North Korean Economy Watch

Korea Times
Yoon Won-sup
12/9/2007

South Korea will provide 5,100 tons of steel plates to North Korea on Dec. 17 in a six-party deal that involves the provision of energy or alternatives to North Korea in exchange for the North’s disablement of its nuclear facilities by year’s-end, government officials said Sunday.

U.S. President George W. Bush sent a personal letter to North Korean leader Kim Jong-il last week urging him to keep his word on the disablement and declaration by Dec. 31.

The shipment is the first alternative to oil sent to the North under the agreement, although participants in the six-way talks have been taking turns to provide 50,000 tons of heavy fuel oil to the North every month recently.

Yonhap
12/8/2007

North Korean leader Kim Jong-il has given warm encouragement to local workers developing Mount Paektu, the highest point on the peninsula that will be opened to South Korean tourists next year, the North’s broadcaster said Saturday.

South and North Korea agreed to open a direct flight route between Seoul and the North’s Mount Paektu during their second summit in October. The inter-Korean tour, set to start in May, is organized by South Korea’s Hyundai Group.

Kim “expressed his gratitude to officials and workers who have wholeheartedly supported the development of the Mount Paektu area,” the Korean Central Broadcasting Station, monitored in Seoul, said, naming technicians, researchers and factory workers involved in the project.

Hyun Jeong-eun, chairwoman of the Hyundai Group, agreed with North Korea during her visit to Pyongyang in early November to start in May sightseeing tours of the North’s 2,744-meter mountain, located on its border with China. A group of South Korean government officials and researchers have conducted an on-site inspection.

Mount Paektu will be the third inter-Korean tourism project organized by Hyundai Asan, a unit of the Hyundai Group in charge of North Korea business. North Korea opened its border city of Kaesong to South Korean tourists early this week, following the launch of a tourism program to the North’s east coast mountain of Geumgang nine years ago.

The Mount Paektu and Kaesong tour projects are part of agreements South Korean President Roh Moo-hyun and North Korean leader Kim Jong-il reached during their summit that sought to boost economic cooperation and reduce tension.

Yonhap
12/8/2007

A ship carrying 1,400 tons of tangerines will leave Sunday for North Korea from a port on this southern island of South Korea to help promote peace and reconciliation between the two Korean states, island officials said Saturday.

They said that the tangerines grown by local farmers have been loaded onto a 3,500-ton ship, which will set sail for the North on Sunday afternoon. With crews including three South Koreans, the Panama-registered ship will arrive at Nampo, a western port town of North Korea, Tuesday, they said.

This is the first batch of 10,000 tons of tangerines that will be sent to the North this year. The officials said that the remainder will be delivered by the end of January next year at the latest.

They said that Jeju Island has sent 36,488 tons of tangerines and 17,100 tons of carrots to the North since 1998. It was humanitarian aid designed to promote peace and co-existence between the two Koreas, which remain technically at war after the 1950-53 Korean War ended in a truce instead of a peace treaty.

Click on the image to see a larger picture. Google Earth Coordinates:   38.374935°, 127.103343°

As many readers know, I have been mapping out North Korea on Google Earth for some time.  I have found numerous propaganda slogans displayed on hills and mountainsides throughout the country, but this recent discovery is by far the best example.  I would like to see this carving from the ground, so if anyone has pictures, please send them to me.

Institute for Far Eatern Studies
NK Brief No. 07-12-5-2
12/7/2007

Kim Yang-gon, head of the DPRK Workers’ Party Unification Front department, led a North Korean delegation to the South, and after two nights and three days, returned to the North on December 1. The last time a North Korean head of the KWP’s Unification Front department visited the South was seven years ago, when, in September 2000, Kim Yong-soon visited Cheju Island. Government authorities are saying that Kim’s trip to the South was publicized in order to facilitate the smooth implementation of the 2007 inter-Korean Summit Declaration

On the day Kim’s delegation arrived, the group visited the Songdo Free Trade Zone, where he and his delegation were moved by a presentation by officials explaining the value of an Inchon-Kaesong-Haeju ‘West Sea Belt’. On the second day, the group visited Daewoo shipyards in Koje, the Busan Customs House, and other facilities.

