North Korean Economy Watch

Daily NK
Jeong Jae Sung
9/18/2007

North Korea has requested for negotiations to begin at the Inter-Korean Summit Talks on the co-development of the Kaema Plateau, also known as “the roof of Korea.” The request was taken into consideration by the Ministry of Unification.

In light of North Korea’s request, the Ministry has recently conducted a survey of North Korean defectors from South Hamkyung, Yangkang and Jagang, where the Kaema Plateau is located, regarding the significant geographical features, the status of current development at the plateau, and the intentions of the North Korean government.

Kim Hyung Seh (pseudonym), a North Korean defector from Yangkang, stated that “I was told by interested parties at the Ministry of Unification that right after the Summit Talks North Korea will deliberate the Kaema Plateau development issue and that they needed my cooperation for a sound investigation.”

According to Kim, the questions asked focused on the North Korean government’s purpose in developing the Kaema Plateau, the potential value of this site as a tourist resort, and wether or not there is enough possibility for tourism given the ever increasing number of visitors from Mongolia.

He asserted that “the Kaema Plateau is a huge forest which has no value as a tourist attraction at the moment. All the particular tourist attractions in North Korea retain villas owned by Kim Il Sung and Kim Jong Il, but there are none at Kaema Plateau, which speaks for itself.”

Kim also added that the affiliates of the Ministry of Unification did not know where the Kaema Plateau was.

“It is difficult for North Korea to develop the area around Kaema Plateau, which is why they followed the shoreline to develop their railways. In order to make this project possible, the basic transportation infrastructure such as airline facilities, roads and railroads must be established first” advised Kim.

The Ministry of Unification has denied every having conducted these surveys. Regarding the interviews with defectors, one affiliate of the Ministery said “We have not held such meetings,” and another said that “We have met [with the defectors], but we never asked about the Kaema Plateau issue.”

Kim Joong Tae, the Director of the Ministry of Unification’s Inter-Korean Economic Cooperation Team, who interviewed Kim, told the DailyNK that “North Korea has never suggested the development of Kaema Plateau. The Ministry merely asked North Korean Defectors about tourism development at Mt. Baekdu.”

The Kaema Plateau is situated across the Middle and Southern region of Yangkang Province, South of Northwest Hamgkyung and East of Jagang. The total area is 14,300 km2 and the height is 1,340m. It is the highest and widest plateau in the entire peninsula, also known as “the roof of Korea.”

Kaema Plateau has abundant forest resources which provide avariety of material lumber. There is also a rich supply of mineral resources, including steel, magnesite, gold, apatite, and copper.

The only source of transportation infrastructure is the military airfields in Pungseo and Jangjin.

It is probable that North Korea’s reason for suggesting the development of Kaema Plateau is to make it tourist site, showcasing various amusment parks and ski resorts. As it is now, this area is completely restricted to civilian traffic. If transportation in the high region is developed, this could be applied for military purposes.

Lee Jin Young (pseudonym), a defector currently residing in South Korea’s Yangcheon district, explained that “the Kaema Plateau is so treacherous that it is only used as a military training field for Special Forces. This was the one area that allied forces could not get control of, even during the Korean War.”

She also added that, “rather than developing Kaema Plateau as a tourist attraction, they should develop the Baekmoo Plateau which includes Mt. Baekdu. The suggestion to develop the Kaema Plateau can only be seen as their intention to construct a better transportation infrastructure.”

Therefore, even if South Korea were to agree to the co-development of Kaema Plateau, there will be huge difficulties regarding the expansion of the social infrastructure and compromising with the military. In particular, the construction of Korean roads, railroads and airfields in the region is sure to cost a lot of money.

Korea Times
Andrei Lankov
9/16/2007

The late 1990s will go down in North Korean history as years of frantic trade activity. As a witty North Korean once put it: “There are two types of people in North Korea now: those who trade and those who are dead.”

I’ve met a number of former North Korean merchants, and today I would like to tell the story of one such woman. The story is typical in many respects, and I suspect that countless thousands of her peers would narrate something similar.

When the Dear Leader died in 1994 and things began to fall apart, Ms. Yoo was in her early 20s, doing semi-skilled work at one of the offices in the North Korean capital.

