Daesong Bank launches Kumgil Card

December 16th, 2016

Simon Cockerell of Koryo Tours has posted images of a new prepay card offered by Daesong Bank (대성은행/Taesong Bank) called “Kumgil” (금길) or “Gold Road”:

The front of the card contains the brand name, logo (a diamond?), sponsoring bank name, and the phrase “electronic payment card”. I spoke with James Pearson at Reuters about the 16 digit number, and based on his research it does not appear to be directly related to the Foreign Trade Bank (FTB). Mr. Cockerell reports on his Instagram page that the card uses the same retail payment equipment as the Narae Card (which is controlled by the FTB), so that means the two banks (Daesong and FTB) have an established clearing mechanism to settle electronic balances (Q: Are other NK banks using this same equipment/part of the same network?). FTB is supposedly the official repository of the state’s hard currency reserves for the purposes of managing foreign trade and domestic hard currency transactions for imported goods, though it apparently does not have a monopoly on individual/company hard currency accounts. Daesong Bank (Taesong) is has been linked to the KWP’s Office 39.

The back of the card reads:

주의사항 (Caution)
1. 카드앞면의 전자요소가 손상되지 않도록 주의하여주십시오.
Be careful not to damage the chip on the front of the card
2. 암호를 련속 3번 틀리게 입력하면 카드의 사용이 중지됩니다.
The card will stop working if you enter the wrong password 3 times.
3. 카드를 분실한 경우에는 즉시 카드발급지점에 알려주십시오.
If you lose the card, immediately notify the branch that issued the card.
4. 기타 제기되는 문제들은 카드발급지점에 문의하여주십시오.
For any other issue, consult the branch that issued the card.

This card is apparently for hard currency purchases only, and it was launched in early 2016. It is functionally the same as the Golden Triangle Bank Electronic Payment Card, Jonsong Electronic Payment Card, KoryoBank Electronic Payment Card, Narae Electronic Payment Card, Ryugyong Commercial Bank Electronic Payment Card, and Sowol Electronic Payment Card.

I should also mention that none of these are “debit cards” since they are not linked with a specific checking (demand) deposit. These are pre-pay cards only. These cards are essentially private digital currency issued by an established bank. The bank maintains control of the hard currency used to top off the cards, which it uses to generate income (float), while the card holder gains the convenience of not having to carry cash, which does offer some security from petty crime, but makes retail transactions more observable to security agencies.

Mr. Cockerell also posted the picture of a loyalty card for the Moran Shop (“Bar”):

He reports that “every time you spend money there it’s recorded on the card and when you reach $500 equivalent in total then there’s some free gift.”

I have written about some other loyalty programs here and here.

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New Kim Jong-un/executive runway under construction

December 15th, 2016

In this Google Earth image, we can see a new Kim Jong-un/executive runway being installed in Unsan County (은산군) Between the Sunchon Cement Factory and a large industrial construction site just south of the runway.

The new runway is approximately 870 meters and is intended for small Cessna-style aircraft–similar to other runways constructed throughout the country intended for the leader. It appears the runway construction is being carried out in coordination with the new industrial construction site taking place just to the south of it.

The new large construction site itself is over 1.5km in length, but its purpose remains a mystery. Like many projects, it has not been mentioned in the official media. If any readers have any ideas what any of the building foundation imprints could be for, please let me know.

I have already talked about this with Radio Free Asia.

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DPRK reports tens of thousands of new houses constructed this year

December 15th, 2016

Institute for Far Eastern Studies (IFES)
2016-12-15

The Korean Central News Agency (KCNA), North Korea’s official wire service, reported on December 3 that tens of thousands of new houses had been built this year. The KCNA report stated that six counties/cities in areas damaged by floods in North Hamgyong Province had seen 19,000 new apartments constructed with families then moving in.

In imitation of the city of Kimchaek, hundreds of housing units have been built in Puryong and Hwadae counties, while hundreds more were constructed in Kangryong county, and 200 multistory houses in Paechon county. Eighty (80) apartments were built at Ryongjon Fruit Farm in Pukchon county, 150 at Chawi Cooperative Farm, and 200 at Sujin, Uiju County.

