Archive for December, 2008

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DPRK to remove inactive Chinese companies from Rajin

Friday, December 19th, 2008

Quoting from the article (h/t Oliver):

North Korea is preparing to remove inoperative foreign companies from a special economic zone in the country’s northeast, officials said after a report that some Chinese firms in the area were asked to leave.

“North Korea appears to have conducted a survey in October to sort out companies that exist only on paper from the Rajin-Sonbong economic zone,” Kim Ho-nyoun, spokesman for the Unification Ministry, told reporters.

He was responding to a request to confirm a recent report by a local daily, the Dong-a Ilbo, that Pyongyang has asked an unspecified number of Chinese firms there to evacuate by the end of November. The firms did not comply with the request since it was not mandatory. About 250 Chinese firms are on the registry, according to the daily.

Although pure speculation, this could also be due to the influence of the Russian government—who has made no secret of its desire to invest in the Rajin.  Russia is also upgrading the railway track from Kashan to Rajin. 

Source:
N Korea to remove inactive cos from Rajin-Sonbong Economic Zone
Asia Pulse Businesswire
(Yonhap)
December 16, 2008

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Posted in China, Economic reform, Foreign direct investment, Rason Economic and Trade Zone (Rajin-Sonbong), Russia, Special Economic Zones (Established before 2013) | 3 Comments »

Inter-Korean economic cooperation office closes after 3 years; cross-border cooperation withering

Friday, December 19th, 2008

Institute for Far Eastern Studies (IFES)
NK Brief No. 08-12-19-1
12/19/2008

On October 28, 2005, an office housing the Inter-Korean Council for Economic Cooperation was established in order to create a channel for routine dialog between North and South Korean authorities and to assist with direct business deals between the two countries. Now, three years later and as inter-Korean relations have stalled, the office has completely closed its doors, causing economic cooperation to wither.

For over three years, the office served as a window fro North and South Korean businesses and workers, assisting with agreements between businesses, passing on documents, delivering samples, and more. In particular, it facilitated a total of 1,269 consultations and deliberations, with a mere 43 in 2005, growing by more than one thousand percent to 446 in 2006 and continuing to grow to 510 in 2007, while only 270 were held this year, bringing together a total of 4070 South Koreans with 3634 North Koreans, for a total of 7704 people making use of the services this office had to offer.

The office also served as a go-between for 10,539 documents sent from the South and 10,656 documents drafted by the North, and mediated the drafting of 668 new regulations for enterprises in the complex. This includes company proposals and promotions, delivery of samples, letters of recommendation, notarization of authentication, and other documents related to economic cooperation.

Of the 1354 samples that passed through the office, 560 were from the South, while 794 were from the North. There were eleven officials from the Ministry of Unification, Ministry of Finance, and other related South Korean government bureaus in the office, as well as another ten officials from the South Korean Trade Council, KOTRA, the Export-Import Bank, the Small and Medium Business Corporation, and the North Korean National Economic Cooperation Federation.

However, on March 24 of this year, North Korea ordered all South Koreans to evacuate the office after Unification Minister Kim Ha-joong stated that “it would be difficult to expand the Kaesong Industrial Complex if the North Korean nuclear issue is not resolved,” and three days later, all eleven government officials were ordered out, leaving only three officials, from KOTRA, the Export-Import Bank, and the Small and Medium Business Corporation behind, along with two employees to manage the facilities.

Now, with North Korean measures restricting land crossings over the military demarcation line, the full closure of the Inter-Korean Economic Cooperation Office, and the expulsion of South Korean workers implemented on the 24th of last month, all South Korean workers in the office had to return to South Korea on the 28th. This is causing considerable difficulties for small and medium businesses that could previously trade with or invest in North Korea at lower costs through the office.

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Posted in Institute for Far Eastern Studies, Inter-Korean Economic Cooperation Committee | Comments Closed

Orascom 3G wrap up

Friday, December 19th, 2008

UPDATE: Here is an older paper by Stacey Banks which I have not read: North Korean Telecommunication: On Hold.

