Archive for August, 2007

China to begin shipping heavy fuel oil to N.K. in mid Aug: sources

Sunday, August 5th, 2007

Korea Herald
8/5/2007

China will begin shipping 50,000 tons of heavy fuel oil to North Korea in mid-August as part of the 950,000 tons promised in exchange for the North’s disabling of its nuclear facilities in the second phase of denuclearization agreement, informed sources here said Sunday.

The agreement, signed February 13 by the two Koreas, China, Russia, Japan and the U.S., also commits North Korea to declare all of its nuclear programs.

South Korea completed Thursday the shipment of 50,000 tons of heavy fuel oil to the North in exchange for the North shutting down its nuclear facilities in the first phase of the denuclarization agreement.

“We understand China will begin providing 50,000 tons of heavy fuel oil to the North in mid August,” a diplomatic source here said. “A working group dealing with energy and economic aid slated for Aug.7-8 in Panmunjeom will decide on detailed measures of the provision.”

The working group is one of five groups launched under the February nuclear deal. Other groups deal with denuclearization, normalization of ties between North Korea and the U.S. and Japan and the establishment of a peace regime on the Korean Peninsula to replace the current armistice that ended the 1950-53 Korean War.

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Cell Phones and Internet Cannot be Used at the Kaesung Industrial Complex

Sunday, August 5th, 2007

Daily NK
Han Hee Yoen
8/5/2007

With the lack of construction of the infrastructure which supports cell phones and internet usage inside the Kaesung Industrial Complex, business management is increasingly becoming difficult.

At the “Inter-Korean Economic Cooperation and US-Korea FTA” conference held at the National Library on the 2nd by the Civil-Headquarters for Activating the South-North Economic Cooperation in Korea and 21st Century North-East Asia Peace Forum, Lee Im Dong, the secretary general of the Kaesung Industrial Complex Committee of Enterprises exposed difficulty, “The Kaesung Complex is facing a lot of hardship due to insufficiency of infrastructure needed for business and political influences at home and abroad.”

Lee revealed, “There are a lot of problems, such as the transportation and customs process, communications issue, labor power, absence of employment flexibility, and effectiveness. These problems should definitely be resolved, but these are impossible problems for the individual enterprises, so the government has to step forward.”

He said, “Cell phones and internet cannot be used inside the Kaesung Complex, so it takes significant amount of time and effort because the products that the buyers want can only be understood over fax and phone.”

Kim Joong Tae, the team manager of the Inter-Korean Economic Cooperation Team under the Ministry of Unification, revealed, “We are improving domestic laws, strengthening communication with enterprises, realizing transportation of joint economic commodities by pursuing formal rail operations, and expanding systematical apparatus at the level of the state.”

Kim also explained, “As for private investment into North Korea, the government and conservative media have upheld an emphasis of self-responsibility of businesses based strictly on market economic principles. The critical point in the government’s aid policy is the agreement issue with principles of the market economy, constraints in financial resources, or North Korea’s lack of understanding of the market economy.”

On one hand, Professor Kwon Young Kyung from the Education Center for Unification said, “Various efforts from the Kaesung Complex (stated during the FTA) is needed to satisfy the standard of establishment of the Committee on Outward Processing Zones on the Korean Peninsula. Most of all, the roadmap for resolving the North Korean nuclear issue, according to the February 13 Agreement, needs to progress smoothly, so that the denuclearization of the peninsula can actively take place.”

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An Official Executed for Smuggling Slogan Trees, Offense “Extravagant Living”

Sunday, August 5th, 2007

Daily NK
Kim Song A
8/19/2007

Last month, Oh Moon Hyuk, a North Korean executive leader making foreign currency in North Hamkyung who had secretly smuggled slogan trees into China was executed, reported Good friends, a North Korea support organization. The organization also informed that part of Oh’s offense was for leading an ‘extravagant lifestyle.’

Regarding the reason behind the public execution, Good Friends informed that Oh Moon Hyuk had “built a private villa with beautiful scenery in Yeonsan, North Hamkyung, drove a Mercedes Benz saying it was from the kindness of the general, enjoyed the pleasure of women at his villa every day and ensured that no security or safety agents ventured near his villa.”