With flood damage in late August, the Party central committee announced on September 10 that the ‘200 day speed battle’s goal’ would be to restore damaged areas, and reconstruction of housing in those areas finished on November 11. People have now begun moving in.

Unlike on Ryomyong Street in Pyongyang — extolled as a personal achievement of Kim Jong Un — construction outside the capital is said to not be progressing properly. Housing construction in Yokjon, Hoeryong, North Hamgyong that began in 2010, as part of a campaign celebrating the personality cult of Kim Jong Suk (the wife of Kim Il Sung), has yet to be completed. There is talk that completion is slated for 2017, but people living there do not believe that will happen.

However, sources indicate that the North Korean authorities have invited individuals to get involved in construction, and thus the project in Hoeryong has resumed. It seems that because construction was part of the campaign to build the personality cult of Kim Jong Suk, there was a fear that stopping the construction would badly influence internal unity.

With the state lacking funds but deeming the continuation of the construction necessary, individuals were eventually allowed to take over. Apparently investors were induced by promises that they would get 50 percent of the proceeds generated from the new housing stock.

Sources say that construction began again in March, and construction materials continue to be brought in. Individual investors have hired workers separately and are managing on-site operations.

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DPRK builds replica Blue House (UPDATE: And destroys it)

December 11th, 2016

UPDATE 2 (2016-12-12): Kim Jong-un visited the nearby training grounds of “Special Operation Battalion of KPA Unit 525,” the unit that carried out the assault on the replica Blue House, on November 4 of this year. Here is the model of the actual Blue House at the training grounds:

Although Kim Jong-un visited this location in early November, these images were apparently not published until after the combat drill was officially announced on December 11. No doubt they would have given away the secret if they had been.

The model has a few discrepancies when compared with satellite imagery, but is a fairly accurate representation of the actual Blue House and its surroundings.

One soldier was also looking at this satellite image on a computer:

The caption reads (roughly): “View of US-ROK Combined Forces Command basic command post. [UPDATE] In the comments section, James Pearson at Reuters has identified this as the Yongsan Garrison ( 37.536828°, 126.983589°) in Seoul:

UPDATE 1 (2016-12-11): The North Koreans finally got around to destroying the Blue House replica. According to Rodong Sinmun (2016-12-11), Kim Jong-un watched a combat drill of Special Operation Battalion of KPA Unit 525 on the outskirts of Pyongyang:

 

 

 

Kim Jong-un appeared happy with the test:

Here is the Google Earth image of the replica:

Here is the video.

So why stage this combat drill now? Inter-Korean politics? UN Security Council meeting on NK human rights?

ORIGINAL POST (2016-4-27):

Blue-house-replica-ROK

The-real-blue-house

Pictured above: (Top) South Korean military image of the replica blue house built in North Korea (Bottom) A Google Earth satellite image of the Blue House in Seoul.

The South Korean military is reporting that the North Koreans have built a replica of the Blue House in “Dewonri/Daiwonri”. According to the Japan Times:

North Korea is preparing to blow apart a replica of South Korea’s presidential Blue House on an artillery range outside Pyongyang, in an apparent propaganda exercise, the South’s military said Wednesday.

An official with the Joint Chiefs of Staff in Seoul said the North’s military had been detected building the half-sized replica at the Daiwonri range near the capital earlier this month.

“The North is apparently preparing to showcase a mock attack on the Blue House using the replica as a target,” the official said.

Around 30 artillery pieces, hidden under coverings, have been brought to the range.

“The exercise is believed to be aimed at stirring up hostility against the South, summoning up loyalty (to leader Kim Jong Un) and fueling security concerns in the South,” the official said.

I refer to this area as the “Taewon-ri (대원리) Artillery Range”, and I have previously written about it at NK News here. The Americans call the location “Sungho Dong Military Training Area”.