ORIGINAL POST: On Monday the Orascom 3G mobile network launched in North Korea.  Just about everyone covered this story…so here are the highlights:

Telecommunications in North Korea: Has Orascom Made the Connection?
Working Paper: Marcus Noland

The topicality of the second paper, on the Egyptian firm Orascom’s role in North Korea’s telecommunications modernization, received a boost this week with the announcement in Pyongyang that Orascom was finally rolling out its cell phone service and creating a joint venture bank with a North Korean partner.  The planned Orascom investments are large: if actualized, they would be the largest non-Chinese or non-South Korean investments in North Korea, and would exceed total private investment in the Kaesong Industrial Complex to date

Financial Times

Orascom is confident North Korea is opening up its economy and says it has been assured by the ­government that everyone will be allowed to buy a mobile. However, experts think that such a volte-face is highly unlikely and reckon only senior military and government officials will be allowed access, and then only to a closed network.

When asked how many people would ultimately use the service, Orascom’s chairman Naguib Sawiris said: “We have a modest target of 5 to 10 per cent of the population.” The population is about 23m. Mr Sawiris expects 50,000 subscriptions in the first three-to-six months.

Jim Hoare, Britain’s former chargé d’affaires to Pyongyang, says the new network is bound to have severe restrictions.

“It’s unlikely that a country that doesn’t allow you to have a radio unless it’s set to the state frequency will suddenly allow everyone to have mobile phones. It’s more credible that there will be a limited network for officials in Pyongyang and Nampo.”

Dong Yong-sung, chief of the economic security team at the Samsung Economic Research Institute in Seoul, believes another obstacle to ordinary North Koreans owning phones will be the cost. “As far as I know, mobile phone registration costs about $1,000,” he said, a sum equivalent to the average annual income.

(NKeconWatch: Others put the price at $700…and there are many problems with asserting that the DPRK’s per capita income is $1,000 per year.)

Bloomberg

The inauguration of Koryolink took place today in North Korea, Orascom Telecom said in an e-mailed statement. Orascom Telecom Chief Executive Officer and Chairman Sawiris attended the event, a company official said, requesting anonymity. The Cairo- based company got a 25-year license and exclusive access for four years in January. It plans to spend as much as $400 million on a high-speed network and the license for the first three years.

The North Korean venture is “in line with our strategy to penetrate countries with high population and low penetration by providing the first mobile telephony services,” Sawiris said in a statement earlier this year.

CHEO Technology JV Company, the North Korean unit that will operate under the Koryolink name, is 75 percent owned by Orascom Telecom and 25 percent by the state-owned Korea Post and Telecommunications Corporation.

The unit will see average revenue per user of $12 to $15 this year as Orascom Telecom targets three of the country’s biggest cities, according to company forecasts.

Koryolink has rolled out its so-called third-generation grid to initially cover Pyongyang, with a population of 2 million.

Orascom is counting on four potential markets in the Stalinist nation, according to a study by Marcus Noland of the Peterson Institute for International Economics.

The military and government officials are the top targets, followed by foreigners working for UN organizations and diplomats. The others are customers from South Korea, which has several economic projects with its neighbor, and local demand from rich North Koreans.

To protect its investment, Orascom “hedged its bet, committing only half of its investment at the outset and making additional investment conditional on its assessment of conditions going forward,” Noland said.

If the deal is threatened, Orascom may withdraw specialized equipment or technicians, reducing the value of the network to Pyongyang, Noland said in his study.

“Orascom may have spread the wealth informally, creating beneficiaries within the decision-making apparatus who would stand to lose if the agreement failed,” according to the study.

Bloomberg

Orascom Telecom, the Middle East’s biggest wireless company, opened Ora Bank in Pyongyang in the presence of Chairman and Chief Executive Officer Naguib Sawiris, a company official said on condition of anonymity. Ezzeldine Heikal, who is also head of Koryolink, Orascom’s North Korean mobile-phone network, was appointed president of the bank, the official said without providing further details.

“This is a big deal, especially as far as North Korea is concerned, because the current banking system is virtually non- existent,” Marcus Noland of the Peterson Institute for International Economics said in a telephone interview from Washington, D.C. “It’s a ground that others have feared to tread and is perhaps an endorsement for North Korea that says ‘we’re open for business.’”

Ora Bank is a joint venture between Orascom Telecom and North Korea’s state-owned Foreign Trade Bank, North Korea’s official news agency reported today. The director of North Korea’s central bank Kim Chon Gyun and Egypt’s ambassador to Pyongyang Ismail Abdelrahman Ghoneim Hussein, were also present at the opening ceremony, the news agency said.

Radio Free Asia

Chinese traders who regularly travel back and forth to North Korea said local residents showed little enthusiasm for the new service, which cost more than U.S. $900 to set up before the Ryongchun explosion.

