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Archive for March, 2015

DPRK-Russia trade in 2014

Wednesday, March 18th, 2015

UPDATE 1 (2015-3-18): Although overall trade volume between the DPRK and Russia was down in 2014, North Korea’s exports to Russia were up. According to Yonhap:

North Korea’s exports to Russia soared nearly 32 percent in 2014 from a year earlier, a report showed Wednesday, amid Pyongyang’s efforts to bolster ties with Moscow.

According to the report by the Korea Trade Investment Promotion Agency, North Korea’s outbound shipments to Russia reached US$10.17 million in 2014, up 31.9 percent from a year earlier.

By item, textile exports came to $4.7 million, or 46.2 percent of the total, followed by machinery with $1.6 million, musical instruments with $1.37 million and electrical equipment with $670,000.

Pyongyang also sold $250,000 worth of cars to Russia last year, 2.3 times more than the previous year, with shipments of optical devices soaring more than 60 times to $190,000.

Bilateral trade volume, however, fell 11.4 percent on-year to $92.34 million last year as Pyongyang’s imports from Russia shrank 14.9 percent to $82.17 million.

Crude imports dropped 7.9 percent on-year to $33.98 million last year, taking up the largest 41.7 percent share of the total imports.

“North Korea has been striving to strengthen economic cooperation with Moscow, though it will take time for the North to diversify its trade markets due to its heavy dependence on China in the past,” said Cho Bong-hyun, a senior research fellow at the state-run Industrial Bank of Korea (IBK) in Seoul.

Last year, more than 90 percent of its exports were bound for China. Bilateral trade between North Korea and China, however, fell 2.4 percent from 2013 to $6.39 billion in 2014, marking the first annual decline since 2009, according to Seoul data.

The 2014 figure is seen as signaling that the strained political ties between the two nations, particularly after the North’s third nuclear test in February 2013, have affected their economic relations.

Amid such languid ties with Beijing, North Korea has been ramping up efforts to forge a closer relationship with Russia, with the two nations declaring 2015 as a year of friendship.

ORIGINAL POST (2014-12-4): According to Yonhap, trade between North Korea and Russia (imports and exports)dropped significantly in the first three quarters of 2014:

Trade between North Korea and Russia dropped significantly this year, despite Pyongyang’s efforts to step up economic cooperation with Moscow, data showed Thursday.

Russia’s exports to North Korea reached US$59.01 million in the first nine months of this year, down 10.1 percent from the same period last year, according to the data by the Vladivostok office of the state-run Korea Trade-Investment Promotion Agency (KOTRA).

In particular, Russia’s exports of flour to North Korea plunged 72.2 percent on-year to $770,000.

Russia’s imports from its neighbor also fell 7.9 percent on-year to $6.46 million during the January-September period.

North Korea’s imports of electronics and coal from Russia also tumbled 61 percent and 44.6 percent, respectively, according to the data.

Russia’s imports of North Korean nuclear reactors, boilers and other machinery, meanwhile, shrank 57.1 percent on-year to reach $451,000,

Bucking the overall decline, Russia’s imports of North Korea-made clothes soared 35.5 percent on-year to $3.61 million, maintaining an uptrend of recent years.

North Korea has been intensifying efforts to expand economic cooperation with Russia, recently deciding to use the Russian ruble as a trade currency as well as launching a fledgling logistics project to link Russia’s border city of Khasan to the North’s port of Rajin.

Read the full story here:
N. Korea-Russia trade shrinks this year
Yonhap
2014-12-4

Posted in Energy, International trade, Oil, Russia, Statistics, Trade Statistics | 2 Comments »

DPRK blamed for cyber attack on South Korean nuclear power plant

Tuesday, March 17th, 2015

UPDATE 1 (2015-3-26): The DPRK has denied the hacking allegation. According to Yonhap:

North Korea again denied its involvement in a series of data leaks at South Korea’s nuclear power operator and rebutted Seoul’s interim probe results that accused the communist regime of conducting the hacking attacks.

The North’s Central Internet Research Institute said that the investigation that linked Internet protocol addresses used in the attack to North Korea is groundless and was fabricated by Seoul, according to Pyongyang’s state media Korean Central News Agency.

The denial follows a March 17 announcement by a special investigation team that found the data leaks at the Korea Hydro and Nuclear Power Co. “believed to have been caused by an (unidentified) group of North Koreans hackers.”

