North Korean Economy Watch

KCNA
4/17/2007

General Secretary Kim Jong Il sent educational aid fund and stipends amounting to 238,000,000 yen to the General Association of Korean Residents in Japan (Chongryon) for the democratic national education of the children of Koreans in Japan on the occasion of the 95th birth anniversary of President Kim Il Sung. 

The educational aid funds and stipends sent so far by Kim Il Sung and Kim Jong Il to Chongryon in 153 installments total 46,006,223,000 yen.

Korea Times
4/17/2007

A close aide to North Korean leader Kim Jong-il was in critical condition due to kidney failure, a civic aid group here said Wednesday.

Jo Myong-rok, first vice chairman of North Korea’s National Defense Commission (NDC), was in critical condition after his kidney was damaged, said Good Friends, a Seoul-based civic relief organization, in a monthly newsletter. Kim Jong-il is the NDC chairman.

Jo is widely known as a close confidant of Kim Jong-il, as he paid a visit to then U.S. President Bill Clinton in 2000 as Kim’s special envoy.

Doctors expect the 79-year-old vice marshal to live another month or two, as he already had one of his kidneys removed 10 years ago, and has gone through treatment for cancer in his intestines, the organization said.

“There were rumors of Jo’s illness,” a South Korean government official, asking not to be named, commented, adding that specifics of the illness were not known.

Korea Times
Lee Jin-woo
4/17/2007

North Korea has urged South Korean manufacturers at the inter-Korean Kaesong Industrial Complex in the North to increase wages for some of the workers there, Unification Ministry officials said Tuesday.

The North demanded a 30 percent wage hike for university graduates working at the complex and a 10 percent salary increase for two-year college graduates, the officials said.

They said Pyongyang called for the different salaries to be dependant on a worker’s job and position.

As of Monday, a total of 13,032 North Koreans work at the complex. Some 10.6 percent and 11 percent of them graduated from universities and two-year colleges, respectively.

“Given the number of highly educated North Korean workers, approximately a four percent wage hike is expected this year,’’ an executive of a South Korean company at the Kaesong site said.

“Besides, we still face much difficulty in exporting goods especially to the United States due to the country of origin of the goods being the DPRK,’’ he said. DPRK stands for the North’s official name _ the Democratic People’s Republic of Korea.

Under the regulations on management of the Kaesong complex, which was agreed upon between the two Koreas in 2003, North Korean workers have been paid $57.50, a quite sizable amount by North Korean standards, per month, regardless of their position _ plus overtime pay.

The current regulations allow a five percent wage increase annually, but the North has not officially requested any wage hike until now.

Seoul and Washington have sought ways to pay North Korean workers directly not by paying North Korean authorities, which have a distinctive social and employment system.

Meanwhile, the North has demanded that South Korean visitors or residents at the Kaesong site, just north of the Demilitarized Zone (DMZ), pay registration fees.

The ministry has withheld the exact amount of money that Pyongyang has demanded, only saying there is a gap between the two sides.

But South Korean companies at the site are worried about the increasing financial burden due to such changes.

In the landmark free trade accord struck between the governments of South Korea and the U.S. on April 2, the two sides agreed to deal with the issue of recognizing Kaesong products as South Korean goods as part of OPZ (outward processing zone) talks in the future.

Unlike South Korean officials who have been positive about the future negotiations on the Kaesong goods, U.S. negotiators remain calm over the issue.

Of 39 South Korean companies at the joint complex, 22 have been operating under a pilot project.

Korea Herald
4/17/2007

London investor Colin McAskill yesterday said he would attempt to transfer $7 million from Macau’s Banco Delta Asia, which the U.S. Treasury has labeled a money launderer, to test if North Korean-linked accounts have access to the international financial system.

The money is part of some $25 million in Banco Delta accounts belonging to North Korean entities and individuals that Macau authorities froze in 2005 after the United States said the bank was laundering money for the communist state. The funds were unfrozen last week as a concession in talks with North Korea to end its nuclear weapons program.

McAskill, who has agreed to buy North Korea’s Daedong Credit Bank and advises a fund that seeks to invest in the country, said legitimate bank transfers of all the deposits are needed to demonstrate the U.S. Treasury is not shutting North Korea out of the international financial system. He declined to name the bank or country he would attempt to move the funds to.