By autumn 1996, even in privileged Pyongyang, food rations were coming less and less frequently. Ms. Yoo’s office, like many other offices across the country, decided to shrink its workforce.

Every month all workers were given one week free, on the assumption they would somehow fend for themselves. They were not paid that week’s wages, and did not receive rations either.

Essentially, it was Ms. Yoo’s mother who was the brains and energy behind the entire enterprise. A kindergarten teacher, she was a typical Korean “ajumma” at her entrepreneurial best: charismatic, charming when necessary, clever andquick-witted.

Actually, Ms. Yoo did not know much about her mother’s contacts and plans.

Now, a decade later, she still remains ignorant. However, one thing was clear: the mother had good connections among the personnel of the hard currency shops.

How did she manage to acquire such connections? After all, the hard currency shops are staffed with privileged people, while a kindergarten teacher is not very high in the North Korean pecking order.

We know not. At any rate, these connections existed and this fact sealed the fate of Ms. Yoo. It was not what people would talk about so much, but Ms. Yoo believes that many of her colleagues started private trade in those years, when it began to flourish. She was no exception, but her situation was better since her mother would take care of business planning.

Ms. Yoo’s mother chose cigarettes as their major merchandise. The smuggled Chinese cigarettes sold extremely well, the packs were light and so could be easily moved by the girl in her early 20s, and profits were very high.

In late 1996 a pack of ten would cost 280 won in the borderland areas, but could be sold in Pyongyang for 400 won wholesale. Later, Ms. Yoo found ways to buy the cigarettes even cheaper, at 240 won a pack, purchasing the merchandise directly from the smugglers instead of the local go-betweens.

Mother sold the cigarettes to the hard currency shop. It is not clear what happened to the merchandise eventually. It seems that the shop managers simply pocketed the money they received from the sales of the cigarettes.

A single trip would garner a net profit of some 20,000 won, and she could go once a month (sometimes more frequently). Now consider that Ms.Yoo’s official salary was 80 won a month, and her father, a junior college teacher, received something like 150 won a month, so the black market money from the cigarettes ostensibly appears an outrageously large amount of money.

However, in the world of the Pyongyang black market, which began to emerge around that time, this was not seen as a fortune. Still, Ms. Yoo spent no more than 1,000 won a month on herself buying whatever was her fancy.

One of her more extravagant splurges was on a South Korean cosmetics set which cost 800 won, or roughly her official annual salary. At the time she did not quite realize where the goods were produced, since being a good, politically correct girl, she still believed that South Korea was populated by beggars living in constant terror of the sadistic Yankees!

But what about travel permits? After all, for decades no North Korean was allowed to leave the county without a permit issued by the police. Well, by the mid-1990s the travel permit system was in disarray with a single exception: entrance to Pyongyang remained strictly controlled.

However, in most cases money talked, and permits could be issued for a moderate bribe. However, Ms. Yoo and her mother discovered an even easier way. They did not bribe officials but bribed railway policemen, those who were on duty on the North Korean passenger trains.

For 500-1,000 won, plus free booze and some presents, a policeman would make sure that Ms. Yoo would reach her destination and come back with sacks of cigarettes, and he also would take care of her personal security.

Better still, the 500-1,000 won bribe was sufficient for few round-trip commercial expeditions. The trips were hard. The carriages were unbelievably crowded, with people packed everywhere, sitting on roofs and ladders. As Ms.

Yoo describes, “even on the roof one could not see a square centimeter of paint, people there were sitting that tight.” Another problem was the frequent delays, so the journey of some 400-500 kilometers would normally take 2-3 days. Still, the money was good, and Ms. Yoo enjoyed the adventure, and even now, ten years later, she seems to be proud of her ability strike deals, calculate profits and losses, and find suppliers.

However, Ms. Yoo’s business activity did not last for long. Somewhat against her will, she found herself lured (or kidnapped) to China and soon fate turned in a way which made a return home impossible.

Institute for Far Eastern Studies
NK Brief No. 07-9-13-1

It has been reported that Chinese and North Korean governments are working in unison to push forward with a plan to jointly build a goods distribution center in the North Korean city of Sinuiju. According to Yonhap News, China proposed a plan for North Korea to build a ‘DPRK-PRC Friendship Distribution Center’ in Sinuiju, and the two countries are currently involved in negotiations over the idea. North Korea has already signed an investment agreement welcoming Chinese investment firms.

