Russian Railways transports 420,000 t of cargo to the Port of Rajin in QI 2015

June 1st, 2015

According to Port News:

In 2014, foreign-trade cargo transportation through the border crossing Khasan (Russian border)–Tumangan (North Korean border) increased 3.2 times over 2013. At the same time, the transportation of coal increased 24 times. In the first quarter of this year, this trend continued. The volume of transported goods increased several times—up to 432 000 t.

Such data were presented by President of Russian Railways Vladimir Yakunin at the OSJD Railway Summit in Seoul.

In 2014, 280 000 t was transported, of which 238 200 t was coal. In the first quarter of 2015, 408 000 t of coal was sent to the port of Rajin.

In total, according to Mr. Yakunin, it is planned to transport 1.5 million t of coal to the port of Rajin in 2015.

Recall that Russian Railways has implemented the reconstruction of the Khasan (Russia)–Rajin (North Korea) railway section and the construction of a cargo terminal in the port of Rajin. The cost of the project amounts to 10.6 billion rubles.

“In fact, the restoration of the site is a pilot project in the reconstruction of the Trans-Korean Railway, which in the future will provide communication between North and South Korea,” said Mr. Yakunin.

Since November 2014, four experimental coal transportation runs have been carried out through the port of Rajin to South Korea.

“The main task today is to ensure the involvement of enough traffic to complete the work of the railway and the terminal and provide a return on investments,” emphasized the head of Russian Railways.

The capacity of the Khassan–Rajin site and the terminal is 5 million t of cargo a year. In the future, when a favorable situation is created, the terminal may be employed for the transport of containers.

“In cooperation with South Korean companies POSCO, Korail, and Hyundai Merchant Marine, a due diligence investigation was conducted and we are discussing the possibility of creating a joint venture for the operation and development of infrastructure. This project is the first practical step in the development of trilateral cooperation on the development of Trans-Korean Railway. In this venture, we count on the support of South Korean businesses, the government, and the President of the Republic of Korea,” said Vladimir Yakunin.

Read the full story here:
Russian Railways transports 420,000 t of cargo to the Port of Rajin in QI’15
Port News
2015-6-1

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Posted in International trade, Rason Economic and Trade Zone (Rajin-Sonbong), Russia, Sea shipping, Trade Statistics, Transportation | Comments Closed

May 30 Measures (5.30 Measures) [UPDATED]

June 1st, 2015

UPDATE 13 (2015-7-16): A new report by the Institute for Far Eastern Studies (IFES) indicated that the DPRK has made progress in reducing sub-workteam units, however it is experiencing secondary problems related to the transition.

North Korea Seeks Supplementary Measures for the Field Responsibility System

North Korea has been promoting the “field management system” as a part of its agricultural reform. Nevertheless, drawbacks exist, and it is trying to overcome shortcomings in the process by blending the new system with the advantages of collectivism.

In the past, farmers were able to follow the technical guidance of skilled workers. But since the implementation of the “field management system,” many are struggling to keep up with the advanced modern technology and agricultural methods.

As a result, North Korea is engaging in training and education programs for farmers to raise their skill level to that of skilled workers by encouraging the collective farming method of communal sharing of labor.

North Korea’s Rodong Sinmun reported on July 10 that, “in the current reality with the implementation of the ‘field management system’, it is impossible to farm with limited technical capabilities.”

The field management system under the bunjo management system (or the subworkteam management system) divides the work unit consisting of 10–25 people into smaller units of 3–5 people, responsible for farming a smaller field. This is virtually a preliminary stage which could lead toward private farm ownership.

The field management system expanded countrywide after Kim Jong Un’s rise to power. It is considered to have contributed in part to the increase of agricultural production.

The newspaper cited pesticide as one example of the problem. In the past, spraying pesticides were for skilled workers; but in recent years, ordinary farmers are responsible for spraying pesticides on their own. However, from lack of experience, many farmers struggled with proper handling of pesticides and ended up wasting them or damaging their crops.

The newspaper, however, also introduced the story of jujube cooperative farms in Anak County of Hwanghae Province, praising one farm’s success in planting rice seven days earlier than planned, despite the adverse weather conditions.

Reportedly, the farmers at this cooperative farm underwent training in modern agricultural technology for 30 minutes every morning.

Another problem pointed out is that because the skill level of every farmer differs, some farmers may mistime rice planting during the planting season. In the past, task teams were formed based on skill level and could eliminate the discrepancies between farms; under the new system, problems are inevitable. Accordingly, it is reported that Anak County jujube cooperative farms are collectively helping each other to overcome this shortcoming.

The newspaper stressed that “when all farmers claim ownership of their field and subworkteam, one can create innovation in the farming operations.” Thus, the North Korean authorities are encouraging “collectivism” to overcome the limitations of the “field management system.”

UPDATE 12 (2015-7-10): The Institute for Far Eastern Studies (IFES) reports on the DPRK’s effort’s to reduce sub-workteam units and increase food production:

Despite Drought Last Year, Food Production Increased Due to Field Responsibility System

North Korea experienced its biggest drought in 100 years last year. However, North Korea claims that this did not affect its food production. North Korean authorities are claiming the main factor behind the increased food production is the will of farmers to produce more after the expansion of the “field management system,” or pojon tamdangje.

In an interview with the weekly newspaper, Tongil Sinbo, Chi Myong Su, director of the Agricultural Research Institute of the Academy of Agricultural Sciences of the DPRK commented, “the effectiveness of field management system (pojon) from cooperative farm production unit system (bunjo) is noticeable and succeeded in increasing grain production despite the adverse weather conditions.”

The field management system under the bunjo management system or the subworkteam management system divides the work unit consisting of 10-25 people into smaller units of 3-5 people, responsible for farming a smaller unit of a field. This is a measure to increase the “responsibility and ownership of farmers.”

From the July 1st Economic Management Improvement Measures enforced in 2002, the autonomy of cooperative farms and enterprises expanded. The “field management system” was piloted from early 2004 in Suan, North Hwanghae Province and Hoeryong, North Hamgyong Province, but was suspended soon afterward. However, this system is reported to have been implemented widely after the first National Conference of Subworkteam Leaders in the Agricultural Sector was held in Pyongyang in February 2014.

Economic principles behind the field responsibility system are stated as, “under the sub-work team structure, a smaller subworkteam consisting of 2 to 3 families or 3 to 4 people depending on the scale and means of production, is responsible for a specific field or plot (pojon) from planting to harvest stage to inspire farmers with enthusiasm for production by distributing the shares of production in accordance with the output of production planning.”

The newspaper added, “Despite the adverse weather conditions last year, the high grain yield was possible due to implementation of scientific farming methods and field management system to increase enthusiasm of farmers,” and “based on this experience, many cooperative farms across the country will expand subworkteam management system to field management system.”

Director Chi stated, “Since the field management system was implemented, farmers’ labor capacity increased to 95 percent. The planting time for corn and rice that took 20 to 30 days in the past is shortened to 10 to 15 days. In the autumn season, grain threshing that took 50 days is now only taking 10 days. This is changing the farming landscape.”

In addition, the distribution shares for farmers increased as well as the state’s procurement last year. This is attributed to “socialist distribution principles that distributed grains produced to farmers in-kind based on their efforts after excluding a specified amount of grain procured by the state.”

He added, “There are quite a number of farming households that received several decades worth of distribution after a year of farming. There is an increasing number of families with growing patriotism to increase the amount of grain procurement to the state.”

UPDATE 11 (2015-6-1): Andrei Lankov reports in Radio Free Asia that the DPRK has slowed down recently announced economic adjustment measures:

If we are talking about the economy, the last two or three years have been a time when hitherto unheard of stories began coming out of North Korea with ever greater frequency. Indeed, from late 2012, the North Korean government began to quietly implement reform policies highly reminiscent of what China did back in the late 1970s. Such reformist policies largely centred around two important documents, namely, the so-called ‘June 28th Instructions’ of 2012 and the so-called ‘May 30th Measures’ of 2014.

The most important part of these sets of policies was a far reaching change to North Korea’s incentive mechanism in agriculture. The ‘June 28th Instructions’ envisioned that farmers would be permitted to work in family-based teams and allowed to retain 30% of the harvest. As economists often say, incentives work, and sometimes even work wonders. Working under the new system, North Korean farmers have produced more food than at any time in the last 25 years, bringing the country quite close to the goal of food self-sufficiency.

The ‘May 30th Measures’ were even more ambitious in their scope. The measures allowed factory managers to buy industrial supplies and produce at market, while also being permitted to sell what their factories were to produce to whomsoever they pleased. They were also given the right to hire and fire personnel at will, as well as setting wages at levels they choose. This system was first implemented in early 2013 in some experimental enterprises. Such enterprises were easy to spot because workers there were paid what can be described as exorbitant wages by North Korean standards. Musan Iron Mine, for instance, being one such experimental enterprise, pays its workers 300,000-400,000 won a month (roughly 100 times what workers would get paid under the old system).

Slowdown but no reversal

The ‘May 30th Measures’ envisioned that the new system would be expanded to include all North Korean enterprises, but this is not what has happened. Reports emanating from North Korea in the last two months leave little doubt that the expected transformation has at best been postponed, at worst, cancelled entirely. Right now, only a minority of North Korean industrial enterprises have been allowed to implement the new model.

What happened? Frankly, it is unlikely we will receive a definite answer to this question any time soon. Of course, it is quite possible that Kim Jong Un suddenly changed his mind and decided to stop reformist activities that he found to be politically dangerous and ideologically suspicious. It is also possible that the reforms faced determined opposition from conservative members of the bureaucracy and military. Last, but not least, it is also possible that North Korean leaders have come to understand the problems that such reforms would face without prior and proper changes to the financial system.

Whatever the reasons, it is clear that the North Korean government has decided to slow down the reform process. At the same time, there has as yet been no reversal.

One can only hope that the North Korean government will not spend too much time in such oscillations between reformism and conservativism. Time is running out for Kim Jong Un, and this is largely because of popular political psychology.

Kim Jong Un, contrary to what many might believe, is quite popular in North Korea. According to many inside and outside the country, the ordinary North Koreans have pinned their hopes on Kim Jong Un for improving their lot. If he wants to succeed, he should not waste the potential that such popular support gives him. Many changes are potentially controversial and painful, and popularity can help smooth the process.

However, reservoirs of good will are depleted unless leaders live up to expectations. Painful reforms need to be implemented quickly, if he waits too long such reforms could prove to be dangerous.

Unlike his father and grandfather, Kim Jong Un cannot afford to ignore the popular will. His father and grandfather had a great deal of control over society and they could always count on the North Korean people’s docility and obedience. However, the surveillance network is not what it was twenty years ago. People are increasingly aware about how poor their country is and how prosperous China and South Korea are. They can also make a living outside government structures, making them potentially less easy to control.

Thus, in such circumstances, it is crucial that Kim Jong Un does not waste time. Let us hope that reforms will get back on track because they may otherwise be grave for Kim Jong Un and the North Korean people alike.

Lankov wrote in a follow-up piece in Al Jazeera on June 11:

The new management system was supposed to be implemented across the entire country starting in 2015, with nearly all industrial enterprises switching to the new model. But it did not happen.

The information emerging from North Korea through different and unconnected sources leave little doubt that the expected switch to the new managerial system has not happened.

As usual, official media is silent, but foreign investors and businessmen, as well as Chinese nationals who visited their relatives in North Korea, and some trusted North Korean contacts, all tell the same story: Reforms are not being implemented as expected.

The new rules

As was the case last year, there are a number of industrial enterprises which operate in accordance with the new rules. However, such enterprises are few and far between, and are still officially considered “experimental”. Most plants and factories still ostensibly follow the ossified rules of a Leninist command economy.

Simultaneously, foreign investors began to feel increasing pressure. They began to face arbitrary changes of rules, demand for additional payments, and other similar actions.

An acute observer described the current situation to the author: “For a couple of years, the North Korean economy resembled a car climbing a steep slope at a good speed. But a few months ago, they switched off the engine, and the car has just begun to slide down the slope.”

Given the highly secretive nature of the North Korean government, one can only guess what made Kim and his advisers change their minds. The decision to stop reforms might reflect some internal governmental turmoil, but also may be a result of a sudden change of Kim’s mind-set – indeed, the North Korean dictator is remarkably moody at times, and reforms are wrought with political risk.

It is even possible that the reforms were slowed down in order to better prepare the wider economic landscape for their full-scale implementation: This full switch to the new system could potentially trigger severe inflation, so some kind of preparatory “groundwork” is advisable and possibly even necessary.

Experimental enterprises

Whatever the reason, the reforms appear to have been stopped, albeit not rolled back. The farmers still receive their share of produce, and some factories work according to the new system, often paying exorbitant salaries to the employees. A miner at the Musan iron mine, where the “experimental enterprise” system is functional, can now easily earn $70 a month, almost 100 times the average nationwide salary of less than a dollar a month.

This gives us reason to hope that sooner or later the reforms will be resumed, and that the current halt is merely provisional. After all, the introduction of household-based agriculture a few years ago followed a similar pattern: The new policies were first announced in June 2012, then shelved, but began to be fully implemented during the spring of 2013.

