Archive for August, 2007

IT business delegation to visit DPRK

Thursday, August 16th, 2007

October 20-27, 2007 (Beijing/Pyongyang)
GPI Consulting

GPI Consulting (Netherlands) is one of the few western companies that has done an audit of the DPRK’s IT capabilitites and has published about them.

They are organizing an IT delegation to visit the DPRK this October.  Here is their marketing flyer and itinerary: NK-IT-tour.pdf

From the Marketing Flyer:

North Korea offers interesting business opportunities in several fields, such as software development, production of computer games, animation and cartoons, data entry en digitization. In order to provide detailed information about the IT opportunities in North Korea, a unique IT Study Tour will take place from 20 – 27 October 2007.

The trip to North Korea will focus on offshoring in the field of IT and BPO (Business Process Out-sourcing). We expect participants from IT- and software organizations that are investigating offshoring, or from consultants researching new offshore locations. Companies interested in exploring a new potential export market are also welcome to join the tour.

Europe still lacks sufficient knowledge about the promising North Korean IT sector. The goal of the business mission is to give the participants detailed information about offshoring, and especially about the opportunities in North Korea. We will strive to have participants from large, small and medium sized companies taking part in the IT study tour.

In order to make a business trip of 7 days attractive, the delegation will visit various companies in Pyongyang in the field of IT, animation, cartoons, computer games and BPO. The business mission will have an informal character with a visit to a university and also with attention to cultural and tourist elements. The participants of the tour will meet in China (Beijing); after returning from North Korea, an extension of the stay in China is possible.

The organizer of this mission is KCC (Korea Computer Center), a major IT services provider in North Korea with offices in several cities, including Pyongyang and Beijing. The European contact for this business mission will be Mr. Paul Tjia, founder and director of GPI Consultancy, Rotterdam, The Netherlands.  Established in 1995, GPI Consultancy is a specialized Dutch consultancy firm in the field of offshore sourcing. It is regularly involved in IT study tours to various offshore countries in Asia.

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3rd Pyongyang Autumn International Trade Fair

Thursday, August 16th, 2007

European Business Association
September 24-27, 2007

The European Business Association (EBA) in Pyongyang and DPRK Chamber of Commerce are orgaizing a booth for European business at the upcoming international trade fair in Pyongyang.  European companies are invited to make use of this opportunity to introduce their business to the North Korean market.

European companies interested in taking advantage of this opportunity are invited to visit the EBA website www.eba-pyongyang.org – please click through to membership for the statutes. The membership fee of 500 Euro will include the following services for companies who would not send their own representative to the trade fair:

  • Poster display (maximum size DIN A2)
  • Distribution of flyers (maximum size DIN A4)
    Feedback for Korean inquiries by e-mail: any contact request and any inquiry by a Korean company will be registered in a special format and will be supplied asap by   e-mail to your company.
  • Photos documenting the participation of your company in the fair.

If a representative will take part, the joint European booth is of course open for him/her to be used during the fair and EBA will support and assist you actively in making contacts and business meetings with potential Korean partners. According to a special arrangement between the EBA Pyongyang and the DPRK Chamber of Commerce, the deadline for visa application has been extended for European businesses to August 20, 2007.

Learn more here

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The gentle decline of the ‘Third Korea’

Thursday, August 16th, 2007

Asia Times
Andrei Lankov
8/16/2006

By Chinese standards, the city of Yanji is rather small, with a population of nearly 400,000. About a third of them are ethnic Koreans: Yanji is the capital of Yanbian autonomous prefecture in the northeastern province of Jilin.

From the first few minutes in Yanji it does not feel completely like China. The streets and shops have signs both in Korean and Chinese, the people (well, many of them) speak Korean among themselves, and restaurants advertise dog meat, a traditional Korean delicacy. But it also feels different from South and North Korea. Yanji is much too poor if compared with the South and much too rich if measured against meager North Korean standards.

