North Korean Economy Watch

Yonhap
4/12/2007

Saddled with a severe food shortage problem, North Korea is poised to raise people’s standard of living this year by concentrating on agriculture and light industry.

In a session of its parliament held on Wednesday, North Korea said its major economic goal is “to improve the living standards of people on the basis of the existing foundations of agriculture and light industry.”

In a related move, the North replaced Prime Minister Pak Pong-ju, the control tower of its economy. It named Transport Minister Kim Yong-il as its new premier. Pak is believed to have been in conflict with senior North Korean officials over electricity supplies.

“Kim is in his early 60s, relatively young for North Korean cabinet members, and he has no prestigious political or educational background. He seems to be credited by his track record of economic expertise and achievement,” a senior Unification Ministry said, asking to remain anonymous.

The impoverished country has depended on international handouts to feed a large number of its 23 million people.

In a recent meeting with U.N. World Food Program officials, a North Korean vice agriculture minister acknowledged that the communist country has a shortfall of about 1 million tons of food and called for aid from the outside world.

“The cabinet will concentrate state efforts on agriculture this year, too, considering it as a mainstay, to thoroughly implement the WPK’s policy of agricultural revolution and make a signal advance in the efforts to settle the people’s problem of food,” Vice Premier Kwak Pom-gi said in a report to the delegates at the session. WPK is the acronym for the North’s ruling Workers’ Party of Korea.

To that end, North Korea plans to raise spending on agriculture by 8.5 percent and on light industry by 16.8 percent compared with last year.

North Korean leader Kim Jong-il also attended the meeting of the parliament, the Korean Central News Agency (KCNA) reported.

The North is officially headed by its titular leader Kim Yong-nam, the president of the Presidium of the Supreme People’s Assembly, the country’s parliament.

But Kim Jong-il rules the country with an iron grip. He is officially the chairman of the National Defense Commission and general secretary of the ruling Workers’ Party. He reserves the office of president for his late father as a way of showing filial piety.

The North also said it will kick off a drive to modernize major light industrial factories and reinforce the production of daily necessities, while state efforts will be channeled into the construction of houses in major cities, the KCNA said.

The North earmarked 40.8 percent of the total budget expenditure for the national economy this year, and in particular, spending on the development of science and technology will rise as much as 60.3 percent compared with last year.

Based on the report from the North’s parliament, South Korea’s Unification Ministry estimated the North’s 2007 budget at US$3.09 billion, up 5.9 percent from a year earlier.

Korea Herald
4/12/2007

The Supreme People’s Assembly, North Korea’s legislature, elected Transport Minister Kim Yong-il as the country’s new premier, replacing Pak Pong-ju, at its fifth plenary session held on Wednesday, Yonhap News Agency quoted a state-run North Korean news agency as reporting.

The SPA also elected Kim Yong-chun, chief of general staff of the Korean People’s Army, as the vice chairman of the National Defense Commission, a position which has been vacant since death of Yon Hyong-muk in October 2005, the Korean Central News Agency said. Kim Jong-il is the NSC chairman, and the NDC has two vice chairmen.

The 62-year-old new premier has served as the land and maritime transport minister since 1994. He visited Syria in 2005 to conclude a maritime transport agreement.

The SPA convenes once or twice a year at irregular intervals. The SPA is headed by Kim Yong-nam, the official president of the Presidium of the SPA. He also serves as the titular head of the communist state.

BBC
4/12/2007

North Korea’s parliament has sacked the country’s prime minister, reports say.

Pak Pong Ju, who had been prime minister since 2003, was replaced during a session of the Supreme People’s Assembly.

No reason was given for the decision to hand the position to former army and navy minister Kim Yong-Il.

North Korean leader Kim Jong-Il was present during the session of the Supreme People’s Assembly but did not comment on the decision.

Limited powers

Kim Yong-Chun was elected vice-chairman of the country’s National Defence Commission during the session, the state-run Korean Central News Agency reported.

The parliament meets once or twice a year to approve budgets or discuss policy but its power is limited. All power in the secretive state rests with the country’s reclusive leader, Kim Jong Il.

While the prime minister is the leader of North Korea’s government and cabinet, it is not the number two position.

That belongs to Kim Yong Nam, chairman of the Presidium of the Supreme People’s Assembly.

Yonhap
Park Hyun Min
4/11/2007

An report estimated that it would cost North Korea 39.7 trillion won (approx. US$ 42.7 billions) during the first 14 years of reform and development.

A report released on the 9th by Managing Director Kim Won Bae and fellow associates of the Northeast Asian Regional Development Center for the Korea Research Institute for Human Settlements, analyzed the costs required by North Korea to commence essential reform based on agreements made to the resolution of North Korea’s nuclear issues.

On an optimistic premise that North Korea and foreign diplomatic relations normalize and that proactive reform and development policies are implemented, the report forecasted that the North Korean economy would rapidly grow similar to China and Vietnam. Contrastingly, if reform policies remained passive and the normalization of foreign relations delayed, the report predicted that the country would be unable to escape from the adverse state.

