Archive for February, 2006

Macau bank drops N Korean clients

Thursday, February 16th, 2006

According to the BBC:

A Macau bank accused by the US of laundering money for North Korea has agreed to dissolve all links with the communist state.

The US Treasury said Banco Delta Asia had acted as a “willing pawn” for North Korea to channel money through Macau.

Macau’s authorities took control of the bank last year after the fraud claims led to a run on its deposits.  Customers withdrew 10% of total deposits after the allegations surfaced.

Officials said the bank would end ties with North Korean clients and tighten its anti-money laundering procedures.


The Times, They Are ‘a Changin’

Wednesday, February 15th, 2006

A New  report, Hungry for Peace: International Security, Humanitarian Assistance, and Social Change in North Korea, compiled by Hazel Smith, a former adviser to U.N. humanitarian agencies who lived in North Korea for two years, claims that the right kinds of aid could have the effect of opening up the country…becuse the place has already opened up quite a bit.

This view contrases with this one, which says that outside efforts to leverage foreign aid to gain concessions will fail because China and South Korea provide all sorts of assistance that requires no quid pro quo.

From the Press Release:

“There are too many analyses of North Korea that assume that this is a society that never changes and that it’s monolithic.  The influx of hundreds of aid workers in the late 1990s, followed by South Korean businessmen, has made old images of the North outdated. Massive social change resulted from the famine that killed a million people made a bankrupt socialist government unable to stop the marketization of the economy.”

The bottom-up erosion of rigid social controls allowed junior officials and some of the population of 23 million people to become exposed to United Nations and other aid workers, diplomatic missions and South Koreans, Smith told Reuters.

While the hard-line communist government of leader Kim Jong-il has resisted any kind of political liberalization, she said, “party officials at the middle level no longer pay so much attention to what the state tells them.”

“There’s a big fragmentation in the country these days,” Smith said, describing a fight between officials who want to restore a command economy and those who think the North must follow China in adopting a market economy.

The more senior leaders believe they can use South Korean and Chinese aid, and maintain North Korea’s political system in a federation with the South. Smith says this is impossible.

But below them are younger, pragmatic technocrats who are “very aware that the regime as it stands is not sustainable and admire what South Korea has done,” she said.

The competition between economic modernizers and old guard security officials gives potential leverage for the United States and other countries at the six-party talks aimed at convincing North Korea to abandon its nuclear weapons.

“There are avenues for negotiation because there are economic outcomes which the North Koreans want,” said Smith.

Dangling economic incentives would help modernizers win, Smith said. South Korea’s modest investments to support nascent civil society and bring North Korea into the outside world was “the best of all the feasible options”.

South Koreans who deal with North Korea “know this is not a very militarily strong country — it’s a weak country, it’s very vulnerable and its people are fed up with the past decade and a half of poverty,” said Smith.


Price and wage data:

Wednesday, February 15th, 2006

Daily DK did a survey of prices in the DPRK this January, 2006.

Official Wages for a North Korean workers labor are 2,000 won to 3,000 won per month (about $1).


Exchange rate

Yuan 350:1 / Dollar 2,715:1 / 100Dollars: 85Euro










Annam rice





3,000~4,000won(it depends on size)


150won per one

Edible oil

Yellow-1,930won per kg


1,500won per 500g

White – 1,660won




Clothes and Shoes





Home handcraft




Private products




Made in China




Handy shoes(for women)



Housing Prices


60won per menth / Paying quarterly

Luxurious apatment


Quality apartment


General apartment


Small apartment


General single story house


Inferior single story house




Cold remedy


Vitamin B1 injection




Amoxicillin (Antibiotics)





120won (1pack)





– When examined, bribery is not necessary
– When getting a medical certificate or medicines, bribery is necessary
– Bribery: one box of tobacco/ as for medicines for 1,000 won, 7000 won



