Archive for July, 2008

Kim Jong il asserts control of border regions

Thursday, July 31st, 2008

As reported earlier this year by the Daily NK, Kim Jong il’s brother in law, Jang Song Taek, was leading an anti-corruption campaign in North Korea’s northern provinces along the Chinese border. Aside from controlling financial leakages, these efforts could be interpreted as attempts by Kim to gain control over military-owned trade companies.

According to a past report:

The inspection group withdrew all trade certificates with exception of those certificates belonging to the families of anti-Japanese guerrilla fighters, and those certificates issued by the Ministry of Finance or the Shinuiju Municipal Administrative Committee.  Therefore, presently at Shinuiju Customs, all import items without trade certificates issued by the above mentioned three groups have to be sent back to China.

Jang’s efforts, though seemingly effective at reasserting financial control of the region, had apparently taken their toll on local commerce:

In Hyesan, Yangkang Province, markets have been significantly reduced in size and scope recently, due to the anti-socialist group’s inspections[.]

[T]he merchants were at unease when under inspection by the National Security Agency (NSA) and other governmental organizations which govern the jangmadang [markets].

For example, transportation of goods by traders has withered away since last year, as the authority of the People’s Safety Agency (PSA) [controlled by Jang] rose and [it] launched [] a strict crackdown on traders’ belongings.

The source explained the situation in Hyesan, that “Hyesan had become the city where Chinese goods were traded for the cheapest value because Chinese goods [enter the country] at Hyesan[.] [During] the (PSA) inspection period [goods] could not be transported inland due to the inspection of trains and cars. Lives of the common people became even tougher than before, since goods could not be circulated through the jangmadang in spite of their low prices.”

“The more stringent the regulation became, the more bribes cadres received and worsened were the lives of people,” the source added.

(NKeconWatch: I have “cleaned up” some of the grammar here to make it more readable.  If you want to see the original version, click here.)

And in Sinuiju:

The intensive inspection of Shinuiju, in which over 70% of Chinese-North Korean commercial traffic occurs, caused several aftereffects inside North Korea: commercial traffic passing through Shinuiju and Dandong decreased by half compared to the past, and the aftermath of the inspections in Shinuiju added fuel to the fire of price rises in jangmadang goods across the country.

For instance, sugar, which is a raw material for doughnuts or candies that are consumed the most by average civilians in the jangmadang, carried a price of around 1,500 won per kilogram before the inspections, but in mid-May, it rose to 2,100 won and vegetable oil hiked from 5,500 to 7,500 won per kilogram. Such an increase in prices also caused a significant threat to the survival of citizens who made a living off the jangmadang trade.

But the final result of the evaluation of the Shinuiju inspection, which caused quite a stir externally, has purportedly been negligible.

The source said, “The volume of trade has decreased over several months and the number of visitors to China has also been reduced by half. The results of the inspection have not produced too much difference, except for the execution of 14 corrupt officials.”

The source further noted, “The only change which has been visible to the eye is the rise in the cost of bribes offered to North Korean customs from 40 to 80 dollars per hundred kilograms of goods. There was a rumor that the loading volume carried into the North would be fixed at 120kg, from 360kg, but this has not been done yet.”(Daily NK)

The Daily NK now reports that in the wake of these developments, Kim Jong il’s National Defense Commission (NDC) has moved in and directly taken over the inspections—and economic conditions have improved:

[Markets] have become lively again in the past few days as inspections by the National Defense Commission (NDC) have gotten underway.

A source in North Korea reported to Daily NK on Friday that “Merchants in Hyesan these days are fish in water. They say that they would not mind at all going through such inspections for an entire the year!”

Part of the reason for the turn around has been a change in focus.  Whereas Jang’s work hit many “ordinary” North Koreans (particularly those working for the wrong trading companies), NDC inspections are focused on controlling the mid- to upper-level cadres.  It is entirely speculatory to ask whether Kim’s strategy was to unleash Jang to get control of the region and afterwards assert direct control himself, or whether complaints from locals forced the NDC to end Jang’s campaign.

Of course this is all unverified information from inside North Korea, so who knows how much of it is correct!


A Dangerous Opportunity in North Korea

Thursday, July 31st, 2008

United Methodist Church: Kentucky Annual Conference
Dr. Bill Moore

Dr. Bill Moore, the pastor of Southern Hills United Methodist Church in Lexington, was in North Korea May 14-29.  The son of United Methodist missionaries, he is a member of a humanitarian aid group called Christian Friends of Korea.  He offers a perspective on a deepening crisis.

I traveled to North Korea during the last two weeks of May as a member of a six-person delegation from a non-government organization (NGO) called Christian Friends of Korea. We flew into the capital city of Pyong Yang to confirm the arrival and proper distribution of donated goods, to deliver donors lists and greetings, and to build relationships and trust. The Board of Directors for this group, of which I am a member, is composed of former missionaries to Korea, the children of missionaries, and others with a concern to relieve the suffering and hardships of the people of this grim Communist dictatorship called the Democratic People’s Republic of Korea.  It is often hard to see the suffering faces of the 23 million North Koreans hidden behind the headlines of international diplomatic struggle and nuclear intrigue.  Famine, floods (two devastating events in 2007), and mismanagement have left the nation in economic ruin. Christian Friends of Korea (CFK) has been quietly working in the DPRK for 13 years, meeting some of the most basic needs of thousands of people struggling with the life-threatening, but curable disease of tuberculosis. CFK’s efforts to show love and compassion to people who continue to endure food shortages, poverty, disease, and oppression are building trust and chipping away at long-standing hostility.   
North Korea is a beautiful place in May.  Everything had greened up nicely.  The cottonwood trees had deposited wind-blown piles of downy fluff in the roadways, blanketing the bushes and spider webs.  The guest house on the banks of the Taedong River near Pyong Yang where our Christian Friends of Korea Team stayed for most of the visit had a dense backdrop of vegetation, populated by ring neck pheasant, which appeared unfazed by the foreigners nearby and sounded off regularly.  The acacia trees were in full bloom.