“He cut down the tress ignoring the directions of authorities who ordered for the protection of the forests and sold the wood to China. He was caught after inspections were made and was sentenced to capital punishment” informed the organization.

On the 6th, a report was made by Yonhap news which gave an account of Oh Moon Hyuk’s public execution. He was reported as a merchant from Chosung Reungrah 888 Trading Company in North Hamkyung who had illegally traded 20,000㎥ worth of wood to China.

North Korean authorities regard the cutting down of slogan trees and trade by merchants as an extremely serious case and ensured that important elites, foreign merchants and persons in charge, all witnessed the execution, informed the report.

On the other hand, since the breakdown of the distribution system in the mid-90s, there have been an increase in the number of merchants trading between North Korea and China, and consequently a steady increase in the number of the newly-rich.

These people lead extravagant lifestyles, indulge in lavish goods and purchase expensive cars which undoubtedly cost hundreds and thousands of dollars. More recently, there are reports that authority officials and tradesmen are increasingly hiring housemaids in their homes.

North Korea executes “slogan tree” smuggler: report
AFP
(Hat Tip DPRK Studies)
8/5/2007

North Korea has publicly executed a trade official for chopping down and smuggling cherished “slogan trees” on which founding leader Kim Il-Sung reputedly carved anti-Japanese messages, a report said Sunday.

Senior local timber trader Oh Mun-Hyok was shot dead and four accomplices sentenced to life imprisonment on July 23, South Korea’s Yonhap news agency said, quoting unnamed diplomatic sources.

Local government and trade officials were forced to watch Oh’s public execution at Yonsa in the northern province of North Hamkyong, it said.

The punishment was harsh because the timber smuggled to China included “slogan trees” on which Kim Il-Sung and his followers had allegedly carved messages against Japan’s colonial rule in 1920s or 1930s, it said.

Kim Il-Sung died in 1994 and his son Kim Jong-Il has since ruled the isolated state.

Pyongyang has protected such trees to highlight the Kim family’s track record of fighting for independence, building a personality cult around them.

Slogans included “General Kim Il-Sung is the nation’s sun!,” “Long live Kim Jong-Suk (Kim Il-Sung’s wife), an anti-Japanese woman commander!” or “Down with Japan’s imperialism” according to North Korean defectors.

Pyongyang media claim more than 1,000 such slogan-inscribed trees still exist across the country, and often report some soldiers or other people had died while trying to save the trees from a brush fire.

But critics in the South say it is a sheer fabrication.

Yonhap said the North’s leader had been outraged by the timber smuggling case involving the cherished trees.

“Some loyalists would sacrifice their lives in the fire to save the slogan trees. Who dares to chop down and trade the slogan trees for money?,” Kim Jong-Il was quoted by an unnamed source as saying, according to Yonhap.

Yonhap also said the North Korean authorities had also recently executed three trade officials for embezzling public funds in southeastern Kangwon province.

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Hyundai Asan to spend $3 billion for new N.K. tour project

Friday, August 3rd, 2007

Korea Herald
Kim Yoon Mi
8.3.2007

Hyundai Asan, the South Korean operator of tour programs to North Korea, said yesterday it plans to spend $3 billion by 2025 to develop an area on the North’s east coast as a new tourist destination.

“We have submitted the final plan to the North in late June. The plan will be reviewed by the North by September,” Yoon Man-joon, Hyundai Asan’s chief executive officer, said at a press meeting in Seoul.

According to the company’s plan, Hyundai Asan will develop the area from Haegeumgang near Mount Geumgang to Wonsan, an eastern port city in the North.

As Hyundai’s relationship with North Korea has recently shown signs of recovery, Hyundai chairwoman Hyun Jeong-eun, widow of the late Chung Mong-hun, will visit Pyongyang as early as late August, Yoon said.

“I’m not sure whether she will be able to meet Kim Jong-il but I’m sure she will visit Pyongyang.”

Hyun will meet North Korean senior officials to discuss new inter-Korean commerce and the tour business to Gaeseong, Yoon said.

Meanwhile, the CEO hinted at legal action against former Hyundai vice chairman Kim Yoon-kyu. Yoon pointed to the possibility of Kim using confidential corporate information acquired by Hyundai to further the latter’s own inter-Korean trade corporation.