North Korean defector Kim Kwang-jin, a senior researcher at the Institute for National Security Strategy in Seoul, said the fact that the government had once pulled the plug on North Korean cell phones meant that it could easily do so again.

“In the beginning, people will be hesitant, because a few years ago many of them made a big investment in cell phones. But service was suspended abruptly, so they are still very concerned that might happen again,” Kim said.

“People are also worried that the ability to pay such a high amount of money for a cell phone may raise a red flag and bring them under scrutiny by the North Korean authorities.”

Most foreigners are banned from using cell phones while in North Korea, although a network for government officials is believed to exist in the capital, Pyongyang.

(NKeconWatch: I personally saw elite North Koreans use mobile phones and even some western journalists in 2005.)

The Guardan

North Korea first experimented with mobile phones in 2002, but recalled the handsets 18 months later after a mysterious train explosion that killed an estimated 160 people. Some experts argue that officials feared the incident was an attempt to assassinate the regime’s “dear leader”, Kim Jong-il, and that mobile phones were involved.

BBC

Some reports suggest that handsets for the new network will cost around $700 each, putting them far beyond the reach of the vast majority of people in the impoverished country.

Choson Ilbo

Although the technology would enable users to send and receive text messages and video content, North Korean customers will only be allowed to speak over their phones.

BMI Political Risk Analysis, Dec 16, 2008 (h/t Oliver)

BMI View: North Korea has officially begun third-generation (3G) mobile phone services, thanks to Egypt’s Orascom Telecom (OT). However, the growth of the network could be limited by the regime’s fear that mobile phones will increase the scope for anti-regime activities.

North Korea has officially commenced third-generation (3G) mobile phone services, thanks to an investment by Egypt’s Orascom Telecom (OT). The firm’s initial target is 100,000 subscribers in three major cities, including Pyongyang, and it eventually hopes to develop a nation-wide network connecting North Korea’s 23mn citizens. OT has promised to invest US$400mn in network infrastructure over the next four years. It has signed a 25-year contract with the North Korean government, and owns 75% of their joint-venture (known as Korealink). OT’s exclusivity rights will last for four years. Orascom’s foray is something of a coup, given that North Korea’s communications network is so rudimentary (for further background see December 8 2008, Industry Trend Analysis – North Korea Prepares For Mobile Network Launch).

Why Pyongyang Fears Mobile Phones
North Korea launched a mobile phone service operated by a Thai subsidiary firm in 2002, but reversed course in 2004, apparently because of a devastating bomb blast on a train in Ryongchon in April of that year. Given that North Korean leader Kim Jong Il’s personal train had passed through the area only a few hours earlier, there was speculation that the explosion had been an assassination attempt, possibly triggered by mobile phone. Since then, only those living in areas close to the border with China have had access to mobile phones, thanks to the proximity of the Chinese network.

Aside from the notion of mobile phones as bomb triggers, they can also make it easier for citizens to communicate with one another. This would increase citizens’ ability to organise anti-government activities – such as protests or sabotage. For example, the popular uprising that led to the overthrow of Philippine president Joseph Estrada in 2001 was dubbed the ‘text message revolution’, because that is how the marches were announced and coordinated. Admittedly, the Philippines is a far more open society than North Korea, but the subversive aspect has not been lost on the regime.

Mobile phones would also make it easier for North Koreans to communicate with the outside world, and thus allow the real-time transmission of information or intelligence to foreign media or spy agencies, and vice versa. They would also allow the North Korean elite to communicate more efficiently, allowing dissident elements to plot against the regime.

Thus, even something as basic as mobile phones are seen as potentially regime threatening.

Mobile Service Difficult To Spread
Consequently, Orascom will surely find it difficult to spread its mobile service across the country. For a start, registration will be tightly watched. Secondly, the cost of the handsets, at several hundred dollars, will mean that only the political and moneyed elites will be able to afford mobiles. Of course, elements of the elite can ‘misuse’ their phones to arrange subversive actions if they deem it worthy, but it seems that the regime are counting on loyalty. Indeed, depending on the sophistication of their equipment, the regime will probably be able to snoop in on the elite’s conversations and movements, giving them an additional layer of security.