Nevertheless, the news remains disturbing. If North Korea rejects reforms, it will slide back into a state of stagnation. This will mean life will become even more difficult for North Koreans and will create a great deal of trouble for North Korea’s neighbours. A reforming North Korea has the possibility of survival, while a stagnant and stunted North Korea is inevitably bound to collapse.

UPDATE 10 (2015-5-27): According to Cao Shigong a member of the Korean Peninsula Research Society, Chinese Association of Asia-Pacific Studies, in the PRC’s Global Times:

A series of proactive measures to adjust economic policies and expand exchanges with foreign countries recently adopted by North Korea have drawn widespread attention. The moves aim to help the country escape the long-lasting economic woes, improve the nation’s political and social stability, and promote economic cooperation within the region. Therefore, they deserve welcome and encouragement. However, it is inappropriate to regard these measures as a signal of overall reforms or a starting point of further opening-up.

North Korea is always reluctant to label its measures for economic development as “reform and opening-up.”

To begin with, China’s implement of reform and opening-up is based on absolute disapproval of the mistaken route that deemed class struggle as the guiding principle. Yet North Korea, as a hereditary regime, does not allow any doubt or modification of its former leaders’ ideologies and political lines such as juche (“self-reliance”) and songun (“military-first”).

Besides, China’s reform has broken the traditional planned economy and set up a market-oriented socialist economy with the coexistence of other diverse forms of ownership, especially allowing the development of private business. But North Korea still cleaves to its old beliefs that planned economy and the public ownership of the means of production are the key characteristics of socialism, and that if they are changed, socialism will be lost.

In addition, as a big country, China enjoys strong tolerance and endurance. Even it is wide open to the world, under the pressure over intruding foreign cultures and values, it can still safeguard its political and social stability. North Korea, however, will find it hard to do the same if it opens up like China, against the backdrop of US hostility, the north-south divide, and fierce competition over systems.

Consequently, North Korea took the measures of “our-style (North Korea-style) socialism” and corresponding “reforms,” including the 7.1 Economic Management Improvement Measures, 6.28 Economic Reform Measures and 5.30 Measures. Though similar to the reform and opening-up of China, they have their own distinguished features.

For instance, the country initiated “land contracts,” yet did not end cooperative farms; it encourages its business to be flexible, yet without changing the way their property is held; it established special economic zones and economic development zones, but with focusing on advantageous areas and corridors.

The basic features of North Korean “reform” measures are improving the policy flexibility, introducing new management styles, and bringing the function of the market into full play, without changing its fundamental system. The country also introduces and utilizes foreign capital under the control of the government. Apparently, these practices stem from the nation’s domestic conditions.

It is generally acknowledged that North Korea’s reform measures have achieved initial success. North Korean economy has recorded positive growth for three consecutive years, with its domestic markets and consumption becoming more active and the strain on food and living supplies eased.

On the other hand, confrontation between North and South Korea is rumbling on, and the arrangements around the only industrial complex between the two sides, the Kaesong Industrial Region, is constantly encountering conflict, which has made business people skeptical about economic collaboration with North Korea. Especially as North Korea keeps conducting nuclear tests, it remains hard for it to break the sanctions and isolation from the international community.

All these factors prove the uncertainty of North Korea’s economic reforms. Hence, media and scholars should be reminded to deliver accurate and comprehensive information over North Korea to the world, in order to prevent giving misleading impression or weakening the risk awareness of investors, causing irreparable losses as a result.

Read the full story here:
North Korean economic reforms tightly tied to domestic conditions
Global Times
Cao Shigong
2015-5-27

UPDATE 9 (2015-3-4): The Associated Press reveals additional details through an interview with Ri Ki Song, professor of the economic science section at Pyongyang’s Academy of Social Science:

The measures give managers the power to set salaries and hire and fire employees, and give farmers more of a stake in out-producing quotas. Some outside observers say they are a far cry from the kind of change the North really needs, but they agree with North Korean economists who say it is starting to pay off in higher wages and increased yields.

The changes were introduced soon after Kim took over in late 2011, codified last May and, according to North Korean economists who recently spoke to The Associated Press and AP Television News, are now being expanded to cover the whole country.

The focus is on management, distribution and farming, said economist Ri Ki Song of the Economic Science Section at Pyongyang’s powerful Academy of Social Science, in an interview in February with AP Television News. Ri said the goal is to prod North Korean managers and farmers to “do business creatively, on their own initiative.”

An embrace of capitalism it is not.

…

Pyongyang has not formally disclosed details of the measures, believed to have been approved on May 30, 2014. But according to the North Korean economists, these are some of the major points:

–Managers can now decide on salaries without following state-set levels. Once an enterprise has paid the state and reinvested income to expand production, develop technology and pay for the “cultural welfare” of its employees, it can use the remaining funds to determine pay levels. As an example, Ri said that since instituting this system, the Sinuiju Cosmetics Factory has raised its average monthly salary from 3,000 won (less than $1 or 119.5 yen on the black market) to 80,000 won, with the highest earners collecting 110,000 won. The new salary levels are more in tune with actual living expenses and costs in the real economy.

–Factories or other enterprises can directly negotiate trade deals with foreign entities and hire or fire workers at their discretion. They can also decide what materials to buy and from whom, and negotiate prices.

–On cooperative farms, subunits of 4 or 5 people have been set up so that each farmer has a greater stake in producing a better yield from their plot. Again, after giving the state its share and covering expenses, the surplus–either in cash or produce–can be distributed on a point-based system at the cooperative itself.

If the farming measures are implemented in a way that gives families long-term responsibility for specific plots, they could go a long way toward transforming millions of North Korean peasants from serfs who merely work the land to sharecroppers who gain at least some direct benefit from their labor. Ri said it was an important reason why crop yields were comparatively good last year, despite severe droughts.

…

Officials, meanwhile, insist they are holding fast to North Korea’s own brand of leader-centric socialism and are only trying out “new management methods of our own style.”

“Our country admits that our economic situation is difficult,” Ri Jun Chol, director of international economic relations at the academy, said in an earlier interview in Pyongyang with the AP. “What I can say is that looking at every quarter, it has made a lot of increase compared to the last year.”

The impact of the measures is impossible to verify because North Korea doesn’t announce economic indicators, saying such data would be useful to its enemies.

Officials also are not ready to give the nod to capitalist-style markets and small enterprises that have sprung up all over the country with the breakdown of the government’s ration system in the famine years of the 1990s. This shadowy private sector is a key engine of the North’s real economy–making up as much as 30 percent of the whole pie. The Kim regime has been more lenient than his father’s, but insists it is a temporary blip.

“In the future, the marketplaces will no longer exist,” the international economy specialist Ri said in his interview with AP. “The main role of the markets is to sell things that factories and other enterprises can’t supply. We allow the markets because the country right now doesn’t have sufficient capacity to produce daily consumer goods.”

UPDATE 8 (2015-2-28): The Economist has published a good article summarizing recent economic changes int eh DPRK–including mention of the 6.28 agriculture policies and the May 30 measures.

UPDATE 7 (2015-2-24): The Institute for Far Eastern Studies (IFES) has published a report on the “Socialist Enterprise Management System”:

“Socialist Enterprise Management System” under Full Implementation

According to the Choson Sinbo, a pro-North Korean newspaper in Japan, North Korea began to strengthen its economic reform measures by enhancing autonomy in industries from August 15, 2013.

The article entitled, “A Look to the Bright Prospects of Building a Powerful Economic Nation” was introduced. It covered a research forum held on February 11 in Japan in commemoration of the Day of the Shining Star.

The article quoted Professor Jae-Hoon Park of Choson University in Japan: “The new economic management method that was adopted into the industrial and agricultural industries from August 15, 2013 was recently formalized into the ‘Socialist Corporate Responsible Management System’ and specific measures were named to fully implement the measures.” He elaborated further on the achievements of the economic reform measures.

This is the first time to hear that a new economic reform measure went into effect in North Korea from August 15, 2013. Previously, North Korea had announced its plans to undergo new economic measures in June 28, 2012 and May 30, 2014.

The Choson Sinbo explained the ‘Socialist Corporate Responsible Management System’ is a new economic reform system in which, “business enterprises are granted certain rights to engage in business activities autonomously and elevate the will to labor through appropriately implementing the socialist distribution system.”

This measure emphasizes the autonomy of business enterprises and is seem to be an expansion of the previously mentioned June 28 and May 30 measures.

In addition, another participant at the forum, Professor Ho-il Moon, explained that “[Work Team] (pojon) responsibility system was introduced from 2013 nationwide. This system was developed to overcome the limitations of equalization of product distribution that goes against socialist distribution principles.”

This year North Korean state media is emphasizing the production in the agricultural industry, and touting the fruition of the pojon system. As a result, the Kim Jong Un regime’s agriculture reform with the pojon system at the core of the changed policy is expected to gain in strength.

According to the Rodong Sinmun, an article on February 6 introduced a successful case of pojon system in an article entitled, “Pojon Responsibility System that Produced Silver.” The article introduced the successes of a cooperative farm in Yongchon District in North Pyongan Province where it is reported to have reaped in more than one ton per chong (or 9,917 square meter) of crops from the previous year in 2013.

The pojon responsibility system reveals a reduction in size of work units working on cooperative farms (previously 10 to 15 people) to a smaller number (3 to 5 people per farm), with each group responsible for cultivating a portion of land. Speculation is that this measure by North Korea may be a precursor step before transitioning to a private farming system.

UPDATE 6 (2015-2-17): The Tongil-Ilbo claims to have a four-page document produced by the North Koreans to explain the 5.30 Measures to foreigners. They did not publish the four page document (why?), but they wrote about it on their web page. Here are some English translation notes from the article:

Could 1st Sec. Kim Jong-un become the North Korean Deng Xiaoping?

– On March 30th, 2013, North Korea adopted Byungjin (병진). Based on this strategy, for now, Kim Jong-un focuses more on economic construction. In 2015 New Year’s address, he emphasized enhancing the living standard of the people.

– Some say that Kim Il-sung tried to construct a political ideology for the nation through the Juche Idea. Kim Jong-il emphasized a “military power nation” based on nuclear power through its military first policy. Kim Jong-un is trying to be Deng Xiaoping in North Korea through economic development.

– Last year, Kim Jong-un proposed the direction of new economy policies through 5.30 Measures, and there is a strong likelihood that North Korea announces specific economic measure from the conception of policies this year marking the 70th anniversary of founding Workers’ Party.

Our Style Economic Management Methods
– 5.30 Measures (5.30담화), announced on May 30th last year with officials who are in charge of the party, state, and military organizations, are about establishing “Our Style Economic Management Methods” (우리식경제관리방법) according to the needs of the day for development.

– In these measures, Kim Jong-un said the methods should be established based on Byungjin (병진) in order to successfully realize the construction of a strong and prosperous socialist nation.

– Especially, Socialist Corporate Responsible Management System (사회주의기업책임관리제) allowed factories (공장), enterprises (기업소), and cooperative organizations (협동단제) to have practical management rights over the means of production based on socialistic ownership (사회주의적 소유), which makes laborers fulfill their responsibility for production and management and realize the principle of collectivism.

– Kim Jong-un urged in the New Year’s address this year that all the factories (공장) and enterprises (기업소) should reduce import dependence or get rid of imports (수입병: “import disease”, too much dependence on imports) and to try to localize materials and facilities [AKA import substitution].

Emphasis on Both ‘Principle’ (원칙) or ‘Actual Benefit’ (실리)? Where should we be more focused?
– As Kim Jong-un pointed out not just the socialistic principle, but also the achievement of actual economic benefits through objective economic principles and scientific logic, he practically focused on “actual benefits”.

– The 5.30 Measures also highlights scientific technology including the importance of scientification (과학화) in economic guidance (경제지도) and all the procedures and elements of production (생산) and enterprise management (기업관리).

– It urges enterprises (기업소) to actively develop new technologies (기술) and new products (신제품), and improve their quality by exercising the authority over product development (제품개발권), quality management (품질관리권) and human resource management (인재관리권), which elevate their competitiveness.

– More specifically, it recommends that factories (공장), enterprises (기업소), and cooperative farms (협동농장) implement Responsibility System (담당책임제) to use and manage national/cooperative property (국가적 협동적 소유) including machine facilities (기계설비), land (토지), and facilities (시설물).

– It is also provides that enterprises (기업소) should assess labor, and distribute in compliance with socialism so that workers receive (받다) fair/commensurate (공정한/일한것만큼) compensation.

– Kim Jong-un urged officials to learn advanced management knowledge and eventually to raise the level of management.

– In the 2015 New Year’s address he emphasized the importance of improving people’s standard of living and constructing an economically powerful and self-supporting economy (자립경제). He also proposed to diversify foreign economic relations (대외경제관계) and to actively carry on its economic special district development business (경제개발구개발사업).