Kim, who was a key player in Hyundai’s inter-Korean business promoted by the late Hyundai Group founder Chung Ju-yung and his late son Mong-hun, was fired by the Hyundai Group in October 2005 for allegedly illegal use of corporate funds.

Recently, Kim has started his own business dealing with North Korea through his company, Acheon Global Corp., and announced last month that the company will trade agricultural and processed food products with the communist country.

“When I look into what businesses he is doing, I can say that he is doing exactly the same thing while he was working for Hyundai. Legal experts tell me that it could be a violation of confidential corporate information,” Yoon said.

Asked if he was willing to take legal action, Yoon did not directly reply but said he does not think Kim’s business is legitimate.

“I am closely watching over (what activities he is making). I hope he doesn’t do such business anymore,” Yoon said.

Hyundai to Spend $3 Bil.on NK Tourism Project
Korea Times

8/2/2007

A South Korean company operating businesses in North Korea said Thursday it plans to spend $3 billion by 2025 to develop an area on the North’s east coast as a new tourist destination.

Yoon Man-joon, chief executive officer of Hyundai Asan, the North Korean business arm of Hyundai Group, said the company submitted the proposal to the North’s authorities in June and that North Korea is expected to make a final decision as early as next month.

The new project calls for Hyundai Asan to develop the costal area from the North’s eastern port city of Wonsan to Haegeumgang near Mt. Geumgang, where the South Korean company built a mountain resort in 1998.

If North Korea approves the proposal, it would be Hyundai Asan’s third major economic project in the North, following the mountain resort and an industrial complex in the city of Kaesong near the inter-Korean border.

Hyundai Group Chairwoman Hyun Jeong-eun, who met North Korean leader Kim Jong-il two years ago, is preparing to visit the North as early as late this month to discuss the group’s North Korean businesses, including the new project, Yoon said.

“Hyun’s visit to Pyongyang is already confirmed,” Yoon told reporters.

It was uncertain whether Hyun will be allowed to meet the North Korean leader during the planned visit, Yoon said.

North Korea’s environmental experts are reviewing the new development proposal by Hyundai Asan, the executive said.

Mount Geumgang, located just north of the border between the two Koreas near the east coast, has attracted more than 1.5 million visitors since 1998, Yoon said.

In the first seven months of this year, some 150,000, mostly South Korean guests, visited the scenic mountain.

Yoon said the company will make efforts to meet this year’s target of 400,000 visitors as the North recently opened an inner side of the mountain.

The North’s approval to open a wider part of Mount Geumgang and its surrounding area to tourists “indicated a normalization in relations between Hyundai and North Korea,” Yoon said.

Hyundai’s business with North Korea was started by its late founder, Chung Ju-yung, in the early 1990s.

Hyun took the helm of Hyundai in 2003 after her husband, Chung Mong-hun, the late founder’s son, committed suicide by jumping from the window of his high-rise office in Seoul, apparently under pressure from a lobbying scandal involving the North Korean mountain project.

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Yamaguchi firm execs found guilty of illegal N Korea clam imports

Friday, August 3rd, 2007

Japan Today (Hat Tip DPRK Studies)
8/3/2007

Three executives of a seafood company in Sanyoonoda, Yamaguchi Prefecture, were found guilty Thursday of importing North Korean littleneck clams in February in violation of the foreign trade control law.
 
The Shimonoseki branch of the Yamaguchi District Court sentenced Yoshio Fujioka, 69, director of Toen Boeki KK, to two years in prison suspended for three years, and his brother Noboru Fujioka, 59, president of the firm, and Yuzo Fujioka, Yoshio’s 41-year-old son and a director at the firm, to 22 months in prison suspended for three years. The court fined Toen Boeki 15 million yen and an affiliated firm 500,000 yen.

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Pyonghwa Motors Producing Trucks in the DPRK

Friday, August 3rd, 2007

Institute for Far East Studies (IFES)
8/3/2007

Pyongwha Motors, the South Korean company producing automobiles in North Korea will expand into truck manufacturing from this year. According to an official from the company, the manufacturer, currently producing six models, plans to begin truck production within the year, and is working together with Hwacheon Motors and other enterprises in the Chinese city of Shenyang.

