Archive for December, 2013

2013 private ROK aid to the DPRK

Monday, December 30th, 2013

Yonhap announced that the ROK is allowing private aid groups to send goods to the DPRK. The article also mentions the total volume of the ROK’s official and private assistance to the DPRK in 2013.

According to the article:

South Korea endorsed private humanitarian aid to North Korea on Monday, an official said, in the latest assistance to Pyongyang despite lingering tensions on the Korean Peninsula.

The two private aid groups are allowed to ship nutritional and medical supplies worth 240 million won (US$227,000) to infants, children and people suffering tuberculosis in the North, unification ministry spokesman Kim Eyi-do told reporters.

The planned aid brought the total amount of assistance to the North by South Korea’s private aid groups to 6.8 billion won since February when President Park Geun-hye took office in Seoul.

South Korea has also shipped aid worth 13.5 billion won to the North through international organizations since February.

All posts on South Korean assistance to the DPRK in 2013 can be found here.

All posts on aid to the DPRK can be found here.

All posts on aid to the DPRK that have statistics can be found here.

Read the full story here:
S. Korea approves private humanitarian aid to N. Korea
Yonhap
2013-12-30

Share

Economic Cooperation Office for Overseas Koreans

Sunday, December 29th, 2013

According to a recent article in Yonhap, the DPRK has established a new body to facilitate investments from overseas Koreans.

According to the article:

North Korea has established a government agency to facilitate investments in the communist nation by overseas Koreans, with its services to get into full swing by January, an official was quoted Sunday as saying.

Pyongyang established the “economic cooperation office for overseas Koreans” in August to provide support and guidance for investments from Koreans living overseas, the agency’s chief, Pak Kyong-jin, said in an interview with Minjoktongsin, a pro-North Korean website operated by a U.S.-based Korean.

The agency’s establishment is part of efforts to rebuild the economy, Pak said.

“An increasing number of overseas Koreans have been visiting the North to discuss investment issues. We have established the agency to handle these issues exclusively,” he was quoted as saying, adding that the agency will begin operation in earnest in January.

Pak said he would advise potential investors to focus on construction and light industries for the time being, rather than resources development projects that require massive amounts of capital.

I have been unable to locate any articles about this organization in KCNA or Naenara.

The DPRK also has the State Economic Development Commissio/Association for managing special economic zones/economic development zones (except for Hwanggumphyong, Rason, Kumgang, and Kaesong which have their own management committees), and the Joint Venture Investment Company for managing joint venture investments outside of the SEZs (presumably from non-Koreans). There is also a little known group called the Peach Economic Development Group which was recently announced. Their specific jurisdiction is unknown.

It is unclear what relationship (if any) this new organization has with these other offices.

You can read the full article here:
N. Korea establishes agency handling investments from overseas Koreans
Yonhap
2013-12-29

Share

DPRK grain production up in 2013

Friday, December 27th, 2013

According to Yonhap:

North Korea’s grain production is expected to rise slightly this year, a report said Friday, possibly higher than initially estimated.

According to the report from South Korea’s Rural Development Administration (RDA), the North’s overall grain production in the 2013-2014 harvest year is expected to reach 4.81 million tons, up 3 percent from 4.68 million tons tallied in the 2012-2013 period.

The rise comes partly from an increase in rice output, which is estimated to gain 2.9 percent on-year to 2.1 million tons.

The figure has a gap with an earlier estimate from the U.N. Food and Agriculture Organization (FAO), which forecast the communist state’s rice output to reach 1.7 million tons this year, slightly better than the annual average of 1.6 million tons.

“The weather in North Korea this year had been more favorable to the growth of crops (than last year) as the average temperature between May and September came to 19.9 degrees Celsius, 0.3 degrees higher than that of last year, while the country’s overall precipitation also rose 7.5 percent on-year to 1,001.5mm over the cited period,” the RDA said in its report.

The report said the North’s corn output was also expected to have gained 1.7 percent on-year to 1.76 million tons this year. The FAO earlier forecast the North’s corn output to reach 2.3 million tons.

North Korea suffers from chronic food shortages with the average amount of rice and corn consumed by the people said to be only half of the daily consumption recommended by the United Nations.