General lead pencil



Big one


Mechanical pencil


Small one


Ball pen


School Uniform

Elementary school


School Bag


Mid and High schools


– Every month, the following costs should be paid to schools: kindergartens – 1,000 won/ elementary schools- 2,5000 won/ middle and high schools- 4,000 won
– Every month, the following stuffs should be provided to schools: scrap irons, glass 15kg and 40 bundles of timbers
– In an irregular basis, the following stuffs should be provided to school: vinyl, wastepaper, paints and gasoline

Railroad Fares

Shinuiju – Pyongyang

High class – 650won

Shinuiju – Chongjin


Low class – 450won

Shinuiju – Gaesung


Shinuiju – Nampo


Shinuiju – Ryongcheon


Sariwon – Pyongyang

200won (low class)

Pyongyang – Dandong(Pyongyang-Beijing international train)

About 10yuan(3,300won)

Dandong – Pyongyang



Fares of Cars and Buses

Shinuiju – Pyongsung


Shinuiju – Jeongju


Shinuiju – Yeomju


Shinuiju – Wonsan


Sariwon – Wonsan


Sariwon – Pyongyang


Sariwon – Pyongsung


Sariwon – Haeju



Accommodation Fee


Usually 100 dollars, at minimum 60 dollars



Private-owned inns

Less than 100~200 won / The most decent room is 500won


Fees for Travel Documents

Safeguard certificate

in a province


Crossing-river certificate


Outside of a province


Passport and visa



Selling Stand in a Market

Depending on size, place and kinds of business





White-black TV



Pentium 3


Color TV

200,000won(new one)

Pentium 4



Made in China – 20,000~30,000won(about 100yuan)


Prices and Phone Bills of Telephone and Mobile Phone


Installation fee(per one)

40,000won(about $200)

Using in a postal office



Rental per month





Kumgang Expansion

Wednesday, February 15th, 2006

According to the Korea Times, 02-10-2006, the Kumgang tourist zone is being expanded.  Here are some stats:

  • The Extended tour zone will reach Wonsan (Where the Japanese Chongryun ships come in)
  • There are plans to finalize a “master plan” of development for the area (lakes, nursing homes, beaches).
  • Since opening in 1998, 1.2 million south Koreans have visited
  • Hyundai Asan hopes to channel 2.3 trillion won ($2.37 billion) into the project through domestic and foreign investors.
  • Besides the tour-related issues, the two sides also agreed on a payment of $400,000 to the three victims of a traffic accident that happened late last year. It wish I could track that $400,000.  It will end up in interesting places for sure.  The accident happened on Dec. 27 in the tourist area, and North Korea called at first for at least $1 million in compensation. In an earlier traffic accident that killed a North Korean soldier in June 2001, $6,000 in compensation was paid.

China Trade Boosting DPRK GNP

Tuesday, February 14th, 2006

According to the Asia Times:


SEOUL – North Korea’s economy would have posted minus growth if it had not been for its rapidly growing trade with China, the South Korean central bank’s research unit said Monday.

North Korea-China trade has been rising by an average 30% every year since 2000, boosting the communist state’s economic growth by 3.5% every year, according to the Institute for Monetary and Economic Research.

As of 2004, the bilateral trade accounted for 39% of the North’s total trading volume, and also made up 77% of annual increase in the North’s trade volume, the institute said. North Korea’s economic growth could have dipped below zero if it were not for such a sharp increase in its trade with China, the institute said. Such a sharp increase in bilateral trade is the result of North Korea’s low production capacity and cheap prices of Chinese goods, it said.

Geographical proximity also boosted the trade. The fast growth of the Chinese economy will result in increased trade with North Korea and induce more market elements in the Stalinist state in the coming years, the institute predicted.

As a result, the inclusion of China in South Korea’s economic cooperation with the North will be one of the options that the government could consider in its policy, it added.


Sinuiju SAR back on?

