North Korean Economy Watch

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-04-20-1
2010-04-20

Ri Ki Song, a professor at the Institute of Economics, a part of North Korea’s Academy of Social Sciences, acknowledged during an interview on April 18 that the North’s currency revaluation of last November had caused some instability to unfold across the country. Professor Ri emphasized during an interview in Pyongyang with Kyoto News, “there was some temporary unrest in some areas . . . but there was absolutely no social upheaval and unstable situations were immediately controlled.”

Professor Ri, in answering questions for the Japanese news agency, was the first North Korean to acknowledge the problems caused by the reform. Regarding foreign media reports of the currency reform, Ri stated that the articles did not reflect the reality of the situation, and that the reforms had not destabilized the North Korean society. These comments were in line with those he made on April 1, when he stated at an APTN press conference, “Many people outside of North Korea have been noisily prattling on about problems emerging during exchange rate fluctuations, but there is no social unrest of the kind they speak of.”

He explained that some instability had occurred because price controls and other measures had not immediately followed the revaluation, and that “markets did not open for a few days [after the currency reform],” acknowledging that preparations for the measures had been insufficient. He also explained that following the currency reform, North Korean authorities had taken steps such as reducing prices on some foods and slashing unproductive expenditures. The government also encouraged women to take up jobs in light industry and in the service sector, and repaired the transport system. In an effort to develop the economy in 2010, the North Korean government boosted the budgets for the light industrial sector by 10.1 percent, and that of agriculture by 9.4 percent.

Professor Ri went on to say that authorities had reduced the price of a kilogram of rice from 40 won to 24 won, had lowered the price of eggs to 8 won, and had cut the prices on cooking oil and soap, as well. He added that this trend will continue for the near future.

The currency revaluation, the first of its kind since 1992, was aimed primarily at increasing the value of the North’s money and harnessing inflation, but despite the reform, the government is still managing foreign exchange rates. While keeping exchange rates under control, Ri stated that authorities could still adjust the value of the won, depending on economic developments as well as other domestic and international conditions.

In both the APTN and Kyoto interviews, Professor Ri called foreign coverage of the North’s economic situation “exceptional,” and insisted that nothing was wrong with the DPRK economy.

According to the Times of India:

Economic sanctions by the United States and other western countries is actually strengthening the Kim Jong-il’s regime, a German social worker involved with a non-government organization told reporters here this morning. Sanctions are also affecting life in other ways like the new-found emphasis on sustainable agriculture, she said.

“The leaders are using the sanctions as a justification. People believe the country is in a bad condition because of outside forces,” Karin Janz, country director in North Korea for the German NGO Welthungerhilfe, said while speaking at the Foreign Correspondents Club in Beijing. The official media justified its actions as efforts to fortify the nation against the onslaught of foreign forces, and the people fully believed it, she said.

The sanctions have hit the North Korean agriculture and caused fears of a worsening of the food situation, Karin said. “The North Korean agriculture is highly industrialized,” she said while explaining the country’s agriculture is heavily dependent on imported farm machines and chemical fertilizers. Most of these materials came from South Korea, which has now slammed the doors.

The government has suddenly realized the value of sustainable development and is asking agricultural cooperatives to change their focus. They are being asked to go for organic farming, grow composts and reduce their dependence on chemicals. It is a new policy on sustainable development by default, she said.

“It could be a good start in the direction of sustainable development. But it is a long way to rehabilitate the soil, which is badly damaged” she said.

The Internet is banned to ensure that local citizens do not communicate with the outside world. There is a limited form of Intranet for university students to chat among themselves. But if the ban on Internet were to be lifted, most North Koreans will use it to absorb new knowledge and grow the country with new technological inputs.

“I cannot imagine some kind of opposition rising because it is simply not possible,” she said while discussing the highly militarized nature of the society. The government controls every aspect of life in North Korea and ordinary people seem to be comfortable living in some kind of a “safety shell”, she said.

Patriotism runs high among the people and most have full faith in their leaders. The only sign of dissatisfaction Karin saw was in January when currency reforms hit a large number of people very badly. People who held old currency notes suddenly found they could not exchange them for the new Won notes the government introduced early this year.

