Archive for July, 2015

DPRK emphasizes development of marine resources

Thursday, July 30th, 2015

According to KCNA:

Development of Marine Resources Spurred in DPRK

The development of marine resources has been pushed forward in a far-sighted way in the DPRK according to a new national strategy for developing marine resources.

The Ministry of Land and Maritime Transport, the Ministry of Fisheries and the State Hydro-meteorological Administration are paying deep attention to marine survey and observation and research into marine resources, while laying sound material and technical bases for them.

Researchers of Kim Il Sung University have made successes in the research into marine energy resources, marine information system and marine environmental protection. They are also pushing ahead with the research into searching for fishing ground on the East and West seas of Korea and the ocean and into aquaculture and marine mineral resources.

The establishment of a latest marine technology park progresses apace.

Kwak Il Hwan, secretary of the DPRK society for marine studies, told KCNA:

It is one of important national policies to protect and develop marine resources.

Students and citizens are encouraged to get more knowledge about the sea through different occasions like the Day of Sea (July 12) and months for maritime physical culture (July and August).

Big efforts have been paid to putting the research into marine resources on a higher scientific basis.

And here is coverage of the report by the Institute for Far Eastern Studies (IFES):

Marine Development Projects Underway in North Korea
2015-7-30

North Korea’s state-run Korean Central News Agency (KCNA) reported on July 24, 2015 that marine resource development projects, such as the establishment of an Advanced Marine Technology Development Zone, are currently being pursued in North Korea.

While KCNA reports that the establishment of the Advanced Marine Technology Development Zone is moving along, Choson Marine Association head clerk Kwak Il Hwan adds, “Protecting and increasing marine resources while actively developing and using them is becoming one of the state’s main policies.”

The news agency also revealed, “As a marine space resource, ports will be constructed, navigation channels will be developed, and there were will be tidelands and marine tourist spots; on the west coast it will become a tideland capable of development as well as a wealth of information.” This statement indicates that the Advanced Marine Technology Development Zone will be designated on the west coast.

“A training system for our country’s experts and engineers in the marine sector is in place, and a technological foundation for the development and use of marine resources, including research bases in each field all over the country, has been secured,” KCNA reported.

Along with this, the news agency revealed that in the Ministry of Land and Marine Transport, the Ministry of Fisheries, and the meteorological observatory, they are proceeding with projects like maritime studies, marine observations and research projects, and maintenance reinforcement work through material and technical means.

In addition, Kim Il Sung University is pushing for the effective development and use of marine resources, invigorating the exploration of fisheries, sea farming, a marine ecology and environmental information management system, the exploration of marine mineral resources, and collection research projects on the East and West coast and in ocean waters.

KCNA also revealed that research in areas like marine energy resource development, marine environment protection technology, and a marine information system are achieving results.

Share

North Korean-supplied missiles to Yemen

Wednesday, July 29th, 2015

According to Yonhap:

Scud missiles fired into Saudi Arabia by Yemeni rebels in recent months came from North Korea, a South Korean intelligence official said Wednesday, in the latest case that illustrated North Korea’s support for the weapons programs of some countries in the Middle East.

Saudi Arabia has shot down about 40 percent of some 20 Scud missiles fired by Yemen’s Houthi rebels, said the official, who is familiar with the issue.

He did not give further details on how South Korea reached the conclusion that the missiles originated from North Korea. He spoke on condition of anonymity because he was not authorized to speak to media.

Missile exports have long been a major source of hard currency for North Korea.

“North Korea has sold missiles to Yemen and sent missile engineers to that country in the 1990s,” said a former North Korean official, who was in a position to know about the arms deals.

Another former North Korean intelligence official in Seoul said North Korea sold many Scud missiles to countries in the Middle East, noting Egypt was the hub of North Korea’s arms trade in the region.

The two former North Korean officials, who later defected to South Korea, asked not to be identified, citing the issue’s sensitivity.

North Korea’s Scud-B missiles and Scud-C missiles have a range of 300 kilometers and 500 kilometers, respectively, according to South Korea’s Defense Ministry.

Read the full story here:
Scud missiles fired into Saudi Arabia from Yemen traced to N. Korea: official
Yonhap
2015-7-29

Share

ROK re-configures inter-Korean cooperation fund

Monday, July 27th, 2015

According to Yonhap:

The Unification Ministry said Monday it has decided to overhaul ways to operate a government fund designed to promote inter-Korean cooperation in a bid to offer humanitarian aid to North Korea on a project basis.

South Korea set up the Inter-Korean Cooperation Fund in 1991 in order to facilitate inter-Korean exchanges and economic cooperation. As of end-June, the fund stood at an outstanding 12.4 trillion won (US$10.7 billion).

The ministry said it will overhaul ways to run the fund so as to provide project-based assistance to the North, a departure from its current practice of offering only emergency relief.