Working-level Taskforce(실무 상무조) is a new generation, assembled for planning and implementation
– It seems that a taskforce (실무 상무조) that normally consists of executives (간부) of each ministry (성) and committee (위원회) was constructed around cabinet executive office (내각 사무국) and national planning committee (국가계획위원회), and it is making specific implementation plans, said Jung Chang-hyun, an adjunct professor of Kukmin University.

– It seems that the taskforce is composed of a younger generation staff, and unlike the 2002 7.1 Measures which were comprehensively implemented, the 5.30 Measures are likely to be implemented incrementally.

– This year, the 70th anniversary of independence, at the same time, for North Korea, the 70th anniversary of the establishment of Workers’ Party, there would be a great celebration on October 10th for the anniversary of founding the party in North Korea, and success or failure of the celebration would depend on economic development, especially, the improvement of living standard of the people that Kim Jong-un proposed at the New Year’s address.

UPDATE 5 (2015-2-9): A Chinese journal has published information on the May 30  Measures.

UPDATE 4 (2015-2-5): Andray Abrahamian at Choson Exchange writes about the May 30 Measures in the Wall Street Journal

UPDATE 3 (2015-2-5): A new report by the Institute for Far Eastern Studies (IFES) refers to a Choson Sinbo article and implies that financial reforms will also be part of the May 30 Measures:

New Economic Management Improvement Measures to Support Financial System Reform

North Korea has a new economic development goal with a target to draw the accumulated capital of North Korean people to promote economic development. Changes to the financial system are being introduced including development of various savings products and promotion of people’s credit card use.

The president of the Central Bank of the DPRK, Kim Chon Gyun, interviewed with Choson Sinbo (a pro-North Korean newspaper in Japan) on February 3 and explained the role of the bank — responsibility for the state’s overall monetary distribution, financial leadership and management — and the recent changes taking place in the bank.

According to President Kim, “The country is trying to better circulate domestically hoarded money to meet the demand for cash in the country’s developing economy.” In this effort, the regime is developing various financial products as well as encouraging its people to use credit cards.

This is an indication that the regime is working on various measures via the development of a variety of banking products to attract more people to deposit money in the bank and use credit cards for purchases.

With increasing international sanctions against the country, North Korea is suffering from foreign capital shortages and is attempting to attract people’s private funds to the bank to fund economic development plans.

“With the establishment of our-style economic management methods, there are plans of improving the methods of financial and economic institutions and installing financial measures in accordance with the emergence of entrepreneurial activities,” said Kim.

This shows that the spread of the market economy is expanding the autonomy of enterprises and increasing the role of the bank in lending activities to provide funds for companies.

Accordingly, speculations are that financial reform is taking place to raise capital in relation to the recent announcement by Kim Jong Un of the May 30th measures, through expansion of individual’s disposition rights, autonomy of enterprises, and decentralization of power.

Meanwhile, the Rodong Sinmun reported on February 3 that “Choson [North Korea] has steadfastly entered the road to happiness.” The newspaper vaunted the achievements of the Kim Jong Un regime, listing as successes the construction of Pyongyang Nursery, Wisong (Satellite) Scientist Street, and Munsu Water Park.

The news reiterated that major changes are underway to resolve food shortages, expressing confidence in economic measures with significantly increased autonomy of economic units. This hints at how the autonomy and decentralization granted to economic agents is acting as an important engine for economic development.

I am still trying to track down a link to the original Choson Sinbo article, but I believe this is it. Here is additional coverage in the JoongAng Ilbo and KBS.

UPDATE 2 (2015-1-26): The Choson Sinbo published an article called “Construction of economy based on the parallel pursuit of economic development and nuclear armament /병진로선에 기초한 경제건설／사회과학원 연구사가 말하는 《현장의 변화》”. A respected colleague has translated the parts related to the “May 30 Measures” and the earlier “June 28 Agriculture Measures” below:

Professor Ri Ki-song [economic research laboratory of the Academy of Social Science] also mentioned that the “Our style economic management /우리 식 경제관리방법의 확립”, which is receiving attention from other countries, also promptly meets the needs of today in terms of North Korea’s earnest strive for economic revival in a peaceful environment.

“At the end of 2011, our supreme leader Kim Jong Un gave guidance on the direction of North Korea. Scholars and workers of the economic field have examined the improvement proposals and broadened its implementations after demonstrative introductions in some units. Last May, our supreme leader also clarified the principle problems concerning ‘Our style economic management methods’.”

According to the professor there are three “clarified principles”. First is accomplishing government’s unified guidance and strategic administration in the economy sector. Second, properly accomplishing responsibility management system of socialist companies in factories, corporations and collective organizations and lastly guaranteeing the party’s leadership in economic business while also firmly promoting political business.

In the meantime, the parliamentary cabinet system along with the parliamentary center system of North Korea has been strengthened and a series of rights (programming rights, organization of production rights, development of products rights, labor management rights, financial rights, joint cooperation rights, etc.) that enable all enterprises to actively and emergently lead business activities, have been readjusted.

During the past 2 years, production has increased in many business entities that accordingly brought on a rise in employees’ standard of living. There were many cases that guaranteed much higher living expanses than previous also in the suburban factories that Professor Ri had visited. There was significant increase especially in units that produced exports such as the Rakwon Machine Complex Enterprise.

In collective farms, a system within the work team management, which makes the farmers take responsibility for their assigned fields, interconnected with the farmers’ enthusiasm for produce and increase in grain production was seen as a result.

Professor Ri pointed out that “there are objective conditions that enable ‘the method that makes farmers take responsibility for the farming of their assigned field’ to be effective”.

“One is establishing a financial basis for agriculture. That is, the nationwide land readjustment program and organization of the natural flowing waterway that were realized in the 20th century by the order of our supreme leader Kim Jong Un. Other is the increase of national investments in the agriculture sector following the parallel pursuit of economic development and nuclear armament of the Kim Jong Un era.

Farmers in collective farms also received increased shares of agriculture produces according to the work done.

So this article sets up the narrative that Kim Jong-un launched the process for establishing new management measures in 2011.

UPDATE 1 (2015-1-15): According to the Institute for Far Eastern Studies (IFES):

In a January 8, 2015 article publish by the Choson Sinbo (a pro-North Korean newspaper in Japan), the North Korean economy was described as a “flexible collectivist system,” adding that “Choson’s (North Korea’s) socialist economy promotes the establishment of a collectivist system that can flexibly respond to the current development.”

The news article explicated that this system is “under the plan and unified guidance of the state which guarantees the socialist enterprises to achieve economic development through ensuring active and evolutionary actions.” This hints at North Korean leader Kim Jong Un’s plans to continually promote a somewhat relaxed socialist planned economy in the future.

Since Kim Jong Un came to power, his regime has taken action to change the management structure and expand the autonomy (and incentives) of enterprises and farms, inter alia. Such changes can be interpreted as North Korea’s moves to highlight the flexibility of the system and the independent actions of economic agents.

The Choson Sinbo article continued: “By adhering to socialist ownership and strictly following objective economic laws in economic guidance and management, rational and just economic space will be created.” It added that “the ultimate conclusion in the establishment of our-style of economic management system is the improvement of people’s living standards.”

According to the article, “Kim Jong Un announced a historic measure regarding the establishment of ‘our-style economic management method’ in May 2014.” This seems to confirm that the recent economic policy announced in North Korea was headed by Kim Jong Un. (Note that in his 2015 New Year Address, Kim Jong Un also emphasized the need for the Cabinet, state, and Party organizations to “make proactive efforts to establish the economic management method of our style,” suggesting it as an important task of 2015.)

Until now, there was only speculation that North Korea had plans to expand elements of the market economy and widen the scope of the policy target. The speculation was based on last year’s announced ‘May 30th Measures’, the details of which were vaguely known. However, this recent article by Choson Sinbo seems to support the certainty of this policy.

The newspaper further elaborated the importance of North Korea’s ‘parallel policy of nuclear and economic development’, but also emphasized the regime’s focus on improving people’s living standards through the “defense industry’s lead to develop the science and technology sector and introduce its achievements to the economic sector associated with people’s livelihoods.”

In regards to the recent US sanctions against the DPRK following the Sony Pictures hacking incident, the news article explained that North Korea was embarking on a variety of strategies — such as seeking multifarious development of foreign economic relations, realizing various trade transactions, increasing the ratio of domestic goods (versus imported goods) of raw materials and equipment — in order to minimize the impact of the US sanctions against the DPRK economy.

The news article concluded that North Korea is not likely to give up its current ‘parallel policy’, despite the foreign threats. Rather, in response to the threats, the DPRK is developing existing foundations of the self-supporting economy in order to be self-sufficient in raw materials and equipment and improve the ratio of domestic goods to imported goods.

ORIGINAL POST (2015-1-15): I was on holiday break when all of the discussion on the “May 30 Measures (5.30조치)” broke out on the internet, so I am getting a late start to this.

First there were two reports (both in Korean) that apparently discuss new “May 30 Measures”. One report is by the Institute for Far Eastern Studies (IFES) and the second is by the Hyundai Research Institute. I will see if I can get these translated (the key parts anyway).

In the meantime, here is a summary that appeared in Yonhap (2014-11-30):

North Korea’s Kim Jong-un regime may announce a new policy vision for politics and the economy next year as the country intensifies efforts to open up a new era of the new leader, a report by a local institute showed Sunday.

“There is a possibility that North Korea may propose a new set of governing norms and power structures as it opens up the era of Kim Jong-un next year, in which the three-year mourning period for (late leader) Chairman Kim Jong-il will have been ended,” said the report by the Institute for Eastern Studies at the Kyungnam University.

“(The country) could suggest a new power structure that suits the Kim Jong-un epoch as the National Defense Commission system was (introduced) for the Kim Jong-il era and the premier system for the Kim Il-sung era,” according to the report.

On the economic front, the North is expected to push to legalize a set of new economic measures the country has experimented with in recent years, the report said, adding homegrown market forces have been pressing for economic reform.

“North Korea’s efforts to lure in foreign investment to its special economic and economic development zones may continue into the (following years),” it noted.

Andrei Lankov commented on the new economic measures mentioned in the two reports–implying that these measures are built on the success of the June 28 (6.28) Measures–with management changes in store for the agricultural and enterprise sectors of the economy. Writing in Al Jazeera, he noted:

This time, the big news is indeed a decision, the so-called “May 30th Measures”, jointly issued early this year by the North Korean cabinet of ministers and the Central Committee of the Korean Worker’s Party. This decision was initially classified, but because it was supposed to be read by so many people, its contents have become public knowledge.

The contents are revolutionary. It seems that, at long last, North Korea has decided to begin Chinese-style reforms. Marshal Kim Jong-un is obviously inclined to do what his late father, Generalissimo Kim Jong Il, was too afraid to, that is, to attempt to transform his country into a developmental dictatorship, largely similar to present-day Vietnam or China.

This decision did not come out of the blue. Indeed, it agrees very well with what Kim Jong Un and his advisers have quietly been doing over the last three years – albeit the slow-motion transformation of the country has attracted little attention from outside world.

The first significant step was the introduction of the so-called “June 28th Measures”. These measures were introduced in 2012, but only became fully into force in 2013. While on paper, they did not look that ground-breaking, they represent a sweeping reform of agricultural management in the North.

The “June 28th Measures” allowed North Korean farmers to create their own production teams of five or six people. It was not explicitly stated, but it was a signal that individual households should register as “production teams”. Such teams were given a plot of land, the assumption being that they would toil the same area for several consecutive years. The land technically remained under the jurisdiction of the state-owned and state-managed “collective farm”, but the produce would henceforth be split 70:30 between the state and the production team (ie the family). Up until then, North Korean production teams had been much larger, and all produce had to be submitted to the state in exchange for a fixed daily grain ration that was allocated to every farmer.

…

Given the precedent in agriculture, the “May 30th Measures” are not quite as surprising as they may first appear, though they are indeed truly radical by the standards of North Korea before 2013.

According to these measures, from 2015, North Korean farming households (for ideological purposes still branded “production teams”) will be allocated not 30 percent but 60 percent of the total harvest.

Additionally, farming households will be given large plots of land – some 3,300sq m – to act as their kitchen gardens. Until now, North Korea, unlike nearly all other communist states, never tolerated private agriculture to any significant degree, and thus, for decades, kitchen gardens were limited to a meagre 100sq m.

The measures did not stop there, though. This time the North Korean leadership has set its sights on reforming the moribund and hollowed out state industrial sector. According to the reforms, directors of state factories will find themselves covered by a new “director responsibility system”. This system makes a director, hitherto state-appointed and carefully supervised representative of the party and state, into the approximate equivalent of a private businessman (factory managers in North Korea are almost always men). Under the new system, factory directors will have the freedom to decide how, when and where they purchase technologies, raw materials and spare parts necessary for their enterprises. They will also be allowed to decide who to sell to. They are also given the right to hire and fire workers, as well as to decide how much to pay for a particular job.

Under the new system, there is a tacit assumption that directors will be able to reward themselves generously for their own work – a feature that makes them virtually indistinguishable from private entrepreneurs in market economies. As a matter of fact, a few foreign delegations that recently visited North Korea were privately briefed about coming changes.