Monday, February 13th, 2006

According to the Daily NK (2006-2-13):

A high-level internal source in North Korea reported on the 12th that North Korea is in the process of restarting the development of Shinuiju Special Administrative Region.

According to the source, a mass number of residents were moved to rural areas, plans were set to move administrative offices and plans were carried out to build the road to Dandong, China is under expansion construction. They are also coming up with measures to better control the usage of cellular phones as well as other political measures.

Such recent development activities in Shinuiju mainly took place after Kim Jong Il’s visit to China, which seems to be part of North Korea’s reformation and liberalization plan.

Driving Out the Residents and Their Number

The source reported, “They are planning to move the Shinuiju residents of about 7,000 families (25,000 to 30,000 people) to close cities and rural areas. Their plan is to strictly sort out those from “bad families” and those who have committed political errors (wrongdoings) and move them to Chulsan-gun [Cholsan], Donglim-gun [Tongrim], Yomju-gun, and Taechun-gun[Thaechon] of North Pyongan province.”

In September of 2002, North Korea announced Shinuiju as the Special Administrative Region and nominated Yang Bin, president of Ouya Group at the time, who was the invited minister of the Shinuiju Special Administrative Region. He said, “We will move the current 200,000 Shinuiju residents to another place.”

At the time, the North Korean government started to build 3 m high fence around the designated region, which clearly showed its preparation to make Shinuiju an isolated Special Administrative Region.

Kim Eun Chul, president of Backdu-Halla Association, a young adults defectors organization and a former Shinuiju resident, said, “Chulsan-gun, Donglim-gun, Yomju-gun, and Taechun-gun are agricultural areas where there is no military or manufacturing production facilities, thus they are adequate places to move the residents.”

“There have been rumors about moving those people with unclear backgrounds out of the region every time they talked about making the Special Administrative Region.”

Provincial Administrative Offices to be Moved

The source reported, “The provincial offices located in Shinuiju city are rebuilt in South Shinuiju and roads to Dandong, China are under construction to be expanded.”

Shinuiju’s administrative offices refer to provincial offices of North Pyongan Province, including Provincial Party (office), People’s Committee, and Administrative Committee. Plans to move these offices to South Shinuiju had been announced when the government announced the plan for the Shinuiju Special Administrative Region in September 2002. South Shinuiju is located about 3 km away from downtown Shinuiju and when Shinuiju becomes a Special Administrative Region, administrative work will be divided and South Shuinuiju will take charge of provincial administrative work.

Yet another source said, “Among the Shinuiju residents, rumors are spreading that Kim Jong Il’s visit to China was for iron and oil trade.” Shinuiju relied on Chinese aid or trade for most of the industrial facilities and as an example, currently, Baekmawon Oil Factory in Shinuiju is receiving oil aid of 1,500,000 tons per year from China.

Additional posts on the Sinuiju SAR can be found here.

Read the full story here:
Shinuiju Special Administrative Region Plan Propelled Once Again
Daily NK
Kwon Jeong Hyun


Japan threatens to tighten the screws (again)

Monday, February 13th, 2006

According to Yahoo News: 


Kyodo) _ Japan plans to apply regulations tightly to issues related to North Korea to put pressure on Pyongyang after bilateral talks made little headway on the abduction and other bilateral issues — without imposing economic sanctions for the time being, government sources said Monday.

The government has urged municipalities which provide tax breaks for a pro-North Korean organization’s facilities to consider whether such preferential treatment is appropriate, according to Abe.

The government may also study tightening customs screening of travelers who take souvenirs back to North Korea under a system to allow simplified customs checks for souvenirs worth up to 300,000 yen, the sources said.