As we moved through the countryside, the workers on the collective farms were transplanting rice plants into the paddy fields.  This is a critical phase of life in the north, and everyone is expected to take part.  Backs bent, barefooted workers move slowly across the fields.  On the mud dikes of the water-filled paddies there are often patriotic slogans on placards, revolutionary red flags flying, and even sound trucks playing inspirational songs.  This idyllic picture of a worker’s paradise belies a truth that is not readily apparent.  The coming fall harvest, which is vital to a nation where one-third of the people suffer from malnutrition, is already in jeopardy.  Previous large shipments of fertilizer from South Korea have been withheld this year for political reasons.  China has pledged to fill the gap, but nothing has arrived yet.  Aid workers from other countries told us that the potato crop is already stunted, and predicted that the rice crop will be twenty-five percent less this year.  Even in years of good harvests, North Korea still falls about 1 million metric tons short of food, out of an estimated 5 million tons needed.    This year the shortfall is expected to exceed 1.6 million metric tons.  For those receiving rations, the daily government ration of grain per person was reduced from 250 grams to 150 grams in June.  Uncertain food aid, coupled with poor food security (effective agricultural production) means an increase among the populace in susceptibility to disease, particularly tuberculosis, which afflicts an estimated five percent of the North Korean people.  In fact, since last year, the registered cases of TB have risen from 52,000 to 100,000 cases.

This was the backdrop for our journey to the Democratic People’s Republic of Korea as an NGO working to provide medicine (specifically tuberculosis treatment drugs), medical equipment, farm machinery, vehicles, construction materials and food for the people of the DPRK.  The needs are real, and the urgency is intensifying. The Chinese character for “crisis” is composed of two other characters: “danger” and “opportunity.” As we traveled to fourteen different medical facilities, we could see that there is a “dangerous opportunity’ to make a difference in this land, and bring hope to many lives.

Our team was a diverse, ecumenical mix of six people.  Our Executive Director, Heidi Linton, grew up in Alaska, married into a famous Presbyterian missionary family, and has effectively immersed herself in the work of Christian Friends of Korea for the last 13 years.  By her indomitable spirit, genuine integrity, and meticulous attention to detail for providing aid and assistance, she has endeared herself to the North Korean leaders assigned to us through the Ministry of Public Health and forged a working relationship which is highly effective.  Dr. John Somerville, retired Presbyterian missionary, was our official Korean speaker on the trip.  A Harvard graduate in Asian studies, Dr. Somerville spent many years teaching in South Korea, and has visited the north on 10 previous visits.  Paul Moffett, a pastor at Lighthouse Christian Center in Puyallup, WA, is the great-grandson of pioneer Presbyterian missionary Samuel Moffett, who came to Pyong Yang in 1905.  Lee Wheeler is an agricultural engineer from Hesston, KS, representing the Mennonite Central Committee, a CFK partner.  He is a greenhouse expert who has also made 10 trips to the DPRK.   Terry Smith, Heidi’s able assistant, came from Memphis, TN and now lives in Black Mountain (headquarters of CFK).  I rounded out the team.  I’m the son of United Methodist missionaries, James and Margaret Moore.  My grandfather, Dr. Stanley Martin, was a Canadian Presbyterian medical missionary in China and Korea.  I grew up in Seoul, South Korea.

Our purpose in traveling to North Korea for Christian Friends of Korea was to make a “confirming” visit, checking to make sure that the supplies and equipment (more than three million dollars worth sent since January) had been properly received, inventoried and distributed; to present lists of donors to the facility directors; and to build relationships and trust with everyone with whom we had contact.  We were accompanied at all times by young government officials who were both personable and efficient, and escorted us to every location.  They shared with us a passion and concern for the welfare of their people.  Part of this work was to visit two warehouse locations to make sure supplies were moving out to the facilities.  This is important also to make way for incoming shipping containers.  It is noteworthy that our North Korean counterparts in the Ministry of Public Health value the aid assistance of CFK and a similar NGO so much that they actually built a spacious warehouse just for receiving shipments to be distributed to CFK ministry sites.  A forklift sent by CFK donors was in use there. The other main task of confirming was to visit the actual facilities, interview directors, staff, and patients, and assess the priorities and needs of each place.  These visits were the heart of our schedule.