Read the previous post on the UN food assessment report here.

Read the full story here:
Report says N. Korea’s grain production likely to grow this year
Yonhap
2013-12-27

Share

DPRK consolidates gold export revenues

Friday, December 27th, 2013

According to the Daily NK:

Approximately two months prior to the purge of Jang Sung Taek, the North Korean authorities halted exports of gold ore from the mines of Hwanghae Province in the southwest of the country, Daily NK has learned.

The step allegedly followed the discovery of improprieties in the operation of mining enterprises managed by persons linked with Jang, and formed part of measures designed to bring foreign currency-earning activities en masse under strict Central Party control.

“The order to halt exports was handed down in October, some months before the official news of the purge of Jang Sung Taek,” a source involved in the industry told Daily NK on the 27th. “It was even applied to foreign currency-earners affiliated with Central Party organs, as well as those from normal provincial-level agencies.”

“A directive ordering operations to cease from the second half of the year was issued to Holdong and Eunpa mines in Yeonsan County, North Hwanghae Province. These mines are shut now and their shafts are just filling up with water,” the source went on. “Mine officials have told me that this order came down stating that neither provincial nor Central Party managed-enterprises were allowed to mine for gold.”

“By doing this just a few months before the Jang Song Taek purge, the authorities moved to integrate foreign currency-earning activities and confiscate those enterprises and funds formerly managed by Jang prior to his purging,” he added. Explicating his view of the logic behind the step, he went on, “[The authorities] wish to greatly reinforce their control over these foreign-currency earning enterprises’ resources so as to bring together the management of Kim Jong Eun’s ruling funds.”

“I am told that they discovered that the enterprises Jang was managing had not been passing their profits to the state in the prescribed manner, so they halted the trade completely” the source alleged. “They controlled the mines, saying that the reason was because Jang was flogging off natural resources for a low price.”

“Previously, only ore with a purity of 20-30g of gold per ton could be exported, so any ore with a lower purity than this was not controlled. But now they are stopping all gold ore from exiting,” he went on to explain, adding that the ban is causing serious problems for the region’s miners, many of whom rely in large part on income from the mines for their survival.

“They used to share export licenses with other enterprises and export ore that way, too, but right now that is also totally prohibited,” he added.

Read the full story here:
Gold Mining Stopped to Unify Funds
Daily NK
Oh Se Hyeok
2013-12-27

Share

Building the economy and construction projects emphasized once again

Friday, December 27th, 2013

Institute for Far Eastern Studies (IFES)
2013-12-27

In an effort to restore the mood of economic development following the ‘terror politics’ created from the execution of Jang Song Thaek, North Korean state media is beginning to emphasize “construction of a powerful economy” and “improvement of people’s lives” once again.

Rodong Shinmun reported on December 19, 2013 that all fields reached their production plans for the year, describing (on page 3) exemplary cases of various party organizations that upheld the legacies of Kim Jong Il and “displayed best practices that actively contributed to improving people’s lives.”

In one article (“Advancement in Science and Technology Is the Lifeline of Constructing a Powerful Economy and Improving People’s Lives”) the importance of science and technology was emphasized. It claimed, “breakthrough in science and technology is the best way to achieve a miracle and innovation in production while protecting the dignity of the nation in the era of knowledge economy.”

Korean Central Television, Korean Central Broadcasting, and Pyongyang Broadcasting encouraged its people to realize “new miracle, new record” in the production fields emphasizing the goals of the Kim Jong Un regime, “construction of economic powerhouse,” and “construction of civilized socialist nation.”

In addition, the military was presented with modern fishing boats. Kim Jong Un’s gift to the military may be interpreted as a display of interest in improving the welfare of soldiers. Kim Jong Un was reported to have made an on-site inspection at the “8.25 Fishery” military unit and expressed interest in the welfare of the soldiers.

Kim Jong Un is also continuing to commend “best citizens” as he delivered letters of appreciation to recognize those that displayed exceptional performance at the construction sites of Sepho Tableland and the residential complex for Kim Il Sung University (KISU) faculty members.