Welthungerhilfe is one of the few foreign NGOs that are still operating in North Korea when most of the others have left either because of the challenges posed by government rules and the drying of financing from western sources. There are many Chinese NGOs but the local government does not allow they to communication with those from western countries.

In her five years travelling across nine provinces of North Korea, Karin has not come across a single case of starvation. The food situation is bad, but it is not as grave as the western media tended to show, she said. The government has also done a fairly good job of developing infrastructure and provide school education although the conditions are still a far cry from what prevails in the developed world, she said.

Here is the Welthungerlife North Korea web page (in German).  Here is the page in English (via Google Translate).

I cannot prove it, but I am willing to bet that Welthungerhilfe built these greenhouses near Kujang (via Kernbeisser).  These greenhouses are too new to be visible on Google Earth.

Read the full story here:
Economic sanctions strengthen North Korea’s dictatorship, says German NGO
The Times of India
Saibal Dasgupta
4/20/2010

According to Yonhap:

A group of North Korean officials, including military officers, were inspecting an inter-Korean factory park in the North this week, a Seoul official said Tuesday, amid concerns Pyongyang may be moving to put the brakes on the long-running symbol of reconciliation.

The inspection, which began Monday with an abrupt notice, was reminiscent of a similar visit in December 2008. Six days later, the communist state temporarily banned South Korean access to it.

Eight North Korean officials, including a senior director of the National Defense Commission (NDC), inspected a South Korean company and some facilities such as a substation and roads in Kaesong on Tuesday, Unification Ministry spokesman Chun Hae-sung said.

The NDC is the highest seat of power in the North, chaired by leader Kim Jong-il. The visitors included uniformed officers who asked both South Koreans and North Koreans at the park rudimentary questions about their operations, Chun said.

“A wide range of questions was asked, such as items produced, the productivity of North Korean workers, the capacity of the sewage, and how certain facilities are maintained,” Chun told reporters.

More than 110 South Korean firms employ some 42,000 North Korean workers at the Kaesong industrial park, born out of the first inter-Korean summit in 2000. The park began operating in 2004.

Pyongyang said on April 8 that it would “entirely reevaluate” the park if relations between the sides do not improve, while ditching Seoul as a partner for joint tours to its eastern mountain resort.

The DRPK recently inspected the Kumgangsan resort before “seizing” several of the facilities.  The Kaesong Zone has been inspected several times before as well.

According to Telegeography:

Tokyo-based newspaper Chosun Sinbo has reported that mobile subscriptions in the DPRK are continuing to rise steadily and could reach 600,000 by the end of the year. The pro-North Korea newspaper added that the number of cellular customers in the communist state currently stands at over 120,000, with wireless infrastructure reportedly present in more than half of the country’s cities and counties that is expected to accommodate 600,000 subscribers by year-end. The DPRK’s only mobile operator is CHEO Technology, which offers services under the Koryolink brand. Citing the head of North Korea’s mobile telecoms department, Choe Un, the report also added that the state plans to produce its own handsets – currently manufactured in China – within the next six months.

According to TeleGeography’s GlobalComms Database, CHEO was awarded a 25-year licence to operate a 3G network in January 2008, with the first four years on an exclusive basis. It is owned by Orascom Telecom Holding of Egypt (75%) and state-owned Korea Post and Telecoms Corporation (25%). Services were launched in December 2008 in the capital Pyongyang, but the network has since been expanded to include the main road running up to the northern city of Hyangsan, with the company currently working on expanding services nationwide.

Yonhap asserts that the Choson Sinbo piece claims the DPRK will start manufacturing mobile phones:

“Within half a year, handphone terminals will begin to be produced,” the paper said. “For a certain time, parts will be imported from overseas and assembled, but eventually the prospect is that development will be self-sufficient.”

The report said equipment for mobile service has been set up in more than half of the cities and counties in the country, adding the service will also be used on major roads and railways.

If a reader can send me a link to the original Choson Sinbo artilce I would appreciate it.  I have troubles navigating that site.

Here are previous posts about North Korea’s mobile phone networks and Orascom.