In December, an unidentified hacker, claiming to be an activist against nuclear power, had posted data about nuclear power plants, including their blueprints, five times and threatened to destroy the facilities while demanding they be shut down.

Earlier this month, the hacker renewed its threats by posting more files on Twitter that included documents concerning the country’s indigenous advanced power reactor 1400, while demanding money in exchange for not handing over sensitive information to third countries.

The state-run KHNP operates 23 nuclear reactors in South Korea that provide nearly one-third of the country’s energy demand.

ORIGINAL POST (2015-3-17): According to the Wall Street Journal:

South Korea on Tuesday blamed North Korea for a December cyberattack on nuclear power-plant operator Korea Hydro & Nuclear Power Co., marking the first online incursion publicly attributed to Pyongyang since the hacking of Sony Pictures Entertainment.

South Korean investigators said state-owned Korea Hydro, which operates the country’s 23 nuclear reactors, and its business partners were targeted in multiple cyberattacks aimed at stealing internal data that included plant blueprints and employees’ personal information.

South Korea’s nuclear-plant management wasn’t compromised in the attacks and no critical data was disclosed, the investigators said. A series of “spear-phishing” emails aimed at stealing passwords and obtaining remote control access of computers were largely unsuccessful, they added.

A Korea Hydro spokeswoman declined to comment, saying the firm wasn’t participating in the investigation.

A Twitter account holder in December posted Internet links to Korea Hydro’s internal-data archives and issued various demands to prevent further leaks, the investigators said.

Investigators said they traced the intrusions back to Internet addresses registered by North Korea. The spear-phishing virus that investigators said was used in the attack, named “kimsuky,” was previously identified by cybersecurity experts as created in North Korea. The related tweets were posted through servers in Shenyang, in China’s northeast, and Vladivostok, Russia, they said.

Pyongyang’s state newspaper in late December denied involvement in the cyberattacks, calling such accusations a ploy to escalate inter-Korean tension.

Tuesday’s statement was the first time South Korea had publicly attributed the cyberattacks to North Korea.

Here is coverage in Yonhap.

Read the full stories here:
North Korea Blamed for Nuclear-Power Plant Hack
Wall Street Journal
Jeyup S. Kwaak
2015-3-17

Posted in Cyber attacks, Illicit activities, South Korea | Comments Closed

South Korea to help develop fish farms in DPRK

Tuesday, March 17th, 2015

According to Yonhap:

South Korea, together with the U.N. Food and Agriculture Organization (FAO), plans to help develop fish farms in North Korea as an aid to the impoverished state, the government said on March 17.

According to the Ministry of Oceans and Fisheries, the Korea Maritime Institute will soon sign an agreement with the FAO to launch a joint study on the fish-raising industry in the North.

The two parties will study climate conditions in North Korea and find the best species for farming, and based on the outcome of the study, South Korea and the FAO will raise a 30 billion won (US$26.5 million) fund to help build new fish farms in the North, the ministry said.

The aid, however, will likely be delivered by the FAO as Pyongyang continues to be at odds with Seoul over its nuclear program.

Inter-Korean dialogue has nearly come to a halt after the North’s third nuclear test in early 2013. The communist state continues to blast daily threats and slander against the South’s Park Geun-hye government.

South Korea’s National Red Cross had offered to send 25 tons of powdered milk for the malnourished children of North Korea last month, but Pyongyang quickly rejected the offer.

North Korea is believed to have suffered a chronic shortage of food since the late 1990s. The country continues to depend heavily on international handouts to feed a large portion of its population of 24 million, accepting nearly $20 million worth of international aid in the first half of 2014 alone.

You can read the whole story here:
S. Korea to help develop fish farms in N. Korea
Yonhap
2015-3-17

Posted in 2015 aid from South Korea, Agriculture, Food, International Aid, South Korea, UN Food and Agriculture Organization | Comments Closed

‘Donju’ step in on state construction

Monday, March 16th, 2015

Pictured Above (Google Earth): The Sunchon Thermal Power Plant Health complex

According to the Daily NK:

The donju —North Korea’s nouveau riche — have recently been expanding their business inroads. Whereas this contingent previously forayed in wholesale/retail businesses, the burgeoning real estate market, and transportation, they are now yielding profits by increasingly partaking in state construction projects, Daily NK has learned.