To this end, the government plans to specify the areas where civilian groups could offer humanitarian aid such as healthcare, agriculture and forestation.

“Through the overhaul, necessary aid including food and others could be delivered (to the North) on a project basis,” Jeong Joon-hee, the ministry spokesman, said in a regular press briefing.

South Korea has almost suspended its massive assistance to North Korea at the government level since 2010, when it imposed economic sanctions on Pyongyang following the North’s attacks on a South Korean warship and a border island that year. But Seoul has continued to allow civilian groups to extend aid to the North.

Seoul said in May that it will encourage more civic groups to increase support to North Korea in non-political areas if they are deemed to promote national unity and reconciliation.

Read the full story here:
S. Korea to overhaul fund on inter-Korean cooperation
Yonhap
2015-7-27

Share

US Sanctions Singapore entity allegedly linked to OMM (UPDATED)

Friday, July 24th, 2015

UPDATE 2 (2015-8-3): The Singaporean firm is being prosecuted. According to the Straits Times:

In the first case of its kind, a Singapore-registered company was prosecuted on Monday for facilitating payment for costs related to the shipment of arms and related material bound for North Korea from Cuba.

Chinpo Shipping Company is alleged to have transferred US$72,017 from its Bank of China account to that of a shipping agent in Panama – C.B. Fenton and Co – on July 8, 2013.

Under the United Nations (Democratic People’s Republic of Korea) Regulations 2010, it is an offence to transfer financial assets that could help North Korea in its nuclear and ballistic programmes, or efforts to produce other weapons of mass destruction.

Chinpo, whose representative is Mr Tan Cheng Hoe, 82, a director of the company, also faces a second charge of carrying on a remittance business without a valid licence between April 2, 2009 and July 3, 2013 .

The court heard that a North Korean Cuba-bound cargo ship, the Chong Chon Gang, docked in Mariel, Cuba, on June 20, 2013, and loaded 25 containers and six trailers of arms and related material weighing 474 tons.

This included two MiG-21 jet fighters, anti-tank rockets and SA-2 and SA-3 Russian surface-to-air missile systems and their parts.

All were bound for North Korea and hidden in the cargo hold under 10,500 metric tons of sugar, said the prosecution in its opening statement.

The company that managed the ship, Ocean Maritime Management (OMM), wanted someone to make payments for them to hide the fact that the money was coming from a DPRK entity.

Chinpo stepped in to help. On May 28 that year, it transferred US$54,270 to pay for the passage of Chong Chon Gang to and from Cuba through the Panama Canal. Another payment of US$72,017 was made on July 8 that year.

Deputy Public Prosecutor Sandy Baggett said that was not the first time Chinpo had transferred money for North Korean companies or OMM.

For at least four years, Chinpo remitted a total of over US$40 million without a licence and without regulation by the Monetary Authority of Singapore.

MAS requires companies to exercise due diligence when dealing with customers and to guard against money laundering.

Mr Edmond Pereria is defending the company, which can be fined up to $1 million if convicted under the UN Act. The penalty for operating a remittance business without a licence is a $100,000 fine.

A joint Ministry of Foreign Affairs and Ministry of Home Affairs statement last week said Singapore takes a serious view of its obligations to prevent the illicit trafficking of weapons of mass destruction, their means of delivery and related materials.

“We will not hesitate to take action against individuals and/or companies that fail to comply with the relevant Singapore legislation that we have put in place to give effect to measures prescribed by United Nations Security Council regulations,” it said.

UPDATE 1 (2015-7-24):  Blacklisted Singapore shipping firm denies arms link to North Korea. According to the AFP (via Straits Times):

A Singapore shipping firm blacklisted by the United States government for allegedly supporting illicit arms shipments into North Korea strongly denied the allegation Friday (July 24) and vowed to clear its name.

Senat Shipping and Trading Pte Ltd said it had “for many years chartered North Korean vessels to operate on the global spot market” but all these were legitimate commercial transactions.

“Senat wishes to stress that all its dealings were legal and involved commercial shipments of commodities on behalf of international commodity traders. These transactions have always been transparent and can survive any form of scrutiny,” it said in a statement.

In imposing sanctions on Senat and its president, Leonard Lai, on Thursday, the US Treasury Department alleged that the company was providing “extensive support” to Ocean Maritime Management Company (OMMC), a North Korean firm that already was under sanctions.

The blacklist freezes any US assets held by Senat and Lai, and prohibits US citizens from conducting any transactions with them.

Chong Chon Gang, a ship operated by OMMC, was seized in July 2013 near the Panama Canal carrying undeclared Soviet-era weapons and fighter jets under thousands of sugar sacks.

The cargo, which came from Cuba, was intended for North Korea.

The US Treasury Department on Thursday claimed that Senat provides support to OMMC by “arranging the purchase, repair, certification, and crewing” of ships for that company.