A typical trip to one of the hospitals or TB rest homes began with a convoy of vehicles traveling to the locations scheduled for the day.  The road surface usually began with paved roads of varying quality that soon gave way to a washboard gravel road, a muddy track snaking up into the hills, or even a rocky stream bed that had to be forded.  Once we arrived, we were greeted by the director, doctors, nurses, and various local officials.  We would be seated around a table with refreshments provided for the visitors (strawberries, peanuts, tea), introductions would be made, the donor list presented in Korean with an explanation, and Heidi Linton would begin the process of inquiry.  What is the current situation in this place?  How many TB patients are there?   How did the devastating floods of 2007 affect the facility and patients?  What are your priorities here?  Is there enough food for the patients?  Local Communist party officials who attended the meetings were visibly uncomfortable about discussions of flood damage or food shortages.  Furtive glances were sometimes exchanged before hospital staff would answer such questions.  The stock answer: “The government provides us with food.” 

Questions would be asked about the arrival of vitamins, health kits, bedding, laundry soap, Pedialyte, doctor’s kits, hospital beds, and TB medicine.  Food shipments of canned meat, soy beans and dry vegetable soup mix were checked on.  A list of donors was presented to the directors at each location.  New equipment was sometimes delivered, including new electronic microscopes and a “Lab in a Suitcase,” a sophisticated package of diagnostic equipment to identify infected TB patients.  Some sites had cargo tri-motorcycles to transport supplies slated for delivery.  A new kind of greenhouse, which does not require an additional heat source even in frigid temperatures, was offered at each place.  A tour of the facilities meant a chance to meet the patients, to inquire about their health, and to offer best wishes and prayers for swift recovery.  Outside, the greenhouses, which are so important for supplementing meager government rations, would be inspected. Walking tractors and bicycles provided by CFK were noted.

One of the highlights of the journey was to see the wonderful progress that has been made in the construction of modern surgical facilities at both the North Hwangae TB Hospital in Sariwon and the South Hwangae TB Hospital in Haeju.  The surgical suites, built with the expertise and direction of CFK Technical Teams, feature new anti-microbial tile on the walls, non-skid floor tiles, power conditioners and new electrical wiring, heating/AC, lighting, and new surgical equipment and supplies enabling more complicated procedures and greatly improved surgical outcomes.  One patient, who had been brought to Sariwon for an operation from a TB rest home, remarked when he saw the gleaming facility, “I feel like I am cured already!”  The result of the renovations is stronger confidence among patients that healing will occur, and the number of patients willing to undergo surgery has tripled.  Because of the sterile conditions, post-operative infection has been greatly reduced.  Eighty percent of the patients used to have post-op infections.  Now it is down to 1 in 5 patients.  We also saw the preparations for a similar renovation at the Kaesong Provincial Pediatric Hospital (serving 144,000 children) where the surgery area has been stripped to the bare stones in preparation for the $200,000 make-over made possible by a CFK donor.  In earlier days this was a Methodist mission hospital, visited by my grandfather who installed x-ray equipment there in the early 1920’s.  At Hwangju TB Rest Home construction is under way to build new facilities that will house150 or more patients.  The buildings will replace two others that were destroyed in last year’s floods.  They need a roof right away, followed by windows and doors.  This is a critical need, and participation from United Methodist Churches would be most welcome in raising funds for this vital construction need.

While there are very encouraging signs of progress at CFK projects, there are specific needs that must be immediately addressed.  There is an expected shortfall in TB medicine, especially in terms of DOTS (Directly Observed Treatment Short Course) drugs which, when given under supervision, are very effective.  Because of a loss of funding by the World Health Organization, CFK is being asked to provide 12,000 treatments in our regions (North and South Hwanghae and Kaesong) which will cost in excess of $245,000.  In response to the deepening food crisis, two 40-foot containers of canned meat will be shipped before the end of the year in a joint effort with the Mennonite Central Committee, who generously provides $500,000 worth of this commodity to CFK projects annually.

Everywhere the CFK Team went on this confirming visit there were expressions of gratitude.  When one director was asked what further assistance he needed for his facility, he exclaimed, “You have already sent a lot!”  Heidi Linton responded that God in His love had provided these things.  The director’s response: “Please send thanks to our Christian friends in America.”

You might be asking: what does the work of Christian Friends of Korea have to do with The United Methodist Church?  It is difficult to do any kind of Christian ministry in North Korea since traditional denominational mission work is not allowed, but an effort through a non-government organization makes it possible.  When needs are critical, we must find mission partners wherever we can.  The mission of CFK also addresses two of the priorities coming out of General Conference: engaging ministry with the poor (preventing starvation) and making the world malaria free, AIDS-free, and tuberculosis free.  Here’s a piece of good news—the US government is in the process of shipping a total of 500,000 tons of food to North Korea as a result of some movement in the nuclear negotiations.  The United Nations World Food Program will distribute 400,000 tons throughout the DPRK.  As a part of this initiative, on June 30 it was announced that the U.S. Agency for International Development’s (USAID) office of Food for Peace will work with 5 aid agencies to distribute 100,000 metric tons of food to 550,000 people at risk, mostly children, elderly and nursing mothers, in two North Korean provinces.  The agencies involved in this effort are World Vision, Mercy Corps, Global Resource Services, Samaritan’s Purse, and Christian Friends of Korea.


North Korean Currency Sovereignty Diminishing

Thursday, July 31st, 2008

Daily NK
Lee Sung Jin

As the circulation of the Chinese Yuan in the North Korean markets increases, it is suggested that the value of the North Korean won will continue to fall.

A source from North Korea said in a phone conversation with the Daily NK on the 29th, “In the jangmadang nowadays, there is nothing one cannot buy with Chinese currency. There is no longer even the need to convert into our own money (the North Korean won).”