The Korean migration began as a trickle in the 1880s, and by the early 1920s it had developed into a large flow. Some of those settlers fled the persecution of the Japanese colonial occupiers at home, but many more were attracted by lands easily available to migrant farmers in what then was known as Manchuria.

An overwhelming majority, some 80%, came from the areas that after 1945 became parts of North Korea. During the Chinese Civil War, most local Koreans sided with the communists, and this helped boost their standing after 1949. The local Koreans were officially recognized as a “minority group”, and in 1952 the entire area was made into an autonomous prefecture, with the Korean language co-official with Mandarin.

Yanbian is a large area, roughly half the size of South Korea, but its current population is merely 2.2 million. South Korea has 48 million people, so the density of population in Yanbian is remarkably low. Indeed, while traveling through the area one can drive for few kilometers without encountering any signs of human settlement – a picture that is unthinkable in most of South Korea or coastal China.

In 1945 about 1.7 million Koreans lived in China, overwhelmingly in its northeastern area. About 500,000 of those chose to move back to Korea in the late 1940s, but a million or so decided to stay. Nowadays, the Korean population has reached 2 million, of whom some 800,000 reside in Yanbian.

Economically, the area has not been very successful – perhaps because it is landlocked, so the import-oriented development strategy does not really work there. The breathtaking economic growth of the past two decades in the country as a whole has changed the looks of the local cities and towns, but Yanbian is still poor by contemporary Chinese standards. Sometimes in the villages around the city one can even see a derelict hut with a thatched roof – a sight that is almost impossible to see more prosperous areas of China. Still, changes are everywhere: the old gray buildings of the Mao Zedong era are being demolished and giving way to new, posh apartment complexes. Construction is everywhere, the number of hotels is astonishing, and good roads criss-cross the area, though motor traffic is still very thin.

Beijing’s policy toward ethnic Koreans has always been somewhat contradictory. On one hand, the Chinese central government follows the Leninist principles it learned from the Soviet Union. According to these principles, the ethnic minorities should be given manifold privileges, often at the expense of the majority group.

Indeed, this is frequently the case with the ethnic Koreans. But there were periods of unease and even open persecution, especially in the crazy decade of Mao’s Cultural Revolution beginning in 1966. A middle-aged ethnic-Korean businessman told me, “Back in the late 1960s, I seldom saw my parents. Because they were members of an ethnic minority, they had to go to ideological-struggle sessions every day and had to stay until very late.”

However, that period was an exception. The same person, who said he is not a fan of the current Chinese system, still admitted when asked about discrimination: “Discrimination? Well, almost none, to be frank. They appoint some Han Chinese officials to supervise the administration, but basically I don’t think Korean people here have problems with promotions or business because of their ethnicity. Sometimes being a minority even helps a bit – it’s easier to get to a university if you come from a minority group.”

It is clear that many Korean community cultural institutions rely on generous subsidies from the central government. The Chinese state sponsors a large network of the Korean-language schools, so until recently nearly all Korean children received secondary education in their ancestors’ tongue. If they wish, they can attend Yanbian University, where ethnic Koreans are given preferential treatment for the entrance exams.

The local television network broadcasts in Korean and the newsstands in the area sell a number of Korean-language periodicals. Some of these publications hardly need sponsorship, since they deal with the ever popular topics of sex, crime and violence, but many others, such as high-brow literary magazines or rather boring local dailies, would go out of business without their state subsidies.

A local law requires every street sign in the prefecture to be written in both Korean and Chinese, and it explicitly stipulates that Korean letters should not be smaller or placed below the Chinese characters. This even applies to advertisements.

The Korean heritage (or rather those parts of the heritage that are deemed politically safe) is much flaunted in the area because it is one of factors that make Yanji attractive to potential tourists. So Korean restaurants are everywhere and local advertisements frequently use images of beautiful girls clad in the Korean national dress or hanbok.