American Koreans reunited with family in the DPRK

Thursday, February 9th, 2006

According to the Seattle Times: (By Barbara Demick, Los Angeles Times)

An American Foundation is working to  reunite Korean families in the US with their relatives in the DPRK.  From the article:

One of the most active U.S. charities working in North Korea announced Wednesday it will try to fill [the communication] void with a program it hopes will eventually lead to family reunions. The Eugene Bell Foundation, which operates out of Washington and Seoul supporting tuberculosis clinics inside the North, said it will start by collecting family information from Korean-Americans who belong to separated families.

“These people are in their 70s and 80s, and there are fewer and fewer of them every year. Many of them don’t speak English well and don’t understand the system well. They need our help if they will ever see their relative again,” said Alice Jean Suh, Washington office director of the Eugene Bell Foundation and the head of the campaign.


Smoke signals from BAT’s North Korea venture

Wednesday, February 8th, 2006

Asia Times
Lora Saalman

On January 10, North Korean leader Kim Jong-il traveled in a luxury train to China’s Guangdong province to sample socialist-flavored capitalism. Just a few months earlier, the North Korean Workers Party introduced reform measures granting foreign investors tax cuts and allowing them to sell goods produced in North Korea without tariffs.

For an economy that ostensibly issued halting economic reforms in 1984, these new measures constitute a revolution, albeit one with Chinese characteristics. In accordance with its giant neighbor’s model, North Korean economic reform is predicated as an alternative to the instability of political liberalization. Unforeseen social and political shifts are to be cushioned by financial solvency to keep the regime intact. With China’s assistance and unofficial aid, sustainable growth may one day be achieved in North Korea. Yet a darker side to North Korea’s economic awakening remains.

Kim Jong-il’s visit comes on the heels of accounts of North Korean money-laundering in Macau and the US decision last June and again in October to freeze the assets of various North Korean companies and financial institutions. While many of these firms are beyond the reach of US sanctions, implied misconduct has already led to runs on the North Korean-affiliated financial institution Banco Delta Asia in Macau.

As allegations swirl of money-laundering through counterfeit cigarettes and currency, a less-known story has emerged on British American Tobacco’s previously undisclosed four-year-old joint venture in North Korea. It presents the dilemma of doing business in a country in desperate need of revenue but with a poor track record of allocating resources to its people. This cautionary tale begs the question as to where exactly Pyongyang’s joint-venture profits are going.

For North Korea, which lacks many of the basic laws for financial transparency and good governance, capital investments are more than economically precarious. Shared contact information and dubious management practices among North Korean companies are ubiquitous.

Daesong-BAT is one of a handful of Western joint ventures in North Korea. The far-reaching tentacles of its North Korean partner illustrate the complexity of verifying the background and connections of any North Korean entity. Like many of its compatriots, North Korea’s Sogyong General Trading Corp (Sogyong) boasts circuitous and often indirect ties to entities engaged in proliferation, international trade, shipping, and money-laundering. These indicators point to larger concerns as to whether joint ventures, particularly Western ones, can be manipulated by North Korea for illicit financing of the regime or even to sustain its alleged WMD (weapons of mass destruction) programs.

Joint ventures and front companies
In establishing Daesong-BAT, British American Tobacco teamed up with Sogyong General Trading Corp, a Pyongyang-based state trader best known for its carpet exports. Sogyong, however, also exports such products as handicrafts, furniture and agricultural produce, while importing machinery, electronics, fishing tackle, chemicals and fertilizer. It is not uncommon for North Korean state-run enterprises to deal in everything from machinery to fishing tackle. Yet eclectic product lists make trade in illicit drugs and weapons all the more difficult to track. Cigarettes are just one more product in the Sogyong export-import pantheon.

North Korean company product lists also rarely convey their full range of trade. Seemingly innocuous industries are often manipulated as front companies. Last year, for example, Japan’s Ministry of Economy, Trade and Industry (METI) listed what appeared to be an innocuous North Korean food manufacturer, Sosong Food Factory, for its participation in nuclear, missile, chemical and biological-weapons proliferation. Cigarettes, like food, have been used at times to mask the real objects being transferred. In one case, Japan in 2002 seized a Chinese vessel and found that the declared store of cigarettes on board actually contained drugs thought to have come from North Korea.