Pyongwha Motors currently manufactures three models in the ‘Bukkuki’ (Cuckoo) SUV series, a pickup truck, the mid-size sedan ‘Wuiparam II’ (Whistle II), and the minibus ‘Samchunri’ (Throughout Korea). As of yet, the company has not decided what type of truck it will produce. The company’s truck production is a result of demand in North Korea. Farms, organizations, factories and other consumers have been asking Pyongwha Motors to “produce a truck that will allow a little bit more to be loaded” onboard, and the company has been listening.

An official from the company stated, “if truck production gets underway, last year’s production of 600 to 700 vehicles will be surpassed and more than 1000 vehicles [will be produced] this year,” and went on to explain that the next step is to decide on an exact model through cooperation between North Korean and Chinese counterparts.

Pyongwha Motors, operated through an equity joint venture between South Korea’s Pyongwha Motors Group and North Korea’s Chosun People’s Leisure Group, first produced an automobile based on a model of an Italian Fiat, and in its second stage of operations, produced SUVs and pickup trucks. Today, the company is in its third stage of operations, producing minibuses, trucks, and mid-size sedans.

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N. Korean workers in Gaeseong complex to receive 5 percent pay raise

Friday, August 3rd, 2007

Korea Herald
5/3/2007

South and North Korea on Friday agreed on a 5 percent pay raise for North Korean workers employed by South Korean companies in an industrial complex just north of the border, officials were quoted as saying by Yonhap News Agency.

Last month, the North notified South Korea that North Korean workers will refuse to work extra hours or on weekends and holidays starting from August unless they get a 15 percent raise in their basic wages.

In a new deal, North Korean workers working in the Gaeseong industrial complex are to earn about $60.375 in basic pay, including insurance, which accounts for 5 percent of the total.

This is the first time that North Korean workers have received a pay raise since the complex began operations in late 2004, in spite of such demands being made several times.

N. Korean workers in Kaesong complex to receive 5 percent pay raise
Yonhap
8/3/2007

South and North Korea on Friday agreed on a 5 percent pay raise for North Korean workers employed by South Korean companies in an industrial complex just north of the border, officials said.

Last month, the North notified South Korea that North Korean workers will refuse to work extra hours or on weekends and holidays starting from August unless they get a 15 percent raise in their basic wages.

In a new deal, North Korean workers working in the Kaesong industrial complex are to earn about US$60.375 in basic pay, including insurance, which accounts for 5 percent of the total.

This is the first time that North Korean workers have received a pay raise since the complex began operations in late 2004, in spite of such demands being made several times.

Currently, 26 South Korean companies employ about 15,000 North Korean workers in Kaesong, including construction and office workers, at the site developed on a trial basis.

The number of North Korean workers is expected to increase to more than 350,000 when the complex becomes fully operational by 2012. Monthly production in the complex exceeds $10 million.

The industrial complex, the crowning achievement of a landmark summit between the leaders of the two Koreas in 2000, is one of the two major cross-border projects that South Korea has kept afloat in spite of United Nations sanctions on the the North following its nuclear weapon test in October. The two Koreas also run a joint tourism project at the North’s scenic Mount Geumgang.

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Tours of Kaesong on the table as South goes North

Friday, August 3rd, 2007

Joong Ang Daily
Seo Ji-eun
8/3/2007

Hyundai Group Chairwoman Hyun Jeong-eun, who has been spearheading inter-Korean commerce, will visit Pyongyang for business talks with high-ranking North Korean officials. The visit, scheduled for as early as late this month, comes two years after she met with North Korean leader Kim Jong-il in Pyongyang.

Yoon Man-joon, president and chief executive of Hyundai Asan, which owns exclusive rights to inter-Korean investment, said in a press conference yesterday, “Chairwoman Hyun will be talking about pending business deals, including launching tourism in the Kaesong Industrial Complex.”

Yoon said the company submitted a proposal to the North two months ago for further development of Mount Kumgang, as the relationship between the two is now in “pretty good shape, although there have been misunderstandings and difficulties.”