However, it would be a mistake to depict the Chinese policy in the area as an ideal to be emulated. The potential threat of irredentism has never been completely forgotten, and it is an open secret that radical Korean nationalists have dreamed about annexing this area since at least the early 1900s. They often say Yanbian is actually a “third Korea” (the other two being North and South), so it should be included into a Greater Korea that they believe will emerge one day.

Until recently such threats were not much pronounced, since the impoverished and grotesquely dictatorial North Korean regime could not inspire much longing for the lost homeland among the Chinese Koreans. Perhaps most local Koreans share the feelings of a middle-aged Korean with whom I had a long talk in the town of Tumen on the North Korean border. While pointing to the barren hills of North Korea, easily seen from a restaurant window, he said, “I am so lucky that my grandparents chose to get out of that place. I think we all would be dead had our grandfather stayed there. It is such an awful place. I do not understand how they manage to survive in North Korea.”

This seems to be the common feeling toward North Korea. There might be a lot of genuine sympathy, as demonstrated in the late 1990s at the height of North Korea’s great famine, when there was widespread grassroots support for the illegal migrants from that country. However, in most cases the North Korean regime is seen by local Koreans as an object of contempt and ridicule, and its unwillingness to emulate the Chinese example is often mentioned as the major reason for the disastrous situation of the country.

However, in 1992 China established formal diplomatic relations with prosperous South Korea, and soon the Yanbian area was flooded with South Korean business people, missionaries, students and tourists. These people were usually attracted by the opportunities to do business without dealing with a language barrier, but some of them began to preach the nationalist gospel as well. Their work was made much easier by the fact that South Korea came to be seen not as a land of destitution but one of prosperity and opportunity. South Korean nationalists love to stress that the lands of Yanbian once were part of the ancient Korean kingdom of Koguryo that lasted 700 years, from 57 BC to AD 668. Koguryo is presented by them – as well as many other Koreans outside of the area – as the most successful of the three ancient Korean kingdoms.
 
Therefore, Chinese authorities are on guard against this nationalist fervor and ensure that a Korean-language education does not mean an education in the spirit of Korean nationalism. At the Korean schools, children study exactly the same curriculum as their peers in the Chinese-language schools. Their textbooks are exact translations of the Chinese textbooks used at the same levels.

“We are a minority group of China, China is our country, so there is no need to study Korean history or literature,” one ethnic Korean told me. “When they teach national history at our schools, it means the history of China, and China only.”

As a result of this policy, the younger generations of Koreans are increasingly out of touch with their Korean heritage. Ko Kyong-su, a professor at Yanbian university, himself an ethnic Korean, remarked: “Nowadays, the Korean youngsters here do not learn about Ch’unhyang and Hong Kil-dong [characters from Korean classical novels] until they enter college, and only then if they chose to specialize in Korean studies.”

To what extent does this dualistic policy of support and restrictions work? This is a somewhat difficult question, but it seems that the overwhelming majority of the local Koreans indeed see themselves as “hyphenated Chinese”, not as proud overseas citizens of either Korean state. Their loyalties are, in most cases, firmly with Beijing.

Still, it is clear that the ongoing nationalist propaganda produces some response. A number of times my Korean conversation partners inquired whether I had seen the Koguryo remains, and once a woman in her early 30s, a fellow traveler on a train from Yanji to Shenyang, said nostalgically, “Two thousand years ago this used to be Korean land. We were so big then!”

This is not exactly a feeling that Chinese authorities would like to nurture, so it comes as no surprise that in official publications, Koguryo is mentioned as a “minority regime” that once existed as a part of multi-ethnic but unified Chinese nation. This nation, according to Beijing propagandists and court historians, existed since time immemorial.