“I am not sending a truck, or queuing outside in a trench coat with a battered old suitcase to bring the money out in cash, and neither should the DPRK,” McAskill said, using the initials for the Democratic People’s Republic of Korea, the formal name of North Korea. “The money should and has to be moved through the international banking system to verify both the efficacy and the integrity of the apparent concession by the United States.”

North Korea on Friday said it will only implement a Feb. 13 accord on ending its nuclear program once it confirms “valid” release of the entire $25 million. It missed an agreed upon deadline on April 14 to begin shutting down its nuclear facilities and allowing inspections by the United Nations’ atomic energy agency.

North Korea should “realize fully its commitments under the Feb. 13 agreement by inviting back the IAEA immediately” and sealing the Yongbyon nuclear reactor, U.S. State Department spokesman Sean McCormack said in a statement posted on the department’s website on Sunday.

Maria de Lurdes Costa, a lawyer and member of Banco Delta Asia’s administration committee, said yesterday that she did not know which if any North Korea-related depositors had been talking with the bank about withdrawing their funds. Even if she knew, “still I wouldn’t tell you,” she said, emphasizing the matters are confidential.

She declined to say if the bank had enough dollar reserves to disburse the full $25 million in U.S. currency. “I would not reply to any of those questions,” she said.

The administrative committee chair, Herculano Jorge de Sousa, received similar queries by fax, a secretary in his office said, but had not had time to respond. The Banking Supervision Department at Banco Delta Asia declined to comment.

The U.S. Treasury ruling that Banco Delta Asia is a “money-laundering concern” becomes final on Wednesday this week, raising the possibility international banks will not do business with the Macao institution. (Bloomberg)

KCNA
4/14/2007

Esmaeil Babaei Ragheb, Iranian charge d’affaires ad interim here, arranged a reception on April 13 on the occasions of the Day of the Sun and the 14th anniversary of Kim Jong Il’s election as chairman of the DPRK National Defence Commission.

Present on invitation were Yang Hyong Sop, vice-president of the Presidium of the Supreme People’s Assembly, Rim Kyong Man, minister of Foreign Trade, Jong Yong Su, minister of Labour, and officials concerned.

Staff members of the Iranian embassy here were on hand.

The Iranian charge d’affaires said in his speech that President Kim Il Sung who liberated the Korean people from the foreign domination made an immortal contribution to strengthening and developing the non-aligned movement.

He noted that the election of Kim Jong Il as chairman of the DPRK National Defence Commission provided a sure guarantee for the accomplishment of the revolutionary cause of Juche pioneered by Kim Il Sung.

The Iranian government and people extend full support and solidarity to the Korean people in their struggle against imperialism and for achieving the country’s reunification, he stressed.

Yang Hyong Sop in his speech noted that the revolutionary cause of Juche pioneered by Kim Il Sung has been successfully carried forward by Kim Jong Il, adding that the Korean people would wage a dynamic struggle under the Songun revolutionary leadership of Kim Jong Il.

He said that the friendly and cooperative relations between the DPRK and Iran provided by Kim Il Sung together with the top leaders of Iran have grown stronger under the deep care of the leaders of the two countries.

He noted that the Korean people would as ever boost the friendly and cooperative relations with the Iranian people in their efforts to reinforce the national defence power to cope with the U.S. high-handed and arbitrary practices and develop the national economy.

Daily NK
Kim Young Jin
4/16/2007

The North Korean authorities ordered that the holiday gifts given to North Korean citizens for 4.15 Kim Il Sung’s birthday, Sun Day, be distributed by each provincial body.

The leader of a people’s unit Mr. Choi of a district in Hyesan, Yanggang said in a phone conversation with Daily NK on the 13th, “The order came from the center to supply liquor and sweets through the body.”

He said, “A ‘4.15 subdivision committee’ has been organized in each province and has been going down to the commercial offices and food factories to directly inspect production.” The committee is a team that exists for the people who were temporarily transferred from party and political organizations for the seasonal production of sweets for distributing to children on Kim Il Sung’s birthday

This order’s intention can be interpreted as North Korean authorities trying to raise the holiday atmosphere by sparking competition among the provinces to celebrate Day of the Sun as “the year of victory in Military First Ideology.”