The trip was reminiscent of when DPRK Cabinet Prime Minister Kim Young-il led a group of more than thirty North Korean entrepreneurs to Vietnam last October, spending four nights and five days walking around tourist areas, an export-processing zone, port facilities, and other industrial areas.

The Unification Front department is but one department within the Workers’ Party responsible for policies toward the South and other countries. Unlike the foreign liaison department, Office 35, and the strategy office, the Unification Front operates openly, but distribution of propaganda leaflets, management of pro-North groups, enticement of overseas Koreans, and other activities are also underway.

The trip South by Kim’s delegation happened just before ROK presidential elections, and highlights the fact that there is barely a month left before North Korea must have its nuclear program frozen and fully disclosed. Kim’s trip to the ROK was promoted and publicized from the beginning, but little information was given to the press, other than coverage of tours of economic facilities.

Daily NK
Han Young Jin
12/7/2007

In North Korea nowadays, individual-use PCs concentrated in Pyongyang and Chongjin, Shinuiju and other large-size cities have been gradually increasing. The trend has been rapidly increasing due to the propagation of computers by North Korean party organizations, the administrative committee office and middle schools.

The computerized citizen registration project by the North Korean village office was completed around the Local People’s Assembly representative elections last July.

A source from Shinuiju, North Pyungan said in a phone conversation with DailyNK on the 5th, “Provincial organizations and the village office are taking on computer-based projects. Large-city wealthy people are also acquiring computers left and right due to their children’s education.”

The new-rich class, who have made huge profits from recent trade with China, believe gradually that “The outer society cannot do anything without computers. Our children have to learn computers, too, to not get behind.”

A majority of computers provided to North Korea are Chinese and South Korean-made and have entered through official trade with North Korea, but a portion has been going through smuggling. South Korean computers, with the exception of Korean software, are permitted. North Korea uses North Korean word processors, such as “Dangun” and “Changduk.”

A portion of the upper-class use the new model computers smuggled from China, but a majority use secondhand Pentium IV-processor or below imported from China. In North Korea’s Shinuiju, a computer (Pentium II) which includes a used CTR monitor is 100~120 dollars and a computer which includes LCD monitor is 300 dollars. The offering price for a used laptop is around 300 dollars.

He said, “People cannot connect to the internet via computers, but can use most programs set up on computers. The resident registration computerization project has been completed and in Pyongyang, networks between libraries are in operation.”

North Korea is the single country in the world that is not connected to an internet cable network. North Korea, while being endowed with the national domain suffix, “kp”, does not operate a domain. People cannot use internet, but can use software programs set up on individual computers such as MS-Word, Excel, and Photoshop.

In North Korea, after 2000, the import of used and new computers from China, Japan, and South Korea through individuals and companies increased dramatically. Around 2001, around 2,000 Samsung, LG and TriGem Computer were provided to North Korea’s main colleges such as Kim Il Sung University and Kim Chaek University of Technology.

Mr. Kim said, “Chosun (North Korea) people prefer LCD monitors, not CTR monitors. Computers that have been coming in North Korea are mostly made in China and South Korean computers such as Samsung, LG, and TriGem Computer have been widely distributed as well.”

Electronic Publications Service using Domestic Network Possible

North Korea prohibits internet, so computer education mostly focused on program usage are taught in colleges and high schools. In schools for the gifted and college computer majors nationwide, a new generation of software developers is being nurtured.

Major organizations in the area of software development are Chosun (North Korea) Computer Center (KCC), Pyongyang Program Center, and the Academy of Sciences.

Since 2002, North Korea has created a network connecting the libraries of Grand People’s Study House, Kim Il Sung University, and Kim Chaek University of Technology. The network has been expanded throughout Pyongyang and the provinces. Currently, a few high officials in Pyongyang can use reportedly the Grand People’s Study House’s electronic publications service at home.