Read the full articles below:
Orascom eyes North Korean network
Financial Times
Christian Oliver
12/14/2008

Orascom Telecom’s Sawiris Signs North Korean Deal
Bloomberg
Tarek Al-Issawi
12/15/2008

Orascom Telecom of Egypt Opens Bank in North Korea
Bloomberg
Tarek Al-Issawi
12/16/2008

North Korea Brings Back Cell Phones
Radio Free Asia
Jung Young
12/16/2008

Secretive North Korea launches restricted mobile phone service
The Guardian
Tania Branigan
12/16/2008

N Korea launches 3G phone network
BBC
Steve Jackson
12/15/2008

N.Korea Restarts Cell Phone Service
Choson Ilbo
12/17/2008

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Posted in Banking, Cell phones, Central Bank, Communications, Economic reform, Egypt, Finance, Foreign direct investment, Foreign Trade Bank, Joint Ventures, Ministry of Post and Telecommunications, Ora Bank, Orascom Telecom Holding, Uncategorized | 5 Comments »

Koryo Tours December newsletter

Wednesday, December 17th, 2008

The Koryo Tours December newsletter went out this week.  You can read it here. Interesting highlights below:

1. Apparently the areas open for tourism in the DPRK are expanding.

“We opened a few new areas to tourism over the course of the year including the East Coast city of Chongjin and the nearby Chilbo mountain area, Haeju in the south west of the country and various sites around Pyongyang. We stayed in a few different hotels, many of which we are now able to offer to our clients and in 2009 we intend to go to even more places than ever before, some wholly new areas and some new and expanded attractions in more familiar places – we can’t give out all details (some innovate, others imitate – have to keep some of it off the website for now to protect our interest!) but trust us – you’ll never have another holiday quite like this one if you choose to go with us next year. We have vastly expanded our range of tours to be ever-more inclusive to all demands.”

“2008 was also the year in which we continued our innovation in new kinds of tours; we ran a football tour where a foreign side played against a Korean team in a friendly, and the first ever Ice Hockey, Volleyball, and even Cricket (yes, cricket!) tours took place, all of them between visiting westerners and local Koreans. We continued our school trips and cultural exchange programs and assisted in several interesting and worthwhile projects, some of which are outlined further below. We also ran Pyongyang’s first ever pub quiz. It was a very interesting year for us all and we hope to repeat this innovation in 2009 so if you have any ideas for trips to DPRK then we would be more than happy to hear them, there are a great many restrictions on what can be done there but we have many years of experience and a track record of getting things done which is second to none, if it can be done, then we will organise it for you.”

2. Koryo Tours took in about 950 tourists this year.
3. Mass Games are presumed to be on in 2009.
4. Tour dates here.

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Posted in Koryo Tours, Tourism | 1 Comment »

DPRK pushes to meet yearly production plans

Wednesday, December 17th, 2008

Institute for Far Eastern Studies (IFES)
NK Brief No. 08-12-17-1
2008-12-17

As the end of the year approaches, North Korea has launched a ‘Year-end Battle’ in order to encourage every sector of the economy to meet annual production targets, without exception.

On December 1, (North) Korean Central Broadcasting announced, “workers, laborers and technicians of the harvesting industry sector overcome difficulties and barriers with indomitable moral strength, while thoroughly accomplishing the (New Year) Joint Editorial’s fighting tasks, focusing all strengths on the struggle to brightly wrap up the deeply meaningful year,”while also reporting on the production innovation of the nation’s mining and smelting facilities.

The program also announced that each North Korean region’s hydroelectric power plants, “brightly bring the year to a close, while the issue more important than any other is ensuring the People’s Economy electrical use, strongly demanding power production, is supported,” reporting that efforts were being focused on ensuring power production equipment was operating at full capacity, and electrical production was being expanded.

Rail transportation in Pyongyang, Kaechun, Anju, and other areas also reported high achievements in distributing coal for electrical production and ores sent to metal factories, as efforts are put into the ‘Year-end Battle’, according to the broadcasters.

One member of the North Korean Cabinet’s office of light industry announced on November 30 that, in accordance with this year’s New Year Joint Editorial’s ‘prioritization of the lives of the people’, the government invested in the Sariwon Weaving Factory, the Haeju Textile Factory, etc., “struggling to produce more good-quality cloth” in textile factories under the guidance of the office of light industry’s department of textile industry management.

North Korea’s broadcasts also reported that the Ranam Coal Mine Cooperative Enterprise, the Musan Mine Cooperative Enterprise, the Chungjin Tractor Accessories Factory and others were also engaged in this ‘Year-end Battle’.