Michael Rank

Over 30,000 Chinese tourists are expected to visit Pyongyang this year, well above normal levels of around 20,000, and numbers are likely to increase further in future, the head of the Pyongyang-based Korean International Travel Company said recently.

In a rare instance of a North Korean official divulging meaningful statistics, Jo Seong-gyu 조성규 赵成奎 was quoted on a Chinese website as saying that in addition to the average 20,000 Chinese tourists who visit under national agreements, a further 20,000 Chinese visitors a year cross into North Korea as border tourists. He said these had been typical levels since a bilateral tourism agreement was signed in 1988. Although Chinese tourists typically number around 20,000 annually, there had been up to 50,000 in some years, as well as years when levels had dipped sharply, he added.

Jo was speaking to Chinese journalists visiting Pyongyang to mark a newly implemented bilateral tourism agreement. He did not say how many border tourists were expected this year, but several new local agreements have been signed recently, so that number is also likely to increase.

Jo said KITC had hired almost 90 Chinese-speaking guides to cope with the expected flood of Chinese tourists. Apart from the usual tourist sights of Pyongyang, the Myohyang mountains and Gaeseong, there are also plans for Chinese tourists to visit the Chinese Korean war cemetery in Hoechang 회창군 county (satellite image here), about 100 km east of the capital, where 134 “martyrs” of the Chinese People’s Volunteers are buried, including Mao Anying 毛岸英, son of Chinese leader Mao Zedong. The 90,000 square metre cemetery is the largest of dozens of such cemeteries in North Korea. Click here for photos of Premier Wen Jiabao visiting the cemetery last October.

Jo said Mt. Chilbo 칠보산 七宝山 on the Sino-Korean border will also be opened to Chinese tourists.

He said the increase in Chinese tourists visiting North Korea was due to a vogue for “red tourism”  – nostalgic tours to revolutionary sites which have become fashionable in China in recent years. These tend to appeal mainly to the older generation who remember the Maoist era, including perhaps the Korean war, and Chinese reports suggest that visitors to North Korea are often in their fifties and sixties.

Jo warned Chinese tourists to behave themselves, saying they should “respect Korean laws and regulations and moral standards and proceed from a standpoint of cherishing Korean-Chinese friendship, mutual understanding and tolerance.”

UPDATE 4: The DPRK has canceled its football team’s visit to Zimbabwe.  According to the Times Live of South Africa:

The North Korean squad had been due to arrive in Zimbabwe on Tuesday to train and play friendlies against local teams before moving onto South Africa, where the World Cup kicks off on June 11.

But a senior source in the power-sharing government of President Robert Mugabe and former opposition leader, Prime Minister Morgan Tsvangirai, said the visit was called off after it provoked outrage among supporters of Tsvangirai’s Movement for Democratic Change (MDC).

UPDATE 3: Zimbabwe continues to put off  deliberation.  According to Voice of America:

Cabinet discussion of whether Zimbabwe should invite the North Korean soccer team to train in the country through the June-July World Cup period has been put off to next Tuesday as President Robert Mugabe and Prime Minister Morgan Tsvangirai are in Tanzania for the World Economic Forum, a ministerial source said.

Education, Sports and Culture Minister David Coltart told VOA Studio 7 reporter Gibbs Dube that the Cabinet will review the decision by the Zimbabwe World Cup 2010 Committee to invite the North Koreans.

“I presume that if the issue has to be discussed by Cabinet, it will be discussed on Tuesday and as far as I am concerned that team has not yet confirmed that it will be training in this country,” Coltart said.

Political commentator Samukele Hadebe said the North Korean team visit should be canceled to promote healing and reconciliation among Zimbabweans traumatized not only by political violence during the 2008 elections but by older episodes like the 1980s Gukurahundi purge of rival liberation activists in the Matabeleland region.

UPDATE 2: It is possible Zimbabwe could back out of the plan since they have yet to confirm a date. And according to the Guardian:

Zimbabwe’s sports minister, David Coltart, said the dates of the North Koreans’ visit were still to be confirmed. “It is important that the Zimbabwe government deals with this matter in a very sensitive way and does not ignore the history of North Korea here, and does not do anything that might inflame passions or reopen old wounds,” he said.