The South Korean military also released a second photo:

area-near-Taewon-ri

 

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The size of North Korea’s market economy, and why it matters

December 10th, 2016

By Benjamin Katzeff Silberstein

The other day, South Korean think-tank KINU (Korean Institute for National Unification) reportedly claimed that North Korea has 404 official markets in total. As Curtis Melvin has already pointed out on twitter, the real number is actually higher, but all this depends on what precise definition you use of markets (institutionalized and government recognized, versus operating in a legal gray zone, et cetera). As this report by the U.S.-Korea Institute laid out last year – also using satellite imagery, like the KINU report does – markets have grown significantly in size since the early 2000s.

The more interesting figures, in my opinion, are KINU’s estimates for what the markets actually generate in terms of income for the government, and how many people they employ. Below, I place these figures in a comparative perspective within the economy as a whole, and discuss the proportional weight of the markets in the North Korean economy. But first, some of the usual caveats:

As with any figures relating to the North Korean economy, a great deal of caution must be exercised in approaching these numbers. It would seem nearly impossible, for example, to accurately calculate the number of people employed by the markets. In theory, this should not be that hard. Using Google Earth, you can measure, with a fair degree of accuracy, the size of the trading grounds, and knowing the rough size of the average market stall in a North Korean market and how many people work in each one, getting a rough number for the amount that they employ should not be impossible. It would be a very rough estimate but arguably that is better than nothing. But in practice, it would still not give the full story of how many people work in the markets, since many people work there part-time, at least according to (possibly outdated) anecdotal evidence.

Moreover, it is important to remember that the market system is not the entire private sector – many other types of exchanges and transactions go on in the North Korean economy, not all recognizable from above, in complexes such as residential buildings and the like, where small business have been known to operate from. So any number for government revenues, it is important to bear in mind, will only be an estimate (again, a very rough one) for the specific type of markets that KINU has recorded. KINU does not seem to have made its report available online yet – perhaps their methodology is laid out clearly enough to answer some of these questions.

What do the numbers tell us?

Still, the numbers are interesting as starting points for a broader analysis of the proportions and size of the North Korean economy. Starting with the number of individuals employed within the market system, KINU puts the number at 1.1 million. This is about 1/25 of the entire population of the country, as derived from the 2008 census. Table 34 (page 187 and onward) gives the total working-age population as approximately 17.37 million. Subtracting the share of the population listed as “studying,” we get around 16.4 million. Further subtracting the share of the population listed as “retired,” which arguably we shouldn’t do since elderly North Koreans are known to be significantly involved in market activities, we get approximately 13.3 million individuals. I do not subtract the share listed as “doing housework” simply because it seems far too unlikely that such a category in North Korea would really be excluded from the market labor force.

Just assuming as a theoretical experiment that KINU’s figures and the census numbers are accurate, we get a 7.5 percent share of people employed in the official market sector. In reality, the share may well lower since many people in the demographic groups subtracted are known to be involved in market activities. Conversely, it may be higher if KINU’s number does not take part-time workers into account or otherwise underestimates the number of market workers. Wheher or not one thinks this to be a high or low number is a matter of perspective. For comparison, the share of the labor force employed in retail trade in the United States was 10.2 in 2014.

Another interesting figure KINU gives is that for government revenue from the markets. Again, this, too, should not be hard to estimate in theory: if you approximate the amount of market stalls through satellite imagery and multiply the amount by the fee paid by each trader to the government, it shouldn’t be impossible to get a rough estimate for how much the trade brings the government. But of course, here, too, complications abound: when looking at markets from above, it is nearly impossible to determine exactly how large the actual trading grounds are, for example, and how much is made up of administrative and storage facilities. Still, an approximate estimate is immensely valuable as a starting point for a broader debate.

According to KINU, the North Korean government collects between $13 and $17 million per day in fees from market traders. Ever since 2003, the North Korean market regime has become increasingly formalized and incorporated into the official economy. This trend has reportedly continued under Kim Jong-un as well, and arguably accelerated during his tenure. This is clearly a wise move from a policy perspective: the government needs the markets and it needs the revenue, and their depiction as a threat to the regime may not be the full story.