“Arms shipments transported by OMMC serve as a key resource for North Korea’s ongoing proliferation activities. Sales from these shipments contribute to North Korea’s other illicit programmes,” said Adam Szubin, the Treasury’s acting undersecretary for terrorism and financial intelligence.

Senat in its statement said that it had chartered the Chong Chon Gang on a regular basis but stressed that it was not the charterer at the time the vessel was intercepted in Panama.

“We strongly stress that Senat was not the charterer of the vessel at the time of its arrest and Senat has not chartered the vessel at all since its arrest,” the company said.

OMMC was blacklisted by the United Nations after the ship was caught, and Senat said that Chinpo Shipping Services, a Singapore firm which had acted as the agent for the vessel, was prosecuted by local authorities at that time.

Senat said it “strongly refutes these groundless and unwarranted allegations” and that it was in the process of contacting the US Treasury Department to explain its side.

ORIGINAL POST (2015-7-23): According to the Wall Street Journal:

The U.S. imposed sanctions on Thursday against a Singaporean company and its president for their links to a North Korean shipping firm that allegedly helped an attempt to move weapons from Cuba to Pyongyang.

Senat Shipping Ltd., the U.S. Department of Treasury said, helped arrange the purchase, repair, certification and crewing of vessels belonging to North Korea’s Ocean Maritime Management Co., which the U.S. targeted last year with sanctions for allegedly managing a vessel sailing from Cuba to Pyongyang that carried illicit cargo falsely declared to be sugar and spare plastic. The vessel was interdicted by Panama in July 2013 on suspicion of moving drugs; it was freed in February 2014 to sail back to Cuba after Pyongyang paid a fine.

“Arms shipments transported by OMMC serve as a key resource for North Korea’s ongoing proliferation activities. Sales from these shipments contribute to North Korea’s other illicit programs,” said Adam Szubin, acting undersecretary of Treasury for terrorism and financial intelligence, in a statement.

Leonard Lai, president of Senat, was also targeted Thursday with sanctions, as was the vessel “Dawnlight,” which Treasury identified as blocked property of Senat.

Neither Senat nor Mr. Lai could be reached.

Treasury also said Thursday it updated its sanctions designation on OMMC, saying the company has continued to operate through multiple front companies and representative offices to evade sanctions. It also updated its listings on two officials who work for Tanchon Commercial Bank under aliases.

The US Treasury Department sent out this information:

North Korea Designations and Updates; Non-proliferation Updates
7/23/2015

OFFICE OF FOREIGN ASSETS CONTROL
Specially Designated Nationals List Update
The following individual has been added to OFAC’s SDN List:

LAI, Leonard (a.k.a. LAI, Yong Chian); DOB 16 Jun 1958; Passport E3251534E (Singapore) expires 20 Mar 2018 (individual) [DPRK].

The following entity has been added to OFAC’s SDN List:

SENAT SHIPPING LIMITED (a.k.a. SENAT SHIPPING & TRADING PTE LTD; a.k.a. SENAT SHIPPING AGENCY LTD; a.k.a. SENAT SHIPPING AND TRADING LTD; a.k.a. SENAT SHIPPING AND TRADING PRIVATE LIMITED), 36-02 A, Suntec Tower, 9, Temasek Boulevard, Singapore 038989, Singapore; 9 Temasek Boulevard, 36-02A, Singapore 038989, Singapore; Panama City, Panama; PO Box 957, Offshore Incorporations Centre Road Town, Tortola, Virgin Islands, British; Identification Number IMO 5179245; alt. Identification Number IMO 5405737 [DPRK].

The following vessel has been added to OFAC’s SDN List:

DAWNLIGHT General Cargo Mongolia flag; Vessel Registration Identification IMO 9110236 (vessel) [DPRK].

The following changes have been made to OFAC’s SDN List:

KIM, TONG-MYO’NG (a.k.a. KIM, CHIN-SO’K; a.k.a. KIM, TONG MYONG; a.k.a. “KIM, JIN SOK”), c/o Tanchon Commercial Bank, Saemul 1-Dong Pyongchon District, Pyongyang, Korea, North; DOB 1964; nationality Korea, North (individual) [NPWMD]. -to- |KIM, Tong-Myo’ng| (|a.k.a. KIM, CHIN-SO’K; a.k.a. KIM, HYOK CHOL; a.k.a. KIM, TONG MYONG; a.k.a. “KIM, JIN SOK”|)|; DOB 1964; alt. DOB 28 Aug 1962; nationality Korea, North; Passport 290320764| (individual) [NPWMD] (|Linked To: TANCHON COMMERCIAL BANK|).