In the Kim Jong Un era, state media is continuing to emphasize the achievements in the construction sectors, calling these times a “new heyday of juche construction.” It listed last year’s construction achievements: completion of Changjon Street, People’s Theatre, Pyongyang Children’s Department Store, Rungra People’s Pleasure Park, People’s Outdoor Skating Rink, Pyongyang Folk Park, and Ryugyong Health Complex.

In addition, it boasted that Munsu Water Park was “miraculously” completed in only nine months. Other achievements were listed: War Memorial, Mirim Riding Club, Ryugyong Dental Hospital, Okryu Children’s Hospital, Unha Scientists Street, and KISU faculty apartment complex.

North Korea is propagating these achievements, heralding the Kim Jong Un era as the “glory days of construction” to promote his accomplishments and consolidate his power base.

During his own period of succession, Kim Jong Il sought the support of the masses by emphasizing construction of Changgwang and Munsu Streets and landmarks such as Juche Tower, Kaeson Mun (Gate of Triumphant Return), and Pyongyang Maternity Hospital.

Share

Orascom’s Audit 2013

Monday, December 23rd, 2013

UPDATE: I got the official exchange rate wrong in the initial post. I have corrected it.

ORIGINAL POST: A couple of weeks ago news came out that Orascom was holding off further investment in the DPRK until it was able to repatriate some of its profits. A few days later Orascom issued a press release denying this and asserting that they are looking for new investment opportunities in the DPRK.

This correction raises questions about just how significant Orascom’s profits in the DPRK are. Information on the growth of KoryoLink has been scarce since it was spun off into a subsidiary company (it no longer appears in Orascom shareholder reports)Martyn Williams did us all a favor, however, and found the Jan-Sept 2013 audit for Orascom Telecom Media and Technology Holding (OTMT), the company now holding the KoryoLink portfolio.

I have uploaded the audit to this site, and you can download it here (PDF). It contains the consolidated financial reports for OTMT, including KoryoLink.

The audit is posted as an image PDF (so the text is not searchable or easily copied into blog posts), but I offer some key data below. The caveat to keep in mind is that all of the USD$ calculations appear to be determined by converting DPRK Won (KPW) at the official rate (appx 100KPW/1US$ and 130KPW/1 Euro). This may be the appropriate accounting standard to employ, but needless to say, this radically overstates the market value of the firm’s position since the current black market rate of the won is approximately 8,000KPW/1US$:

OTMT-screenshot-1-2013-09

US$422 million is $42.2 billion North Korean Won (converted at the official rate). Converted back to US$ at the black market, the total is just US$5,275,000.

OTMT EBITDA (Earnings before income tax, depreciation, amortization) for the period Jan-Sept 2013 are listed as USD$178,962,000. This is just  US$2,237,025 million at the black market rate.

Capital expenditure from Jan – Sept 2013 is listed as USD$40,931, 000 (Appx $665,128 at black market rate).

KoryoLink’s tax exempt status ended on Dec 15, 2013.

The audit specifically addresses the difficulties of operating in North Korea’s official financial sector:

OTMT-screenshot-2-2013-09

Some additional documents from June of this year can be found here and here. I am not an accountant and already have enough on my plate, so if there are any researchers out there that want to take a crack at this stuff, please do.

Share

Economic gap between the two Koreas

Monday, December 23rd, 2013

According to Yonhap:

Trade and economic levels between South and North Korea remained quite wide last year, data showed Monday, pointing to prolonged lackluster business and economic conditions in the reclusive North.

According to the data by Statistics Korea, South Korea’s total trade volume stood at US$1.07 trillion as of 2012, which is 157 times larger than the North’s $6.8 billion. In particular, the South’s exports came to $547.9 billion, 188.9 times larger than those of the North.

The nominal gross national income (GNI) levels between the two Koreas also remained wide.

The GNI for the South was estimated at 1,279.5 trillion won ($1.21 trillion) last year, 38.2 times larger than the North, the data showed. On a per-capita basis, South Korea’s GNI was 18.7 times larger than that of the North.

South Korea also outperformed the North in infrastructure and other social overhead capital spending.

The South’s road network totaled 105,703 kilometers, which compared with the 26,114 km for the North, the data showed. The South had the power generating capacity of 81.8 million kilowatts a year, which is 11.3 times larger than the North.