In South Hamgyung Province, a new lecture hall and electronic library were built at the Hamheung Medical Science College, and construction was underway to expand the number of classrooms. Also, the Heungnam Basic Foods Factory, the Hamheung Orthopedic Surgery Hospital and the Sinheung Irrigation were under construction as each locality is pushing forward with selected economic construction projects.

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Posted in Agriculture, Clothing, Dams/hydro, Electricity, Energy, Institute for Far Eastern Studies, Light Industry, Manufacturing, Railways | Comments Closed

The NSA Smuggling Ring

Wednesday, December 17th, 2008

Daily NK
Lee Sung Jin
12/17/2008

Recently in the North Korea-China border region, North Korean smuggling groups associated with the National Security Agency have been actively operating.

A source from Yangkang Province relayed in a phone conversation with the Daily NK on the 16th, “On the 9th in Songjeon-ri, Kim Jong Sook County in Yangkang Province, a van ferried on a raft fell into the water, so the border guards and the National Security Agents tried to get it out in the middle of the day. The van was being smuggled from China by the ‘national smuggling group.'”

The “national smuggling group,” or “NSA smuggling group,” which earned its epithet from the North Korean citizens, is directly operated by the National Security Agency and is composed of soldiers, well-to-do merchants, Chinese emigrants, and Chinese relatives of officials.

The group was organized in the fall of last year and has been in operation since then. The source added that its size, members, and range of traded items have significantly increased.

The source stated further, “In Hyesan alone there were at least three smuggling groups by the end of the summer, but with the passing by of the fall harvesting season, there are now about seven in operation. With the National Security Agency making profit from these groups, the No. 8 Bureau of the Chosun (North Korea) People’s Army (in charge of mobilizing war supplies) even formed a group last summer.”

In particular, it has become known that the No. 8 Bureau, under the patronage of the National Security Agency, sold a massive supply of medicinal herbs secured in North Korea to the Chinese merchants in exchange for Chinese rice.

The source emphasized, “Usually, there are four or five active members of a smuggling group. In the past, they only smuggled at night, but the groups have lately been taking advantage of quiet places during the day to hand over goods.”

He said, “When the groups engage in smuggling, the commander or vice-commander of the border guard unit will go on duty. After the National Security Agency calls the border unit, the smuggling group(s) goes out at a pre-determined time and hands over the goods.”

Goods that are currently handled by the groups are not only marine products or scrap iron, but are increasingly high-priced goods such as gold or drugs, because they can be traded for cash.

The source explained, “The smuggling groups have to give approximately 30 million North Korean won (approximately USD8,500) per person a month to the state, but ordinary smuggling does not suffice to make such a sum of money. The state severely punishes trading drugs or gold, but given the exorbitant sum which has to be paid to superiors, there has been a tendency to engage in the trading of such goods.”

He noted, “Nowadays, each unit acquires the necessary goods, so the border smuggling channel created by private individuals for trading has also been used by the national organization.”

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Posted in Black markets, Economic reform, Illicit activities, Ministry of State Security (MPSS, NSA, SSD) | Comments Closed

Water Trade Burgeoning in North Korea

Monday, December 15th, 2008

Daily NK
Moon Sung Hwee
12/15/2008

Amidst the trend of increasing numbers of civilians trying to make ends meet through trade in the wake of the July 1st Economic Management Reform Measure, medical students in North Korea have started doing business by drawing water from the Yalu River.

However, due to the territorial nature of the Yalu River, water-selling, and attendant incidents of violence in order to grasp commercial rights, have become more frequent.

A source from Yangkang Province said in a phone conversation with the Daily NK on the 9th, “Three Hyesan Medical School students who were selling water near the People’s Committee of Yangkang Province building attacked a couple in their 30s, who had to be taken to hospital on the 7th.”

The source said, “Generally, the Yeinbong-dong (in Hyesan) is where students of Kim Jong Sook College of Education and Bongheung Middle School sell water, and the area around Hyemyung-dong is designated for Hyemyung Middle School and Hyesan Medical School students. The Hyesan Medical School students mistook the villagers drawing water for people trying to enter their zone, so the incident erupted.”

According to the source, the medical school students used their handcart to crash into the couple’s sleigh. The husband, angry at this, hit one of the students, which provoked the two remaining students to collectively assault the couple and flee.