“The South Pyongan Sunchon Thermal Power Plant recently built swimming pools and bathhouses by utilizing waste heat recovery, a project in which several of the donju invested,” a source in South Pyongan Province informed Daily NK on the 16th. “The authorities merely granted permission—the entire project was undertaken with the money invested by the donju.”

The recently constructed swimming pool can hold up to 200 people, creating potential for significant financial profits to be split 50/50 between the state-run power plant and the donju investors, according to the source. She noted that since last year, the Sunchon Thermal Power Plant has already reaped in significant construction funds through residual revenue from the swimming pool.

“The swimming pools, bathhouses, and steam room facilities boast modern amenities, such as restaurants and snack bars, attracting scores of patrons,” she explained. “All the waste heat from the power plant turbines was squandered until the launch of this construction project, which was based on a proposal by the donju to redirect the secondary heat in order to establish swimming pools and steam bathhouses.”

Those members of the donju with more expendable wealth have impressive business acumen, utilizing connections with executives of state-run enterprises in order to partake in various profitable ventures. “The donju are doing what the state cannot ,” the source pointed out.

She expounded on this by saying that donju business domains are rapidly expanding to encompass state construction endeavors. Beset by financial difficulties, North Korean officials are heavily reliant on the donju to implement state-run construction projects, creating a de facto “public-private partnership.” Party cadres forge a symbiotic relationship with the donju: the former receive immense kickbacks from the latter, who are more than willing to pay for the opportunity to expand their business terrains.

“The city of Sinuiju has been carrying out a large-scale national project of building apartments recently,” a different source based in the city told Daily NK. As previously reported by Daily NK, a multitude of the donju have invested in this large-scale venture.

“The donju are investing in the apartment construction under the condition of attaining a certain degree of leasing rights; in other words, they will effectively own the place and charge rent to individuals to reap in profits,” she concluded.

Read the full story here:
‘Donju’ Step In on State Construction
Daily NK
Seol Song Ah
2015-3-16

Posted in Black markets, Construction, Economic reform | Comments Closed

And just how much are overseas North Koreans earning?

Monday, March 16th, 2015

Anna Fifield, in this interesting Washington Post story, actually gets a current data point:

Kim is part of the economic lifeline that is keeping North Korea afloat. He manages a factory in a small town outside Dandong, China’s commercial gateway to North Korea, where North Korean women work making clothes for a Chinese company. The women are allowed to keep one-third of the $300 a month they earn, while the rest goes back to Kim Jong Un’s regime in Pyongyang.

In a second article, she provides a little more information:

In the clothing factory, the women work 13 hours a day, 28 or 29 days a month, and are paid $300 each a month — one-third of which they keep. The rest goes back to the government in Pyongyang.

“Even though I want to pay them more, I have to send a certain amount home to my country, so this is all I can give them,” Kim said in his office at the factory. On his desk, an open laptop revealed that visitors had interrupted his game of solitaire.

…

North Korea is thought to have at least 50,000 workers outside the country earning money for the regime, and 13,000 of them work in Dandong.

Assuming that there are 50,000 workers earning $200 each / month for Pyongyang (a low-ball figure in my opinion), this would imply a cash transfer of $120 million per year. Not a lot of money on a national scale, but remember this is a lower-bound estimate.

At the same time in Geneva, special rapporteur Marzuki Darusman said he was launching an inquiry into the “bonded labourers” working for the DPRK. Read more about this in The Guardian.

The full articles are worth reading here:
“Talking kimchi and capitalism with a North Korean businessman”
Washington Post
Anna Fifield
2014-3-16

North Korea’s growing economy — and America’s misconceptions about it
Washington Post
Anna Fifield
2014-3-13

Posted in China, International trade, Labor conditions/wages | Comments Closed

North Korean cabinet adopts forest restoration resolution

Thursday, March 12th, 2015

According to the Institute for Far Eastern Studies (IFES):

North Korea’s official news agency, Korean Central News Agency reported on March 7, 2015 that the North Korean Cabinet has adopted a resolution to support national forest restoration activities.

According to the news agency, the Cabinet recently “announced this decision, which they adopted to fully mobilize the entire party, military, and citizenry in the forest restoration battle.”

The resolution states that the General Bureau of Forestry of the Ministry of Land and Environment Preservation will procure the funds necessary for forest restoration and that the State Planning Committee, General Bureau of Forestry of the Ministry of Land and Environment Preservation, as well as other agencies such as the forestry and agriculture ministries, will draft a concrete plan.