The source added, “In Chosun (North Korea) nowadays, one can buy a kilogram of rice anywhere for 5 Yuan. Merchants, in particular, like the Chinese currency.”

According to the source, direct transactions in the PRC’s currency began in the fall of last year. In a significant part of the border regions (in North Hamkyung, Yangkang, Jagang Provinces, and Shinuiju) 50 and 100 Yuan notes began to circulate, usually in residential deals and in the sales of furniture and electronic goods.

However, since the first half of this year, with the rapid rise in general food prices in the country, the source elaborated that 5, 10, and 20 Yuan notes began to appear in the purchase of daily necessities in public markets.

According to the Daily NK’s research, the exchange rate for one Yuan in North Korea at the end of June was 435 won in Pyongyang, 440 won in Wonsan, 435 won in Shinuiju, 430 won in Hamheung, 450 won in Hoiryeong, and 445 won in Chongjin. When compared to the Daily NK’s research last December, it can be seen that the value of the North Korean won has declined 5 to 20 won in each region.

The source added, “In Hoiryeong, and other border cities, the price of a kilogram of rice being equivalent to 5 Yuan is engrained in the people’s minds.”

He explained, “Among ordinary citizens, the fact that a yardstick for the price of food is changing to the Yuan symbolizes “disobedience” towards our (North Korean) currency. With the devaluing of the North Korean currency, people are flocking to the dollar or to the Yuan.”

Additionally, the source noted, “Average citizens do not know the market exchange rate of the Yuan, which is constantly changing, so the merchants believe that they can gain from dealing in the Yuan.”

He explained, “Until now, only money changers in the border region had Chinese money and in major cities of the southern provinces, the merchants usually dealt in the dollar or in the euro. However, nowadays, with those in the southern regions trading frequently with China, the Yuan is often exchanged for the dollar in the border area.”

One source in Yangkang Province said in a phone conversation with the Daily NK on the 28th, “Smugglers have also played a big role in the growth of Yuan exchange. These days, people in their 20s carry several tens of Yuan to gain acceptance.”

The source explained, “It is a trend among the wives of officials to deal in the Yuan in the jangmadang even when they have North Korean currency. Using Chinese money is seen as a symbol of a person’s wealth and power.”

He added, “People in the border region try not to carry around North Korean money if they can. Even until just a few years ago, only the rich had access to the Yuan, but these days everyone is trying to get a hold of the Chinese currency.”

Finally, the source predicted, “As long as the state fails to resume normal food distribution and the state-operated stores do not sell products, the Yuan will soon take over as the standard currency for all transactions.”


Next Mass Games in 2012?

Thursday, July 31st, 2008

I received a Koryo Tours email update this morning about the status of future Mass Games performances:

We have just been told by our partners in the DPRK that there is a chance there will be no mass games next year – possibly not even until 2012 which is the next big anniversary (Juche 100 – the 100th birthday of Kim Il Sung!!!). For Americans this year’s mass games may be the last opportunity to visit the country.

Nothing has been set in stone but we wanted to give you all pre-warning. This year there are 2 different performances – ARIRANG and PROSPER THE MOTHERLAND! – the latter has never been seen before so it really is a once-in-a-lifetime opportunity.

Historically the Mass Games are performed on special anniversary holidays (those in years divisible by 5 or 10).  Since 2005 (60th anniversary of victory over Japanese imperialism) they have been held annually.  This change could mark a return to the original schedule.

You can subscribe to the Koryo Tours email list here.


(UPDATED) UN World Food program gearing up for operations

Wednesday, July 30th, 2008

Update 3: The second shipment of US food aid has arrived in North Korea.  Also, DPRK has suffered terrible rains in August.  Story here and here. 

UPDATE 2: The Daily NK reports some good news on the DPRKs food production:

With the stabilization of food prices in North Korea, which had skyrocketed during the first half of the year, the potato harvest which began at the end of June has been lifting the food burden of the citizens.

A source from North Korea said in a conversation with the Daily NK on the 26th, “In the border regions of North Hamkyung Province the first round of harvesting was successful. Accordingly, the price of new potatoes has fallen below 300 won since mid-July.”

The source added, “In the market in Hyesan, Yangkang Province, potatoes cost 280 won per kilogram. Newly-harvested barley has also been appearing; it’s a huge help to the civilians.”

Until the first week of June, the jangmadang price of potatoes in North Korea was 300 won in Pyongyang, 400 won in Hoiryeong, and 450 won in Chongjin per kilogram.

Regarding the price of rice and corn, the source continued, “In the North Hamkyung and Yangang Provinces, the price of rice is 2,200~2,400 won (per kg) and the price of corn 1,200~1,400 won. Originally, during the collective farm’s harvest distribution in December, 4kg of potato was equivalent to 1kg of corn, so the prices of rice and corn are not actually any more expensive now.”

UPDATE 1: Here (link) are the results of the UN World Food Program/FAO June DPRK survey. Some highlights:

The RFSA covered 53 counties in eight provinces (Ryanggang, North Hamgyong, South Hamgyong, Kangwon, North Hwanghae, South Hwanghae, South Phyongan, Pyongyang). Experts visited hundreds of households, child institutions and hospitals across the country in the most comprehensive assessment on food and nutrition conducted in DPRK since 2004. Key findings indicate:

  1. Food availability, accessibility and utilization have deteriorated sharply since 2007.
  2. Close to three quarters of the households have reduced their food intake.
  3. More malnourished and ill children are being admitted to hospitals and institutions.
  4. Diarrhoea caused by increased consumption of wild foods was one of the leading causes of malnutrition amongst children under five.