OCEAN MARITIME MANAGEMENT COMPANY LIMITED (a.k.a. EAST SEA SHIPPING COMPANY), Dongheung-dong Changgwang Street, Chung-ku, PO Box 125, Pyongyang, Korea, North; Donghung Dong, Central District, PO Box 120, Pyongyang, Korea, North; No. 10, 10th Floor, Unit 1, Wu Wu Lu 32-1, Zhong Shan Qu, Dalian City, Liaoning Province, China; 22 Jin Cheng Jie, Zhong Shan Qu, Dalian City, Liaoning Province, China; 43-39 Lugovaya, Vladivostok, Russia; CPO Box 120, Tonghung-dong, Chung-gu, Pyongyang, Korea, North; Bangkok, Thailand; Lima, Peru; Port Said, Egypt; Singapore; Brazil; Identification Number IMO 1790183 [DPRK]. -to- OCEAN MARITIME MANAGEMENT COMPANY LIMITED (|a.k.a. EAST SEA SHIPPING COMPANY; a.k.a. HAEYANG CREW MANAGEMENT COMPANY; a.k.a. KOREA MIRAE SHIPPING CO. LTD.|)|, Dongheung-dong Changgwang Street, Chung-ku, PO Box 125, Pyongyang, Korea, North; Donghung Dong, Central District, PO Box 120, Pyongyang, Korea, North; No. 10, 10th Floor, Unit 1, Wu Wu Lu 32-1, Zhong Shan Qu, Dalian City, Liaoning Province, China; 22 Jin Cheng Jie, Zhong Shan Qu, Dalian City, Liaoning Province, China; 43-39 Lugovaya, Vladivostok, Russia; CPO Box 120, Tonghung-dong, Chung-gu, Pyongyang, Korea, North; Bangkok, Thailand; Lima, Peru; Port Said, Egypt; Singapore; Brazil; Hong Kong, China; Shenzhen, China; Identification Number IMO 1790183| [DPRK].

RA, Kyong-Su, Beijing, China; Tanchon Commercial Bank Representative to Beijing, China (individual) [NPWMD]. -to- RA, Kyong-Su (|a.k.a. CHANG, MYONG HO; a.k.a. CHANG, MYO’NG-HO; a.k.a. CHANG, MYONG-HO|), Beijing, China; Tanchon Commercial Bank Representative to Beijing, China (individual) [NPWMD] (|Linked To: TANCHON COMMERCIAL BANK|).

Here is additional coverage in The Guardian, and Channel News Asia.

Read the full story here:
U.S. Targets Singaporean Supporter of North Korean Maritime Firm
Wall Street Journal
Samuel Rubenfeld
2015-7-23

Share

Real estate and insurance laws adopted for SEZs

Wednesday, July 22nd, 2015

According to KCNA:

Rules of Real Estate and Insurance in EDP Adopted

Rules of real estate and insurance in the economic development parks (EDP) were adopted according to the decision of the Presidium of the Supreme People’s Assembly of the DPRK.

The rule of real estate consists of seven chapters and 59 articles and the rule of insurance four chapters and 52 articles.

The rules deal with possession, registration and employment of real estates, their rent and rate, conclusion of insurance contract, formalities of insurance offices, etc. in the EDP.

Share

Joint NK-Russia pharmaceutical company revamps operations

Tuesday, July 21st, 2015

According to the Daily NK:

Python, a joint company between North Korea and Russia, which had manufactured health supplements during Kim Jong Il’s era, has recently renewed its contract and is set to manufacture products using materials produced in North Korea, Daily NK has learned.

“Python closed down due to financial difficulties but has recently renewed its contract with North Korea,” a source in Russia told Daily NK. “On the 7th, the North Korean consul general and the deputy prime minister of Zabaykalsky Krai signed related contracts to operate the Python factory.”

An additional source in Russia confirmed this development.

The factory, located in Russia, is currently shuttered due to financial restraints, but the North Korean state authorities have been providing cadres dispatched to the facility for management with living expenses. The source said the factory is expected to give the Russian city Chita a boost in its local economy, helping to propel the deal.

“Before production ground to a halt, Python had been sending hefty sums of money to North Korea. Russia can also rake in profits from the company, so neither wants to give up on the endeavor,” the source speculated. “Once production begins, North Korea will select and dispatch workers to Russia who will produce medicine and health supplements.”

He added, “We can’t tell exactly how much was being made from the production, but former workers say under normal operations, the sum going to the North was significant,” the source said, noting that North Korea is surely hoping the deal can try to make in a dent in the dearth of state foreign-currency funds.

“In the past, Python mainly produced health supplements, such as ‘baljam’ (herbal wine) and ginseng extract,” he explained. “But after Russia was introduced to capitalism, financial, ideological, etc. difficulties emerged and operations took a toll. Over the past few years, only a few North Korean managers have been left behind.”

