivers. Driver’s licenses are that much recognized in North Korea.

In South Korea, being a driver is not the ideal profession but in North Korea, a “car driver” is very popular. Once you obtain your driver’s license and get assigned to a truck, you never have to worry about making a living again. The income is fairly good.

Kim said, “There is just one time that I faced a difficult situation working as a driver.”

A Conscientious Accountant is the First to Starve

He said, “While transporting radishes and cabbages for the company employees’ use, I put aside 2 tons for an accountant and myself. If a driver takes it alone then he’ll be caught by the accountant so the two collaborate to embezzle goods. But the new accountant was a conservative and nice woman. She refused the 1 ton of cabbages that had been allotted to her and demanded that I bring back my portion too. I begged her “to turn the other way” but it didn’t go through. I ended up restoring the cabbages and radishes.

Moreover, he said, “this nice accountant was the first to starve when the food rations ended in 1995. She had been conservative and waited for rations from the Party but ended up dying. I survived. Even in the Great Starvation period, none of the drivers starved to death.”

To obtain a driver’s license in North Korea, one must learn about the basic structure of the car and simple maintenance operations along with a year of driving practice at an automobile driving school. After a year of education and passing the test, a diploma is given.

Only with this diploma the Automobile Management Bureau of the provincial Safety Agency (County Police Agency) gives out an official driver’s license. At this time a Grade 4 is given. With this “Grade 4″, one can’t automatically start driving.

There are heavy equipment driver’s license to operate excavators and tractors and automobile driver’s license. Heavy equipment driver’s license has 7 grades and automobile driver’s license has 4 grades.

Most “Grade 4″ drivers work as assistant drivers to drivers with much experience for at least 3 to 5 years and gain experience and skills on driving and car repair. Even afterwards, one must give bribes to the affiliated company (factory) to receive one’s own car and drive.

Grade 1 License is Nearly Impossible

Once a driver who has been distributed a car drives without any accidents, their grade is raised once every 3 to 5 years. If they get into an accident, the promotion rate slows down.

According to the testimony of another defector Choi Young Chul [pseudonym] who had worked as a car driver, most drivers obtain a “Grade 4″ status after 10-15 years of experience. However, from “Grade 3″ it’s not just driving that one must excel at. From “Grade 3″ regardless of years of experience and lack of accidents, one must pass the National Public Official Exam to obtain [higher levels].

“Grade 3 drivers are given the same license as a college graduate. In Kimchaek City where I lived there were only two people who had a Grade 2 driver’s license,” he said.

Choi said, “To obtain a “Grade 1″, you must be able to build a car. Realistically even if most drivers drive long-distance for more than 30 years, they remain at “Grade 4″. Even if you graduate from Dukcheon Automobile College (3 years), you’re only given a “Grade 4″. If you graduate with flying colors, you’re given a Grade 3.”

The reason it’s hard to obtain a “Grade 3″ driver’s license in North Korea is because drivers must have overall knowledge about maintenance as well as thorough knowledge and skills on repair.”

With a highway system that is deteriorated and the absence of a car repair system, the frequency of break downs or troubles are very high. Also, most civilian cars excluding military cars have a severe deterioration.

Choi also exposed, “There is an item that North Korean drivers never forget when they leave for a long distance trip. Lighters, rice, drinking water and a pot are integral. It’s like our life. When there’s a severe problem and it’s impossible to fix on the spot, they survive off of the rice and call the factory and wait. Most drivers who have driven for 10 years struggle from gastroenteric trouble.

It’s Choi’s explanation that if a car breaks down in an uninhabited area in the winter or a mountainous road, it can eventually lead to a human casualty. Thus it is the driver’s burden to take care of the damages and repair as well as the casualties from it.

On the other hand, the North Korean military trains army drivers for the military through a separate driving school in each troop. Recruits who had just graduated from middle-high school receive education for a year at the driving school to work as army drivers. In “Ohro Driving School” in Youngkwang, South Hamkyung Province and “Lanam Driving School” in Lanam-district, Chongjin, North Hamkyung are representative army driving schools in the Hamkyung Province areas.

Once they finish their rookie training and dispatched to a base, they fulfill their army duty by working as a car driver. After being discharged, these military drivers must go to the corresponding Defense Department Automobile Management Bureau and exchange their licenses with societal driving licenses.

The amusing fact is that at this time most army drivers receive societal driving licenses that is a grade lower than one that was given in the military. It is also evidence that the North Korean society does not trust the discharged soldiers who tend to cause accidents frequently.

Yonhap
8/1/2007

Pyeonghwa Motors Corp., a South Korean automaker with exclusive rights to produce cars for the North Korean market, said Wednesday it has been in talks with Chinese automaker Brilliance Automotive Holdings Ltd. to assemble trucks in North Korea, a company official said Wednesday.

In North Korea, Pyeonghwa Motors is assembling some 600-700 vehicles, including sport-utility ones, sedans and mini buses, a year at its plant in Nampo, near the capital Pyongyang.

The North has requested Pyeonghwa Motors to produce trucks for farmers and factory workers, the official said.

“We will soon select a truck model after consultations with North Korean and Chinese sides,” the official said on the condition of anonymity, citing protocol.

If the North Korean plant begins production of trucks, annual vehicle sales of Pyonghwa Motors in North Korea will exceed 1,000 units, the official said.

The North’s economy went into a steep decline in the early 1990s after the collapse of the Soviet Union, according to reports released by South Korea’s Bank of Korea.

However, since the late 1990s, the North Korean economy has been growing again, helped by an influx of foreign aid and better weather, the South’s central bank said.

Now available on Google Earth! 
(click above to download to your own Google Earth)

North Korea Uncovered v.3

Google Earth added a high-resolution overlay of the area between Pyongyang and Nampo.  In it, most of the Koguryo tombs listed with UNESCO are now distinguishable.  In addition, viewers can see the latest Kim Jong Il palace (including a yacht), the DPRK’s premier golf course, and the Chinese-built Taean Glass factory.  I have also made some progress in mapping out the DPRK electricity grid.

This is the most authoritative map of North Korea that exists publicly today.  Agriculture, aviation, cultural institutions, manufacturing, railroad, energy, politics, sports, military, religion, leisure, national parks…they are all here, and will captivate anyone interested in North Korea for hours.

Naturally, I cannot vouch for the authenticity of many locations since I have not seen or been to them, but great efforts have been made to check for authenticity. In many cases, I have posted sources, though not for all. This is a thorough compilation of lots of material, but I will leave it up to the reader to make up their own minds on the more “controversial” locations. In time, I hope to expand this further by adding canal and road networks.

I hope this post will launch a new interest in North Korea. There is still plenty more to learn, and I look forward to hearing about improvements that can be made.