The experts found that the majority of the families surveyed have cut out protein from their diet, and are living on cereals and vegetables alone. Food prices have soared — rice now costs almost three times more than a year ago, and maize has quadrupled. Heavy reliance on support from relatives as a means of coping with food shortages is widespread in areas such as North Hamgyong Province, one of the worst affected regions.

Donors to WFP’s current programme in DPRK include the United States (US$60 million), Republic of Korea (US$20 million), Russian Federation (US$8 million), Switzerland (US$6.6 million), Germany (US$3.4 million), Australia (US$4.2 million), UN CERF (US$2.3 million, for CERF see:, Multilateral funds (US$1.9 million), Cuba and Italy (US$1.5 million each), Canada, Denmark, Ireland, Luxembourg and Norway (US$1 million each), Finland (US$737,000), Turkey (US$150,000), Greece (US$ 45,000) and private donors (US$17,000).

ORIGINAL POST: North Korea’s food crisis has been out of the headlines since US food aid arrived a couple of weeks ago followed by the destruction of the Yongbyon cooling tower, six-party talks progress, ASEAN non-aggression treaty, and Kumgang shooting incident.  But now that the UN World Food Program is preparing operations, the crisis is back in the news.  From the Wahsington Post:

The main U.N. aid agency in North Korea, the World Food Program, will resume emergency operations there in the next two weeks to help feed more than 5 million people over the next 15 months at a cost of $500 million, said Jean-Pierre de Margerie, the agency’s country director in Pyongyang.

“The situation is indeed very serious,” de Margerie said at a news conference in Beijing.

The resumption of emergency operations, which were scaled back in 2005 on a request from the North Korean government, was decided after a U.N. survey last month showed the most severe and widespread hunger among North Koreans in a decade. The survey was taken after the Pyongyang government, in an unusual gesture, officially acknowledged a growing hunger crisis and appealed for international aid.


[…] the United States recently pledged to give North Korea 500,000 tons of food over the next six months, most of which will be distributed by the World Food Program as part of its emergency effort. De Margerie said the first delivery, 37,000 tons of wheat, arrived in a North Korean port two weeks ago, and more shiploads are expected soon.

In contrast to past practice, the North Korean government has been willing to allow U.N. aid workers more leeway to monitor delivery of the new food supplies, de Margerie said. Similarly supple oversight rules were negotiated by the United States as a condition for its 500,000-ton donation.

The ballooning food crisis began mainly because of flooding last summer that damaged fields, leading to insufficient crops and soaring food prices. At the same time, de Margerie said, imports dropped dramatically this spring, particularly from South Korea and China.

This exacerbated a perennial shortfall of around 20 percent, or 1.6 million tons, in the amount of food needed to adequately nourish North Korea’s 23 million inhabitants. As a result, prices of such staples as rice, eggs and corn doubled, tripled and even quadrupled, de Margerie said.

Now, de Margerie said, resumption of emergency operations will aim at getting food to between 5 million and 6 million people by September, which is considered a critical period because this autumn’s crops will not have entered the government-run distribution system. Quick donations of about $20 million are needed to get the new program running swiftly, he added.

And where are these funds going to come from.  Well, New Zealand has made public its intentions to fund the effort:

New Zealand will provide half a million dollars to the United Nations to help North Korea which is facing a food shortage.

New Zealand previously gave $500,000 via the Red Cross after last year’s floods.

New Zealand established diplomatic relations with North Korea in 2001.

According to Yonhap:

The areas undergoing the crisis include the Hamgyong and Ryanggang provinces, the site said, adding that the World Food Programme plans to launch a new project to address the food needs in these northeastern regions. 

Read the full stories here:
U.N.: Millions Hungry in North Korea
Washington Post Foreign Service
Edward Cody

NZ to give aid to North Korea
National Business Review

Northeastern NK in serious food crisis: UN Web site


Beijing Olympics make life harder for North Korean merchants

Tuesday, July 29th, 2008

According to previous reports, Beijing’s border control policies have stiffened up in preparation for the 2008 Olympics.  The Daily NK reports these policies are adversely affecting North Koreans visiting family and conducting business in Jilin.

The Daily NK claims that North Koreans pay appx. US$400-500 in bribes and processing fees to obtain a passport, exit visa, and Chinese entrance visa. (The article does not explain how these prices break down, although it would be interesting to know how much Beijing charges North Koreans for various visas.)  China typically issues North Koreans family visit visas which are valid for three months, but if a North Korean visitor can secure a residence and employment, this can be easily extended for up to a year.  As a result, many North Koreans stay with family for the full year and try to earn some money to take home.

Because of the Olympics, Beijing is now apparently rejecting all family visit visa extensions and stepping up patrols for illegal “visitors.”  This means the North Koreans who paid hefty sums to be in China have to go underground if they wish to stay in the PRC.  They will also face additional hardship in recovering “travel costs.”  Additionally, many North Koreans who are married to Chinese face greater chances of being deported.

Interestingly, this policy was not ordered by local organizations but by the Jilin Provincial Communist Party.

