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Archive for January, 2010

DPRK Policy on Foreign Trade

Tuesday, January 5th, 2010

Foreign Trade (Naenara)
January, 2010

(An interview of a reporter of Foreign Trade of the DPRK with Sin On Rok, director of a bureau of the Ministry of Foreign Trade)

Question: I’d like to have a talk with you about the DPRK policy on foreign trade. Would you please tell me about the fundamental of its foreign trade policy?

Answer: The DPRK Law on Foreign Trade was adopted by the decision of the Standing Committee of the Supreme People’s Assembly in 1997. Article 2 of the law stipulates that it is a consistent policy of the DPRK to develop foreign trade.

The fundamental of its foreign trade policy is to consolidate the foundation of the independent national economy and, on this basis, to expand and develop trade relations with other countries.

This foundation provides a material guarantee for promoting foreign trade on the principles of complete independence and equality. If the developing countries, in particular, fail to conduct trade business based on their self-reliant national economy, they can neither construct independent structure of trade nor defend their sovereignty in the end.

From this point of view, the DPRK government has consistently maintained trade policy of developing foreign trade on the basis of the independent national economy and further consolidating its foundations through foreign trade.

In the past the government has developed heavy industry with machine building industry as its core, light industry and agriculture simultaneously in conformity to the actual conditions of the country and, relying on them, produced and exported goods that are highly competitive in international markets. And it has always ensured that foreign trade serves development of the economy and betterment of the people’s life.

Q: What is the principle pursued by the government in foreign trade relations?

A: The DPRK government employs the policy of maintaining the principles of independence, equality and mutual benefits, as well as credit-first principle in the relations of foreign trade.

The government has so far developed trade relations holding fast to these principles and given active support and assistance to the developing countries in their efforts to establish the fair international economic order.

It has put forward the credit-first policy in trade dealings and ensured that all the trading corporations keep credit in their transactions so as to create better climate for foreign trade of the country. It is making efforts to establish rigid discipline that corporations should ensure the superior quality of exports, keep delivery date and faithfully discharge contractual obligations like payment for imported goods.

Q: I think the issue of making foreign trade diversified and multifarious also assumes due importance in the foreign trade policy of the government.

A: You are right. Article 3 of the Foreign Trade Law stipulates that diversification and variegation of foreign trade constitute a basic way for wide-ranging trade. The State shall ensure to deal with different countries and corporations employing various forms and methods in foreign trade.

For the sake of diversification of foreign trade, we pay a primary attention to the neighbouring countries in developing economic exchange and cooperation including trade.

It is due to the geographical location and role of our country in the economic development of the Northeast Asia and the rest of the world.

And the government executes a policy of expanding the scope of foreign trade to all countries in Asia, Africa, Latin America and Europe in its effort to make foreign trade diversified.

Entering the new era, our country intensified the diversified economic exchange and trade transactions with EU member nations.

The EU top level delegation paid a visit to our country in 2001. The DPRK-EU symposium was held in Torino, Italy in March 2007 and the 3rd DPRK-EU economic symposium held in Pyongyang in October 2008. These events marked important occasions in the development of economic and trade relations between the DPRK and the European countries.

The DPRK government is also carrying out the policy of making foreign trade multifarious in keeping with the developing trend of international trade.

It puts a stress on processing trade on the basis of its economic potentialities and up-to-date processing technologies.

The government encourages local trading corporations to import raw materials and accessories and to process and assemble them for export in different sectors of the economy such as textile, clothing, machinery and facilities, rolling stocks and electronic goods.

We are channeling much effort into the export of technological products like software relying on the development of information industry of the country.

Transit trade and consignment trade are also in full swing.

Q: What is the highlight in the export policy of the government at present?

A: The key issue in the export policy is to improve export structure from the export of raw materials into that of processed goods.

The government makes efforts to give full play to the potentialities of existing export bases while building new ones in various sectors, increase the variety and volume of exports and upgrade their quality.

It defined the production bases of internationally competitive goods as strategic export industries, and is concentrating its investment on them and paying a close attention to their scientific and technological development.

The government takes some measures to encourage the export business of the corporations with a view to increasing export volume of the country.

It affords preferential treatments such as loaning from banks and supply of raw materials and power to those export bases and corporations which have cultivated new markets with new items of export or produced and exported hi-tech goods.

Besides, the government simplifies export procedures and upgrades services of the export-related institutions so as to carry on the smooth operation of export business of the country as a whole.

The DPRK government will continue to promote the impartial and reciprocal economic and trade relations with all countries on the principle of independence, mutual respect and equality.

and

DPRK Tariff System
Foreign Trade, Naenara
Kim Tong Hyok, University of the National Economics
January 2010

The tariff system in the DPRK contributes to protecting the independent national economy and improving people’s livelihood.

The basic aim of the tariff policy in our country is to apply either no or low tariff on materials and goods imported for the acceleration of economic construction and the betterment of people’s life and high tariff on goods that have been or can be produced at home.

First, the government builds a tariff barrier against the imports which can be produced in our country.

High tariff is imposed on such imports as the goods that the domestic factories and enterprises are now producing or have potentials to produce, the products that are not needed at present in economic sectors, and the goods that are of no direct use for enhancing people’s living standards so as to increase the domestic production capacity and raise the quality of the homemade articles to be competitive in the world markets.

Second, the government imposes low or no tariff on the imports which are in short supply or unable to produce at home, i.e. the latest machines and equipment, oil and crude rubber needed for consolidating the foundations of the independent national economy and some of daily necessities that are more profitable to import than to produce at home.

It is impossible for each country to produce by itself all things necessary for its economic construction and people’s life because its natural and economic conditions and the level of productive forces differ from those of others.