In spite of all those problems and potential challenges, until recently Yanbian prefecture could be seen as a poster case for China’s “nationality politics”. Indeed, unlike the situation in Russia, Japan or the United States – three other major countries with sizable ethnic-Korean communities – the Korean-Chinese have remained fluent in their ancestors’ language, though they overwhelmingly belong to the third or even fourth generation of immigrants. They are also quite socially successful. If measured by such indicators as life-expectancy and infant-mortality rates, Koreans are the second-most-prosperous ethnic group in China. Their educational achievements are also well above average.

However, nowadays things are not that rosy – at least if judged from Korean nationalist perspectives. Beginning in the mid-1990s, the ethnic Korean population of Yanbian began to shrink, with its share dropping to 36.3% in 2000 (from 60.2% in 1953), and is still falling.

Local Korean schools are being closed for the lack of students, and Korean parents are increasingly unwilling to send their children to the ethnic schools. Until a decade ago, more or less every Korean family chose to educate their children at a Korean school, but this is not the case anymore. The number of children enrolled in Korean schools in 2000 was merely 45.2% of the 1996 level. In the 1990-2000 period, 4,200 Korean teachers, or some 53% of the total, left their jobs because of school closures. This does not mean Koreans are more poorly educated – on the contrary, the past two decades have witnessed a great education boom. But their education is increasingly conducted in Mandarin, not Korean.

Contrary to what many China-bashers want to believe, this process is not a result of some deliberate discrimination or the cunning policies of Beijing. No doubt some Chinese policy planners might feel a bit of relief when they see how a potentially “separatist” area is losing its explosive potential, but it seems they have done nothing to speed up such development. Rather, Koreans are becoming the victims of their own social success.

In the past, the aspirations of the average ethnic Korean was to graduate from a high school, settle down in his or her local village, and become a good farmer who could afford to have rice on the table for every meal. Now, success is increasingly associated with a university degree. However, the university education is in Mandarin, as are the entrance exams. Korean parents know that Chinese-language schooling gives their children better educational advantages.

This process is easy to see even without statistics. It is clear that a large proportion of younger people speak Korean, but it is also clear that many youngsters do not feel too comfortable when communicating in their parents’ tongue, and are happy to switch back to Mandarin at the first opportunity. It was instructive to see two Korean families who sat next to me on a train: the youngsters, in their 20s, spoke Korean to the parents but preferred Mandarin among themselves.

Another part of the crisis is the low fertility rate of the ethnic Koreans. The Koreans’ birth rate has always been lower than that of the Han Chinese, even though, as an ethnic minority, they are exempt from the “one-child policy”. In 2000, the average Korean woman in Yanbian had 1.01 births in her lifetime. This again reflects the higher education levels of the ethnic Koreans: better-educated groups tend to have less children.

Migration is also taking its toll. A large number of ethnic Koreans have moved away from their village communities. Some of them even went to South Korea – either for good, or just to make some money doing unskilled jobs. But for most of them the destinations of choice are the large Chinese cities, such as Shenyang or Beijing. While in the city, Korean settlers tend to maintain close relations with other Koreans, but they still live in a Chinese-language environment, and speak little Korean. The chances of marriage with a Han Chinese are high, and children from such marriages are usually monolingual – Mandarin.

So it seems that the days of the “Third Korea” are numbered. Even the infusion of South Korean money is not enough to reverse the unavoidable process of assimilation. Koreans are not subjected to forced Sinification; they are making a rational choice, even if it is one that Korean nationalists do not approve of. If things continue as such, in a few decades only hanbok-clad girls and the obligatory signs in Korean shops and restaurants will remind one of the Korean community that once thrived in Yanbian. But I hope it will always be a good place to feast on dog meat.

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Kim Jong Il, “Eat Fruits by Planting Fruit Trees in Every Home.”

Wednesday, August 15th, 2007

Daily NK
Han Young Jin
8/15/2007

The Kim Il Sung Socialist Youth League magazine, “Youth Vanguard” maintained, “Every household should plant at least five stumps of fruit trees, according to Kim Jong Il’s command. A beautiful landscape made up of persimmon, apple, and pear orchards and houses peace is unfolding in the fatherland.”