Lankov also wrote a similar article for the New York Times:

A new set of market-oriented reforms adopted by the Central Committee of the Workers’ Party and by the cabinet of ministers on May 30, 2014, appears to aim to liberalize the economy as a whole. The content of this classified economic policy document was first partially leaked to the South Korean daily Segye Ilbo in June. Later it was confirmed by many sources and is now widely discussed by Pyongyang watchers.

The “May 30 Measures,” as they’ve come to be known, envision the significant reduction of state control of the economy and a dismantling of central planning. Managers of state enterprises will be allowed to purchase items on a free market, making deals with other enterprises or even private businesses. They will be given the right to fire and hire workers, and pay them as much as they want.

At coal mines near the border with China, where the new “system of managerial responsibility” has been tested since late 2013, the best miners may now receive up to $70 a month, an exorbitant wage for the North.

Mr. Kim has also left untouched the unofficial private economy, which began to grow in the 1990s and now contributes significantly to North Korea’s tiny G.D.P., as much as 50 percent by some estimates. This economy of small businesses like food stalls, bicycle repair shops and truck deliveries, as well as larger ones like small coal mines and fishing companies, has never been explicitly accepted by the government. But since Mr. Kim’s ascension, officials have left this gray market alone.

The agricultural reforms are already bearing fruit. In 2013, the country enjoyed the best harvest in decades when — in a first since the 1980s — it produced nearly enough food to feed its population on a subsistence level.

Choson Exchange also offered some helpful comments from the Hyundai paper.

These items are probably also related:

1. Economic Management Improvement Measures – changes after one year (IFES, 2014-4-11)

2. North Korea’s ‘New Economic Management System’: Main Features and Problems (Korea Focus, Park Hyeong-jung)

3. Recent DPRK wage increases / economic management changes

4. Recent information on implementation of economic adjustment policies

5. “Securing economic profit,” fundamental to economic management (IFES 2014-10-31)

6. North Korea’s evaluation of its 2013 economic policy

7. Worker’s Party sets up Economy Department

8. North Korea making visible progress towards economic reforms

9. DPRK altering Commercial Distribution system

10. Kim Jong-un’s directions on improving economic management

11. Miners Fail to See Promised Salary Bump (Musan Mine)

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Posted in 6.28 Policy on Agriculture (June 28), Byongjin, Economic reform, May 30 Measures (5.30) | Comments Closed

North Koreans arrested for trade in rhino horn

May 28th, 2015

According to the Daily NK:

One of the two North Koreans arrested on site for engaging in illegal trade of rhinoceros horns in Mozambique has been confirmed a Pyongyang diplomat, according to the Voice of America.

“Of the two arrested North Koreans, one was confirmed to be Park Chol Jun, a diplomat working at Pyongyang’s embassy in South Africa,” VOA reported, citing an official working at Seoul’s mission in the same country.

The two perpetrators, arrested on the 3rd this month, posted bail the following day and left the country for South Africa, the official said.

The North Korean mission there paid roughly 30,000 USD for their bail, the South Korean official said.

North Korean diplomats are said to often engage in illegal activities in other countries.

In March, a Pyongyang diplomat was deported from Bangladesh after attempting to smuggle in 27kg of gold, while in April, a couple from the North’s mission in Pakistan was caught selling alcohol on the streets of Karachi without a license.

“These kind of illegal activities have been around for a long time, because they stem from structural problems in operation,” Hong Sun Kyeong from the Committee for the Democratization of North Korea, who was also a former Pyongyang diplomat in Thailand, said. “Since the late 1970s, the North has not been giving its overseas missions money to operate. So not only do they have to make their own money, the state also makes it a rule that they have to wire back ‘loyalty foreign currency.’”

He added, “Back in the North, they do not recognize such illicit activities as being illegal, so even if officials are deported, they can just as easily be sent to missions in other countries.”

Here is coverage in the Joong Ang Ilbo.

Read the full story here:
Pyongyang diplomat caught in illegal trading of rhino horns
Daily NK
Kim Seong Hwan
2015-5-28

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Posted in Illicit activities, International trade, South Africa | Comments Closed

North Korean economic reforms tightly tied to domestic conditionsCao Shigong

May 27th, 2015

According to Cao Shigong a member of the Korean Peninsula Research Society, Chinese Association of Asia-Pacific Studies, in the PRC’s Global Times:

A series of proactive measures to adjust economic policies and expand exchanges with foreign countries recently adopted by North Korea have drawn widespread attention. The moves aim to help the country escape the long-lasting economic woes, improve the nation’s political and social stability, and promote economic cooperation within the region. Therefore, they deserve welcome and encouragement. However, it is inappropriate to regard these measures as a signal of overall reforms or a starting point of further opening-up.

North Korea is always reluctant to label its measures for economic development as “reform and opening-up.”

To begin with, China’s implement of reform and opening-up is based on absolute disapproval of the mistaken route that deemed class struggle as the guiding principle. Yet North Korea, as a hereditary regime, does not allow any doubt or modification of its former leaders’ ideologies and political lines such as juche (“self-reliance”) and songun (“military-first”).

Besides, China’s reform has broken the traditional planned economy and set up a market-oriented socialist economy with the coexistence of other diverse forms of ownership, especially allowing the development of private business. But North Korea still cleaves to its old beliefs that planned economy and the public ownership of the means of production are the key characteristics of socialism, and that if they are changed, socialism will be lost.

In addition, as a big country, China enjoys strong tolerance and endurance. Even it is wide open to the world, under the pressure over intruding foreign cultures and values, it can still safeguard its political and social stability. North Korea, however, will find it hard to do the same if it opens up like China, against the backdrop of US hostility, the north-south divide, and fierce competition over systems.

Consequently, North Korea took the measures of “our-style (North Korea-style) socialism” and corresponding “reforms,” including the 7.1 Economic Management Improvement Measures, 6.28 Economic Reform Measures and 5.30 Measures. Though similar to the reform and opening-up of China, they have their own distinguished features.

For instance, the country initiated “land contracts,” yet did not end cooperative farms; it encourages its business to be flexible, yet without changing the way their property is held; it established special economic zones and economic development zones, but with focusing on advantageous areas and corridors.

The basic features of North Korean “reform” measures are improving the policy flexibility, introducing new management styles, and bringing the function of the market into full play, without changing its fundamental system. The country also introduces and utilizes foreign capital under the control of the government. Apparently, these practices stem from the nation’s domestic conditions.

It is generally acknowledged that North Korea’s reform measures have achieved initial success. North Korean economy has recorded positive growth for three consecutive years, with its domestic markets and consumption becoming more active and the strain on food and living supplies eased.

On the other hand, confrontation between North and South Korea is rumbling on, and the arrangements around the only industrial complex between the two sides, the Kaesong Industrial Region, is constantly encountering conflict, which has made business people skeptical about economic collaboration with North Korea. Especially as North Korea keeps conducting nuclear tests, it remains hard for it to break the sanctions and isolation from the international community.

All these factors prove the uncertainty of North Korea’s economic reforms. Hence, media and scholars should be reminded to deliver accurate and comprehensive information over North Korea to the world, in order to prevent giving misleading impression or weakening the risk awareness of investors, causing irreparable losses as a result.

Read the full story here:
North Korean economic reforms tightly tied to domestic conditions
Global Times
Cao Shigong
2015-5-27

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Posted in 6.28 Policy on Agriculture (June 28), DPRK Policies, Economic reform, May 30 Measures (5.30) | Comments Closed

2015 Kaesong wage fight (UPDATED)

May 25th, 2015

In 2011, Kaesong workers officially received their 5th consecutive annual pay increase. In 2012, they “received” their 6th consecutive pay increase. In 2013 there was no pay increase because Pyongyang closed the complex down in a dispute with the South Koreans. In 2014, work resumed at the complex and Kaesong workers “received” a 5% pay increase, but Pyongyang wanted a 10% to make up for the 2013 year (in which they closed the complex). Now it looks like Pyongyang is raising tensions (unjustifiably in my opinion) to recover a “pay increase” they feel they are owed.

For those new to this topic, I should point out that we are not talking about wages paid to North Korean workers. We are talking about US dollar balances (cash) that are given directly by South Korean firms to the North Korean government. The North Korean government keeps all of the hard currency and pays its workers in local currency. That said, The North and South Koreans still officially refer to “wages” (even though they are nothing of the sort), so I will as well.

I am chronicling this developing story in periodic updates below.

____________________

UPDATE 21 (2015-12-26): Two Koreas conclude Kaesong fee negotiation. According to the Joong Ang Ilbo:

The two Koreas concluded a 13-month negotiation process on Thursday regarding the amount South Korean companies should pay North Korea for their use of land at the Kaesong Industrial Complex (KIC).

According to the Ministry of Unification, the two sides agreed that South Korean companies will pay a fee of 64 cents per 1 square meter (10.76 square feet). An official agreement was signed between the Kaesong Industrial District Management Committee of the South and North Korea’s Central Special Zone Development Guidance General Bureau.

Pyongyang had demanded $1 per 1 square meter throughout the negotiation, which began in November 2014, while the South insisted on the rate of 50 cents.

An official from the Ministry of Unification said that Seoul presented several international precedents to persuade Pyongyang and cited the operations model at the Samsung Electronics factories in the Yen Phong Industrial Zone in Vietnam.

According to the source, Samsung Electronics pays 50 cents per 1 square meter for its smartphone factory in Vietnam. Qingdao Sino-German Ecopark charges in the range of 64 cents.

“The land usage fee was settled based on the peculiar nature of the KIC, international standards and the financial considerations of the companies,” the official said. “It serves the goal of improving the global competitiveness of the industrial zone.”

Kim Yong-hyun, a North Korean studies professor at Dongguk University, said the deal was meaningful in that Pyongyang had remained flexible when Seoul presented international norms.

…

The companies were exempt from paying a land usage fee until the end of this year. While the North demanded that the South pay the fee for all the land that was supposed to be developed under the deal, Seoul insisted that it pay only for the land on which the businesses actually operate.

After more than a year of negotiations, the North accepted the South’s argument and decided to levy the fee for only the 920,000 square meters of the land used out of the complex’s total 3.3 million square meters.

UPDATE 20 (2015-8-17): Reuters reports that the Koreas have worked out a deal. According to the article:

North and South Korea agreed to increase the minimum wage for North Korean workers at a joint factory park by 5 percent, a South Korean industry representative said, ending a months-long dispute despite heightened tensions on the Korean peninsula.

The compromise, reached Monday, raises the monthly wage to $73.87 at the Kaesong Industrial Complex, which is just north of the heavily fortified inter-Korean border.

“The fact that dialogue between South and North met with good results is welcomed and a good signal for stable management in Kaesong,” Yoo Chang-geun, vice chairman of the Corporate Association of Kaesong Industrial Complex, said on Tuesday.

…

The new wage is slightly below the $3.65 increase, or 5.18 percent, North Korea had demanded, which exceeded the annual increase of 5 percent agreed when the zone was established.

Here is coverage in Yonhap:

South and North Korea have agreed to hike the minimum wage by 5 percent for North Korean workers at a joint industrial park in the North, a government official said Tuesday, a move that will help resolve a monthslong row.

The two Koreas have been embroiled in a dispute following North Korea’s unilateral decision to hike the minimum wage by 5.18 percent for the about 55,000 North Korean workers at the Kaesong Industrial Complex in the North’s border city of the same name.

The quasi-state committees from the two Koreas reached an agreement on Monday to hike the wage to US$73.87, the most contentious issue in the dispute, according to a ranking official at the Unification Ministry. A 5 percent hike is the same level at which the wage has been increased every year so far.

“The most pressing issue of the wage cap has been resolved though there is still a long way to go,” the official said, asking not to be named. “But the move is expected to support the stable supply of labor and improve business conditions.”

The move is expected to raise the total monthly wage by far more than 5 percent when other compensation is included, according to an official at the group of 124 South Korean firms that are running factories in the park.

…

Seoul has rejected Pyongyang’s unilateral move to hike the wage, saying that it breaches a 2004 agreement that calls for the two sides to set wages through consultations.

In July, the two sides held talks of the joint committee that operates the complex, the first since June last year, but they failed to reach an agreement.

The ministry said that the two Koreas plan to hold a meeting of the committee to discuss how to revise labor guidelines.

The government official said that the two sides have agreed to continue to set the wage cap through consultations.

“By taking into account the grave situation facing inter-Korean ties, the government plans to take measures to develop the complex,” the official said.

According to UPI:

The agreement also covers social welfare for North Korean factory workers in Kaesong. Taken together, the payment of workers’ health insurance and other benefits indicates total income is to increase between 8 and 10 percent.

Coverage for North Korean workers is to include provisions for work-related injuries, death insurance and unemployment benefits.

Workers also are to be compensated for hours worked overtime and for holidays at a rate that is between 50 to 100 percent of regular hours worked, according to South Korean officials.

Ongoing tensions between the two sides have affected business operations in Kaesong but productivity at the complex has soared dramatically despite the wage dispute.

From January to April, production value was estimated to have reached $186 million, up 25 percent from $148 million from the same period in 2014.