The directive also set up a management system including a supervisory and regulatory task for forest conservation, and it urged for cooperation between county residents and the development of scientific technology in the forestry sector.

In accordance with First Chairman of the National Defence Commission Kim Jong Un’s guidelines, since last year North Korea has repeatedly drawn attention to the precarious state of the country’s forests and has been encouraging tree-planting and nature conservation.

Welcoming ‘Tree-Planting Day’ on March 2, Kim Jong Un also revealed North Korea’s plans to begin an intense forestation restoration campaign. The leader spoke directly regarding this effort, saying, “Forests are a precious resource of our country and a great treasure that we must bequeath to future generations […] However, since the ‘Arduous March,’ people, while saying that they are procuring firewood and provisions, have recklessly damaged our forests, and since the country could not even erect a forest fire prevention measure, our country’s precious forest resources have been greatly reduced.”

In addition, while referencing issues like the drought and damage incurred during the rainy season due to the deforestation, Kim Jong Un emphasized patriotism: “If the country’s forests are not currently beyond repair, they lie at the crossroads of recovery.”

Ordering the complete restoration of forests within 10 years, Kim added that “The entire party, military, and citizenry need to fully engage in a forest restoration battle to make the green forests in the Motherland’s mountains lush.”

Following this, ‘Tree-Planting Day’ was held as an extensive tree-planting event, and Kim Jong Un encouraged the people to plant many saplings in the central tree nursery and regional tree nurseries.

In addition he stressed the importance of the forest conservation work and ordered the supervision and regulation of forest development and conservation through means such as the prohibition of reckless logging, forest fire prevention measures, and the provision of firewood.

On March 2, 2015, Rodong Sinmun reported that Kim Jong-un had given a talk on forestry. You can download a PDF of the talk here.

Posted in Cabinet, Forestry, Lumber, Ministry of Land and Environment Conservation | Comments Closed

DPRK, Russia declare 2015 as “friendship year”

Wednesday, March 11th, 2015

According to KCNA:

The Democratic People’s Republic of Korea and the Russian Federation decided to make 2015 in which fall the 70th anniversaries of Korea’s liberation and the victory in the great Patriotic War in Russia as a year of friendship between the two countries, prompted by the purpose to develop the bilateral relations onto a new higher stage in various fields including politics, economy and culture under a mutual agreement.

During the year of friendship the two countries are to invigorate exchanges of delegations and contacts between national institutions and regions and hold joint cultural events in Pyongyang and Moscow and other cities of the two countries.

Here is coverage in Yonhap:

North Korea and Russia will mark 2015 as a year of friendship and step up bilateral exchanges in political, economic and cultural sectors, the North’s official news agency said Wednesday.

“The Democratic People’s Republic of Korea and the Russian Federation decided to make 2015, in which falls the 70th anniversaries of Korea’s liberation and the victory in the great Patriotic War in Russia, as a year of friendship between the two countries,” the North’s Korean Central News Agency (KCNA) said in a brief dispatch.

The countries will “develop the bilateral relations onto a new higher stage in various fields, including politics, economy and culture under a mutual agreement,” the KCNA said.

The two countries will also invigorate exchanges of delegations and contacts between their national institutions and regions, the report said, adding that joint cultural events will take place in Pyongyang and Moscow as well as other cities.

The designation came as the two countries are scurrying to tighten bilateral ties amid languid North-China relations.

Choe Ryong-hae, a governing party secretary, visited Russia in November as a special envoy of North Korean leader Kim Jong-un as part of efforts to improve relations.

In May, the North Korean leader is expected to attend a Russian ceremony in Moscow marking the 70th anniversary of the Soviet victory over Nazi Germany in World War II. It would be the reclusive leader’s first foreign visit since taking power in December 2011.

Here are some recent Russia-DPRK engagement stories:

1. Russia-Korea pipeline development
2. DPRK and Russia set up business and exchange council
3. DPRK-Russia trade down in 2014
4. Russian investment in DPRK railway line and coal exports
5. Port No. 3 in Rason and coal shipments to South Korea
6. Russia forgives DPRK debt

You can read the full Yonhap story here:
N. Korea, Russia declare 2015 as friendship year: KCNA
Yonhap
2015-3-11

Posted in International trade, Russia | Comments Closed

Korea-China FTA (as it relates to the DPRK)

Wednesday, March 11th, 2015

UPDATE 1 (2015-3-11): Dandong tries to position itself as gateway to North Korea via China – [South Korea] FTA. According to Yonhap:

The Chinese border city of Dandong, known for its bustling trade with North Korea, has unveiled a plan to become a “bridgehead” to boost trade between South Korea and China as the two nations work to formally sign a bilateral free trade deal.