Youth Vanguard said on the 5th,”Every home should plant fruit trees. The great General has ordered that each farm plant over five stumps of fruit trees and he has now ordered that agricultural households start a fruit tree planting movement.”

Further, it stressed, “It is the esteemed General’s heart’s desire and the Father’s, who has sacrificed his entire life to provide a life for us citizens, noble will to help expand persimmon or pear houses in every village.”

Also, it said, “The esteemed General has offered his whole heart and energy to nourish this lofty goal into a reality,” and introduced the following anecdote.

It was a day in Juche 87 (1998), January.

The esteemed General, who has provided high-powered leadership in several areas of business through strenuous efforts while fighting the strong snowstorm in the northern region, told a person in charge of a district that he did well in ceaselessly managing the area, but a fruit-tree planting movement should take place in every household.

After saying so, he ordered the construction of 55 homes and to plant fruit trees in every home. At that moment, the worker could not stop his passions from flowing.

The 55 homes were cozy homes, which supported the teaching of the esteemed General, and were built next to a mid-size powerplant.

The homes were newly built and since this is the coldest season of winter, the home owners had not yet thought about how to decorate the surroundings.

The worker in charge had felt touched by the warm grace of the esteemed General who let us civilians to live in such nice houses and even taught us about planting fruit trees, so that we could enjoy delicious fruit and perspire under scenic fruit trees.
The esteemed General, while looking at the workers, re-emphasized that every home should plant fruit trees this spring.

The Youth Vanguard relayed, “The children who are starting new lives in order to observe the will of the Party have started a new custom of sending and receiving young fruit tree plants whenever given the chance.”

Regarding this, North Korean defector Lee Min Bok, whose background is the Academy of Science for Agriculture, said, “In 1978, an order also came down to plant five stumps of fruit trees in domestic homes.”

Lee said, “The party said to plant five stumps of fruit trees, so I planted them diligently, but after a little while, my mother had chopped down all of the trees. When the trees bear fruit, it is easy to be stolen, so my mother exhibited wisdom.” Other houses also cut them away before the trees started bearing fruit.

He reminisced, “We could not even eat corn and life was so hard, so how people could plant trees and eat fruit from them? They even told us not to plant corn, but I planted them anyway in secrecy.”

One defector said, “The North Korean authorities, under the pretext of dissolving the food shortage, created plots of grass all over the country and made us breed goats and rabbits. They also made us pursue a fish-farming business.”

He pointed out, “Who would create a pasture for raising goats in a matter of few years while he or she is in the midst of starvation? Would goats provide several days worth of food? If there is available land, our situation dictates that we plant an additional row of corn.”

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N. Korea urges concerted efforts for economic reconstruction

Wednesday, August 15th, 2007

Yonhap
8/15/2007

North Korea, celebrating the 62nd anniversary of Korea’s liberation from Japan’s 1910-45 colonial rule on Wednesday, called on its people to make concerted efforts to build a strong socialist economy.

The Rodong Sinmun, the official newspaper of the North’s Workers’ Party, said in an editorial that there is no more urgent task than reconstructing the national economy and improving the people’s livelihood.

“On the economic front, the principles of socialism and utilitarianism should be thoroughly observed … All potentials and resources should be fully mobilized to boost production and construction,” said the paper.

“Food problem has to be addressed, while the light industry sector has to be revolutionized in order to mass-produce high-quality consumer products. Economic reconstruction and improvement of public livelihood are the most urgent tasks facing the nation.”

But the editorial still allotted much of its space to eulogizing the accomplishments of the North’s late founding leader Kim Il-sung and his Songun (military first) policy.

“The president’s plan for building a rich and powerful country is being carried out in all fields thanks to the Songun leadership of Kim Jong-il. The country in which the great Songun politics is being successfully applied will make ceaseless creations and leaping progresses and the president’s behest will come true in the socialist country,” said the paper, referring to the elder Kim as the president.