The report estimated that a minimum of 23.7 trillion won and maximum 39.7 trillion won would be needed for investments, if active reform were to take place. Retrospectively, if reform were to take a slow stance, then approximately 11.5~26.4 trillion won would be needed.

For every 1 trillion won North Korea invested in construction, the report claimed that it would gain approximately 2.7 trillion won. If South Korea were to invest 1 trillion won in North Korea, then the affect would be a little less with a profit of 2.5 trillion won.

Furthermore, if North Korea development was based on South-North cooperation, then South Korea would have the burden of supporting North Korea 319~698 billion won annually during the first phase (2007~2011), and then an additional 1.29~1.95 trillion won during the second phase (2012~2020).

If the international community became involved, South Korea would only need to support 336~515 billion won annually in the first phase and 651 billion won to 1.11 trillion won during the second.

The report also claimed that the direction of the development on the Korean Peninsula should be based on cooperation between South and North Korea with the possibility of transferring this support to neighboring countries.

Further, basic facilities managed by South-North Korea cooperation would be supervised into three industries and development around the border locations currently separating South and North Korea would be managed by North Korea. This would extend to raw materials and production also.

Mr. Kim who was in charge of the research project said, “Already, cooperation between the South and the North is accurately and effectively taking precedence over the North Korea issue within the international community” and added, “North Korea, the Korean Peninsula, nations interested in understanding North Korea and the international community must join to destroy North Korea’s nuclear development, support the North Korean economy and help solve its issues.”

Daily NK
Kwon Jeong Hyun
4/10/2007

At the end of March, the price of North Korean rice in Hoiryeong City’s jangmadang (market) fell to 820 won per 1kg, around 200 won lower than early January of this year. At a 100 won less value, the price of rice is in a falling state.

The result of Daily NK’s survey of three cities – Shineju, Hoiryeong, Kwaksan – in North Korea’s southern and northern regions at the end of March revealed that the declining price of rice will remain a reality through all regions of North Korea. In Shineju, North Korean rice costs 800 won per kg, 850 won for South-Korean rice, and 700 won for Chinese rice. The price of rice in Shineju is not much different than in January.

The price of corn, which is the staple among North Korea’s low-income, fluctuated narrowly from 340 won at the beginning of the year to 370 won at the end of March. Compared to the decline in the price of rice, the price of corn remaining at the current level can be said to reflect the demand for corn which has been transferred from the demand for rice on a small-scale.

As a whole, the stability of North Korea jangmadang’s price of rice indicates that food supply for North Korean citizens is relatively stable, compared to before. Since the North Korean authorities have not fulfilled the nationwide rations, a large majority of the citizens are purchasing their food at the jang.

In spite of North Korea entering the spring shortage season where the difficulty of obtaining food becomes more severe, the stability of the current price of rice is significant contrary evidence from the position upheld by world’s food organizations or domestic aid organizations of “100,000 tons of food deficit” in North Korea.

The value of the North Korean currency has been in a recession since March. In the Northern region, the currency declined from 3200 won per dollar early this year to 3050 won by the end of March. The Chinese yuan has also declined from 418 won to 360 won. North Korea’s inflation is falling back daily.

The price of North Korean pork at 2500 won per kg does not differ much from early this year. The price of flour, which is rare in North Korea, is 1000 won per kg; it always exceeds the price of rice. The price of North Korean sea foods is still astronomical. The bidding price for one frozen Pollack is 4000 won. That is enough to buy 5kg of rice.

A local source who conducted the price investigation of markets inside North Korea said, “The results of this investigation revealed that the price difference among the North Korean regions is very significant” and “besides medicinal or daily products, the price level in Hamkyungdo is higher than the price level in Pyongando.”

[NKeconWatch: Exit the government, enter the mafia?]

Daily NK
Han Young Jin
4/10/2007

South Korean court recently ruled to nullify any contract between defectors and brokers. Brokers help North Korean defectors to sneak into South Korea and get paid in return.

On Sunday, Seoul Metropolitan West District Court ruled against plaintiff, a broker, who sued former defector, a forty-five year old female A. In a ruling, the court stated “H (the broker) exploited A’s inexperience and hastiness to profit exorbitant amount.”

H made a complaint against A to pay five million won (roughly 5,400 US dollars), the amount A made a contract to do so in China for helping her to defect to Seoul.

Such controversy between brokers and defectors have been ongoing problem for a long time. And many have argued the contracts between defectors in China and brokers to be illegal.

The court ruling is based on South Korean civil code article number 104, in which ‘any legal activity lack of fairness due to one’s inexperience or hastiness is nullified.’ However, as the district court ruled, is brokerage of defection really an ‘act of exploiting defectors to profit exorbitant amount?’

There are many different types of brokers; somebody who profit from helping defectors, and others who receive minimal amount of compensation, barely enough to take defectors to Seoul, with somewhat humanitarian intention.

The decision by court on Sunday, however, might cause all those “contracts” between brokers and defectors invalid, which would definitely reduce the number of brokers and extent of their rescuing activity.

As of now, most of defectors who entered South Korea are helped by those brokers. Defectors, who lack information and legal status, often find it extremely hard to find safe area or a route via a third country to South Korea. Until they are in safe area or Seoul, brokers provide them protection and ways to escape.