Third, the government holds the principle to introduce advanced technologies in executing tariff system.

It imposes no or low tariff on hi-tech products and preferential tariffs on the goods imported by foreign-invested enterprises for the purpose of introducing advanced science and technology.

Fourth, the government defined correct criteria for tariff on the imports and is properly applying them.

It stipulated appropriate criteria of assessing the price of each variety of the imports pursuant to the regulations for the implementation of the DPRK Customs Law and the provisions of the Customs Law, and is now applying them in keeping with the requirements of the developing reality.

Besides, the government has prepared the catalogues of export commodities and the tariff rate table in conformity to the provisions of GATT and exercised tariff system suitable to each phase of development of the national economy, thus further promoting foreign trade and preventing tax evasion and other commercial wrongdoings which exert negative influence upon international markets.

Today the DPRK tariff system makes a big contribution to the protection of the independent national economy and the development of foreign trade.

Posted in International trade, Law on Foreign Trade, Ministry of Foreign Trade | Comments Closed

Citizen Mobilization Kicks Off Early

Monday, January 4th, 2010

Daily NK
Jung Kwon Ho
1/4/10

According to sources within North Korea, citizens have been mobilized to produce fertilizer and ordered to submit scrap materials for use by the state in an attempt to bring to fruition the New Year’s Statement, in which light industry and agriculture were promoted as the main frontiers for development in 2010.

One source from North Hamkyung Province told The Daily NK on the 3rd, “The first battle of this year began on the 2nd of January. A decree was issued, stating that each adult resident has to provide 50 kilograms of fertilizer to surrounding farms.”

He went on, “Middle school students of 11 and above have to provide 30 kilograms of fertilizer to their school, and any senior citizen over the age of 60 has to provide 30 kilograms of fertilizer to their neighborhood office. This fertilizer production battle will continue until the end of March”.

This is an unusual duration, the source explained, “The annual fertilizer production battle is normally completed on February 15th, but this year the authorities are emphasizing the importance of agriculture and, as a result, declared the completion date to be the end of March.”

“The production of fertilizer is an annual event, however, its target volume and duration has doubled. The lack of available fertilizer has already initiated competition between workplaces to secure access to public toilets and dumping grounds.”

A different source in Yangkang Province explained how things were being done there, “Middle school students over the age of 15 up to adults under the age of 60 have to provide fertilizer privately to surrounding farms by sled. Students from 1st to 3rd grade in middle school and senior citizens over the age of 60 have to provide the fertilizer to a neighborhood location designated by municipal committees of the Party.”

According to the same source, the temperature in Hyesan was -26C on the 2nd when workers from each workplace and factory, and residents of people’s units, assembled in the square in front of the Kim Jong Suk Art Hall to transport the fertilizer by sled to nearby farms in Chun-dong, Geomsan-dong and Wun-dong, and to Hwajeon Cooperative Farm, causing problems.

The source explained that the farms were up to 16 kilometers away, so, “Numerous people suffered from frostbite during the transfer.”

In addition to production of fertilizer, each workplace and organization received instructions to submit scrap metal, paper, rubber and vinyl. On this topic, the source commented, “Residents are making a hoo-ha about the requirement to submit unused materials for light industry like scrap metals. During the vacation in January, each middle school student is supposed to produce fertilizer and provide ten kilograms of scrap metal plus five kilograms of scrap paper and rubber to a designated depot. When such tasks are completed, the student gets a certificate from the depot and then has to show it to school.”

The source concluded, “Residents are already concerned about the possibility of increased compulsory mobilization even worse than that for the 150-Day Battle last year.”

Posted in Agriculture, Education, Kim's New Year Address (Joint editorials), Labor conditions/wages | Comments Closed

Reunification costs

Sunday, January 3rd, 2010

According to Peter Beck in the Wall Street Journal:

The cost [of reunification] will depend in large part on how that transition unfolds. The best of the plausible scenarios would see Korea following the German path of sudden and bloodless reunification. The worst outcome would be violence akin to the unification of Vietnam or Yemen. A middle road would resemble the chaotic post-Communist transitions of Romania and Albania. This seems most likely given the similarities between Kim’s autocratic, autarkic rule and Nicolae Ceausescu’s and Enver Hoxha’s reigns in their countries.

Any of these outcomes is sure to be expensive because the North will require massive investments to build a modern economy. The economy collapsed in the 1990s amid a massive famine that likely killed hundreds of thousands. Infrastructure, starting with the power grid, railway lines and ports, will require tens of billions of dollars to build or upgrade. Few factories meet modern requirements and it will take years to rehabilitate agricultural lands. The biggest expense of all will be equalizing North Koreans’ incomes with their rich cousins in the South, whether through aid transfers or investments in human capital like education and health-care.

Even the best-case German model will cause heartburn in South Korean officials. Despite the $2 trillion price tag West Germany has paid over two decades, Bonn had it relatively easy in the beginning. East Germany’s population was only one-quarter of the West’s, and in 1989 East German per capita income was one-third of the West. The two Germanies also had extensive trade ties.

In contrast, North Korea’s per capita income is less than 5% of the South’s. Each year the dollar value of South Korea’s GDP expansion equals the entire North Korean economy. The Northern population is half the South’s and rising thanks to a high birth rate. North and South still barely trade with each other—China-Taiwan trade is 54 times greater in dollar terms than inter-Korean trade. That the North is starting from so far behind means even more resources will be needed than Germany required to achieve convergence in standards of living.