Hyundai Asan’s inter-Korean business was previously led by former Vice Chairman Kim Yoon-kyu, who had the trust of late Hyundai Group founder Chung Ju-yung and his late son Mong-hun, the former president of Hyundai Asan. Chung Mong-hun, Hyun’s late husband, committed suicide in 2003 amid a prosecution investigation into the company’s secret transfer of money to the North. Hyun took the helm from her deceased husband. Kim was forced to step down in late 2005 over allegations of diverting corporate funds. North Korea, which had built strong ties with Kim, threatened to sever business with the firm in protest.

According to Yoon, Hyundai Asan plans to spend $3 billion to develop land between the Hageum River and the city of Weonsan, and North Korea is expected to respond to the proposal in late September. He added that the recent launch of tours of the inner part of the Mount Kumgang resort area has been positively received, and will help the company meet its annual goal of 400,000 visitors this year.

Hyundai Asan and North Korea are also in talks regarding opening up Birobong, the highest peak on the mountain, to South Korean tourists, Yoon said.

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Kaesung Industrial Complex Workers Refuse Overtime or Special Work?

Friday, August 3rd, 2007

Daily NK
Kim Yong Hun
8/3/2007

As August 1st was the deadline that North Korea placed for a 15% increase in the wages of the Kaesung Industrial Complex laborers, companies have raised their guards on the changes of this situation.

North Korea had claimed before that if South Korean companies wouldn’t raise the wages by 15%, it would refuse to work overtime or work on special duties. If North Korea carries out such policies, it is predicted that there will be a setback for companies entering the Kaesung Industrial Complex.

The labor regulations that North Korea and South Korea agreed on limit the range of annual wage increase to 5%. If wages are raised to North Korea’s requests, minimum wage will increase from $57.50 to $66.00 and overtime (4 hours X 26 days) and special work (4 times a month) will near $118 per month.

Companies have decided to negotiate with the North by preparing a guideline through which they could compromise between both sides.

Kim Kyu Chul, Representative of the Forum for Inter-Korea Relations, a citizens group for economic cooperation between South and North Korea expressed his concern stating, “An overwhelming wage increase will be a great burden to companies and thus it is inevitable to control the amount of output and there is a good possibility that start-up companies will put their businesses on hold or give up.”

According to the Forum, the productivity of the Kaesung Industrial Complex remains at a mere 50% that is less than factories of China or Southeast Asia. The assertion is that the payability will worsen if wages are drastically increased with conditions of low productivity.

On the other hand, North Korea also requested the construction of a child care facility along with the wage increase and thus the Kaesung Industrial Complex Committee of Enterprises (Chairman Kim Ki Moon, Central Chairman of SME’s) opened a temporary hearing on July 26th and decided to implement a policy of an 8-month unpaid child care leave instead of a child care service.

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North Korean Grade 1 Driver’s License Near Impossible to Obtain

Friday, August 3rd, 2007

Daily NK
Kim Min Se
8/3/2007

“There is no better way to make a living than being a driver in North Korea. By delivering food, vegetables and even lumber for winter use to companies, one can take a portion as a driver too. Even when transporting radishes or cabbages for Kimchi (Korean cabbage pickles) one can always put aside the ones of best quality in a plentiful amount.”

Defector Kim Choong Il [pseudonym] who had come to South Korea due an unavoidable situation had worked in North Korea as a driver for a company. Reminiscing his days as a driver in North Korea he smiled and even said that he missed the life.

“People who need cars come ask and even bring gas so there are no expenses on my part. I just need to drive. I rarely even ate at home. Most of the time I was treated out. Because there are no means of transportation, everyone wants to use cars. I even make some business when I drive long distances for company-related work. Sometimes when I drive a couple merchants on the road because they beg me to give them a ride, I get drinks and cigarettes for free.”

In South Korea, any healthy adult – male or female – is eligible for driver’s license. However in North Korea, there are several classes of driver’s licenses and they limit the training of drivers. Driver’s licenses are that much recognized in North Korea.

In South Korea, being a driver is not the ideal profession but in North Korea, a “car driver” is very popular. Once you obtain your driver’s license and get assigned to a truck, you never have to worry about making a living again. The income is fairly good.

Kim said, “There is just one time that I faced a difficult situation working as a driver.”