The only category that the North outperformed the South was in coal production. It produced a total of 25.8 million tons of coal last year, about 10 times the amount of coal produced by the South, according to the data.

The two Koreas had a combined population of 74.4 million, with the South holding a population of about 50 million, the data showed.

The statistics agency has been providing such information on the North every year since 1995 as a way to provide a glimpse into the economic and industrial conditions of the reclusive country.

Read the full story here:
Trade, economic gaps between 2 Koreas remain wide: data
Yonhap
2013-12-23

Share

Koreas promoting Kaesong Industrial Center to foreign investors

Thursday, December 19th, 2013

According to the Associated Press:

North Korea allowed about 30 foreign government officials, central bankers and diplomats to tour the industrial complex in Kaesong. The foreigners were in Seoul, South Korea, for a conference of the Group of 20 countries.

“This is an authoritarian regime with a very nasty way of punishing anybody … who is against the regime,” said Paola Subacchi, director of international economics research at Chatham House, an independent policy institute based in London. “There’s no transparency, no accountability, nothing that could make an international investor happy and willing to invest.”

But Subacchi said the complex’s expansion might bring positive changes to North Korea because it would provide jobs and help feed North Korean workers and their families.

Hong Yang-ho, South Korean chairman of the committee that oversees management of the park, estimated the complex would create jobs for about 120,000 North Korean workers if it is fully occupied with factories. About 40 percent of the complex is currently being used.

The industrial park combines South Korean capital and technology with cheap North Korean labor. Currently around 53,000 North Koreans are working in the complex at some 120 companies. North Korea is estimated to have received $80 million in workers’ salaries in 2012, an average of $127 a month per person, paid in U.S. dollars, according to South Korea’s Unification Ministry.

The invitation to visit Kaesong was the first concrete step that the two Koreas have taken toward opening the complex to overseas investors since they agreed to restart the park in September.

Operations had been halted in April when North Korea withdrew its workers amid tension over its threats of nuclear war. The complex reopened after North Korea toned down its rhetoric and began pursuing diplomacy with South Korea.

The two Koreas also agreed to work toward attracting overseas investment and discuss other ways to improve business, including better communication and allowing people and goods to move more freely to and from Kaesong.

Domenico Lombardi, a think tank director, said he would not build a factory in Kaesong if he were a businessman because of the risks and high uncertainty.

But he said it was a positive sign that North Korea was eager to show the park to foreigners.

“This is the first step of what a more open North Korea would be one day,” said Lombardi, director of the Global Economy program at the Center for International Governance Innovation, based in Ontario, Canada.

The next challenge for North Korea will be “making their own economy more accessible to foreign investors,” Lombardi said.

Read the full story here:
Inter-Korean Factory Park Tough Sell to Outsiders
Associated Press
Youkyung Lee
2013-12-19

Share

US OFAC expands sanctions list

Thursday, December 19th, 2013

According to the Daily NK:

It is believed that representatives from Excellence Mineral Manufacturing Co., Ltd and Soe Min Htaeik Co. recently met with North Korean authorities to facilitate the import of military supplies for use in North Korea’s state-run weapons program.
A third company, Asia Metal Company Limited, is thought to have constructed factory facilities for use by the Myanmar Directorate of Defense Industries (DDI).  It is estimated that around thirty North Korean nationals are currently employed on the site.
Lt. Col. Kyaw Nyunt Oo of the DDI was the only individual added to the list.

Information on OFAC’s Specially Designated Nationals List (SDN) can be found here.

Here is a link to the SDN List Sorted by OFAC Sanctions Program (Search for DPRK)

Here is a link to the SDN List Sorted by Country (Search for Korea, North)

Read the full story here:
NK Weapons Suppliers Added to Sanctions List
Daily NK
Jin Dong Hyeok
2013-12-19

Share

Dennis Rodman’s third trip to DPRK

Thursday, December 19th, 2013

UPDATE 2 (2013-12-26): A couple of the individuals involved in getting Rodman into the DPRK for his second trip (post-Vice) have written an op-ed explaining their motivation. According to the article:

Sometimes private citizens can ease tensions between governments when public officials cannot.