More than a dozen reports by governments, academics and investment banks in recent years have attempted to estimate the cost of Korean unification. At the low end, the Rand Corporation has figured on $50 billion. But that assumes only a doubling of Northern incomes from their current level, which would still leave incomes in the North at less than 10% of the South. At the high end of these projections, Credit Suisse estimated last year that unification would cost $1.5 trillion, but with North Korean incomes rising to only 60% of the South. I estimate that raising Northern incomes to 80% of Southern levels—which would likely be a political necessity—would cost anywhere from $2 trillion to $5 trillion, spread out over 30 years. That would work out to at least $40,000 per capita if distributed solely among South Koreans.

All of this leads to the question of who would foot the bill. China is the greatest supporter of the current regime in Pyongyang, with trade, investment and unconditional economic assistance worth $3 billion a year. Yet even if that flow continues to the Northern part of a reunified Korea (it most likely would not), it will be a fraction of the $67 billion a year that would be needed to equal $2 trillion over three decades. After South Korea, Japan would become the largest source of aid, but the $10 billion it is prepared to pay in reparations for having colonized the North would barely make a dent.

That leaves international institutions like the World Bank—and Seoul and the United States. It will be a wise investment to secure peace and prosperity in North Asia, but that money won’t grow on trees. Policy makers need to start considering now how they would spend it, to minimize the risk of wasting it in post-reunification confusion. And officials need to think about where they’ll secure the cash. Multinational corporations will rush in, but the bulk of the burden will fall on the shoulders of South Korea—requiring careful fiscal management, borrowing and tax increases.

Korean unification is unlikely to take place in the near future, but since it will most likely be sudden and cost trillions of dollars, the time to prepare is now.

I cannot find a copy of the Credit Suisse research on line this evening. Here and here are a couple of media stories reporting on its findings.

Here is a link to the Rand Corporation study, “North Korean Paradoxes,” mentioned above.

Here are some additional studies on this topic:

Global Economics Paper No. 188: A United Korea? Reassessing North Korea Risks
Goldman Sachs Slobal ECS Asia research
Goohoon Kwon, CFA
September 2009
(Post here)

Currency Conversion during Korean Unification
Brookings Institution
Yeongseop Rhee, Nonresident Fellow, Foreign Policy
January 2009
(Post here)

Prospects from Korean Unification
Colonel David Coghlan
Strategic Studies Institute, US Army

Posted in Emigration statistics, Foreign aid statistics, GDP statistics, Statistics | 2 Comments »

New DPRK currency plummets against Chinese yuan

Sunday, January 3rd, 2010

According to Yonhap:

North Korea’s new currency introduced in late November has plummeted in value compared to the Chinese yuan, a local radio broadcaster claimed Sunday.

The Seoul-based Open Radio for North Korea (ORNK), citing unidentified sources along the Sino-North Korean border, said that merchants were exchanging one yuan for 1,000 new North Korean won as of late last month, plummeting from the 50 won traded for every yuan on Dec. 3, right after Pyongyang introduced the new currency.

Under the move, the communist country knocked two zeros off its currency without warning on Nov. 30 in the first such value adjustment since 1959.

The radio, which aims to inform North Koreans on events happening in the outside world, said the value of the new North Korean currency fell to 520 won to the yuan by the middle of last month, indicating a steady depreciation throughout the month.

Before the currency reform took place, 1 yuan was worth around 588 old won, which is equivalent to 5.88 new won.

The ORNK speculated that the reason for the new currency’s weakness may be Pyongyang’s decision to not allow foreign currency to circulate in the market.

“The official proclamation to ban foreign currency use was made on Dec. 28, but there have been rumors circulating after the currency reform took place, causing the new won to depreciate against Chinese money,” the radio station report said.

It said that with Pyongyang unlikely to allow the use of foreign money as a medium of exchange or to bolster its new currency, it may be hard to determine when the value of the new won will stop falling.

North Korean media reported early last month that authorities were introducing new money to curb the mushrooming free market and raise the value of the country’s legal tender.

There have been unconfirmed reports that the currency reform has drawn resistance from ordinary citizens and merchants, whose savings have been drastically cut by the unannounced measures.

Read the full article here:
N. Korea’s new currency plummets against Chinese yuan: report
Yonhap
1/3/10

Additional info:

1. Previous posts on the DPRK’s recent monetary changes can be found here.

Posted in Banking, Fiscal & monetary policy | Comments Closed

Naenara published an excerpt of the 2010 joint editorial of Rodong Sinmun, official organ of the Central Committee of the Workers’ Party of Korea, Josoninmingun, newspaper of the Korean People’s Army, and Chongnyonjonwi, organ of the Central Committee of Kim Il Sung Socialist Youth League:

Bring about a radical turn in the people’s standard of living by accelerating the development of light industry and agriculture once again this year that marks the 65th anniversary of the founding of the Workers’ Party of Korea

Today our service personnel and people greet the New Year Juche 99 (2010) with the pride of being victors, who wrote a new history of great revolutionary upsurge.

A heyday unprecedented in the history of the nation lies ahead of them, who are courageously rushing towards the world by tapping the inexhaustible potentials of Songun Korea.

Kim Jong Il is leading the campaign for the building of a great, prosperous and powerful nation to a brilliant victory as he steers the efforts to effect a great revolutionary upsurge on the strength of single-hearted unity. Now all the service personnel of the Korean People’s Army and all the people are offering their heartfelt thanks and the greatest glory to him who is shaping the brilliant future of the country and the revolution with unflagging energy and untiring leadership, and are filled with a firm determination to support the Party’s cause to the last with intense loyalty and heroic feats.

Last year Juche 98 (2009) was a year of dramatic change, when a phenomenal age of realizing all the ideals of the people has come.