Here is information in the New York Times:

The Kaesong wage issue has been a subject of negotiation between the Koreas since February. On Tuesday, officials at South Korea’s Unification Ministry, who spoke at a news briefing on the condition of anonymity, said that workers’ monthly minimum wage would be raised 5 percent, to just under $74. The North had wanted an increase of 5.18 percent.

The Kaesong park is a significant source of hard currency for the impoverished North. Workers there earn a monthly average of $166, including overtime compensation. The South pays the wages directly to the North Korean government; how much each worker actually receives is unknown.

None of the media highlighted that nearly all increased spending on North Korean workers at the Kaesong Industrial Complex is simply a larger transfer to the North Korean government will little going to the actual workers themselves.

UPDATE 19 (2015-8-14): North Koreans at the Kaesong Industrial Complex already “paid” more than workers at other foreign-owned ventures. According to Radio Free Asia:

Local employees hired by foreign-invested companies inside isolated North Korea are earning much less than their counterparts who work at South Korean firms inside the Kaesong Industrial Complex, businessmen with knowledge of the situation said.

Foreign-invested companies pay local employees less than the U.S. $70.35 monthly minimum wage paid to the 53,000 North Koreans who work at the Kaesong Industrial Complex, the joint inter-Korean economic project north of the demilitarized zone, sources said.

Some North Koreans who work at the industrial park receive more than U.S. $140 a month when overtime is included, they added.

A Chinese-Korean businessman who operates a roofing material company and metal pressing company in the Rason area on the northeast tip of the country told RFA’s Korean Service that he pays his North Korean workers about 300 Chinese yuan (U.S. $47) a month. Other Chinese companies in Rason pay similar wages to their North Korean employees, he said.

A Chinese businessman who employs about 100 North Koreans at a mine he is developing in Hwanghae province said he pays his workers U.S. $60-$70 a month.

“There might be some wage differences at other foreign companies, but they are not that much different from the level of wages I pay,” he said.

The sources noted that some media reports published outside North Korea put the average monthly wage of workers in the Rason Special Economic Zone, set up by the North Korean government in the early 1990s to promote economic growth through foreign investment, at around U.S. $100. But this contradicts salary information provided by the foreign companies doing business there, they said.

“It’s a big problem paying the same wage rates to the workers dispatched unilaterally by the North Korean authorities [to foreign-invested companies inside the country] without determining whether they’re skilled or unskilled, or taking into consideration if they are men or women, based on the nature of the work they’re supposed to do,” one source said.

While those who work for foreign-invested companies in North Korea also receive an allowance for one meal per day, the sources said, they also log fewer hours than their Kaesong counterparts, because they often fail to report for work whenever authorities order labor mobilizations or electricity supplies are low.

UPDATE 18 (2015-7-17): The talks ended with no resolution. According to Yonhap:

South and North Korea on Thursday failed to settle their months-long dispute over wages of North Korean workers employed at their joint factory park in rare inter-Korean talks held in the communist country.

Delegations from Seoul and Pyongyang sat together in the North Korean border town of Kaesong earlier in the day over the tangle, which started with the North’s unilateral decision in February to hike the minimum wage for about 55,000 North Korean laborers.

The North demanded the per-hour minimum wage be lifted by 5.18 percent to US$74, but the South had resisted the steeper-than-agreed hike before the two countries agreed last week to settle the issue through dialogue.

The ground rules set when the joint cooperation project opened in 2004 capped the maximum rate of wage increase at 5 percent per year.

The meeting ended without any major progress as the two sides failed to narrow gaps on the wage issue, a South Korean official said after the talks broke down.

The two sides intend to meet again to put the issue to renegotiation, although a date has not been set, he noted.

Pak Chol-su, a vice director of North Korea’s special economic zone development department, who heads the North Korean delegation, had earlier expressed hopes for a favorable outcome as the negotiations kicked off inside the Kaesong complex.

Touching on the severe drought reported in the North, Pak also said recent rainfalls “pretty much improved harvest.”

The Thursday meeting marks a rare opportunity of inter-Korean contacts with the countries mired in long-running military and diplomatic tensions.

It was the first meeting of their joint committee in charge of running the Kaesong Industrial Complex since the last one was held in June last year. It was also the first government contact between the countries following a working-level military dialogue convened in October in 2014.

Amid the bellicose mood, the North abruptly called off U.N. Secretary-General Ban Ki-moon’s planned peace-promoting visit to the Kaesong park in May.

The joint factory park, the result of the first-ever inter-Korean summit in 2000, is the last remaining symbol of once-vibrant inter-Korean reconciliation. It has also served as a core source of foreign currency for the cash-strapped North, while providing South Korean companies with a cheap but skilled workforce.

A total of 124 South Korean firms, mostly small- and medium-sized manufacturers, run factories at the complex under the auspice of the South Korean government.

The operation of the complex has been a yardstick of ups and downs for inter-Korean ties.

In April 2013, the North unilaterally shut down the park for about four months amid worsening tensions on the peninsula.

Since the unilateral wage hike demand in February, the countries agreed to tentatively freeze the minimum wage at the current $70.35 level, allowing the two sides to buy time for talks on the wage issue.

Also discussed in the Thursday meeting was how to tighten public order among South Koreans moving in and out of the complex.

The North has vowed to take punitive actions on South Koreans who are caught carrying banned goods into the North including USB memory sticks or newspapers from the outside world.

Here is coverage in the Daily NK. Here is coverage in the Joong Ang Ilbo.

UPDATE 17 (2015-7-9): Two Koreas to hold talks to negotiate Kaesong wage issues. According to Yonhap:

South and North Korea plan to hold talks on a joint industrial park in the North next week to discuss a prolonged dispute over the North’s unilateral move to raise wages for its workers at the complex, Seoul officials said Thursday.

North Korea has accepted the South’s offer for holding the meeting at the Kaesong Industrial Complex next Thursday at the border city of the same name, according to the unification ministry.

The move raises hopes for resolving a months-long wage row between the two Koreas following Pyongyang’s unilateral bid to hike the minimum wage by 5.18 percent to US$74 per month for about 55,000 North Korean workers at the park. A total of 124 South Korean small- and medium-sized enterprises are operating factories there.

The South has rejected the communist neighbor’s move, saying it is in breach of a 2004 agreement that calls for the two sides to set wages through consultations. The wage cap has been set at 5 percent per year.

In August 2013, the two Koreas decided to set up a joint committee in charge of running the industrial park following the North’s unilateral move in April of that year that shut down the park for about four months.

The committee is an integral part of a deal that called for reopening the complex and adopting safeguards to prevent any work stoppages in the future. The committee has not met since June last year due to the North’s refusal.

The joint factory park, which opened in 2004, is the last remaining symbol of inter-Korean reconciliation. It has served as a major revenue source for the cash-strapped communist North, while South Korea has utilized cheap but skilled North Korean laborers.

In what could be a temporary relief, North Korea accepted South Korea’s tentative offer in late May to pay wages at the current level of $70.35, but Seoul and Pyongyang have yet to resolve the issue fully.

Meanwhile, the ministry said that Pyongyang has sent a notice to Seoul saying that it will tighten its surveillance over South Koreans moving in and out of the complex.

The North is known to have expressed complaints over South Koreans bringing in goods, such as mobile phones and newspapers, that are restricted in the North, vowing to take punitive actions if found.

In response, the South said that the issue should be dealt with in accordance with the two sides’ agreement and related regulations, according to the ministry.

UPDATE 16 (2015-5-25): South Korean firms begin paying regular wages, though the matter is still not resolved. According to Yonhap:

South Korean firms in an inter-Korean factory park in North Korea plan to pay wages to their North Korean employees this week, a government official said Monday.

The move came days after Pyongyang accepted Seoul’s tentative offer of wage payments for North Korean workers at the factory park in North Korea’s border city of Kaesong at a previously agreed level until separate consultations are held.

The deal on Friday would allow South Korean firms to pay the wage based on the US$70.35 per month that was originally set. But it called for the 124 South Korean firms to provide retroactive pay based on the outcome of separate consultations.

The official said North Korea demanded that South Korean firms in Kaesong pay March and April wages by the end of this month. The official asked not to be identified, citing policy.

The sides have yet to produce a deal over the more sensitive issue of a wage cap, which has been set at 5 percent per year.

In February, North Korea unilaterally decided to hike the minimum wage by 5.18 percent to US$74 per month for about 53,000 North Korean workers in the factory park.

The factory park, an outcome of the first-ever inter-Korean summit of leaders in 2000, is a major symbol of reconciliation between the rival Koreas.

It combines South Korean capital and technology with cheap North Korean labor to produce clothes, utensils, watches and other labor-intensive goods.

The factory park is a major source of hard-currency for the impoverished north.

UPDATE 15 (2015-5-22): Koreas buy time for talks on wage at factory park. According to Yonhap:

North Korea has accepted South Korea’s tentative offer of wage payments for North Korean workers at a joint industrial park, allowing the two sides to buy time for talks on Pyongyang’s unilateral wage hike, officials said Friday.

The two Koreas have been embroiled in the wage dispute as North Korea unilaterally decided in February to the hike minimum wage by 5.18 percent to US$74 per month for about 53,000 North Korean workers at the Kaesong Industrial Complex in the border city of the same name.

The agreement between the quasi-state committees from both sides will allow South Korean firms to pay the wage based on the $70.35 per month that was originally set, according to government officials. Then, the 124 South Korean firms will provide retroactive pay.

Friday’s deal is not final as the two Koreas have not produced a breakthrough over the more sensitive issue of a wage cap. But the North has accepted Seoul’s offer to pay the wage at a previously agreed level until separate consultations are held.

Seoul has rejected the North’s unilateral move, saying that the North violated a 2004 agreement that calls for the two sides to set wages together. The wage cap has been set at 5 percent per year.

“The move will ease concerns about production setbacks that could be sparked by North Korean workers’ threat not to work or to seek a work slowdown,” the Ministry of Unification said in a statement.

It added that the government will make efforts to resolve the wage dispute as soon as possible through talks with North Korea.

The agreement came amid concerns about the strained inter-Korean ties following North Korea’s recent abrupt cancellation of its invitation for U.N. Secretary-General Ban Ki-moon to visit the industrial complex.

On the same day a group of businessmen visited the KIC to help resolve the impasse. According to Yonhap:

A group of South Korean businessmen visited a joint industrial complex in North Korea Friday amid a drawn-out row over wage payment for North Korean workers there, an official from the group said.

The two Koreas have been embroiled in the wage dispute as North Korea unilaterally decided in February to hike monthly wages by 5.18 percent for about 53,000 North Korean workers at the Kaesong Industrial Complex in the border city of the same name. Seoul has rejected the North’s unilateral move.

The group of South Korean businessmen with factories there visited the complex in an effort to resolve the prolonged dispute as the 10-day period of the wage payment for April began Sunday. They made similar visits three times before.

The visit came as North Korea abruptly canceled its invitation for U.N. Secretary-General Ban Ki-moon to visit the industrial park, dampening hopes for better inter-Korean ties.

The joint industrial park, which opened in 2004, is the last remaining symbol of inter-Korean reconciliation following a landmark inter-Korean summit in 2000. It has served as a revenue source for the communist country while South Korea has utilized cheap but skilled North Korean labor.

Seoul said that Pyongyang violated a 2004 agreement that calls for the two sides to set the wages together. The wage cap has been set at 5 percent per year.

In August 2013, the two Koreas also decided to set up a joint committee in charge of running the complex following the North’s unilateral move to shut down the park for about four months in April of that year.

Seoul has requested its companies not to send out paychecks, vowing to punish violators. But despite the warning, about 50 out of 124 South Korean companies have paid March wages to the North’s workers apparently after threats from the North.

Here is coverage in Xinhua.

UPDATE 14 (2015-5-19): Kaesong companies pass resolution opposing North’s unilateral wage raise. According to the Hankyoreh:

Kaesong Industrial Complex tenant companies reached an agreement not to accept North Korea’s unilateral demands to increase wages. Instead, they agreed to provide the North Korean authorities with a letter of guarantee to pay the difference in the wages once North and South Korean negotiators reach an agreement.

During a general meeting of the Corporate Association of Gaeseong Industrial Complex (CAGIC) on May 18, with about 90 tenant companies attending, a group of company chairs approved a letter of guarantee they had proposed providing to the North Korean Bureau of Central Special District Development.

On May 15, the association chairs visited Kaesong to meet Park Chol-su, deputy chief of the bureau, and offered to write a letter of guarantee. The letter would state that the companies refuse to accept North Korea’s request to raise wages but promise to retroactively pay the difference in the wages and the late fees according to the agreement that North and South Korean authorities eventually reach.

On Apr. 20, the deadline for paying the wages for March, the North Korean bureau had asked the South Korean tenant companies to sign a letter of guarantee in which they would effectively acknowledge the wage increase on which it had unilaterally decided and agree to pay the ensuing late fees. Reportedly, five companies agreed to this demand.
In order to prevent South Korean companies from giving in to North Korea’s demands for raising wages, the South Korean government asked them to first deposit workers’ wages with the South Korean management committee, which would then forward the payment to the North Korean bureau.