The source relayed, “Subsequently, the relatives of the couple and their friends sought out the Hyesan Medical Student dormitory with axes and spades, so the People’s Security Agency (PSA) was called. The PSA searched all over the dormitory, but ultimately could not find the suspects.”

In Hyesan, Yangkang Province, as water provision to civilians became more erratic due to failing subsistence, the business of drawing supplies from the Yalu River to take to far-flung regions started springing up. Not only does the business not require much capital, but water can be fetched from the Yalu River with a handcart or a sleigh and be sold in residential areas, so it is popular among college students who come from farming regions to Hyesan, or among middle school students.

“Selling water is mostly monopolized by middle school and college students. This is a job that ordinary people will take up as a last resort,” the source said.

He added, “Those college students who come from the country side and live in dormitories take up this business. A portion of middle school students, in order to contribute to the livelihoods of their families or to make personal allowances, choose to do it as well.”

“In Hyesan right now, 50 liters of water costs around 300 North Korean won, and a 70-liter Chinese bucket sells for 400 won,” he explained.

He then said, “Water is fetched from the Yalu River with a handcart or a sleigh: one sleigh can carry about four to five 50-liter water buckets. This business cannot be done solo, so people usually undertake this in groups of three or four.”

The source stated, “Water merchants go back and forth between the Yalu River and where they are based at least four times a day. Sometimes, they can even go seven to eight times a day, but there are not too many people who buy water.”

“Those who buy water are mostly cadres or merchants who have to go to the markets. Also, people who sell liquor or tofu require a lot of water. With so many water merchants, incidents of fighting over territory are quite common.”

Hyesan, which began receiving aid from international organizations in 2003, was the pride of the North Korean authorities, especially since the completion of a “natural water supply system” which took two years to construct. However, as a result of simultaneously burying the water and the sewage system at the time of construction, the polluting of the city’s water resulted. The residents of densely populated areas, which are located mostly on hillier regions relatively far from the Yalu River, have not been receiving tap water, noted the source.

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Posted in Black markets, Economic reform, General markets (FMR: Farmers Market), Water | Comments Closed

Number of North Koreans in the Kaesong Industiral Zone increases

Sunday, December 14th, 2008

Quoting from the article:

North Korea has increased the number of its nationals working at a Seoul-funded industrial estate in the communist state since tighter border controls were introduced, data showed Sunday.

Statistics from South Korea’s unification ministry show North Korean workers numbered 37,168 in Kaesong, the estate just north of the border, on Friday, up from 36,618 on November 31.

On December 1 North Korea imposed stricter border controls and expelled hundreds of South Koreans from Kaesong amid strained cross-border ties, leading to fears in Seoul that Kaesong will eventually be closed down.

“The latest statistics show North Korea will not shut down Kaesong but thoroughly protect business there,” Kim Yong-Hyun, a professor of North Korean studies at Seoul’s Dongguk University, told AFP.

“The North is saying tighter border controls are targeting the Seoul government, not private businesses there, in a dual-track policy on the South.”

Read the full article here:
Number of NKoreans increased at Seoul-funded estate
AFP
12/14/2008

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Posted in Economic reform, Foreign direct investment, Joint Ventures, Kaesong Industrial Complex (KIC), Labor conditions/wages, Manufacturing, Private property | 1 Comment »

Female N. Korean worker defected from Kaesong complex: activist

Wednesday, December 10th, 2008

Yonhap
12/10/2008

A North Korean defector who escaped from an inter-Korean industrial complex in the border city of Kaesong where she was employed remains in a third country, a South Korean activist here said Wednesday.

The 27-year-old woman, whose identity was withheld for her safety, fled Kaesong in late September and has since asked for help to travel to South Korea, according to Kim Yong-hwa, who leads a Seoul-based civic group advocating for the human rights of North Korean defectors.

The Unification Ministry and officials from South Korean firms operating in Kaesong said they had not heard about the defection and that there was no sign of abnormality at the complex around that time.

If confirmed, it would be the first known defection from the industrial complex, where about 36,000 North Koreans are employed by dozens of South Korean factories operating under the tight control of authorities from Pyongyang.

Seoul officials say the workers were carefully selected from a pool of young people with good family backgrounds from the North Korean border city or Pyongyang to ensure they would not be unduly influenced by the atmosphere of capitalism at the comoplex.