Since we met NBA Hall of Famer Dennis Rodman in May, we have been helping to coordinate his visits to the Democratic People’s Republic of Korea and organize an international basketball tournament sponsored by Irish bookmaker Paddy Power. Seeing as our government has branded the DPRK a “critical” national security threat, we find it reflects badly on Foggy Bottom that the three Americans best acquainted with its supreme leader are a retired NBA star, a mixed martial arts fighter and a tuba-playing human geneticist.

Mr. Rodman constantly reminds those around him to “just do one thing: Do your job.” Now it seems he is picking up some of the slack for the U.S. State Department.

Despite decades-old antagonisms, it was ultimately not confrontation but détente between the capitalist and communist blocs that brought the threat of global nuclear war to an end. Perhaps the most memorable episode of this process was President Richard M. Nixon’s visit to the People’s Republic of China and the period of Ping-Pong Diplomacy that laid the groundwork for it; USA/PRC relations were theretofore nonexistent. As Klaus Mehnert put it, the country “had been closed off so completely that there seemed to be about as many astronauts going to the moon as there were foreign observers getting into China.”

In 1967, presidential candidate Richard Nixon expressed his hope for détente with Peking, writing, “There is no place on this small planet for a billion of its potentially most able people to live in angry isolation.” On Christmas 1970, People’s Daily ran a front-page story with a photograph of Chairman Mao Tsetung and American journalist Edgar Snow standing side by side atop the Tien An Men rostrum; at the top of the page, the day’s Mao quote: “All the peoples of the world, including the American people, are our friends.” While Washington dismissed this gesture given Snow’s sympathy for Mao, in retrospect it seems it was intended as a subtle olive branch.

With spring came a chance meeting between American and Chinese ping-pong players concluding with an exchange of gifts. This simple act of humanity touched off a string of cultural and, later, diplomatic interactions.

Days later, the American team was invited to Peking. President Nixon took the opportunity to announce an easing of sanctions and his hope for normalized bilateral relations and “the ending of the isolation of Mainland China from the world community.”

Henry Kissinger’s secret visit to Peking that summer paved the way for “the Week that Changed the World.” Although Nixon and Mao certainly did not see eye to eye, their shared view that diplomacy is preferable to both isolation and war made normal relations between Washington and Peking possible.

The value of cultural exchanges consists in their power to erode misconceptions. For instance, Dr. Terwilliger spent a month this summer in Pyongyang teaching human evolutionary genetics to a class of very talented Korean undergraduates.

Aside from teaching scientific critical thinking, he took care to present his students with the best side of the American people, to demonstrate that we are a generous and friendly people rather than the “brigandish aggressors” of the familiar caricature. He was both surprised and encouraged by their interest in Mr. Rodman’s February visit.

They noted that hearing Mr. Rodman say nice things about their country made them rethink their stereotypes about Americans, for they had now seen one embracing their leader. Many had even read Mr. Rodman’s autobiography and remarked that they admired his frankness in describing the difficulties he faced in his early life.

Such reactions can only bode well. Hostility is inevitable when the common man on each side sees highlighted only the worst aspects of the other. Mutual understanding is where rapprochement starts.

While the first few timid steps may proceed slowly as trust is built, the example of Ping-Pong Diplomacy demonstrates that if the momentum is sustained it can offer governments new options with which to pursue peace and may even be developed into a full gallop (what the Koreans call “Chollima speed”) toward rapprochement. At the very least, track-two diplomacy can present unique opportunities for engagement between private citizens whose governments remain at odds.

Mr. Rodman would be the first to recognize that he is neither a politician nor a diplomat — and yet, that is precisely what makes him such a promising agent of reconciliation. As a cultural icon, Mr. Rodman has the power to project a relatable human face in a way a government functionary simply cannot: by doing down-to-earth things all people can enjoy.

Our government has repeatedly missed the basket, but at least this time Mr. Rodman is there to pick up the rebound. As he has said, “[Kim Jong Un] loves basketball. … Obama loves basketball. Let’s start there.”

An associate professor at Columbia University in New York City, Joseph D. Terwilliger was a member of Dennis Rodman’s September and December delegations to Pyongyang. John Doldo IV, a Watertown native who has also spent time in North Korea, has been working behind the scenes helping to coordinate many aspects of the project. Both authors worked on a strictly voluntary basis in order to avoid any financial conflict of interest.