”The manager who cannot even provide one bottle of alcohol is not entitled”

However, the central party provided the order without a realistic plan of action, leaving it in the hands of factory and enterprise offices.

Another well-informed source stated that, “The central party has sparked a competition amongst the provinces to see which municipality provides more.”

On the 80th birthday anniversary of Kim Il Sung in 1992, when the “Supply Diversification” competition was kindled, the news spread that Junchun Commercial Office in Jakang, to where Jung Chun Sil (a member of Supreme People’s Committee) belongs, supplied 13 kinds of socks, candles, matches, and alcohol, but most of the provinces stopped after passing out one bottle of drink.

The well-informed source also stated that more than one bottle of drink could not be distributed this time. Soju is an item which cannot be left out from the holiday provision. Each provincial organization was known to bluff. “Factory managers who cannot provide at least one bottle of drink should forfeit their positions.”

At a food factory producing drinks, 10 hours of electricity was provided and the factory entered production round the clock, but it still had difficulty due to the lack of electricity and raw materials.

Demand-driven supply is also insufficient. After supplying drinks produced at this factory to organizations of influence, coal and mine workers, and laborers who work in dangerous jobs, there is not enough for all citizens.

As a result, authorities are asking factory and enterprises offices themselves to provide the laborers. Most factories are ordering from individual home-brew traders.

Failure in “gift” production for children

In the midst of this, it has been known that units which have taken charge of production of gift-use sweets are in a state of panic.

A part of the provinces used corn taffy and substituted corn instead of flour because of the lack of candy powder (sugar). Also, provisions had to be completed by April 13 to 14th, but the production line could not operate due to the lack of electricity, so goods could not ensure within the planned time.

Until the early 1990s, the central party promised flour, sugar, and other materials, but due to the worsening of financial difficulties, it decreed that provinces themselves take care of these goods. After the 65th birthday anniversary of Kim Il Sung in 1977, North Korea provided sweets to pre-school students who are at least five-years old to 11-year old elementary school students as a way of boosting their devotions but under the pretext of “gifts.”

Defector Mr. Kim reflected, “I can remember, after going up one by one to receive gifts, approaching the portraits of Kim Il Sung and Kim Jung Il and bowing. In 1970-1980, the snacks and sweets were at least 10 different kinds, but now, there is only corn snack and one package of candy.”

Daily NK
Kang Jae Hyok
4/16/2007

In commemoration of the anniversary of Kim Il Song’s 95th birthday (Apr. 15), North Korea has been preparing various spring festivities including the “Arirang” performance.

The number of foreigners visiting North Korea during this time is also expected to escalate.

Recently, the DailyNK confirmed through Chinese merchants that bribery and gifts had been exchanged between North Korean authorities. It is these during these seasons of Kim Il Song and Kim Jong Il’s birthday and the founding of the Workers Party and the Republic that bribes are most favorable.

For the past 4 years, Ma Il Su (pseudonym, 43) a Chinese merchant living in Jilian has been importing North Korean agricultural produce and herbal medicines to sell in China. In a telephone conversation with the DailyNK, he informed on the 12th, “I have prepared a special gift to give to North Korean authorities for when I enter the country on the 14th.”

He said, “On the whole, anyone trading with Chosun (North Korea) also offers gifts to them… The best offering is in the form of money.”

“Offering cash to the nation is the best but there are times when electronic goods are also given” he said.

Ma continued, “In order to trade in Chosun, you need the cooperation of authorities on your side” and said, “To charm the hearts of authorities, gifts must be given frequently. The best way to do this is by offering gifts at times of Kim Il Song and Kim Jong Il’s birthday.”

“You should go to the People’s Committee and offer the gifts to the chairman directly saying, ‘I sincerely pray for the Great Leader’s health and Chosun’s growth.’ Then they (the North Koreans) become ecstatically excited they do not know what to do” he said.

When asked whether or not gifts had to be offered to individual authorities Ma said, “You cannot trade if you do not offer bribes to authorities… Officials prefer cash as well as watches or electronic goods such as widescreen TV’s. In particular, they like watches made from South Korea.”

“I have already arranged for sheets of Chinese currency to give to individual authorities in timing with Kim Il Song’s birthday” he said and added, “Nowadays, offering bribes has become a norm in North Korea. There would be chaos if a gift was not offered.”