But he added: “I don’t think it is right to attack a group of young players for what happened 27 years ago in this country.”

Strangely…I met Coltart in Washington a few years ago. He was an MP representing Bulawayo at the time.

UPDATE 1: A Zimbabwe perspective:

Boycotting North Korea solves nothing
Tendai Huchu
4/21/2010

The people of Zimbabwe, more than any other nation in Africa, seem pathologically unable to come to terms with their past. As a nation we share the same psychological symptoms of people who have suffered abuse as children.

At the moment there are calls by some for the people of Matebeleland to boycott the visit by North Korea’s football team on May 25 for warm up matches before the World Cup. They site the Gukurahundi massacres in the mid 1980’s as the reason the North Koreans should be boycotted. These people forget that aggressive attempts to court teams like Brazil to Zimbabwe were rebuffed because of our current circumstances. A lot of countries want nothing to do with us but the North Koreans have agreed to come. They could have gone directly to South Africa like everyone else and found facilities there far superior to anything we can offer.

That the Gukurahundi atrocities were a great tragedy in the history of our nation is beyond debate. This is still an issue we have yet to come to terms with, but exactly how boycotting a team we have invited can help redress our past is difficult to understand. North Korea like Zimbabwe is an undemocratic state. These footballers have no influence whatsoever on their government’s policies, especially those from twenty years ago. The majority of them would have been toddlers or not even born when we were slaughtering each other in the 80s. It is absurd to punish these players for something that they had nothing to do with whatsoever. We are quick to protest when New Zealand and England boycott our cricket team because of their differences with the Mugabe government, yet here we are proposing to do the exact same thing to the North Koreans.

The Observer newspaper in the UK quoted Bulawayo-based activist Effie Ncube saying that the invitation is a “profound insult” because of North Korea’s role in training the Fifth Brigade. This is a typical Zimbabwean attitude of blaming everyone else except ourselves for things that have gone wrong.

The North Koreans are a people we should sympathize with. There are too many similarities between them and us to mention. Like us they depend on handouts from the international community or else they would starve. We, better than most other nations, know what it is like to be isolated from the rest of the world. We know what it is like to live under a government which has no regard for its citizen’s rights and opinions. This is an opportunity to show solidarity to a people who have many similar problems to our own.

We can continue to be a bitter and angry people who constantly look back at the past, not taking responsibility for our actions and blaming everyone else for the things we have done to one another or we can move on. The North Koreans are not our enemy, they have never been. Sport is supposed to bring people together, not to divide them. There is nothing that can be gained by protesting against the North Korean football team for something they had absolutely no involvement in. They deserve to be shown our true Zimbabwean hospitality. We can only pray that the future of both our nations is going to be better than the past we are leaving behind.

ORIGINAL POST: According to Times Live of South Africa:

Zimbabwe’s tourism minister has appealed to activists in the western provinces of Bulawayo to drop plans to protest against the North Korean football team’s scheduled camp in the country during the World Cup.

The presence of the team from the dictatorship of President Kim Jong Il has stirred up strong emotions over the massacre in the early 80s of an estimated 20,000 civilians of the Ndebele speaking people of western Zimbabwe, carried out by soldiers of the Zimbabwe army’s notorious Fifth Brigade who were trained by North Korean instructors.

Groups have threatened to carry out protests against the team in the western city of Bulawayo and in South Africa where over a million Zimbabwean exiles from President Robert Mugabe’s rule now live.

“We are totally against bringing the team to Zimbabwe,” said Methuseli Moyo, spokesman for the Zimbabwe African People’s Union party. “Having a team flying the North Korean flag is very provocative.” The team is due in Harare on May 25 and is set to play friendly matches against the Zimbabwe national team in the capital and in Bulawayo, but activists have warned they would make Bulawayo’s Barbourfields stadium a centre of resistance against the North Koreans.

Tourism minister Walter Mzembi was quoted Sunday in the weekly Standard newspaper as appealing to the groups not to mix politics with sport and to allow national healing to take place.

“Sport must remain the bridge for people-to-people contact, probably the only bridge that has remained standing even when nation states are in a state of fall-out,” he said.