The government is putting pressure on tenant companies, threatening that it will not extend the loan repayment schedule for companies that do not obey these instructions. Tenant companies were loaned emergency operating funds when the complex temporarily shut down in 2013.

“During a meeting with the group of company chairs on May 17, the Unification Minister said that, if we can show that the companies are not agreeing to North Korea’s demand to raise the wages, the Ministry might not predicate extending the loan repayment schedule on depositing workers’ wages with the management committee,” CAGIC Chairman Chung Ki-sup told reporters after the general meeting on Monday.

“In order to comply with this, we reached an agreement in the general meeting today to pay North Korea the April wages according to the February rates, before North Korea had asked for a wage increase.”

This past February, North Korea notified South Korea that it would be unilaterally increasing the minimum wage of North Korean workers at the Kaesong complex by 5.18% from US$70.35 to US$74 a month beginning with the March wages.
49 of the 125 tenant companies had paid the wages to North Korea as of May 8. The South Korean government is currently investigating to see whether these companies used double bookkeeping to pay their wages at the level North Korea demanded.

The South Korean government has insisted on raising the minimum wage no more than 5% through deliberations between North and South, as the labor regulations stipulated before North Korea unilaterally revised them.

On May 15, the South Korean government sent a message to North Korea through the secretariat of the Inter-Korean Joint Committee on the Kaesong Complex proposing that the committee hold its sixth meeting on May 20, but North Korea again refused to receive the message.

The joint committee was set up after operations at the complex were suspended for five months in 2013 in order to prevent the reoccurrence of such a shutdown. The committee is supposed to convene every quarter, but last year, only one meeting was held.

UPDATE 13 (2015-5-14): The North Koreans have issued a statement that tried to tie the Kaesong wage increase to revision of domestic labor regulations rather than a unilateral action against South Korea. According to KCNA:

New Labor Regulations to Be Invariably Enforced in KIZ
Pyongyang, May 14, 2015 09:56 KST (KCNA) — The Presidium of the Supreme People’s Assembly of the DPRK revised the labor regulations and promulgated them in November last year in conformity with the development of industrial zones, taking into full consideration the situation in the Kaesong Industrial Zone (KIZ), realities in international special zones, etc.

Pursuant to them, the DPRK notified the south side that a new wage pattern would be applied from March this year so that businesses of the south side might be fully ready for the new regulations.

In consideration of conditions of businessmen, the DPRK took such generous measure as extending the date of wage payment for March a week.

Nevertheless, the south Korean authorities, far from thanking the DPRK for its good faith and generosity, pulled up it over its legitimate enforcement of legislation, terming it “unilateral one violating the north-south agreement.” Not content with this, they are threatening and blackmailing the businesses to prevent them from paying the wages for March while making investigations into them.

A spokesman for the General Bureau for Central Guidance to the Development of the Special Zone declared in a statement on Wednesday the KIZ is an economic special zone being operated together with businessmen of the south side and that the south Korean authorities, therefore, have neither reason nor pretext to interfere in it.

We cannot but take a serious note of the fact that the south Korean authorities are set to apply a “deposit” system to wage payment from April, something rare to be found in economic zones of other countries, in a crafty bid to use the businessmen for wantonly violating the laws and regulations in the KIZ and openly encroaching upon the sovereignty of the DPRK, the statement noted, and went on:

Businessmen of the south side should keep vigilance against this move so that they may not be scapegoats for the authorities’ plot to wantonly violate the DPRK’s laws and regulations in the KIZ, an encroachment upon its sovereignty.

They should seriously think once again over what they would gain by yielding to the pressure of the authorities to turn the KIZ into the one of factories without workers where business autonomy is seriously violated.

Explicitly speaking, the issue of enforcing the new labor regulations is not an issue to be discussed at the talks between authorities as it is an issue concerning the DPRK’s legitimate enforcement of legislation.

The south Korean authorities should stop at once putting the brake and pressure upon the businesses’ autonomous management in the KIZ and deliberately laying an obstacle in the way of the operation of the KIZ and ensure their free management.

Not only the south Korean authorities but also the commission responsible for the management of the KIZ are to blame for the situation prevailing in the zone.

If the management commission continues working hard to infringe upon the inviolable sovereignty of the DPRK, making the KIZ a political bargaining chip for someone under the manipulation of the south Korean authorities, departing from its mission, the DPRK will call it into question for the ensuing serious consequences and it would not be possible for the DPRK to entrust the management of the KIZ to the commission.

The KIZ is, in actuality, a zone for north-south economic cooperation, not a theater for confrontation between the authorities of the north and the south.

The DPRK will keep enforcing the new labor regulations for the normal development of the KIZ in the future.

UPDATE 12 (2015-4-21): Pyongyang has allowed normal wages to be paid for March of 2015. According to the Hankyoreh:

“The North said it would allow the payment of the regular wages for now and calculate the difference from the hike later,” explained Corporate Association of Gaeseong Industrial Complex chairman Chung Ki-sup in a telephone interview with Hankyoreh on Apr. 20. That day marked the deadline for payment of March wages to North Korean workers at the complex.

North Korea recently announced a unilateral 5.18% hike in the minimum wage at the complex, which would raise monthly pay from US$70.35 to US$75.00. The South Korean government has blocked tenant companies from complying on the grounds that a unilateral increase beyond the agreed-upon 5% ceiling is unacceptable.

Chung explained that North Korea “wants us to sign statements confirming the unpaid difference.”

“Wage payments were already made over the course of ten days, so late fees for the difference are being deferred until this weekend,” he added.

The agreement buys a few extra days for authorities on both sides to discuss the matter before additional frictions erupt over the minimum wage hike at the complex. Tenants companies have reportedly convinced North Korea to accept the earlier US$70.35 minimum wage standard for March pay, with the difference to be paid retroactively after authorities reach an agreement on the matter.

“It appears that North Korea took into account the difficult position the tenant companies are in with the South Korean government insisting that they not pay the extra amount,” Chung explained.

“I don’t think North Korea wants the repercussions of this to grow either,” he said.

A group of tenant company directors at the complex had initially planned to visit Kaesong on Apr. 20 to discuss the wage issue, although the plans were eventually canceled.

“Our biggest concern is out of the way now that the North has agreed to accept the pre-hike pay,” Chung said. “My understanding is that the visit was canceled because they concluded it wasn’t going to really fix matters as they stand now.”

UPDATE 11 (2015-4-20): Kaesong firms stuck between Korean governments. According to Arirang News:

South Korea’s Kaesong business owners are stuck in a dilemma.

On the one hand, they’re facing the prospect of having to pay a late fee if they don’t comply with the North’s demand for a wage hike, but on the other hand, they face the possibility of punitive measures from the South if they do.

None of the 124 South Korean companies have paid the March wages yet, which are due April 20th.

North Korea has threatened to impose a late fee of 15 percent per month if the South Korean companies don’t issue the wage payments on time.

South Korea says it will not accept the North’s unilateral demand for a wage hike, saying Pyongyang violated a 2004 agreement that calls for two quasi-governmental committees to set the pay rate together.

The two committees met for a second time on Saturday, but failed to reach a compromise.

In addition, Seoul has warned the South Korean companies operating in the complex that they will face punitive measures if they concede to the North’s wage hike demands.

The two Koreas have been at odds over the issue since February, when the North unilaterally decided to raise the wage level by more than 5 percent to roughly 74 U.S. dollars a month starting in March for the approximately 53-thousand North Korean workers in the complex.

Seoul’s Unification Ministry says it is still sending messages to Pyongyang asking to meet on the wage issue, but the North maintains that it’s a matter for Pyongyang to decide.

Yonhap reports that a few South Korean firms have made increased payments in accord with Pyongyang’s demands:

Three South Korean firms have paid more wages for North Korean workers in the Kaesong Industrial Complex as Pyongyang demanded, a government source here said Monday.

Their move runs counter to the South Korean government’s firm stance not to accept the communist neighbor’s unilateral decision to raise wages for its 53,000 workers in the North’s border town.

The North unilaterally decided to raise the minimum wage by 5.18 percent to US$74 per month, starting in March, for those workers employed by the 124 South Korean small- and medium-sized firms in the Kaesong zone.

Three of the firms paid the increased wages, the source said. They are expected to face administrative punitive action from Seoul’s government.

The South’s unification ministry, meanwhile, dismissed news reports that the North extended a deadline for the payment of the March wage.

UPDATE 10 (2015-4-15): Seoul hints at drawn-out row over Kaesong wage problem. According to Yonhap:

South Korea said Monday it will not be restrained by a timetable in resolving an ongoing row over wage hikes for North Korean workers at a joint industrial park in the North.

The two Koreas have been in dispute since the North unilaterally decided in February to raise the wage level by 5.18 percent to US$74 per month starting in March for about 53,000 North Korean workers hired by South Korean companies at the Kaesong Industrial Complex in the North’s border city of the same name.

Seoul is seeking to hold talks with the North over the issue through a quasi-governmental committee as the payday for the March wages, which began Friday, will last for 10 days. None of the 124 South Korean firms have paid March wages to North Korean workers.

Seoul’s unification ministry said that it will do its best to resolve the wage dispute, adding that the row may be prolonged if it passes the deadline.

“As we cannot exclude the possibility that the wage dispute cannot be settled until April 20…the Seoul government will continue to make efforts to resolve the issue,” Lim Byeong-cheol, spokesman at the unification ministry, said at a press briefing.

“What’s important is that the government has the will to tackle this row. We do not prejudge any situations without having a specific deadline in mind.”

Seoul has not accepted the North’s unilateral move, saying Pyongyang violated a 2004 agreement that calls for two quasi-government committees from each side to set the wages together. The wage cap has been set at 5 percent.

Its efforts for the talks have gained urgency as North Korea will take days off on Wednesday and Thursday to mark the April 15 birth anniversary of its late founder, Kim Il-sung.

The industrial complex opened in the early 2000s, the last remaining symbol of inter-Korean reconciliation. It has served as a major revenue source for the cash-strapped communist country.

Lim also called on North Korea to stop threatening to retaliate against a move by Seoul activists to resume their campaign to send anti-Pyongyang leaflets and other materials via balloons across the inter-Korean border.

“It is not desirable for North Korea to criticize Seoul activists’ leaflet launch as it is a matter of freedom of speech,” Lim said. “North Korea should immediately stop making threatening remarks to South Korean people.”

Despite Seoul’s request for restraint, anti-North Korea activist Park Sang-hak on Thursday made an attempt to launch balloons carrying leaflets and copies of DVDs of “The Interview,” a U.S. comedy film about a plot to assassinate North Korean leader Kim Jong-un. His attempt was scuttled by police.

North Korea said Friday it will take “ruthless” actions against Seoul activists’ move, saying that the move to send the U.S. movie to the North is tantamount to a declaration of war against Pyongyang.

UPDATE 9 (2015-4-1): S. Korea not budging on Kaesong wage row (Yonhap):

South Korea said Wednesday it will ask the country’s firms at the Kaesong Industrial Complex in writing not to succumb to North Korea’s pressure to raise wages for its workers.

The unification ministry said it will soon send a formal letter to 124 South Korean firms operating in the zone just north of the inter-Korean border.

The move comes as the companies, mostly small and medium-sized, will begin to pay March’s wages to around 53,000 North Korean employees on April 10.

In February, the North decided unilaterally to revise a set of labor rules that included the elevation of the minimum wage for its workers at the Kaesong Industrial Complex from US$70.35 to $74 starting in March.

The South has rejected the North’s decision, saying the wage issue should be decided through bilateral discussions.

It has urged the South’s firms in Kaesong not to follow the North’s measure.

“We plan to send an official letter to them in order to again make clear the government’s stance on the matter,” Unification Ministry spokesman Lim Byeong-cheol said.

He added there has been no progress yet in efforts to hold talks with North Korea to discuss the issue.

Here is coverage in the Hankyoreh.

UPDATE 8 (2015-3-18): South Korean business owners have crossed into the Kaesong complex to complain about Pyongyang’s unilateral wage increase. According to the Financial Times:

On Wednesday more than a dozen businessmen representing about 120 companies visited Kaesong, about 10km north of the border, to voice their concerns about the move, amid growing concerns about the future of the joint economic project

…

“The unilateral change of labour rules is a problem,” said Chung Ki-sup, head of the council of the South Korean businesses operating in Kaesong, ahead of the 14-member delegation’s arrival in the North. “But this can be easily resolved when dialogue resumes.”

…

Mr Chung said the North’s stance might in part be a reaction to Seoul’s refusal to ban North Korean defectors and rightwing civic groups from sending anti-North leaflets across the border.

Experts say the wage disputes are unlikely to lead to another closure of the industrial complex, but the problems have renewed scepticism over the merits of the project.

“The disputes are unlikely to be resolved anytime soon,” said Park Hyung-joong, researcher at Korea Institute for National Unification. “Pyongyang wants to use Kaesong as a political bargaining chip when inter-Korean relations are not good. So the complex will remain exposed to political problems, but closing it carries too big political risks for both sides.”