The plan, put forward by the Dandong city government in Liaoning province on Tuesday during the country’s annual session of the Communist Party-controlled parliament, came as the bilateral trade deal between South Korea and China is expected to be signed within the first-half of this year.

“China and South Korea completed free trade negotiations. Dandong will make efforts to serve as a bridgehead of trade between China and South Korea,” the Chinese city government said in a statement.

The trade deal is expected to give a big boost to the city’s ambition to become a trade hub in the northern parts of the Yellow Sea and the Bohai Strait, adjacent to the Korean Peninsula, it said.

Details of the Chinese city’s plan are sketchy, but the city is expanding its logistics and marketing facilities to cope with rising trade if the South Korea-China free trade deal is implemented, according to the statement.

As much as 80 percent of bilateral trade between North Korea and China is conducted through Dandong.

Although China’s trade with North Korea appears largely unaffected, large-scale economic projects between the allies have made little progress as China’s leadership has been increasingly frustrated with the North’s defiant pursuit of nuclear weapons.

Last week, Chinese Premier Li Keqiang said Beijing will spare no effort to formally sign a bilateral free trade agreement with South Korea “as soon as possible.”

The deal calls for South Korea and China to remove tariffs on about 90 percent of goods traded between the two nations over the next two decades. However, rice and cars were excluded from the deal.

ORIGINAL POST (2015-2-26): Goods at teh Kaesong Complex will be included in the China-[South] Korea FTA. According to the Joong Ang Daily:

More than 300 products manufactured in the Kaesong Industrial Complex in North Korea will be given special tariff reductions for export to China once the Korea-China Free Trade Agreement (FTA) takes effect, the South Korean government said Wednesday.

This is the largest number of products from Kaesong that will be eligible for tariff reductions in a bilateral trade pact signed by Korea. Its FTAs with the United States and the European Union don’t deal with products manufactured by South Korean companies in the North Korean industrial park.

New agreements have been negotiated in the three months since President Park Geun-hye and Chinese President Xi Jinping announced the free trade pact last November in Beijing.

According to the Ministry of Trade, Industry and Energy, a newly upgraded pact was signed and exchanged on Wednesday in Beijing after follow-up negotiations were held recently.

China is the largest importer of Korean goods in the world, and trade with the country has consistently risen over the past decade.

The FTA initialing on Wednesday in Beijing came after three months of continuous negotiations in which the two sides came up with more detailed articles and resolved technical and legal details.

On Wednesday morning, commercial attaches from the Korean embassy in Beijing exchanged the initialed documents with their counterparts.

With the initialing, the two countries confirmed the English version of the FTA document, and the “substantial agreement” announced in November has gotten a step closer to implementation.

The pact still requires official signing and final ratifications from the two countries’ legislatures before going into effect.

“The two governments agreed to do our best to complete an official signing by the first half of this year so that our exporters can start benefiting from the FTA as soon as possible,” Woo Tae-hee, assistant minister for trade and chief FTA negotiator, said at a press briefing at the Sejong government complex on Wednesday morning.

Signings of FTAs are usually done by trade ministers, but an official at the Trade Ministry said this FTA is likely to be signed by the two presidents.

Under the updated agreement, Korean producers of 310 products in Kaesong will benefit from reduced or completely eliminated tariff as if the products were produced locally.

This will improve the price competitiveness of those exports from Kaesong to China.

To be eligible, at least 60 percent of each product’s raw materials should come from China or Korea. The list of 310 products will be renegotiated every year.

The Kaesong provision is a lot more generous than in Korea’s other FTAs, the Trade Ministry says.

Korea’s FTA with the European Free Trade Association (Korea-EFTA), consisting mostly of Scandinavian countries, gave tariff breaks to 267 products from Kaesong. The Korea-India FTA gave breaks on 108 products. The FTAs with ASEAN, Peru and Colombia gave breaks to 100 products.

Korea and China also inserted language into the FTA to launch a group to discuss opening more industrial complexes in North Korea.

The updated Korea-China FTA also includes an article that potentially allows other countries or offshore industrial complexes like Kaesong to join the Korea-China FTA. The article was added on China’s request.