Read the full article here:
China Rounds Up Defectors in Preparation for the Olympics
Daily NK
Lee Sung Jin


Interview with Ken Frost, CFO, Phoenix Commerical Ventures

Monday, July 28th, 2008

Interview Blog, Germany
(click here for all their North Korea-related interviews)

Phoenix Commercial Ventures Ltd is a venture capital company that offers investors business and investment opportunities in the DPRK” – Interview with Ken Frost (CFO of Phoenix)

Klaus-Martin Meyer: Mr. Frost, you are member of the Board of Phoenix Commercial Ventures Ltd, a company that offers investors business and investment opportunities in the Democratic People’s Republic of Korea (DPRK) otherwise known as North Korea. Would you mind introducing yourself and your company as well to our readers?

Ken Frost: Phoenix Commercial Ventures Ltd is a venture capital company that offers investors business and investment opportunities in the DPRK, enabling them to take advantage of the economic reforms that are taking place there.

Phoenix is owned and run by four experienced professionals, who are based in London, Paris and the DPRK. The Board has between them many years of international business experience, and an invaluable network of well placed contacts. Phoenix offers a unique service, by being able to offer direct access to the DPRK.

Phoenix Commercial Ventures Ltd specialises in project finance in the DPRK. As is well known, the business environment is difficult, and the company targets very specific investment projects; these are small enough to manage and have the capacity to generate foreign currency, either through export or import substitution.

Phoenix Commercial Ventures Ltd maintains an office in Pyongyang, almost the only European company to do so, and operates with the following specific aims:

• Identify commercially viable investment projects in the DPRK, on a case by case basis
• Identify reliable local partners for all forms of business in the DPRK, either trade or investment
• Seek overseas investment sources for such projects
• Minimise the risk in such projects, by taking responsibility for supervision of the local set-up procedures and management of the projects

The Board of Phoenix Commercial Ventures Ltd consists of nationals of the UK, France and the DPRK. The European flavour is enhanced by the fact that most of the counterparties and suppliers in the various projects are also European, and the DPRK government views Phoenix Commercial Ventures as a prime conduit for European business and investment in the DPRK.

One of the directors of Phoenix Commercial Ventures is also General Manager and CEO of the Daedong Credit Bank, the only western-invested foreign bank in the DPRK. Based in Pyongyang, this is a 70-30 joint venture between a UK financial management company based in Hong Kong and the Korea Daesong Bank, one of the main DPRK banks.

Phoenix Commercial Ventures is unique in having this connection with a reliable, locally based financial institution. The synergy benefits include a wider exposure to local business contacts in differing fields; as well as an additional degree of control, made possible by the fact that the various joint venture projects have to maintain their accounts with the bank.

We have a number of projects within DPRK, including two 50/50 joint ventures:

– Hana Electronics JVC, a consumer electronics company now ranked as one of the top three best performing joint ventures in DPRK, as assessed by the Ministry of Finance.

– Sinji JVC, whose main areas of operations are retail, software and bonded processing.

Full details about our company can be found on our website

I am the CFO of Phoenix and am a chartered accountant with over twenty years international experience of FMCG industries, consumer electronics, rough diamond distribution and the Internet. I have worked in KPMG, Philips Electronics, De Beers and run my own Internet company. I am also a Scholar on Gerson Lehrman Group Councils.

In November 2007 I reached the finals of Accountant of the Year held by the Association of International Accountants at the President’s Awards Dinner 2007. This award is designed to recognise organisations’ accountancy stars.

In January 2007 I was awarded, based on recommendations from fellow members of the ICAEW, a New Year’s Honour by AccountingWeb. The award was for my services to the accountancy profession in opposing the merger of the ICAEW with other accountancy bodies.

In November 2006 I was awarded an honorary fellowship of the Institute of Professional Financial Managers (IPFM), for my services to the accountancy profession.

In January 2006 Accountancy Age placed me on their Financial Power List for 2006. I was 11th on their list of the top 50 of “The Ones To Watch”. The list identified the “most influential names to look out for” in the world of finance for 2006.

Klaus-Martin Meyer: We read on your website “offers investors business and investment opportunities in the Democratic People’s Republic of Korea (DPRK), enabling them to take advantage of the economic reforms that are taking place there.” Can you tell us what kind of opportunities this could be?

Ken Frost:There are three main areas of investment opportunities open to investors, which we can facilitate within the DPRK:

1 Small scale investments ($500K or less) yielding good levels of return (20% or more).

These investment opportunities are in local production (consumer goods, bonded processing, software etc) for domestic market consumption and export. These utilise the advantages that DPRK has over all the other countries in the region namely:

– 99% literacy
– skilled/disciplined/hard working workforce
– well educated workforce, many speak a good level of English
– lowest wage rates in the region

Phoenix has a number of opportunities that it can offer investors in this area; eg bonded processing, consumer manufacturing, clothing manufacturing and software development.

2 Natural resources

DPRK has proven abundant natural resources worth several trillion dollars; eg coal, gold, copper, titanium, lead, zinc, nephelite, nickel, magnesia, graphite etc.

The investment required would be of a higher order than the small scale investments above, $1M plus. The money would be used to bring existing mines back to production, by pumping out flood water and renewing worn out capital equipment.

Phoenix has, via its working relationship with CPEEC, a number or opportunities in the natural resource sector that it can offer genuine investors.

3 Infrastructure development

Clearly investment in infrastructure is the costliest form of investment. However, given the dilapidated state of the roads, railways, ports, electricity grid etc it is necessary if the economy is to be revived.