While not as licentious as drug or human trafficking, even the black-market trade of cigarettes could have a tangible impact on North Korea’s financing, as seen in Eastern European illegal cigarette rings. These factors highlight the danger of taking a North Korean food or even carpet manufacturer at face value.

North Korea’s network
Among the elements of obfuscation, the company name Daesong-BAT merits attention. Rather than combining or modifying the titles of the two partner companies to form Sogyong-BAT, Daesong-BAT combines British American Tobacco’s acronym with a name that could either point to North Korea’s Daesong district or Daesong General Trading Corp (Daesong). If it turns out to be the latter, Japan and other governments have prominently featured Daesong for its ties to missile and nuclear proliferation.

Incidentally, Daesong maintains one of the most extensive and convoluted North Korean networks, with more than 10 subsidiaries. It also is suspected of falling under Bureau 39, which earns foreign currency for North Korea. A direct connection between Daesong-BAT and the sinewy Daesong franchise has yet to be established but, as illustrated below, nothing is clear cut in North Korean business relations.

Because of the lack of transparency and convoluted nature of North Korean companies, contact information often serves as the first stencil for tracing overlap between industries. In the case of Daesong, the US Central Intelligence Agency’s Open Source Center follows the use of the same fax number to establish potential business and branch linkages. If the same logic is applied to Sogyong, another pattern emerges. Sogyong shares common fax numbers with at least two companies, Korea Foodstuffs Trading Corp (Foodstuffs) and Korea Kwail Trading Corp (Kwail). These companies in turn share fax numbers with nearly 100 companies in North Korea.

Among North Korean firms sharing contact information with Sogyong-linked entities, Japan’s METI and official European export monitors have listed at least six as end-users associated with North Korean WMD programs. In October, the US government targeted one in particular, Korea Ryonha Machinery Joint Venture Corp (Ryonha), freezing its assets under US jurisdiction and placing it on the US Specially Designated Nationals and Blocked Persons list. Ryonha is a prime example of the complex web of North Korean subsidiaries. Last June, the US Treasury Department also targeted the assets of its parent company Korea Ryonbong General Corp, formerly known as Lyongaksan, which heads five other US-designated entities.

Ryonha is not an aberration among companies converging with Sogyong. Among other Foodstuffs and Kwail-connected entities, Korean company databases list Korea Pyongyang Trading Corp as a distributor of methane gas derived from animal excrement. Apparently, effluent is not its only fetid source of income. The Japanese government has listed the very same company, along with subsidiaries of two other firms tracing back to Sogyong, namely Korea Ryonhap Trading Corp and Korea Jangsu Trading Corp, for nuclear, missile, chemical and biological weapons proliferation.

Proliferation networks may not be the only mechanisms at Sogyong’s fingertips. Contact information also links the two Sogyong-connected associates with at least four North Korean financial institutions. Among these, Koryo Bank and Korea Joint Bank have alleged ties to the now-infamous Banco Delta Asia in Macau. Banco Delta Asia’s own purported involvement in counterfeit-currency distribution and counterfeit-cigarette smuggling does not bode well for Daesong-BAT, no matter how convoluted their connections. Banco Delta Asia may have three degrees of separation between it and Sogyong, but in North Korea’s fishbowl of finance this does not preclude cooperation.

Banco Delta Asia is also reported to maintain a close business relationship with Macau-based Zokwang Trading, which its own vice general managing director claims is a part of North Korea’s Daesong General Trading Corp. Daesong, as mentioned earlier, has a pervasive proliferation record. It also has reported links to Changgwang Sinyong Corp (Changgwang), which has been repeatedly sanctioned by the United States for its missile-proliferation activities and sales to Iran and Pakistan. Zokwang in turn deals in missiles and nuclear-power-plant components, all the while maintaining a partnership with the notorious Changgwang. Combined with Sogyong’s branch in the joint \-venture hub Shenyang, China, even indirect ties to Macau suggest that Sogyong has the ability to tap into proliferation, industrial and financial networks in China and beyond.