Here is coverage in the Daily Mail and Yonhap.

UPDATE 7 (2015-3-17): The DPRK has tried circumventing the South Korean government to reach out to the Kaesong firms themselves. According to Arirang News:

In an unprecedented move, North Korea asked the heads of South Korean companies operating at the inter-Korean industrial complex in Kaesong to gather for a meeting that was scheduled for earlier in the day.

No specifics about the meeting were announced and the South Korean government asked the company heads. not to respond to Pyongyang’s call.

Instead, the South Korean government held a meeting in Seoul this afternoon with most of the leaders of companies from the complex.

Seoul discussed possible countermeasures and urged the leaders not to abide by Pyongyang’s one-sided demands.

Watchers believe the meeting was Pyongyang’s way of pressuring the South Korean companies to go along with its unilateral decision to raise wages for its workers from a little over 70 U.S. dollars to 74 dollars a month and revise labor regulations.

UPDATE 6 (2015-3-12): The DPRK rejects South Korea’s call for talks on Kaesong wages. According to Yonhap:

North Korea claimed Thursday its decision to raise wages for its workers at the Kaesong Industrial Complex is a legitimate measure under its sovereignty, dimming hopes of an early resolution to disputes between the two Koreas over the issue.

The North’s Central Special Development Guidance Bureau, which is in charge of operating the complex, made clear that it is not a matter to be decided through consultations with the South’s government.

Last month, Pyongyang notified Seoul of its unilateral decision to elevate the minimum wage from US$70.35 to $74 starting in March. It also said it would collect 15 percent of their basic wage plus overtime payments as “social security.” Currently, the South’s firms pay 15 percent of the basic wage alone.

The South strongly protested against the decision, suggesting that the two sides hold dialogue on March 13 to discuss the problem.

Officials here emphasized that the two Koreas have agreed to decide every issue related with the operation of the joint venture through mutual consultations.

…

The decision on the wage hike is a “normal and legitimate” exercise of the North’s legislative rights, the bureau’s spokesman told Pyongyang’s propaganda website, Uriminzokkiri.

It’s not a subject for bargaining with the South, he added.

It makes no sense, he added, for the North to hold talks with the South at a time when it is staging a war rehearsal with joint military drills with the United States on the peninsula.

He argued that wages for the North’s workers in Kaesong are still low for their heightened skills and productivity and in comparison with the wage level in special economic zones in other nations.

UPDATE 5 (2015-3-11): Throwing fuel on the fire of this mess, the North and South Koreans are required to resolve real estate rental rates this year. There will be no practical way to resolve this issue independently of the ongoing wage dispute. According to Yonhap:

When the Kaesong Industrial Complex in the North’s border town of the same name started operations in 2004, Seoul agreed with Pyongyang to pay the rent for the North Korean land used by South Korean companies from 2015 after negotiations on the amount.

…

In November, the North’s Central Special Development Guidance Bureau in charge of the industrial complex notified its South Korean counterpart of its intention to start talks on the rent issue, according to the officials.

…

But the negotiations are widely expected to face a bumpy road, given a wide opinion gap shown in the countries’ previous exchanges on the issue.

In 2009, the North attempted to collect up to US$10 of rent per 3.3 square meters of land, but it faced strong opposition from South Korea, so the plan was dropped immediately.

Following the North’s notification in November, Seoul has decided not accept such a level of rent as put forth by the North in 2009, which could further mount the inter-Korean tension over the factory complex down the road, according to the officials.

The joint Kaesong factory park is already at the center of an inter-Korean feud after the North announced last month its unilateral decision to raise the minimum wage of North Korean workers in the park from US$70.35 to $74 starting with their March wages.

Seoul, however, rejected the wage increase decision and said it will punish any South Korean firms complying with the North Korean demand.

April 10 is feared to become a watershed in the inter-Korean tension over the Kaesong park as South Korean firms will start paying March wages that day.

South Korean officials have previously said that the North could take extreme measures, such as the withdrawal of its workers from the complex in a bid to increase pressure on the issue.

UPDATE 4 (2015-3-9): South Korea not happy with the DPRK’s moves on Kaesong. According to Yonhap:

South Korea’s unification ministry issued a strongly-worded statement Monday against North Korea’s attitude on their joint venture in Kaesong, calling again for immediate dialogue to resolve pending problems.

It’s “deeply regrettable” that the North is not responding to Seoul’s offer of talks to discuss Pyongyang’s unilateral decision to raise wages for its workers at the Kaesong Industrial Complex, said the ministry.

“It’s questionable whether (the North) has the will for the development of the complex as the two sides agreed,” its spokesman Lim Byeong-choel said, reading out the statement at a press briefing.

The North is violating an inter-Korean agreement and rules to decide all issues related to the operation of the Kaesong zone, including working conditions, added Lim.

Last month, the communist nation announced a 5.18-percent hike in the minimum wage for its workers in the zone to US$74 a month starting in March.

“The government can never accept such a unilateral measure by North Korea,” the official said. “The government will take every necessary step for the development of the Kaesong Industrial Complex and the protection of (the South’s) firms there.”

He urged Pyongyang to hold talks with the South on Friday as proposed.

Launched in 2004 in the North’s border town, the zone is home to about 120 South Korean firms, mostly small and medium-sized, which employ more than 53,000 North Korean workers.

The South’s government has advised the companies not to comply with the North’s decision on the wage level.

UPDATE 3 (2015-3-4): South Korean government holding meeting with stakeholders to determine response to DPRK. According to Yonhap:

The South Korean government said Wednesday it will hold a round-table meeting this week with the heads of local firms operating in the Kaesong Industrial Complex to discuss how to handle North Korea’s unilateral decision to raise the wages of its workers there.

The unification ministry is scheduled to hold the meeting with the council of relevant companies at its headquarters in Seoul at 5 p.m. on Thursday, said ministry spokesman Lim Byeong-cheol. The ministry is in charge of inter-Korean relations.

“We plan to review measures regarding the recent situation,” he said at a press briefing. “Along with related government officials, Chung Ki-sup, head of the council, and about 10 other representatives will attend (the meeting).”

Another ministry official also said the meeting is intended “to share the government’s position on the matter and listen to the opinion of the firms.”

Last week, the North announced it would raise the minimum wage for its workers in the zone by 5.18 percent to US$74 a month starting in March.

South Korea said it cannot accept a decision made without mutual consultation.

The ministry spokesman said the North has not responded yet to the South’s offer of talks on the Kaesong complex on March 13.

“The government will continue to urge North Korea to hold consultations between the authorities of the two sides, which are essential for the development of the Kaesong Industrial Complex,” Lim said.

The North is apparently aware that both sides have already agreed to resolve every problem related to the operation of the joint venture, he added.

UPDATE 2 (2015-2-26): According to Yonhap:

North Korea has notified South Korea of its unilateral decision to raise the minimum wage for its workers at the Kaesong Industrial Complex by 5.18 percent, the unification ministry said Thursday.

In a fax message sent Tuesday, the North said it would increase the minimum wage from $70.35 to $74 starting on March 1, a ministry official told reporters.

In addition, the North announced that it would collect 15 percent of their basic wage plus overtime payments as “social security,” he said. Currently, the South’s firms pay 15 percent of the basic wage alone.

The North Korean workers’ average wage amounted to $141.4 per month in 2014, according to the ministry’s data.

Under Pyongyang’s plan, South Korean firms will have to pay $164 on average for a North Korean worker a month, up 5.53 percent from the current $155, said the official.

He stressed that the South’s government can’t accept the North’s move.

“The two sides are supposed to set wages for workers at the complex and other working conditions through mutual consultations,” he said. “The government will advise our firms to pay the current level of wages until the issue is settled through consultations between the related authorities of the two sides.”

Those companies are scheduled to pay March wages for the North’s workers between April 10-20.

Earlier Thursday, the South attempted to deliver a protest letter, but the North refused to receive it, said the official.

“It’s very regrettable that the North shows such an attitude,” he said.

About 120 South Korean garment and other labor-intensive plants employ more than 53,000 North Koreans at the complex, which was created in 2004.

UPDATE 1 (2014-12-09): North Korea amends Kaesong Industrial Complex labor regulations, lifts wage increase limit. According to the Institute for Far Eastern Studies (IFES):

According to a December 5th report of North Korea’s propaganda media Uriminzokkiri, the Presidium of the Supreme People’s Assembly reached a decision on November 20 to revise the Act on the Kaesong Industrial Complex (KIC).

It reported that ten provisions in the Kaesong worker regulations were revised including the 5 percent ceiling on annual wage increase to the minimum wage.

North Korea’s General Bureau for Central Guidance on the Development of the Special Zone delivered the notice in writing to the Kaesong Industrial Complex Management Committee on December 8, stipulating that 13 provisions were revised. Out of the 49 total provisions, the 13 provisions that were modified pertain to the function of the KIC Management Committee and the wage system.

According to the decision, North Korea elucidated the labor and wage regulations will be unilaterally directed by the General Bureau, dismissing the authority of the KIC Management Committee. Furthermore, the clause that depicts the minimum wage of USD 50.00 and limit of 5 percent wage increase were deleted. Instead, the revised provisions prescribe that the General Bureau will make the decision every year.

In addition, overtime pay will be increased from the current 50 percent to between 50 to 100 percent. Furthermore, workers who have worked for more than a year will be eligible for severance pay, regardless of the condition of their leave. The previous clause stated severance pay was to be paid only when the termination incurred from “circumstance of the company”; but this condition has been deleted from the revised clause, and pay must now be given even for voluntary leave. Also removed was the provision that states the wage should be paid directly to the employee in cash.

Meanwhile, the South Korean government made a statement disproving the recent modifications to the KIC regulations. The South Korean government is refuting North Korea’s decision based on the fact that it was a unilateral decision by the North without consulting the joint committees of the KIC. The South is affirming its position to strongly counter against the North’s one-sided decision.

Revision of the labor regulations of the KIC is regarded as a violation to the general agreement that undermines the stability and the credibility of the KIC regulations. Such labor regulations clearly violate the inter-Korean agreements on wage system and various labor and tax systems newly reached by the various institutions in the North-South Joint Committee of the KIC after the KIC was restarted last year.

The current minimum wage of a KIC worker is USD 70.30, which reaches up to an average of USD 150.00 per month after various incentives are included. Each company is paying a total of USD 210.00 per employee where 15 percent of the minimum wage is allocated to social insurance, transportation, and snack costs.

North Korea has persistently demanded for a wage increase. North Korean employees dispatched to China’s Dandong City are paid an average of USD 300.00 per month. Thus, the recent move by North Korea can be seen as a move to raise the minimum wage at the KIC to a similar level. In addition, this move can be interpreted as North Korea’s intention to maximize economic gain by taking unilateral action toward tenant companies in the KIC.

ORIGINAL POST (2014-12-9): In 2011, Kaesong workers received their 5th consecutive annual “pay increase”. In 2012, they received their 6th consecutive pay increase. In 2013 there was no pay increase because Pyongygang closed the complex down in a dispute with the south Koreans. In 2014, Kaesong workers received a 5% pay increase, but Pyongyang wanted a 10% to make up for the 2013 year (in which they closed the complex!). Now it looks like Pyongyang is signaling that it intends to unilaterally raise wages.

According to Yonhap:

South Korea is scrutinizing North Korea’s unilateral decision to amend a number of wage-related clauses at the jointly operated Kaesong Industrial Complex, an official said Tuesday.

As soon as a review of the North’s demands are finished, the government will take appropriate steps, the unification ministry official told reporters.

“We are in the process of reviewing and analyzing the contents revised by the North,” he said on background.

The South and the North have an agreement over 49 items in place on the working conditions for around 53,000 North Korean workers in the zone.

Without prior consultations with the South, the North announced its decision to revise 13 of them, which include scrapping a 5-percent cap on the annual minimum wage increase rates, easing qualifications for severance pay and strengthening the authority of the North’s agency in charge of running the complex, according to the official.

North Korean workers’ wages have jumped 5 percent every year since 2007. North Korean workers are currently paid US$70.35 each month. If various allowances and incentives are counted, wages reach $130, reportedly about 50 percent higher than the average income of workers in North Korea.

Read the full story here:
S. Korea reviewing NK move over Kaesong workers’ wages
Yonhap
2014-12-9

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Posted in Finance, Fiscal & monetary policy, Foreign direct investment, Kaesong Industrial Complex (KIC), Kaesong Industrial District Development Committee, Labor conditions/wages | Comments Closed

Cafe culture thrives from extra time and cash

May 22nd, 2015

According to the Daily NK:

Along with restaurants selling food such as pizza and hamburgers, a growing number of cafes are sprouting up across North Korea, breaking out of Pyongyang where they were once concentrated. Major cities in other provinces have seen an increase in relatively affluent and young people who are willing to splurge on coffee and western dishes, Daily NK has learned.

“In the areas around Hamheung Station square a lot of coffee and tea houses as well as hamburger shops have popped up,” a source in South Hamkyung Province told Daily NK on Thursday. “Around the intersection and marketplace, where there’s a lot of foot traffic, state companies under the Party and military have opened coffee and hamburgers joints to pull in more money.”