Exactly what motivated the woman to defect is not known, but Kim said she was apparently forced to choose between her marriage and her job, which earned her a relatively good salary in the impoverished nation.

The communist North bans female workers at Kaesong plants from getting married, a violation of their rights, Kim added. “(The young woman) is said to have gotten a warning once from the authorities over the matter,” he said.

Kim says North Korea exploits its workers at Kaesong by giving them only US$2 out of their monthly wage of about US$60 paid by South Korean firms.

Currently, 88 labor-intensive garment, kitchenware and various other South Korean factories operate in Kaesong. Pyongyang recently expelled hundreds of South Korean officials and managers from the complex in an effort to pressure Seoul to change its hardline North Korea policy.

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Posted in Economic reform, Emigration, Foreign direct investment, Kaesong Industrial Complex (KIC), Labor conditions/wages, Special Economic Zones (Established before 2013) | Comments Closed

Behind North Korean Plan to Reopen State Stores

Wednesday, December 10th, 2008

Daily NK
Moon Sung Hwee
12/10/2008

The North Korean authorities recently announced the intention to sell all industrial products in state-operated stores, soon after announcing the revised “10th-day farmers markets,” which open only on the 1st, 11th and 21st of every month, starting from next year.

According to an inside source in North Hamkyung Province, a new instruction on the sale of industrial products in state-operated stores was introduced during the latest cadres’ lectures. As rumors of the large-scale entry of Chinese goods onto the market due to Chinese loans circulate among people, there has been in a flutter in the market.

The source stated that the idea of industrial product sales was introduced during a cadres’ lecture on the 29th of November under the title, “measures to improve the current situation and people’s lives,” which also explained the transformation of the current market system into the “10th-day farmers market” system.

In the source’s opinion, “It signifies the government’s attempt to monopolize the industrial-product market, which was actively and spontaneously established by the people after the ‘march of tribulation’ in the late 1990s. Industrial goods to be sold in the state-operated stores would include both Chinese and North Korean products.

During the lecture, it was stated that “All industrial goods that have been passing through the jangmadang (markets) must now be sold in the state-operated stores and only vegetables or certain agricultural products can be sold within the farmers markets,” which suggests the prohibition of individuals selling food-related products and industrial goods.

With regard to the backdrop of this policy, the authorities explained that, “The current market was a temporary measure taken by the state considering the difficult situations caused by the march of tribulation. However, the markets after some time deviated from the state’s intention and socialist economic principles and have become a hotbed of crimes generating capitalist and anti-socialist trends. Therefore, we are ridding ourselves of all markets and reviving the farmers market.”

The source explained that this measure does not seem to “simply control the markets. But if they begin selling industrial products in the state-operated stores, they would be able to circulate money within the regime that has been circulating within private markets and among individuals by tying purchase profits to national banks.

He said, “Due to the jangmadang, the gap between the rich and the poor has widened. And, because money is not flowing within the regime, the authorities are getting rid of private sales to revive the banks so as to recover the regime economy… It seems the state-controlled economy will become better next year” he added.

However, the source also relayed that “Although they announced the selling of industrial goods only in the state-operated stores from next year, nothing, regarding exactly when and how, was mentioned during the lecture.”

“There is also another rumor that even ‘procurement stores’ would have to sell products on the same price level with the state-operated stores, or they would have to close down. It basically signifies that the regime will not permit any form of private sales, by selling all products that had been sold by individuals” he added.

The source reported that there have been heated debates on this decision among North Koreans.

“Famers gladly took this decision that industrial goods will sell in state-operated stores because they have been complaining that they sold agricultural products at next to nothing while buying industrial goods at such a high price. They are expecting that industrial goods will cost less than now” the source reported.

“However, workers in urban areas are extremely concerned that they cannot sell anything in the jangmadang. An average workers’ salary is 1,500 North Korean Won and if individuals are not permitted to sell, workers’ families will be harshly affected” he forecasted.

The source continued on and said, “Even though they say workers get paid well, how are they expected to live when a pair of military boots costs 9,000 North Korean won. One month’s salary is not even half a kilo of rice.”

The source in the end expressed concern because workers began “explicitly complaining about cadres who only fill themselves up. I personally think that there will begin a massive war within the markets starting from New Year’s Day”.

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Posted in Agriculture, Black markets, China, Economic reform, Food, General markets (FMR: Farmers Market), Labor conditions/wages, Light Industry, Manufacturing, Price liberalization | 2 Comments »

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