“Through the Korea-China FTA, I think China wants to set up a new trade order within Northeast Asia, which other major Asian economies like Hong Kong and Macau can also participate in and expand this bilateral free trade pact into a larger-scale trade partnership within Asia,” Woo explained.

The two countries also decided to form a separate committee that discusses new business zones in each country to encourage the exploitation of the Korea-China FTA. Discussion of jointly operated business zones received a boost in the wake of Chinese Vice Premier Wang Yang’s visit to Seoul at the end of January.

The locations of such business zones are undecided yet, but candidate regions include Yancheng, Yentai and Guangzhou, cities located on China’s southern and eastern coasts, and Saemangeum on the western coast of Korea.

The Korea-China FTA’s services and investment articles also got more specific.

As soon as the FTA goes into effect, Korean law firms with a China office can do joint projects with local law firms.

The rule will be first tested within Shanghai Free Trade Zone. Also, the Chinese government agreed to lower barriers for business licenses for Korean builders.

However, the Korea-China FTA still seems to be limited to manufacturers, and other areas remain protected by tariffs including farmers and manufacturers in weak sectors.

China excluded most of Korea’s key export items to China in auto parts, steel and petrochemical industries from the tariff elimination list.

Korea’s sensitive agricultural products like rice, meat, vegetables and fruits will still keep their current tariff levels.

The level of tariff reduction and schedule for elimination varies by the product.

But most of Korea’s top exports to China, such as displays, petrochemical products, mobile phones and auto parts, will maintain current tariff levels.

On the other hand, the tariffs on top imports to Korea from China – the list is similar, including semiconductor, mobile phones, computers and displays – will be mostly eliminated as soon as the FTA is implemented.

The details of Korea-China FTA are currently available to the public on the Trade Ministry’s website.

Read the full story here:
Korea-China FTA includes Kaesong
Joong Ang Daily
2105-2-26

Posted in China, Economic reform, Foreign direct investment, International trade, Kaesong Industrial Complex (KIC) | Comments Closed

“Golden” ambassador stopped in Bangladesh

Saturday, March 7th, 2015

UPDATE 1 (2015-3-9): According to the BBC, the ambassador has been expelled:

angladesh has expelled a North Korea diplomat caught trying to smuggle 27kg (59lb) of gold into the country.

Son Young-nam, the first secretary of North Korea’s Dhaka embassy, was stopped as he arrived in Bangladesh via Singapore on Friday.

He was released and has not been charged, according to diplomatic protocol, but customs officials said it was a “clear case of smuggling”.

Sanctions against North Korea tightly restrict the movement of money.

Mr Son’s bag, which he had refused to allow customs officials to inspect, was found to contain gold bars and ornaments worth about US$1.6m (£1m).

North Korea’s ambassador, Ri Song-hyon, was summoned to the foreign ministry on Monday and told to send Mr Son home.

“We told the ambassador to prosecute him in North Korea and update us about the action to be taken against him,” Mohammad Shahidul Haque, the ministry secretary, told Reuters.

“We conveyed to him that the government would take serious action if any embassy official is found to be involved in any crimes in future.”

Mr Son was reported to have left Bangladesh on Monday night.

Official figures show customs officers have seized nearly 1,000kg (2,200lbs) of gold in the past 22 months at Bangladesh’s two international airports.

ORIGINAL POST (2015-3-7): According to the Wall Street Journal:

Bangladeshi authorities said they intercepted a North Korean envoy who arrived at Dhaka’s international airport with 27 kilograms of gold—worth an estimated $1.4 million—in his carry-on bag.

Customs officials said they seized the gold and detained the diplomat, who they identified as Son Young Nam, a first secretary at the North Korean embassy in the Bangladeshi capital, on Thursday. Mr. Son was released Friday, they said.

Sales of gold have long been an important source of funds for the North Korean regime, which has been largely cut off from the global financial system by sanctions imposed to curb its nuclear-weapons program.

Kim Kwang-jin, a former banker for the Pyongyang regime, said North Korea could have been moving the precious metal in an effort to find buyers.

Bangladeshi police officials said they are also investigating whether Mr. Son was acting as a courier by a local smuggling ring. Bangladesh has become a transit point for illicit gold shipments bound for India, which has raised import duties on the metal.

Bangladeshi authorities said the North Korean diplomat had arrived from Singapore. “We tried to scan his bag, but he resisted,” said Kazi Zia Uddin, a senior customs official. “He gave in after he was told he would be arrested.”