She added, “The coffee is imported from China and Italy. They’re drawing a lot of attention because they not only have hot teas but also all kinds of fruit juices and even an ice shaving machine for hotter days.” The places are becoming popular among donju [new affluent middle class], college students, and young people, as popular “hang out” venues.

“They also have drip coffee and Americanos that South Koreans love so much. They serve it in a 200ml cup right on the spot, and it’s roughly 12,000 KPW [1.48 USD] for one coffee,” she said. “In the case of ordinary residents, they’re unfamiliar with the taste, so many choose hot tea, which is only about half the cost, or they go with cold fruit juices as well.”

An increasing number of people are willing to pay for coffee and drinks, despite them being over double the price of an average laborers’ monthly wage. Such establishments are spreading in large cities such as Nampo, Pyongsong in South Pyongan Province, Chongjin in North Hamkyung Province, and Wonsan in Kangwon Province. Most of these cities are home to foreign currency-earning trading companies, according to the source.

“Restaurants and stands affiliated with trading companies tasked with earning foreign currency sell hamburgers, pizza, waffles and other processed foods made with ready-made mixes,” the source said. “Other restaurants that claim to be more upscale sell omurice [Japanese omelette stuffed with fried rice], curry, yakisoba [stir-fried noodles], and other varieties of Japanese dishes.”

She explained that while the prices at these coffee shops and hamburger establishments may be more than five times that of an average establishment, “more people are showing a tendency to splurge once or twice a month.” When cadres from the Central Party make business trips to areas outside of Pyongyang, provincial officials even escort them to these eateries as a form as hospitality.

This greater variety of cuisine has been welcomed by many, with people from affluent classes to young college students saying they are learning more about the world through various foods, according to the source. However, she did add some are not so pleased about tastes with which they are unfamiliar and the attending hefty price tags.

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Cafe culture thrives from extra time and cash
Daily NK
Choi Song Min
2015-5-22

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Posted in Food, Restaurants | Comments Closed

North Korea raising food quality and quantity

May 21st, 2015

Institute for Far Eatern Studies (IFES)
2015-5-21

“Currently, North Korea is not just addressing the issue of food quantity but is raising food quality as well,” the Chosun Sinbo reported on May 13, 2015 in an editorial entitled ‘The Sepho Plateau Ranches’ (Sepho dungpan mokjang). The Chosun Sinbo editorial made this argument and revealed that due to the food quality issue, “North Korea is pushing forward the development of the Sepho Plateau Ranches until the anniversary of the Party’s founding. These ranches are located throughout Kangwon province, the regional center of animal husbandry that produces North Korea’s edible meat, in the counties of Ichon, Pyonggang and Sepho.”

In reference to the food quantity issue, the editorial said, “The UN Food and Agriculture Organization (FAO) is reporting that North Korea will be food self-sufficient within three to four years […] When you think about the difficult food situation during the time of the ‘Arduous March,’ one cannot help but be moved.”

Regarding these ranches spread over three counties, the newspaper reported, “The site of Chosun University in Japan is approximately 7 chongbo [about 70,000 m2] in area, while these ranches are over 50,000 chongbo [496 km2], more than 7,000 times more vast […] Last year North Korea and the Mongolian People’s Republic reached an agreement in which the Mongolian People’s Republic will offer North Korea assistance in livestock farming technology as well as 10,000 livestock animals for free.” This agreement will contribute not just to the Sepho Plateau Ranches but to the overall development of North Korea’s livestock industry.

The newspaper also revealed North Korean society’s overall progress. “Although we do not have expertise in satellites, we can easily guess as to the technological significance of a successful satellite launch. In addition, the fishing industry, led by the People’s Army, has also had success in recent years and is filling the people’s tables with food,” the Chosun Sinbo reported.

It recalled the words of Kim Jong Un’s 2015 New Year’s address, in which he vowed to “solve the people’s food issues through the three axes of agriculture, livestock and fisheries and raise the standard of living to the next level.” It also pointed out that Kim Il Sung had said, “Let’s work so that everyone can wear silk clothes and eat meat soup in tile-roofed houses.”

Meanwhile, North Korea plans to cultivate Sepho tableland (the flat and expansive land of Kangwon province’s Sepho, Pyonggang and Ichon counties) and build a large-scale animal husbandry complex, creating hundreds of square kilometers of pastures and vegetable plots, hundreds of cattle sheds, over 20 livestock product processing plants and more than 1,000 employee residences.

As the people’s standard of living improves, North Koreans are also placing greater importance on things like technology, health and environmental-friendliness. At the ‘18th Pyongyang Spring International Product Exhibition,’ which opened on May 11, 2015, health products such as medicine sold better than ever. In addition, high-tech products such as energy-saving products and environmentally-friendly diesel engines exceeded the number of everyday products at the expo. Previously, North Korea primarily exhibited traditional products like ginseng, sea cucumber, and honey; but due to the emphasis on domestic technological development, businesses displaying domestic technological products are becoming more common.

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Cost of defection rising (or demand curves slope down)

May 21st, 2015

According to Reuters:

It’s much more dangerous, and twice as expensive, to defect from North Korea since Kim Jong Un took power in Pyongyang three and a half years ago, refugees and experts say, and far fewer people are escaping from the repressive and impoverished country.

With barbed-wire fencing erected on both sides of the Tumen River that marks the border with China, more guard posts and closer monitoring of cross-border phone calls, the number of North Koreans coming annually to the South via China has halved since 2011.

Most defections are arranged through brokers, usually Chinese citizens who are ethnically Korean, and their charges have doubled to about $8,000 per person, beyond the reach of most North Koreans – and that gets them only as far as China.

“Intelligence has stepped up monitoring (of phone calls) on border passages, dampening brokers’ activities,” said Han Dong-ho, a research fellow at the government-run Korea Institute for National Unification in Seoul, who regularly interviews defectors.

“The more dangerous, the more expensive. Many connections with brokers, which North Koreans call ‘lines’, have been lost.”

The crackdown on defections under Kim has come even as his government has eased restrictions on economic activity, resulting in a slight improvement in livelihoods for many, and providing less reason to escape.

The hundreds of miles of barbed wire strung across T-shaped concrete pillars on the banks of the Tumen were put in place in 2012, according to residents on the Chinese side and historical satellite imagery.

On the North Korean side, guard posts, dogs and shabby concrete watch towers dot the banks of the river, where locals said children from both sides once played together on the winter ice.

“Since Kim Jong Un came in, there have been times where local brokers have refused to go to certain areas on the Chinese side because of the increased security risk,” said Sokeel Park of Liberty in North Korea (LiNK), which works with defectors.

There are 27,810 North Koreans resettled in South Korea, according to Seoul’s Unification Ministry.

The annual number of defections rose steadily from the late 1990s, according to South Korean government data, when a devastating famine sent desperate North Koreans into China in search of food. It peaked in 2009, when 2,914 North Koreans arrived in the South – the greatest influx since the end of the 1950-53 Korean War.

But in Kim Jong Un’s first year in power in 2012, just 1,502 North Koreans made it to the South – a 44 percent decrease on the previous year. Last year, the number was 1,396.

Disguises and secret codes
From his smoke-filled office in Seoul, human rights activist and defector middleman Kim Yong-hwa manages secret hideouts in China for North Korean refugees, sending them South Korean clothes for disguise and secret codes to communicate with brokers.

“There are still many people who want to cross over to China and to South Korea, but the reality has changed,” said Kim, who is himself a defector and heads the NK Refugees Human Rights Association of Korea.

Kim connects North Koreans hiding in China with brokers there, asking the defectors to get new mobile phones or wipe their contacts to keep traceable calls to a minimum.

Tighter border controls, however, have significantly increased the risk – and therefore the cost – of defecting.

Kim, who says he has helped thousands of North Koreans flee the country over the last decade, has considered closing his business this year due to his network of willing brokers dwindling to 20 from about 60 in the past.

“They demand advance payments now, given the risks they have in China,” Kim said, adding that he has resources to help only half of the 40 or 50 North Koreans who call him every month.

The overwhelming majority of defectors are female, and come from just two neighboring provinces in the northeast of the country, far from the capital Pyongyang, in an area bordering China where North Koreans considered disloyal under the country’s political class system have traditionally been sent.

Unlike men, who tend to have obligations to the state and workplace, North Korean women often have more flexibility and are freer to trade, smuggle, or secretly flee. Women accounted for a record-high 83 percent of the 292 defections to South Korea in the first three months of 2015.

Those who make the illegal crossing risk being shot, or repatriated and possibly tortured, according to a United Nations report last year.

But beyond the danger of getting caught at the border, an improvement in living conditions in some parts of North Korea may affect anyone’s resolve to leave the country. Economically, North Korea has changed since the famine years of the nineties, and a burgeoning market economy means food is easily obtained.

“All things being equal, an improving economy in North Korea, especially in the northeast provinces, would also lead to a decline in defector numbers,” said Park of LiNK.

But a gradual improvement in living standards cannot account for the 44 percent drop in defections under Kim Jong Un, Park said, pointing to the ramped-up border security.

“Compared to 10 years ago the primary motivation for defection has gone from food, to freedom,” he said.

Read the full story here:
It now costs $8,000 per person to defect from North Korea
Reuters
Ju-min Park and James Pearson
2015-5-21

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DPRK selling Viagra in Bangladesh

May 15th, 2015

According to UPI:

A North Korean restaurant manager in Bangladesh was arrested in connection with illegal sales of Viagra and alcohol on Friday.

The supervisor of Pyongyang Restaurant in Dhaka, identified as a North Korean woman, had been secretly selling the impotence drug alongside other pharmaceuticals, reported South Korean news agency Yonhap.

Bangladesh’s Customs Intelligence Investigation Department was tipped off about the illegal sale of alcohol – and a raid on Friday uncovered 210 pills of Viagra, other medications, 94 cans of Foster’s beer and ten bottles of whisky, according to Bangladesh news site Prothom-Alo.

Pyongyang Restaurant in Dhaka is presided over by North Korea embassy staff, and an embassy employee reportedly tried to block the investigators.

Moinul Khan, head of the Customs Intelligence Investigation Department, said legal steps would be taken against the one North Korean national who was arrested.

Yonhap reported Bangladesh news network Jamuna TV was first to report the arrest, and said the North Korea-operated restaurant was raising funds through illegal operations.

Bangladesh’s population is mostly Muslim, with 83 percent of the country adhering to the Islamic faith. Alcohol cannot be sold without government permission.

This is not the first time North Korean envoys have been connected to illegal activity in Bangladesh.

In March North Korean diplomat Son Yung Nam tried to transport $1.4 million worth of gold bars, 170 in total.

Bangladeshi customs officials said the gold was most likely headed for a “local criminal racket” in order to raise cash for North Korea.

Read the full story here:
North Korean arrested in Bangladesh for sales of Viagra, alcohol
UPI
Elizabeth Shim
2015-5-15

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Posted in Drug smuggling, Illicit activities, International trade | Comments Closed

Development of stem cell cosmetics in North Korea

May 14th, 2015

Institute for Far Eastern Studies (IFES)
2015-5-14

The Chosun Sinbo, mouthpiece of the General Association of Korean Residents in Japan, reported that North Korea has developed and is now producing cosmetic products that utilize new natural materials and cutting-edge technology, including stem cell technology.

“At the Pyongyang Cosmetic Factory, they are concentrating on developing functional cosmetic products that are natural and low stimulating,” the Chosun Sinbo revealed on April 28.

The biotechnology and light industry divisions of the State Academy of Sciences, as well as scientists, teachers and researchers at the Han Duk Su Pyongyang Light Industry University, are assisting in this work.

According to researchers within the biotechnology division, the product utilizes stem cell technology in regenerating skin, and it is effective in preventing aging, moisturizing skin, and lightening skin.

They said that they developed the cosmetic additive (which has a pine tree scent) at the Pyongyang Natural Perfume Research Center, and that this product matches the characteristics of one’s skin by age and is effective in things like skin lightening and removing wrinkles.

They added that they have also developed a beauty cream that has a moisturizing and whitening effect due to its natural hydrating materials derived from kelp.

In March 2015, First Secretary Kim Jong Un inspected the Pyongyang Cosmetics Factory. During his inspection he cited world-renowned cosmetics brands like Lancome, Chanel, Christian Dior and Shiseido and encouraged the factory to “continually raise the quality of its products so that we can compete with such foreign cosmetic products.”

In particular, Kim noted that “the eyeliner and mascara made by foreign countries retain their shape when exposed to water, whereas the mascara and eyeliner produced domestically create ‘raccoon eyes’ when the wearer only yawns.”

The Pyongyang Cosmetics Factory was established in April 1962 and is North Korea’s representative cosmetics factory, producing all sorts of cosmetic goods such as the ‘Unhasu’ brand. It also produces over 60 types of functional cosmetics including soap, shampoo, beauty cream and skin lotion.

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Posted in Cosmetics, Light Industry, Manufacturing | Comments Closed

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