He added that the North Korean laborers who worked at Python were guaranteed housing and food in addition to receiving a monthly salary of 50 to 60 USD, and given that the organization is a pharmaceutical company, most of the Party cadres dispatched there are college graduates; some researchers were sent with their families as well.

Meanwhile, earlier on the 14th, Radio Free Asia [RFA], citing Russian internet publication ‘Business Buryatia,’ also reported that “North Korea and Russia are planning to co-produce medical products in Chita, a city in Eastern Siberia as early as before the end of this year.”

Read the full story here:
Joint NK-Russia pharmaceutical company revamps operations
Daily NK
Kang Mi Jin
2015-07-21

Share

DPRK coal shipments to China 2015

Sunday, July 19th, 2015

Back in 2014, Kevin Stahler argued that the DPRK’s anthracite coal exports were falling due to Chinese environmental and trade policies. This year Bloomberg reports that coal exports are showing heavy growth:

China-DPRK-Anthracite-2015

North Korea was the only country to boost coal shipments to China this year as Vietnamese supply slumped.

Chinese coal imports tumbled 40 percent in the five months through May, according to customs data. North Korean shipments jumped 25 percent, overtaking Mongolia and Russia to become China’s largest foreign source of coal after Australia and Indonesia, as Vietnamese imports dropped 91 percent.

An expanding power sector means Vietnam is preparing next year to start importing coal, ending its role as the world’s biggest supplier of a high-quality grade known as anthracite. North Korea’s benefiting from the rising exports as it needs foreign income amid a three-month drought that’s threatening harvests and raising the possibility that it will need to import food.

“It may be a replacement for the lack of exports from Vietnam,” Guillaume Perret, founder and director at Perret Associates, a coal research company in London, said by phone Friday. “It could be that some power plants or industrial sectors need high-quality anthracite for blending. There’s not so much anthracite in the world, so they may be replacing Vietnamese exports with North Korea.”

Vietnam Shipments

China’s shift to a more consumer-driven economy from heavy industrial investment has damped the nation’s demand for commodities from iron ore to copper. The country imported 7.5 million metric tons of coal from North Korea in January through May as Vietnam’s shipments fell to 180,000 tons and total foreign supplies dropped to 62 million tons. The customs data doesn’t distinguish between grades of thermal coal.

“North Korea is the new No. 1 exporter of anthracite,” Georgi Slavov, head of basic materials research in London at Marex Spectron, said Friday by e-mail. “Vietnam held the No. 1 spot for many years before that.”

Australia and Russia’s coal sales to China dropped as much as 45 percent in the period, while South Africa and the U.S. made no shipments at all in 2015, the customs data show. North Korea produced 43 million short tons (39 million metric tons) of coal in 2012, the last year for which the U.S. Department of Energy has estimates. That’s about 1 percent of Chinese output.

Anthracite in China closed unchanged on July 14 at 604 renminbi ($97.27) a metric ton, according to weekly data from the China National Chemical Information Center. Prices slid 12 percent so far this year.

NK News followed up with a separate story. You can read it here.

Here are comments by Marcus Noland.

Read the full story here:
North Korea Gains in China Coal Exports as Vietnam Bows Out
Bloomberg
Alessandro Vitelli
2015-7-19

Share

Bank of Korea on the DPRK’s economic performance in 2014

Friday, July 17th, 2015

The Bank of Korea has published its annual assessment of the North Korean economy. The report on economic performance in 2014 can be downloaded here (PDF).  Previous years’ reports can be downloaded from my economic statistics page.

The report claims that the DPRK’s GDP increased by 1% in 2014. Nominal GNI was valued at 34.2 trillion KRW, (2.3% of South Korea). GNI per capita stood at 1.388 million KRW, (4.7% of South Korea).

Growth a number of industries was positive, but had fallen from 2013 rates. Among these industries were mining, as wells as agriculture, forestry, and fishing (combined) and heavy industry and chemical industry (combined).  Growth in light industry was higher than in 2013 as was electricity, gas and water (combined) and services. The biggest annual turnaround came in the construction industry, which saw a growth rate of 1.4% following a -1% fall in 2013.

The volume of North Korea’s external trade (sum of exports and imports of goods, excluding inter-Korean trade) amounted to $7.61 billion dollars in 2014 (up $0.27b from 2013). Exports totaled $3.16 billion (down 1.7% from 2013). Imports totaled $4.45 billion (up 7.8% from 2013).

Here is coverage in Yonhap:

North Korea’s economic growth is estimated to have slowed last year from a year earlier as its staple primary industries posted tepid performances, data showed Friday.

The North’s economy is projected to have expanded 1 percent in 2014, decelerating from the 1.1 percent on-year growth in the previous year, according to the data compiled by South Korea’s central bank, the Bank of Korea (BOK).

It has posted economic expansions for four years in a row since it contracted 0.9 percent and 0.5 percent in 2009 and 2010, respectively.