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Lifting US Sanctions Key to NK’s Economic Revival

Wednesday, August 15th, 2007

Korea Times
8/15/2007

To understand what is at stake, we need to look back at key events in the past that led to North Korea’s isolation in the global economy.

U.S. economic sanctions against North Korea began on June 28, 1950, only three days after North Korea invaded South Korea, when the United States invoked a total embargo on exports to North Korea. Over the years, many more U.S. sanctions have been imposed against North Korea, and North Korean companies. Three of these sanctions have had a significant impact.

The first was the suspension of the Most Favored Nation (MFN) trade status, imposed on September 1, 1951. This sanction, which is still in effect, made it impossible for North Korea to even consider exporting its products to the United States.

The second is the placement of North Korea on the list of countries that support international terrorism. This sanction, imposed on January 20, 1988, followed North Korea’s blowing up of Korea Air Lines 858 on November 29, 1987, off the waters of Thailand.

This sanction has entailed many restrictions, including denial of North Korea’s ability to borrow money from international financial institutions.

The third measure is not a single action, but has taken the form of a tightening grip around the financial network used to fund North Korea’s illicit financial activities.

Although the ultimate target is North Korea, the threat of actual sanctions has been targeted against banks, including Banco Delta Asia, which deal with North Korea’s accounts. These financial sanctions involving Banco Delta Asia have been the focus of recent overt and covert negotiations between North Korea and the United States.

On September 17, 1999, President Clinton agreed to the first significant easing of economic sanctions against North Korea since the Korean War ended in 1953.

The U.S. easing of sanctions against North Korea, announced on June 19, 2000, may have been too little to persuade the leaders of North Korea to give up their prized long-range missile technology. North Korea carried out a nuclear test on October 9, 2006, and the United Nations passed Resolution 1718, further tightening North Korean economy.

There is no doubt that all these sanctions are having an impact on the North Korean economy. For instance, the North Korea’s annual trade deficit has averaged between $800 million and $1 billion in recent years, depending on whether deficits against South Korea are included.

The huge trade deficit is not sustainable, and it will eventually lead to a decrease in North Korea’s trade and gross domestic product. Studies indicate that the entire trade deficit appears to have been financed by weapons sales, illicit activities, and funds flowing from South Korea through joint projects. With the two UN resolutions adopted during 2006 and the tightening of North Korea’s financial transactions that began in 2005, North Korea should find it increasingly more difficult to pay for its trade deficit.

The key issue is not whether North Korea deserves the lifting of all the sanctions imposed against the country on the basis of its behavior since 1950, but how to bring about a peaceful resolution of pending security and humanitarian issues without military confrontation. This brings us to the importance of the upcoming summit between President Roh and North Korean leader Kim.

My assessment is that the collapse of the Soviet Union in 1989 led to an important change in the approach of North Korean leaders toward a better calculation of costs and benefits.

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2nd Inter-Korean Summit and Prospects for Discussion of Economic Cooperation

Tuesday, August 14th, 2007

Institute for Far Easter Studies
NK Brief No. 07-8-14-1

The second inter-Korean summit meeting is coming up soon, scheduled to open on August 28 in Pyongyang, and interest is building regarding discussion on economic cooperation. It is true that the North is prioritizing political and military issues in order to shore up its government by normalizing relations with the United States. However, considering its serious economic woes, the ability of South Korea to offer a ‘gift package’ can significantly influence the success or failure of this summit.

It is not yet clear how economic cooperation will fit into the agenda, but Seoul and Pyongyang have been constantly discussing this issue, so some insight has been given. In particular, the ‘consumer’ North has been referring to domestic and international cooperation, and through Pyongyang’s requests, some clarity has been added to what goals could unfold during the upcoming meeting.