DPRK also has a keen interest in infrastructure development focussed on green/renewable energy areas.

Phoenix has on it books a profitable renewable energy project that would suit a serious, well financed and experienced green energy investor.

The DPRK is the final economic frontier and is a “green field” site. Its primary advantages are:

– Location (physical position between Russia, South Korea, China and in AP)
– Location (historical, all the major players now want to move forward)
– Location (resources, it has abundant rich resources both mineral and human capital – high literacy, well educated etc)

Klaus-Martin Meyer: What are the main differences between your company and a conventional venture capital company that is investing for example in internet our biotech companies?

Ken Frost: Companies such as those you mention are industry-specific, whereas ours is location-specific. Our company is relevant to people who might want to invest in the DPRK.  We work in the DPRK and have a physical presence in the DPRK, other “conventional” venture capital companies do not.

Klaus-Martin Meyer: Are there any differences to other investment companies?

Ken Frost: We apply the same principles to potential investments as any other professional investment company, we look at:

– the risk
– the returns
– the quality of the local management
– the quality of the business plan
– the size of investment
– the share offered for that investment etc

We also pay very close attention to corporate governance issues such as; financial reporting, management structure and ethics etc. We have a code of conduct which can be seen on our website.

Phoenix Commercial Ventures Ltd is committed to being a responsible corporate citizen and to the pursuit of a sustainable future, both economic and social.

Phoenix Commercial Ventures Ltd adheres to three fundamental ethical principles:

– Integrity
– Competence
– Courtesy

To this end Phoenix Commercial Ventures Ltd has developed a Code of Conduct, which sets out to ensure that these principles are followed in its operations. The Code of Conduct governs Phoenix’s business decisions and actions. The Code applies equally to corporate actions, and to the behaviour of individual employees when conducting business on behalf of Phoenix.

We work very hard with our local management teams and business partners to ensure that international standards re reporting, corporate governance and ethics are understood and followed.

Klaus-Martin Meyer: What are your plans for the company’s future? How do you see Phoenix Commercial Ventures in five years time?

We see the coming period for Phoenix as that of being continued growth.

In our view there will be a major upswing in economic relations between the DPRK and other countries over the coming months/years. Phoenix Commercial Ventures is uniquely placed to take advantage of, and to respond to, that upswing.

We are one of the very few organisations to have made successful joint ventures in the DPRK. We are also one of the very few organisations to have people with many years’ experience, and cultural sensitivity, actually on the ground in Pyongyang. You cannot run a business by email!


(UPDATED) North Korean circus tours Europe

Sunday, July 27th, 2008

UPDATE 4: Circus gets coverage in Dutch media.  Story hereYou Tube video of the circus performing in Pyongyang here.

UPDATE 3: Video report of the performance in the Netherlands here. (hat tip to NOS)

UPDATE 2: Werner found out the information for Germany:

In Frankfurt / Germany they will perform from 4th to 28th Sept.

For place, time and tickets please look at:

UPDATE 1: Thanks to a reader for finding the information and posting in the comments:

It appears they are going to perform in Amsterdam’s Koninklijk Theater Carré from 08/01/2008 to 08/31/2008. Tickets can be ordered at this URL:

ORIGINAL POST: According to Yonhap, the Pyongyang Circus Troupe will be touring Germany and the Netherlands for the next three months, showing off their 10 signature stunts.

From the article:

Formed over 50 years ago, the troupe is one of North Korea’s foremost cultural groups, making a visit to South Korea in 2000 on the eve of the first inter-Korean summit in Pyongyang.

“This is the first time the troupe is giving a solo performance in Europe,” the paper said, adding the tour will help improve relations between North Korea and European nations.

I imagine this is the circus that performs on Kawngbok street in Pyongyang.  There is a second “Korean People’s Army Circus” in Moranbong district.

I do not know where they will be performing, or where to get tickets, so if anyone out there can find out, please let me know.

Read the full article here:
N. Korean circus troupe to tour Europe: report


Working as a Lawyer in Pyongyang

Sunday, July 27th, 2008

Brendan Carr over at Korea Law Blog dug up some information on law firms operating in the DPRK.  All the information he posts is worth reading, but here are some highlights:

[T]he prospect of working as a foreign lawyer in Pyongyang has been on my list since I’ve been a lawyer.

Michael Hay, a foreign legal consultant in Seoul since 1990, actually did this—striking out from “Big Four” firm Bae, Kim, & Lee in 2001 [domain lapsed] to focus on being a full-time North Korea consultant. He established KoreaStrategic Inc. as a consultancy (its domain lapsed in June 2006, though), then with a splash announced the formation of Hay, Kalb & Associates as the first foreign/North Korean joint venture law firm in Pyongyang. The Hay, Kalb website, too, disappeared sometime in 2005, and I lost touch with Mike Hay around the same time. I remain curious to know about his adventure up North; I’m sure it’s been fascinating. However, he was always extremely tight-lipped about what he was doing there. Other than that he was focusing on North Korea “full-time, all the time” it was hard to get any specifics out of him.