Kim Jong Il worked out a grand plan for making a decisive turn in the Korean revolution and the building of a thriving nation by effecting a new revolutionary upsurge and wisely led the efforts of the service personnel and people. After kindling the torch of a great upsurge in Kangson, home to the Chollima movement, he proposed launching the 150-day and 100-day campaigns successively, and took revolutionary measures to bring them to a victorious conclusion. His outstanding leadership ability was the source of impetus for the unprecedentedly great innovations and leap. The matchless fighting spirit of the leader, who continued the forced march of high intensity to vibrant hard-fought fields for an upsurge throughout the year, burning his heart with noble love of his country and fellow people, gave free rein to the mental strength of all the service personnel and people and worked world-startling miracles across the country. Last year’s struggle etched in their hearts the truth that his decision is precisely practice and they will always emerge victorious when they follow him.

Last year witnessed one remarkable event of knocking on the gate to a thriving nation after another.

The successful launch of man-made satellite Kwangmyongsong No. 2 and the successful second underground nuclear test by our own efforts and technology were a landmark event signalling the first victory in the building of a prosperous nation. The perfection of the Juche-based steel-making system in the Songjin Steel Complex and the attainment of the cutting edge of the CNC technology constitute a great victory of the great Juche idea and an auspicious event for the whole country and all the people that demonstrated our inexhaustible economic and technological potentials. The firework displays on the Day of the Sun–birthday of President Kim Il Sung–, May Day and the WPK anniversary in October were a striking manifestation of the lofty ideals and ambition of the Korean people who are building a thriving nation and the rosy future of Songun Korea that is advancing under the leadership of the great Party.

The economy of the country entered the stage of full-scale upturn as all the people staged a life-and-death struggle under the leadership of the Party.

The 150-day and 100-day campaigns were an unforgettable struggle that wrote the most brilliant chapter in the history of our great upsurge. The whole course of the heroic campaigns conducted by all the people, including the workers, clearly showed what kinds of miracles would be performed and what kinds of changes would be effected when we give free rein to the might of the harmonious whole of our leader, our Party and our people, in which the Party trusts the people and the people defends the Party and the leader at the risk of their lives.

Production sharply increased in the sectors of basic industries, vanguards of the national economy, and the industry as a whole achieved revitalization. Structures of lasting value in the Songun era, like the Nyongwon Power Station, Wonsan Youth Power Station, Waterway on the Miru Plain and Mansudae Street, were built across the country. The gasification project in the Namhung Youth Chemical Complex was completed, and dynamic efforts were made to upgrade the major factories and other enterprises. Last year remarkable achievements were brought about in agricultural production and rural construction, many cooperative farms transformed into ideal villages appropriate to a prosperous country and the production foundations and potentials of the light-industry sectors, including the textile and food-processing industries, strengthened markedly.

Remarkable successes were achieved in the development of socialist culture.

In the heat of the revolution in literature and the arts in the Songun era conducted under the energetic guidance of Kim Jong Il, masterpieces were produced and re-presented one after another in the fields of the cinema, opera, drama and music. Examples of mass-based culture and the arts in the era of a great upsurge were set to inspire the whole country with revolutionary enthusiasm and militant spirit. Kim Il Sung University, Wonsan University of Agriculture and other institutions of learning were refurnished splendidly, and sportspersons registered good results bringing great pleasure to the people.

The victorious great upsurge of last year confirms that the DPRK is developing in leaps and bounds, and the day when the successful building of a thriving nation will be proclaimed is just approaching.

New Year Juche 99 (2010) is a year of general offensive, when all-Party and nationwide efforts should be concentrated on improving the people’s standard of living on the basis of the laudable victory and achievements of the great revolutionary upsurge.

Kim Jong Il said:

“Our building of the country into an economic giant is aimed, to all intents and purposes, at radically improving the people’s standard of living. When the people’s living standards are decisively improved, hooray for socialism and singing of Arirang of prosperity can ring out louder across the country and the gate to a prosperous nation be opened.”

This year marks the 65th anniversaries of the founding of the glorious Workers’ Party of Korea and the country’s liberation.

The anniversary of the founding of the WPK will be an important occasion for demonstrating the mounting national spirit and mettle of the Korean army and people, who are adding brilliance to the undying exploits performed by President Kim Il Sung in building the Party and carrying out the revolutionary cause of Juche and the human cause of independence, and are speeding up the building of a thriving socialist nation on the strength of the single-hearted unity around the leadership of the revolution. We should celebrate the anniversary as a great revolutionary event to be written down in the history of Kim Il Sung’s nation as we give the fullest play to their ardent loyalty to the Party, great guide, that has opened up a bright future for the country and people.

The great upsurge we are bringing about as we make unheard-of creation and leap forward under the leadership of the Party has entered a new phase.

The might of the country’s economy, including the heavy industry, was strengthened in the flames of the gigantic great upsurge, setting up a springboard for the country, already a politico-ideological and military power, to justifiably reach the status of an economic giant.

Now, based on the brilliant achievements of the great revolutionary upsurge, the Party is unfolding unprecedentedly grand plans and operations to bring about a decisive turn in the people’s standard of living. It is the firm determination and will of the Party to enable the people, who have braved severe hardships together with the Party, to enjoy the blessing of socialism to their heart’s content by getting them relish the substantial fruits of the present great upsurge and realize without fail the noble intention and desire of President Kim Il Sung who devoted his heart and soul to the people all his life. True to the intention of the Party, which regards it as the supreme principle in its activities to steadily improve the people’s standard of living and spares nothing for them, we should channel all our efforts to improving the people’s standard of living.

To launch a sweeping campaign to bring about a drastic turn in the improving of the people’s standard of living in the flames of the great revolutionary upsurge—this is the general orientation of this year’s efforts.

We should conduct an all-Party and nationwide drive for improving the people’s standard of living to ensure that the achievements of the great upsurge are followed by greater ones and this year becomes a prosperous year filled with the people’s happiness.