The BOK explained that the North’s construction sector lent support to the overall growth, bouncing back to a 1.4 percent on-year growth last year from a 1 percent fall the previous year.

Pyongyang’s agricultural and fishery industry, which accounts for 21.8 percent of its total output, expanded 1.2 percent last year, slowing from 1.9 percent growth in 2013.

Growth in its mining and manufacturing sector, which accounts for 34.4 percent of overall output, gained 1.1 percent, down from 1.5 percent a year earlier.

The data, meanwhile, showed that North Korea’s nominal gross national income (GNI) came in at 34.2 trillion won (US$29.8 billion) last year, which is roughly 2.3 percent of South Korea’s 2014 GNI of 1,496.6 trillion won.

Since 1991, the BOK has been releasing the growth estimate of the North based on data provided by Seoul’s intelligence agency and other institutions specializing in North Korean studies.

Here is coverage in Bloomberg (with carts!).

http://www.bloomberg.com/news/articles/2015-07-17/north-korea-grew-1-in-2014-is-south-s-best-guess

Share

Choco Pies in North Korea (UPDATED)

Tuesday, July 14th, 2015

Choco-pie-Pyongyang

Pictured above (Source here): A Choco Pie wrapper in Pyongyang (October 2014)

UPDATE 6 (2015-7-14): The Daily NK reports that the DPRK’s ‘Choco Pie’ knock-off falls far short:

Daily NK has obtained a North Korean snack rolled out to squash demand for a popular South Korean treat that had first become a sensation among factory workers in the inter-Korean industrial complex and spread across the country. Known as ‘Chocolate Danseolgi,’ the snack displays a striking resemblance with the much-loved South Korean ‘Choco Pie’.

The new treat is said to have been produced to cut off fantasies about the capitalist world its workers may harbor.

DNKE_1325_295691_1436859978_i

Starting last month, North Korea has been providing its Kaesong factory workers with ‘Danseolgi’, according to a source who has ties with the North and passed on the new snack to Daily NK on the condition of anonymity. This comes after Pyongyang banned supplies of the famed ‘Choco Pie’ within the industrial complex last year, as they were being sold by the workers on the black market for good returns and gaining greater popularity across the country.

The South Korean ‘Choco Pie’ snack was first introduced to Kaesong workers in 2006. Due to its soaring popularity, many had come to develop a sense of curiosity or fantasies about the South, the source said. Seeing the chocolate cake snack with marshmallow filling win over so much love, Pyongyang set out to create an alternative in the hopes of choking off demand.

Last year, after banning ‘Choco Pie’ supplies, the North tried to force South Korean firms to provide its factory workers with a home-grown chocolate double-layered cake snack, and this year in March, it even rolled out a chocolate coated rice cake treat also similar to an existing South Korean product.

Despite these efforts, local goods have failed to take off, as Kaesong workers are already acquainted with tastes from South Korea and are only eating the ‘Danseolgi’ as they have no other choice, according to the source.

The treat is one of the “latest products” put out for Kaesong workers. “It was smuggled out of the country by way of a North Korean trader in the Rason Economic Special Zone who works with Chinese traders,” she explained.

“Currently in the North, the ‘Chocolate Danseolgi’ is being distributed to workers as supplies, and they’re not sold on North Korea’s regular markets,” she asserted. Every last ingredient used to make the snack, from the butter to the chocolate, is imported from China.

Predictably, Kaesong workers invariably far prefer the taste of the original chocolate snack from South Korea, the source said, adding, “North Korea will never be able to produce the South’s Choco Pie.”

One of Daily NK’s reporters who tried out the North Korean ‘Danseolgi’ described the snack as “decidedly lacking in chocolate flavor ” and “being overwhelmingly pungent of butter.” The wrapper claims to include marshmallow in the product, but our taste tester reported any semblance of its texture to be nonexistent and noted that the cake itself is incredibly prone to crumbling.

UPDATE 5 (2015-6-9): DPRK asks that all South Korean food served in the KIC be replaced by North Korean substitutes. According to Voice of America:

North Korea has asked South Korean businesses at the Kaesong industrial complex to replace all foodstuffs given to its workers at the inter-Korean park with North Korea-made products.

A representative of the South Korean businesses, who visited the complex Tuesday, told VOA’s Korean Service that South Korean companies began distributing North Korean substitutes for popular South Korean food supplies to the North Korean workers as early as March. Almost all South Korea-made food products have now been replaced with North Korean products.

Choco Pie, a popular South Korean snack cake, also has been replaced with a similar North Korea-made sweet. The chocolate covered cake with marshmallow filling has become one of the most popular items in the North’s black markets. Other North Korea-made foodstuffs given to the workers include instant noodles with chicken broth and condiments.