Ma said, “I am aware that my fellow tradesmen are offering gifts of similar nature” and estimated, “If we collect the amount of gifts offered by the Chinese, there should be quite a lot.”

Money given by Chinese merchants to the People’s Committee first reaches the respective local authorities of the Party → higher party authorities → central authorities in Pyongyang, and finally is offered as a bribe to Kim Jong Il. In the end, the money is donated into Kim Jong Il’s private fund and used for his personal pleasures.

Following the July 1st measures in 2002, North Korea-China trade has expanded significantly with hundreds of Chinese merchants filtering into North Korea everyday. In accordance with Ma, the number of people offering bribes to North Korean authorities seems to be considerably large.

Joong Ang Daily
Seo Ji-eun
4/17/2007

Hyundai Asan also plans to offer ‘doctor fish,’ which eat dead skin, at the Mount Kumgang spa.

Hyundai Asan Co. said yesterday it will launch a call taxi service at Mount Kumgang in North Korea on Friday to allow better tourist access to the scenic mountain area.

The van-sized taxis will run from the lodging facilities in the neighborhood of Onjeonggak rest area, where restaurants and souvenir shops are located, to Guryeong Falls and Manmulsang, an area with a number of unique rocks and cliffs.

Hyundai Asan, the exclusive operator of inter-Korean businesses, said taxi charges will be similar to the rate applied to van-sized call taxis in Seoul, except paid in dollars. The basic fare will be $5 for the initial distance of 4 kilometers and $1 per additional 800 meters.

Currently, shuttle buses are the sole means of transportation, but these operate only during designated hours and to designated places. An increasing demand for private transportation motivated Hyundai to execute the taxi plan, according to the company spokesman.

Tourists will only have to ask Hyundai Asan employees in any of the districts in the Mount Kumgang area to use the taxis, which will be driven by ethnic Koreans living across the Yalu River in Northwest China, often called joseonjok. The drivers of the buses currently running at the North Korean resort area are also joseonjok.

Hyundai Asan also said it will release doctor fish, a species of fish known to feed on dead skin, at the Mount Kumgang spa. The fish are in the midst of the quarantine process and will be unveiled to tourists by late this month. Using the fish at the spa will cost $10, according to Hyundai Asan.

Joong Ang Daily
4/17/2007

Nearly seven out of every 10 North Korean defectors in South Korea are unemployed, while those with jobs earn less than half the minimum wage set by the government, a survey by a Seoul National University professor revealed yesterday.

According to a survey of 451 North Korean defectors conducted between August and September last year, 306 or over 67 percent were unemployed, while those with jobs earned an average hourly wage of only 1,560 won ($1.68).

The minimum wage set by the government is 3,480 won an hour.

The study, done by Park Sang-in, a professor of public administration studies, also showed over 60 percent of North Korean defectors find jobs through private job-consulting firms or their acquaintances, and only 16.2 percent, or 73 respondents, said they found work through government employment offices.

“[A large number of] North Korean defectors appeared to be losing interest in finding jobs due to repeated failure to find employment,” said the professor.

Over 10,000 North Koreans have defected to South Korea since the end of the 1950-53 Korean War. Each defector receives 6 million won upon arrival here in government resettlement support, and an additional 13 million won is available to each family for housing.

In addition, each defector can receive up to 15 million won over a period of three years if he or she is employed or going through job training during the period.

Yonhap
4/16/2007

The U.N. World Food Program (WFP) has only been able to gather one-fifth of the amount of recovery aid it is seeking for North Korea, with less than a year left in the aid program, according to the agency’s tally on Sunday.

A resourcing update for North Korea dated Thursday showed the WFP received donations totaling just short of US$21 million, accounting for 20.53 percent of the aimed $102 million. The donations include $3.2 million carried over from previous operations.

Russia remained the biggest donor with $5 million, which is almost 5 percent of the total. Switzerland provided $2.57 million.

Germany donated $1.66 million. Other contributors include Cuba, Denmark, Ireland, Luxembourg, Italy and Poland.

Private donations totaled $8,474 as of Thursday.

The United Nations has contributed $2.3 million, or 2.25 percent of the total.

Called “protracted relief and recovery operation,” the project runs from April 1, 2006, to March 31, 2008.