Calls to the North Korean embassy in Dhaka went unanswered on Friday and Saturday, the weekend in Muslim majority Bangladesh.

A man who answered the phone at the North Korean embassy in Singapore and declined to give his name said he had “no idea” about the gold shipment and hadn’t heard of Mr. Son.

Bangladeshi airport officials said Mr. Son told them he had been given the bag with the gold by a man in Singapore whom he declined to identify. Mr. Son said he was to deliver it to “a friend” of the man in Dhaka, the officials said.

A police official said four North Korean diplomats came to the airport seeking Mr. Son’s release.

Gold smuggling through the Dhaka airport has risen sharply in recent months, with large quantities seized. In February, officials discovered 61 kilograms of gold in the toilet of a Bangladeshi aircraft.

Mr. Kim, the former Pyongyang banker, who defected while based in Singapore in 2003, said that North Korea may have moved the gold to Bangladesh for sale after running into problems selling it in Singapore.

North Korea has previously sold gold bullion in the Singapore market, he said. But tighter restrictions imposed by the city-state on sales of precious metals, stones and other valuable items last year have made it harder.

Singapore’s new rules, intended to combat money laundering and terrorism financing, require dealers to submit a report to the government for any cash transaction valued over about $14,000.

Gold sales help provide funds used by North Korean leaders to ensure the loyalty of senior officials by providing them with a comfortable lifestyle, according to high-level defectors.

Choi Kun-chol, a former senior North Korean official who worked at the state’s main gold-trading business, told the Journal last year that sales of gold from North Korean mines has fallen from a peak of around 10 tons in the late 1980s to around four tons in more recent years.

North Korea often uses diplomats to carry cash and other valuables, defectors and diplomats say. Increased sanctions and scrutiny of official bank accounts have increased the need for secret movement of items in this way, they say.

Posted in Gold, Illicit activities, International trade, Singapore | Comments Closed

Railways Profit on “donju” cash

Thursday, March 5th, 2015

According to the Daily NK:

The North Korean railway system, a popular form of public transportation, is the latest mechanism through which the authorities are raking in profits. Railway officials are charging more than 100 times the regular state price for tickets on the most popular routes– a move specifically targeting the donju [new affluent middle class] and their money.

“Following orders handed down from the Ministry of Railways, diesel engines started towing train cars at the beginning this year, allowing the trains to run on time,“ a source in North Hamkyung Province reported to Daily NK on March 4th. “Previously it was hard to operate the 23~24 trains, which run between Pyongyang and Chongjin, due to shortages of electricity. However, this problem was solved by utilizing diesel engines that replaced the electric trains.”

He went on to explain that diesel engines, free from reliance on electricity, allow trains to depart and arrive on time despite shortages in power. Needless to say, this reliable option is extremely popular, particularly among those reliant on them to do business, which the railways are using to their advantage by charging exorbitant fees for their services.

“A limited number of tickets for these trains are sold in the official railway offices for 1,300 KPW [10 RMB] to regular customers. But it’s all a facade. Behind the scenes, dozens of women are being mobilized to sell tickets for 100 times the actual price,” he said. “It’s already difficult enough for most travelers to purchase tickets for a train bound for Chongjin from Pyongyang, and now the only real option is to get them on the black market, where the cost is exponentially higher.”

In this burgeoning black market arena, ticket prices have skyrocketed 100 RMB [135,000 KPW] and make up 80% of total sales; only 20% of ticket sales take place at official train station ticketing offices. Areas surrounding the stations are filled with female brokers selling tickets, who, according to the source, constantly holler out, “Get your ticket for the express train—100 RMB!”

For the donju, trains serve as an integral part of their business operations–and time is money. “Trains other than the Pyongyang-Chongjin train take more than fifteen days to travel 800 km,” the source explained. “Late last month, it took a 9~10 train from Pyongyang bound for Musan twenty days to arrive at its destination.”

The 7~8 train, which runs from Pyongyang to the Tumen River, was originally an international express bound to Russia, while the 9~10 train transported civil servants to various locations for international business trips. The 23~24 train, however, is the most widely used train in modern North Korea, designated specifically for business purposes since the proliferation of market activity at the start of the 21st century.

Read the full story here:
Railways Profit on Donju Cash
Daily NK
Choi Song Min
2015-3-5

Posted in Ministry of Railways, Railways, Transportation | Comments Closed

North Korean Economy Watch