A Conscientious Accountant is the First to Starve

He said, “While transporting radishes and cabbages for the company employees’ use, I put aside 2 tons for an accountant and myself. If a driver takes it alone then he’ll be caught by the accountant so the two collaborate to embezzle goods. But the new accountant was a conservative and nice woman. She refused the 1 ton of cabbages that had been allotted to her and demanded that I bring back my portion too. I begged her “to turn the other way” but it didn’t go through. I ended up restoring the cabbages and radishes.

Moreover, he said, “this nice accountant was the first to starve when the food rations ended in 1995. She had been conservative and waited for rations from the Party but ended up dying. I survived. Even in the Great Starvation period, none of the drivers starved to death.”

To obtain a driver’s license in North Korea, one must learn about the basic structure of the car and simple maintenance operations along with a year of driving practice at an automobile driving school. After a year of education and passing the test, a diploma is given.

Only with this diploma the Automobile Management Bureau of the provincial Safety Agency (County Police Agency) gives out an official driver’s license. At this time a Grade 4 is given. With this “Grade 4”, one can’t automatically start driving.

There are heavy equipment driver’s license to operate excavators and tractors and automobile driver’s license. Heavy equipment driver’s license has 7 grades and automobile driver’s license has 4 grades.

Most “Grade 4” drivers work as assistant drivers to drivers with much experience for at least 3 to 5 years and gain experience and skills on driving and car repair. Even afterwards, one must give bribes to the affiliated company (factory) to receive one’s own car and drive.

Grade 1 License is Nearly Impossible

Once a driver who has been distributed a car drives without any accidents, their grade is raised once every 3 to 5 years. If they get into an accident, the promotion rate slows down.

According to the testimony of another defector Choi Young Chul [pseudonym] who had worked as a car driver, most drivers obtain a “Grade 4” status after 10-15 years of experience. However, from “Grade 3” it’s not just driving that one must excel at. From “Grade 3” regardless of years of experience and lack of accidents, one must pass the National Public Official Exam to obtain [higher levels].

“Grade 3 drivers are given the same license as a college graduate. In Kimchaek City where I lived there were only two people who had a Grade 2 driver’s license,” he said.

Choi said, “To obtain a “Grade 1”, you must be able to build a car. Realistically even if most drivers drive long-distance for more than 30 years, they remain at “Grade 4”. Even if you graduate from Dukcheon Automobile College (3 years), you’re only given a “Grade 4″. If you graduate with flying colors, you’re given a Grade 3.”

The reason it’s hard to obtain a “Grade 3″ driver’s license in North Korea is because drivers must have overall knowledge about maintenance as well as thorough knowledge and skills on repair.”

With a highway system that is deteriorated and the absence of a car repair system, the frequency of break downs or troubles are very high. Also, most civilian cars excluding military cars have a severe deterioration.

Choi also exposed, “There is an item that North Korean drivers never forget when they leave for a long distance trip. Lighters, rice, drinking water and a pot are integral. It’s like our life. When there’s a severe problem and it’s impossible to fix on the spot, they survive off of the rice and call the factory and wait. Most drivers who have driven for 10 years struggle from gastroenteric trouble.

It’s Choi’s explanation that if a car breaks down in an uninhabited area in the winter or a mountainous road, it can eventually lead to a human casualty. Thus it is the driver’s burden to take care of the damages and repair as well as the casualties from it.

On the other hand, the North Korean military trains army drivers for the military through a separate driving school in each troop. Recruits who had just graduated from middle-high school receive education for a year at the driving school to work as army drivers. In “Ohro Driving School” in Youngkwang, South Hamkyung Province and “Lanam Driving School” in Lanam-district, Chongjin, North Hamkyung are representative army driving schools in the Hamkyung Province areas.

Once they finish their rookie training and dispatched to a base, they fulfill their army duty by working as a car driver. After being discharged, these military drivers must go to the corresponding Defense Department Automobile Management Bureau and exchange their licenses with societal driving licenses.

The amusing fact is that at this time most army drivers receive societal driving licenses that is a grade lower than one that was given in the military. It is also evidence that the North Korean society does not trust the discharged soldiers who tend to cause accidents frequently.

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