“Bring about a radical turn in the people’s standard of living by accelerating the development of light industry and agriculture once again this year that marks the 65th anniversary of the founding of the Workers’ Party of Korea!” is a slogan we should uphold.

Light industry and agriculture are the major fronts in the efforts for the improving of the people’s standard of living.

Great are the foundations of light industry and agriculture, which our Party has laid out with an eye on today against all odds.

An all-Party, nationwide effort should be directed to mass-producing consumer goods. The light-industry sector should carry forward the upgrading of its factories and enterprises on a high level, and strive to improve the quality of the consumer goods. Local-industry factories should be operated at full capacity, and units, as many as possible, should launch a campaign to turn out more daily necessities favoured by the public. The agricultural sector should sharply increase the grain output by thoroughly applying the Party’s policy of agricultural revolution, like improving the seeds, doing double cropping and improving potato and soya bean farming. It should strictly observe the requirements of the Juche farming method and introduce organic and other new farming methods and technologies. We should ensure that the updated stockbreeding, fish farming and fruit production bases that have established a Juche-oriented breeding system and embodied the principle of profitability demonstrate their great effect in reality.

We should radically increase the state investment in the fields related to the people’s living, and all the sectors and units should supply fully and in time the raw and other materials needed for the production of light-industry goods. We should gain access to more foreign markets, and undertake foreign trade in a brisk way to contribute to economic construction and the improving of the people’s standard of living.

The four vanguard sectors are the engine of the national economy and a key to solving the problem of the people’s living.

In December last year, Kim Jong Il kindled the flame for the new year’s drive while inspecting the Kim Chaek Iron and Steel Complex and placed the workers of the Songjin Steel Complex, who had perfected the Juche-based steel-making system, in the van of the great revolutionary upsurge in the Songun era. The vanguard sectors, with a firm view that the development of light industry and agriculture depends on that of heavy industry, should push ahead with today’s general offensive for the improving of the people’s standard of living by means of increased production.

Steel production leads to the production of grain and machinery. The sector of metal industry should increase the capacity of Juche iron production that relies on the domestic raw materials and fuel and scale without fail the targets of pig iron, steel and rolled steel production set by the Party. The sector of electric power industry should channel effort to run thermal power stations at full capacity and push ahead with the construction of large-scale hydroelectric power stations, including the Huichon Power Station. The sector of coal industry should produce coal without condition for the thermal power stations, chemical factories and other important units, and step up modernization projects to steadily enhance its production capacities. The sector of rail transport should set an order and discipline as strict as in the army, produce new-type locomotives and freight cars in a larger number and make railway service modernized and railways heavy-duty.

The sector of machine-building industry should extend the scope of introduction of the CNC technology on a high standard as required by the IT age, and effect a revolution in the production of tools, so as to produce high-performance, state-of-the-art machinery in a larger number.

We should implement the people-oriented policies of the Party and the state to enable all the people to substantially enjoy the benefits of socialism.

The true nature of our socialism lies in putting the people’s well-being above anything else and providing them with all the benefits. We should ensure that the advantages of the people-oriented policies, like giving free medical care and free education, formulated by President Kim Il Sung and applied by the Party and state throughout their history are given fuller play to in the people’s living. We should speed up the construction of 100 000 flats in Pyongyang with those in Mansudae Street as a model, and build beautiful socialist streets and villages in a greater number in other urban and rural areas. Socialist principles should be maintained in commodity circulation, and the quality of welfare service improved decisively.

The fundamental secret of making a new leap in this year’s general offensive is in launching a campaign to push back the frontiers of science and technology in all sectors.

We must turn out as one under the slogan, “Let us push back the frontiers of science and technology in all the sectors of the building of a great, prosperous and powerful country and leap higher and faster!” The sector of defence industry, a major front in pushing back the frontiers of science and technology, should continue to lead the efforts to open the gate to a great, prosperous and powerful country, and all other sectors and units of the national economy should launch a drive to push back the frontiers of science and technology. They should bring science and technology close to production and put themselves on a modern and scientific basis in a far-sighted manner, focusing on enhancing their abilities to develop new technologies and products. We should map out a correct strategy for the development of science and technology as required by the 21st century, and rapidly develop core technologies, technical engineering of major sectors and basic science. Scientists and technicians should fulfil their role as the pioneers in pushing back the frontiers of science and technology and standard-bearers in making their country a scientific and technological giant, with a determination to glorify their country by means of their intelligence, their technology. All the sectors should conduct a vigorous mass technological innovation movement to push back the frontiers of science and technology and create new norms and records.

Today’s vibrant reality requires a revolutionary change in the organizing of economic work.

The leading economic officials should map out aggressive and realistic business and management strategies, and actively push ahead with the advance of the current great upsurge. A strict discipline should be established in planning, financial management and labour administration, so as to give full play to the superiority of the highly-organized, socialist planned economy.

In order to maximize the speed of this year’s general offensive, it is necessary to give steady play to the unconquerable mental strength of the service personnel and people.

Our Party remains unchanged in its stand to persistently hold fast to the ideological strength, mental strength, no matter how the situation may change.

The mental strength of our people is based on the strong will and fighting spirit of General Kim Jong Il. All the Party members and other people should become staunch revolutionaries and vanguard fighters, who, defending their leader unto death, translate into reality the idea of great upsurge and the far-reaching plans of the General, who continues his unremitting forced march for the benefit of his country and fellow people. The slogan “When the Party is determined, we can do anything!” must become the eternal motto of our people in their life and struggle.

For us, who have to make a higher and faster leap towards the world, national dignity is as precious as life itself. We should thoroughly embody the Korean-nation-first spirit in all fields of social life as befits the people of a dignified power, who opened up an era of frontier science in which our satellite is circling the orbit.