In conjunction with this, North Korean Chamber of Commerce Secretary General Yoon Young-suk held an interview with Yonhap News in the Chinese city of Changchun on September 3. At that time, while refuting a new push for the development of the Sinuiju Special Administrative Region, he stated that “regarding the procurement of a range of goods required in [North Korea], I have heard talk of a plan for a DPRK-PRC Friendship Distribution Center in part of the Sinuiju region.”

The scope of trade between China and North Korea is growing by the day, yet the Sinuiju Customs Office responsible for customs clearance for Chinese imports was limited from the beginning, and the need for a replacement facility has been brought up time and time again. This new distribution center appears to be in response to these calls for a larger facility. The construction of the center will be a cooperative project involving materials and capital from China, while North Korea will provide the land and labor.

A trader from Pyongyang acting as a confidential informant stated, “repairs on the road portion of the [steel bridge spanning the Yalu River connecting Dandong and Sinuiju] carried out from the 10th to the 26th of last month were also part of the material aid from the Chinese.” Officials at the North Korean consulate in Shenyang traveled to the bridge on the 23rd of last month to inspect the progress of the upgrades.

Not long ago, a Chinese trader traveled to Pyongyang, then by road to Sinuiju and over the river to Dandong. He observed, “many construction workers involved in large-scale ground leveling construction work along the railroad tracks running through the heart of downtown Sinuiju,” and, “approximately 10-20 meter deep, very large scale construction appeared to be underway.”

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.

Daily NK
Kwon Jeong Hyun
9/5/2007

At the landslide restoration of Manpo railroads, only by shovels and hoes

The operations of the Hyesan-Manpo Line connecting the border city of Manpo in Jagang, and Hyesan in Yangkang, has ceased due to a landslide accident occurring at the end of July.

The Hyesan-Manpo Line is the line passing through Jaseong, Jagangdo and connecting to Haesan City through Yangkang’s cities, Kim Hyung Jik and Kim Jong Suk.

On the 30th of August, a landslide accident took place being approximately 1.2 km from the Manpo Marine Transportation Office for the Yalu River upper stream direction. Around 20m of rail was covered by the slide.

To clean up the landslide, railroad laborers were urgently enlisted, but the equipment for restorations consisted only of shovels, hoes, and fertilizer bags, so the fixed date of recovery has continuously been delayed.

Manpo faces Jian in Jilin, China. It is a point of strategic importance for rail transportation. Besides the Hyesan-Manpo Line, which is the branch line for the Yalu River, it is the terminal station of the Manpo Line starting from Sooncheon, South Pyongan and an international train operating once a day to Jian, China is also connected to the city.

North Korea and China alternately operate every other year the international line train connected to Jian, China. Starting this year until next year, North Korean trains will be coming and going from China for two years and from 2009, a Chinese rail will frequent Manpo.

One source related to Jian Station explained, “Through the international rail between Manpo and Jian, North Korea’s timber and medicinal herbs entered China and motorcycles, bicycles, and electric home appliances have gone into North Korea.

Additionally, I have captured on camera images of North Korean civilians at the Yalu River. Initially from the outside, I could confirm that the civilians’ health conditions. attires, and accessories have improved much compared to the past. Chinese-made motorcycles could easily be spotted and the number of cars has increased significantly as well.

A Chosun taxi driver whom I met in Jian explains the defector repatriation situation in the graphic epithet, “Collarbone Steel Lines.”

He said that at the time when two defector women were forcibly captured at the public security office in Jian in 2001, the North Korean public security personnel pierced steel through the collarbones of the women and dragged them. Should I believe such a word-of-mouth tale? It is a similar rumor to the story of defectors, forcibly repatriated through the Hoiryeong tax office in 2000, who were taken by steel lines hooked through the nose.

Due to the continuous inspection of the Jian Police and the neglect of Korean-Chinese society, it is not easy to find defectors in Jian nowadays.

Jian is developing as a tourist spot through which South Korean tourists starting from Dalian and Dandong inevitably pass on their way to Baekdu Mountain.