Daily NK
Yoon Il Geun
12/6/2007

Good Friends, a Seoul-based relief organization said in its weekly report released on December 3rd, “The North frequently readjusts its resident registration project in Sinuiju. Nowadays, divorced couples are banished to other areas.”

Sinuiju situated near the Yalu River is the North’s gateway to China and second largest city after Pyongyang. The resident registration project has been strictly enforced in both cities. Individuals such as Prisoners of the Korean War and South Korean defectors to the North are not allowed to reside in these major cities.

In 1989, right before the North’s celebration of Pyongyang World Festival of Youth and Students, the North Korean authorities drove out those with a bad family background (based on its unique caste system) and the disabled out of Pyongyang. At that time, the authorities also banished divorced people to the outskirts of Pyongyang for the reason of their being ‘indecent.’

Lately, the divorce rate in the North is skyrocketing. More than 90 percent of divorce cases have to do with economical reasons. Many times, men fail to bring money home even if he has a job, and women are left alone to solely take care of child rearing and homemaking.

Usually, the North Korean courts do not decree divorces. When the divorce rate increases and becomes a serious social problem in the North, Kim Jong Il orders the courts not to decree divorces and the courts do not divorce people. If Kim Jong Il makes an order to expel divorced people to the provincial areas, his order is carried out as intended. In addition, divorced party cadres and administrative officials are either demoted or dismissed. Military officials, if divorced, are discharged. Divorced teachers must leave their schools. In the North, divorced people are believed to have a corrupt ideology.

Nevertheless, divorce is increasing particularly among the poor. Mostly, it has to do with economical reasons. As women engage themselves in business in the market, women’s power has increased whereas men are often considered to be good for nothing.

It is reported that women’s consciousness has changed especially in cities as foreign films and South Korean TV dramas are introduced to the North. A new way of thinking among women conflicts with men’s traditional male-oriented thinking. It is also reported that separation among married couples is increasing, and there are many young couples who do not register their marriages.

Moreover, the number of people, who bribe the courts to divorce their spouses, has greatly surged. It costs between 50,000 and 100,000 North Korean won to have judges issue a divorce certificate. The average wage among judges is 2,000 won. The amount is less than the worth of the US $1 dollar, which is sold around at 3,300 North Korean won in the market. Apparently, had it not been for bribes taking from divorce suitors, North Korean judges would not make their living.

Daily NK
Sohn Kwang Joo
12/6/2007

It was in Yanji where I met the 25-year-old defector, Kim Soo Mee. She was born and raised in the mountains that separated her village from larger towns in Hamkyung Province.

Because of her mother’s ferver for educating her children, Kim Soo Mee was able to attend the First Senior Middle School, a specialized school for gifted students, following her timely graduation from primary school.

When she was 12 years old, the national famine greatly affected her town. People scattered about the streets looking for food, and dead bodies could be seen everywhere. Many students stopped going to school and instead spent their days searching for food. However, Soo Mee’s mother urged her to continue with her studies. With her mother’s encouragement, Soo Mee gained acceptance into a prestigious university in North Korea.

She received good grades at the university and had high hopes of working in a well-established company in Pyongyang. However, due to her family background, she was forced to remain and work in the small rural town.

The living conditions in North Korea’s capitol are surprisingly different compared to the local cities.

Kim Soo Mee explained about the corruption surrounding university admissions in North Korea. “Only children who grow up in rich families can be admitted to the universities in Pyongyang, as huge sums of money are needed to bribe institution administrators. For example, if a student wants to attend Kim Il Sung University, often times a family will pay upwards of 1,000 dollars just to afford the child a chance of getting accepted. Pyongyang Medical College and Kim Hyong Jik College of Education usually require approximately 500 dollars in bribes.”

I was curious to ask, “Can a student bribe their way into a school even if he or she does not have good grades?”