In an attempt to keep South Korean foodstuffs from the complex, the North is imposing an additional business tax on the companies for bringing in South Korea-made products. About 50 South Korean businesses supplying food for the complex face bankruptcy, according to representatives of the South Korean businesses.

Some business owners have expressed concern about the quality of North Korean foodstuffs. One representative said some workers are suffering from food poisoning after the switch.

A South Korean official who asked to remain anonymous told VOA the North Korean move is aimed at blocking the flow of South Korean products into the North and earning foreign currency.

South Korean companies have been providing about $60 per month in snacks to each North Korean worker. With approximately 53,000 workers at the complex, Pyongyang can now garner up to $3 million every month from the snack sales.

UPDATE 4 (2014-9-24): According to the Daily NK, workers in the KIC are receiving a different dessert than the Choco Pie now. Also, the Kumunsan Company is producing substitute goods, and they are winning over consumers:

[…] the once popular South Korean snack Choco Pie is seeing a decline in its asking price. In June, Pyongyang demanded that South Korean companies at the industrial complex stop distributing Choco Pies to workers there, as officials had found it problematic that North Korean workers were saving the snacks and selling them in the markets. More recently, the northern workers have been receiving Chaltteok Pie (찰떡) [a chocolate covered rice cake from the South], individually packaged coffee, yulmucha (율무차)[grainy tea made with Job’s Tears], and candy bars.

“In Pyongyang, at the ‘Geumeunsan Trade Company,’ (금운산, Kumunsan Trade Corporation) they have been baking bread for about a year,” the source said, adding, “Of all the different kinds of bread, the most popular are the ones with butter inside, and they are less than 1000 KPW– much cheaper than Choco Pie.”

The trade company is an affiliate of the Military Mobilization Department [Military Manpower Administration in South Korea], which deals with the procurement of military supplies among its many functions. They either directly import the goods or obtain them from military factories in various locations across the country, and oversee the manufacturing of military equipment and machinery.

Geumeunsan Trade Company maintains branches in multiple areas, including Rasun and Cheongjin, and the office in Pyongyang imports ingredients such as flour, sugar, and cooking oil directly from China. According to the source, the raw material prices are cheaper than in the  North’s markets, and the products taste good, allowing it to monopolize the confectionery market there.

“The company has brought in foreign equipment and technology, putting it ahead of the South’s Choco Pie in price and taste,” he said, concluding, “This is why with the introduction of these different breads in Pyongyang, the price of Choco Pie [from the South] has dropped to 500 KPW from 1,200 KPW.”

See also this story in Radio Free Asia.

Read the full story here:
Kaesong Goods Fetch Highest Market Prices
Daily NK
Seol Song Ah
2014-9-24

UPDATE 3 (2014-7-1): Media reports claim that the DPRK has banned the use/possession of Choco Pies in the Kaesong Industrial Complex. According to the Washington Post:

By some estimates, as many as 2.5 million Choco Pies were traded monthly — though it’s unclear who exactly was so assiduously following Choco Pie markets.

Regardless of its volume, the trade will now surely be shrinking.

According to recent reports in the South Korean press, North Korean authorities have now banned the South Korean-produced Choco Pie at the Kaesong Industrial Complex following a lengthy crackdown on the chocolate treat that has made it scarce in Pyongyang.

Before, workers could pocket as many as 20 pies every night of work. But now, South Korean factory staff said they’ll instead get sausages, instant noodles, powdered coffee or chocolate bars as a bonus.

More information here and here.

UPDATE 2 (2013-9-20): Is the DPRK manufacturing a counterfeit Choc Pie? According to the Daily NK:

Ryongsong-foodstuff-factory-2013-11-21

Pictured Above: Ryongsong Foodstuff Factory, Ryongsong District, Pyongyang (Google Earth)

The price of a North Korean own-brand “Choco Pie” fell to just 500 won in domestic markets following news that the Kaesong Industrial Complex (KIC) was to reopen, Daily NK has learned. The local version of the chocolate snack, which is made by Orion in South Korea, had previously risen to 3000 won on the back of the protracted KIC closure.

A source in Pyongyang reported to Daily NK on the 19th, “Sometime around May, Yongseong [Ryongsong] Foodstuff Factory in Pyongyang started selling ‘Choco Pies’ in the markets. People hadn’t seen a Choco Pie since Kaesong stopped, so their reaction was really something.”

“People were surprised because the packets said ‘Choco Pie’ and ‘Choco Rice Cake’ [a similar product with a glutinous rice center], and they couldn’t tell the difference between them and those from the ‘neighborhood below’ [South Korea] unless they checked closely,” the source went on. “Sure, people could tell they weren’t the real thing as soon as they ate them, but they were still pretty satisfied.”

According to the source, after South Korean Choco Pies disappeared from North Korean markets following the closure of the KIC, domestic traders started looking into importing the original South Korean and similar Chinese versions of the popular treat. However, the cost and difficulty of doing so meant that very few ended up crossing the border.