The sector of art and literature should produce many masterpieces so as to give the fullest play to the mental strength of the service personnel and people.

In order to achieve the goals set by the Party this year, we should strengthen in every way the might of our revolutionary ranks, whose core is the Korean People’s Army.

The KPA should plan and conduct all forms of its military and political work on the highest level this year that marks the 50th anniversary of the start of the Songun-based revolutionary leadership of Supreme Commander Kim Jong Il, thus giving fuller play to the inexhaustible might of the revolutionary army of Mt. Paektu.

The KPA is an elite force that has formed a harmonious whole with the Supreme Commander in idea and will, in disposition and pluck, and in feeling and emotion.

It should train all its men and officers into the vanguard fighters of the Songun revolution, holding aloft the slogan “Let us defend with our very lives the leadership of revolution headed by the great Comrade
Kim Jong Il!” It should ensure that it overflows with the soldiers’ spirit of implementing without condition the orders and directives of the Supreme Commander by holding the work of establishing the revolutionary command system and military discipline as a priority task of the Party political work and developing the work without letup. It should always remain highly alert without a moment of relaxation or indolence while keeping itself fully ready for combat action so that it can resolutely frustrate any surprise attacks of the enemy.

The men and officers of the People’s Army should continue to perform feats that would go down in history in the grand construction sites, including the Huichon Power Station, by displaying the revolutionary soldier spirit. Under the slogan “Let us help the people!” they should strengthen the unity between the army and the people, a foundation of Songun Korea, and become the role models for civilians in the ideological spirit, morality, sports and physical culture, the arts and all other aspects.

The working class, youth and all other people, who are taking part in the effort for the building of a great, prosperous and powerful country, should launch determined offensives, regarding their work places as battle fields. Our workers should create a new speed of advance in the spirit of having performed labour feats during the 150-day and 100-day campaigns.

The youth, who are a shock brigade in the great revolutionary upsurge, should make breakthroughs in the construction site of the Paektusan Songun Youth Power Station and other most difficult and labour-intensive posts and build more monumental edifices representing the Songun era, burning their hearts with the determination to move even the mountain if the Party calls them to do so. They should become heroes, who add lustre to the era of great upsurge with undying labour feats, and talented persons, who highly demonstrate the dignity of the country by pushing back the frontiers of science and technology.

We should strengthen the Party and remarkably enhance the role of Party organizations to achieve a brilliant victory in this year’s general offensive.

This year, when we will be celebrating the 65th anniversary of the founding of the Party, Party organizations should give free rein to our Party’s militant might, which was built in the tempest of the Songun revolution, by bringing about a fresh turn in the Party work.

They should further intensify the Three-Revolution Red Flag Movement, so as to ensure that the revolution in ideology, technology and culture is waged briskly at all units.

We should defend the interests of the masses in a thoroughgoing way and solve all problems by relying on their strength as required by the revolutionary mass line of the Party.

Officials should become true servants of the people, who understand their sentiments and unfold their work as suited to these sentiments, and commanding personnel who, enjoy reputation and love among them, as they are possessed of free and easy character and ennobling humane traits.

All Party members, with a high political consciousness that they are the members of the glorious Workers’ Party of Korea, should become skillful political activists and courageous fighters, who always hold the flag in the van in all fronts of making a great upsurge.

The working people’s organizations should strengthen ideological education and briskly conduct various kinds of mass movements, like the socialist emulation movement among their members so as to give free rein to their patriotic enthusiasm in today’s effort for building a great, prosperous and powerful nation.

This year marks the 10th anniversary of the publication of the historic June 15 North-South Joint Declaration. The North-South Summit and the publication of the June 15 North-South Joint Declaration in 2000 were a historic event that is of great significance in accomplishing the cause of national reunification. Under the banner of June 15 North-South Joint Declaration, a new era of independent reunification has been opened, and great, unprecedented successes were achieved in the development of inter-Korean relations and the national reunification movement. The previous ten years since the publication of the June 15 Declaration followed by the publication of the October 4 Declaration for its implementation, during which the Korean nation has advanced along the road for independent reunification and peace and prosperity, has clearly confirmed that these declarations are the most reasonable reunification programmes and the ideal of “by our nation itself” is the very national spirit and the one and only ideal in the June 15 reunification era.

Last year, we took active and bold measures and made sincere efforts in order to improve the aggravated inter-Korean relations and bring a radical phase in national reunification. Our measures evoked great support and sympathy at home and abroad and created an atmosphere of dialogue and cooperation between the north and the south.

The schemes of the separatist forces to thwart the advance of the era of June 15 reunification are vicious, but they cannot break the desire and will of the fellow countrymen to achieve independent reunification and national prosperity by implementing the north-south joint declarations, and it is inevitable that the pro-reunification, patriotic forces will prevail over the separatist forces and emerge victorious.

This year we should hold high the slogan “Let the entire nation unite under the banner of north-south joint declarations and achieve national reunification at the earliest date!”

The way for improving the north-south relations should be opened.

Unshakable is our stand that we will improve the north-south relations and open the way for national reunification on the basis of the historic June 15 Joint Declaration and October 4 Declaration. If the south Korean authorities continue to negate the June 15 Declaration and cling to the policy of confrontation in collusion with the foreign forces, the relations between north and the south will never be improved. They should refrain from committing acts that may aggravate the confrontation and tension, and take the road of respecting the North-South Joint Declaration, promoting north-south dialogue and improving the relations between both sides.

National reconciliation and cooperation should be promoted actively.