Energy Sector

The North Korean economy is saddled with severe shortages of electricity and fuel oil, causing production to slow and therefore stagnating consumption, putting the country into an ongoing vicious circle of economic depression. North Korea possesses facilities to produce 7.7 million kW of steam- and hydro-electric power, but in reality is incapable of operating these facilities at more than 30%.

The opinion that expansion of North Korea’s electrical infrastructure is necessary, not only for the North, but also for South Korea, is gaining strength. South Korean projects to develop North Korean mines and import its coal have been delayed due to a lack of electrical power. In the future, enterprises looking to set up in North Korea will also require a steady supply of electricity.

In what way the two Koreas will cooperate on energy is not yet known, but North Korea is sticking to its demand for light-water nuclear reactors. If construction were restarted on the reactors begun by the now-defunct Korean Peninsula Energy Development Organization (KEDO), North Korea could quickly have not only the energy production amount currently available, but an additional 2 million kW, as well.

North Korea’s power facilities are in a state of deterioration, but the number of facilities in the North are adequate for the current state of the economy, so a plan for the restoration of generation and transmission facilities, or the 2 million kW of electrical power offered by the South Korean government two years ago could be considered sufficient.

Natural Resource and Infrastructure Development

One other highly probable agenda item on inter-Korean economic cooperation will be development of natural resources. This is because a model in which North Korea’s relatively abundant underground natural resources are developed, and in which these resources being used by South Korean businesses, would create a ‘win-win’ result for both Seoul and Pyongyang.

According to a report given by the Korea Resources Corporation at a conference last year, North Korea possesses upward of forty different valuable minerals, including iron-ore. Analysis of these North Korean resources shows that a considerable amount of South Korea’s 40 trillion won (430 billion USD) worth of mineral imports per year could be brought in from North Korea instead.

As development projects in North Korea’s graphite mines are already underway, and the import of North Korean anthracite is being considered in order to meet quickly growing demand for charcoal in the South, cooperation in the natural resource sector appears to be one of the core points to inter-Korean economic cooperation.

As for North Korea’s railways, the heart of the country’s distribution infrastructure, completion of the section of track on the Kyungui Line between Kaesong Station and Moonsan Station, as well as the section of the East Sea Line between Mt. Kumgang Station and Jejin Station, means that the infrastructure for regular service between the two countries is now in place, although talks regarding the details of such regular service are not being held.

If regular service on these two lines between North and South Korea can be achieved, expensive transportation costs can be reduced, and of course, in the future, connection of the railway with continental rail networks such as the Trans-Siberian Rail and the Trans-China Rail would help to enable the Korean Peninsula to emerge as the hub of North East Asian distribution.

Furthermore, considering the fact that North Korea’s mining facilities and technology, as well as its ports, loading facilities, and other transportation infrastructure, are severely lacking, a plan linking development of natural resources to projects developing infrastructure also appears viable. It is also already known, to some extent, the nature of North Korean needs in its infrastructure sector, and if this upcoming summit closes successfully, it is expected that an inventory of these needs will become more concrete.

Vitalizing Kaesong Industrial Complex

The Kaesong Industrial Complex (KIC) is also an important undertaking. At the moment, a problem has arisen concerning the construction of a second KIC, but even if only the originally planned 26.4 million square-meter complex is built, the fact is that currently the first 3.3 million square-meter stage is complete, and considering that it employs North Korean labor, this is no easy feat. Companies moving into the KIC are asking that easy communication with South Korea and simplified import procedures be prioritized.

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Inter-Korea Cooperation Fund riddled with holes

Monday, August 13th, 2007

Korea Herald
Choi He-suk
8/13/2007

The Inter-Korea Cooperation Fund is riddled with problems, a team of civilian experts reported.

At present, the country’s support measures for North Korea are carried out using the Inter-Korea Cooperation Fund.

According to reviews evaluating public funds’ relevance and the efficiency of asset management carried out by civilian experts, the management of the Inter-Korea Cooperation Fund is inefficient and poorly planned. The panel also said that the Unification Minister-led committee in charge of the fund lacks the expertise required for asset management.