“I wouldn’t want to make this a political issue. It’s purely a sports issue.” He said he had extended invitations to the major teams in the World Cup, including Brazil, England and the United States, but North Korea was the only team that had responded.

The North Korean [5th Brigate] instructors were brought to Zimbabwe in 1983 at the request President Robert Mugabe to form a new brigade of the army, composed exclusively of Shona-speaking veterans of Mugabe’s civil war guerrilla army, to put down a limited insurgency against Mugabe’s rule by Ndebele-based guerrilla veterans.

The Fifth Brigade troops immediately developed a reputation for savage brutality, butchering children and pregnant women to deny the guerrillas support among the population of rural areas where they operated.

Military experts say that the Fifth Brigade’s methods were starkly different from the rest of the country’s largely British-trained army.

Mugabe, held responsible for the massacres, has only referred to the murderous period in the country’s history as a moment of madness. Demands for acknowledgment of the brutality are rising round the country, but two weeks ago police forcibly closed down an art exhibition portraying the suffering of the period, and arrested the artist.

Additional information: 
1. Here is a satellite image of Barbourfields stadium.  (I visited Bulawayo in 1996 and it was a lovely town at the time).

2. Last I read North Korean laborers were building football stadiums in South Africa for the World Cup.  This was in dispute and I do not know whether it has been confirmed or disproven.

3. North Korean laborers built Zimbabwe’s Heroe’s Acre.  Here is a satellite image of it.

4. And just for fun, here is a satellite image of Robert Mugabe’s retirement palace.  If you view the location in Google Earth, you can scroll through historical imagery to see this and neighboring houses under construction.

According to the Choson Ilbo:

North Korea spent more than US$5.4 million on fireworks displays along the banks of the Taedong River in Pyongyang on Wednesday to celebrate former leader Kim Il-sung’s 98th birthday the following day.

A North Korean source on Friday said the North had imported about 60 tons of fireworks from China for the display and invited foreign engineers for technical assistance. “They must have spent more than W6 billion for the fireworks and their display, transportation, and labor,” the source said.

The regime temporarily cut power and banned driving in an area near the Juche Tower for the fireworks spectacular to maximize the effect. The North’s state-run Korean Central Television broadcast the fireworks for an hour from 9 p.m. on Thursday, and reran it the following morning.
…
At the fireworks ceremony, Kim Ki-nam, a close aide to Kim senior and a secretary of the North Korean Workers’ Party’s Central Committee, said, “We put on the fireworks display full of hope today because we have held matchless great men in high esteem generation after generation.” Some interpret this as a hint at the succession from leader Kim Jong-il to his son Kim Jong-un.

You can watch the fireworks show on YouTube: Part 1, Part 2 (the new 10-minute CNC song kicks in at 5:10), Part 3.

Aside: I managed to get a great mp3 of the CNC song.  I am working on a CNC post and you will hopefully be able to donwload  it there.

UPDATE 4: Here is the DPRK Pavilion’s web page (h/t NKNews.org).

UPDATE 3: A video of the DPRK pavilion at the Shanghai expo can be seen here.

UPDATE 2: Voice of America offers a description of the interior of theD PRK’s Pavilion:

Inside, there is a replica of Pyongyang’s Juche Statue, a small waterway that represents the North’s Taedong River, a traditional bridge and large fountain with colored lights.

On top of the fountain, a group of white marble statues of naked boys encircle two others. One boy holds the other up in the air as he lifts a dove into the sky.

In one corner, there is a small cave that contains a reproduction of a mural from the North’s Koguryo Tombs, a World Heritage site.

Along a wall, beneath the phrase “Paradise for the People,” a row of television sets plays videos depicting everyday life in North Korea.

Some of the videos show North Koreans leisurely bowling, playing golf and ice skating. Although some of the footage appears to be recent, other shots seem to be decades old.

Many who visited the pavilion Tuesday say that aside from the fact that there were no lines to get in, they wanted to visit because, as they put it, North Korea is so mysterious.