Therefore, attention turned to domestic production. The source explained, “Production volumes were low at first, and the state tried to control the flow of the product into the markets. They were 500 won a piece at the end of the first month; but that had risen to 3000 won by the end of last month. But the price sank back down upon news of the KIC re-start.”

“As soon as Choco Pies stopped coming out of the KIC, Yeongsong Foodstuffs Factory moved quickly and must have made quite a bit of money,” he guessed. “They were trying to imitate the South Korean pies but the product was way too sweet, which is partly why the price collapsed on the news of Kaesong.”

Only 60% (32,000) of the pre-closure North Korean workforce (53,000) returned to work when the KIC re-opened for a “trial run” on September 16th. At the same time, South Korean businesses, many facing financial difficulties after five months of nonproductive shutdown, have reportedly reduced the quantity of Choco Pies and other snacks previously distributed to workers. It is unclear what effect these circumstances could have on the price of goods flowing out of the KIC over the longer term.

Read the full story here:
NK Choco Pie Price Falls on KIC News
Daily NK
2013-9-20

UPDATE 1 (2011-10-31): According to the Daily NK, North Korean management in the Complex requested back in August that South Korean businesses stop offering ‘Choco-pies’ (a South Korean snack) to North Korean workers and give them cash instead.

ORIGINAL POST (2009-5-20): Donald Kirk has a must-read article in today’s Asia Times on the subtle ways that the Kaesong Industrial Zone is undermining Pyongyang’s control over the North Korean people.  He points out that the DPRK’s verbal attacks on South Korea, combined with demands for new land, labor, and road use contracts in the Kaesong complex, are an attempt to blame South Korea when Kim Jong-il finally closes the project.

Quoting from the article:

Think Choco Pie, the thick wafer-like confection, all pastry and cream, served in the Kaesong Industrial Complex as a daily dessert for the 40,000 North Koreans who toil for 100 South Korean companies with factories in the complex.

“North Koreans love Choco Pie,” said Ha Tae-keung, president of NK Open Radio, which beams two hours of news daily into North Korea from its base in Seoul. “It’s an invasion of the stomach.”

North Korean workers, and the friends and family members for whom they save their daily treats, may salivate over Choco Pie, but it’s giving a severe stomach ache to senior officials fearful of the infiltration of South Korean culture in all corners of their Hermit Kingdom.

Choco Pie – along with other favorite South Korean cakes and candies as well as instant coffee – has come to symbolize the image of the capitalist South as a multi-tentacle beast that may be impossible to digest.

For Kim Jong-il, suffering from diabetes, recovering from a stroke and hoping to survive a few more years while grooming his neophyte youngest son, in his mid-20s, to succeed him, the best way to deal with the Kaesong complex, 60 kilometers north of Seoul and just above the demilitarized zone between the two Koreas, may be to spit it out.

It’s for this reason, said Ha, that North Korea has precipitously scrapped the agreements under which South Korean companies operate in the complex, built and managed by Hyundai Asan, an offshoot of the sprawling South Korean Hyundai empire.

“He’s come to see Kaesong as a burden rather than an asset, and is inclined to shut it down,” said Ha.

While the Kim Jong il government focuses its attention on cultural infiltration from the South, there appears to be little it is doing, or can do, about cultural infiltration from China–the DPRK’s most significant trading and political partner to the north:

When it comes to South Korean cultural infiltration, however, North Korea has far more to fear from the entry of goods from China than from the Kaesong complex. South Korean DVDs and CDs, even soft-core porn movies made in the South, are now distributed surreptitiously throughout North Korea. Electronic gadgetry, MP3 and MP4 players, TV sets, radios and rice cookers, also shipped via China, are also available for those with the money to pay for them.

Read the full article here:
Pyongyang chokes on sweet capitalism
Asia Times
Donald Kirk
5/21/2009

Share

China-DPRK border trade zone approved in Dandong

Monday, July 13th, 2015

According to Xinhua:

A border trade zone between China and the Democratic People’s Republic of Korea (DPRK), located in northeast China’s Liaoning Province, has been approved, the provincial government announced on Monday.

According to the city’s foreign trade bureau, the Guomenwan border trade zone covers 40,000 square meters of land in the border city of Dandong. It is expected to open in October.

Residents living within 20 kilometers of the border will be able to exchange commodities with people from the DPRK and enjoy a duty-free policy on goods purchased for less than 8,000 yuan (1,288 U.S. dollars) per day, authorities with the bureau said.

Dandong is the key hub for trade, investment and tourism between China and the DPRK. There are more than 600 border trade enterprises in the city, and trade with the DPRK accounts for 40 percent of the city’s total trade turnover.

Read the full story here:
China-DPRK border trade zone approved
Xinhua
2015-7-13

Share