If one turns his or her head while standing in the front of the monument of Gwanggaeto the Great, North Korea’s propaganda slogan, “Let us thoroughly observe the teachings of the Great General and comrade Kim Il Sung” is discovered.

I am curious what kinds of thoughts will form in South Koreans, who seek Jian in order to find the vestiges of past history, regarding the current progress of North Korea’s history and the approaching reunification.

Korea Herald
9/5/2007

A Boeing 747 carrying 75 tons of emergency relief goods worth $8 million arrived in Pyongyang last week by a direct flight from the United States, while denuclearization talks between the two countries were making progress in Geneva.

Officials here say it was the first time that a full planeload of U.S. emergency relief materials were delivered to North Korea since Pyongyang began accepting private U.S. donations in the mid-1990s after severe floods hit the country. The airlift, provided by Samaritan’s Purse, a North Carolina-based Christian charity organization, consisted of medicine, medical supplies, antibiotics, temporary shelter materials and other items needed for the relief of flood victims.

U.S. transport authorities gave their permission for what was known as “the first direct flight from continental U.S. to North Korea since the Korean War.” Airlifted supplies included goods purchased with a $50,000 grant from the U.S. government, according to a press release from Samaritan’s Purse, currently represented by Franklin Graham, son of the late evangelist Billy Graham. A dispatch from the (North) Korean Central News Agency said Pyongyang’s Foreign Minister Pak Ui-chun met the American visitors who delivered the relief materials.

The American charity group’s swift, large-scale delivery of emergency aid was a noteworthy gesture of friendship, shown in response to the disastrous floods last month. After years of extreme antagonism over the North’s nuclear armament, such a people-to-people exchange of goodwill is inspiring.

The Graham family has special relations with North Korea: Billy Graham’s wife, Ruth Bell, attended Pyongyang Foreign School in the 1930s, Billy Graham visited North Korea twice in the 1990s and other family members traveled to the country in recent years. At a time when diplomatic relations are being explored between the two countries, such personal ties can prove valuable in promoting mutual understanding. Many hope “swords into ploughshares” will not remain a biblical prophecy.

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.

Daily NK
Kwon Jeong Hyun
8/24/2007

The term for the train crew of North Korean Pyongyang-Beijing international rail connecting North Korea and China is limited to two years, relayed a related person of Dandong Customs in China on the 22nd.

The source at the customs said in an interview with DailyNK, “The crew of Pyongyang-Beijing international rail is a very competitive position. Only by paying a significant sum of bribe can one gain such a position.”

The source said, “Most of the international rail crew simultaneously trade. The crew who can conduct secret trade via trains is known as a covetable profession among the North Korean citizens.

Further, “The term of employment for North Korean crew do not surpass two years. There is so much corruption and the positions are quickly exchanged after the upper-level management receiving bribery from other applicants.”

He said that he has received introductions from new North Korean crews to watch over them during the 2 years.

The person said, “Most of the crew do secret trade. They think that they have offered that much, so they should earn that much as well. There are many instances where even the customs is aware of what is going on.”

He said that the product which is usually traded is cigarettes. “Cigarettes are brought in North Korea at around 4 boxes (around 2,000 packs) per a person.”

“They relay goods that outsiders send and also goods that cannot legally come out of North Korea. Please understand my difficulty in revealing the situation in greater detail. All kinds of goods can be secretly brought onto trains.”

The cigarettes are a favorite good which both the North Korean and Chinese customs make efforts to pay back the duties. However, by bringing these cigarettes secretly into North Korea without the payment of duties, the making of money is inevitable.”

The source said, “According to what I have heard from Chosun (North Korea) crews, there is a saying that failure to earn several hundreds of thousands of dollars during the two years is moronic. How many train crew are there? They consider the international rails as private trading floors, so what is there that they cannot do? I know of workers of the international freight trains who saved over 50,000 dollars.”

He said, “While observing North Korean railroads for over 10 years, I only saw once one person working as a crew for the freight train for four years.”

International rail between China and North Korea operates twice weekly. 2-3 passenger trains on the back of the Pyongyang-Shinuiju rail and 1 freight train have been divided as international rails and operate to Beijing.”