Proliferation, industry and finance mean little without the means to transport goods and technology. Sogyong-associated entities Foodstuffs and Kwail share fax numbers with North Korea’s national airline Air Koryo, which has also been cited by official European monitors for proliferation. A 2003 Far Eastern Economic Review article even named Air Koryo as the transportation mechanism for Daesong’s suspected military assistance to Myanmar. Sogyong’s own shipping vessels Sogyong 1 and 2, which were detained in Japan on safety violations in December 2004 and January 2005, complete the final leg of the contact-linked proliferation, financing and shipment triangle. This network belies a much more intricate set of alliances than the domestic-consumption-based joint venture touted by British American Tobacco and Sogyong General Trading Corp.

Standards of business conduct
British American Tobacco’s website advocates transparency in international business and laudably eschews bribery, corruption, illicit trade, and money-laundering. In October, BAT executives further contended in The Guardian that the company’s North Korean cigarette joint venture fuels only domestic consumption, not exports to China or elsewhere. In spite of these reassurances, BAT is no stranger to the dangers of black-market cigarette production and transshipment. A February 2000 article in The Guardian even accuses BAT of complicity, by knowingly allowing illicit smuggling of its cigarettes to occur.

In the case of Daesong-BAT, British American Tobacco officials have admitted to knowing little of the company’s North Korean joint-venture operations. Ominously, BAT has stated that an unnamed Singapore division controls its North Korean joint venture. Lack of oversight combined with a dubious North Korean offshore mechanism for managing an ostensibly domestic industry raises significant warning signs. The incestuous relationship between state-run North Korean entities that share fax numbers of companies and banks listed for WMD procurement and money-laundering through counterfeit tobacco should also elicit concern. These are not simply dilemmas for British American Tobacco, but pose challenges to any companies forming joint ventures in North Korea.

Economic integration, as in China’s case, may bring North Korea more into step with international norms and standards. Ironically, engagement that is likely to lead to greater future transparency may also be manipulated for North Korea’s short-term illicit gains.

In 2003, the British government pressured BAT to close down its cigarette factory operations in the military dictatorship of Myanmar because of concerns over that country’s lack of human rights. Given the legion of obstacles impeding transparency in North Korea, BAT and other Western firms could be contributing to the worsening of more than human rights. They could be aiding and abetting illicit North Korean financing that is alleged to fuel Kim Jong-il’s slush fund and WMD programs.


Kaesong Industrial Park Update and Expansion

Tuesday, February 7th, 2006

From the Korea Times:

Tuesday, February 7, 2006

By Hwang Si-young

KT Corp., the country’s No. 1 fixed-line telecom and broadband operator, will build a gigantic communications center at the Gaeseong Industrial Complex in North Korea by 2007, the company said yesterday.

“Many local companies are expected to set up plants in Gaeseong in a few years. To meet a growing demand for fixed-line telephone and internet services, we decided to build a large communications center, approximately 9,900 square meters in size,” said KT’s Gaeseong District Office director Joung Youn-kwang.

There are currently 11 companies based in Gaeseong Complex. They are permitted and approved by the Ministry of Unification and Korea Land Corporation to do their businesses in Gaeseong.

The size of the industrial complex currently stands at 92,400 square meters, but according to KT, it will be expanded more to around 3,300,000 square meters by 2007, housing 300 or more companies.

As of now, KT operates a small communications center using a two-story temporary building in Gaeseong.

The company is likely to build a center after the overall industrial complex expansion is completed, Joung said.

KT will soon begin negotiating with its North Korean counterpart to secure land and bring additional telecommunications equipment, the company said.