South Korean government no longer offers protection for defectors at first hand for various reasons. Whatever the reasons may be, North Korean defectors are willing to pay a certain amount of money, which most of them do not have, in exchange of their freedom to go to Seoul. So defectors sign a contract with brokers to promise to take some of the government subsidy for settlement to reimburse.

An Inchon-based broker J said in an interview “Brokers are taking high risks because there’s no collateral but a piece of signed contract.” According to J it costs two million won to get a defector out of China safely. The cost includes food, transportation from northeast China to a country in Southeast Asia and bribe.

Since defectors do not have any money beforehand, brokers usually borrow money from bank with high interest. Thus, total cost could rise up to three million won to even five million.

Another broker K called the price “completely market price.” “This is not a risk-free business. If court nullify contract between defector and broker, there will be no more brokers, the only ones that defectors could ask for help.”

A broker from Busan, Y, told his experience. Y also went to court with a “contract” on his hand. In this case, the judge decided to let defectors pay at least some of the money.

Even defectors view the cash for entering Seoul as fair and legitimate.
Another K, a defector, said “I didn’t think even ten million won was too much to go to South Korea when I was in China. If there was no broker, I could’ve never escaped to South Korea.”

The district court’s decision might make in sense on the code. However, given harsh condition of defectors in China and South Korean government’s indifference toward them, brokers are necessary in rescue of wandering defectors.

KCNA
4/10/2007

A ten-day film show opened Tuesday on the occasion of the Day of the Sun. 

Films dealing with the immortal revolutionary exploits of President Kim Il Sung and personality of Kim Jong Il as a great man will be screened at cinemas and cultural houses in Pyongyang and other parts of the country during the period. 

Among them are documentaries “Honor of Our People Holding the Great Leader in High Esteem”, “They Are Together in the Course of the Great Songun Leadership” and “Under the Guidance of the Great Brilliant Commander” and feature films “Star of Korea” and “Mt. Paektu”.

An opening ceremony took place at the Pyongyang International Cinema House.

Kang Nung Su, minister of Culture, made an opening speech.

At the end of the ceremony the participants watched newly-released documentary “Finding Himself among the People All His Life” (Part 1). 

Similar ceremonies were held in provinces on the same day.

It will probably be on display in the International Friendship Exhibition soon…

Gift to Kim Jong Il from American
KCNA
4/10/2007

General Secretary Kim Jong Il was presented with a gift by the visiting governor of New Mexico State, U.S. 

Governor Bill Richardson handed the gift over to Kim Yong Dae, vice-president of the Presidium of the Supreme People’s Assembly of the DPRK, Tuesday

Korea Herald
Annie Bang
4/10/2007

Twenty organizations of North Korean defectors established a politically unified group in Seoul yesterday and pledged to lead activities to democratize the North.

The group also revealed satellite photos of 17 private houses in the North owned by the North Korean leader Kim Jong-il.

“The defectors, who experienced living under the dictatorship of North Korean leader Kim Jong-il, must seek more systematic ways to democratize North Korea,” said Sohn Jung-hoon, secretary of the newly founded Committee of Democratizing North Korea.

The committee was formed by almost all the organizations of North Korean defectors in the South, including Democracy Network against North Korean Gulag, and Association of the North Korean Defectors.

“It is impossible for North Korea to recover its economy and resolve the shortage of food without freedom,” the committee said in a statement. “Democratizing North Korea is a must to bring peace on the Korean Peninsula, to improve inter-Korean relations and to recover the North Korean economy.”

Hwang Jang-yop, chairman of NKD, who was secretary of the Central Committee of the North Korean Workers’ Party, will lead the unified group.

There are over 100,000 North Koreans who defected from the North as of February, and the Seoul government believes the number will exceed 200,000 in five years.

Yonhap
4/10/2007

South and North Korea on Tuesday agreed to dispatch a joint team to China to disinter and repatriate the remains of a prominent independence fighter buried there.

They will also push to organize joint commemorative events for the 100th anniversary of the death of the freedom fighter An Jung-geun in 2010, according to a statement released by the Unification Ministry.

The agreement came at the end of the one-day working-level talks held in the North Korean border city of Kaesong. The talks were resumed after a 13-month hiatus.

“The joint excavation team will be sent to China for about a month beginning in late April. We will work out details for the dispatch later at the truce village of Panmunjom,” the statement said.

An was executed in Dalian in 1910, a year after assassinating Hirobumi Ito, Japan’s first resident-general in Korea, on a railway platform in Harbin. His remains are still buried near a former prison run by Japanese authorities in Dalian.

An’s assassination of Hirobumi was an attempt to prevent Japan’s annexation of Korea, but the Korean Peninsula was formally colonized by Japan from 1910 to 1945.

During the Japanese colonial period, millions of Koreans are believed to have been killed or sent into forced labor, including sexual servitude for the Japanese military.

The South Korean delegation was headed by Lee Byeong-gu, director general of the Ministry of Patriots and Veterans Affairs, while Chon Chong-su, deputy bureau chief of the Committee for the Peaceful Reunification of the Fatherland led the North Korean team.