Reconciliation should be promoted with the common national interests given precedence, and cooperation should be encouraged through travel and contacts between the people from all walks of life. All sorts of legal and institutional mechanisms that hinder the projects for common interests and prosperity of the nation should be abolished and free discussion and activities of the broad sections of the people for reunification should be fully ensured.

The unity of the entire nation constitutes a decisive guarantee for the country’s reunification. All the fellow countrymen in the north, south and abroad should strengthen solidarity and collaboration to develop the national reunification movement. They should build up the atmosphere of independent national reunification, reconciliation, cooperation and unity on a nationwide scale to greet the 10th anniversary of the publication of the June 15 North-South Joint Declaration and the 30th anniversary of the advancing of the proposal for the founding of the Democratic Federal Republic of Koryo.

The entire Korean nation should crown the year 2010 as a year of opening a new phase of independent reunification by frustrating all challenges of the anti-reunification forces with their concerted efforts and stepping up the grand nationwide march toward reunification.

The fundamental task for ensuring peace and stability on the Korean peninsula and in the rest of Asia is to put an end to the hostile relationship between the DPRK and the USA. It is the consistent stand of the DPRK to establish a lasting peace system on the Korean peninsula and make it nuclear-free through dialogue and negotiations. Our Party and the Government of our Republic will strive to develop relations of good-neighbourliness and friendship with other countries and achieve global independence under the unfurled banner of independence, peace and friendship.

Our Party is a great guide which steers our motherland and people to sure victory, and ours are a heroic army and people who perform everything without fail once the Party has planned and decided to do it.

The majestic firework display to be held on the auspicious October holiday will resound all over the world as a reflection of the determination of all the service personnel and people to follow the Party to the last along the road of Songun and the delight of all the people in enjoying the blessings of socialism.

More about the joint editorial below:
(more…)

Posted in CNC, Domestic publication, Kim's New Year Address (Joint editorials), Korea Today | 5 Comments »

North Koreans headed to Thailand

Friday, January 1st, 2010

According to Voice of America:

Thai immigration authorities say they took more than 1,000 North Koreans into custody this year, compared with less than 400 in 2008 when Beijing tightened security for the Olympics.

Read the full article here:
Increasing Numbers of North Korean Refugees Head to Thailand
Voice of America
12/30/2009

Posted in Emigration, Thailand | 4 Comments »

DPRK appropriating KEDO equipment

Friday, January 1st, 2010

According to the Joong Ang Ilbo:

North Korea has reused equipment and materials left from the halted construction work on light-water reactors, breaking a prior agreement with a multinational organization that oversaw the botched construction project.

According to the Unification Ministry and other sources, North Korea has taken 190 vehicles from the site in Kumho, South Hamgyong Province, and 93 pieces of heavy equipment, including cranes and excavators, and is likely using them for military purposes.

Sources said thousands of tons of steel bars and cement and communication devices are also being used by the North.

In late 2005, the Korean Peninsula Energy Development Organization, also known as KEDO, stopped construction of non-military nuclear reactors in the North. The work had begun in August 1997 as part of the 1994 Agreed Framework between the United States and North Korea. Under the terms of the agreement, Washington said it would build two reactors in the North in exchange for Pyongyang’s agreement to freeze all nuclear weapons activities.

But in October 2002, the United States said it had obtained intelligence that the North had been operating a clandestine program to produce highly enriched uranium to develop weapons and the U.S. State Department said North Korea admitted to doing so. By January 2003, the North withdrew from the Nuclear Non-proliferation Treaty. KEDO suspended its construction in November 2003.

Two years later, the KEDO’s board decided to terminate the construction project, which was about 30 percent complete. In December 2005, North Korea asked KEDO workers to leave the country and said they would not be allowed to repatriate equipment and construction materials.

At the time, KEDO and North Korea had agreed to leave materials at the site. Most belonged to South Korean subcontractors, and they had planned to sell off some of it to make up for financial losses stemming from the halted work.

In 2003, after the KEDO first suspended construction, the North said it would not allow the transfer of equipment unless it received compensation. A government official here said, “The North moved the equipment before we could even address the compensation issue, and that’s clearly in violation of our agreement. It can even be regarded as stealing.”

In January 2006, the Roh Moo-hyun administration in Seoul said the North had pledged to store the materials and that it expected the North to honor its word. Despite suspicions that the North had used some of the equipment in preparation for their second nuclear test this year, the current Lee Myung-bak administration has also remained silent.

But intelligence sources tell a different story.

They said the North started using equipment almost immediately after KEDO’s withdrawal and that the North Korean military was involved.

“North Korea is trying to keep South Koreans or KEDO officials from going near the construction base,” one source said. “Recent satellite photos of the site show that hundreds of the black covers that were used to conceal materials are mostly gone.”

Sources estimate equipment and materials are worth about 46 billion won ($39 million). South Korea, one of the founding members of the KEDO, spent $1.1 billion on the construction project.

Here is a satellite image of the KEDO reactors. Here is an image of the KEDO residential compound.

Posted in Construction, Energy, KEDO, Nuclear | 1 Comment »

DPRK bans use of foreign currency

Friday, January 1st, 2010

According to ABC News:

North Korea has banned the use of foreign currency, another sign its hard-line communist government is intent on reasserting control over the country’s nascent market economy.

Reports say the decree warns of severe punishment for anyone using U.S. dollars, euros, yuan and other non-North Korean currencies. Foreign currencies previously were accepted in some shops, restaurants and other outlets, particularly those catering to foreigners.

The order, issued by North Korea’s state security bureau and going into effect Jan. 1, aims to “forbid the circulation of foreign currency,” China’s state-run CCTV television said in a brief report late Wednesday.

The Daily NK, a Seoul-based online news outlet, said the order prohibits all individuals and organizations apart from banks from possessing foreign currency. It said the decree was posted in public and at workplaces, and went into effect Dec. 28.