UPDATE 1 (2013-12-24): According to NK News, the Irish gambling company Paddy Power has decided to end its sponsorship of Rodman’s trips to the DPRK. According to the article:

Irish betting company Paddy Power has ended its partnership with Dennis Rodman and his “basketball diplomacy” initiative.

“We have been reviewing the partnership on an ongoing basis, and with the benefit of hindsight, we probably got this one wrong,” company spokesman Paddy Power (and son of Paddy Power’s founder, Paddy Power) tells NK News.

“Circumstances have changed quite a lot in North Korea; there has been worldwide scrutiny of the North Korean regime, probably more in the past month than in the past couple of years.

“There has been almost total condemnation of North Korea worldwide, and we’re really responding to that.”

Though they won’t be involved, Rodman’s plan to bring 11 other former NBA players to Pyongyang is still a go, according to Power.

“We have spoken to Rodman’s people,” he says. “The event is apparently still happening, but we just won’t be a part of it.”

“Dennis is very appreciative of Paddy Power’s support up to this point for this historic game of basketball diplomacy taking place on Jan. 8th,” Rodman’s agent Darren Prince told the Associated Press.

Here is an article on the history of Rodman and Paddy Power.

ORIGINAL POST (2013-12-21): Dennis Rodman has made his third trip to the DPRK. Trip one post here. Trip two post here.

The organizer, Michael Spavor, has been tweeting the trip here. Based on his pics, here is the appx itinerary:

1. Arrive at night and drive to hotel (motorcade). 2013-12-19

2. Meeting with sports minister. Poto with sports minister. Meeting room. 2012-12-20

3. Dennis Rodman “leads” training for DPRK team. Game scheduled against an American team in January. Pic 1, Pic 2, Pic 3, Pic 4, Pic 5. 2012-12-20. Here is AP video of the training. Rodman is smoking a cigar.

4. Travel to Koryo Hotel for lunch. 2012-12-20

5. Travel to Korea Federation for the Protection of the Disabled. Pic 1, Pic 2, Pic 3. 2012-12-21

6. Travel to the Recuperation Center and pools at the newly renovated Munsu Water Park. Pic 1, Pic 2, Pic 3, Pic 4, Pic 5, Pic 6, Pic 7, Pic 7, Pic 8, Pic 9. 2012-12-21

7. Travel to Mirim Riding Club. Pic 1, Pic 2, Pic 3, Pic 4, Pic 5, Pic 6. 2012-12-21

Rodman and the group left the DPRK without meeting Kim Jong-un, however, I suspect that he will get together in the upcoming fourth trip slated to take place in January.

Journalists have asked Rodman about current events (Jang song-thaek, Kenneth Bae and human rights) in the DPRK, and he has responded. According to the Telegraph:

“It has nothing to do with me. I mean, whatever his uncle has done, and whoever’s done anything in North Korea, I have no control over that,” Rodman said in Beijing. “I mean, these things have been going on for years and years and years.

“I’m just going over there to do a basketball game and have some fun,” he said.

Ahead of the trip, Seoul-based North Korean human rights activist Shin Dong-hyuk said in an open letter in the Washington Post that Rodman should talk to Kim about human rights abuses in North Korea.

Rodman said it was not his place to talk about such issues.

“People have been saying these things here and there. It doesn’t really matter to me. I’m not a politician. I’m not an ambassador,” he said.

“I’m just going over there to try and do something really cool for a lot of people, play some games and try to get the Korean kids to play,” he said.

“Everything else I have nothing to do with. If it happens that he wants to talk about it then great. If it doesn’t happen I just can’t bring it up because I don’t (want) him to think that I’m over here trying to be an ambassador and trying to use him as being his friend and all of a sudden I’m talking about politics. That’s not going to be that way,” Rodman said.

Rodman is expected to provide North Korea’s national basketball team with four days of training during the trip.

Here is a video interview with Rodman at the Koryo Hotel. Here is much of what he said in the video printed in an article.

He also intends to return to Pyongyang in January with a team of fellow former National Basketball Association stars to hold basketball games on Kim’s birthday.

Share