UPDATE 1:  The Shanghai Expo has posted some information on the DPRK’s Pavilion. Here are some of the details:

Theme: Urban Development of Pyongyang, the Capital of DPR Korea (Prosperous Pyongyang based on the River Taedong Culture)

Pavilion Features: The pavilion perfectly merges national characteristics of DPRK together with its modern beauty. Outer walls are decorated with national flags and a winged steed bronze statue. Main items exhibited in the pavilion include Juche Tower, Taedong River, Korean-style pavilions, rockeries and small stone caves. All of them present a prosperous and modern Pyongyang based on the traditions of DPRK, where education, science, culture and sports have achieved great development during its long history.

Pavilion Highlights
Highlight 1: The Juche Tower Model — 4.5-meter-high model of Juche Tower is exhibited in the pavilion.
Highlight 2: Symbol of Taedong River — winding river flows across the pavilion, reminding people of the stretching Taedong River.
Highlight 3: National Section and Stone Caves — national section and stone caves are exhibited on the right side of the pavilion. Inside the cave the world heritage of tomb murals in Jiangxi County and paintings of DPRK style are displayed.

Here are some photos of the DPRK’s pavilion (h/t Daylife):

And here are some photos from the Shanghai Scrap blog:

ORIGINAL POST: According to the PRC’s People’s Daily:

China welcomes countries including the Democratic People’s Republic of Korea (DPRK) to participate in the 2010 Shanghai World Expo, a Foreign Ministry spokesman said Tuesday.

…

DPRK Chamber of Commerce Vice-Chairman Ri Song Un told Xinhua on March 18 that the country had already finished preparatory work for the 2010 Shanghai World Expo, its first Expo appearance.

Situated in an area of 5.28 square kilometers at the core the city of Shanghai to exhibitions, events and forums, the six-month expo starting from May 1 will attract about 200 nations and regions and international organizations’ participation, as well as 70 million visitors from home and abroad.

Read the full story here:
China welcomes DPRK in attending Shanghai World Expo: FM spokesman
People’s Daily
3/30/2010

According to the Wilson Center’s North Korea International Documentation Project (NKIDP):

Documents obtained by NKIDP scholar Bernd Schaefer from the archives of East Germany’s state security service, or Stasi, were featured in an article in South Korea’s Dong-a Ilbo. The documents detail procedures for admitting clandestine members of the Korean Workers’ Party from South Korea to East Germany for meetings with North Korean officials. According to the documents, North Korea and East Germany established special procedures for South Korean “comrades” to secretly enter the GDR for meetings with North Korean officials at the DPRK embassy. East Berlin was also used as a stopover for these South Korean “comrades” traveling to Pyongyang for meetings with North Korean officials.

View the article in Korean at the Dong-a Ilbo website.  There were additional articles in Korean (here and here) and one in English here.

The Strategic Studies Institute has published a paper on the DPRK’s illicit activities.  You can download the paper here (PDF). It has been added to my DPRK Economic Statistics page.  Here is the forward:

The authors of this monograph have exposed a key piece of the puzzle which helps to provide a better understanding of North Korea’s surreptitious international behavior. For years, North Korea’s military provocations have been obvious to the world, however, much of its decisionmaking is shrouded in secrecy, particularly that of a wide-range of clandestine activities. This monograph is unique in the way that it sheds light on the illicit activities of the regime, and how those illegal activities are used to support its military programs and the government itself.

From drug trafficking to counterfeiting, from money laundering to cigarette smuggling, North Korea’s Central Committee Bureau 39 is an active participant in the criminal economy of the region with tentacles extending well beyond Asia. The authors discuss how these activities have negative strategic consequences for a number of stakeholders and nations throughout the region while describing how such activities provide critical funding streams for military programs and regime supporters.

As a result, North Korea is not just a “rogue state,” but practices what is essentially criminal sovereignty whereby it organizes its illegitimate activities behind the shield of non-intervention while using the tools of the state to perpetrate these schemes abroad. The authors argue that this arrangement has important links to succession issues within the regime. They also argue that policy makers who are concerned with the development of future policies and strategies aimed toward North Korea must view those new policies from a different perspective than that used in the past.

This paper draws heavily on information from Kim Kwang-jin who is working at the Committee for Human Rights in North Korea. Without Mr. Kim’s contributions, much of this activity would remain unknown to us.  You can make a donation to support Mr. Kim’s work here in the US at this web page.