There are two other law firms advertising their services and office presence in North Korea: Italy’s Birindelli e Associati (now Chiomenti after being acquired) and Singapore’s Kelvin Chia Partnership

But today I found that the International Financial Law Review’s IFLR Legalwire, to which I hadn’t previously subscribed, recently (May 2008) reported on Birindelli partner Sara Marchetta’s experiences in Pyongyang. It’s fascinating stuff, published in two parts—go read Part 1 and Part 2. The article gave the impression that Hay, Kalb was still trading, which is promising, but Marchetta says that Birindelli kept no expatriate lawyer there year-round, because there were only four or five clients a year needing legal services, mostly in resource-extraction and processing ventures.

From Marchetta’s interview, I thought the following observations were worth noting:

Obtaining copies of laws: 

The first issue is looking for legal resources  – the law- as it is extremely complicated to get them.  Even if you are a law firm and have people who are well-connected, its still a very long process to get a copy of a law.  Even if the law has already been enacted and should be public, you still need special permission.  If the law has not yet officially been translated into English, then you need to obtain special permission to get it and translate it.

The second thing is that the intended implementation of the law in a western sense does not exist.  Especially when you go out of Pyongyang and Kaesong [North Korea’s special economic zone], everything is pretty much left up to political decision: whether you can stay here or there, what you do and cannot do…

Just to give you an example: in terms of a corporate tax, you go to a place, make an investment and you pay a corporate tax even if you don’t profit.  It’s sort of a tax for being there.  Corporate tax ends up being interpreted as a presence tax , which is paid independently of whether you make profits or not.  In a few cases, we did find this type of interpretation, which is obviously extremely bizarre.    So it is really a matter of general legal culture – which is totally lacking – and education of the administrative middle to low levels.

Does [this environment] hinder getting things done?  Yes and no. Yes in the sense that getting a deal done takes more time because you do not have all of the information available at the beginning.  No in the sense that once there is the intention of getting the deal done, there is a lot of facilitation from the bureaucratic and governmental point of view.  If they say yes, its basically yes and it will happen.

How big is your office in Pyongyang:

It is currently staffed with two people.  We have no expatriates.  It is a joint venture as we are there in cooperation with a DPRK government entity called the Korean Justice Committee [KJC].  It is equivalent to the Chinese Ministry of Justice.

Are your lawyers at the office North Koreans?

Yes, they are North Korean lawyers. One of them is a pure lawyer, the other one is more someone who is well-connected in the government and has also PR and English capabilities.  One side has the legal knowledge, and on the other side, fluent in English that they use to work with foreigners.

Does your JV status with the KJC give you an advantage over foreign firms?

As a matter of fact, from an operational point of view: yes.  From the client’s point of view, I don’t know.  I have no idea.  I don’t think this is something that is hindering the expansion of our client base in Pyongyang, but I am not sure if it enhancing it.

What types of clients do you serve?

We serve companies looking at setting up a presence in the DPRK.  These are large companies that deal with natural resources, like mining or consumer goods, and most of them have already a presence in China.

What are teh key sectors of Work?

Well we deal with mining projects.  This means that yo go there, you test the product and if it’s okay then you give the technology to be extracted in a proper way.  You do part of the processing of the mineral and export it.  This is one deal.  On the other side, before advising on an investment we advise our clients on precessing contracts.  Obviously this can be done not just for mining, but for shoes, clothes, and any other product that can be exported.  The deal structure is basically these two.

Looking forward, is there enough going on to fairly classify the DPRK as an “emerging market”?

Not in terms of a domestic market.  I don’t think that the domestic market is going to develop very much, but the DPRK is a good place for processing contracts.  I mean, you send raw materials and they send back the finished product.  There is also a strong market for natural resources and low-to-medium technology projects.  There, you can produce basic chemicals, basic pharmaceutical products and some consumer goods.  The Chinese are doing clothing here, doing shoes, and a lot of other things.

Do you predict enough work growth to expand?

Not for the time being for a number of reasons.  One, we do not see an increase in DPRK-related work.  We have two, three, four, maximum five clients a year and that’s basically it.  So this is the main reason.  Then you have always the political issue.  It’s always there.  The political wind is really swinging a lot and it changes by the season and is very much affected by the situation of the six-party talks.  So for the time being, we are looking at what is happening and we are doing what we can do, but we do not have plans to enlarge our presence in the DPRK for the time being.


Koryo Tours August 2008 Newsletter

Saturday, July 26th, 2008

Koryo Tours has tremendous access to the DPRK and they are pursuing several interesting projects.  Check out their newsletter here.  Of special note, there will be two different mass games performances this summer/autumn.  From the newsletter:

As before the big news though in terms of tourism in DPRK is the Mass Games event – this year for the first time two different performances have been arranged with the classic Arirang show being performed on Mon, Wed, Fri and Sat, and the brand new, not-yet-seen (even by the critics!) Prosper the Motherland! taking place on Tuesdays and Thursdays. Both of these shows feature the full complement of 100,000 performers in the May Day Stadium and both will run to approx 90 minutes offering anyone who s there the chance to witness what is simply the greatest show on Earth, some information on the events can be found here. The Olympics will pale in comparison… a double dose of Mass Games will undoubtedly be vastly superior to the sight of amateur athletes running around in circles and throwing things!

Also, Nick Bonner is producing a new (non-documentary) film in North Korea. The plot, according to the newsletter:

Comrade Kim goes Flying – we are in development with our new romantic comedy feature film…to be filmed in Pyongyang with Korean cast and crew….more about this later – but a coal miner dreams of flying on the trapeze until she is thwarted by the strong man….

UPDATE: Here is an interview with KT’s Simon Cockerell on Interview Blog.