However, the team, comprised of 67 civilian experts including university professors, accountants and researchers, did not include the fund among those slated for abolition.

The reviews, carried out during the first half of the year, showed that the fund’s sources of revenue must be diversified. The review panel said that most of the fund’s revenues are generated from the government budget and that the proportion of resources raised from the private sector and through in-house projects remain insignificant.

The reports added that despite the fact that those responsible for managing the fund realize the need to find new sources of revenue and to draw up detailed expenditure plans, such changes have failed to materialize.

The reports also highlighted the need to draw up long-term plans for the fund’s management and said that the Ministry of Unification should take the lead in establishing long term plans and strategies for the management of the fund to reflect the changes in inter-Korea relations.

The review panel also suggested that the private sector’s participation in the fund needs to be increased.

The reports said that although the government should continue to provide support for private organizations in inter-Korea projects, local financial institutions should be at the core of related projects in the future when non-governmental exchanges become the mainstay of economic relations between the two Koreas.

The reports also showed that some of the projects operated through the fund overlap with those financed by other public funds and that such projects should be operated in collaboration with concerned bodies.

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Repairing power plants, cables viable way to help N. Korea: think tank

Monday, August 13th, 2007

Yonhap
Lee Joon-seung
8/13/2007

Repairing North Korea’s existing power generation infrastructure is an effective way to help North Korea cope with its chronic power shortage, a South Korean state-run think tank said Monday.

The Korea Energy Economic Institute (KEEI) said refurbishing North Korea’s existing infrastructure may be a more effective way to boost electric power than building new thermal generators and nuclear reactors.

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Weekly Report on North Korea (July 30, 2007 – August 5, 2007)

Monday, August 13th, 2007

South Korean Ministry of Unification
Serial No.851 (July 30 to August 05, 2007)

Internal Affairs

  • According to the report by the Central Broadcasting Station on July 30, North Korea held the Election of Deputies to the Provincial (Municipality Directly under Central Authority), City (District) and County People’s Assemblies of the DPRK on July 29 and announced the result through the report by the Central Election Guidance Committee.
  • According to the reports by the Central Broadcasting Station from August 1 to 4, Chairman Kim Jongil inspected a sub-unit of KPA Unit 4318, the Unit 136, and the Unit 273.
  • The Central Broadcasting Station reported on August 2 that cooperative farms in Dahungdan-gun, Yanggang-do, are focusing on potato farming.

Inter-Korean Affairs

  • According to the reports by the Central Broadcasting Station and Pyongyang Broadcasting Services on August 3, the spokesperson of the Committee for the Peaceful Reunification of the Fatherland announced a statement on August 2 to criticize the U.S.-ROK joint military exercise Ulchi Focus Lens from August 20 to 31.
  • The Rodong Daily reported on August 4 that on the occasion of the 10th anniversary of Kim Jong-il’s work “Let Us Carry out the Great Leader Comrade Kim IL Sung’s Instructions for National Reunification,” North Korea held a Pyongyang city report session on August 3 and published a commemorative editorial on August 4 on the Rodong Daily.

Foreign Affairs

  • The standing committee chairman of the Supreme People’s Assembly Kim Young-nam made a formal visit to Algeria, Egypt, and Ethiopia from July 24 to 31.
  • North Korean delegates led by Minister of Foreign Affairs Pak Ui-chun visited the Philippines to attend the ASEAN Regional Forum from July 28 to August 2.
  • With the U.S. House’s adoption of the resolution on comfort women, North Korea is continuously criticizing Japan, maintaining Japan’s raising the abduction issue is causing trouble in the six party talks.
  • North Korean Minister of Foreign Affairs Pak Ui-chun met South Korean counterpart Song Min-soon during the ASEAN Regional Forum and reaffirmed that the abolition of the U.S. hostile policy against North Korea should be the precondition of the implementation of the second step of February 13 Agreement. 
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