Using the low number of $13 million gives us a figure of $4.7 billion in revenue per year, while the higher figure of $17 million gives $6.2 billion per year. Both the low- and the high-end estimates would put government revenues from market fees at a significantly higher figure than, for example, North Korea’s trade with China. In 2015, for example, North Korea’s exports to China estimated a total of $2.95 billion. The latest sanctions additions are estimated to take off around $700 million from North Korea’s export incomes. It is important to remember that even if they were to accomplish that, which remains doubtful, North Korea still has a domestic economy that matters greatly too. And remember – these are only estimated (estimated!) figures for government revenue from a specific type of market. They do not represent the entire private sector in North Korea.

So, while the role of exports should not be underestimated, it is important to remember that North Korea has a domestic economy of considerable size. Perhaps whatever pressure the sanctions applies on the North Korean economy could serve as an argument for those in the policy bureaucracy pushing for economic reforms that could further let the private economy develop.

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KINU report claims North Korea has 404 markets

December 10th, 2016

Benjamin Katzeff Silberstein 

As reported by Yonhap here (I will try to find a link to the full report as soon as it is up):

North Korea currently has 404 official markets which employ some 1.1 million people, a local think tank said Friday.

The Korea Institute for National Unification (KINU) came up with the figures based on an analysis of the North Korean markets using Google Earth and a survey of North Korean defectors. The total does not include unauthorized markets.

Google Earth is a Google application that lets the user look at any corner of the earth as if viewed from a satellite.

The average number of customers reaches 57,000 per market. Nine markets are larger than South Korea’s famous 14,437-square-meter Dongdaemun Market in terms of their respective size, according to a KINU report.

The institute estimated North Korea collects US$13-17 million a day in usage fees from merchants selling goods at the markets. The communist state has received the fees since it gave an official permit to the markets in 2003, it said.

The communist state also has many temporary markets that have not gotten official authorization from the state, known as “Jangmadang.” These markets are set up in vacant fields where local merchants gather to sell and trade goods.

Full article:

N. Korea operates 404 official markets: report
Yonhap News
2016-12-10

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KCNA reports on Kangryong Green Zone

December 9th, 2016

The Kangryong Green Zone was first announced on a promotional VCD given to foreign participants of a SEZ conference in Pyongyang in October 2013. However, the project was not formally announced in KCNA until July of 2014. KCNA has not mentioned it again until today.

According to KCNA:

Pyongyang, December 9 (KCNA) — The DPRK has pushed ahead with the project to develop Kangryong County of South Hwanghae Province into an international green model zone.

Kangryong County has favorable conditions for the project, as it is bound on sea rich in marine resources like sea cucumber and scallop. And its beachfront is abundant in energy resources, including wind, solar and tidal powers.

The county has circumstances favorable for sustainable development of agricultural production by means of bettering its ecosystem with organic farming method and introducing ring-shaped rotation production system.

In this regard, Hong Kil Nam, director of the Secretariat of the Korea Green Research and Development Association, told KCNA:

The county is highly potential to be a world-level green zone for its excellent natural ecological environment and good conditions for the development of fishery and agriculture.

With an increasing interest of the government in the county, a master plan for developing the whole county into an international green model zone was well matured in keeping with the reality of the DPRK and the world trend of development.

The master plan regards it as its principle to protect and improve the county’s natural ecological environment, set up a system of ecological circulation featuring the green zone, raise the utilization of resources and energy to the maximum and achieve the sustainable economic development. To this end, the plan includes such detailed projects as construction of an industrial zone for production of green goods, infrastructure and tourist zones with populated, forest and other areas.

Meanwhile, it is gaining momentum to draw up detailed plans and create a favorable environment for investment.

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30 Ancient Koguryo Tombs unearthed in DPRK

December 8th, 2016

Pictured Above (Google Earth): Chondok-ri ( 38.481739°, 125.927308°) with a 2km radius indicating the approximate location of the tombs

According to KCNA (2016-12-8):

Archaeologists of the DPRK Academy of Social Sciences have recently unearthed a large group of tombs dating back to Koguryo Kingdom (B.C. 277-A.D. 668).

In this regard, Dr. Cha Man Dal, head of an excavating party under the Archaeological Institute of the academy, told KCNA:

The group tombs are located on a hill, about 2 kilometers northeast of Chondok-ri seat, Pongsan County of North Hwanghae Province.