She explained that such students are instructed to leave certain indicating marks on their test paper at the college entrance examination as a way for evaluators to discern whether the student offered a bribe or not. The evaluators rank the students by the amount in bribes their families have paid, and then rank them according to their family background.

Her college life was unbearable because she had no financial power or a strong family background to support her.

385 days out of her college years were spent practicing for the 40 seconds of the military parade it would take to pass by Kim Jong Il’s podium. The average student spends almost two and a half years preparing for national events such as military parades and agricultural support activities that take place in the Spring and Fall. These hardships led Soo Mee and many of her fellow students to dream of going abroad.

The most popular jobs after graduation include diplomatic posts and working in foreign currency-making companies. She went on to explain that it is now undesirable to work as a discharged soldier or a member of the Party.

As for the common perception of Kim Jong Il among North Korean youths, she maintained that “through propaganda, the people are made to believe that the General (Kim Jong Il) ‘s meals consist of only a few rice balls and salted radish. However, I was shocked to find out that preparation of the General’s meals costs 1,000 dollars.” This information was told to her by a researcher from Kim Il Sung and Kim Jong Il’s Longevity Institute.

Most of the intellectual students have an unfavorable opinion about Kim Jong Il, but the general public does not see the truth behind his lies.

“In the movie, ‘Geumjin River’ (2004), there is a line that states, ‘We are poor because the heavens took away our Supreme Leader (Kim Il Sung) in wrath because the people did not respectfully take care of him.’ The authorities are currently insisting that our country is now poor because of imperialistic pressures and economic sanctions imposed on us by America.”

I asked, “What do the Pyongyang citizens think about the future of North Korea?”

“Most think that we should open and reform our state, but they can never mention the words ‘open’ and ‘reform’ in public,” she replied. “The authorities often proclaim that we can attain wealth by properly following the Military-First Policy and by establishing a strong economic society. But the problem is they do not tell us how to do so. The only people not doing business in the jangmadang are cadres of the Party, generals of the Army and National Security or Safety Agents; they maintain favorable living conditions by collecting bribes from the citizens.”

Daily NK
Yang Jung A
12/5/2007

After the Inter-Korean Summit held in October, the North began to place age limits for females who can do business in the market. The regime has risen the minimum age from 35 to 49 years old. Since most men are enrolled in workplaces, it is mostly women who engage themselves in business activities and are therefore being targeted by the age limit.

According to a study conducted by DailyNK on North Korean markets, business activities have slowed due to the regulation of the market. However, if a woman bribes the officers in charge of enforcing the regulations, she can continue to do business. In the rural areas, it is known that the regulations are not strictly enforced.

The complaints of the North Korean people regarding the regulations are growing ever more intense because their livelihoods depend on market activity. Below is an overview of the current market situation in the North..

◆ Market Conditions

Although detailed statistics are not available, it is reported that there are around three to four markets in each North Korean city.

In Pyongyang, the city with the largest population, there is one market for every district (19 in all). On densely populated “Tongil (unification) Road,” there are two markets. Kangdong, administratively located within Pyongyang, has three markets. Additionally, there are small-scale markets, such as the No.67 Munitions-Factory market and Hari Plaza market. The one in Kangdong is relatively large.

Shiniju, known as the center of trade between North Korea and China, has three markets: Chaeha, Namjoong and Dongseo (aka Pyonghwa). South Shiniju has only one. There are two markets for each of the larger districts in Chongjin, the second largest city after Pyongyang. Overall, each town in each county has at least one market and each county has one or two small-scale farmer’s markets.

◆ Average income

In the past, markets were always bustling with people except during the rice-planting and harvest seasons. However, since the State has begun controlling prices and enforcing an age limit on merchants, the markets have become stagnant.

Around 50 to 60 merchants used to engage in business in each block of each market in Pyongyang. Now, there are only seven or eight merchants on each block. Therefore, nowadays, shoppers are finding it hard to buy quality products in the market.

The average daily earning for merchants depends on the types of items sold. Merchants who sell agricultural products make about 3,000 won, and those who sell sea products earn between 5,000 and 6,000 won. Those who trade industrial products are reported to make as much as 10,000 won per day.