There was no mention of the new ban Thursday in official North Korean state media. In Seoul, a South Korean official confirmed the ban, speaking on condition of anonymity because he was not authorized to speak to the media on intelligence matters.

The order comes weeks after the government redenominated North Korea’s currency, the won, as part of a far-reaching currency overhaul aimed at curbing runaway inflation and reasserting control over the economy.

The latest currency decree gives businesses 24 hours to deposit all foreign currency in banks. “When it is needed for trade, it can be withdrawn after obtaining approval,” it said, according to the Daily NK.

The ban is aimed at seizing foreign money tucked away by those still engaging in private market commerce, analysts said.

“North Korea has a problem with people trying to exchange their money for foreign currencies, and then storing the savings in their cabinets since they don’t know how the value of the local currency might change, said Jeong Kwang-min, a research fellow at the state-run Institute for National Security Strategy in Seoul.

The new ban shows the regime’s intention to “firmly” resolve and bring the black market under control, Jeong said.

“The ban is meant to root out people still trading at markets,” said Yang Moo-jin of Seoul’s University of North Korean Studies. “More broadly, it’s aimed at smoothly completing the currency reform by restricting the use not only of local currency but also foreign currency.”

The latest ban also applies to foreigners, who must exchange foreign bills into North Korean won in order to purchase items, reports said.

Sweden’s ambassador to North Korea, Mats Foyer, said by e-mail Thursday that he had received no official notification of the decree.

If this policy change does take effect, it will represent the republic’s third foreign exchange management regime.

Initially, the DPRK (like most communist countries) used Foreign Exchange Certificates (FECs) to control the circulation of foreign currency. When foreigners arrived in Pyongyang, they changed their local money for FECs which could be spent in various sanctioned retail outlets. The DPRK’s Foreign Trade Bank issued FECs which were different from local North Korean won (issued by the central bank) in both color and and purchasing power. Capitalist Westerners received green FECs and expats from fraternal socialist governments received red FECs. Coins were also differentiated.

Shopping could be a bit confusing, however. Price tags could potentially hold three numbers: the green FEC price, the red FEC price, and the won price. I believe that shops that catered to repatriated Japanese Koreans (such as the Rakwon Department Store near the Changwang Health Complex) were priced in actual yen, but it is possible these individuals were forced to exchange their yen into green FECs. Expats from fraternal socialist countries reportedly complained because although their governments were underwriting the DPRK, the red FEC prices in department stores were often higher than the green prices.

As in China, FECs were eventually abandoned and hard currency shops and state-owned retailers began accepting hard currency directly. I am not sure how, why, or when this transition occurred, but it was in effect until this week. Under this regime, tourists, diplomats, business persons and other visitors spent their dollars, euros, yen and yuan directly on goods and services in the DPRK, but the retail outlets in which they were allowed to make purchases were severely limited. Prices were originally denominated in dollars but in 2004 they were changed to euros (though dollars remained just as acceptable).

Under this regulatory regime, most visitors to the DPRK could arrive and leave without ever seeing any local currency. Some percentage of the foreign exchange undoubtedly ended up in KWP, KPA, and state coffers, however it is likely that quite a bit was skimmed off the top, legally or otherwise, in the process. This would explain the shift to the new regime.

This third foreign currency management regime is interesting but not for the reasons cited in the media. In addition to striking a blow at the country’s markets, which it most definitely will, this policy brings all of the overseas trading companies operating under the protection of the KWP, KPA, and select ministries, under the indirect control of the Foreign Trade Bank. Whereas these organizations were previously allowed to hold some level of foreign currency on site for discretionary purposes, they will now be forced to deposit these funds in a Foreign Trade Bank branch or exchange them for won at the official rate. Additionally, all of the future earnings that these organizations generate abroad will need to be handed over for won when their agents return from assignments overseas. It is highly likely that these companies will choose to keep their earnings overseas rather than repatriating them, or use their earnings to purchase cheaper goods which they can import into the DPRK (while pocketing the difference and keeping it in a foreign bank account).

The implications for tourists, visitors, and expats are also interesting. This new policy would imply that the Korea Trade Bank will set up currency exchange kiosk at the airports, border crossings, retail outlets, and hotels for foreigners to swap their currency for local won. Although we will have to declare our hard currency when entering the country, the fact that we are carrying local currency makes it easier for us to take advantage of spontaneous purchases–even potentially from private merchants and restaurants. In other words, knowing that locals will not come into possession of hard currency, the North Korean government might give us more “economic freedom” in our time there. Of course this is probably just wishful thinking. The gap between the official and market exchange rate will also give rise to black market currency traders who will seek out foreigners to the best of their abilities.

Overall, it is difficult to see this policy as anything but a power grab. Foreign exchange will become more difficult to obtain and so will the goods manufactured or grown overseas (including China). North Koreans will be left with fewer choices and as a result will come under greater control of the state. I am willing to believe that most North Koreans have enough sense to predict this outcome as well. It will be interesting to see how well this policy sticks or whether entrepreneurial North Koreans will find ways to evade the new rules as they have done countless times before.

Additional Links:

1. Here is a link to the original ABC story.

2. Here is a wikipedia page about the DPRK’s monetary history.

3. Here is the Daily NK story mentioned above.

4. Here are previous posts related to the DPRK’s currency revaluation.

5. This Reuters article adds additional information.

6. Here is a report by the Institute for Far Eastern Studies (IFES)

7. Here is a rather humorous report on the “benefits” that the currency fiasco is bringing the North Korean people.

Posted in Banking, Finance, Fiscal & monetary policy, General markets (FMR: Farmers Market), Tourism, Uncategorized | 6 Comments »