There are nearly 30 tombs in four rows in an area of 185 square meters with individual ones around it, which shows the area was a big burial site with hundreds tombs.

Most of tombs are 10 meters in diameter and 2 meters in height and the biggest one is 17 meters in diameter and 2.4 meters in height. The tombs are arranged at intervals of 10-20 meters and can be divided into the earthen one with a stone chamber and the other with two stone chambers, all of them with arch-style or inclined-plane ceilings before getting collapsed.

Unearthed from the tombs were human and horse bones, bronze spoons and decorations, silver-clad iron nails, iron handles of coffin, grey earthenware and other remains.

The newly-unearthed tombs and remains will serve as material evidence to give fresh understanding of advanced cultural development of Koguryo, a powerful state that existed in the East for a thousand years, and precious treasures showing the good qualities of the Korean nation.

KCTV footage of the tombs can be seen here.

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Musan Market damaged in flooding

December 8th, 2016

Other outlets have already covered the recent flood damage using satellite imagery (see here and here).  I added one small contribution in Radio Free Asia today…Here is a satellite image of the Musan Market (무산시장) taken before and after the recent flooding:

Images: Google Earth. Top: 2014-1-13, Bottom: 2016-9-14

Nearly half of it was washed away when the river rose.

I will have more to say on this topic after the holidays.

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New E-Commerce Website ‘Manmulsang’ Launched

December 8th, 2016

Institute for Far Eastern Studies (IFES)
2016-12-7

A new shopping website, ‘Manmulsang’, has been launched in North Korea. The North Korean site, announced that there is “recently in our republic a new shopping website [e-commerce] offering a wide variety of commercial services through the state computer network and mobile telecoms network.”

According to the site, Manmulsang was developed by Yonpung Commercial Information Technology Company, and allows users to find information about domestically produced and imported products, as well as to read information about the economic activities of vendors registered on the website. Additionally, it has features including an ‘e-shop’, ‘economic information’, ‘upload product’, ‘announcements’, ‘my products’, ‘restaurant information’ and ‘food order’.

There are hundreds of products available in the ‘e-shop’, with the site saying “this site has new and special service features that distinguish it from sites that have existed before: it allows users to read domestic and foreign economic information – economic information services – and to order food via food order services.”

North Korea has demonstrated an interest in e-commerce since 2005. In an article entitled ‘The features of e-commerce and issues with its development’ published in Sahoegwahakwon hakbo [Social Science Studies Review] (Issue 2, 2005), the author, North Korean professor Ri Haeng Ho, says “With the rapid development of information technology, new phenomena are evident that were not previously visible in the economy”. In the article, Ri introduces the features, advantages and tasks related to e-commerce.

Ri also says that “beyond the development of e-commerce, commercial distribution is expanding into previously unimaginable areas. . . . Trade is expanding through the internet, and e-markets are being launched, providing information relevant to the market price of traded goods and thus facilitating trade.” Thus, Ri states e-transactions are characterized by the openness of commercial activity, the centrality of small, specialized retailers, and the emergence new specialist brokerage services.

Ri also argued that “the introduction of e-commerce will, with the aid of information technology, maximize effectiveness in commercial transactions, reduce production costs and raise profit. . . . E-commerce can cut waste and maximize cost reduction.”

As advantages he listed: (1) saving manpower and time through overcoming physical distance, standards and divisions; (2) reducing prices through using virtual shops; and (3) minimize unnecessary production and waste.

Ri goes on to emphasize that while company-company and company-individual transactions are highly active, there is a need to expand electronic payment systems, deal with tax payment issues, revise relevant laws, and establish computer security systems.

An article entitled “General Understanding of e-commerce” carried in Social Science Studies Review (Issue 3, 2005) also asserts that “In order to creatively apply the results of e-commerce transactions to our country’s specific trade conditions and circumstances, there is a need to deepen research into e-commerce transactions.”

At the same time, the Swiss Agency for Development and Cooperation (SDC) opened the Pyongyang Business School in July 2005, and the school has taught e-commerce, advertising and public relations management, new product development and marketing strategy, among other subjects, to North Korean government cadres, trade company personnel, and foreign trade research institution personnel, most of whom are in their forties and fifties.

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