◆ Prohibited sales items

The North Korean authorities are now exercising control over the types of products that can be sold in the market and have increased the list of banned items.

The list of prohibited sales items in Hamkyung Province, centering on Hoiryeong, is as follows: electric rice cookers, electric frying pans, automobile tires and parts, diesel fuel, gasoline, beef, medicines, electric blankets, VCRs (Even home-manufactured VCRs cannot be traded in the market. They are only available at State-run shops.), rubber belts, bearings, welding rods, electric motors, electrical wirings, alcohol, foreign films, and so on.

It has been reported that market managers exercise control inside-market activities, whereas security agents patrol outside of the market. The level of regulation depends on the individuals charged with enforcing the regulations. Bribed officials do their job only perfunctorily.

◆ People’s responses to market regulation

Unlike markets in major cities such as Hoiryeong, Musan, and Chongjin in North Hamkyung Province, markets in small cities and towns of the province operate as usual regardless of the State’s market regulations.

In small cities and towns, people know each other, and market managers and safety agents do not strictly enforce the state’s regulation as their counterparts do in big cities. Even in major cities, however, many merchants under the age of 40 continue to do business. If they fail to get inside the market, they do business in alleys adjacent to the market.

Many merchants complain about the market regulations, and some even get into altercations with market managers.

For instance, they violently stand against and even swear at the mangers, saying, “You guys live in comfort because you receive food from the State and take bribes from us. However, we live from hand to mouth each day here in the market. How could you then regulate the market?”

◆ Some servicemen secretly engage in business

Some poverty-stricken soldiers and officials as well reportedly steal rice distributed to the army and sell it to merchants. Unlike commoners, servicemen are tightly watched, so they cannot readily involve themselves in money making activities.

Some destitute low ranking soldiers clandestinely take their emergency rations and sell them in the market. Canned beef manufactured at Ryongsung Meat Processing Plant is sold at 3,500 won and Canned mackerel at 2,500 won in the market.

However, heavy punishment awaits servicemen who are caught engaging in illegal market activities. So, they covertly sell military provisions to only personal aquaintences.

Yonhap
12/5/2007

South and North Korea signed a security guarantee Wednesday for daily cross-border freight train service scheduled to start next week, the first substantial measure to follow up on agreements by the two countries’ leaders at their October summit, the Defense Ministry said.

The move came at a one-day meeting at the truce village of Panmunjom, which coincided with a separate meeting of deputy prime ministers of the divided nations here on boosting economic cooperation in line with the deal between South Korean President Roh Moo-hyun and his North Korean counterpart Kim Jong-il.

The cargo train will carry raw materials and manufactured goods between South Korea and the North Korean border city of Kaesong, where South Korea operates an industrial park for a number of its small labor-intensive plants.

The agreement calls for guaranteeing safe passage of the cargo rail service linking Munsan Station in the South to Bongdong Station, which serves as a gateway to the Kaesong industrial park, as agreed at the second inter-Korean defense ministerial talks.

“It will take effect at midnight on Dec. 11,” the ministry said at a briefing on the results of the talks. “The train will be allowed to run at a speed of 20-60km per hour. Train drivers and other crew will be banned from taking photos in the other side’s area.”

But the talks did not address the date for the next round of general-grade talks between the two sides or how to improve the operation of the Kaesong industrial complex, including ways to facilitate transportation, customs clearance and telecommunication services, according to the ministry.

The defense chiefs of the two Koreas agreed to support inter-Korean economic cooperation projects in their rare meeting last week in Pyongyang.

The two Koreas plan to run a cargo train every day on the reconnected rail line between Munsan and Bongdong starting on Tuesday. The 19.8-km route between the two border towns was severed during the 1950-53 Korean War.

The cargo service is expected to facilitate the movement of goods to and from the Kaesong industrial complex, a joint venture between the technology-savvy South and the labor-abundant North.